City of Milwaukee v. Chi., M., St. P. & P. Ry. Co.

• Decision Date: 10 November 1936
• Citation: 223 Wis. 73,269 N.W. 688
• Parties: CITY OF MILWAUKEE v. CHICAGO, M., ST. P. & P. RY. CO. et al.
• Court: Wisconsin Supreme Court

223 Wis. 73

269 N.W. 688

CITY OF MILWAUKEE

v.CHICAGO, M., ST. P. & P. RY. CO. et al.

Supreme Court of Wisconsin.

Nov. 10, 1936.

Appeal from an order of the Circuit Court for Milwaukee County; Otto H. Breidenbach, Judge.

Affirmed.

Suit by the City of Milwaukee begun May 22, 1935, to foreclose tax certificates issued to it. The real estate on which the tax was levied is owned in fee by the Chicago, Milwaukee, St. Paul & Pacific Railroad Company, but is subject to a leasehold estate in the Lincoln Fireproof Warehouse Company. Other defendants are tenants of the warehouse company and mortgagees of the railroad company and the county of Milwaukee, which also is the holder of certain tax certificates. The owner of the fee and the owner of the leasehold answered. Demurrers were interposed by the plaintiff to certain counterclaims and by Milwaukee county to certain cross-complaints. The demurrers were sustained on March 4, 1936. The issues arising between the owner of the fee and the owner of the leasehold estate on their respective pleadings are not considered on this appeal.

The city's complaint shows the ownership of the premises by the railroad and the possession by the warehouse company; the assessment and levy of taxes; the amount of city and county taxes levied for each of the years involved; the sale of the land for nonpayment of taxes; the acquisition of tax certificates upon such sales; and the accrual of interest. The judgment sought is of foreclosure and sale pursuant to section 75.19, Stats. The warehouse company and the railroad, so far as the claims of the city and county are concerned, each answered setting up defenses and pleading four counterclaims as against the city and cross-complaints as against the defendant Milwaukee county. To these the city and county demurred.

The first counterclaim alleges that the taxes levied were based upon assessed valuations that had been fraudulently made in that such valuations were grossly in excess of market value. The demurrer to this part of the answer has been withdrawn. The order sustaining the demurrer to the second, third, and fourth counterclaims and cross-complaints, to be more fully referred to in the opinion, is challenged on this appeal.Ray T. McCann, of Milwaukee, for appellant Lincoln Fireproof Warehouse Co.

Bender, Trump & McIntyre, of Milwaukee, for defendant and appellant Railway Co.

Wm. A. Zabel, Dist. Atty., O. L. O'Boyle, Corp. Counsel, and C. Stanley Perry, Asst. Corp. Counsel, all of Milwaukee, for respondent Milwaukee County.

Walter J. Mattison, City Atty., and John J. Dolan, Asst. City Atty., both of Milwaukee, for respondent City of Milwaukee.

FAIRCHILD, Justice.

The state has set apart property, used in railroad and utility operation, to be assessed for certain taxation purposes by the State Tax Commission, leaving other property to be assessed by local authorities. The Tax Commission is required to make an annual assessment of the property of all railroad companies within this state for the purpose of levying and collecting taxes thereon. When there is included in this assessment and levy railroad property used in transferring freight or passengers between cars and vessels, then “for the purpose of accounting to the proper assessment districts, the commission shall make a separate valuation of each such dock, pier, wharf and grain elevator, including the approaches and appurtenances thereto.” Sections 76.01 to 76.16, Stats. The taxes paid by the railroad on such terminal facilities are to be “distributed to the towns, cities, and villages in which they are located.” Section 76.28. The local authorities will, of course, assess and collect taxes on property not necessarily used in operating the railroad.

The appellant railroad company owns land part of or adjacent to its right of way which has been leased to the appellant warehouse company. There was a controversy, beginning in 1922, over the nature of the use of the land and building thereon and as to whether the business carried on by the warehouse company was such use and so connected with the operation of a railroad as to place the property for taxation in the class assessable by the Tax Commission. The question arising was whether the warehouse property was a terminal facility within section 76.16, Stats., or a business sufficiently independent thereof so that the predominant use was other than railroad operation. That part of the dispute, at least, was finally settled by decision of this court in the case of Lincoln Fireproof Warehouse Co. v. Milwaukee, 208 Wis. 70, 241 N.W. 623, 242 N.W. 558. The controversy as now presented under the pleadings is limited by that decision to the rights given and preserved to the respective parties by what occurred during the years in which the Tax Commission assessed the land and building as railroad property and in which the local taxing authorities also treated it as property subject to local taxation. Because the appellants agreed with the Tax Commission that it should make the assessment,they refused to pay the respondent city the tax locally assessed (there was no city or local assessment in the year 1924), during the years when the matter was in dispute. The respondent city sold the property under the delinquent tax statutes and the certificates here in foreclosure resulted.

[1] In the second counterclaim against the city and cross-complaint against the county, appellants' claim is that the property is unlawfully subjected to double taxation by the tax represented by the certificates; that if appellants are obliged to recognize the certificates as valid, they will be deprived of their property unlawfully and contrary to their rights guaranteed by the State and Federal Constitutions because they have already paid the tax levied by the Tax Commission under chapter 76, Stats. The proposition that the collection of the certificates is not enforceable because the property was erroneously assessed under that chapter (chapter 76, Stats.) and that erroneous tax paid, while the tax which should have been and was rightfully assessed and levied under chapter 70, Stats., was ignored, cannot be upheld. Terminal Warehouse Co. v. Milwaukee, 205 Wis. 607, 238 N.W. 513, 80 A.L.R. 247; Lincoln Fireproof Warehouse Co. v. Milwaukee, supra. The ultimate facts in this part of the answer show that the Tax Commission during certain years levied a tax; that that tax was improperly levied; that the appellants in good faith, but under a misapprehension of the application of the law to the true facts, paid into the state treasury the amount of that tax according to the provisions of chapter 76, Stats. It is alleged that during the years involved all the real estate owned by the railroad company which was necessarily used in the railroad business was assessed and taxes levied thereon by the Tax Commission, and that the land upon which the warehouse stands was included, that this tax was paid. There is no statement setting forth a claim by the appellants that any portion of the taxes paid were remitted to the city of Milwaukee, and the allegations found in the counterclaim and cross-complaint to the effect that the assessment and valuation of the property and the computation and levy of the taxes thereon under chapter 76, Stats., and the payment of said taxes by the railroad constitute payment in full of all and any taxes that may be lawfully assessed and levied against said real estate do not, by liberal construction, warrant an inference that a claim is being made that the respondents received and retained any amount that ought to apply on the payment of taxes which we now understand to have been properly assessable by the local taxing authority.

[2] This is not a case where the appellants acknowledge the justice of the respondents' demand on the one hand, but on the other set up a demand of their own to counterbalance it either in whole or in part. If the pleading could be construed as setting forth a claim of payment or part payment of the local taxes, received into possession of the city and county, it might be that the facts as pleaded then would be sufficiently stated to sustain the pleading, but the general tenor, in fact the apparent assertion, to be read out of the allegations is that power and duty in the local authorities do not exist and that the taxes levied by them under chapter 70, Stats., were void. The language employed in setting out the alleged counterclaim does not, and very evidently was not intended to, depart from the contention that because of the assessment under chapter 76, Stats., and the payment of that tax, no assessment under chapter 70, Stats., could be lawfully made. But the ruling on the proposition that the tax paid to the Tax Commission was a discharge of its tax obligation was against appellants in the Lincoln Warehouse Case, supra. The lack of any showing that appellants have paid taxes locally assessed or anything entitling them to a credit thereon, because the city and county have had the benefit, leaves this counterclaim and cross-complaint based solely on the general proposition which was decided adversely to appellants in the Lincoln Warehouse Case. It follows, therefore, that the demurrer to the second counterclaim and...