Commonwealth v. Rosenfield Bros. & Co.

• Decision Date: 31 May 1904
• Citation: Commonwealth v. Rosenfield Bros. & Co., 118 Ky. 374, 80 S.W. 1178 (Ky. Ct. App. 1904)
• Parties: COMMONWEALTH v. ROSENFIELD BROS. & CO.
• Court: Kentucky Court of Appeals

80 S.W. 1178

118 Ky. 374

COMMONWEALTH v. ROSENFIELD BROS. & CO.

Court of Appeals of Kentucky.

May 31, 1904

Appeal from Circuit Court, Franklin County.

"To be officially reported."

Proceedings by the commonwealth of Kentucky against Rosenfield Bros. &amp Co. to collect interest alleged to be due on certain taxes on distilled spirits during the bonded period.From a judgment for defendant, the commonwealth appeals.Reversed.

White &amp Ray, for the Commonwealth.Sweeney, Ellis & Sweeney, Gibson Marshall & Gibson, D. W. Lindsey, C. H. Shields, Chas. H Stoll, and W. H. Mackoy, for appellees.

BARKER J.

The appellees, Rosenfield Bros. & Co., are the owners and proprietors of a distillery bonded warehouse in this state, wherein were stored during the fiscal years from 1898 to 1903, inclusive, distilled spirits; and this is a proceeding on the part of the commonwealth, by the Auditor's agent, to collect interest alleged to be due on the taxes assessed for state and county purposes during the bonded period.Without entering into a detailed statement of the pleadings, we can materially abbreviate the opinion by a simple statement of the issues, which are adequately presented in the record.No question is raised as to the regularity of the assessment of the distilled spirits, or of the payment by appellees of the principal of the taxes due thereon at the proper time.The questions presented are: First, whether or not the taxes due from appellees to the commonwealth do or do not bear interest under the statute regulating the taxation of distilled spirits.Second, if so, is, or not, the commonwealth estopped from now collecting the interest by reason of the fact that the Auditor received the principal sum of the taxes from appellees, without interest?And, third, whether the five-years statute of limitation applies to the claim of the commonwealth under this proceeding.

The law regulating the subject in hand is contained in article 5, c. 108, Ky. St. 1903, §§ 4105 to 4114, inclusive.The following sections, relating to the payment of the taxes, are peculiarly applicable to the subject under discussion:

"Sec. 4109.Any person or corporation having the custody of such spirits on the fifteenth day of September in the year the assessment is made, shall be liable for all taxes due thereon, together with all interest and penalties which may accrue; and any warehouseman or custodian of such spirits, who shall pay the taxes, interest or penalties on such spirits, shall have a lien thereon for the amount so paid, with legal interest from day of payment.

"Sec. 4110.Taxes on distilled spirits which may be assessed while in a bonded ware house, and on which the United States government tax has not been paid, or will not become due before the first day of March after the assessment, shall be due on the second day of January, May and September next after the said government tax becomes due or be paid, or when the spirits are removed from the warehouse; and the taxes on each year's assessment shall bear legal interest until paid.

"Sec. 4111.Every owner or proprietor of a bonded warehouse in which distilled spirits may be stored, as contemplated in the preceding section, shall, on the first day of January, May and September next after said government tax shall have been paid, become due, or be removed from the warehouse, make and transmit to the Auditor of Public Accounts, and the clerk of the county court in which the spirits may have been at the time of the assessment, a statement sworn to by the person whose duty it is to make the report, showing the quantity of spirits on which the government tax has been paid or has become due, and what spirits have been removed from the warehouse during the preceding four months; the years in which such spirits were assessed for taxation, and the county, city, town or taxing district in which the warehouse is situated in which the spirits were stored at the time of the assessment, and shall, at the same time, pay all taxes and interest on such spirits due the state, county, taxing district, city, or town to the officers entitled to receive the same.

"Sec. 4112.On the failure of any owner or proprietor of any such warehouse to pay the taxes and interest within five days after the same becomes due, he shall be deemed delinquent, and a penalty of eight per cent. on each year's taxes due on the spirits shall attach, and the officer authorized to collect such taxes shall at once cause such proceeding to be instituted for the collection of such taxes, with such interest and penalties as may be provided by law for the collection of other delinquent taxes."

These sections are substantially the law as enacted in 1892(Laws 1892, p. 312, c. 103, § 6), except that the following language with which section 4110 closes, "and the taxes on each year's assessment shall bear legal interest until paid," was originally as follows, "and the taxes on each year's assessment shall bear interest as other taxes"; the change having been made in 1902(Laws 1902, p. 321, c. 128, § 6).

The first question for adjudication is whether or not, under the law as existing from 1892 to 1902, the taxes in question bore interest.It will be observed that in each of the foregoing sections, wherever the payment of taxes is mentioned, it is also provided that the payment of interest shall be made; and if it be true, as contended for by appellant, that the taxes under consideration do not bear interest during the bonded period, then it must be confessed that the Legislature has taken great pains to insert into every section relating to the subject-matter words which mean nothing.In section 4109 it is provided that the "person or corporation having the custody of such spirits on the fifteenth day of September in the year the assessment is made, shall be liable for all taxes due thereon, together with all interest and penalties which may accrue," and "when payment shall be made by the warehouseman of the taxes, interest or penalties, he shall have a lien for the amount so paid, with interest from the date of payment."Section 4110(prior to 1902): "And the taxes on each year's assessment shall bear interest as other taxes."Section 4111 provides how and when the state taxes shall be paid, and that the proprietor of the warehouse "shall, at the same time, pay all taxes and interest on such spirits due the state, county, taxing district, city, or town to the officer entitled to receive the same."Section 4112: "On the failure of any owner or proprietor of any such warehouse to pay the taxes and interest within five days after the same becomes due, he shall be deemed delinquent," etc.We do not know how the Legislature could have made it plainer that state taxes on whisky in bond should bear interest than by the language used in the sections aforesaid.

It is contended, however, that inasmuch as the language of section 4110 is, "and the taxes on each year's assessment shall bear interest as other taxes," and because other taxes do not bear interest, therefore all of the language used by the Legislature in providing for interest on the deferred payment of taxes assessed against whisky in bond is nullified.To this, we cannot agree.If there is anything plain in the statute in hand, it is that the taxes shall bear interest, and it cannot be consonant with any known or sound principle of statutory construction that the three words, "as other taxes," because they are incorrectly used, shall nullify all of the other parts of the statute, which make it perfectly clear that the Legislature intended that the taxes should bear interest.

It may be conceded, as urged by counsel for appellees, that taxes do not bear interest without a special requirement therefor.We think that the sections quoted plainly show that the Legislature intended to require the deferred payments of taxes on whisky in bond should bear interest.

Let us see, now, what the statutory requirement on the subject of interest on other taxes is.Section 4091 provides, in regard to taxation on the franchises of corporations, that if they(the corporations) fail to pay the taxes due, after receiving 30 days' notice, they shall be deemed delinquent, and a penalty of 10 per cent. on the amount of the tax shall attach, and thereafter said tax shall bear interest at the rate of 10 per cent. per annum.Section 4103 contains a similar provision as to interest with reference to railroad taxes as that contained in section 4091, andsection 4143 provides as follows: "Any person or persons failing to pay their taxes by the first day of December in the year following the...