Commonwealth v. Stone

• Citation: 279 Ky. 243
• Parties: Commonwealth et al., ex rel. Martin, Commissioner of Revenue, v. Stone.
• Decision Date: 20 June 1939
• Court: United States State Supreme Court — District of Kentucky

279 Ky. 243

Commonwealth et al., ex rel. Martin, Commissioner of Revenue, v. Stone.

Court of Appeals of Kentucky. Chancery Branch, Second Division.

June 20, 1939.

1. Taxation. — If owner of realty is personally liable to taxing authorities for taxes assessed against realty, taxes are a "debt."

2. Statutes. — Tax laws are construed more strictly against taxing authorities.

3. Taxation. — A statute providing that holder of legal title, holder of equitable title, and claimant or bailee in possession of property when assessment is made should be liable for taxes thereon, was intended merely to fix liability for taxes as between such persons, and was not intended to make any such persons personally responsible to taxing authorities to extent of subjecting them to personal judgment as though the tax were a debt (Ky. Stats., sec. 4023).

4. Taxation. — Where purported sales of realty to state in satisfaction of taxes for years 1931 through 1936 were void, taxing authorities were not entitled, in addition to lien against realty, to personal judgment against holder of legal and equitable titles to realty (Ky. Stats., secs. 4023, 4036).

Appeal from Jefferson Circuit Court.

Lawrence S. Grauman and Robert L. Sloss for appellants.

Oscar O. Bader amicus curiae.

Before Thomas A. Ballantine, Special Judge.

OPINION OF THE COURT BY CHIEF JUSTICE RATLIFF.

Affirming.

On July 31, 1931, and each year thereafter, including July 1, 1936, Sam H. Stone was the holder of the legal and equitable titles to certain real estate located in Jefferson County, Kentucky, which was assessed for state, county and school taxes for those respective years. He failed to pay the taxes and the real estate was sold by the sheriff of Jefferson county and purchased by the state for the amount of the taxes, penalties and costs.

In March, 1939, the appellants brought this suit in the Jefferson circuit court pleading the facts indicated above and further alleging that the sales or attempted sales of real estate in satisfaction of said taxes were void and asked that the sales be set aside and sought to be adjudged a lien against the real estate for the taxes, and further sought personal judgment against Stone for the amount of the taxes in addition to the lien on the real estate.

Stone was duly summoned, but filed no answer to the action and in due course appellants prepared and tendered a judgment by default adjudging that the respective taxing authorities have a lien against the property for the taxes and also a personal judgment against Stone. The chancellor entered so much of the judgment as adjudged appellants a lien against the property for taxes, but refused to render a personal judgment against Stone. Appellants have appealed seeking a reversal of the judgment upon the ground that they were entitled to a personal judgment against Stone in addition to the lien against the real estate.

Appellants rely chiefly upon Sections 4023 and 4036 of the Kentucky Statutes.

Section 4023 of the Statutes, insofar as it is pertinent, reads:

"The holder of the legal title, and the holder of the equitable title, and the claimant or bailee in possession of the property on the first day of July of the year the assessment is made, shall be liable for taxes thereon; but, as between themselves it shall be the duty of the holder of the equitable title to list the property and pay the taxes thereon, whether the property be in possession or not at the time of the payment. * * *"

Section 4036 of the Statutes, provides that whenever any person shall purchase property sold for delinquent taxes, and the sale shall be set aside because of any irregularity, except where the owner has paid his taxes and has a receipt for same, the purchaser shall have a lien on the property for the amount of taxes and costs paid by him, and for which the property is liable, with legal interest which may be recovered from the owner of the property or person owning the same.

It is conceded that the purported sales of the property in question in satisfaction of said taxes were void, and the sole question involved on this appeal is, whether or not appellants are entitled to a personal judgment against Stone, the owner of the property.

Appellants insist that the language of Section 4023 of the Statutes, "the holder of the legal title * * * shall be liable for taxes thereon," means that in addition to a lien against the property for taxes, the holder of such title mentioned in the statute, shall be personally liable and that a personal judgment may be rendered against him and the amount of taxes may be collected out of any other property or assets of the holder of the title, the same as any other debt. To sustain their position, appellants cite and rely upon Campbell County v. Newport & Cincinnati Bridge Company, 112 Ky. 659, 66 S.W. 526, 23 Ky. Law Rep. 2056. That action was based on Section 4104 of our Statutes, providing for the manner of collection of taxes due the commonwealth from any railroad or bridge company. It is provided that such taxes may be recovered by the auditor of public accounts, by action in the name of the commonwealth in the Franklin circuit court. It is thus seen that the opinion in that case is based upon a special statute providing for the collection of taxes due the commonwealth from railroads and bridge companies. We do not think it has application to the collection of taxes against real estate owned by individuals. Appellants also cite the case of Louisville & Jeffersonville Ferry Co. v. Commonwealth, 108 Ky. 717, 57 S.W. 624, 626, 22 Ky. Law Rep. 446, 480. That case, like the case supra, has no relation to the collection of taxes assessed against real estate, but deals primarily with the collection of franchise taxes. Certain other cases are referred to and discussed in brief of appellants, which deal with...