First National Bank of Sturgis v. Watkins

• Decision Date: 11 October 1870
• Citation: 21 Mich. 483
• Court: Michigan Supreme Court
• Parties: The First National Bank of Sturgis v. William M. Watkins

21 Mich. 483

The First National Bank of Sturgis v. William M. Watkins

Supreme Court of Michigan

October 11, 1870

Heard October 6, 1870 [Syllabus Material] [Syllabus Material] [Syllabus Material]

Case made from St. Joseph circuit.

This was an action of assumpsit brought by the First National bank of Sturgis in the circuit court for the county of St. Joseph against William M. Watkins. The facts, as agreed to by the parties, are stated in the record to be these:

"The plaintiff is a corporation, duly organized as a banking association, under the laws of the United States, and doing business in the state of Michigan.

"On the 30th day of June, A. D. 1868, a specific tax for the sum of $ 460 had been assessed by the auditor-general against said bank, under and by virtue of act No. 122 of the Session Laws of 1867, entitled 'An act to tax banking associations organized under the laws of the United States,' approved March 27, 1867; and the said bank had refused for more than twenty days to pay said tax.

"On the day last aforesaid, the said auditor-general issued a warrant, a copy of which is hereto annexed and made a part hereof, and delivered the same to the defendant, who then was sheriff of St. Joseph county, in said state. On the 12th day of July, A. D. 1868, the said sheriff called at the banking house of the said plaintiff, in the village of Sturgis, with said warrant, during banking hours, and notified John J. Buck, the cashier of said bank, and then and there in charge of the funds thereof, that he, the said sheriff, had said warrant and should proceed to execute the same, unless the same was paid.

"The said cashier thereupon delivered to said sheriff the amount required by said warrant, in lawful money, to wit: four hundred and sixty dollars, and forty-six dollars fees, and at the same time informed said sheriff that the same 'was done under protest,' and that said bank reserved all their legal rights, 'claiming that the tax was illegal.' At the time the sheriff called at said bank, as aforesaid, the vault was open, and the money of said bank, amounting to over fifty thousand dollars, was in sight of said sheriff.

"The sheriff, on the 22d of July, 1868, paid over said money to the state treasurer and took his receipt therefor, less the fees aforesaid. The payment or delivery of said four hundred and sixty dollars, and said forty-six dollars fees, was made by said John J. Buck, cashier of said bank, to prevent a seizure of the property of said bank, by said defendant."

The cause was tried before the circuit judge without a jury, and the plaintiff recovered a judgment. It now comes before this court upon a case made under the statute.

Judgment affirmed, with costs.

W. L. Stoughton, for plaintiff:

1. The act of March 27, 1867, imposing a specific tax on national banks is in conflict with the laws of the United States, and therefore void: Smith v. Bank of Tecumseh, 17 Mich. 479.

2. It necessarily follows that the warrant issued by the auditor-general gave the sheriff no authority or jurisdiction. The rule that a ministerial officer executing a warrant issued by an officer having competent jurisdiction will be protected (4 Mich. 291), does not apply in this case. The warrant of the auditor-general was a nullity, and not available for any purpose: Mills v. Martin, 19 J. R., 33; Nichols v. Thomas, 4 Mass. 233; Com. v. Albro, 1 Gray 45.

3. This illegal tax was not voluntarily paid, but collected by legal duress, and may be recovered in an action for money had and received: 2 Greenl. Ev., § 121; 1 Pars. on Con., 595, n. x; McDougal v. Brown, 16 Ill. 32; Harmony v. Bingham, 12 N. Y., 116; N. Y. & H. R. R. v. Marsh, 12 N. Y., 309; Wisner v. Bulkey, 15 Wend. 321; Joiner v. Egremont, 3 Cush. 567; Preston v. City of Boston, 12 Peck 7; State v. Williams, 20 Law and Eq., 319. In this case it is said, "Where money demanded and paid under an illegal demand, colore officii, the payment can never be voluntary." So, also, in Faulkner v. Hunt, 16 Cal., it is said, "An illegal tax paid under protest may be received back." I do not claim that the protest gives any new right. It is only evidence that the payment was not voluntary: Story on Agency, § 300, note 1; Bank of U. S. v. Bank of Washington, 6 Peters 8.

4. The action was properly brought against the officer, who compelled the payment under color of process, which was void: Ripley v. Gelston, 9 J. R., 201; Fry v. Lockwood, 4 Cow. 454; Mich. State Bank v. Hammond, 1 Doug. 530. And his liability was not changed by passing the money over to the state treasury: Story on Agency, sec. 301; Fry v. Lockwood, above cited; McDonald v. Brown, above cited; Townson v. Wilson, 1 Campb. 396.

Dwight May, attorney-general, for defendant:

I. Where a party is compelled by duress of his person or goods to pay money for which he is not liable, it is not voluntary, but compulsory: Harmony v. Bingham, 12 N. Y., 116; Chase v. Dwinal, 7 Me. 134; Shaw v. Woodcock, 7 B. and C., 14; Ripley v. Gelston, 9 Johns. 201; Jayner v. Inhabitants, etc., 3 Cush. 567; Preston v. Boston, 12 Pick. 14.

(a) But where the owner is in possession of his goods, the threat of a distress of rent, or of any other legal process, is not such a duress, for a party may defend himself against such suit or proceedings.

(b) Judge Shaw's opinion (in 12 Pick.) is the key to all of the decisions in that state upon this question; and as we have no statute in this state authorizing a levy upon the person as well as the property for a tax, they can have but little weight as authority with us. To the same purport is the case in 3d of Cush., 567, relied upon by plaintiff: Mays v. Cincinnati, Ohio St., 268.

In Illinois the court follows Preston v. Boston. The difference between the statutes of the two states is wide, yet the court seeks to avoid the variance by asserting that because the party paying the tax cannot bring replevin, he therefore has no day in court: Bradford v. Chicago, 25 Ill. 420. Either trespass or trover would lie against the officer, which would seem to be a sufficient answer to this proposition. Whenever the same question occurs in Massachusetts, not relating to the collection of a tax, the court holds a different doctrine: 7 Cush. 131.

In some decisions, it is made a rule of convenience, as when the property is in such a condition or in such kind as to be a great inconvenience and damage to the party to be without it. Such is the case of goods in bond. By long usage, the party pays the duty under protest and may sue for the money paid. This is authorized by U. S. statute: 7 Wallace 122.

c. A duress exists where an alternative has been forced upon a party, which by its inherent force he is driven to evade by a payment of money.

II. Was the payment in this case voluntary?

a. It is well settled that an action for money had and received does not lie to recover back money paid by mistake of law, or where the same is voluntarily paid with a full knowledge of all the facts: Clark v. Dutcher, 9 Cowen 674; Mowatt v. Wright, 1 Wend. 355; Waite v. Leggett, 8 Cowen 195; Benson v. Monroe, 7 Cush. 125; Tyler v. Smith, 18 B. Monroe, 799; Woodburn v. Stout, 28 Ind. 77; Robinson v. City of Charleston, 2 Rich. 317.

b. The facts in this case show that there was no duress, no coercion, no levy, the money was paid on demand. The payment under protest does not make it involuntary, it rather indicates that plaintiff then understood his legal rights, and knew that there was no obligation to pay.

III. Where money is paid to an agent for the purpose of being paid over to his principal, and is actually paid over, no suit will lie against the agent to recover it back: Fry v. Lockwood, 4 Cowen 456; Swift v. Poughkeepsie, 37 N. Y., 511. The defendant paid the money over except his fees, without notice and before suit brought.

IV. But can the plaintiff maintain this action at all, even conceding that the money was paid under protest, as claimed? Upon a state of facts similar to those involved in this case, and where there was a protest before payment of the tax, the Supreme Court of Illinois (46 Ill. 374) held that a state tax assessed against the shareholders of a national bank under the law of that state, cannot be recovered back merely because the mode of assessment provided by law may have been illegal, the property...