Flowers, Inc. v. Rausch

• Decision Date: 28 December 1977
• Docket Number: No. 11728,11728
• Citation: 354 So.2d 641
• Parties: FLOWERS, INC. v. Mrs. Lucy Reid RAUSCH, Clerk of Court, Parish of St. Tammany and Collector of Revenue, State of Louisiana.
• Court: Court of Appeal of Louisiana — District of US

Page 641

354 So.2d 641

FLOWERS, INC. v. Mrs. Lucy Reid RAUSCH, Clerk of Court, Parish of St. Tammany and Collector of Revenue, State of Louisiana.

No. 11728 Court of Appeal of Louisiana, First Circuit.

Dec. 28, 1977.

Rehearing Denied Feb. 13, 1978.

Writ Granted March 31, 1978.

William J. Jones, Jr., Randall E. Roach, Covington, for plaintiff-appellee.

Lucy Reid Rausch, in pro. per.

Edwin M. Callaway, Dept. of Revenue & Taxation, Baton Rouge, for defendant-appellant.

Before LOTTINGER, EDWARDS and PONDER, JJ.

LOTTINGER, Judge.

This is a suit by Flowers, Inc., plaintiff, against Mrs. Lucy Reid Rausch, Clerk of Court of St. Tammany Parish, and the Collector of Revenue ¹ for the State of Louisiana seeking a writ of mandamus to have tax assessments and liens filed in the mortgage records for St. Tammany Parish cancelled and erased insofar as they affect certain immovable property owned by the plaintiff. From a judgment in favor of plaintiff, the defendant, Secretary of Revenue and Taxation, has appealed.

There is no dispute as to the facts. On October 9, 1964, and August 9, 1966, the State of Louisiana, Collector of Revenue, recorded in the mortgage records in the parish of St. Tammany tax assessments and liens filed against Tan Ho Land and Cattle Co., Inc., for corporate income and franchise taxes. Plaintiff, Flowers, Inc., acquired certain immovable property located in St. Tammany Parish from Tan Ho Land and Cattle Co., Inc. by quitclaim deed dated November 2, 1972. At the time of this acquisition the tax assessments and liens had not been satisfied and were still of public record. On October 9, 1976, the instant suit was filed.

In appealing appellant contends the Trial Judge erred in: (1) applying LSA-C.C. art. 3369, (2) not relying on LSA-C.C. art. 3547, and (3) holding the recordation of an imprescriptible judgment or tax assessment, in favor of the state, would perempt with the passage of ten years.

In examining the merits of this case we find the two central issues to be (1) whether recordation of a tax assessment is prescriptible or whether it is peremptible and (2) if it is concluded that recordation of a tax assessment perempts with the passage of time, is this peremption valid against the state.

ISSUE NO. 1

LSA-R.S. 47:1581 provides:

"Any tax, penalty, interest, or other charges duly assessed under this Sub-title, being the equivalent of a judgment, shall not be subject to the running of any prescription other than such prescription as would run against a judgment in favor of the State of Louisiana in accordance with the Constitution and laws of this state; and the recordation of such assessment shall have the same effect as a recordation of a judgment." (Emphasis supplied.)

In Collector of Revenue v. Pioneer Bank & Trust Co., 250 La. 446, 196 So.2d 270 (1967), the Supreme Court said:

"A tax claim may be assimilated to other monied demands for purposes of this discussion, except that it is collectible by methods other than suit. Indeed, R.S. 47:1561 vests in the Collector three alternative remedies for the collection of taxes, i. e., assessment and distraint, summary court proceeding or ordinary suit (see Collector of Revenue v. Olvey, 238 La. 980, 117 So.2d 563 and Collector of Revenue v. Frost, 240 La. 1067, 127 So.2d 151), and, whenever one of these remedies is exerted to final conclusion and the tax assessment or judgment, as the case may be, becomes executory by distraint or otherwise, the status of the tax claim is thus transformed into an assessment or a judgment enforceable by seizure, garnishment or distraint. It therefore necessarily follows that the constitutional prescription, applicable only to tax claims which have not been asserted during a three year period, can no longer be invoked, forasmuch as the running of that prescription has been forever tolled by the action of the Collector in having timely reduced the claim to final assessment or judgment. (Footnote omitted.)

"Once an assessment of taxes has been made and has become final, either by reason of the tax debtor's failure to appeal to the Board of Tax Appeals and thereafter to the courts, or, as here, by his failure to appeal to the courts from an adverse decision of the Board of Tax Appeals, the 'assessment' of the Collector or the 'judgment' of the Board of Tax Appeals or the court, in the event of appeal, the tax assessed is no longer a claim but an established liability which may be collected either by distraint or through judicial process as provided by R.S. 47:1574. Being a final assessment or a judgment, as the case may be, the constitutional prescription provided in Section 19 of Article 19 (La.Const. (1921)) is irrelevant and were any prescription at all applicable it would be the one which applies to judgments. But the prescription applicable to judgments or final assessments cannot be invoked against the State. For Section 16 of Article 19 of the Constitution (La.Const. (1921)) declares: 'Prescription shall not run against the State in any civil matter, unless otherwise provided in this Constitution or expressly by law'. And R.S. 47:1579 states 'There shall be no prescription running against any state tax, license, excise, interest, penalty or other charges levied under this Sub-title, except that ordained in the Constitution of Louisiana.' "

Thus the holding of Pioneer, supra, leaves no doubt that a tax assessment, is equivalent to a judgment, and upon becoming final as between the state and the tax debtor, is imprescriptible.

In Carroll v. Seip, 25 La.Ann. 141 (1873) the Supreme Court said "that a judicial mortgage, like any other, must be reinscribed within ten years from the first inscription, in order to preserve the rank acquired by said inscription."

The Supreme Court in reviewing the applicable jurisprudence as it relates to the registry of mortgages and the failure to timely reinscribe in State ex rel. Pickett v. Bullock, 197 La. 776, 2 So.2d 209 (1941) stated:

"It is the settled jurisprudence of this court under the provisions of Article 3369 of the Revised Civil Code that failure to reinscribe a mortgage within ten years from the date of its original inscription affects neither the existence of the mortgage nor its rank as between the parties thereto (Shepherd v. Orleans Cotton Press Co., 2 La.Ann. 100; Bonin v. Durand, 2 La.Ann. 776; Police Jury of West Baton Rouge v. Bergeron, 11 La.Ann. 390; Byrne v. Citizens' Bank, 23 La.Ann. 275; Seyburn v. Deyris, 25 La.Ann. 483; Watson v. Bondurant, 30 La.Ann. 1; Factors' & Traders' Ins. Co. v. Warren, 37 La.Ann. 85; and Harman & Stringfellow v. Legrande, 151 La. 253, 91 So. 726) but that where the rights of third parties are affected, the reinscription after the ten-year period takes rank only from the date of its reinscription (Executors of Liddell v. Rucker, 13 La.Ann. 569; Gegan v. Bowman, 22 La.Ann. 336; Byrna (Byrne) v. Citizens' Bank (23 La.Ann. 275), supra; Norres v. Hays, 44 La.Ann. 907, 11 So. 462; and Hite v. Charbonnet, 193 La. 581, 192 So. 64) and that it is the mandatory duty of the recorder of mortgages, on the application of a secondary mortgage creditor or any other interested party, to cancel and erase such a mortgage in so far as it affects the applicant's rights. Act No. 87 of 1843; Section 2239 of the Revised Statutes of 1870; Britton & Koontz v. Norment, 20 La.Ann. 508; and Chaffe & Brothers v. Morgan, 30 La.Ann. 1307.

"In the case of Shepherd v. Orleans Cotton Press Company, supra, the court held that the failure or delay to reinscribe a mortgage is fatal and if it 'is suffered to expire without re-inscription, the mortgage loses its rank, and a subsequent re-inscription gives it effect only from the time it is made. A litigation between the mortgage creditors does not dispense from re-inscription; even the sale of the property effected under the mortgages, does not dispense from it, when the purchaser fails to pay the price. The inscription must continue until the proceeds of the property mortgaged are reduced to possession,' reasoning that 'Registry laws, provided they are known and certain, can work no injury. * * * The inscription is exclusively in the power of the party having an interest to make it. If he does not reinscribe, he cannot complain of losses sustained through his own neglect.' (Italics ours.) To the same effect are the cases of McElrath v. Dupuy, 2 La.Ann. 520; Hyde v. Bennett, 2 La.Ann. 799; Hyatt v. Gallier, 6 La.Ann. 321; and Barelli v. Delassus, 16 La.Ann. 280."

The distinction or difference between prescription and peremption was explained by the Supreme Court in Succession of Pizzillo, 223 La. 328, 65 So.2d 783 (1953), to wit:

"The difference between prescription and peremption is that the former simply bars the remedy whereas, in the latter, time is made of essence of the right granted and a lapse of the statutory period operates as a complete extinguishment of the right. (Citations omitted.) Peremption admits of no interruption or suspension; performance of the required act must be accomplished within the specified time or else the right of action no longer exists."

Thus we hold that the effect of recordation of a judgment perempts in ten years. LSA-C.C. art. 3369.

It is important, however, to note that the Supreme Court in Pioneer did not hold that the effect of recordation of a tax assessment was imprescriptible, but merely held that the tax assessment itself was imprescriptible. The distinction between a tax assessment and the recordation of a tax assessment must be made and understood. The tax assessment is, as is a money judgment, sufficient as between the tax creditor, the state, and the tax debtor to support and authorize execution on the tax assessment as one would on a judgment. However, as between the tax creditor and third parties, just as it is necessary to record a money judgment, it is necessary to record the tax assessment for it to be effective.

We conclude therefore that a tax...