Freitag v. Huiskamp
| Decision Date | 08 April 1969 |
| Docket Number | No. 53259,53259 |
| Citation | 166 N.W.2d 915 |
| Parties | Loretta FREITAG, Lee County Treasurer, Lee County, Iowa, Appellant, v. Carl C. HUISKAMP, Executor of the Estate of Eva L. Huiskamp, deceased, Appellee. |
| Court | Iowa Supreme Court |
Robert B. Dickey, Keokuk, for appellant.
Boyd, Walker & Concannon, Keokuk, for appellee.
This is an action at law by a county treasurer for the collection of moneys and credits tax on previously untaxed securities.
Since the action was started there has been a change in the personnel of the Treasurer's office and the taxpayer has died. Substitutions have been made. The Treasurer will be referred to as plaintiff. The original taxpayer will be referred to as defendant.
From the record before us it appears that there has been a consistent failure to properly list property for taxation. Tax evasion should not be condoned.
In this case the trial court, while frowning on the result, permitted over $400,000 in taxable moneys and securities to escape taxation. This was accomplished by an unduly strict and limited definition and application of the word 'demand'. With a result as flagrantly unjust as we have here we should do more than just frown.
In 1959 defendant made an individual return to the couny assessor valuing her taxable moneys and credits in the aggregate sum of $45,000. That return was accepted by the assessor and board of review, listed by the county auditor, and certified to plaintiff-treasurer. Subsequently the tax on that amount was paid in full. Later, in July 1960, acting pursuant to a directive from the State Tax Commission, plaintiff placed 'an additional assessment' for moneys and credits on defendant's tax record for property having a value of $490,356. Plaintiff-treasurer then sent her the following letter:
'We have been ordered by the State Tax Commission to place on our tax list omitted (sic) monies and credits for the past five years. The tax is listed as follows:
Valuation Tax
"1956 $495,230 2971.38
1957 $453,558 2721.35
1958 $391,715 2350.29
1959 $490,356 2942.14 10,985.16
No meeting between defendant and the state tax field man took place. Nothing further was done until the present action was commenced July 1, 1963.
Defendant in answer to interrogatories stated that she owned corporate stock valued at $454,650.99. Exempt stocks were not included. At the trial in district court defendant's executor admitted the answers were correct. Defendant had made a return to the assessor of taxable moneys and credits owned by her in the amount of $45,000. Whether the difference was the result of undervaluation or omission is of no consequence. No one could be so naive as to think a difference of over $400,000 was inadvertent or a mere oversight. The practice had been followed for a number of years but the statute of limitations barred recovery prior to 1959.
Neither the assessor nor county treasurer had knowledge of the situation until the State Tax Commission discovered the discrepancy between the report to the assessor and the defendant's income tax return. The tax commission directed the county treasurer to levy an additional tax. Pursuant thereto the treasurer entered the assessment.
I. Section 441.19, Code of Iowa, requires an owner to assist the assessor in listing all his property for taxation. The omission of $400,000 is not very effective assistance.
II. Section 443.12, Code of Iowa, provides:
The only question before us is the sufficiency of the treasurer's demand. Everything else appears. The property was not listed or assessed. The treasurer was apprised thereof. An additional assessment was noted on defendant's tax records. By letter, quoted supra, defendant was notified as to what had been done and why. The amount of the additional assessment and the tax thereon were stated. Reference was made to penalty to be added. (Penalty could not be computed until date of payment was known). Defendant was told where, when and with whom she might question the assessment. The letter was polite, courteous and informative. It was not blunt or threatening. However, it seems inconceivable that a wealthy taxpayer accustomed to paying taxes could misunderstand or misconstrue the letter or think that she could ignore it.
III. The statute does not define 'demand.' Neither form nor content is prescribed. The rules governing the sufficiency of an original notice to confer jurisdiction do not apply.
Section 443.13, Code of Iowa, provides:
This action would require notice as an original action. We have no such issue here.
IV. Laubersheimer v. Huiskamp, Iowa, 152 N.W.2d 625 was an attempt to collect tax on allegedly omitted moneys and credits. We held that the tax on moneys and credits must be assessed to actual owner and that there was no valid assessment against defendants jointly.
The issues in the case now before us were not decided there.
It is, of course, well settled that procedure for collection of moneys and credits tax is statutory. In the absence of a valid assessment an action for collection must fail. See Laubersheimer v. Huiskamp, supra, and cases cited therein. There are many cases that so hold but those cases are not authority for the issue before us.
V. Bell v. Stevens, 116 Iowa 451, 90 N.W. 87 is the only Iowa case cited or relied upon that considers the formal sufficiency of a treasurer's demand.
That case had a factual background comparable to the case before us. The taxpayer had failed to list for taxation certain moneys and credits. The treasurer brought action to collect. The sufficiency of the demand for payment was challenged. Except for editorial division and renumbering the statuory provisions remain the same. What the court said is so appropriate to our present problem that we quote at some length.
demurrer to the petition stated the following special grounds thereof: (1) That the notice or demand mentioned in the petition is an original notice of the commencement of an action by another party not a party to this suit, and therefore this action is prematurely brought * * *.
'The point made by the defendants is that this notice is not a 'demand,' within the contemplation of the statute above quoted, because (1) the same 'H. M. Tracy, Treasurer,' is not equivalent to 'H. M. Tracy, Treasurer of Jackson County, Iowa,' and (2) the writing so served upon the defendants is not a demand for the payment of taxes, but a notice of the commencement of an action to recover judgment. We think these objections cannot prevail. As we have already seen, the statute makes it the duty of the county treasurer to demand of the proper person the amount which should have been taxed against the omitted property, and, if not paid within 30 days, to bring suit therefor, but does not prescribe the form of such demand, or state whether it shall be in writing or otherwise. Its essential purpose is to inform the person against whom it is asserted of the basis of the claim made against him and of the amount thereof, and give him an opportunity to pay without litigation; and, while it is, doubtless, the better practice to make such demand by a formal writing, duly served, we do not feel at liberty to say that a notice or demand of less formal character, which accomplishes that essential purpose, is legally insufficient, because not stated with the most exact precision. It would be the merest affectation to say that when served with this writing the defendants did not instantly know and fully understand that the county treasurer of Jackson County made a claim that their intestate, Mott Watson, concealed and withheld $86,000 worth of moneys and credits from assessment for the year 1895, and that said officer demanded at their hands, as the administrators of said Watson, the sum of $3,487, in payment of the taxes upon the property thus omitted. * * *
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