Highland Park I. School Dist. v. Republic Ins. Co.

• Decision Date: 06 February 1942
• Docket Number: No. 13191.,13191.
• Citation: 162 S.W.2d 1056
• Parties: HIGHLAND PARK INDEPENDENT SCHOOL DIST. v. REPUBLIC INS. CO.
• Court: Texas Court of Appeals

162 S.W.2d 1056

HIGHLAND PARK INDEPENDENT SCHOOL DIST. v. REPUBLIC INS. CO.

No. 13191.

Court of Civil Appeals of Texas. Dallas.

February 6, 1942.

Rehearing Denied May 15, 1942.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Dallas County; Sarah T. Hughes, Judge.

Suit by Highland Park Independent School District against Republic Insurance Company to recover back taxes. From an adverse judgment, plaintiff appeals.

Reversed and remanded.

Claude D. Bell, R. M. Vaughan, and J. W. Hassell, all of Dallas, for appellant.

W. H. Shook and J. L. Shook, both of Dallas, for appellee.

YOUNG, Justice.

This further suit between the parties is for back taxes, following assessment proceedings on alleged unrendered personal property for the years 1923 to 1931, inclusive. The Insurance Company reserves are thus sought to be back-taxed; consisting of items and amounts that are fully described and discussed in previous appeals: 57 S.W.2d 627 (El Paso, writ refused); 129 Tex. 55, 102 S.W.2d 184 (Sup. Ct.); 123 S.W.2d 784 (this Court).

In a jury trial, at close of testimony, the court sustained defendant's motion for instructed verdict, refusing plaintiff's similar motion and requested issues subject thereto. Judgment was rendered accordingly, followed by plaintiff's appeal. The trial court indicated no particular grounds for its ruling (none being required), but same was obviously based on one or more of the following defenses, here urged by defendant as counter propositions, viz: (1) School districts have no inherent power to levy and collect taxes without an election authorizing same, and plaintiff not alleging and proving that an election was ever held, a defendant's verdict was inevitable as a matter of law; (2) the power of an independent school district to back-assess on personal property is derived from, and limited to, the authority conferred on the State and County under Art. 7208 R.S., which prohibits the back-taxing of such property except "two years past"; (3) a tax assessor has no right during the current year to reject the rendition tendered by the taxpayer, and make an ex parte assessment. Similarly, an attempt by a subsequent assessor to reject the renditions tendered by the taxpayer, currently and in previous years to former assessors, would be void; all such renditions having been accepted annually by the tax officer, approved, equalized, and resulting taxes fully paid; (4) the back assessment was made without notice to defendant, either by the assessor or the Equalization Board; hence was void as not in accordance with law, and a denial of due process to defendant under both State and Federal Constitutions, Vernon's Ann.St.Const. art. 1, § 19; Const.U.S. Amend. 14; (5) the back assessments were void, no property being omitted from the original assessments, in this: That for each of the years sued on, the aggregate value of all of defendant's property was set forth in its rendition. These values were sought to be reduced by deducting its real estate (separately taxed) and by the elimination of other non-taxables not here contested. In addition, the gross valuations in each rendition were then sought to be reduced by the amount of defendant's debts and liabilities; and when plaintiff's back assessment was made on reserves (shown in renditions as legally deducted), it was an assessment on defendant's liabilities and debts owing by it, and not on money or property owned by it. Wherefore, plaintiff's action must fail because no property or money owned by defendant has been back-assessed.

The above is deemed a fair summary of the Company's major defenses and obviates the necessity of particularizing its other counter propositions.

Quite essential to a study of the present controversy are the facts and points that were at issue in the preceding litigation; the Company asserting in all prior suits its right to deduct from its rendition sheets of total personal assets (submitted annually for taxation) the said reserves, as "indebtedness" under the language of Arts. 7147 and 7163 of the Tax Statutes, Title 122. The first case above cited related to 1926 and 1927 school taxes, and was decided by the El Paso Court January 26, 1933, on which, application for writ of error to the Supreme Court was refused. There, according to Judge Higgins, no dispute existed as to the listing of defendant's gross assets or the valuation thereof. The Company had tendered its renditions to the tax collector, deducting the named reserves as debts. The collector rejected same and made an ex parte assessment, which listed the reserves as taxable. Though the assessor's rendition was later approved by the Commissioners' Court, sitting as a Board of Equalization, it was ruled a void assessment perforce of noncompliance with Arts. 7185, 7206, 7211 and 7214 of the statutes; the court holding that the only difference between the parties was one of valuation, or "as to the true value of defendant's assets." In this connection, the court said: "* * * If the deductions claimed by defendant on its listing were not properly deductible, the commissioners' court had the authority to correct the defendant's listing (Articles 7206 and 7218) by eliminating same and thereby increase the valuation of its taxable assets. Ferguson v. Steen, Tex.Civ.App., 293 S.W. 318." For the two years, however (1926, 1927), defendant paid in and the plaintiff's assessor accepted the amount produced by the Company renditions.

The second appeal involved school district taxes for the year 1933, the Company tendering to plaintiff formal rendition of all personal property, again deducting therefrom as "indebtedness" the following claimed liabilities: Reserve for unearned premiums, $1,542,532.05; for unpaid losses $125,026.56; for taxes $115,120; for reinsurance balances $51,594.37. Plaintiff's assessor took no exception to this rendition, as provided by Art. 7211, or affirmative steps required by Arts. 7208 and 7218, but his own formulation of a new assessment (which included above reserves as assets) was disregarded by the Equalization Board. This body then had only to consider defendant's aforesaid rendition sheets which show no personal property subject to taxation. The Board, however, upon hearing, fixed a substantial valuation upon said personal property, which was accepted by the Insurance Company, and the assessment approved. The School District then sought to discharge its assessor and Board, appoint a new official and reviewers, to the end that defendant's valuations be increased to the amount of its own assessment. Thereupon, defendant filed suit for injunctive relief; and upon trial to the merits, the action of the original Equalization Board was decreed final. The prior injunction was then made permanent, requiring the District to desist from further efforts at reassessment and accept the taxes tendered on the basis of the findings of the first Equalization Board. In the Supreme Court (Opinion by Judge German, January 20, 1937), the action of the said Equalization Board was held final as to values, and that, in absence of statutory steps by the assessor, defendant's rendition was the only basis for assessment of the tax; also holding that Art. 5057a, Vernon's Ann.Civ.St., authorizing a deduction of the reserve therein mentioned, was constitutional. The trial court's judgment against the District, permanently enjoining it from again attempting to assess taxes for the year, and requiring it to accept the tendered sums for 1933 taxes, was affirmed. Judge German went further and held (unnecessary to the precise issues before the Court, we think, but to be followed as a pronouncement of our Supreme Court) that the deduction of the other reserves in defendant's inventory sheets was a failure to render same for taxation; that such items constituted omitted, or unrendered property, which was not properly before the District Board, and whose action in deducting them was not final. This extra holding was in direct conflict with that of the El Paso Court (first appeal), in that, under similar circumstances (a rendition by the Insurance Company disclosing its total assets, but deducting the reserves), Judge Higgins had ruled that the true issue was simply one of valuation, which the Board had final jurisdiction to settle after statutory procedure. Arts. 7206-7212.

The third appeal (Opinion by this Court November 26, 1938) was over defendant's personal taxes for the current year 1934. The issues in that case simply concerned, (1) the effect of defendant's tender ($1,220.64) as in full of its tax liability, and (2) questioning the right of the District assessor to increase defendant's valuations by the three reserves therein named, as well as the Equalization Board's approval of same as taxable items. The Board having followed the statutes, Arts. 7206-7212, we merely held that their action was final; the Company's remaining contention relative to Art. 5057a, discussed in the opinion, having already been determined by the Supreme Court, 102 S.W.2d 184, supra.¹ (See footnote).

The present suit, instituted May 7, 1937, alleged that defendant had failed and refused to render for taxation described amounts of personal property during the years 1923 to 1931; and an assessment was made by its assessor, back-taxing defendant through such period at the rates applicable to the respective years. This action was taken January 30, 1934, as a supplement to the current assessment, was approved by its Equalization Board December 31, 1934, and aggregated more than $95,000, including penalties and interest. Defendant was not given notice of the supplemental assessment, either at the time the assessor ascertained the taxability and valuations of the so-called unrendered property, or when the same was approved by the Equalization Board and placed on the tax rolls. The School District, by this procedure, sought, in effect, to back-tax all the defendant's reserves (deducted in its...