Holloway v. Putnam County

• Decision Date: 09 February 1976
• Citation: Holloway v. Putnam County, 534 S.W.2d 292 (Tenn. 1976)
• Parties: Jimmie Horn HOLLOWAY, Appellant, v. PUTNAM COUNTY, Tennessee; and Mayor and Board of Aldermen of Monterey, Tennessee, Appellees.
• Court: Tennessee Supreme Court

Page 292

534 S.W.2d 292

Jimmie Horn HOLLOWAY, Appellant, v. PUTNAM COUNTY, Tennessee; and Mayor and Board of Aldermen of Monterey, Tennessee, Appellees.

Supreme Court of Tennessee.

Feb. 9, 1976.

Cameron & Jared, Cookeville, for appellant.

Aron P. Thompson, Cookeville, Griffith & Stokes by Ogden Stokes, Nashville, for appellees.

OPINION

HENRY, Justice.

This is a suit to recover city and county ad valorem property taxes paid under protest. The Chancellor sustained a motion made pursuant to Rule 12.02 Tenn.R.Civ.P. and dismissed the action.

I.

Taxpayer owned certain real estate located in Monterey, Putnam County, Tennessee, which she had agreed to sell to certain individual purchasers but for the ultimate use and benefit of a Cookeville bank which contemplated its use as the site of a branch office. As a condition of the conveyance grantees demanded that all property taxes be paid. Pursuant to this demand, and in order to complete the transaction, and under an alleged 'economic coercion' she paid the taxes due Monterey for the years 1936 through 1961, and Putnam County for the years 1937 through 1961. Payment was made, under protest, on 9 May 1972.

It is alleged in the complaint, filed on 2 May 1973, that on or about 16 November 1972, approximately six months after payment, the Chancery Court at Cookeville declared these taxes to be 'invalid, unenforceable and uncollectible'. The complaint, however, does not contain a copy of any such decree nor is there any substantiation of this allegation.

By amendment to the complaint, it is asserted that the taxes were uncollectible because:

a. No process had ever been served on the prior owner of the property.

b. No notice had ever been published as required by Sec. 67--2001 T.C.A.

c. Collection of the taxes was barred by Sec. 67--2010 and/or 67--1326, T.C.A.

d. Defendants were guilty of laches.

The motion of the defendants, Putnam County, asserts that the suit 'was filed too late, being more than thirty (30) days after taxes are paid, and more than six (6) months after taxes are paid, as provided by T.C.A. § 67--2305.' Monterey asserts the same defense but relies upon § 67--2313 for its 30-day suit institution rule. The Chancellor correctly treated this as a Rule 12.02(6) motion.

II.

We are presented with an anomalous situation in that the Chancellor did not address the issue raised by the pleadings, viz., whether the suit was barred by the statute of limitations. Instead, his action in sustaining the motion to dismiss was predicated upon findings that may be summarized as follows:

a. That the taxes were assessed against plaintiff's property; that they were unpaid; and that payment was made under protest.

b. That the complaint contained no allegation that the taxes were illegal or void--simply that they were paid under compulsion and duress.

c. That she was required to pay the taxes in order to close the sale.

d. That there was no allegation that the taxes were not due and owing to the respective defendants.

e. That there was no allegation that either defendant placed her under duress.

f. That the complaint does not specify how or why the taxes were erroneously or illegally collected.

g. That the prior decree of the court dismissed only those taxes which had not been paid at the time of the dismissal, at which time plaintiff had already paid her taxes.

h. That plaintiff did not pay the taxes under duress.

These findings by the Chancellor form the basis of the assignments in this Court, but their resolution does not reach the issues raised in the trial court and discussed in brief and oral argument before this Court. We, therefore, address these issues.

III.

The statutory remedy for the recovery of erroneous tax payments, has its origin in Chapter 44 of the Public Acts of 1873, and appears in the Code as § 67--2301 et seq., T.C.A. In its original form it was 'an act to facilitate the collection of revenues' and 'revenue due the state' (see caption of act), and had no application to county and city taxes. Saunders v. Russell, 78 Tenn. 293 (1882). Cities and counties were left to their common law remedies and if the tax was illegal, in the sense of being unauthorized by any law, taxpayers could pay under protest and sue for recovery. Railroad v. Williams, 101 Tenn. 146, 46 S.W. 448 (1898). The right to the pursuit of the common law remedy in cases involving county and city revenue was upheld in Prescott v. City of Memphis, 154 Tenn. 462, 285 S.W. 587 (1926). In Swift & Co. v. State, 165 Tenn. 256, 55 S.W.2d 267 (1932), this Court again held that the act of 1873 had no application to city and county revenue. See also Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685 (1934) and State ex rel. Anderson County v. Aycock, 193 Tenn. 157, 245 S.W.2d 182 (1951).

By chapter 184 of the Public Acts of 1955, counties (but not cities) were brought within the statutory scheme, to a narrow and limited extent. This enactment now appears as the last paragraph of § 67--2301 T.C.A. and reads as follows:

The county court clerks of the various counties are also authorized and empowered to settle and adjust with taxpayers all errors and double assessments of county taxes erroneously or illegally collected by them and to direct the refunding of the same. Any claim for such refund by the county of taxes or revenue alleged to have been erroneously or illegally paid shall be filed with the county court clerk supported by proper proof within one (1) year from the date of payment, otherwise the taxpayer shall not be entitled to refund and said claim for refund shall be barred.

It was the evident purpose of this enactment to provide an efficient, expeditious and inexpensive remedy for county taxpayers who are the victims of Errors and double assessments and, therefore, of taxes erroneously and illegally collected This is a permissive and alternative administrative remedy but is not mandatory or exclusive. It provides an unacceptable remedy for a taxpayer whose taxes are tainted with the illegality of wrongful assessments or any form of invalidity which may not be processed on an administrative basis. See Seagle-Paddock Pools of Memphis, Inc. v. Benson, 503 S.W.2d 93 (Tenn.1973).

This is the only portion of the statutory scheme which has any relation to county revenue.

We hold that a taxpayer has two remedies for the recovery of county taxes, viz.: (1) the administrative procedure provided under § 67--2301, T.C.A. and (2) payment under protest and a common law suit for recovery. Such a suit is in the nature of an action of assumpsit for money had and received and is governed by the six-year statute of limitation as set forth in § 28--309, T.C.A. The cause of action accrues and the statute begins to run on the date of payment of taxes under protest.

We therefore, hold that as to the defendant, Putnam County, this suit is not barred by statute.

IV.

The City of Monterey is in an entirely different category.

By Chapter 324, Public Acts of 1959, cities were brought within the purview of the general statutory scheme for the recovery of erroneous tax payments. This enactment, carried into the official code as § 67--2313 provides as follows:

67--2313. Recovery of taxes paid municipalities.--The provisions of §§ 67--2303--67--2308, inclusive, and of §§ 67--2310--67--2312, inclusive, shall apply to the recovery of all taxes collected by any of the municipalities of this state. In order to carry out the legislative intent that all of said sections, which now apply to the recovery of state taxes erroneously paid, be conformed to apply also to the recovery of taxes erroneously paid to municipalities, the following provisions...