Jones, Sheriff v. Citizens' Bank of Hartford

• Decision Date: 22 March 1929
• Citation: 228 Ky. 699
• Parties: Jones, Sheriff, v. Citizens' Bank of Hartford.
• Court: United States State Supreme Court — District of Kentucky

228 Ky. 699

Jones, Sheriff, v. Citizens' Bank of Hartford.

Court of Appeals of Kentucky.

Decided March 22, 1929.

1. Highways. — Annual levy for payment of bonds issued in accordance with authority of Constitution, sec. 157a, when made, must apply to property then taxable for local purposes.

2. Highways. — Acts 1924, c. 117, amending Ky. Stats., sec. 4092, pursuant to authority of Constitution, sec. 171, and withdrawing in part from local taxation shares of stock in bank and trust companies and in national banks, held not invalid in so far as the exemption from local taxation affected special levy for benefit of road bonds issued under section 157a prior to the enactment of the exemption statute, in that the constitutional provision authorizing the levy did not provide any means or machinery for assessment of property, but simply conferred authority to levy tax within limits defined in accordance with provision of section 159, requiring annual levy to discharge obligation within 40 years.

3. Taxaton. — It is a proper subject of legislative power, when authorized by the Constitution, to determine what property is or is not subject to local taxation.

Appeal from Ohio Circuit Court.

OTTO C. MARTIN for appellant.

KIRK & BARTLETT for appellee.

J.W. CAMMACK, Attorney General, M.B. HOLIFIELD, Assistant Attorney General, and TRABUE, DOOLAN, HELM & HELM, amicus curiae.

OPINION OF THE COURT BY JUDGE WILLIS.

Affirming.

The sheriff of Ohio county appeals from a judgment enjoining him from collecting a tax bill from the Citizens' Bank of Hartford, Ky. The question presented is the validity of the Act of March 14, 1924 (Acts 1924, c. 117), amending section 4092, Kentucky Statutes, withdrawing in part from local taxation shares of stock in banks and trust companies incorporated under the laws of this commonwealth and in national banks doing business in this state, in so far as the exemptions of such shares from local taxation affects a special levy of 20 cents on each $100 of taxable property for the benefit of road bonds which were issued under section 157a of the Constitution prior to the enactment of the exemption statute. In March, 1923, Ohio county voted in favor of an issue of $300,000 in bonds for the construction of roads and bridges. Section 157a of the Constitution authorized the county to issue bonds not in excess of 5 per centum of the value of the taxable property therein, for public road purposes, provided the approval of the voters be first obtained. The same section empowered the county to make a levy, in addition to the tax rate allowed under section 157 of the Constitution, in an amount not exceeding 20 cents on the $100 of the assessed valuation of said county, to pay the interest, and to provide a sinking fund for the redemption of the bonds at maturity. It is not clear from the petition, but it may be assumed from an allegation that a levy was made in January, 1924, that the bonds authorized by the vote of the people of Ohio county were issued prior to the enactment in question. Section 171 of the Constitution was amended in 1915 so as to authorize a classification of property for taxation, and pursuant thereto the act of 1924 was passed. Chapter 117, Acts 1924, p. 415. It levied an annual tax of 50 cents on each $100 of the fair cash value of shares of stock in banks, both state and national, doing business in this state, and provided that said tax should be in lieu of all other state, county, city, town, or other levies, except that counties and cities might impose a tax of not exceeding 20 cents on each $100 of the fair cash value of such shares, and school districts were permitted to levy a tax thereon of 40 cents per $100 of value. The appellee paid the taxes assessed against it under the act of 1924, but declined to pay an additional levy of 20 cents on the $100 for the road bonds.

It is the argument of appellant that section 157a of the Constitution is not affected by any other provision of that instrument, and that the power conferred to levy the tax for the redemption of the road bonds carried with it an implication that the assessed valuation of the property then existing should continue to exist until the bonds were paid. It is argued further that the Legislature, as to pre-existing debts, is not authorized to change the property that is "subject to taxation," and that all property which was subject to taxation when the bonds were issued must continue subject to taxation so long as the bonds are outstanding, regardless of an act of the Assembly to the contrary. We do not doubt that section 157a of the Constitution conferred power upon the county to issue bonds and to make a levy therefor annually; but the levy when made must apply to the property then taxable for local purposes (Cooley on Taxation [3d Ed.] p. 117; Anderson v. City of Mayfield, 93 Ky. 230, 19 S. W. 598, 14 Ky. Law Rep. 370; City of Buffalo v. Le Couteulx, 15 N.Y. 451; Newman v. North Yakima, 7 Wash. 220, 34 P. 921), and there is no provision of the Constitution, express or implied, that an assessment shall remain as it may happen to be when bonds are issued, or that the same property shall remain liable to taxation. On the contrary, the Constitution and all legislation pursuant to it contemplated an annual assessment of property for the purposes of taxation. Indeed, the Constitution provides that, whenever a debt is contracted, provision must be made for an annual levy to discharge the obligation within 40 years. Section 159. Section 157a of the Constitution did not provide any means or machinery for the assessment of property. That section of the Constitution conferred upon the county authority to levy a tax within the limits defined, but the property assessable was not fixed or limited, and the levy was to be applied to the property assessed for taxation for local purposes. What was to be assessed was left to agencies created by other laws passed pursuant to other provisions of the Constitution and they were subject to any change or modification the legislative power prescribed, so long as in harmony with the fundamental law. Cf. Larue v. Redmon, 168 Ky. 487, 182 S.W. 622. It presupposed an assessment under existing laws, and laws that might supplant them. It may be, and probably is, true, in many instances, that the assessed value of property in a county increases from year to year, and the county is authorized to reduce the levy if sufficient funds are produced without going to the limit of the authority conferred. It is necessary to look to other sections of the Constitution and to other statutes for the assessment of property upon which a levy for road bonds may operate. The assessed valuation is taken, not at the time of the vote, but at the time the bonds are issued to determine the amount that may be issued. But it is not expected that the assessed...