Lyon v. Receiver of Taxes

• Decision Date: 21 December 1883
• Court: Michigan Supreme Court
• Parties: LYON and others v. RECEIVER OF TAXES.

17 N.W. 839

52 Mich. 271

LYON and others v. RECEIVER OF TAXES.

Supreme Court of Michigan

December 21, 1883

Where an insolvent firm has assigned its stock for the benefit of creditors, a personal tax against the firm cannot be satisfied from the stock in the hands of the assignee; and if the assignee pays the tax under protest in order to avoid seizure of the stock, he can immediately sue the officer collecting it, to recover it back.

Error to superior court of Detroit.

Ashley Pond, for plaintiffs.

Henry M. Duffield, for defendant.

SHERWOOD J.

Cornwell Price & Co., a corporation doing business in the city of Detroit, on the twenty-seventh day of November, 1882, made a general common-law assignment of all its property, for the benefit of its creditors, to the plaintiffs in this case, who accepted the trust, and entered immediately upon the discharge of their duties as such. A city tax for the year 1882, in the city of Detroit, was duly assessed against the personal property of Cornwell, Price & Co., and on the day of the assignment, and after the same was made, efforts were made by the receiver of taxes to collect the same. On the twenty-second day of December thereafter he entered the store of plaintiffs and threatened forcibly to take possession of and sell sufficient of the assigned property to satisfy said city tax, which amounted to the sum of $667.78. The plaintiffs, in order to prevent the forcible taking of the property, paid the tax to the defendant under protest, and on the following day brought this suit in assumpsit, under the common counts, accompanied by a bill of particulars, claiming the amount paid under protest. Defendant pleaded the general issue. The case was tried by the court without a jury. The court made special findings of the facts and of the law, and gave judgment for the defendant. The plaintiffs bring error.

No exception is taken to the findings of fact by either party. The conclusions of law are as follows: "(1) That the corporation of Cornwell, Price & Co. was duly organized, and was existing when the assignment was made; (2) that the assignment was a lawful one; (3) that at the time the tax was paid to the receiver, the plaintiffs were the owners of the property proposed to be taken by the receiver; (4) that the said tax was not a lien on the goods in the hands of the assignees, and the said goods were not liable to seizure to satisfy the tax assessed to Cornwell, Price & Co.; (5) that the payment by Harris of said tax was compulsory; (6) that this suit cannot be maintained against the defendant individually."

Counsel for plaintiffs insist "(1) that the findings do not support the judgment; (2) that the court erred in making the finding of law numbered six." It is difficult to perceive upon what ground the judgment given in this case can be sustained under the former decisions of this court. There is no evidence or finding in the case tending to show that the defendant ever paid over the money collected of plaintiffs to the city before the commencement of this suit. The court finds that when the money was paid the receiver stood in the store; said he had the goods selected upon which he was ready to make his levy, and threatened to do so and take the goods away unless plaintiff paid the tax demanded and in the face of such threatened action by the officer, the plaintiffs, under protest, paid the money. Certainly, under the decisions of this court, heretofore made, such payment was not voluntary. First Nat. Bank of Sturgis v. Watkins, 21 Mich. 483; Atwell v Zeluff, 26 Mich. 118; Detroit v. Martin, 34 Mich. 174. The court further finds as a matter of fact, that the assignees took possession as soon as the assignment was made; and that as a matter of law the assignment was valid, and that the receiver had no lien upon the property; and that at the time the tax was paid the plaintiffs were the owners of the property. If these conclusions are correct, then the assignees held a perfect legal title to the property as soon as the delivery was made under the assignment (which was before the effort of the receiver to collect) and at the time the money was paid by plaintiffs. Why then should they not have had judgment? Certainly under such circumstances the receiver would have no more right to levy upon the property than they would have had upon that of any other citizen of Detroit.

But it is claimed by defendant that no effect can be given to the protest made, because it was not made in writing, containing the grounds of the protest, as required by section 42 of Act No. 9, Laws 1882, p. 36. There is nothing in this position. That section relates to taxes against real estate only. It is further claimed by defendant that the title did not pass to the plaintiffs when made and the property delivered, until the statutory bond was filed. It is enough to say upon this point that the bond was filed within the 10 days...