Milwaukee Cnty. v. Dorsen

• Decision Date: 10 May 1932
• Citation: 242 N.W. 515,208 Wis. 637
• Parties: MILWAUKEE COUNTY v. DORSEN.
• Court: Wisconsin Supreme Court

208 Wis. 637

242 N.W. 515

MILWAUKEE COUNTY

v.DORSEN.

Supreme Court of Wisconsin.

May 10, 1932.

Appeal from a judgment of the Circuit Court for Milwaukee County; Otto H. Breidenbach, Circuit Judge. Reversed.

Action by Milwaukee county, plaintiff, commenced on the 14th day of August, 1926, against Sigmund Dorsen, defendant, to recover an income tax. From a judgment in favor of the defendant entered on the 18th day of September, 1931, the plaintiff appeals.John W. Reynolds, Atty. Gen., and George A. Bowman, Dist. Atty., and O. L. O'Boyle, Corp. Counsel, both of Milwaukee, for appellant.

Churchill, Bennett, Churchill & Davis, of Milwaukee, for respondent.

OWEN, J.

The assessor of incomes for the county of Milwaukee in 1924 assessed an additional incometax upon the defendant for the years intervening between January 1, 1915, and January 1, 1924. The additional income tax so assessed was not paid by the defendant for the years subsequent to 1918, and this action was brought to recover the amount thereof.

Among other grounds, the defendant resists the collection of the tax upon the ground that it is void because the assessor of incomes failed to give the defendant notice of the proposed additional assessment, as required by section 71.11 (1), Stats. 1923, which was then applicable in the premises. That section conferred power upon the assessor of incomes to levy additional assessments upon income received during the years following January 1, 1915. The section provided, however, that “no additional assessment shall be made under this subsection without giving at least ten days' notice in writing of the proposed assessment to the person to be subjected thereto. Such notice may be served by mail.” After making an examination into defendant's books and affairs and securing such information as was available with reference to the defendant's income during the years succeeding January 1, 1915, the assessor of incomes of Milwaukee county on June 10, 1924, addressed to the defendant a letter stating: “Herewith you will find a copy of report covering an examination made of your income tax liability as disclosed by your records and available information. The attached exhibits and schedules indicate an additional tax of $7,448.97 which is fully indicated here and which will be placed on the 1924 tax roll. Any further information you desire will be furnished by this office at your request.” The taxpayer took no action in response to this communication except to refer it to his attorney. Neither the taxpayer nor his attorney called at the office of the assessor of incomes until after July 16, 1924, when the assessor of incomes wrote the taxpayer that he had levied an assessment upon his income of past years “in accordance with my letter of June 10, 1924.” The defendant made no appeal to the county board of review for a reversal or re-examination of the tax thus imposed, as was his privilege under section 71.13 (4), Stats. 1923.

The respondent contends here, as the lower court held, that the notice of the additional income tax assessment required by the provisions of section 71.11 (1) was jurisdictional in nature, and that, because the notice given the defendant by the assessor of incomes did not state a time and place when and where the defendant might appear before the income tax assessor and be heard upon the question of such additional assessment, the income tax assessor lost all jurisdiction to make the assessment, and that the tax sought to be collected in this action is null and void. Respondent relies upon Everett Water Co. v. Fleming, 26 Wash. 364, 67 P. 82;Puget Mill Co. v. Skagit County (D. C.) 242 F. 333;Byram v. Thurston County, 141 Wash. 28, 251 P. 103, 252 P. 943;Lewis v. Bishop, 19 Wash. 312, 53 P. 165;Weyerhaeuser Timber Co. v. Pierce County, 133 Wash. 355, 233 P. 922, in which cases a similar statute was construed as requiring a notice of the time and place when and where the taxpayer might be heard.

[1][2][3] In construing our statute, it is well to have in mind, we think, some fundamental principles with reference to the subject of taxation as well as the general scheme and plan of taxation which has obtained in this state for many years. It is well settled by our decisions that the Legislature has plenary power to deal with the whole question of taxation subject to the constitutional limitations that taxes can be imposed only for public purposes, and that the rule of taxation must be uniform. Its power is supreme in the selection of objects of taxation, determining the amount of taxes to be levied thereon and the purposes thereof, subject to such limitations, and in devising the machinery for assessing the taxable property, imposing taxes thereon, and in collecting and disbursing the same. State ex rel. Ellis v. Thorne, 112 Wis. 81, 87 N. W. 797, 55 L. R. A. 956;State ex rel. Hessey v. Daniels, 143 Wis. 653, 128 N. W. 565. It is no doubt necessary that any taxing system should, at some point during the process of assessment, accord the taxpayer an opportunity to be heard with reference to the valuation or taxability of his property. Such notice, however, may be general and rest only in the provisions of the statutory law of which the taxpayer must take notice. In Cooley on Taxation, vol. 1 (3d Ed.) p. 59, and running through pages 60 and 61, it is pointed out that taxation proceedings are not judicial proceedings, and that “as applied to the proceedings for the levy and collection of taxes it does not imply or require the right to such notice and hearing as are deemed essential to the validity of the proceedings and judgments of judicial tribunals.” And again: “Where a law imposes a tax or assessment upon property according to its value, notice of every step in the tax proceedings is not necessary; the owner is not deprived of property without due process of law if he has an opportunity to question the validity or the amount of such tax or assessment either before that amount is finally determined or in subsequent proceedings for its collection. Personal notice is not an essential of due process in taxation; for that notice is sufficient which is given by statute, or by publication.” And on page 629 he says: “It is not customary to provide that the taxpayer shall be heard before the assessment is made, except where a list is called for from him; but a hearing is given afterwards, either before the assessors themselves, or before some court or board of review. And of the meeting of that court or board the taxpayer must in some manner be informed; either by personal notice, or by some general notice which is reasonably certain to reach him, or--which is equivalent--by some general law which fixes the time and place of meeting, and of which he must take notice. The last is a common method of bringing the assessment to the notice of the taxpayer, and it is perhaps the best of all, because it comes to be generally understood, and is remembered.” Speaking of notice and hearing as an essential element of due process of law, Mott, in his work “Due Process of Law,” at section 89 says:

“But the courts found even the criterion of notice and hearing too strict for universal application. While it became the standard rule for testing the validity of administrative procedure, it could not always be applied even in this class of cases. Whenever it was appropriate, the courts insisted on a notice and hearing, but in the administration of tax assessments such a procedure might have blocked the whole governmental machine. The exigencies of efficiency in the collection of taxes made impossible the formalities of a personal notice. The courts saw this clearly and consequently held that a general notice, with a hearing at some stage of the proceedings was sufficient. It became necessary to restrict even this rule. Although there must be an opportunity for some sort of hearing, the court held the mere failure to take advantage of the opportunity would not invalidate the proceedings. In some cases the chance to put in a formal statement of the value of the property taxed had been construed to be a valid hearing.”

From the above it will be noted that much less formality as to notice and opportunity to be heard will suffice to satisfy the requirements of due process of law in taxation proceedings than before judicial tribunals.

[4] For many years the statutes of this state have provided for a hearing of aggrieved taxpayers before a board of review created by the statute. The taxpayer is not entitled to a specific notice of the time and place of the meeting of the board of review. The statute fixing the time and place of the meeting of such board, together with the giving of such general notice as the statute may require, has always been deemed a sufficient notice to the taxpayer to satisfy the requirements of due process of law. Our statutes have also generally required that the board of review shall not increase any assessments or make new assessments without notice given to the taxpayer of such intention in time to appear and be heard before the board in relation thereto. Such was the provision of section 71.13 (4) (b), Stats. 1923, with reference to additional income taxes. It is to be noticed that this statute did not require the notice to fix a time and place when and where the taxpayer might be heard. Nor did it fix any specific time within which the notice should be given. It simply provided in most general terms that the taxpayer be notified in time to appear and be heard before the board in relation to such proposed assessment.

[5] Furthermore, for many years the plan of assessment and taxation set up by the statutes of this state has prohibited any taxpayer from questioning the validity of his assessment unless he has appeared before the board of review and challenged the validity or justice of such assessment. This also, so far as it related to income taxation, was fully expressed in section 71.14, ...