Moran v. Leccony Smokeless Coal Co.
| Decision Date | 22 June 1940 |
| Docket Number | 9023. |
| Citation | 10 S.E.2d 578,122 W.Va. 405 |
| Parties | MORAN v. LECCONY SMOKELESS COAL CO. et al. |
| Court | West Virginia Supreme Court |
Rehearing Denied Sept. 16, 1940.
Syllabus by the Court.
Clarence W. Meadows, Atty. Gen., and W. Holt Wooddell, Asst. Atty. Gen., for appellant.
William H. Sawyers, of Hinton, and File, Scherer & File, of Beckley for appelle Piney Coking Coal Land Co.
Ashworth & Sanders, of Beckley, for appellees Beckley Nat. Exchange Bank, trustee, and Leccony Smokeless Coal Co.
Ernest K. James, State Tax Commissioner, appeals from a decree of the Circuit Court of Raleigh County, entered on the 23rd day of August, 1939, which denied to
the State of West Virginia the priority contended for as against the property of the Leccony Smokeless Coal Company on account of certain tax liens established in the cause.
This was a proceeding to subject to sale the property of the Coal Company. Receivers were appointed to preserve the property and the cause was referred to a commissioner in chancery to ascertain the property owned and the various debts and liens thereon. The report of the commissioner was filed on the 18th day of May, 1939, and a decree entered thereon on the 31st day of May. By this decree it was adjudged that as to personal estate the lien of the State and its sub-divisions for personal property taxes for the years 1937, 1938, and 1939 was first in priority; second, the lien of Piney Coking Coal Land Company for rents, royalties, and taxes paid under lease, aggregating the sum of $28,202.74, excepting from the force of this lien certain property held by the Coal Company under conditional sales contracts; third, the holders of first mortgage bonds aggregating $200,000; fourth, certain judgments upon which executions had issued, the priority as between these judgments being fixed by the decree; fifth, a judgment in favor of Wilmot Engineering Company; sixth, a lien in favor of Sanford Day Iron Works, Inc., against certain mine cars, under a conditional sales contract; seventh, liens in favor of Mine Safety Appliance Company and the Hartzell Propellor Fan Company against specific property, also obtained under conditional sales contracts.
As to the real estate, the first lien established by the decree of May 31, 1939, is that of the $200,000 mortgage bonds mentioned above, and the priority of the remaining liens was in the order named, fixed as follows: The lien of the Board of Education of Raleigh County on 87/100 acres of land under a deed of trust; certain judgments, in the order named in the decree, and certain laborers' or mechanics' liens the lien of the United States Government, amounting to $15,546.72; gross sales taxes due the State of West Virginia for the years 1937 and 1938, and consumer's sales taxes for the same years which, with penalties, aggregate $8,996.04, and a further claim of $1,044.99; certain funds designated as trust fund liens; the lien of the State Department of Unemployment Compensation in the sum of $25,133.45; and, last, the common claims.
It will be observed that as to the personal property the amount decreed as rents, royalties and taxes, as well as the bonds proven under the mortgage lien mentioned, take priority over the lien of the State of West Virginia for its indirect taxes, and that as to the real estate the mortgage lien of the bond issue of $200,000 and the lien of the Board of Education of Raleigh County, together with various liens in favor of holders of judgments and laborers' and mechanics' liens take precedence over the lien of the State of West Virginia for its indirect taxes, and the question of the correctness of that holding is presented to us for review. There are the additional questions of whether or not the expenses of receivership and costs of suit must first be provided for and whether the holders of claims under conditional sales contracts are entitled to priority over the lien of the State for its taxes. We will consider these questions in their proper order.
A motion was made by the United States at the same term to set aside this decree, of which the court took time to consider. The motion was withdrawn on August 23, 1939, and on that day a decree was entered ratifying and confirming the decree of May 31. From this later decree the appellant prosecutes this appeal.
We interpret the decree appealed from as providing for the payment of the expenses of the receivership and the general costs of the suit, out of the funds in the hands of the receivers, before any of the other liens in question attach. We think this ruling is correct. Apparently there is no serious objection thereto, although points one and two in the assignments of error contained in the petition for appeal do raise the question of the right of the court to decree any lien, other than that of the United States, as superior to the lien of the State. What we have said in the case of C. H. Sprague & Son, Inc., v. Price Hill Colliery Company, 10 S.E.2d 574, decided on this day, will suffice to express our views. These views are supported by the cases there cited:Hulings v. Jones, 63 W.Va. 696, 60 S.E. 874, and City Bank v. Bryan, 76 W.Va. 481, 86 S.E. 8, L.R.A.1915F, 1093.
The claim of the State of West Virginia is based upon the statutes imposing what is known as the gross sales tax and the consumer's sales tax. The gross sales tax was first established in this State by Chapter 110, Acts of the Legislature, 1921, (Code, 1923, Chapter 31A). By that act it was provided: Section 9. In Central Trust Co. v. Hall, 106 W.Va. 687, 146 S.E. 825, the effect of this act on liens existing prior to the enactment of the law was considered. Gross sales taxes for the years 1922 to 1925, inclusive, were assessed against certain real estate of the Barren Creek Colliery Company. This company had in 1919 executed a deed of trust to secure a debt under which the property covered thereby was sold and purchased by the Trust Company, and it was contended that the act not being retroactive in its terms, the purchaser under the deed of trust, who acquired title in 1927, could hold the property free of the tax lien, and the court sustained that position. That case is strongly relied upon as decisive of the case at bar, but amendments since that decision are as strongly relied on to support a different theory. The act was amended in 1933 (Chapter 33, Section 12, First Extraordinary Session, 1933). By that act it was provided: The pertinent provision of the act in its present form, as amended by Chapter 106, Acts 1937, effective on March 13th of that year, is as follows: 1937 Michie Code, 11-13-12.
As to the consumer's sales tax, which was first enacted in 1933, the provision with respect to liens, Chapter 108, Acts 1937, is: 1937 Michie Code, 11-15-17. It will be observed that the lien of the gross sales tax is limited to the property "used in the business or occupation upon which such tax is imposed", which the lien of the consumer's sales tax is upon all of the property of the taxpayer.
It was held in Central Trust Co. v. Hall, supra, that "a statute is not to be construed as designed to interfere with an existing contract or with vested rights, unless the intention that it shall so operate is expressly declared; and the courts will apply a new statute only to future cases, unless there is something in the very nature or language of the act which discloses legislative intention of retroactive operation." That case states a sound principle of law, and we are bound thereby. We think however, the case before us is quite different from that presented to the court in Central Trust Co. v. Hall. There the statute under consideration provided that the tax should constitute a lien upon the property of the taxpayer, but the priority of that lien was not declared. Under these conditions the court was fully warranted in holding that, in the absence of express language declaring the statute to be retroactive in effect, the lien created thereby would not be superior to an existing lien. Assuming, as we have a right to do, that the legislature, when it amended the act in 1933 and 1937, had before it this holding, it is fair to say its natural intent would have been to correct the weakness which the decided case had developed, and it evidently attempted to do so, because in the 1933 amendment it provided that the lien should have the same priority as the lien of the general property tax, clearly showing an intention to create a priority in favor of the State. Just how this provision as to the priority of the general property tax should be interpreted became a disputed question, and is even...
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