Municipal Acceptance Corp. v. Canole

• Decision Date: 06 September 1938
• Docket Number: 34326
• Citation: 119 S.W.2d 820,342 Mo. 1170
• Parties: Municipal Acceptance Corporation, a Corporation, Appellant, v. William A. Canole, Collector of the Revenue of the County of Howard
• Court: Missouri Supreme Court

119 S.W.2d 820

342 Mo. 1170

Municipal Acceptance Corporation, a Corporation, Appellant, v. William A. Canole, Collector of the Revenue of the County of Howard

No. 34326

Supreme Court of Missouri

September 6, 1938

Appeal from Howard Circuit Court; Hon. A. W. Walker, Judge;

Reversed and remanded (with directions).

Jones Hocker, Gladney & Jones, Vincent L. Boisaubin, Sullivan Reeder & Finley and Ralph T. Finley for appellant.

(1) Under the settled law of Missouri, injunction is the proper remedy for relief against an illegal tax, assuming that there is no adequate remedy at law. Brinkerhoff-Faris Trust & Savs. Co. v. Hill, 328 Mo. 836, 42 S.W.2d 23, 281 U.S 678. (2) The plaintiff has no adequate remedy at law, and, having exhausted all administrative remedies, properly sued to enjoin the collection of the tax by the defendant. Silverfield v. Multnomah Co., 97 Ore. 483, 192 P. 413; Noll v. Morgan, 82 Mo.App. 112; Valle v. Ziegler, 84 Mo. 218; Ward v. Board of Equalization, 135 Mo. 320; State ex rel. Parker-Washington Co. v. St. Louis, 207 Mo. 366; State ex rel. v. Madison County Court, 136 Mo. 327; State ex rel. Brennan v. Walbridge, 62 Mo.App. 164; State ex rel. Johnson v. Bank, 279 Mo. 236; Jacobs v. Cauthorn, 293 Mo. 162; Boonville Natl. Bank v. Schlotzhauer, 317 Mo. 1311; Jefferson Bridge & Transit Co. v. Blaser, 318 Mo. 380. The State Tax Commission having no authority to assess the plaintiff with property owned by it, the ownership of the property was jurisdictional, and doubtless the plaintiff was not even required to appear before the Tax Commission and State Board of Equalization. 61 C. J. 1086-1087; State ex rel. v. Mission Free School, 162 Mo. 332; State ex rel. v. Convention Hall Assn., 301 Mo. 674. (3) The defendant collector is the only necessary and proper party defendant, and this action is a direct attack upon the judgment of assessment. Bank of Carthage v. Thomas, 330 Mo. 19, 48 S.W.2d 930; Boonville Natl. Bank v. Schlotzhauer, 317 Mo. 1311, 298 S.W. 732. (4) Under our statute, the assessment of personal property can only be against persons owning or holding such property on the 1st day of June. Under our statutes, one "holding" property means one having the care, charge or management of such property as trustee, administrator, executor or agent for a nonresident owner. Secs. 9746, 9756, R. S. 1929; State ex rel. Rudder v. Haphe, 326 Mo. 460, 31 S.W.2d 788. Fairbanks, Morse & Company, as seller, did not retain the control and management of the property sold. State v. Bartlesville Lodge, 33 P.2d 510; Bell v. City of Fayette, 325 Mo. 94. (5) The assessment of property against one not the owner thereof is illegal. 61 C. J. 1073-1074; Sec. 9946, R. S. 1929, as amended, Laws 1933, p. 424; Western Ranches v. Custer County, 28 Mont. 278, 72 P. 660. (6) Under the law of Missouri, a conditional sales contract is in the nature of a chattel mortgage. Sec. 3125, R. S. 1929; Fairbanks, Morse & Co. v. Baskett, 98 Mo.App. 63; Tufts v. Wynne & Thompson, 45 Mo.App. 46; Wurmser v. Sivey, 52 Mo.App. 424. (7) The city of Fayette, as conditional vendee in possession, was the real and beneficial owner of the property in question, and the same was not assessable to Fairbanks, Morse & Company or its assignee, Municipal Acceptance Corporation, as conditional vendor; and the trial court erred in failing to so hold. Singer Sewing Machine Co. v. Cooper, 263 F. 998; Farber v. Purdy, 69 Mo. 603; Anderson v. Harwood, 47 Mo.App. 664; State v. Case Co., 248 N.W. 726; Cranfill Bros. Oil Co. v. State, 54 S.W.2d 813; Buttram v. Gray Co., 62 F.2d 44; Wells v. Savannah, 13 S.E. 442; State v. White Furniture Co., 206 Ala. 575, 90 So. 896; Birmingham v. Emond, 157 So. 67; Bowls v. Oklahoma City, 104 P. 903. (8) Fairbanks, Morse & Company or its assignee under the terms of the notes and contracts in question, had an equitable lien on the property sold and the right to foreclose such lien and equity, regardless of Section 3126, Revised Statutes 1929. Wayne Tank & Pump Co. v. Quick Service Laundry Co., 285 S.W. 750; Hagler v. Salem, 333 Mo. 340, 62 S.W.2d 751; General Excavator Co. v. Emory, 40 S.W.2d 490; McFadden Securities Co. v. Stoneleigh Garage, 55 F.2d 1025; In re Bettman-Johnson Co., 250 F. 665; In re National Cash Register Co., 174 F. 579. (9) The trial court erred in failing and refusing to hold that the assessment being illegal, the tax levied thereunder was illegal and unauthorized by law. State ex rel. Koeln v. Lesser, 237 Mo. 318, 141 S.W. 888; Hannibal v. Bowman, 98 Mo.App. 108, 71 S.W. 1122; State ex rel. Tillery v. Railroad Co., 97 Mo. 356, 10 S.W. 436. (10) The trial court erred in failing and refusing to hold that the collection of the tax in question by the defendant would deprive the plaintiff of its property without due process of law under the State Constitution, and would also violate the due process and equal protection clauses of the Federal Constitution. Mo. Const., Sec. 30, Art. II; U.S. Const., Sec. 1, Fourteenth Amendment; State ex rel. v. Pub. Serv. Comm., 330 Mo. 730, 51 S.W.2d 73; State ex rel. Wright v. Ry. Co., 82 Mo. 685; Cumberland Pipe Line Co. v. Lewis, 17 F.2d 170; 12 C. J. 1188-1190.

Roy McKittrick, Attorney General, and James L. HornBostel, Assistant Attorney General, for respondent; Walker Pierce and Tyre W. Burton of counsel.

(1) Appellant has an adequate remedy at law for relief against an illegal assessment of tangible personal property, if it is not the owner of said property, at the time the tax is sought to be collected; hence injunction is not the proper remedy. Scottish Union & Natl. Ins. Co. v. Bowland, 196 U.S. 611, 49 L.Ed. 619; State ex rel. v. Haphe, 31 S.W.2d 790; Milwaukee v. Koeffler, 116 U.S. 219, 29 L.Ed. 612; (a) Appellant does not offer to do equity. Dundee Mortgage Trust Inv. Co. v. Parish, 24 F. 197; Northern Pac. Ry. Co. v. Walker, 148 U.S. 391, 37 L.Ed. 494. (2) Tangible personal property of business and manufacturing corporations are assessed at place where property is found or located. Sec. 9764, R. S. 1929. (3) The Missouri State Tax Commission has the right to place omitted property on tax books; approval of the State Board of Equalization necessary. Sec. 9855, R. S. 1929; State ex rel. St. Louis v. Caulfield, 333 Mo. 270, 62 S.W.2d 823. (4) There is a broad distinction between a contract to sell as distinguished from a sale. 55 C. J., sec. 5, p. 39. (5) The contracts in question have been construed by this court and it was held that such did not create a debt on behalf of the city. Bell v. City of Fayette, 28 S.W.2d 356. (6) If the contracts in question created a debtor-creditor relationship between the city of Fayette and appellant, then the contracts would be void. Sec. 12, Art. X, Mo. Const., Hagler v. City of Salem, 62 S.W.2d 751; Sager v. Stanberry, 78 S.W.2d 431; Forrester v. Moore, 77 Mo. 662. (7) A conditional sale creates a debtor-creditor relationship. Sec. 3126, R.S. 1929; Vette v. Drug Co., 137 Mo.App. 244. (8) The referring to the contracts in question as "conditional sales" or "contracts of purchase" is unimportant, if the contents of said contracts show otherwise. Puryear-Meyer Grocery Co. v. Cardwell Bank, 4 S.W.2d 489. (9) The ownership of the tangible personal property being in appellant, even though the use and possession of said tangible personal property is enjoyed by another, makes appellant liable for the taxes thereon. State ex rel. v. Springfield Convention Hall Assn., 257 S.W. 113; Jasper Land Imp. Co., v. Kansas City, 239 S.W. 864. (10) Appellant's assignor, Fairbanks, Morse & Company, by placing the title and ownership of the tangible personal property in itself and not the city of Fayette, should be conclusive upon this court. State ex rel. v. Miss. River Bridge Co., 134 Mo. 322; Bell v. City of Fayette, 28 S.W.2d 356.

Ellison, J. All concur, except Douglas, J., not sitting, because not a member of the court when cause was submitted.

OPINION

ELLISON

The plaintiff below, a Delaware corporation, appeals from a decree of the Circuit Court of Howard County dismissing its bill for an injunction against the respondent tax collector of that county. On June 1, 1932, appellant owned $ 60,000 in pledge orders theretofore executed by the city of Fayette to Fairbanks, Morse & Company in payment for certain Diesel engines and accessory equipment furnished by the latter on a so-called conditional sale contract for the city's municipal electric plant. The pledge orders had been assigned to appellant by Fairbanks, Morse & Company along with its title to the machinery. The State Tax Commission, fixed the value of the machinery for taxation. The appellant took the matter to the State Board of Equalization which approved the assessment. Thereupon the appellant brought the instant injunction suit against the respondent collector.

There are only two issues in the case: (1) is injunction the proper remedy, or has appellant an adequate remedy at law; (2) was appellant the owner of the machinery in such sense as to make it liable to taxation thereon. On the first issue respondent says appellant can wait until it is sued for the taxes and interpose as a defense in that case the contentions it is making here; also that it has failed to do equity. On the second issue appellant maintains it had only a "security" title; that the beneficial, taxable title was in the city of Fayette; and that the collection of taxes from it (appellant) would violate Sections 9746 and 9756, Revised Statutes 1929 (Mo. Stat. Ann., pp. 7867, 7872), Section 30, Article II, Constitution of Missouri, and Section I of the Fourteenth Amendment of the Constitution of the United States.

On the proposition that appellant has an adequate remedy at law respondent is clearly wrong. Appellant asserts the machinery...