Pacific First Federal Sav. & Loan Ass'n v. Pierce County, 30130.
Decision Date | 13 March 1947 |
Docket Number | 30130. |
Citation | 27 Wn.2d 347,178 P.2d 351 |
Court | Washington Supreme Court |
Parties | PACIFIC FIRST FEDERAL SAVINGS & LOAN ASS'N v. PIERCE COUNTY et al. |
Action by the Pacific First Federal Savings & Loan Association, a corporation, against Pierce County, a municipal corporation and others, on behalf of the plaintiff and 58 other taxpayers, for recovery of tax payments paid under protest. From a judgment in favor of the plaintiff, the defendants appeal.
Judgment affirmed.
Appeal from Superior Court, Pierce County; F. G Remann, judge.
Teats & Teats, Metzger, Blair, Gardner & Boldt, Thor C. Tollefson, Theo L. DeBord, and Patrick M. Steele, Pros. Atty., all of Tacoma, for appellants.
Metzler, McCormick & Metzler, Eisenhower, Hunter & Ramsdell and Gershom C. Rowland, all of Tacoma, for respondent.
Robert S. Macfarlane, Dean H. Eastman, J. N. Davis, Charles F. Hanson, Thos. Balmer, A. J. Clynch, R. Paul Tjossem, Merritt, Summers & Bucey, all of Seattle, amici curiae.
This action was instituted in the superior court by plaintiff on its own behalf, and for 58 other corporate and individual tax payers of Pierce county, for the recovery of tax payments for the year 1944, paid under protest.
The essence of plaintiff's action, is contained in the following portions of its complaint:
The assignments of error call in question the action of the trial court in granting recovery to respondent.
The cause was presented to the superior court upon an agreed statement of facts which may be summarized as follows: October 5, 1943, the port commissioners of the port of Tacoma, adopted their resolution numbered 701. The resolution approved a budget for the port for the year 1944. The total expenditures were estimated to be in the sum of $832,203.98, and the total revenues were estimated to be in the amount of $467,735.36, which necessitated the raising of $364,468.62 by tax levy. At the time the resolution was passed, the port commissioners knew that they would have on hand at the end of the year, a surplus of $250,000. The commission planned and contemplated that the $250,000 would be held available for use and used for port purposes not listed or included in the expenditures set forth in the budget resolution.
In the operation of the port it is necessary to have substantial sums of money available for use as working capital. In 1944 it was necessary that the amount of working capital be in excess of normal requirements as a result of war conditions. All movements of property and materials through the facilities of the port of Tacoma were in complete control of the federal government and its agencies. This situation was expected to continue, and for that reason there was a longer than ordinary time interval elapsing between the expenditures by the port of Tacoma of money for labor, freight advances, and other operating expenses in handling such commerce, and receipt of payment therefor from government agencies.
Because of regulatory controls and unavailability of labor and materials, there was a considerable deferred maintenance on the physical properties. It was also thought necessary that new equipment be acquired, and some existing equipment be replaced to handle the anticipated movement of heavy military material, and to operate the facilities of the port of Tacoma to its full capacity. The commissioners had been advised by military authorities that with the shift in emphasis of the war to the Pacific theatre the port of Tacoma must be prepared to put its properties in condition to operate at full capacity. The exact time, however, when this condition would come about was unknown, and could not be ascertained, but might have been within 90 days, nine months, or any other period of time from and after the sixth day of October, 1943.
It has been the uniform practice of the commission not to include surpluses expected to be on hand at the close of the current year in preparing estimates of expenditures and revenues for the succeeding year. In order to raise the amount of $364,468.62, 4.25 mills were assessed against the taxable property in Pierce county, as shown below, the total valuation of the taxable property in Pierce county being $85,757,323.
Millage for port bond interest fund .. 2.25 Port of Tacoma fund millage .......... 2.00 ---- Total millage .................... 4.25
Appellant takes the position that there is no statutory budget act applicable to port districts; that, in any event, there is no statutory provision applicable to port districts regulating the contents of the budget, or requiring specific treatment of 'surplus,' 'probable surplus,' or 'available surplus'; that within the millage limitations of Rem.Rev.Stat. § 9692, now, Rem.Supp.1943, § 9692, taxes shall be levied for port districts by the county commissioners in such amounts as will raise the amount of revenues that the port commission estimates and certifies to the county commissioners is necessary; that such estimates and the resulting tax levies are illegally excessive only when so excessive as to be constructively fraudulent; that respondent raised no such issue in this case, and the undisputed facts preclude such an issue; that whatever process the port commission may adopt in arriving at its estimate of the amount of revenue necessary to be raised by taxation, whether by adoption of a budget either written or oral, or in some other manner, is a matter of internal management and of no concern to any taxpayer so long as the end result, that is, the amount estimated and certified to the county commissioners as required to be raised, is not illegally excessive.
Respondent contends that a port district cannot circumvent the limitations upon its taxing powers by wilfully omitting from its estimated revenues, in preparing its annual budget, an available cash surplus held in reserve, on the pretense of using that cash fund for indeterminate possible future port improvements and uses.
As a preliminary to a consideration of the applicable statutes, it is well to bear in mind the following rules that must be taken into consideration in the interpretation of statutes relating to taxation by municipalities.
The general rule is that the creation of a cash surplus by a taxation agency violates sound public policy and the spirit and theory of laws relating to taxation.
In speaking of available surplus as contained in the budget law, we had the following to say in Weyerhaeuser Timber Co. v. Roessler, 2 Wash.2d 304, 97 P.2d 1070, 1072, 126 A.L.R. 882:
In People ex rel. Schaefer v. New York, C. & St. L. R Co., 353 Ill. 518, 187 N.E. 443, 445, a contest was had over the accumulation of funds in a levee and sanitary district. The court found that there was a large surplus beyond the ordinary requirements for the year, and that the levy was probably unnecessary. In passing upon the issue presented, the court had this to say: ...
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