Parlett v. Dugan

Decision Date01 April 1897
Citation37 A. 36,85 Md. 407
CourtMaryland Court of Appeals

Appeal from circuit court of Baltimore city.

Suit by John F. Parlett, city collector, and another, against Ferdinand C. Dugan, as trustee of George C. Nicholas. From a pro forma order sustaining a demurrer to the petition complainants appeal. Affirmed.

Argued before McSHERRY, C.J., and FOWLER, PAGE, RUSSUM, and BOYD JJ.

Thomas I. Elliott, S.D. Schmucker, George Whitelock, and Liston G Ketchum, for appellants.

Jos. W Hazell, for appellee.


This appeal was taken from a pro forma order of the circuit court of Baltimore city sustaining a demurrer to the petitions of John F. Parlett, collector of state and city taxes for Baltimore, and of John M. D. Heald, trustee, which asked the court to require Ferdinand C. Dugan, trustee of George C. Nicholas, to pay certain state and city taxes out of funds in his hands. The two petitions were consolidated by order of the court. They allege that on the 1st day of October, 1867, a certain lot of ground on Post Office avenue, in the city of Baltimore, was leased for the term of 99 years, at the annual rent of $990, payable quarterly, free and clear of all deductions for taxes, etc.; and the lease contains a covenant on the part of the lessee, his assigns, etc., to pay the taxes. The reversionary interest became vested in the petitioner, Heald, in trust for certain children of Adaline Spurrier; and on the 28th day of November, 1893, George C. Nicholas became the owner of the leasehold interest. On the 18th day of May, 1895, Nicholas assigned to Mary N. Forman an undivided half interest in the leasehold; and on the 24th day of May, 1896, he executed to the appellee a general deed of assignment of all his property, in trust for the benefit of his creditors. On the 1st day of May, 1896, at the instance of Mary N. Forman, a receiver was appointed to take charge of the leasehold property, collect the rents, and pay the charges thereon until the further order of the court. The receiver had in hand when the petitions were filed $812.15, while the ground rent due October 1, 1896, amounted to $815, and the state and city taxes for 1894, 1895, and 1896 were still unpaid, amounting to $1,428.68 for the three years. The appellee refused to enter into possession of Nicholas' interest in said leasehold property, and rejected it, "as being without benefit to his trust estate." The petitions further allege that the appellee had in hand funds of the estate of Nicholas far more than sufficient to pay the taxes.

The question intended to be raised is whether, under these circumstances, the state and city taxes on the leasehold property must be paid out of the funds in the hands of the trustee, which were received from other parts of the estate. It is conceded that the taxes for 1896 cannot be collected by this proceeding, but those for 1894 amount to $498.09, and for 1895 to $460.96, and the appellants claim that they should be paid. Although, at the time of the assignment, Nicholas only owned a one-half interest in the property, there is nothing in the record to show when the levy for 1895 was made, and therefore we do not know whether Mary N. Forman was the owner of the half interest then, or whether she became such after the levy. Nor is there anything to show from what the fund in the hands of the trustee was derived, although we presume from the argument of counsel that most, if not all, of it, was from collections or the proceeds of sales of personal property. By section 47 of article 81 of the Code, all state, county, and municipal taxes are made liens on the real estate of the party indebted from the time they are levied, but they are not made liens on personal property. Although the legislature has broad powers in making taxes liens either on the property taxed or other property, they are not liens merely because they are taxes, but must be expressly made so by legislation. The legislature of the state has given taxes priority over other debts in a number of instances. Administrators are required by section 65 of article 81 of the Code to pay all taxes due by their decedents as preferred debts, to the exclusion of all others, except funeral expenses. By section 64 of that article, when a sale of either real or personal property was made by any ministerial officer, under judicial process or otherwise, all sums due and in arrears for taxes from the party whose property was sold were required to be first paid and satisfied; but by Acts 1892, c. 518, that section was so amended as to only require the taxes on the particular property sold to be paid out of the proceeds of sale. Section 15 of article 47, amended by Acts 1896, c. 184, in giving priority to certain wages and salaries, expressly reserved from the effect of the preference all proper and legitimate costs, expenses, taxes, etc. But there is no statute which makes the taxes now in controversy a lien on the fund in the hands of the trustee, nor is there any statute which expressly gives them priority over other claims in the distribution of that fund.

It is contended, however, that, at least so far as the state taxes are concerned, the priority in no wise depends upon a lien in favor of the state, but it is by virtue of its prerogative right derived from the common law entitling her to be first paid, excepting only where some antecedent lien stands in the way. It is true that it has been the settled law of Maryland for...

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