Republic Ins. Co. v. Highland Park I. School Dist.

• Decision Date: 20 January 1937
• Docket Number: No. 6929; Motion No. 12807.,6929; Motion No. 12807.
• Citation: Republic Ins. Co. v. Highland Park I. School Dist., 102 S.W.2d 184, 129 Tex. 55 (Tex. 1937)
• Parties: REPUBLIC INS. CO. v. HIGHLAND PARK INDEPENDENT SCHOOL DIST. OF DALLAS COUNTY et al.
• Court: Texas Supreme Court

102 S.W.2d 184

REPUBLIC INS. CO. v. HIGHLAND PARK INDEPENDENT SCHOOL DIST. OF DALLAS COUNTY et al.

No. 6929; Motion No. 12807.

Supreme Court of Texas.

January 20, 1937.

On Motion to Correct Opinion, etc., March 3, 1937.

Error to Court of Civil Appeals of Fifth Supreme Judicial District.

Suit by the Republic Insurance Company against the Highland Park Independent School District of Dallas County and others. A judgment for plaintiff was reversed by the Court of Civil Appeals [80 S. W.(2d) 1053], and plaintiff brings error.

Judgment of the Court of Civil Appeals reversed, and judgment of the District Court affirmed.

Smithdeal, Shook, Spence & Bowyer and W. H. Shook, all of Dallas, for plaintiff in error.

R. M. Vaughan, Bell, Goode & Howard, Vaughan, Purl & Lewis, and Bell & Clark, all of Dallas, and Greenwood, Moody & Robertson, of Austin, for defendants in error.

J. W. Gormley, of Dallas, amicus curiæ.

GERMAN, Commissioner.

Plaintiff in error, Republic Insurance Company, is incorporated under the laws of the State of Texas, and is engaged in the business of writing fire and casualty insurance. It has its office and principal place of business within the Highland Park Independent School District, Dallas County, Tex. It will be designated plaintiff. The real defendant in error is the Highland Park Independent School District. It will be referred to as defendant.

On March 28, 1933, plaintiff prepared a rendition of all property which it claimed was subject to taxation in said school district for the year 1933, verified same by proper oath, and delivered it to C. H. Hickcox, the then duly appointed, qualified, and acting tax assessor of said district. The tax assessor promptly acknowledged receipt of this rendition, but took no action thereon as provided by article 7211 of the Revised Statutes of 1925, except as may hereinafter be indicated. The rendition apparently went to the duly appointed board of equalization of the school district, because that board met and organized early in August, 1933, and sent a notice to plaintiff to appear and show cause why the valuation of its property should not be raised. The board disposed of all of its business of equalizing valuations prior to August 28, 1933, except the rendition of plaintiff of its personal property, and the rendition of two other parties. The board met on August 28, 1933, for the purpose of discussing the rendition of plaintiff of its personal property, and for the purpose of equalizing the assessment of the two other parties. These two assessments were promptly disposed of, and the hearing centered upon the rendition of plaintiff.

It is appropriate to state here that the controversy involved in this proceeding is of long standing, and concerns mainly the right of plaintiff to deduct from the valuation of its personal property its legal reserve, as provided by what is known as article 5057a of Vernon's Annotated Texas Civil Statutes, being chapter 190 of the Acts of the 40th Legislature passed in 1927. In the last analysis the complaint of the school district mainly is that plaintiff should not have been permitted to deduct from the value of its personal property the sum of $1,834,273.98 as items of reserve, and should not have been permitted to deduct the sum of $402,671.87 in United States tax-free bonds, which bonds the district claims were fraudulently purchased on December 28, 1932, for the purpose of evading taxation.

Prior to the date of the meeting on August 28, 1933, the defendant school district, being dissatisfied with the rendition of plaintiff, employed attorneys for the purpose of attempting to contest the rendition, or to get it corrected and supplemented in such way as to include property which plaintiff had deducted, being principally the items above mentioned. To this end the attorneys procured a copy of the annual statement made by the plaintiff to the Board of Insurance Commissioners of the State of Texas for the year ending December 31, 1932, and from this report made up a statement of all assets of the company shown thereon, together with the values attached thereto in said report, including the various items of reserve which had been deducted from the rendition made by plaintiff, and the United States bonds. The statement as thus prepared showed a value of property rendered by plaintiff far in excess of the value placed thereon in the rendition as the taxable value, and included items which had been deducted by plaintiff from the rendition, being the items above mentioned. The statement thus prepared showed a valuation of more than $2,000,000, including reserves deducted by plaintiff, and a valuation of some $600,000, excluding reserves, which the district claimed should be taxed. The statement thus prepared and bearing date August 25, 1933, was attached to the rendition made by plaintiff and bore the signature of the tax assessor. No notice of an attempt to increase valuations as provided for in article 7211 of the Revised Statutes, or to make a return of unrendered property, was given by the assessor to the plaintiff, and prior to the hearing plaintiff had been given no opportunity to file controverting oath as provided by article 7211. At the meeting held on August 28, 1933, the purported action of the tax assessor, as contained in the statement mentioned, was brought to the attention of the board of equalization for the first time. The presiding member of the board thereupon caused the tax assessor to be placed under oath and he was questioned concerning the statement. The tax assessor disavowed it as his official act, and admitted that the items of property listed in the statement, as well as the purported values, were taken from the report filed with the Board of Insurance Commissioners as of date December 31, 1932, and did not constitute an official recommendation or estimation of values on his part, as provided for in article 7211, and did not in any manner constitute his official act. His repudiation of this statement as an official act was complete; or at least was sufficient to justify the board of equalization in treating it as complete. Acting upon the statements made by the tax assessor, the board disregarded the purported statement and proceeded upon the theory that it had nothing before it except the formal rendition made by plaintiff. Although the rendition as returned and verified showed no personal property subject to taxation, nevertheless the board affixed a valuation upon the rendition of personal property of $330,760.65. Under the admitted custom of fixing taxable values at 65 per cent. of the estimated values the board fixed the taxable value at $215,000, approved the assessment, and closed its meeting.

Plaintiff accepted the valuation fixed by the board. Thereafter the defendant, acting by its board of trustees, attempted to discharge the tax assessor and to appoint another one in his stead. It also attempted to discharge the board of equalization and to appoint other members in their stead. It thereupon sought to renew the controversy concerning the rendition by plaintiff, although the action of the board in all other respects had been accepted. This new board organized and set a day in October, 1933, for a hearing. The newly appointed assessor attempted to amend or supplement the rendition made by plaintiff in exactly the same manner as had theretofore been attempted. Plaintiff thereupon filed this proceeding in the district court of Dallas county, seeking an injunction to restrain defendant school district, its trustees, and the newly appointed assessor and equalization board from proceeding further, claiming that the action of the original board was final and conclusive. The district court, after withdrawing the case from the jury, rendered judgment in favor of plaintiff, restraining the district and its officials from proceeding further in the attempt to revise the rendition made by plaintiff and to reassess its property. The court also issued a mandamus requiring the acceptance of taxes tendered by plaintiff on the basis of the assessment of $215,000 made by the board of equalization on August 28, 1933. The Court of Civil Appeals reversed the judgment of the trial court and rendered judgment in favor of the school district, dissolving the injunction and vacating the mandamus. This action of the court was based on a holding that the assessment by the board of equalization on August 28, 1933, was void, because arbitrarily taken without hearing proof, and because the statute authorizing plaintiff to deduct its legal reserve was unconstitutional and void. 80 S.W.(2d) 1053. Chief Justice Jones dissented on the question of the unconstitutionality of the statute.

We are of the opinion that the Court of Civil Appeals erred in holding that the action of the board of equalization on August 28, 1933, was void. Both members of the board who sat at the hearing testified that the tax assessor appeared before them and under oath absolutely disavowed the statement of August 25, 1933, attached to plaintiff's rendition, as his official act, either as an attempt to change values, as provided for by article 7211, or as an attempt to assess unrendered property, as provided by other articles of the statute. This testimony was undisputed, and undoubtedly was sufficient to justify a finding on the part of the board that no official action had been taken or recommended by the tax assessor. In addition, article 7211 requires the tax assessor, if he be dissatisfied with the values fixed by the owner, to at once place on the rendition his estimated values. This article further contemplates notice to the owner, or at least an opportunity to controvert the values fixed by the assessor prior to the time the rendition is referred to the board of equalization. The failure of the assessor to act prior to August 25, 1933, and to give notice, was sufficient to justify the board in declining to be bound by the statement...