Robertson v. Bank of Yazoo City.

• Decision Date: 12 July 1920
• Docket Number: 21282-21284
• Citation: 123 Miss. 380,85 So. 177
• Court: Mississippi Supreme Court
• Parties: ROBERTSON, STATE REVENUE AGENT v. BANK OF YAZOO CITY. Same v. CITIZENS' BANK & TRUST CO. Same v. DELTA BANK & TRUST CO

85 So. 177

123 Miss. 380

ROBERTSON, STATE REVENUE AGENT v. BANK OF YAZOO CITY.

Same v. CITIZENS' BANK & TRUST CO.

Same v. DELTA BANK & TRUST CO

Nos. 21282-21284

Supreme Court of Mississippi

July 12, 1920

March 1920

APPEAL from circuit court of Yazoo county, HON. W. H. POTTER, Judge.

Proceedings by Stokes V. Robertson, State Revenue Agent, to back-assess the Bank of Yazoo City, the Citizens' Bank & Trust Company, and the Delta Bank & Trust Company, with protest by the banks filed with the board of supervisors. Back-assessment disapproved by the board of supervisors and causes appealed to the circuit court, wherein demurrers to the so-called replications of the State Revenue Agent were sustained and final judgment rendered against him, and he appeals in each cause. Affirmed by an equally divided court.

Affirmed.

R. H. &amp J. H. Thompson and Fultan Thompson, for appellant.

The question presented in each of these cases is one of great importance to the state and to the several counties in Mississippi, one vital to their finances, one which will determine the power or the want of power in the courts of the state to bring to book, defaulting taxpayers who have wilfully and purposely defrauded the state of its revenue. It may be stated thus:

Can a taxpayer, with intent to defraud the state and county of taxes justly due from him, fraudulently and criminally deceive the board of supervisors of his county and induce it by his deceitful, fraudulent and criminal pretenses and representations, to approve of a shameful undervaluation of his property listed for taxation, and escape liability for what he justly owes for taxes by pleading the board's approval of his fraudulent assessment so obtained in bar of all demands afterwards made on him for the taxes, the payment of which he has wrongfully escaped by his aforesaid evil practices?

The court's attention is called to Mississippi Code 1906, pp 1046, 1047 and 1048, each of which, especially sections 1047 and 1048, the banks have violated on six separate occasions, once in each of said years.

We commend to the court the following extract from one of its previous opinions delivered in the case of Gulf, etc., Railroad Co. v. Adams, State Revenue Agent, 85 Miss. 772. In that case this court, after defining the presumptions attending the findings of assessing boards, used language especially applicable to the cases at bar. This court at p. 800 of the report said: "But, of course, this doctrine is not to be extended to assessments procured to be made by fraud nor to assessments made in conscious and deliberate defiance of law as to all such, whether the property withheld from or escaping assessment be franchise or other property, we adhere to and reaffirm the wholesale doctrine announced in Revenue Agent v. Clarke, 80 Miss. 134, 31 So. 216."

The replication in each of these cases distinctly avers that the bank failed to comply with the code section and while the crime denounced in the statute may be the crime of the officers of the bank, rather than the crime of the bank itself, the banks cannot take advantage of nor escape results arising from crimes committed by their officers any more than they can be benefited by or escape results of crimes committed by themselves. But the banks have pleaded guilty in these cases to their own violations of section 1047 of the code. That section makes it a crime for any taxpayer to wilfully undervalue his property listed for taxation. The replication in each case distinctly avers that the bank, wilfully and knowingly undervalued its property and did so with the intent and purpose, fraudulently, to escape taxation justly due from it to the state and county and the averment is admitted to be true. The facts fully justify the designation of the conduct of the banks as having been criminal as well as fraudulent.

If there be a principle of law to which there should be no exception, that principle is that fraud vitiates everything; a fraudulently obtained judgment is itself utterly void and should not be made the predicate of a plea of res adjudicata in a proceeding like the ones at bar.

If the state and county had proceeded in equity to have the judgment pleaded by the banks vacated as having been fraudulently obtained and the facts pleaded in the replication had been established their right to a decree could not reasonably have been questioned, save, perhaps on the ground that the chancery court was not the proper tribunal in which to bring the suit. See Adams v. First National Bank of Greenwood, 103 Miss. 744, S.C. 60 So. 770, and several other cases holding the chancery court not to be a tribunal for collecting taxes. Under equitable principles the judgment of the board of supervisors pleaded, is certainly void, the facts averred in the replications being true. They are void at law as well as in equity, aside from mere matters of procedure sometimes held to govern common-law courts. The proceedings followed in these cases by the revenue agent are statutory and are not governed by the cast-iron rules sometimes controlling in common-law courts.

The board of supervisors is not confined in the exercise of its jurisdiction to common-law matters, nor is it restricted by common-law rules of procedure. This being true, the circuit court, on appeal from the board of supervisors, the trial being de novo, is no more confined in its jurisdiction to common-law matters than the board itself was so confined, nor is it any more restricted by common-law rules of procedure than the board of supervisors is so restricted. The board of supervisors in the exercise of its powers may consider and enforce equitable principles when applicable to questions and controversies before it just as freely and fully as it may consider and enforce common-law principles, and the circuit court on appeals from the board of supervisors has all the power in a de novo trial as the board of supervisors had in fact upon such appeals the circuit court acts as if it were the board of supervisors.

It is idle, therefore, for the banks in these cases to invoke authorities to the effect that a judgment cannot be assailed for fraud in a collateral proceeding; and this for two reasons: first, these cases do not collaterally but directly assail the judgments of the board of supervisors pleaded; and second, the board of supervisors, in determining whether the judgments are fraudulent and void can properly and legally apply to the question equitable as well as legal principles.

It is perhaps useless for us to have made the foregoing contentions based on the fact that the board of supervisors may apply equitable as well as legal principles to all matters presented to it for decision and that the circuit court, upon appeals from the board has the same power, because this court in Adams, State Revenue Agent, v. Clarke, 80 Miss. 134, has practically decided the cases now before the court in appellant's favor.

It is true that some of the expressions in the opinion of the court in Adams v. Clarke, seemingly except from the conclusion therein, reached a case where all of the taxpayers' property was seemingly assessed, but undervalued. The exceptions, we say it with due respect, are illogical, if fraud vitiates an assessment and the formal judgment approving it.

We conclude our references to Adams v. Clarke, by quoting a few sentences from the opinion of the court in that case commending them to the court, they are: "Courts do not sit to enable lawbreakers to profit by their own wrongdoing. The proposition that the assessment in this case, made in intentional and wilful disregard of all the sanctions required by law to make it an assessment, is res adjudicata, is abhorent to justice, and would put a premium on fraud." How applicable these sentences are to the cases at bar! This court did not allow Clarke to escape on his undervalued "solvent credits nor can we see how this court can allow the banks to escape on their undervalued capital stock, in view of the admitted facts, pleaded in the replication in each of these cases. We are told by this court in Adams v. Lamb-Fish Lumber Company, 104 Miss. 48, S.C. 60 So. 645, that valuation is a most important element in an assessment. How can an important element of an assessment be fraudulent without the assessment itself being fraudulent.

There is another case decided by this court having pertinency to the question now before it. That case is Adams, State Revenue Agent, v. Kuykendall, 83 Miss. 571.

The decision of this court in the case of Adams, State Revenue Agent, v. Luce, 87 Miss. 221, S.C. 39 So. 418 must be construed as limited to the facts of that case, and when so construed it has no application to the cases at bar. Adams, State Revenue Agent, v. People's Bank of Biloxi, 108 Miss. 346, S.C. 66 So. 407, is worthy of note. There, as in the cases at bar, there was a failure to comply with the statute, Mississippi Code 1906, p. 4273, requiring the officers of banks to deliver to the assessor a statement under oath showing the number and amount of its shares of stock, etc., estimating the stock at par unless increased or diminished as therein specified. The people's bank of Biloxi rendered its property under the heading "personal property not otherwise described," making no showing of or reference otherwise to its capital stock. Its irregular, informal and unauthorized assessment was formally approved by the board of supervisors. This court held that such an assessment was not res adjudicata when pleaded to an assessment of the bank's capital stock afterwards made by direction of the state revenue agent. It will be noted, too, that in that case there was no averment or proof of fraud in the rendition of the irregular and informal assessment...