State ex rel. Ford Motor Co. v. Gehner

• Decision Date: 08 April 1930
• Docket Number: 29936
• Citation: 27 S.W.2d 1,325 Mo. 24
• Parties: The State ex rel. Ford Motor Company v. Fred Gehner, as Assessor, and as President of Board of Equalization, and as Head of Assessment Division of Department of Finance, and Edmond Koeln, as Collector of the Revenue, and Louis Nolte, as Comptroller, of City of St. Louis
• Court: Missouri Supreme Court

27 S.W.2d 1

325 Mo. 24

The State ex rel. Ford Motor Company v. Fred Gehner, as Assessor, and as President of Board of Equalization, and as Head of Assessment Division of Department of Finance, and Edmond Koeln, as Collector of the Revenue, and Louis Nolte, as Comptroller, of City of St. Louis

No. 29936

Supreme Court of Missouri

April 8, 1930

Record quashed.

Moore & Fitch for relator.

(1) The income tax laws expressly provide that the procedure for assessing personal property for taxation, so far as applicable, shall apply to the assessment of incomes. Secs 13133, 13126, R. S. 1919. (2) The Income Tax laws fall within the class of revenue statutes. Such laws must be strictly construed; if doubt exists, such doubt will be resolved in favor of the taxpayer and against the State. State ex rel. Ins. Co. v. Hyde, 292 Mo. 342; In re Estate of Clark, 270 Mo. 351; State ex rel. Ins. Co. v Gehner, 315 Mo. 1126; State ex rel. v. Railroad Co., 87 Mo. 236; United States v. Merriam, 263 U.S. 179; Gould v. Gould, 245 U.S. 151. (3) The power has not been given the assessor by law to make an additional assessment of income taxes after taxes for that year have been assessed in due and regular course. Without express authority, the assessor has no power to make a determination of an additional sum of income subject to income tax for any year which income had theretofore been considered by the assessor in due and regular course, and on which taxable income the assessor had already levied an income tax within the time fixed by law. State ex rel. v Lesser, 237 Mo. 310. (4) The law does not give the assessor the right to assess incomes, or personal property for alleged back taxes; this is especially true when the taxpayer had theretofore made a return of its income for said year, and the return was received by the assessor, and the net taxable income of the taxpayer had been fixed by the assessor for taxation according to said return, and taxes had been levied thereon within the time fixed by law, and was paid, in due course. Secs. 12798, 12799, R. S. 1919; Cape Girardeau v. Buehrmann, 148 Mo. 198; City of Hannibal v. Bowman, 98 Mo.App. 103; 37 Cyc. 1017, par. b; 37 Cyc. 1067, par. c. (5) "The assessment is the basis for the tax. Therefore, if the assessment is void, it necessarily follows that the tax is likewise void." City of Hannibal v. Bowman, 98 Mo.App. 109. See, also, State ex rel. v. Lesser, 237 Mo. 318; State ex rel. Wyatt v. Ry. Co., 114 Mo. 1; State ex rel. v. Thompson, 149 Mo. 441. (6) "The failure of the taxpayer to give in his list is the basis and condition precedent to any authority in the assessor to make out the list for him. In this case then the action of the assessor was jurisdictionless and void, inasmuch as a proper list had already been returned by the defendants, and consequently no basis for the exercise of the assumed power existed." State ex rel. v. Spencer, 114 Mo. 574. (7) The right of a taxpayer to appeal from an order fixing the value of his property for taxation is equal to "a day in court," that is, "to due process of law." In this case the additional assessment was made by the assessor in April, 1929, on alleged income of the taxpayer, earned in the calendar year 1926, after the assessor had determined the taxable income for the year 1926, as provided by law and in due course, in April, 1927, on taxpayer's return duly filed. The assessor, in 1929, gave no notice to the taxpayer that he had made an additional assessment on taxpayer's income earned in 1926. The board of equalization had adjourned before taxpayer was advised such additional income tax had been levied. Taxpayer had no chance to have the action of the assessor reviewed. Taxpayer was deprived of due process of law, and was also deprived of an opportunity to have "a day in court." The acts of the assessor in determining additional income subject to taxation, and in assessing and levying income tax thereon, was in violation of Section 30 of Article II of the Constitution of Missouri and of Section 1 of the Fourteenth Amendment to the Constitution of the United States in that it deprived that taxpayer of its property without due process of law. State ex rel. v. Cummings, 151 Mo. 49; State ex rel. v. Seahorn, 139 Mo. 582.

Stratton Shartel, Attorney-General, and A. M. Meyer, Assistant Attorney-General, for respondents.

(1) The tax complained of in this case was actually levied by law. Sec. 13106, Laws 1921 (1 Ex. Sess.) p. 187; State ex rel. Liggett v. Gehner, 316 Mo. 1075. (2) The act of the assessor in placing an assessment for income tax upon his books does not partake of the nature of an assessment of real or personal property, involves no judgment or discretion, and is not an "assessment judgment" as that term is used in the cases cited by relator. In this case the true assessment was the result, not of any action of the assessor nor of the exercise of any discretion or judgment on his part, but was the result only of (a) the terms of the law and (b) the relator's sworn return, acting upon each other. The assessor could not exercise either judgment or discretion in fixing the "value" of an income of $ 3,524,802.19, and whether or not the deductions claimed on the return were allowable was a question not of fact, discretion or judgment, but of law, and relator was just as much presumed to know the law as was the respondent assessor. (3) All that was involved in this case was the mere manual act of writing upon a page in the assessor's "supplementary bill" book the amount of income tax which was due from relator and unpaid for the year 1926, upon the face of the law (of which relator had notice) and relator's own sworn return. It amounted to the mere correction of a clerical omission or error. As such an error, the entry was subject to correction. (4) The assessor had jurisdiction to correct such an error as here complained of, and properly exercised his authority in so doing. First Nat. Bank v. Anderson, 196 Iowa 587, 192 N.W. 6; State ex rel. v. Timbrook's Executors, 240 Mo. 226; Secs. 12819, 12801, 12969, R. S. 1919. (5) Statutes fixing the time within which duties of taxing officers shall be done, are directory, and their violation, unless some substantial right of the taxpayer is involved, constitute mere irregularities of which the taxpayer is not in a position to complain. State ex rel. v. Stamm, 165 Mo. 83.

OPINION

Blair, J.

This is an original proceeding by certiorari against respondent Gehner, as assessor and as president of the board of equalization, and Edmond Koeln, as collector, and Louis Nolte, as comptroller, all of the City of St. Louis, seeking to quash a supplemental assessment against relator for income taxes for the year 1926. Our writ issued. Respondents filed a joint return. Relator filed its motion for judgment on the pleadings, thereby admitting all facts in respondents' return which are well pleaded.

Relator is a Delaware corporation, with its principal office in Detroit, Michigan. It does business in Missouri and maintains a branch office in St. Louis. On April 14, 1927, relator filed in the office of respondent assessor its duly verified income tax return for the year 1926, showing total Missouri income of $ 3,524,802.19. Total deductions were claimed in the sum of $ 1,191,879.06, leaving $ 2,332,923.13 of taxable income. On such return respondent Gehner assessed the tax upon relator's Missouri income for 1926 at $ 23,329.23, and certified the same to respondent Koeln for collection. The tax was paid by relator to respondent Koeln on May 31, 1927.

One of the items claimed by relator as a proper deduction from its Missouri income for 1926 was an item of $ 515,882.03, representing such proportion of its total Federal income tax as should properly be allocated to relator's Missouri business. This deduction was not challenged by the assessor at the time. However, on March 21, 1929, the income tax department of the State Auditor's office notified relator that the Missouri Supreme Court had ruled "that a foreign corporation that does not pay its Federal income tax within the State of Missouri is not allowed to deduct this item from their Missouri State Corporation income tax returns," and asked relator to advise the deductions it had made for Federal income taxes in 1926 and 1927. On April 8, 1929, relator replied that it had deducted from its Missouri income tax for the year 1926 the sum of $ 515,878.03, and for the year 1927 the sum of $ 313,672.45, on account of Federal income taxes paid by it. On April 12, 1929, the state income tax department notified relator that it then proposed to disallow its Federal income tax deductions for 1926 and 1927 and to advise the assessor to set up an additional tax on the assessment books. Thereafter, and on or about May 1, 1929, respondent Gehner set up on his records against relator the following supplemental assessment: "Additional taxable income on account of disallowing deductions of Federal taxes (Missouri Supreme Court opinion, 292 S.W. 1028; letter on file from company); income to be taxed $ 515,878; tax assessable at one per cent $ 5,158.78," and respondent Gehner certified such assessment to respondent Koeln and the same was set up against relator on the collector's income tax records on May 15, 1929, and on the same day respondent Koeln made out and delivered to relator a tax bill for such additional tax. It is the record of this supplemental assessment, covering taxes on additional income for 1926, which relator now seeks to quash.

On April 8, 1927, this court decided the case of State ex rel. Liggett & Myers Tobacco Co. v. Gehner, 316 Mo 1075, 292 S.W. 1028, wherein it was held that a foreign corporation which paid its Federal income tax in Missouri was entitled, under...