State ex rel. Koeln v. Motlow
| Decision Date | 20 November 1934 |
| Citation | 76 S.W.2d 417,336 Mo. 40 |
| Parties | State of Missouri at the Relation of Edmond Koeln v. Lem Motlow, Appellant |
| Court | Missouri Supreme Court |
Rehearing Denied November 20, 1934.
Appeal from Circuit Court of City of St. Louis; Hon. Granville Hogan, Judge.
Affirmed.
Cullen Fauntleroy & Edwards for appellant.
(1) The State of Missouri is not entitled to recover taxes upon the land described in the petition because the land belonged to the United States by virtue of a seizure of it by the officers of the United States acting under the Internal Revenue Law. Art. XIV, Sec. 1, Const. of Mo.; R. S. 1929 sec. 9743; Van Brocklin v. State of Tennessee, 117 U.S. 151; McCulloch v. Maryland, 4 Wheat. 316; Cooley on Taxation (2 Ed.), 83-85; 25 Am. & Eng. Enc. of Law (1 Ed.), 106; United States v. Insley, 130 U.S. 265; Irvin v. Wright, 258 U.S. 219; Wisconsin Cent. Railroad Co. v. Price County, 133 U.S. 504; Herrick & Stevens v. Sargent & Lahr, 132 Am. St. Rep. 291; People ex rel. v. United States, 93 Ill. 30, 34 Am. St. Rep. 155. (2) Title to the property vested in the United States from and after the date the unlawful acts were committed, and certainly from September, 1923, when the property was seized by the internal revenue officers acting for the United States Government. United States v. Stowell, 133 U.S. 1; Henderson's Distilled Spirits, 14 Wall. 44; Thatcher's Distilled Spirits, 103 U.S. 679; Heidritter v. Elizabeth Oil-Cloth Co., 112 U.S. 294; 33 C. J. 372, sec. 297; Dobbins v. United States, 96 U.S. 395, 24 L.Ed. 637; United States v. Eight Hundred Caddies of Tobacco, 2 Bond, 305; 33 C. J. 372; United States v. Sixty-four Barrels of Distilled Spirits, 3 Cliff. 308; 33 C. J., sec. 212, p. 345; 33 C. J., sec. 296, p. 372; Agnew v. Haymes, 141 F. 631. (3) The decree perfected the title which the Government acquired by the seizure of the property, and that title related back to the date of the seizure, and the decree was clearly one of condemnation and forfeiture. United States v. Stowell, 133 U.S. 1; Southern Surety Co. v. Motlow, 61 F.2d 464; Motlow v. United States, 35 F.2d 90; Lancy v. Boston, 71 N.E. 304; Bird Mining Co. v. Weir, 271 U.S. 616; People ex rel. v. Burke, 193 N.Y.S. 601; Coop v. State, 69 W.Va. 443, 35 L. R. A. (N. S.) 669, 71 S.E. 582; Olds v. Little Horse Creek Cattle Co., 22 Wyo. 351, 140 P. 1009; Graff v. Ackerman, 38 Neb. 723, 57 N.W. 513; Tyler v. Cass County, 1 N.D. 382, 48 N.W. 233. (4) Case No. 12,590 was filed on the 11th day of December, 1925, and clearly at that time the defendant was not the owner of the property, and in case No. 13,965 the petition was filed December 13, 1928. At that time Lem Motlow was not the owner of said premises and the lien of the United States Government was not satisfied until November 1, 1930. Therefore the plaintiff has no right to recover. R. S. 1929, sec. 9953; Swiegart v. Reed, 221 Mo. 33; Bent v. Investors Sec. Assn., 300 Mo. 552; Keaton v. Jorndt, 259 Mo. 180.
Edward W. Foristel and Frank H. Haskins for respondent.
(1) The taxes for 1920, 1921, 1922, 1923 and 1924 became a lien on the property before the seizure by the Government and this lien was not affected by the seizure. R. S. 1929, secs. 9756, 9779, 9793; State ex rel. McKee v. Clements, 281 Mo. 201; Blossom v. Van Court, 34 Mo. 390; Morey v. St. Louis Artificial Ice Rink Co., 242 Mo. 249; United States v. Stowell, 133 U.S. 20; DeGiverville v. Legg, 48 Mo.App. 577; United States v. Distillery Co., 25 F. 865; United States v. 64 Barrels Distilled Spirits, 27 F. 1121. (2) The law prohibiting states or persons from enforcing a tax or lien on property of the United States is solely for the benefit and protection of the Government, and goes no further than is necessary in protecting its property and enforcing its laws. People ex rel. v. United States, 93 Ill. 37; Van Brocklin v. State of Tennessee, 117 U.S. 155; Heidritter v. Elizabeth Oil-Cloth Co., 112 U.S. 304; Wis. Cent. Ry. v. Price County, 133 U.S. 504. (3) Even if the Government has a prior lien on the property, a lien claimant may take such legal steps to perfect his lien as do not of themselves disturb the lien of the Government. Heidritter v. Elizabeth Oil-Cloth Co., 112 U.S. 304; State ex rel. v. Davidson, 286 S.W. 355, 356. (4) Upon seizure of the property the Government had only right of possession and a lien which does not become a title until final judgment of condemnation. State v. Heman, 7 Mo.App. 424; Tracey v. Course, 58 N.Y. 149; 33 C. J. 373, sec. 300; United States v. Stowell, 133 U.S. 16; Southern Surety Co. v. Motlow, 61 F. 466. (5) The rule that the judgment of condemnation relates back to the commission of the wrongful act applies only for the purpose of preventing a transfer of property by the wrongdoer and thereby destroying the lien of the Government. Heidritter v. Elizabeth Oil-Cloth Co., 112 U.S. 294; Henderson v. Distilled Spirits, 14 Wall. 44; United States v. Stowell, 133 U.S. 16. (6) Unless the Government had actual title instead of only a lien the real estate was subject to a lien for state taxes. Essex County v. Salem, 153 Mass. 142; McWhinney v. Logansport, 130 Ind. 9; State ex rel. v. Davidson, 286 S.W. 356; Speed v. St. Louis County, 42 Mo. 382. (7) The stipulation and judgment in the condemnation case was not a final judgment of condemnation or transfer of title to the United States, but was a release and abandonment of the lien on this property and a substitution of other property in lieu thereof. 33 C. J. 373, sec. 300; Tracey v. Course, 58 N.Y. 149.
This case, coming to the writer by reassignment, is a suit for back taxes on real estate for the years 1924, 1925 and 1926 for State purposes, school purposes and municipal purposes of the city of St. Louis. Defendant sought to defeat the collection of these taxes under the following provision of Section 1, Article 14, of the Constitution of this State, to-wit: "No tax shall be imposed on lands the property of the United States;" under Section 9743, Revised Statutes 1929, of the revenue laws of this State, exempting from taxation pursuant thereto, as follows: "Lands and lots, public buildings and structures with their furniture and equipments, belonging to the United States;" and under the Federal decisions holding that a state cannot tax property of the Federal Government. [McCulloch v. Maryland, 4 Wheat. 316; Van Brocklin v. Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845; Wisconsin Central Railroad Co. v. Price Co., 133 U.S. 496, 10 S.Ct. 341, 33 L.Ed. 687; Irwin v. Wright, 258 U.S. 219, 42 S.Ct. 293, 66 L.Ed. 573.] Judgment was rendered against defendant in the circuit court for $ 3,882.76 for the amount of the taxes and penalties. This amount was adjudged to be a special and first lien to be levied out of the above real property, which the sheriff was directed to sell according to law for that purpose. Defendant has appealed from this judgment.
Prior to the effective date of wartime prohibition in 1917, the real estate in question was leased by defendant to the Jack Daniel Distilling Company, a corporation of which defendant was the principal stockholder. Thereafter, the distilling company suspended operations but continued to store whiskey on the premises. After national prohibition went into effect defendant, on January 1, 1921, made a new lease to the distilling company to continue until December 31, 1925. The distilling company filed notice of intention to continue in business in accordance with Section 3259, Revised Statutes (26 U.S.C. A., sec. 282). The company also gave the bond required by Section 3260, Revised Statutes (26 U.S.C. A., sec. 284). Defendant in accordance with Section 3262, Revised Statutes (26 U.S.C. A., sec. 286), filed an owner's consent for the period of the lease which provided that "the undersigned further expressly agree and consent that the lien of the United States for taxes and penalties shall have priority of any mortgage, judgment or other encumbrances upon said property, and that in case of the forfeiture of the distillery premises or any part thereof, the title to the same shall vest in the United States discharged of any claim of title by the undersigned or any such mortgage, judgment or other encumbrance." Thereafter, in June, 1923, defendant and his associates sold all of their stock in the distilling company to other persons and the lease previously made was terminated. A new lease was then made to the distilling company, under its new ownership, for one year with provisions for annual renewals. In September, 1923, it was discovered that the whiskey of the distilling company had been wrongfully removed without payment of the tax imposed thereon by the United States. The property was immediately seized by the Collector of Internal Revenue and on January 16, 1924, a proceeding in libel was commenced to condemn the real estate as forfeited to the United States and "that the title thereto be vested in the United States for the purpose of disposal thereof and that the United States Marshal may be ordered to sell and dispose of the same." Under this proceeding the United States Marshal took the property into custody and continued to hold the same until it was released by order of the United States District Court, September 25, 1928. Thereafter, on December 13, 1928, this suit was commenced. An account of defendant's troubles with the Federal Government and other litigation growing out of the seizure can be found, by those interested, in United States v. Motlow, 13 F.2d 645; Motlow v. United States, 35 F.2d 90, and Southern Surety Co. v. Motlow, 61 F.2d 464.
For the decision of the question presented in this case it is only necessary to consider the proceedings in the libel suit for the condemnation of the real estate...
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