State v. Georgia Co.
| Decision Date | 28 February 1893 |
| Citation | 17 S.E. 10,112 N.C. 34 |
| Parties | STATE et al. v. GEORGIA CO. |
| Court | North Carolina Supreme Court |
Appeal from superior court, Guilford county; Brown, Judge.
Creditors' bill by the state and Guilford county against the Georgia Company. Judgment for defendant. Plaintiffs appeal. Reversed.
L. M Scott and R. M. Douglas, for appellants.
D Schenck and P. B. Means, for appellee.
This is a civil action in the nature of a creditors' bill brought by the state and county for the appointment of a receiver for the defendant corporation to collect its assets and pay its debts. It stands on complaint and demurrer therefore all the allegations of fact in the complaint, for the purposes of this appeal, are admitted to be true.
These allegations are that on June 6, 1889, the board of commissioners of Guilford county, upon due notice, and after full hearing, assessed against the defendant the sum of $62,445.78 as state and county taxes and penalties for the year 1888; that the said taxes were returned by the sheriff as uncollectible; that defendant gave notice of appeal, but abandoned its appeal, and removed all its property and effects, which were of great value, from the state, for the purpose of preventing the collection of taxes, and in fraud of its creditors; that defendant is insolvent, or in imminent danger of insolvency; that defendant has forfeited its corporate rights; and that the plaintiffs have exercised due diligence, and exhausted all apparent means of collecting their debts. The complaint also alleges the organization of defendant corporation under the laws of this state, its domicile in Guilford county, the issue of its stock and bonds, the acquisition of its property, and its liability to taxation. These taxes were assessed in conformity to section 90, c. 218, Acts 1889. It is well settled that the board of county commissioners, when sitting with the justices of the peace, has succeeded to all the powers of the old county court in matters of taxation. The board exercises judicial powers, has a clerk and a seal, and keeps a record of its proceedings. Code, §§ 715, 716. Within its jurisdiction, it is a court of record. "The tax list is a judgment against every person for the amount of the tax, and the copy delivered to the sheriff is an execution." Huggins v. Hinson, Phil. (N. C.) 130, cited and approved in Commissioners v. Piercy, 72 N.C. 181; London v. Wilmington, 78 N.C. 109; Gore v. Mastin, 66 N.C. 371; Railroad Co. v. Lewis, 99 N.C. 62, 5 S.E. Rep. 82; and Commissioners v. Murphy, 107 N.C. 36, 12 S.E. Rep. 122. Indeed, every revenue act from 1869 down to the present expressly provides that the tax list shall have "the force and effect of a judgment and execution." The plaintiffs have, therefore, a judgment and execution, with a return of nulla bona by the sheriff. In Jones v. Ashford, 79 N.C. 172, the court says: "The diligent and honest prosecution of a suit to judgment, with a return of nulla bona, has always been regarded as one of the extreme tests of due diligence;" and, further: "The return of the execution unsatisfied is evidence of the exhaustion of its legal means of collection;" citing Camden v. Doremus, 3 How. 515.
The defendant insists that a tax is not a debt. It may not be a debt in its most limited sense,--that is, liable to set-off and the other incidents of a simple contract between individuals,--but it is a debt in the highest sense of the word. In this sense it is defined by Bouvier as "any kind of a just demand;" by the Century Dictionary as "that which is due from one person to another, whether money, goods, or services;" and by Webster substantially the same, with "thing owed, obligation, liability," given as synonyms. All causes of action become debts after judgment. Dellinger v. Tweed, 66 N.C. 206; Rap. & L. Law Dict. pp. 352, 696. The old action on a judgment was an action for debt, (3 Bl. Comm. 159,) and so is an action for a penalty. "The government has the same right to enforce a duty as a debt, and may enforce it in the same way." People v. Seymour, 16 Cal. 332. When a tax is imposed, the taxpayer becomes a debtor. Savings Bank v. U. S., 19 Wall. 227; Attorney General v. ___, 2 Anstr. 558, cited and approved in 19 Wall. 241. "Debt lies in favor of the United States against an importer for the duties due on goods imported." U.S. v. Lyman, 1 Mason, 482. In this case the argument for the government was by Mr. Webster, and the opinion of Judge Story was approved in Savings Bank v. U.S., supra. Whatever construction may be placed upon the word "debt," no such restricted meaning is ever applied to the words "credit and creditor." "A creditor is he who has a right to require the fulfillment of an obligation or contract." Bouv. Law Dict. Credits comprise "every claim or demand for money, labor, interest, or other valuable things, due or to become due." Acts 1891, c. 326, § 85.
The plaintiffs, being creditors, could formerly bring a creditors' bill in equity, and now, under sections 694 and 701 of the Code, against the corporation, with or without proceedings enforcing its dissolution. Defendant further contends that, whether the state and county are creditors or not, they are precluded from bringing a creditors' suit to enforce payment of their claims, because there is a specific remedy for the collection of taxes in the revenue act itself, (Acts 1891, c. 326, § 77,) which they insist the plaintiffs must pursue. The specific remedy pointed out restricts only the officers who collect the revenue, and not the sovereign, or the county, which, pro hac vice, stands in the place of the sovereign. "General statutes do not bind the sovereign, unless specially mentioned in them." "Every plea of the state is cognizable in a court of record." State v. Garland, 7 Ired. 48, cited and approved in State v. Adair, 68 N.C. 68, and Ex parte Harris, 73 N.C. 65; Savings Bank v. U.S., supra, and cases there cited; Meredith v. U. S., 13 Pet. 486. The county is a part of the delegated authority of the state, and is pro hac vice the state. U.S. v. Railroad Co., 17 Wall. 322. In any event, the joinder of the county with the state cannot affect the right of the state to sue. Moreover, this right to sue is recognized by clear implication in section 3324 of the Code, authorizing the governor to employ counsel in every case in any court in which the state is interested; and also in section 48, c. 216, Acts 1889, appropriating $2,500 to be expended by the state treasurer to secure the collection of taxes. The same provision occurs in the act of 1891. Why employ counsel if they cannot be heard in court? The imposition of a tax clearly implies the intention to collect. If the plaintiffs cannot bring a creditors' suit they cannot prove their claims in a suit brought by another, and would thus be compelled to stand idle, and see a private creditor, or even a stockholder, bring suit, and absorb the entire assets of the delinquent corporation. Thus the sovereign would be placed beneath the subject, the creator below the corporation of its own creation. The principle that the absence of an adequate statutory remedy preserves the right of action is recognized by all the authorities. Gatling v. Commissioners, 92 N.C. 536; Cooley, Tax'n, p. 13, note, and cases therein cited. Moreover, throughout all the authorities a clear distinction seems to run between the cases where a private plaintiff brings an action to compel the levy and collection of taxes to pay a debt due him and where the sovereign seeks to collect its own taxes for the general purposes of government.
The citizen has only such remedies as are given to him; the state has inherently all remedies not voluntarily and unequivocally relinquished. There being no distinction between actions at law and suits in equity in this state, any proper relief can be granted in a civil action. A creditors' suit is of itself a very comprehensive and liberal action. It is not demurrable, because remedy might have been held by supplementary proceedings. Bronson v. Insurance Co., 85 N.C. 411; Hughes v. Whitaker, 84 N.C. 640. It is not demurrable, because the cause of action is dormant. Bacon v. Berry, 85 N.C. 124. It can be brought before judgment. Bank v. Harris, 84 N.C. 206; Mebane v. Layton, 86 N.C. 571. It is an old and well-settled mode of procedure, fully adequate to settle all conflicting interests.
Nor can we see the force of defendant's contention that, because the state had the right to have its charter declared forfeited because of its failure to pay its taxes, therefore the state has no right to this remedy. The forfeiture was a penalty which the state could insist on or waive at its...
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