State v. Rand
| Decision Date | 18 December 1888 |
| Citation | 40 N.W. 835,39 Minn. 502 |
| Parties | State of Minnesota v. Rufus R. Rand and another |
| Court | Minnesota Supreme Court |
Appeal by defendants (impleaded with A. T. and L. S. Rand) from a judgment of the district court for Hennepin county, where the cause was tried by Young, J., without a jury.
Jackson Atwater & Hill, for appellants.
F. F Davis and J. C. Worrall, for respondent.
OPINION
Citation issued by the district court for Hennepin county, addressed to A. T. Rand, L. S. Rand, Rufus R. Rand, and Kate Rand, requiring them to show cause why they should not pay certain taxes assessed against them for the year 1886, but remaining wholly unpaid. The citation was not served upon A. T. and L. S. Rand. Rufus R. and Kate Rand answered, alleging -- First. That each had duly returned for assessment a list of personal property; that each had been duly taxed therefor, and had paid the amount of said taxes as by law required. Second. That the tax claimed in the citation had been unlawfully assessed against defendants, on account of certain facts quite fully set forth, but which may be stated briefly as follows: The four persons named in the citation were the heirs-at-law of one Mary C. Rand, deceased, whose estate was being probated in said Hennepin county, and who died seized of certain real property in said county; that as such heirs the defendants, on February 13, 1886, entered into a written contract, (a copy of which was made a part of the answer,) whereby they sold, and upon payment of the purchase price agreed to convey, to the "Minneapolis Club," a corporation, the real property before mentioned, and that the tax referred to in the citation was that improperly assessed against said heirs, for and on account of the said contract with the club, as a credit belonging to said defendant heirs upon which they should pay taxes. From an inspection of the contract of sale it appears that it is in the common form, the defendant heirs giving immediate possession, and agreeing to convey by warranty deed upon being paid $ 2,500 cash in hand, which was acknowledged, $ 2,500, May 1, 1886, (which had been paid when the assessment was made,) and $ 5,000, May 1, 1887. The purchaser covenanted and agreed to make the abovementioned payments, and the further sum of $ 40,000, on or before May 1, 1897, with interest at 6 per cent., payable semi-annually; to pay all assessments and taxes which might be levied or imposed upon the property after May 1, 1886; and in case the vendors should convey upon the payment of $ 10,000, to execute and deliver a mortgage upon the property to secure the balance of the purchase price. The state contends that if these deferred payments are a credit subject to assessment, the assessor's method of procedure is justified by Gen. St. 1878, c. 11, § 38. We assume this to be so, as counsel for appellants is silent upon the proposition, and the section cited seems to sustain the position of the state.
The next question is whether the item listed by the assessor upon his own motion is a credit within the meaning of the constitution and the tax laws of this state. Section 3, art. 9, of the constitution provides that "laws shall be passed taxing all moneys, credits, investments in bonds," etc. In obedience to this constitutional mandate the legislature has provided, through section 3 and the 23d subdivision of section 16, chapter 11, aforesaid, for the listing and assessment of that class of personalty ordinarily denominated as "credits." If this be one, it is taxable, and those to whom it is payable must bear the burden which the framers of the constitution declared should be laid upon its species. The objections to this manner of creating revenue have often been stated by political economists, but no one now questions the abstract right of the people to exact, through their properly constituted representatives, tribute in this form for governmental purposes. The right so to do is not disputed here, but it is contended that the amount due appellants upon the contract of sale is not a credit; that the contract is wholly conditional, differing from the absolute obligation to pay evidenced by note; that it cannot be sold or assigned, and could not be collected except upon tender of a willingness, coupled with an ability, to convey; and that it is not certain, as no decree of distribution of the estate has been made, that they ever will be seized of the property mentioned in their contract, and thus able to perform. They sum up the many objections by asserting that, as they have no more property than was theirs the day before the contract was made, it results in double taxation. By means of section 4, chapter 11, supra, we are informed that "the term 'credits,' wherever used in this act, shall be held to mean and include every claim and demand for money or other valuable thing, and every annuity or sum of money receivable at stated periods, due or to become due, and all claims and demands secured by deed or mortgage, due or to become due." Credits, in an act making them subject to taxation, (essentially the same as ours, including section 18, relative to deductions for debt,) are defined to be "the excess of the sum of all legal claims and demands, whether for money or other valuable thing, * * * due or to become due to the person liable to pay taxes thereon, * * * when added together, (estimating every such claim or demand at its true value in money,) over and above the sum of all legal bona fide debts owing by such person." Payne v. Watterson, 37 Ohio St. 121. The query seems to be a simple one. If the appellants and their codefendants have a claim or demand for money, or there is a sum of money due or to become due from the corporation named in the contract, secured or unsecured, the broad and comprehensive wording of the statute includes it, and it was the duty of each defendant (assuming all to be residents of the city in which the taxation was attempted) to list his or her interest with the assessor. Upon a failure to do so, the assessor but performs his sworn duty when he properly returns the omitted items. The intent of the law-makers to reach the creditor class is apparent, and while the practical working of a statute so sweeping and unmistakable in its terms may remind us that, as was said in Finley v. City of Philadelphia, 32 Pa. 381, "there is nothing very poetic about tax laws," it will remain difficult, probably impossible, to convince the debtor class, with tangible real and personal property, from which it secures an income, that it should be taxed, while credits, from which the creditor class derives its income, should wholly escape the burden of taxation.
In the case at bar it will be observed that no notes were executed by the purchaser, nor did the vendors enter into a bond for a deed. The contract contains the bargain; the corporation covenanting absolutely, in words, upon its part to pay upon days certain, and the vendors in equally as formal and binding a manner agreeing to convey the premises upon receiving a part only of the purchase price. There were but two things which could possibly prevent the vendors from receiving their money: First, their own inability to give a perfect title to the premises; and, second, the insolvency of the vendee. We must assume the solvency of the latter, and with equal confidence must presume that the vendors will be able to convey when the time comes, in accordance with their contract. We then have the written promise of the purchaser to pay and the agreement of these defendants to deed. Either or both can be enforced as readily as if promissory notes evidenced the pecuniary liability of the one party, and a bond the accountability of the other. The obligation of the one to make the promised payments, and of the other to execute and deliver a conveyance, are definite and conclusive. It is true that the writing, of itself, lacks the elements of negotiability. But the interests of each party, therein specifically fixed, are capable of transfer. Besides, the application of the tax law to the claim or demand it is designed to reach depends not upon the negotiable or transferable qualities of such claim or demand, but upon its character. In con struing a statute which makes every claim, demand for money, every security, or sum of money receivable at stated periods, due or to be come due, subject to assessment at its true value, we are unable to distinguish between an executory agreement in this form and one which is more formal, simply because it is evidenced by a bond for a deed and promissory notes. Had this contract been so shaped, its force and effect, the rights and remedies of the respective parties, would have been the same,...
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