Stroop v. Rutherford County

• Decision Date: 05 June 1978
• Citation: 567 S.W.2d 753
• Parties: Robert T. STROOP and wife, Mary H. Stroop, J. W. Robinson and wife, Callie M. Robinson, Claiborn J. Harrell and wife, Rebecca Bell Harrell, and Bobby Tarpley and wife, Reba C. Tarpley, suing Individually and on behalf of others similarly situated, Appellants, v. RUTHERFORD COUNTY, a Political Subdivision of the State of Tennessee, Ben Hall McFarlin, County Judge of Rutherford County, Tennessee, Ed Elam, County Court Clerk of Rutherford County, Tennessee, Allen J. Stockard, County Trustee for Rutherford County, Tennessee, and Homer Jones, Register of Deeds for Rutherford County, Tennessee, Appellees.
• Court: Tennessee Supreme Court

Page 753

567 S.W.2d 753

Robert T. STROOP and wife, Mary H. Stroop, J. W. Robinson and wife, Callie M. Robinson, Claiborn J. Harrell and wife Rebecca Bell Harrell, and Bobby Tarpley and wife, Reba C Tarpley, suing Individually and on behalf of others similarly situated, Appellants, v. RUTHERFORD COUNTY, a Political Subdivision of the State of Tennessee, Ben Hall McFarlin, County Judge of Rutherford County, Tennessee, Ed Elam, County Court Clerk of Rutherford County, Tennessee, Allen J. Stockard, County Trustee for Rutherford County, Tennessee, and Homer Jones, Register of Deeds for Rutherford County, Tennessee, Appellees.

Supreme Court of Tennessee.

June 5, 1978.

Kenneth W. Snell, Murfreesboro, James M. Sykes, Nashville, for appellants; Joe K. Walker, Springfield, of counsel.

Larry K. Tolbert, Wm. T. Sellers, Murfreesboro, for appellees; Smith & Sellers, Murfreesboro, of counsel.

OPINION

BROCK, Justice.

The plaintiffs bring this action on behalf of themselves and others similarly situated to recover payments of privilege taxes levied upon transfers of realty pursuant to an unconstitutional private act of the legislature, Chapter 172 of the Private Acts of 1969. Pursuant to the motion of the defendants, the trial court dismissed the complaint for failure to state a claim upon which relief could be granted. See Tenn.R.Civ.P. 12.02.

The sole ground asserted in the motion to dismiss was that:

"The complaint on its face shows that these plaintiffs failed to pay the transfer tax under protest, and thereby waived any and all right to refund of said money paid upon the act being declared unconstitutional at any future date."

The Chancellor did not sustain this ground but did grant the motion, stating:

"There having been no statement of facts presented to the court to show duress upon the part of the plaintiffs, nor to show involuntariness on the part of the plaintiffs, other than the conclusion of the pleadings, the court finds from the undisputed facts appearing on the face of the pleadings and as a matter of law that plaintiffs and each of them have failed to state a claim upon which relief can be granted."

This appeal, then, presents two questions:

(1) When a county, as distinguished from the state or a municipal corporation, exacts payment of a tax under an unconstitutional enactment, may the taxpayer recover such tax paid without a formal declaration of protest at the time of payment, provided, such payment is made involuntarily and under duress?

(2) If protest is not required, do the facts stated in the complaint in this case, constitute a sufficient allegation of duress?

I

We hold that a taxpayer need not make a formal protest at the time of payment in order to be entitled to recover county taxes illegally exacted.

The legislature has provided a statutory procedure for the recovery of state and municipal taxes which have been illegally exacted, T.C.A., §§ 67-2301 through 67-2313, but these statutes do not govern actions to collect county taxes illegally exacted; the taxpayer is left to resort to his common law remedies for recovery of county taxes paid. ¹ Holloway v. Putnam County, Tenn., 534 S.W.2d 292 (1976); Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685 (1934); Little Rock and M. R.R. Co. v. Williams, 101 Tenn. 146, 46 S.W. 448 (1898); Cincinnati N.O. & T.P. R.R. Co. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361 (1908).

One of the statutory requirements for the recovery of taxes paid to a municipality or the state is that the taxpayer make formal protest at the time of payment of such taxes. T.C.A., §§ 67-2303, 67-2313. But, we must turn to the common law to determine whether protest at the time of payment is necessary in order for the taxpayer to maintain a suit for recovery of taxes paid to a county.

Although some of the older cases held to the contrary, the modern common law rule is that if the taxes in question were paid under compulsion or duress and not voluntarily it is not necessary that protest at the time of payment be shown in order for the taxpayer to maintain an action to recover such taxes. Merchants Despatch Transportation Corp. v. Ariz. State Tax Commission, 20 Ariz.App. 276, 512 P.2d 39 (1973); Southern Service Company v. Los Angeles County, 15 Cal.2d 1, 97 P.2d 963 (1940); Howard v. Augusta, 74 Me. 79 (1882); Pere Marquette Ry. Co. v. Ludington, 133 Mich. 397, 95 N.W. 417 (1903); Atweel v. Zeluff, 26 Mich. 118 (1872); Koewing v. West Orange, 89 N.J.L. 539, 99 A. 203 (1916); Jaynes v. Heron, 46 N.M. 431, 130 P.2d 29 (1942); Mercury Mach. Importing Corp. v. City of New York, 3 N.Y.2d 418, 144 N.E.2d 400 (1957); Horgan v. Taylor, 36 R.I. 232, 89 A. 1058 (1914); State v. Akin Products Company, Tex.Civ.App., 279 S.W.2d 409 (1955) aff'd, 155 Tex. 348, 286 S.W.2d 110 (1956); Swanton Village v. Town of Highgate, 128 Vt. 401, 264 A.2d 804 (1970); Great Northern Ry. Co. v. State, 200 Wash. 392, 93 P.2d 694 (1939); Annot., 142 A.L.R. 1198 (1943); 72 Am.Jur.2d 342-43 State and Local Taxation § 1082 (1974); 84 C.J.S. 1286-87 Taxation § 638 (1954).

No published opinion of this Court appears to have decided this issue, although there are statements in some of the cases to the effect that protest at the time of payment is required in order for the taxpayer to maintain an action for recovery. Most of these statements appear in cases involving attempts to recover taxes paid to the state or to municipalities which, of course, by the terms of the statute, must have been paid under protest. The statements appear also in cases in which the contested issue was whether the taxes were paid as the result of duress or coercion, not whether payment under protest was a requirement.

Actions to recover taxes which have been illegally exacted and paid involuntarily under coercion or duress are in the nature of actions for money had and received, a form of restitution. Holloway v. Putnam County, supra ; 72 Am.Jur.2d 340, State and Local Taxation §§ 1077, 1078 (1974). Of course, one may not have restitution of a sum of money voluntarily paid, whether for taxes or some other demand. Id. at § 1080. Accordingly, one who desired to later contest the legality of a payment which he was forced to make has often resorted to the technique of formally protesting at the time of making such a payment in order to facilitate the task of later proving that the payment was not made voluntarily. In other words, entering a protest at the time of payment is one means, but not the only means, of providing proof that the payment was involuntarily made. 66 Am.Jur.2d 1049, Restitution and Implied Contracts § 111 (1973).

We hold that if the taxpayer makes a payment of county taxes involuntarily and under duress, as discussed infra, he may maintain an action to recover the same, although he did not make formal protest at the time of payment.

II

We now consider the question whether the complaint in this case sufficiently alleges that the taxpayers made their payments involuntarily and as the result of duress or coercion.

The tax in question was imposed by Chapter 172 of the Private Acts of 1969 which provided:

"Section 1. That there is hereby imposed in and for Rutherford County a special privilege tax upon all transfers of realty situated in Rutherford County in the amount of .3 of 1% of the consideration for said transfer in each and every case other than transfers to secure the payment of a debt or transfers to confirm a title already in the grantee. The incidents of this tax shall be upon the grantor only.

"Section 3. That the County Court Clerk shall certify upon the face of each instrument of conveyance the payment of said tax and that said instrument shall not be received by the Register of Deeds for recordation until said certification appears thereon."

The complaint alleges that Chapter 172 of the Private Acts of 1969 is in violation of Article XI, Section 8, and Article I, Section 8, of the Constitution of Tennessee, in that, it is contrary to the general statutes of this State, T.C.A., §§ 67-4101 and 67-4102, Item S, and has been so declared by the Chancery Court for Rutherford County in a final decree in another case.

The complaint alleges that plaintiffs paid the taxes in question under duress and compulsion, in that, upon presenting themselves at the Rutherford County Register's office for the purpose of recording deeds to parcels of real estate located in Rutherford County which they had sold or purchased, they were

". . . thereupon advised and told that said deed or deeds would not be recorded and put of record by said Register of Deeds unless and until the payment of the special realty transfer tax was made to the County Court Clerk and a certificate of payment of said special taxes was stamped thereon."

Plaintiffs further allege:

"Plaintiffs and others similarly situated were thereby compelled under duress to pay a special tax in order to protect their property interest by the recording of their deeds.

". . . and that failure to pay said special tax would have resulted in possible loss of their statutory and constitutional rights to have the protection afforded by registration of said deeds."

In our opinion, these allegations sufficiently allege that the taxes in question were paid under duress and compulsion and not voluntarily. Bell v. Clay County, supra. See Trower v. San Francisco, 152 Cal. 479, 92 P. 1025 (1907); New Smyrna Inlet Dist. v. Esch, 103 Fla. 24, 137 So. 1 (1931); Coleman v. Consolidated Realty Company, 239 Ky. 788, 40 S.W.2d 387 (1931); Malin v. La Moure County, 27 N.D. 140, 145 N.W. 582 (1914).

It has been aptly said that the terms "voluntary" and "involuntary," when used with reference to the payment of taxes, are not applied in their ordinary sense. Singer Sewing Machine Co. v. Teasley, 198 Ala. 673, 73 So. 969 (1916); Maxwell v. San Luis Obispo County, 71 Cal. 466, 12 P. 484 (1886). Thus, with respect to the payment of taxes, it has been recognized that a payment may be...