The State at Relation and to Use of Johnson v. St. Louis-San Francisco Railroad Company

• Decision Date: 30 July 1926
• Docket Number: 25535
• Parties: The State at Relation and to Use of Tom K. Johnson, Collector of Revenue, Appellant, v. St. Louis-San Francisco Railroad Company
• Court: Missouri Supreme Court

286 S.W. 360

315 Mo. 430

The State at Relation and to Use of Tom K. Johnson, Collector of Revenue, Appellant, v. St. Louis-San Francisco Railroad Company

No. 25535

Supreme Court of Missouri

July 30, 1926

Appeal from Cass Circuit Court; Hon. C. A. Calvird, Judge.

Reversed and remanded.

George R. Chamberlin and Allen Glenn & Son for appellant.

(1) The occasions and mode of exercising the power of taxation are within the discretion of the law making authorities, which are here delegated to the county court, limited to the constitutional requirements. State ex rel. v Springer 134 Mo. 212. (a) The question of what was a proper rate of tax to produce the amount required, is a matter which rests within the discretion of the county court as it is by no means certain what the deficiencies in collection will amount to. Sec. 13030, R. S. 1919; People v. Wabash Ry. Co., 129 N.E. 826; People v. Sandberg Co., 115 N.E. 741, 118 N.E. 469; State ex rel Kersey v. West. Union Tel. Co., 304 Mo. 207. (b) All right to tax is legislative, and this is delegated to the county court. Courts will not interfere with this unless manifestly abused. The constitutional questions raised in amended answer are also answered in the cases that follow: Keith v. Bingham, 100 Mo. 307; Heman v. Schulte, 166 Mo. 417; Moberly v. Hogan, 131 Mo. 19; State ex rel. v. Wheeler, 5 L. R. A. (N. S.) 1142; Bank v. Staats, 155 Mo. 55. (2) Legislature delegates power to county court to levy tax. In re Birmingham Dr. Dist., 274 Mo. 150; State ex rel. v. Burton, 266 Mo. 723. (a) The court cannot interfere with the rate of taxation which is levied by the Legislature, or agencies provided by the Legislature. State v. Wheeler, 5 L. R. A. (N. S.) 1142; State ex rel. v. Andree, 216 Mo. 617; State ex rel. v. Goodbar, 195 Mo. 561; State ex rel. v. Vaile, 122 Mo. 34; Decker v. Diemer, 229 Mo. 296. (b) Levy of rate which would raise an excess is not lost to taxpayer, and the power to so levy is delegated by the Legislature to county courts. Baltimore Ry. Co. v. People, 66 N.E. 150; People v. C. B. & Q. Ry., 125 N.E. 314; People v. Sandberg Co., 115 N.E. 741; State ex rel. v. Ellison, 285 Mo. 301; Pope v. Lockhart, 299 Mo. 141.

E. T. Miller, A. P. Stewart, John H. Lucas, W. C. Lucas and D. C. Barnett for respondent.

(1) The court did not err in finding the issues for the respondent, both at law, and upon the evidence. No other finding could have been made. The levy was in excess of power and forbidden by the Constitution. Mo. Constitution, art. 10, sec. 11; art. 2, secs. 4, 10, 20 and 30; U.S. Constitution, amendments 5, 14. (2) Secs. 1042, 1043, 1044, 1045, chap. 8, art. 4, R. S. 1919, is the only authority for the funding and payment of this indebtedness. Section 1045 is a limitation and inhibition upon the county court, against a levy for any sum in excess of twenty-five cents on the $ 100 valuation. Jackson Lumber Co. v. McCrimmon, 164 F. 759; Railroad Tax Cases, 13 F. 750; Sanoma County Tax Cases, 13 F. 700; 37 Cyc. 966, 967, 970; State v. Wabash Railroad Co., 97 Mo. 296; Alexander v. Helber, 35 Mo. 334; City of Carondelet v. Picot, 38 Mo. 125; State v. Green, 87 Mo. 583. The amount necessary to pay and discharge the indebtedness did not exceed $ 45,595, with a levy of $ 91,190. An excess in 1920 of over $ 60,186.91, and all years to 1928, to pay the same. 2 Desty on "Taxation," p. 1194; 26 R. C. L. 28; 37 Cyc. 966, 967; State v. Wabash Railroad Co., 97 Mo. 296; Cornet v. St. Louis County, 240 S.W. 104; State ex rel. Hayes v. Snyder, 139 Mo. 549; State ex rel. Brumbaugh v. Railroad Co., 149 Mo. 645; State ex rel. Caldwell v. Railroad Co., 165 Mo. 611; State ex rel. Kolen v. Lesser, 141 S.W. 888; Kansas City v. Field, 285 Mo. 253; Alexander v. Helber, 35 Mo. 334; City of Carondelet v. Picot, 38 Mo. 125; State v. Green, 87 Mo. 583. (3) None of the authorities cited by the appellant herein are applicable to the law and facts herein. Sec. 13030, R. S. 1919, applies to general and not special taxes. (4) Sec. 13040, R. S. 1919, conclusively affirms the rule established in the instant case. Squaw Creek Drainage Dist. v. Harper, 213 Mo. 27; State ex rel. Blades v. Wabash Railroad Co., 251 Mo. 146; People ex rel. v. Ill. Cent. Ry. Co., 266 Ill. 636.

Ragland, P. J. All concur, except Graves, J., absent.

OPINION

RAGLAND

This is a suit to recover a special tax levied by the County Court of Cass County, in 1920, to pay the annual interest on a certain bonded indebtedness of that county and create a sinking fund for the payment of the principal when it became due. The bonds on account of which the tax was levied were issued in full settlement and satisfaction of certain judgments which had been rendered against Cass County on bonds theretofore issued by it in aid of the Clinton and Kansas City Branch of the Tebo & Neosho Railroad. There were 390 of these funding bonds, all dated June 1, 1902; each was for the sum of $ 1,000 and each bore four per cent per annum interest from date, payable semi-annually. All were due and payable twenty years after date, but the county reserved the option of paying one-third of them at any time after five years from date, another third at any time after ten years from date and the remainder at any time after fifteen years from date. The bonds were issued pursuant to the provisions of what is now Article IV, Chapter 8, Revised Statutes 1919, and in due conformity therewith. At the time of their issuance the county court made and entered of record the following order:

"And it is further ordered by the court that in order to meet the interest accruing on said three hundred and ninety bonds, as the same become due, and to create a sinking fund for the payment of the principal thereof, as said bonds become due and payable, there is hereby levied and assessed an annual tax of twenty-five cents on each one hundred dollars assessed valuation of all the taxable property of said county."

At its May term, 1920, the county court levied a tax of fifty cents on the $ 100 valuation on all taxable property in the county to pay the interest on the funding bonds and create a sinking fund for their redemption at maturity. At that time there were $ 76,000 of the bonds outstanding, of which $ 30,000 had been called for payment. There was then a balance in the county treasury from previous levies belonging to the bonded-debt fund the sum of $ 23,686.17. The total assessed valuation on which the levy was made was $ 18,238,111. The total tax levied was therefore $ 91,190.55. The tax against defendant's railroad property under the levy was $ 2,306.41. Of this defendant paid, December 29, 1920, the sum of $ 1,522.23, which would have been the amount of the tax had it been levied at the rate of thirty-three cents on the $ 100 valuation. This suit is to recover the balance with interest and costs.

At the trial, in 1923, the defendant showed from the county records that the proceeds of the 1920 levy, together with the balance on hand at the time the levy was made, greatly exceeded the amount required to retire the outstanding bonds; that all of these bonds were either paid on presentation, or bought by the county on the open market, prior to August 1, 1922, at which time there remained in the bond fund a balance of approximately $ 39,000, which was turned over to the county's general revenue fund.

Plaintiff offered to show that at the time the levy was made the bank which was the county depository, and with which the bonded debt fund had been deposited, had been closed and was in the hands of a receiver; that the conditions of the bank were such as to then indicate that its assets would not pay upon final liquidation as much as twenty-five cents on the dollar; and that the solvency of the sureties on the bond given by the bank to secure the county's funds was, or at that time appeared to be, wholly destroyed by the bank's failure. All of the evidence so proffered was rejected by the trial court, on defendant's objection.

The defenses pleaded and pressed in argument and brief are essentially these: (1) fifty cents on the $ 100 valuation, in addition to other county taxes which were levied, exceeded the maximum rate for county purposes as fixed by the Constitution; (2) the order of the county court, made at the time of their issuance, fixed the rate at which taxes were to be levied for the payment of the annual interest on the bonds and the creation of a sinking fund for their redemption when due; and (3) the levy was grossly excessive, and therefore violative of designated provisions of both State and Federal Constitutions.

From a judgment for defendant in the circuit court plaintiff prosecutes this appeal.

I. The Constitution contains no express limitation on the amount of taxes which may be levied annually to pay such a bonded indebtedness as was owing by Cass County in 1920. Section 11 Article X, in terms excepts from its operation taxes to pay valid indebtedness existing at the time of the adoption of the Constitution, or bonds which might thereafter be issued in renewal of such indebtedness. The funding of such an indebtedness and the levying and collecting of taxes to pay the bonds issued pursuant thereto, are governed exclusively by Article IV, Chapter 8, Revised Statutes 1919. Section 1042 of that article provides that no such funding bonds shall be payable "in less than five nor more than thirty years from the date thereof." And Section 1045 commands that any county issuing such bonds, "shall, at the time of issuing the same, provide in the express manner provided by law for the levy and collection of an annual tax sufficient to pay the annual interest on such funding bonds as it falls due, and a sufficient sinking fund for the payment of the principal of such...