Western Machinery Exchange v. Grays Harbor County

• Decision Date: 25 May 1937
• Docket Number: 26545.
• Citation: 68 P.2d 613,190 Wash. 447
• Parties: WESTERN MACHINERY EXCHANGE v. GRAYS HARBOR COUNTY et al.
• Court: Washington Supreme Court

68 P.2d 613

190 Wash. 447

WESTERN MACHINERY EXCHANGE v. GRAYS HARBOR COUNTY et al.

No. 26545.

Supreme Court of Washington, En Banc.

May 25, 1937

Appeal from Superior Court, Grays Harbor County; Wm. E. Campbell Judge.

Action by the Western Machinery Exchange, a corporation, against Grays Harbor County and another. From a judgment of dismissal, plaintiff appeals.

Affirmed.

Karl R. Bendetson, of Aberdeen, for appellant.

Paul O Manley, of Montesano, G. W. Hamilton, Atty. Gen., and W. A Toner, Asst. Atty. Gen., for respondents.

BEALS Justice.

Plaintiff Western Machinery Exchange, a corporation, being the owner of certain personal property in Grays Harbor county, against which property the county treasurer was seeking to foreclose a tax lien by the statutory process of distraint, instituted this action for the purpose of procuring a reduction in the amount of the tax and a decree requiring the county and its treasurer to accept a reduced amount in full of the unpaid taxes for the years 1930 to 1936, inclusive; plaintiff also asking for an injunction restraining the county treasurer from proceeding to sell the property during the pendency of the action. In its complaint, plaintiff alleged that the personal property referred to therein was subject to taxes for the years 1930 to 1935, inclusive, in the sum of $8,249.44, and had been assessed for the year 1936 in the sum of $582.09; that the taxes so alleged were arbitrary, illegal, fraudulent, and excessive, because based upon a valuation grossly in excess of the fair true market value of the property, and also in excess of the valuation thereof for purposes of taxation, as compared with like property similarly situated; that the taxing agencies of the county had valued the property referred to at twice the amount at which they should have valued it for taxation purposes.

A temporary restraining order was issued, and the defendants required to show cause why the same should not be made permanent. The defendants demurred to the complaint upon the grounds that the court had no jurisdiction; that several causes of action were improperly united; that the complaint failed to state facts sufficient to constitute a cause of action; and that the action had not been commenced within the time limited by law. Plaintiff's complaint was amended by adding thereto allegations to the effect that, unless the sale under the distress instituted by the county treasurer should be restrained, plaintiff would have no opportunity to assert in the tax foreclosure proceeding the facts pleaded in its complaint. After argument, the superior court entered an order sustaining the demurrer, and, plaintiff having elected to stand on its complaint, judgment was entered dismissing the action, from which plaintiff has appealed.

Section 1, c. 62, Laws of 1931 (page 201), entitled 'Actions to Recover Illegal Taxes,' provides that neither the collection of a tax nor the sale of property for nonpayment of any tax shall be restrained, except:

'(1) Where the law under which the tax is imposed is void; and

'(2) Where the property upon which the tax is imposed is exempt from taxation.'

By section 2 of the act, it is provided that, if a tax be deemed unlawful or excessive, the owner of the property taxed may pay the same under written protest, and then bring an action to recover the tax or any portion thereof which may be held illegal.

Section 7 of the act (page 204) reads as follows: 'Except as permitted by this act, no action shall ever be brought attacking the validity of any tax, or any portion of any tax: Provided, however, That this section shall not be construed as depriving the defendants in any tax foreclosure proceeding of any valid defense allowed by law to the tax sought to be foreclosed therein.'

Appellant relies upon the section last quoted, and in the first place contends that, as in a proceeding by way of distress instituted by the county treasurer for the enforcement of a tax lien against personal property no formal court proceeding is instituted, appellant in the case at bar, suing the county and its treasurer to enjoin the collection of an alleged illegal tax, occupies in law and in fact the position of defendant, within the purview of section 7, supra. In this connection, appellant cites the opinion of this court in the case of Elder v. Massachusetts Mortgage Co., 159 Wash. 450, 293 P. 711, 85 A.L.R. 638, in which it was held that a mortgagor who as plaintiff removed to the superior court a chattel mortgage foreclosure commenced against him by notice and sale, occupied in the superior court, although nominally plaintiff in the proceeding, the position of a defendant resisting an attempted foreclosure of the mortgage. As the summary tax foreclosure by way of distress which may be initiated by a county treasurer for the purpose of enforcing payment of a tax against personal property is not a proceeding in court, and affords the owner of the property no lawful method of resisting the same, save by the institution of an action Before the superior court, we assume for the purposes of this case, without deciding, that appellant's argument is well taken, and that in the case at bar appellant occupies in fact and in law the position of a defendant in a tax foreclosure proceeding, and, if his complaint states a valid defense to the tax foreclosure, the court could enjoin the county treasurer from proceeding to summarily sell the property until the merits of the action could be determined.

Appellant argues that the proviso in section 7, supra, preserves to a defendant in any tax foreclosure proceeding the right to urge that the tax sought to be foreclosed is based upon a valuation so excessive as to constitute a fraud against the taxpayer, and that such a defense must be held to be a 'valid defense allowed by law,' within the scope of the proviso. It is doubtless true, as argued by appellant, that for many years a tax, if based upon a valuation so excessive as to amount to fraud in law, was subject to reduction at the suit of the owner of the property, and that this defense could also be urged in a proceeding instituted by the county for the foreclosure of the tax. Whatcom County v. Fairhaven Land Co., 7 Wash. 101, 34 P. 563; Benn v. Chehalis County, 11 Wash. 134, 39 P. 365; Pacific County ex rel. Lockwood v. Ellis, 12 Wash. 108, 40 P. 632; Olympia v. Stevens, 15 Wash. 601, 47 P. 11; Solberg v. Baldwin, 46 Wash. 196, 89 P. 561.

The intent of chapter 62, Laws 1931 (page 201), above referred to, is clear. The statute was enacted for the purpose of requiring prompt payment of taxes, and to prevent the bringing of equitable actions for the purpose of enjoining the collection of a tax against certain specified property. Section 2 of the act refers to the 'levy of taxes for public revenue which are deemed unlawful or excessive,' and provides that the property owner may pay any such tax under written protest, and sue for the recovery of the tax or any portion thereof. By section 6 of the act (page 204), it is provided that no action may be instituted for the recovery of any tax pursuant to the particular statute in question, or otherwise, unless the action shall be commenced prior to 'the 30th day of the next succeeding January following the date when said tax is payable.' This limitation section immediately precedes section 7, containing the proviso above quoted. The act, then, requires the owner of property which he deems excessively taxed to promptly pay the tax, if he desires to test its validity, and sue to recover the same or any part thereof.

In the case of Casco Co. v. Thurston County, 163 Wash. 666, 2 P.2d 677, 77 A.L.R. 622, this court, sitting en banc, unanimously held that the act of 1931 was not an encroachment upon the constitutional powers of the courts, and that as the legal remedy provided by the act was speedy and adequate, the taking away of the remedy by way of injunction was a valid exercise of legislative authority.

In the later case of Church v. Benton County, 186 Wash. 59, 56 P.2d 1010, it was held that the act of 1931 and chapter 10, Laws 1933, p. 130, providing for the settlement of actions brought for the reduction of property valuations, for the recovery of taxes paid under protest, and other similar purposes, should be construed together, and that the later act did not repeal the earlier.

Manifestly one of the major purposes of the act of 1931 was to prevent the bringing of actions attacking a tax as excessive without first paying the tax, and to forbid the issuance of injunctions in such actions preventing the enforcement of the tax as levied. If it be held that section 7 of the act, supra, permits the owner of the property to interpose a defense in a proceeding for the...