Clark v. Maher , 34 Mont. 391 ( 1906 )

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

Between the first Monday in March, 1904, and the 1st of July following, the assessor of Silver Bow county required from W. A. Clark & Brother, copartners engaged in business as private bankers, in Silver Bow county, a statement showing all their real and personal property subject to taxes for that year. They returned the list of property which showed real estate of the value of $127,610, which valuation was subsequently raised by the board of equalization to $132,610, and personal property listed substantially as follows:

Moneys on hand or in transit, $403,869.27;

Due from other banks, bankers, etc., subject to draft, $1,203,059.47;

Bills and accounts receivable and other credits, $1,657,533.52;

Deposits made by other persons, $3,686,397.89.

They asked that the amount of debts (deposits) be deducted from the aggregate amount of moneys and credits, including money due from other banks, bankers, etc., and stated that the list was furnished pursuant to section 3695 of the Political Code. On July 9th following, Clark & Brother received from the assessor a copy of the list so furnished by them, with a statement by the assessor attached thereto, that under the law the only deductions which could be made from bills and accounts receivable are accounts payable other than current deposits, and, as no such accounts had been returned, he, the assessor, had assessed to them the amount of bills and accounts receivable, $1,657,550, less the value of real estate returned, $127,610, leaving the net value of personal property assessed to them, $1,529,940. Application was made to the board of equalization for relief, which was denied.

The taxes levied upon the real estate were paid before November 30, 1904; but the taxes levied upon the solvent credits, $1,529,940, were not paid, and, on December 19, 1904, the county treasurer published the delinquent tax list, including therein this item: “Clark, W. A. & Bro., Bankers — North 2214 feet, lot 1, block 29, Butte Townsite, sold for taxes on solvent credits, including deposits in bank, $27,937.20.” To this delinquent tax list was attached the usual notice by the treasurer that, unless the taxes were paid, the real estate upon which such taxes were a lien would be sold to satisfy the same on January 9, 1905. Prior to the last date this action was commenced.

An amended complaint was filed setting forth the facts herein mentioned and asking that the county treasurer be restrained from selling the real estate mentioned above. To this amended complaint the defendant county treasurer interposed a general demurrer, which was sustained by the court, and, the plaintiffs having elected to stand on their amended complaint, judgment was entered in favor of the defendant, from which judgment the plaintiffs appealed.

Apparently W. A. Clark & Brother, in returning their list to the assessor, proceeded upon the theory that they could deduct their debts from moneys on hand under those provisions of subdivision 8, section 3695, above, allowing such deduction to be made, and the remainder of their debts they could deduct from their solvent credits under the provisions of section 3701 of the same Code, and thereby eliminate for the purpose of assessment all their personal property. The assessor and board of equalization apparently proceeded upon the theory that those provisions of subdivision 8, section 3695 above, only, were applicable to appellants’ case, and, therefore, their solvent credits were liable for taxation without allowing any deduction for debts due by them. In this court, however, appellants practically concede that the provisions of section 3701 only are applicable to this case.

This action was commenced prior to the enactment of the amendment to section 3695. (Session Laws 1905, p. 54, Chap. XXY.) It is to be observed that there is a direct conflict between the provisions of section 3701, above, and that portion of subdivision 8 of section 3695, which provides for a deduction of debts (deposits) from money on hand and in transit, and which further provides that only deposits other than current deposits may be deducted from bills and accounts receivable and other credits. Section 3701 authorizes any taxpayer to deduct or have deducted from his credits all debts then owing by him; but this section does not authorize the deduction of debts from money on hand, and, if it attempted to do so, would clearly violate the provisions of the Constitution.

In Daly Bank & Trust Co. v. Board of Commissioners, 33 Mont. 101, 81 Pac. 950, this court held that the provisions of section 3701 are general and applicable alike to all taxpayers, whether natural persons or corporations, and we see no reason for receding from that position now. This being so, and the provisions of section 3701 conflicting directly with those of subdivision 8 of section 3695 above, the provisions of section 3701 prevail, for there is not anything in such.a construction inconsistent with the meaning of.the Chapter in which both sections are found. This is the rule of construction provided by section 5165 of the Political Code which reads: “If conflicting provisions are found in different sections of the same chapter or article, the provisions of the section last in numerical order must prevail, unless such construction is inconsistent with the meaning of such Chapter or Article.”

Furthermore, the attempt of the legislature to authorize private bankers to deduct their debts from moneys on hand is abortive. That portion of subdivision 8 of section 3695 above referred to is in direct contravention of sections 11 and 16, Article XII, of the Constitution of Montana.

These appellants, having made timely demand, were entitled to have their debts deducted from their credits (Daly Bank & Trust Co. v. Board of Commissioners, above), and this notwithstanding they mistakenly thought they could also deduct such debts from moneys on hand. The assessor could not have been misled by any statement of appellants attached to their list of property, respecting the particular provisions of the Code under which they assumed that their assessment would be made. The assessor’s duty was to make the assessment according to law, not according to what appellants may have thought the law was or ought to be.

But it is said that, adding together the amounts of the moneys on hand and in transit and the amounts due from other banks, bankers, etc., practically the same amount (though larger) is obtained as that upon which the assessment was made; and, as appellants did not pay the taxes on the greater amount they cannot complain that they are required to pay on the lesser amount. But such an argument, while it may have some foundation in morals, has none in law. In the first place, moneys due from other banks and bankers are credits within the definition of that term as given by section *3680 of the Political Code. In the second place, to say that, because one species of property which a man does own is not assessed, he may be made to pay taxes on property which he does not own, or on property which he does own but which is not liable for taxation, violates almost every principle of the law of taxation.

According to the return made to the assessor by these appellants, their property liable to taxation consisted of their real estate, and of moneys on hand and in transit, amounting to $403,869.27. The appellants could not assess their own property. They were only called upon to furnish a list of the items. It was the duty of the assessor to make the assessment, and, if he failed to do so in a proper manner, these appellants cannot be held to be to blame.

Appellants having paid the taxes levied upon their real estate directly, such real estate could only be sold to satisfy the lien of a tax levied upon their personal property, and such a lien could only be created by a valid tax. As an indispensable prerequisite to a valid tax there must have been a valid assessment of such personal property. (Northern Pac. R. R. Co. v. Carland, 5 Mont. at p. 171, 3 Pac. 146; Board of Commissioners v. Anderson, 68 Fed. 341, 15 C. C. A. 471 (Montana case); Worthington v. Whitman, 67 Iowa, 190, 25 N. W. 124; People v. Hastings, 29 Cal. 450; 27 Ency. of Law, 2d ed., 660.) At least two steps are necessary to be taken to make a valid assessment: First, listing the.persons and property; and, second, estimating and fixing the value of the property. (State ex rel. Butte v. Johnson, 16 Mont. 570, 41 Pac. 706; People v. Weaver, 100 U. S. at p. 545, 25 L. Ed. 705.) And this assessment must be made by the proper officers, and cannot be made by the court. (Danforth v. Livingston, 23 Mont. 558, 59 Pac. 916; State Railroad Tax Cases, 92 U. S. 575, 23 L. Ed. 663; Hulbert v. People, 189 Ill. 114, 59 N. E. 567; Monroe v. Town of New Canaan, 43 Conn. 309; 2 Cooley on Taxation, 912.)

The cash on hand belonging to these appellants and which was liable for taxation was not assessed at all; on the contrary, this amount was completely wiped out by deducting debts of an equal amount from it, while appellants were assessed with $1,529,940, represented by solvent credits. But from the amount of these credits appellants were entitled to have deducted their just debts represented by the current deposits; and had this deduction been made there would not have been anything left of their credits subject to taxation.

The fact that appellants had more than $400,000 worth of property liable to taxation and with which they ought to have been assessed, but were not, does not justify the imposition of taxes upon $1,500,000 of property which they had, but which was not liable to taxation under the circumstances presented by this case.

Some contention is made that appellants are not entitled to an injunction upon the showing made in their amended complaint. The maxim, “He who seeks equity must do equity,” is quoted by respondents. It is said to be applicable here for the reason that appellants have not paid or offered to pay the taxes upon the $403,869.27, moneys on hand and in transit. But, as we have said before, this amount was not assessed to them, and, an assessment being necessary to a tax, there were not any taxes due from appellants on that property, and, therefore, nothing for them to pay or tender. And they cannot be charged with being remiss in failing to pay or tender an amount not due or payable at the time this action was commenced.

The tax levied upon the amount of credits without any deduction having been allowed for debts was void, and, under the authority of Montana Ore Pur. Co. v. Maher, 32 Mont. 480, 81 Pac. 13, and Hensley v. City of Butte, 33 Mont. 206, 83 Pac. 481, injunction was a remedy available to these appellants.

Under the view we have taken it is not necessary to consider the question whether the delinquent tax list, in so far as it applied to property of these appellants, was sufficiently explicit to warrant the sale contemplated if no other objection had been made. The complaint states facts sufficient to constitute a cause of action in favor of appellants.

The judgment is reversed, and the cause is remanded to the district court, with directions to overrule the demurrer.

Reversed and remanded.

Mr. Chief Justice Brantly and Mr. Justice Milburn concur.