Whaley v. Commonwealth

Opinion of the court by

JUDGE O’REAR.

Under provisions of the 'Statute permitting counties to acquire turnpike and gravel roads within their limits either by donation, purchase, or condemnation, the fiscal c.ourt of Nicholas county, on June 25, 1897, contracted with the Maysville & Lexington Turnpike-Road Company, purchasing the latter’s road within that county at the agreed price of $23,000. At the previous November election the question had been duly submitted to the voters of the county whether they were in favor of free turnpike a.nd gravel roads, resulting in a vote of 1,6165 for to 483 against the proposition, which was duly canvassed and certified. Other roads had been acquired by the county since the vote named, either by gift or purchase, aggregating about 150 miles. Prior to June, 1897, the fiscal court had levied a tax rate of 34 cents on the $100 for county purposes for that year, but no part of it for turnpikes or for their repair. On June 25, 1897, the fiscal court made an additional levy of 25 cents on the $100 for turnpike purposes. At the same time it contracted with the Carlisle & Sharpsburg Turnpike-Road Company to acquire its road at the price of $15,000. It is claimed, however, that the court had, by the purchase of the Maysville &■ Lexington road, exhausted the limit of indebtedness which it could incur for that year, under section 157 of the Constitution, and therefore the attempted contract with the Sharpsburg road was void. The order laying the 25-cent levy above named undertook to apply or apportion it among the roads of the county. Of this application, $2,500 was attempted to be set apart for the Carlisle & Sharpsburg Turnpike-Road Company in part payment of the consideration for its road. The 'sheriff, appellant S. A. Ratliff, undertook the collection of these taxes, and it is shown that he did collect them, — both levies. There was an issue as to the amount collected, but the appellant is not questioning the finding of the lower court in fixing the amount of the balance not before accounted for by him, which was $7,605.20. Appellee Aris Wiggins filed an action in the Nicholas Circuit Court in April, 1898, in the name of the Commonwealth of Kentucky for the' use of the said Aris Wiggins and all other taxpayers of Nicholas county, and by said Aris Wiggins on behalf of himself and all taxpayer^ of Nicholas county, in which he set out the- foregoing facts, substantially, adding that 'he was a citizen of Nicholas county, and owned the legal and equitable title to more than $10,000 worth of real and personal property therein, which had been assessed and was assessable for taxation therein, and that the sheriff, Ratliff had proceeded to collect and had collected from the 3,000 taxpayers of Nicholas county the above-named tax (the said 25-eent levy), amounting, it was alleged, to some1 $10,000; that the sheriff had collected it, and the taxpayers had paid it, under a mutual mistake of law and fact, each believing the levy was valid and that they' and their property were liable to pay it; that the sheriff had asserted the whole tax as a lien against theiir property, and would have distrained it hut for their payment. He brought the suit in equity on behalf of himself and the other 3,000 taxpayers of Nicholas county to recover the whole o'f the tax represented by the 25-cent levy, contending it was void. While this action was pending, appellant was< ruled by the Nicholas court to settle for the county levy' collected by him for the year 1897, and appointed a commissioner to make the settlement, who reported, charging the sheriff with the taxes on the total assessed valuation of the county, less exoneration and delinquents, at the rate of 59 cents on the $100. From this settlement the sheriff appealed to the circuit court* and the proceeding was consolidated with the suit of Wiggins, above named. The circuit court adjudged the excess above 50 cents levied by the Fiscal Court of Nicholas county to be in violation of section 157 O'f the Constitution, limiting the maximum tax. rate for any one year to 50 cejnts, and corrected the settlement to that extent, and in some other minor particulars, remanding it to the fiscal court. That body adopted the judgment of the circuit court, and demanded of the sheriff the payment of the balance thus fixed, which he declined to- pay; and the fiscal court ordered suit instituted upon his bond, which was done, and that suit also consolidated with the Wiggins suit. When the court adjudged the 9 cents excess void, Wiggins, on behalf of himself and all other taxpayers of Nicholas county, instituted an action in the Nicholas Circuit Court against appellant Ratliff, sheriff,- ■and appellants H. Whaley, W. B. Ratliff and Waller Sharp as sureties on his official bond, to recover of them the tax illegally collected and withheld by the sheriff. This last-named suit was heard and adjudged, resulting in a judgment in favor of the plaintiffs, and the sheriff and his sureties have prosecuted this appeal. The sheriff has also prosecuted appeals from the judgment declaring only the 9 cents of the 25-cent levy void, and from the judgments of the circuit court requiring- him to pay to Nicholas county the balance found in his hands of the 16 cents that was held to be valid. His sureties have appealed from the judgments making them liable for any part of the tax collected. Wiggins prays a cross appeal because the whole of the 25-eent levy was not adjudged void-, Their cases have been ordered heard together, and are so determined.

Numerous questions of practice and matters of law are urged, many of them not sufficiently material, in our opinion, to wrarrant reversal if we should concur that they were indeed errors. Those questions of a more serious nature we will state and dispose of in their order: (1) The right of Wiggins to maintain this action. (2) Wheth- or the lower court adopted a correct method in directing its master commissioner to ascertain the names of all persons' who had paid taxes for the year 1897, and the amounts so paid by them, respectively, and that nine fifty-ninths of the sum so paid by each of them should be reported as the basis of a final distribution. (3) Was the 25-cent levy void in toto, or only the 9 cents in excess of the 50-cent limit? (4) Was the sheriff and the sureties of his official bond liable for these taxes so collected by him? (5) Was the money collected by the sheriff in excess of the constitutional limitation a liability embraced by the term® of his bond, for which his sureties were liable? .(6) Was the sheriff or hi®'sureties liable for such excess collected by a deputy of the sheriff, and not paid to the principal by the deputy? In addition to the above, appellee Wiggins raised these questions on his cross appeal: (7) Ho claims interest should have been allowed on' the judgment in favor of the taxpayers from May, 3898, when the sheriff’s answer was due, and when appellee ■contends he should have tendered, the money into court. (8) That the $2,500 appropriated to the Carlisle & Sharps-burg Turnpike Road Company was void, and the collection of any part of the 25-cent levy, oven within the 50-cent limit was void. (9) That the sheriff, being but a bailee, c-ould not in any event prosecute this appeal, because no substantial right of his is determined or affected. The court has» merely adjudged which of two contending claimants is entitled to the fund which he holds for the rightful claimant.

1. In Blair v. Turnpike Co., 67 Ky., 157, this court held that a sheriff holds the money collected by illegal taxation on a void subscription to turnpikes as a trust fund for the benefit of taxpayers who contribute that fund. Section 25 of the Civil Code of Practice provides: ‘‘If the question involve a common or general interest of many persons, or if the parties- be numerous and it is impracticable to bring all of them before the court within a reasonable time, one or more may sue or defend for the benefit of all.” Before the adoption of the Code in Kentucky a similar practice was indulged as a part of equity jurisprudence, and in line with like practice in other jurisdictions where the common law prevailed. To prevent a multiplicity of suits where one might settle the question at issue and grant complete relief to all interested, courts of equity have long entertained a suit at the instance of one or more of the class affected, suing for all. At one time it wa.s thought, and to some extent it was held, that the rule above noted did not embrace actions by a taxpayer to restrain the collection of or to recover illegal taxes imposed. The reason urged was that there was not a common title, or such Identity of interests as so connected the interest of one with all the others as to bring them within the rule; it being argued that each taxpayer’s cause of action was complete in itself, and could he maintained or defended without reference to the presence of other taxpayers, and that frequently, and indeed generally, separate defenses would be required to the claim of each, and in event of a judgment in their favor separate recoveries must be adjudged them. The modern tendency ha® been, though, to extend the rule, codified in the language-of section 25, supra, so as to include the class of cases to which this one belongs. Prom the authorities, and from the weight of the best reasoning defining tie principle governing this practice, we find that, where the individual taxpayer may maintain an action at law to recover back the illegal tax which he has paid, all the reasons for exercising the jurisdiction io prevent a multiplicity of suits 'apply. Although each taxpayer has a remedy by action at law, it is manifestly inadequate and imperfect, and often nominal. By means of the equitable jurisdiction the whole controversy and the rights of each individual taxpayer can be fully determined in one judicial proceeding by one judicial decree. Such questions involve, we may say, public or community rights; and a practical, speedy, expedient, and, so far as may be possible, inexpensive, method should be provided for their settlement. This we think was fairly within the contemplated meaning of section 25, supra. These conclusions, we think, are fully sustained by Pom. Eq. Jur., section 270; Cooley, Tax’n, p. 769; Road Co. v. Thomas (Ky.) 3 S. W., 907; and Com. v. Tilton (Ky.) 54 S. W., 11.

2. It follows from the foregoing that the circuit court proceeded properly in having its master commissioner ascertain the names of all persons in the county who had paid any part of ;the tax in question, and to report what part decided to have been illegally assessed' and collected each one .paid, as the basis of a final decree in the action. The tax boobs in the possession of the sheriff being public records (section 4138, Kentucky Statutes), it was proper that the commissioner should have recourse to them, as the most accessible and best evidence of the amounts assessed to and paid by each person. The objection that these books were not filed in this record is not well taken, because by law they are required to remain among the records of the sheriff’s office. If any item of the commissioner’s report is questioned, the sheriff was competent a® a witness to testify concerning the books, and certainly could not have been misled or injured by his having their custody, instead of the commissioner.

3. It is argued for the taxpayers that as the Constitution prohibits the levy of any tax rate in one year, in a county of which Nicholas is of a class, of more than 50 cents on the $100, the levy of 25 cents, when 34 cent® .had been previously levied, was void; that it being one sum, and not separable, the whole of that levy was void. The general rule on this subject is, if the legal tax or an illegal item embraced in the levy be separable from the remain der, that which is above the legal limit will be void, while that within will be upheld. Many eminent authorities may b.e cited to support this doctrine. In this State, in Levi v. City of Louisville, 97 Ky., 394, (30 S. W., 973), (28 L. R. A., 480), this principle was recognized in the following statement: “The legal part of this levy can be sep arated from the illegal, and the omission to assess cer tain personal estate in the proper mode will not render the entire ordinance inoperative. 1 Desty, Tax’n, 468.” Nicholas county having adopted the free-turnpike system, its fiscal court was authorized to levy as much as 25 cents on the $100 for road and bridge purposes each year, provided the- total levy for the year did not exceed 50 cents on the $100. That court was the .sole judge of the necessity .of the levy, and of the manner in which it should be applied upon its roads. If it went beyond the constitutional restriction, only that part that is without the court’s power is* contrary to the law. In Mix v. People, 72 Ill., 242, this principle is tersely discussed, the court saying in part: “It is also insisted that even if the levy was made, it being in excess of the per cent, allowed by the Constitution, the entire levy is void. The eighth section of article 9 provides that the ‘county authorities ■shall never assess taxes the aggregate of which shall exceed 75 cents per $100 valuation, except for the payment of indebtedness existing at the adoption of this Constitution, unless authorized by a vote of the people of the county.’ This) provision renders all this tax void which is in excess of the constitutional limit; but the books abound in cases which hold that, in the exercise of á power, any excessive . action beyond the power will not vitiate acts within the power, where the acts well performed can be separated from those that are not authorized. Here' there can be no question that 75 cents on the $100 valuation wa-s fully warranted, and that sum can be readily separated from the ■illegal and unauthorized sum levied in excess of that amount. It'requires but a simple calculation to mialce ■the separation with precision. In such oases this court has uniformly held that the tax levied within the limit of the power will be sustained when it can be separated from the portion that is illegal. O’Kane v. Treat, 25 Ill., 557; Briscoe v. Allison, 43 Ill., 291; State v. Allan, Id., 456; Allen v. Railroad Co., 44 Ill., 85; People v. Nichols, 49 Ill., 517. “It has beep so repeatedly held that an illegal levy of tax does not vitiate or affect the portion legally levied, when the two can be separated, that the question must be regarded as settled, and we must decline its further discussion. The court below did not, therefore, err in separating the legal portion of the levy for county purposes from the illegal, and in rendering judgment for the portion authorized by law.” This court, in Daviess Co. Ct. v. Howard, 13 Bush, 101, held that bonds issued iii excess of authority conferred by law were void to the extent of the excess only. That view, upon appeal to the United States Supreme Court, was affirmed. Daviess Co. v. Dickinson, 117 U. S., 657-665, (6 Sup. Ct., 897), (29 L. Ed., 1026). We are of opinion that the tax levy of June 25, 1897, was valid! to the extent of 16 cents, and void a® to the remaining 9 cents; that it was separable, because- only nine fifty-ninths of the total levy for that year being void, it was a matter of simple calculation to determine and eliminate the illegal part. This process is criticised because it is said a part of the 10 cents was appropriated to the payment of $2,500 to the Carlisle & Sharpsburg road, which it is alleged was void. Even if the appro> priation to the Carlisle A Sharpsburg road was void, but a small fraction of the ,50-cent levy would be involved in it; and as the fiscal court had the right to use the valid part of this 25-cent levy in payment of its road expenses, this- surplus might be so appropriated. In Field v. Stroube, 103 Ky., 114; 19 R., 1751 (44 S. W.,363), we held that, where a surplus remains after the object to be- obtained by a particular levy has been accomplished, such surplus might be appropriated by the county, even for general purposes, and that such appropriation was not prohibited by section 180 of the Constitution. Such a construction is necessary, because it is impossible to fix accurately a tax rate to meet exactly a liability. Exonerations, delinquencies, or miscalculation, decrease or increase of valuation by supervisors or boards of equalisation, and other unforeseen circumstances, will, in every probability, produce either a surplus or deficit of tax; and, if a surplus, to hold that it could never be used for any purpose, except that for wlhieh it was specifically levied, would tend to, in time, lay up a public fund entirely unavailable for any public purpose. A construction leading to such an absurd result will be repudiated as not having been within the contemplation of the framers of the Constitution.

4. The pleadings show that these actions' were based upon the sheriff’s official bond, required of him by section 4133, Kentucky Statutes. Tt is not stated that the sheriff executed the county-levy bond provided for in section 1884 of the statutes. The sureties in the official bond might have pleaded the fact of such execution, if it had been a fact, when the actions would have been upon the, last-named'bond. Lyons v.Breckinridge Co. Ct., 101 Ky., 715; 19 R., 951; 42 S. W., 748. But if the county-levy bond was not executed the actions might be upon the official bond. We so held in Howard v. Com., 105 Ky., 604; 20 R., 1411 (49 S. W., 466), followed in Pulaski Co. v. Watson, 106 Ky., 500; 21 R., 61 (50 S. W., 861), and Catron v. Com., 52 S. W., 929.

5. It follows from what has been said that the sureties upon the official bond of the sheriff were liable to Nicholas county for the 16 cents of the 25-cent levy made June 25, 1897. But, in our opinion, they were not liable to any one for the excess. Their liability is measured by the terms of their bond alone. They engage that their principal shall perform every act which the law required of him as .such official to perform, and that, if he fails to do tbfiit which he is required by law to do in the discharge of his official duties, they will answer for such default. Hawkins v. Com., 17 Ky., 146, was an action upon a sheriff’s bond, alleging .as breach of its covenants his failure to make or pay over to the plaintiff certain funds .represented by the attachments in the sheriff’s hands for distraint. It appeared that the writs of attachment were void. Said the court: “If, therefore, each of the attach-meats is void, it follows that neither of the assignments of breaches shows any breach of the condition of the sheriff’s official bond. Though received by the deputy, if void the attachments conferred no authority upon the deputy; and, of course, the plaintiff in the attachments can have no c-ause of complaint against the sheriff for the failure of the deputy to levy and return the attachments. Nor is the sheriff liable if, as alleged, the deputy received from the person against whom the attachment issued the amount thereof, and failed to pay the same to the plaintiff in the attachments; for, having received the money under void process, the deputy must be considered as holding it for the use of the plaintiff, in whose favor the process issued, not in his official capacity, but as a private individual; and it is to him, and not to the principal sheriff', the plaintiff must have recourse for indemnity.” Hammond v. Crawford, 72 Ky., 76, was an action upon the bond of a county school commissioner for money drawn from the treasury, by virtue of his office; for the school districts of his county, and not paid over. The money appears to have been drawn by the commissioner without the certificate required of him by law. Raid the court: “The certificate of the superintendent is required as a precautionary measure to protect the treasury from imposition. But the sureties of a commissioner are not responsible for money drawn from the treasury by him, unless it is drawn according to law; and, in an action against them as sureties, the petition should contain a statement of every fact necessary to show that the auditor had the authority to draw his warrant on the treasurer for the amount drawn by the commissioner.” Griffith v. Com., 73 Ky., 281, was an action on a sheriff’s bond, alleging as> a breach his failure to pay to the plaintiff certain fee bills listed with the sheriff by the plaintiff for collection, and which he had collected, but failed to pay over on demand. The' statute made it the duty of the sheriff to receive and oollect certain fee bills, which were' by law distrainable. The record failing to show that the fee bills in question could have been legally di-strained for the sureties were held not liable, the court using this expression: “The sheriff would be individually liable on his covenant to collect and account for the fee bills which he acknowledged he had received, but his sureties are not. They can only be made liable for money collected on writs and process which the law makes it his duty to take and collect.” In Greenwell v. Com., 78 Ky., 320, the railroad tax provided by law to be levied in certain districts of Nelson county for the year 1S7S had been omitted from the tax levy as fixed by the county court order. > The sheriff proceeded to collect and did collect it. Failing to pay it over, action was instituted against his sureties on his bond. In denying recovery of the sureties, this court said: “It is true that appellants voluntarily executed the bond as the sureties otf the sheriff, and by so doing made themselves liable for any of his official defalcations; but here they are proceeded against, not on account of the failure of the sheriff to do w,h:at the law required of him, but for failure to do what the law did not require or exact of him and his sureties*. . . . Before these sureties can be made liable for this 'tax, it must appear that the sheriff has failed to discharge some duty imposed on him by Ia.w with reference to its collection.” Dawson v. Lee, 83 Ky., 55, is to the effect that, where the sheriff collects an unconstitutional tax, no such liability attaches- therefor to his sureties, that if they pay it off, in supposed discharge of their liability on his bond, they could be subrogated to the rights of the State. The court held his bond not to cover such, supposed liability to the'State. In Osenton’s Adm’x v. Burnett, 19 R., 610, 41 S. W., 270, this court again and lately said: “The liability of the obligors- in an official bond is measured by its terms. . . . If the [tax] collector collected more than was sufficient for that purpose, or might have done so with a reasonable effort, he may be liable to the county; but not so with his sureties.” No act which is prohibited by the Constitution can ever become a duty. Every act, whether of the Legislature, of the judiciary, or of the executive branch of government, in violation of the terms of that instrument, is- void ab initio. It is the duty of an officer charged with the execution of an act to know whether it is within the Constitution, and, if he have doubts, to refrain from doing it, -says Judge Cooley in his Constitutional Limitations (page 88). The fiscal court being prohibited from levying the 9 cents in question, its action was void; and, of necessity, so was every other act thereafter of whomsoever attempting to enforce it. Consequently it was not the duty of the sheriff to collect it, and therefore- it is not covered by' the undertakings of his sureties in his bond.

6. Upon the authority of Hawkins v. Com., 17 Ky., 146, cited above, as well as because of the conclusions above set out, neither the sheriff nor his sureties were liable for that part of the unconstitutional tax collected by the deputy, Sparks, and not paid over to the sheriff'. That is a personal and individual liability of Sparks to the taxpayers.

7. Until the settlement was- completed, and the amount due by the sheriff was properly ascertained, interest should not have been charged; and the circuit court properly fixed the date in accordance with this view.

8. The question now recurs, was the contract made by-Nicholas county with the Carlisle & Sharpsburg road, herein before adverted to, beyond the constitutional limit of indebtedness allowed to be contracted by the county?It will be remembered that Nicholas county had bought other roads, costing- some $23,000, and this one of $15,000, making $38,000 for that year. The taxable property of Nicholas county was $3,938,544, and about 3,100 tithes for the year 1897. Section 157 of the Constitution provides as follows: “. . . No county, city, town, taxing district, or any other municipality shall be authorized or permitted to become indebted in any manner, or for any purpose, to an amount exceeding, in any year, the income and revenue provided for suoh year, without the assent of two-thirds of the voters thereof, voting at an election to be held for that purpose; and any indebtedness contracted in violation of this statute shall be void.” An other clause of the section fixes the maximum rate of taxes-to be levied by the county under the conditions admittedly existing in Nicholas county -at 50 cents on the $100. It will thus be seen that the revenues and income of' the county for that year-were not and could not have been sufficient to meet that indebtedness. The record discloses that the proposition had been regularly and legally submitted at the November election in 1896 whether the county should avail itself of the provisions of th-e free-turnpike statute; that is, whether the county would adopt the system of free turnpikes in the county, instead of the toll system then in vogue. The record also discloses that there were 'something over 150 miles of turnpike roads, in the county, most or all of them held and operated by-private ownership. It necessarily followed that to adopt the free-turnpibe system meant to buy or condemn many or all of these roads, and to do either involved the county’s assuming the corresponding financial liability represented by their fair value. A vote, therefore, in favor of the proposition necessarily was a vote in favor of incurring the necessary indebtedness to enable the county to carry into effect the voter’s will and mandate. And when 1,665 of the voters voting at the election called and held for that purpose voted in favor of the proposition, as against the 483 who opposed it, the requisite tw-o-thirds majority had fairly and sufficiently expressed themselves in favor of incurring the indebtedness. If the proposition submitted to the voter and printed on the ballot had been, “Are you in favor of free turnpikes, and of incurring for the county such debt as may be legally necessary to pay for the turnpikes now owned and operated in the county by private owners?” and if the majority voting in the affirmative had been as shown by this record, no one would have questioned that the result was a fulfillment of the constitutional requirement. The question submitted, “Are you in favor of free turnpikes and gravel roads ?” involved fairly and fully the question of necessary indebtedness to pay for them. No other means were possibly available, save the creation of a present indebted’ ness' to be met by future taxation. The court must indulge the presumption that the voters of Nicholas county both knew and intended the construction herein given the proposition. To deny it is to question in the first place their common understanding, as not knowing the necessary and legal results of their action; and in the next place it would be to question tbeir honesty or fair purpose to pay for the roads they were voting to acquire, and which by their votes they were authorizing and directing their fiscal representatives to acquire for their use and in their name. The views, apparently in conflict, with this opinion, expressed in Road Co. v. Wiggins (Ky.) 47 S. W., 434, iseem to have been in response to argument, and, because not necessarily involved in the record then under consideration, merely dicta, and not binding on this court.

9. The sheriff had such interest in the result of these litigations a® to entitle him to appeal from the judgments against him.

It follows that the judgments in favor of Nicholas county are each affirmed. The judgment in favor of the Commonwealth of Kentucky, for use of Ari® Wiggins and other taxpayers, against S. A. Ratliff, is reversed in so far as it' adjudges against Ratliff any part of the illegal tax collected by his deputy, Sparks, and not paid over to Ratliff, and affrmed in all other respects. The judgment in the case of Wiggins, for the use of the taxpayers, against Whaley and others, the sheriff’s sureties, is reversed. The judgment on the cross appeal of Wiggins for himself and othens is affirmed. In so far as these causes are reversed, they are remanded for proceedings consistent herewith.

Judges Guffy and Du Relie dissent from that part of the opinion holding the incurring of the obligation for the Carlisle & Sharpsburg road a legal liability against the county. Judges Guffy, DuRelle and Wlhite dissent from the views of the opinion holding the sureties not liable for that part of the tax collected by the sheriff and his deputy, held herein to have been in violation of the Constitution.

Petition for rehearing by both parties overruled.