Gully v. Adams County

On account of the importance of this case, I deem it proper to set forth my view of the facts and law of the case as disclosed by this record.

On January 11, 1932, J.B. Gully, state tax collector, for the use and benefit of the city of Natchez, Mississippi, exhibited his bill in the chancery court of Adams county against said county. A demurrer to the original bill was sustained and an amended bill was filed, to which the court below again sustained a demurrer, and the complainant in the court below, the appellant here, declining to amend further, the original bill as amended was dismissed, and the state tax collector prosecutes an appeal here.

The original bill was filed by W.J. Miller, who was then the state tax collector. Afterwards J.B. Gully succeeded him and continued the prosecution of the suit.

After alleging the power of the state tax collector to bring suit for past due obligations, especially with reference to municipalities, the appellant alleged that he caused an examination of the records of the city of Natchez and the county of Adams, and ascertained therefrom that during the years 1927, 1928, 1929, and 1930, there had been collected by the county of Adams ad valorem taxes for road purposes, on property within the city of Natchez, amounting to various sums of money of which the city of Natchez was entitled to one-half but which it had never received; and that he, as state tax collector, was authorized by the law to demand on behalf of the city of Natchez one-half of said ad valorem taxes. An account addressed to the board of supervisors of Adams county demanding one-half of the ad valorem road taxes collected on the property for the several named years, with the amount collected and the city's share thereof, was attached to the bill of complaint as an exhibit, and it was alleged that said account had been presented to the board of supervisors of said county and had been rejected, and that the state tax collector demanded payment thereof on behalf of the city of Natchez. There was further attached to the bill as an exhibit a resolution of the mayor and board of aldermen of the city of Natchez, passed May 5, 1920, in which it was recited that the said city desired to preserve for itself the benefit of an act of the Legislature, approved April 3, 1920, being chapter 232 of the Laws thereof, claiming thereunder its share of all levies and collections made by the county of Adams for road purposes, and the clerk of the municipal board was directed to forthwith make and file a copy of the resolution with the board of supervisors.

The bill alleged that the city of Natchez was a municipality, the streets of which were worked at the expense of the municipal treasury by its authority, and alleged that for the several years there had been collected annually on the property within the city of Natchez certain amounts for road purposes; that prior to the enactment of chapter 232 of the Laws of 1920, the county of Adams had levied a tax for road purposes, but after said enactment the board of supervisors had levied annually, for the years named, by including in the levy of taxes made for the general funds of said county a sufficient levy to maintain the roads of said county, and had periodically, after the collection of such taxes, under such levy, allocated or transferred from the general fund to the county highway fund sufficient money for the maintenance of the county roads, and passed the diverted fund to the credit of the county highway systematically for the years for which suit is brought herein. It was alleged that prior to the annual levy of taxes the board of supervisors published in its budget, as required by the statute, the amount of money which would be devoted to the maintenance of the public roads of the county, and that sums were so allocated by the board of supervisors, after the collection of the taxes for the several years, and that the county of Adams had resorted to the subterfuge and administrative devices of including its road maintenance levy in the general fund levy for the collection of taxes for the maintenance of its highways, and that this practice was pursued during the years 1927, 1928, 1929, and 1930; and that no part of same was levied for the purpose of paying bonds issued for road purposes or the interest thereon, or for creating a sinking fund for retiring same. It alleged further that the resolution passed by the city of Natchez in this behalf was on the same day served on the board of supervisors of Adams county, as shown by an entry on the minutes of said board of supervisors. The exhibit disclosed that, for the years 1927 and 1928, the board of supervisors transferred, as alleged in the declaration, for road purposes, thirty-one thousand dollars; for the years 1928 and 1929, sixteen thousand dollars; for the years 1929 and 1930, twenty-five thousand dollars; for the years 1930 and 1931, thirty-three thousand seven hundred dollars, making a total transfer of one hundred five thousand eight hundred dollars; and that for these respective years, the city of Natchez' one-half share thereof was: ten thousand six hundred forty-five dollars and forty cents, five thousand five hundred thirty dollars and thirty-four cents, eight thousand five hundred eighty-seven dollars and fifty cents, eleven thousand six hundred thirty-six dollars and fifty-six cents, making a total alleged to be due the city of Natchez of thirty-six thousand three hundred eighty-nine dollars and eighty cents.

I shall take up and consider the several points argued as ground for upholding the action of the court below in sustaining the demurrer to the bill.

1. The right of the state tax collector to prosecute this suit is upheld in Gully, State Tax Collector, v. Copiah County (Miss.), 147 So. 300.

2. It is contended by Adams county that its system of levying the taxes as a part of the general fund of the county, and afterwards allocating a portion thereof to the county highway fund, was not an administrative device or subterfuge, and that the taxes so levied were not subject to the claim of the city of Natchez on account of chapter 232 of the Laws of 1920 and amendments thereto.

The applicable statutes under which the state tax collector claims that Adams county is in default of money due the municipality are chapter 232, Laws of 1920, chapter 129, Laws of 1928, and sections 6417 and 6418 of the Code of 1930. By chapter 232 of the Laws of 1920, it is provided that "one-half of all ad valorem taxes collected by or for a county . . . on property within a municipality, the streets of which are worked at the expense of the municipal treasury, or worked by municipal authority, for road purposes of such county . . . shall be paid over to the treasurer of such municipality for said municipality." (Section 1.) Section 2 provides further: "Any municipality desiring to preserve for itself the benefits of this act shall by resolution notify the board of supervisors that such municipality will claim its one-half of all road taxes collected therein, and thereafter such municipality shall be entitled to all the benefits of this act."

It will be noted that prior to the enactment of chapter 232 of the Laws of 1920 the county had been collecting taxes for road purposes as such, and after the enactment of this law it no longer levied taxes for road purposes, but published in its budget that it would expend moneys for road purposes, and thereafter levied taxes for that purpose as a part of the general county fund and allocated and devoted same to that purpose.

In the case of Town of Purvis v. Lamar County, 161 Miss. 454,137 So. 323, we held that statutes, evidencing fixed and long-continued, consistent legislative policy and intent, must not be so construed as to permit inferior administrative boards to resort to administrative devices operating to set aside such intent; and further that this court did not arm the board of supervisors with an administrative device by which it could evade or set aside the entire purpose and policy of the law in respect to the share of the towns in the current ad valorem road taxes. The court further held that the question of whether the county was acting within or without the authority of law in borrowing money and issuing its note therefor for road maintenance purposes, which the tax therein was levied to pay, did not avail the county in that suit. The Town of Purvis case was followed and approved by the case of Gully, State Tax Collector, v. Attala County, 165 Miss. 86, 145 So. 907, and the same rule was again announced.

The board of supervisors of Adams county had the power to levy an ad valorem tax for road purposes, and it could not by administrative devices of shifting its funds from one account to another escape its liability for that portion thereof which belonged, under chapter 232 of the Laws of 1920 and all the subsequent amendments thereto, to the city of Natchez. The board of supervisors had the power to levy the tax, and the fact that it did not pursue the proper method in making its levy cannot now be used as a defense to defeat the claim of the municipality thereto. In the case at bar the county resorted to an administrative device condemned in the Town of Purvis case.

It is said that the Town of Purvis case does not apply here, because the money was illegally collected and transferred from the general fund to the county highway fund. The board of supervisors gave notice herein, by its county budget, that it would expend these large sums for the maintenance of the county highways, and then resorted to the device of putting the sums required by it for general county purposes and highway purposes into one levy, making one tax of so many mills. Thus, for instance, as an illustration, if the figures show that, if needed, a three-mill tax was required by it for general purposes of the county and a two-mill tax for road purposes, the board of supervisors resorted to the device, when it made its levy each year, of combining the two taxes and levying a total of five mills for general county purposes. I do not for a moment contend that this was a legal device, but I do say that the county budget, together with the immense amount of money amassed by the board in the treasury, shows that it was an administrative device, and that it is of no consequence whether the device was legal or illegal. In the case of the Town of Purvis, supra, the board of supervisors resorted to the plan of working its public roads and proceeded so to do on credit, issuing short-term loan warrants, and thereafter levied a tax to pay these loan warrants which it had illegally issued and which debt it had illegally contracted, resorting to the device of using short-term loan warrants and levying a tax to pay the loan warrants issued in lieu of bonds. A tax was not levied for road purposes to be thereafter expended, but one levied to pay a debt which had been illegally contracted; and this the board had no power to do. In that case we held that the municipality's share of the money must be paid to it whether the taxes were legally collected or not. To hold otherwise would destroy all the efforts of the Legislature to confer the absolute right upon municipalities to one-half of the money collected within its borders for road purposes. And this is a clear case for the application of the rule announced in the case of Town of Purvis, supra.

So far as the bill in this case shows, Adams county has this money on hand in excess of one hundred thousand dollars, and the only defense interposed for it in one of the other opinions is that the money was illegally obtained by it from the taxpayers of the city of Natchez. It is clear that it levied and collected sums herein set forth in excess of the amount needed for other than road purposes. It is clear that it notified all taxpayers by the county budget, which it published in advance of the levy, that it would collect money for road purposes. This it did not do directly, but undertook to do by an administrative device; and to plead its own fraud as its only defense should not be allowed. It is but a kindness to the board of supervisors of Adams county now to hold the county liable to the city of Natchez for the money collected from its taxpayers for road purposes. The allegation is clear that it was for no other purpose.

By section 3972, Code 1930, the clerk of the board of supervisors is required to have his books contain accounts under headings corresponding with the several headings of the budget, and not to correspond with the subsequent levy of the board. It therefore appears that the budget law was complied with, at least the contrary is not shown.

3. The contention is made that the resolution adopted in 1920 by the governing authorities of the city of Natchez does not extend to or include the years for which this suit is brought. It will be noted that chapter 232 of the Laws of 1920 requires action by resolution of the mayor and board of aldermen and stipulates that thereafter the municipality shall be entitled to its share of the road money collected within its borders. The resolution passed is very full and complete and leaves no room for doubt that it did not, in terms, undertake to limit the time within which the municipality could make claim to the money. The municipality had the right to pass the broad general resolution, and, so long as it remained unrepealed, it was effective to comply with the statute just so long as the Legislature authorized the municipality to receive one-half of the funds collected for road purposes by the county. It was not necessary for the city of Natchez to pass the resolution periodically or annually. There cannot be applied to it any statute of limitations or laches, as held by this court in the case of Town of Crenshaw v. Panola County, 115 Miss. 891, 76 So. 741, wherein it was expressly held that section 104 of the Constitution of 1890 provides that the statute of limitation shall not run against a municipal corporation — that the Constitution closes the door when the plaintiff is a municipal corporation.

4. It is insisted that the statute was repealed by chapter 227, Laws of 1926, as announced in the case of Board of Sup'rs of Lauderdale County v. City of Meridian, 149 Miss. 139,114 So. 803. In that case we expressly held that chapter 227, Laws of 1926, only repealed chapter 232 of the Laws of 1920 to the extent that levies for specified improved roads were no longer within the purview of the latter act. The statement does appear in the case of J.B. Gully, State Tax Collector, v. Board of Supervisors of Copiah County (Miss.), 147 So. 300, 301, that the entire statute enacted in 1920 was repealed, and cites the Meridian case. This was error and the balance of the opinion clearly indicates that the court did not intend to modify or overrule the Meridian case, but rather cited it with approval.

5. It is next urged that under the authority of sections 6417 and 6418 of the Code of 1930, effective November 1st of that year, it was necessary for the governing authorities of the city of Natchez to again make demand or application to the board of supervisors of Adams county in order to maintain this suit. Section 6417 requires the board of supervisors of a county to pay to a municipality, such as Natchez, one-half of all the money collected for road purposes as therein described; and section 6418 is in this language:

"Where any municipality may be entitled to a portion of any road tax under the laws in effect prior to the adoption of this code which has not yet been paid to it, such municipality shall be entitled to receive payment thereof on application to the board of supervisors of the county in which it is located, and the board of supervisors is hereby authorized to pay to such municipality its portion of such tax."

By this section all the rights of the municipality, as existed under prior acts, to one-half of the road funds here involved, as construed by this court in prior decisions, were preserved to the municipality. In the case at bar the state tax collector, who was entitled and empowered to sue, made demand, and the board of supervisors rejected the claim and is now litigating the case. We are of the opinion that the state tax collector on behalf of the city of Natchez fully made application for the payment of this claim, and that the application on the part of the municipal authorities, contemplated by section 6418, would only involve a matter of costs and is not a condition precedent to the liability of the county, as is the case with reference to the resolution of the governing authorities of a municipality, required by chapter 232 of the Laws of 1920.

Having reached the conclusion that on May 5, 1920, the municipal authorities complied by resolution with the demand feature of chapter 232, Laws of 1920, it would seem, and we so hold, that the formal demand of the state tax collector fully complied with the requirement of section 6418, Code of 1930. After the 1920 notice, the municipality acquired a continuing right to its share of the road money, so long as its resolution and the statute upon which same was predicated remained in force. It is not to be controverted that the municipal authorities cannot give away its public tax money. See Files v. McWilliams,49 Miss. 578; Klein v. Board, 51 Miss. 878.

6. It is insisted that by virtue of chapter 129, Laws of 1928, it was necessary for the appellant to have alleged that the road funds had not been otherwise appropriated. This court expressly held in Gully v. Board of Sup'rs of Copiah County, supra, that as to taxes collected after the passage of that statute no such allegation is necessary, for the words therein "have not been paid" refer to the past and not to the future. We are of opinion that in the case of Ackerman v. Choctaw County, 157 Miss. 594,128 So. 757, this court did not then have before it the question here presented, and later properly presented in the Copiah County case, which should now be approved by us in the case at bar. As to the taxes collected subsequent to the enactment of the Laws of 1928, it is not necessary to allege that the funds have not been otherwise appropriated.

7. It is next contended that by section 6390, Code of 1930, it was mandatory upon the board of supervisors to levy a tax for road purposes, and that this language in the conclusion of the section prohibits a recovery in this case: "And such funds shall be kept as a separate road fund and shall be paid out only on allowances and warrants of the board of supervisors for said purposes." The subsequent sections 6417 and 6418 clearly authorize the payment of the taxes here involved to the municipality, and when the three sections are construed together, as we must do, there seems to be no merit in the contention.

As to the taxes collected for the year 1927, the bill does not allege that there funds remained in the treasury and were not otherwise appropriated, and in the Copiah County case we held this allegation necessary as to 1927 taxes. I think the Laws of 1928 do not purport to be an amendment of the Laws of 1920, but only an amendment of chapter 227, Laws of 1926, and, consequently, apply only to the class of roads therein specifically named. However, unless the Copiah County case is overruled thereunder as to 1927 taxes, this allegation is necessary. As to all the other taxes collected for road purposes, as herein determined, the bill alleges a good cause of action. The demurrer was a general one, and it must be sustained or overruled in its entirety. The allegations were not sufficient as to the year 1927, but were adequate as to the subsequent years; so it follows that the court below should have overruled the demurrer. See N.O. N.E.R.R. Co. v. N.O.G.N.R.R. Co., 107 Miss. 453, 65 So. 508.

Cook and Anderson, JJ., concur in this opinion.