Second National Bank v. City of New York

Scott, J. (dissenting):

This action is, in form, one to recover the sums paid by plaintiff for taxes in the years 1904 to 1907 inclusive, with interest. In point of fact all that plaintiff seeks to recover, and all that it has recovered, is interest upon the taxes paid in those years from the respective dates of payment to the 1st day‘of October, 1909, when the taxes were legally relevied under the provisions of an act of the Legislature known as chapter 74 of the Laws of 1909.

In People ex rel. Bridgeport Savings Bank v. Feitner (191 N. Y. 88) it was held that the taxes attempted to be levied upon bank shares in the city of New York for a series of years, including those respecting which plaintiff now sues, were invalid because the tax commissioners, acting as assessors,, had failed to give the banks against whom the taxes were levied notice of their assessment and an opportunity to be heard thereon. The court was able to find in the General Tax Law a provision for the giving of such notice and opportunity, which the commissioners had apparently overlooked and had certainly disregarded. The court, therefore, held that the act authorizing the tax was valid and constitutional, but that *499the levying of the assessment and tax was void because the commissioners had not performed the acts necessary to invest themselves with jurisdiction to fix a valid assessment. That decision was handed down in January, 1908. In 1909 the Legislature passed an act known as chapter 74 of the laws of that year. This act, after providing for the due publication of notices, etc., and a reassessment to be made by the board of taxes, provided that such a proceeding might be reviewed by certiorari if begun on or before October 31, 1909, and that every determination made by the said board should be final and conclusive unless reversed or modified in a proceeding by certiorari brought as in the act provided. Under this act the board of taxes reassessed the plaintiff for the years respecting which this action is brought, at the same figures at which the former assessments had been fixed. The plaintiff, being satisfied with these assessments, made no attempt to review them by certiorari, and the money which it had paid on account of the invalid taxes was left in the hands of the city to be credited upon the taxes when legally levied. The only question here is as to the city’s liability for interest during the period that elapsed between the payment of the illegal tax and the levy of the legal one. The act of 1909 came before the Court of Appeals in People ex rel. American Exchange National Bank v. Purdy (196 N. Y. 270), which was a proceeding by certiorari to review the assessment of the relator for the year 1907. The court pointed out that the act was not strictly speaking a curative one in the sense that it legalized a defective assessment, but that “the object of the statute was to lay hold of assessments commenced several years before the act was passed, and to authorize their completion by doing what had not been done, although required by law.” In other words, the effect of the act was not to legalize and validate an illegal and invalid assessment and tax, but to authorize a new assessment and tax validly levied. The old levy, under compulsion of which plaintiff paid the taxes, still remained as illegal and invalid as it had always been. The case last cited came before the Court of Appeals a second time (199 N. Y. 51) when it appeared that the assessment had been remade and the tax relevied under the act of 1909. The court took occasion to *500point tint that the purported (original) assessment not only was not valid when the proceedings then before the court were commenced, but as it was then laid, had never been made valid, from which it followed, as was held, “ that relator having paid its taxes under the coercion and duress of a purported assessment invalid in fact, but claimed and appearing to be valid and enforceable under ordinary circumstances, would be entitled to have those taxes refunded with interest and without prior, demand.” It was considered, however, that inasmuch as, under the statute, a valid assessment had been made and a valid tax laid at the same amounts as the original invalid ones, it was unnecessary to resort to the circuitous method of paying back the taxes only to repay them at once upon the valid tax, but that relator was entitled to be paid interest on the amount it had paid for the period between the payment of the illegal tax and the date upon which the lawful tax became payable.

The defendant does not question plaintiff’s right to be paid interest upon the taxes paid in the years 1905 to 1907, inclusive, but insists that it has lost the right to recover them because it did not resort to a writ of certiorari to review the reassessment in 1909, claiming that by the provisions of the act passed in that year the exclusive remedy provided for an aggrieved taxpayer was by means of such a writ. This contention, as we think, loses sight of the distinction between an invalid assessment as a basis for taxation and an unlawful tax based upon an assessment. What is reviewable by certiorari is the assessment fixed as the basis upon which a tax is to be levied. This being a quasi judicial act on the part of the assessors, must be reviewed, if at all, by certiorari. Hence, if the plaintiff had been dissatisfied with the reassessment made in 1909 it should have applied for a writ of certiorari to review it, and if the assessment had been vacated in such a proceeding the tax would necessarily have fallen with it, but the writ would have operated directly only upon the assessment and but indirectly upon the tax. The plaintiff, however, had no complaint to make concerning the reassessment of 1909, and had no fault to find with the tax based upon that assessment. The limitation of time within which a certiorari might be sued out under the *501act of 1909 was, therefore, no concern of plaintiff’s. Its grievance is the earlier invalid tax. What operated as duress and coercion upon plaintiff was not the first invalid assessment, but the void and illegal tax based upon it, and the general rule is that a sum collected under an illegal tax can be recovered in an action at law for money had and received without first instituting certiorari proceedings. (Bruecher v. Village of Portchester, 101 N. Y. 240; Jex v. Mayor, etc., 103 id. 536.) That the assessment upon which the first tax was levied was wholly void, and not merely irregular and voidable, is firmly established by the various decisions of the Court of Appeals above referred to. The assessors were wholly without jurisdiction to make it, not because they had not jurisdiction of the general subject of assessment for purposes of taxation, but because the jurisdiction to levy a valid assessment was special and limited upon their observance of the indispensable constitutional prerequisite to a lawful assessment. These they omitted to observe. Being absolutely void it was not necessary first to attack directly the assessment before seeking to recover the money paid under coercion and duress of the illegal tax based on it. So far, therefore, as concerns the award of interest on the taxes paid in 1905 to 1907, inclusive, the judgment appealed from is clearly right. As to the tax of 1904, a different question is presented by defendant’s plea of the six years’ Statute of Limitations, which is the statute applicable to such an action as the present. That tax was paid to the receiver of taxes on December 29, 1904, by means of plaintiff’s cashier’s check drawn on itself, and on that date the amount thereof was entered upon the defendant’s books as a payment by plaintiff of the taxes of 1904. On the same day the check was deposited by defendant and credited to its account in the National Oity Bank of New York. On the next day, December 30, 1904, it was presented to and paid by the plaintiff through the New York Clearing House. This action was commenced on December 30, 1910. The question is whether the payment was made on December 29 or December 30, 1904. If on the former date its recovery is barred by the Statute of Limitations; if on the latter date it is not. In Brundage v. Village of Portchester (31 Hun, 129; affd., *502102 N. Y. 494) it was said in a similar case, The action was perfect at the instant payment was made,” and Trimmer v. City of Rochester (30 N. Y. St. Repr. 703) is to the same effect. We are of opinion that, in the present case, payment was made when the check, subsequently honored, was delivered and received in payment, credited upon the city’s books as a payment and deposited in bank to the city’s account. A very similar question arose in Hunter v. Wetsell (84 N. Y. 549), where the application of the Statute of Frauds depended upon whether payment on account of a contract was made when a check was given and accepted, or when it was afterwards honored by the bank upon which it was drawn. The court said: It is admitted that the check was then given, and it cannot be successfully denied that it was both delivered and received as a payment upon the contract price. * * * It is quite true that a check, in and of itself, is not payment, but it may become so when accepted as such and in due course actually paid. While not money, it is a thing of value, and is money’s worth when drawn against an existing deposit which remains until the check is presented. * * * We think, therefore, there was a payment ‘ at the time,’ within the meaning of the statute, and that the contract of sale was valid. ”

We are, therefore, of opinion that the tax was paid when the check was delivered and accepted on December 29, 1904, and that the cause of action then accrued. Consequently it was barred by the Statute of Limitations when the action was commenced.

The judgment appealed from should, therefore, be modified by deducting from the recovery so much thereof as represents interest upon the tax paid in 1904, and as modified affirmed, without costs to either party in this court.

McLaughlin, J., concurred.

Judgment reversed, with costs, and complaint dismissed, with costs. Order to be settled on notice.