State v. Cheraw & Darlington R. R.

The opinion of the Court was delivered by .

Mr. Justice Jones.

This action was brought under the statute, approved March 2d, 1897 (22 Stat., 453), entitled “An act to provide for the collection of past due railroad taxes, and for the distribution of the same,” to recover taxes, State, county and special, with penalties, alleged to be past due for each of the twenty fiscal years from 1876 to 1896, inclusive, on its railroad property in the territory embraced ■within Chesterfield, Darlington and Florence counties. The complaint attempts to set up forty-eight causes of action, each cause of action being for the amount alleged tO' be due in each of said counties in each fiscal year. So much of the complaint as is set out in the “Case” showing one of these alleged causes of action is officially reported herewith. The case is here on appeal from an order overruling a demurrer interposed on two grounds: (1 ■) That the Court could take *573no jurisdiction. (2) That the complaint does not set forth facts sufficient to constitute a cause of action. For a detailed statement of the grounds of demurrer, see the official report.

1 ' As we analyze the case, the crucial question is whether a . legal liability to pay an ad valorem tax arises from an act of the legislature imposing or authorizing a tax levy on all taxable property, and the mere possession or ownership of taxable property, or is an assessment of such property for taxation by proper officers, an essential prerequisite. In our opinion, an assessment or valuation of property for taxation is essential to constitute a legal liability to pay taxes. The provisions of the Constitution on the subject are: Art. I., sec. 6. “All property subject to taxation shall be taxed in proportion to its value.” Art. III., sec. 29. “All taxes upon property, real' and personal, shall be laid upon the actual value of the property taxed, as the same shall be ascertained by an assessment made for the purpose of laying such tax.” Art. X., sec. 1: “The General Assembly shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe regulations to secure a just valuation for taxation of all property, real, personal and possessory * * These provisions of the Constitution of 1895 were also contained in the Constitution of 1868, art. I., sec. 36, art. II., sec. 33, art. IX., sec. 1. If there had been nothing in the Constitution except the provision first quoted, requiring that all property shall be taxed in proportion to its value, by necessary implication, some mode of valuation would be necessary in order to ascertain the certain, proportionate share of the public burden to be borne by each individual taxpayer. But nothing is left for implication on this subject, a valuation of all property for taxation is expressly enjoined. Taxes are not to be laid upon taxable property merely, nor upon its actual value, but upon its actual value as ascertained by an assessment made for the purpose of laying sucti tax. It is thus clear that an official > valuation for taxation is essential to constitute a tax, which *574must not only be certain in amount, but must be justly apportioned. Other provisions of the Constitution might be cited, for example, sec. 13, art. X., where it is provided: “The General Assembly shall provide for the assessment of all property for taxation; and the State, county, township, school, municipal and all other taxes shall be levied on the same assessment, &c.” Pursuant to such provisions of the Constitution, the General Assembly has passed general and standing laws in reference to the assessment and taxation of property, and the idea that an official assessment is prerequisite to constitute a legal tax runs through it all. Under the scheme of our tax laws, the names of all taxpayers and a statement of their taxable property with its value, as assessed by proper officers for taxation, the rate of taxation, and the specific amount due by each, are entered by the county auditor on the book known as the “County Duplicate,” and this duplicate when delivered to the county treasurer becomes his warrant for the collection of taxes, subject to certain provisions for additional entries after delivery- of the duplicate to the treasurer. Taxes are legally assessed and'become a charge against the taxpa)rer when so entered according to law. In sec. T70, General Statutes 1882, it is provided: “All taxes * * * legally assessed shall be considered and held as a debt payable to the State by a party against whom the same shall be charged; and such taxes * * * and penalties shall be a first lien in all cases whatever upon the property taxed, &c.” Touching railroad property, it is assessed by a State board of equalization, and the comptroller general is required to certify such assessment to' the county auditor, who is required to charge the respective railroad companies in his county with such valuation. If any railroad company fail to comply with the statute requiring it to- make returns of its property for taxation, the State board of equalization is required to assess such property, adding fifty per centum as penalty, and to> certify the result to the county auditor, who is required to place the same on his duplicate for taxation. So, then, it appears that not only is an assess*575ment indispensible to an ad valorem tax, but it is necessary to an assessment that it be done by the proper officers in the manner provided by law. When,, therefore, the legislature imposes or provides for the imposition of a tax levy of so many mills on the dollar upon all taxable property, reference is necessarily made to existing laws in relation to the assessment of property for taxation, whether the levy relates to an assessment previously made for such tax, or to an assessment being made or about to be made for such tax; and so it must be held that an act of the legislature, imposing or authorizing a tax levy on all taxable property, means on all taxable property as assessed for taxation by proper officials as provided by law. Whatever may be the moral obligation of every person to bear his due proportion of the public burden, no legal liability to pay is created until that proportion is ascertained by an assessment according to law. The case of The Dollar Savings Bank v. United States, 19 Wall., 227, and King v. United States, 9 Otto, 229, are cited to the effect that an assessment is not essential to a tax. In the first named case, the Court construed an act of Congress requiring every savings bank to pay a tax of five per cent, on all undistributed earnings made or added during the year to their contingent funds, as imposing a certain sum upon the bank for which the bank became debtor to the government, and that no other assessment than that made by the statute was necessary. This rule clearly could not apply here, where the constitutional and statutory provisions in relation to assessment of property for taxation exist, which require taxes to be levied on property as assessed for taxation. The second case cited was rested on the first named, and need not be further noticed. Much more applicable to the case before us is the case of People v. Weaver, 10 Otto, 539, where the Court held, quoting the syllabus, that “the provisions of the national bank law that State taxation on the shares of the bank shall not be at a greater rate than is assessed on other *576moneyed capital in the hands of individual citizens of the State, has reference to the entire process of assessment, and includes the valuation of. the shares as well as the ratio of per centage charged on such valuation.” In this last mentioned casé the Court uses this pertinent language: “This valuation, then, is part of the assessment of taxes. It is a necessary part of every assessment of taxes which is governed by a ratio or per centage. There can be no rate or per centage wthout a valuation.” Then the Court proceeds to quote the following: “ ‘When taxes have been properly decided upon, an assessment may become an indispensable proceeding in the establishment of any individual charge, against either person or property. This is always requisite when the taxes are to be levied in proportion to an estimate either of value, of benefits, or the results of business.’ ‘An assessment, strictly speaking, is an official estimate of the sums which are to constitute the basis of an apportioment of a tax between the individual subjects of taxation within the district. As the word is more commonly employed, an assessment consists in the two processes listing the persons, property, &c., to be taxed, and of estimating the sums which are to be the guide in an apportionment of the tax between them * * *. Taxation by valuation cannot be apportioned without it.’ Cooley Tax., 258, 259; Burroughs Tax., p. 198, sec. 94. So, also, Judge Bouvier defines assessment to be determining the valueof a man’s property or occupation for the purpose of levying a tax. Determining the share of a tax to be paid by each individual. Levying a tax. 1 Bond., 154.” See, also, 25 Ency. Law, 199, and cases cited.

2 3 In the light of the foregoing, let us ascertain what' is the true construction of the statute under which this action is brought. The act both in its title and in the body thereof authorizes an action for past due taxes. This undoubtedly must be'held to mean delinquent taxes on property assessed for taxation, for only such taxes are past due. In a complaint for such taxes it is essential to allege that the property upon which the taxes are claimed was by *577the proper officer assessed for taxation, since, as we have shown, assessment for taxation is one of the basal facts upon which must rest the legal liability to pay the tax. The complaint in this case failed to allege such fact, and defendant’s demurrer in this particular should have been sustained. As shown, it is not sufficient to allege the possession or ownership of taxable property with a specified value, for taxes are laid on assessed values. There is nothing in the complaint from which we might infer that plaintiff meant or attempted to allege that the property was assessed. The complaint informs that the defendant, claiming to be exempt from taxation, did not return its property for taxation. In the absence of any allegation that the State board of equalization, in default of such return, assessed said property, adding fifty per centum as a penalty, the inference is that said property has not been assessed. We cannot assume that the State board of equalization did its duty, and assessed said property in the absence of the slightest reference thereto. We could with equal propriety draw an inference that the board of equalization acquiesced in defendant’s claim of exemption, and for this reason did not make the assessment. The fact, too, that the complaint is for taxes alleged to be due on the actual value of defendant’s taxable property, instead of for taxes due on the assessed value, with fifty per centum added as a penalty, shows that the pleader did not intend -to allege that the defendant’s property was assessed for taxation by the State board of equalization in default of a return thereof by the taxpayers. Nor do we think there is anything in paragraph 3 of the complaint to help the plaintiff in this particular. The allegation that the General Assembly “levied a tax” of certain specified rates “on every dollar’s worth of taxable property in the county of Chesterfield, and the same became a lien on the property of the defendant situate in said county; that the sum of $2,496 was thus levied upon the said property of defendant, and the same was due and payable not later than December 31, 1896, and if not paid, then a penalty of fifteen per *578cent, on the same was levied by the statute of said State” — states a legal 'conclusion merely, without stating the basal fact necessary to complete a tax levy, to create a tax lien, to make taxes payable, to authorize a penalty for nonpayment of taxes, viz: an assessment of defendant’s property for taxation. The allegation of such conclusions of law raises no issue, and under the well established rule are not admitted by a demurrer. As stated in 25 Ency. Law, 320, “The complaint or declaration should show a prima facievalid tax, and the propertyagainstwhichandthepersonuponwhom it is a charge. It should show the jurisdiction of the Court over the subject matter, and that the property is delinquent: It need not aver how and by whom the levy and assessment were made;” and again on page 323, “It rests with the plaintiff to show a lawful levy and assessment;” and again on pages 324 and 325, where it is stated that the absence of an assessment is always a good defense. It thus appears that While in a suit to collect taxes, it is not necessary to allege all the probative facts by which a lawful levy and assessment are established, yet it is necessary to' allege the levy and assessment. But it is contended that the act of 1897, supra, authorizes an assessment of defendant’s property for taxation in the proceedings brought to recover past due taxes. .The mere statement of the proposition is its refutation. If, as we have seen, an assessment of property for 'taxation is essential to constitute legal liability for taxes, and if the legal liability of defendant must exist at the commencement of the action, how can it be possible to authorize assessment for taxation in the action brought to recover taxes past due? We have no means of ascertaining the intention of said act, 'but by its language construed in the light of legislative power. We find nothing- in the act to warrant a construction that in a suit under it to collect past due taxes, the jury, or the Court and jury trying the cause, are constituted a tribunal to assess defendant’s property for taxation. Under this construction of said act it is irrelevant to discuss points argued before us; as, for example, whether *579it is competent for the legislature to authorize the assessment of railroad property belonging to companies claiming exemption from taxation, as a separate class, and by a different tribunal from that authorized to assess all other railroad property; or whether said act construed to authorize the jury trying the cause to assess the property of defendant, violates constitutional provisions in reference to “due process of law,” “equal protection of the law,” &c.

4 Construing the act as one authorizing a suit for past due taxes there is no doubt the Circuit Court has jurisdiction. The complaint, however, is demurrable on the ground that it fails to state facts sufficient to constitute a cause of action, in that it fails to state that defendant’s property was assessed for taxation in the years for which said taxes are claimed.

The judgment of the Circuit Court is reversed, without prejudice to the right of plaintiff to apply -to the Circuit Court for leave to- amend the complaint in the particular discussed herein as may be advised.