Commonwealth v. Tredegar Company

Kelly, J.,

delivered the opinion of the court.

The examiner of records for the judicial circuit embracing the city of Richmond reported to the local board of review for that city certain capital alleged to have been omitted from the tax returns of the Tredegar Company for the-years 1903 to 1911 inclusive. At a hearing before the, local board of review, the Commonwealth insisted upon, and the Tredegar Company denied, the correctness of the report of the examiner, with the result that the board rejected the report in toto, and instructed the commissioner of the revenue hot to extend the tax upon his books. Thereupon, the Auditor of Public Accounts, with the approval of the State Tax Board, issued written instructions to the commissioner of the revenue directing him to disregard the action of the local board and to make the assessment of the alleged omitted capital in accordance with the report of the examiner. The commissioner subsequently made the assessment and extension as directed by the Auditor.

This suit in equity was brought by the Tredegar Company for the ultimate and principal purpose of enjoining and restraining the collection of the taxes assessed as above pointed out by the commissioner of the revenue. The circuit court, hearing the cause upon the bill and exhibits and a demurrer thereto, and being of opinion that the assessment was unauthorized and void, directed the commissioner to strike'the same from his books, and decreed that “the defendants (the Commonwealth of Virginia, the city of Richmond and their tax officers) are restrained and enjoined from collecting or attempting to collect said omitted taxes until said defendants shall take an appeal (from the action of the local board of review) to the Hustings Court of the city of Richmond, and it shall be finally determined by the *509court of last resort that such extensions of said taxes are authorized by law, valid and should be collected.”

From this decree the present appeal was allowed, and the first question to be decided is, whether a court of equity has jurisdiction of the cause.

Prior to February 24, 1916, the jurisdiction of courts of equity to restrain an illegal or unauthorized tax was well settled by the decisions in this State. Wytheville v. Johnson, 108 Va. 589, 590, 62 S. E. 328, 18 L. R. A. (N. S.) 960, 128 Am. St. Rep. 981, and cases cited there. The jurisdiction having once attached, it will survive until destroyed by express statutory enactment (Redd v. Supervisors, 31 Gratt. [72 Va.] 695, 697) ; and the mere fact that an adequate remedy at law has been provided by statute does not defeat the jurisdiction. Herring v. Wilton, 106 Va. 171, 175, 55 S. E. 546, 7 L. R. A. (N. S.) 349, 117 Am. St. Rep. 997; Wytheville v. Johnson, supra.

In manifest recognition of these principles, the General Assembly passed an act, approved February 24, 1916, (Acts 1916, p. 89), which provides, “that no suit for the purpose of restraining the collection or assessment of any tax, State or local, shall be maintáined in any court of this Commonwealth, except when the party has- no adequate remedy at law.” This statute, in our opinion, is conclusive of the instant case. The gist of the proceeding, plainly shown by the prayer of the bill, is to correct and cancel the assessment, to exonerate the complainant from the tax, and to perpetually enjoin its collection. Precisely this relief was available to the complainant by a simple motion at law, under sections 567, 568 and 569 of the Code. If the act of February 24, 1916, is to be given any eifect at all, it must be held to apply to this suit. The test of the statute in every case is to be found in the adequacy of the remedy at law. In this instance, every possible defense against the assessment which is raised in the equity suit could have been equally *510availed of in the motion under the statute. Quoting the language of Judge Keith in Johnson v. Hampton Institute, 105 Va. 319, 326, 54 S. E. 31, 33: “we think the remedy afforded by this statute (Code, sec. 567), which provides, for bringing both the citizen and the Commonwealth before the court, is ample and complete to meet all the exigencies of the case presented in the pleadings.”

It is earnestly contended that the only course open to the Commonwealth, after the local board of review had rejected the report of the examiner of records, was an appeal to the Hustings Court of the city of Richmond, and that the subsequent action of the Auditor and the commissioner was null and void. This is a debatable proposition, but if we concede that the contention is sound in so far as the validity of the assessment in question may depend upon the action of the examiner and of the board of review, we have no difficulty in holding that if the assessment is right in substance, it could be upheld as an independent assessment made by the commissioner under the instruction of the Auditor, without any action on the part of the examiner of records or the board of review. In other words, we think that under section 508 of the Code, it is the duty of the commissioner of the revenue to assess for taxation any property which he finds has not been assessed for taxation for any of the previous years within the limits prescribed by that section. If he makes an erroneous or an illegal and invalid assessment, the remedy under section 567 of the Code is adequate, and the previously existing remedy by injunction is cut off by the act of February 24, 1916. This, we think, is as it should be. The remedy by motion under the statute is prompt and simple, and, as construed by this court, is peculiarly adapted to a fair and just settlement of disputes of this character between the Commonwealth and its citizens. In Commonwealth v. Schmelz, 114 Va. 364, 370, 76 S. E. 905, 907, Judge Buchanan said: “Under these provisions of the Code, *511if there has been an error in the assessment complained of to the prejudice of the taxpayer (not caused by his failure or refusal to furnish a list of his property to the commissioner of the revenue) he is entitled to be relieved tó the extent of the erroneous assessment. If, on the other hand, the error in the assessment or in the failure to assess his property be to the prejudice of the State, the State is entitled to receive from him the taxes properly assessable against him. In other words, the taxpayer who comes into court under these sections to be relieved from paying more taxes than he claims he ought to pay renders himself liable in that proceeding to pay all taxes with which he is chargeable in that jurisdiction upon a correct assessment of his property. This is the practice in some of the courts of the State, and we think is the proper practice. It is the duty of the party who seeks relief under these statutes (and of all other persons) to pay taxes upon all of his property taxable in the jurisdiction. If he has been improperly assessed on some property and has not been assessed at all upon other property upon which he is assessable with taxes, there is no hardship—indeed, it is. only just and equitable—in assessing him with and requiring him to pay all the taxes with which he is assessable in that jurisdiction as a condition to granting him the relief sought. There is no difficulty, in a proceeding like this, to be relieved from an erroneous assessment, for the court to examine into and do all that the commissioner of the revenue is required to do under the provisions of sections* 508 and 509 of the Code.”

In view of the convenience, elasticity and fairness of proceedings under these statutes, it was doubtless the controlling purpose of the legislature in the enactment of the act of February 24, 1916, to compel a resort thereto whenever the remedy thereunder was adequate. At any rate, the case before us is clearly within the terms of the act and we are of opinion that the circuit court ought to have sustained the demurrer and dismissed the bill.

*512The remedy by motion under section 567 of the Code is still open to the appellee, and nothing herein is to be construed as indicating any opinion concerning its right to relief ágainst the assessment.

For the reasons stated, the decree complained of will be reversed, and.an order will be entered here sustaining the demurrer and dismissing, the bill.

Reversed.