Jones v. Heinzle

DISSENTING OPINION.

Batman, J.

I fully concur in the opinion adopted by a majority of the court, with reference to the item of $3,969.92 mentioned in the complaint, but cannot agree with the opinion as to the remaining item of $452.28, alleged to have been assessed as income and excess profit taxes for the years 1914, 1915 and 1916. It appears from the averments of the complaint that appellees sold their stock in the Big Four Coal Company to appellants, and that the contract in suit was executed in connection therewith. In the absence of such contract the vendors would not have been liable for any of the obligations of said company, but the purchasers would have taken the stock, with the burden resting on the company to discharge its own obligations. Therefore, appellees, as such vendors, are required to pay only such obligations of the company as are imposed on them by a fair and reasonable construction of said contract. The leading purpose in construing any contract is to ascertain the intention of the parties from the language employed. And, having ascertained such intent, it is the duty of the court to give it effect. Gwinn v. Wright (1908), 42 Ind. App. 597, 86 N. E. 453; Straus v. Yeager (1911), 48 Ind. App. 448, 93 N. E. 877; Carmichael v. Arms (1912), 51 Ind. App. 689, 100 N. E. 302; Modern Woodmen, etc. v. Miles (1912), *441178 Ind. 105, 97 N. E. 1009. It is a rule of construction, applicable to contracts, that — “the terms of every written instrument are to be understood in their plain, ordinary, and popular sense, unless they have, generally, in respect to the subject-matter, as by the known usages of trade, or the like, acquired a peculiar sense, distinct from the popular sense of the same words; or unless the context evidently points out that, in the particular instance, and in order to effectuate the immediate intention of the parties, they must be understood in some other and peculiar sense.” The Evansville, etc., R. Co. v. Meeds (1858), 11 Ind. 273; Beard v. Lofton (1885), 102 Ind. 408, 2 N. E. 129. In the instant case, there is nothing in the contract itself to indicate that the term “indebtedness” found therein, was used in any sense different from its plain, ordinary and popular meaning, and there are no averments in the complaint to the effect, that such term had acquired a particular meaning by usage, distinct from its popular sense, and that it was used in said contract in that acquired sense. Undér these circumstances we must determine the meaning of the contract in question by giving such term its plain, ordinary and popular meaning. Straus v. Yeager, supra; Carmichael v. Arms, supra; Modern Woodmen, etc. v. Miles, supra; Wallace v. Morgan (1864), 23 Ind. 399; Gladstein v. Levine (1912), 49 Ind. App. 270, 97 N. E. 184; Rastetter v. Reynolds (1903), 160 Ind. 133, 66 N. E. 612.

The courts throughout the country, in considering the plain, ordinary and popular meaning of the term “debt,” or “indebtedness,” and in determining whether taxes and assessments were properly included within such meaning, have spoken frequently in that regard in no uncertain words. Thus it has been held that taxes are not debts; that debts are obligations for the payment of money, founded upon contract express or implied, *442while taxes are imposts, levied for the support of the government, or some special purpose authorized by it; that the consent of the taxpayer is not necessary to the enforcement of the latter, as they operate in invitum; that the nature of taxes are not affected by the fact that in some states an action for debt may be instituted for their recovery, as the form of procedure cannot' change their character. Meriweather v. Garrett (1880), 102 U. S. 472, 26 L. Ed. 205; Peter v. Parkinson (1910), 83 Ohio St. 36, 93 N. E. 197, Ann. Cas. 1912A 751; Hanson v. Franklin (1909), 19 N. D. 259, 123 N. W. 386; Georgia Railroad & Baking Co. v. Wright (1905), 124 Ga. 596, 53 S. E. 251; In re United Button Co. (1906), (D. C.) 140 Fed. 495; State, ex rel. v. Dix (1911), 159 Mo. App. 573, 141 S. W. 445; Hecox v. Teller County (1912), 198 Fed. 634, 117 C. C. A. 338; United States v. Chamberlin. (1907), 156 Fed. 881, 84 C. C. A. 461, 13 Ann. Cas. 720; Danforth v. McCook (1898), 11 S. D. 258, 76 W. 940, 74 Am. St. 808; State, ex rel. v. Trust Co. (1908), 209 Mo. 472, 108 S. W. 97; City of Shreveport v. Gregg & Ford (1876), 28 La. Ann. 836; Jones v. Gibson (1885), 82 Ky. 561; City of Carondelet, etc. v. Picot (1866), 38 Mo. 125; North Mo. R. Co. v. Maguire (1872), 49 Mo. 490; Bailies v. City of Des Moines (1905), 127 Iowa 124, 102 N. W. 813; Hewitt v. Traders’ Bank (1897), 18 Wash. 326, 51 Pac. 468; Lane County v. Oregon (1868), 7 Wall. 71, 19 L. Ed. 101; State v. Chicago, etc., R. Co. (1906), 128 Wis. 449, 108 N. W. 594; Freeholders, etc. v. Weymouth (1902), 68 N. J. Law 652, 54 Atl. 458; Borough v. Fidler (1892), 147 Pa. 532, 23 Atl. 799; City of Rochester v. Gleichauf (1903), 82 N. Y. Supp. 750, 40 Misc. Rep. 446; City of N. Y. v. McLean (1901), 68 N. Y. Supp. 606, 57 App. Div. 601; Gatling v. Commissioners (1885), 92 N. C. 536, 53 Am. Rep. 432; Rochester v. Bloss (1906), 185 N. Y. 42, 77 N. *443E. 794, 7 Ann. Cas. 15; Sonnesyn v. Akin (1903), 12 N. D. 227, 97 N. W. 557. Numerous other cases might be cited of like import, but more are unnecessary. The above cases abound in many significant expressions such as the following: “Taxes are not debts in the ordinary sense of that word.” Hecox v. Teller County, supra; “It (a tax) does not establish the relation of debtor and creditor between the taxpayer and the state.” Peter v. Parkinson, supra; “A tax is not a debt in the ordinary sense in which that term is used.” Danforth v. McCook, supra; “It is correctly contended * . * * that taxes are not debts in the ordinary sense of the word.” City of Shreveport v. Gregg & Ford, supra; “But taxes have never been held by elementary law writers or courts as debts in the ordinary meaning of the word.” Jones v. Gibson, supra; “Debt does not, either in its ordinary or technical sense, include taxes. * * * Debt is a much more specific term than demand or obligation and it has a well defined meaning in law.” Bailies v. City of Des Moines, supra; “Taxes are not strictly a debt.” In re United Button Co., supra; “Taxes are enforced contributions upon persons or property levied by authority of the state for the support of the government. They are not ‘debts’ in the ordinary sense of the word.” Hewitt v. Traders’ Bank, supra; “The greatest of English elementary writers upon law, when treating of debts in their various descriptions, give no hint that taxes come within either; while American state courts of the highest authority, have refused to treat liabilities for taxes as debts, in the ordinary sense of that word, for which an action of debt may be maintained.” Lane County v. Oregon, supra; “Taxes are, in legal contemplation, neither debts nor contractual obligations, but are in the strictest sense of the word, exactions.” Freeholders, etc., v. Weymouth, supra; “Tax,es are not debts in the ordinary sense of *444that term.” Gatling v. Commissioners, supra; “The tax, however, does not become a debt within the meaning qf such word as commonly used.” Rochester v. Bloss, supra. “Blackstone defines ‘debt’ as a sum of money due by certain express agreement. * * * The word ‘debt,’ standing alone, in its usual and ordinary sense, imports an obligation resting upon contract. This is its common meaning. * * * The word ‘debt’ however, also has an uncommon meaning, covering all kinds of obligations.” Sonnesyn v. Akin, supra.

As disclosed by the cases cited above, many courts, in support of their declarations that a tax is not a debt, point out the fact that the essential characteristics of a debt are not present in a tax. An author on the subject of taxation has said that the courts have almost universally so held. 27 Am. & Eng. Encyc. of Law, 580. In some instances the court cite the fact that a tax, unlike a debt, does not arise by contract, is not subject to set-off or attachment, does not bear interest, unless it is so provided by statute, and is not assignable as a debt. Peter v. Parkinson, supra; Bailies v. City of Des Moines, supra; City of Camden v. Allen (1857), 26 N. J. Law 398; Crabtree v. Madden (1893), 54 Fed. 426, 4 C. C. A. 408; Morris v. Lalaurie (1887), 39 La. Ann. 47, 1 South. 659; Perry v. Washburn (1862), 20 Cal. 318. 'Judge Cooley in his work on taxation, based on a number of authorities cited, states that taxes “do not draw interest, as do sums of money owing on contract; but only when it is expressly given. They are not the subject of set-off, either on behalf of the state or the municipality for which they are imposed, or of the collector, or on behalf of the person taxed, as against such state, municipality or collector.” Cooley, Taxation (2d ed.) 17. Such facts, it is held, clearly show that a tax is not a debt. In this connection we note that the majority opinion refers to the case of Savings Bank v. *445United States, supra, as sustaining the view that a tax is a debt, but in the later case of United States v. Chamberlin, supra, the court, in referring to said former case said: “In view of the express provision of the statute providing for such a tax by suit, it ought not to be said that it was the mind of the court in the Savings Bank case to overturn the hitherto generally recognized rule of law that a tax is not regarded as a debt.” (My italics.) That case, therefore should not be taken as running counter to the almost unbroken 'line of decisions, which hold that a tax is not to be regarded as a debt, either in the legal signification, or common acceptation of that term.

Turning from the decisions in other jurisdictions, to those of our own state, I find the following significant expressions, bearing on the subject under consideration: “A tax is not an ordinary debt. It is not founded upon contract, express or implied. It flows from the exercise of sovereign power, and is imposed without the consent of the debtor. It is enforceable summarily, by distress or sale, and without exemption or relief from valuation laws.” Gallup v. Schmidt, supra. “A debt, in a general sense, arises out of an express or implied promise made by one person to another to pay a sum of money.” Heinl v. City of Terre Haute (1903), 161 Ind. 44, 66 N. E. 450. “It is essential to the idea of debt that an obligation should have arisen out of a contract, express or implied.” State, ex rel. v. Hawes (1887), 112 Ind. 323, 14 N. E. 87; Quill v. City of Indianapolis (1890), 124 Ind. 292, 23 N. E. 788, 7. L. R. A. 681. “Taxes levied or imposed by the state are not debts in the ordinary acceptation of that term, so as to make them bear interest under the general interest law of the state.” State v. Mutual Life Ins. Co., supra. “It is the settled law of this state that a tax is not an ordinary debt. It is not founded upon contract, ex*446press or implied.” Cullop v. City of Vincennes, supra. (Dissenting opinion.)

In the case of State v. Chicago, etc., R. Co., supra, the court in considering whether a tax is a debt in the ordinary sense of that term said:

“There is some confusion in judicial expressions as to whether an ordinary tax is a debt. Because it is a liability, it will be found sometimes spoken of as the former, no idea of the contractual element necessary to one strictly so called being in mind. As a rule, whenever any court has been required to decide whether such a tax involves such element the decision has been in the negative. One might easily be misled by reading the different expressions even of the same court on the subject, if the circumstances under which the varying expressions were used are not taken into consideration. For examples, in (certain named cases) -an ordinary tax is in each instance spoken of as a debt, the precise nature of the liability, however,'not being involved. In In re Assignment of Riddell (1896), 93 Wis. 564, 67 N. W. 1135, such question was directly involved and the conclusion was that such taxes are not debts in the ordinary sense.”

The case of Board of Com’rs., etc. v. Harrell (1897), 147 Ind. 500, 46 N. E. 124, cited in the majority opinion, is a fair illustration of the class of cases mentioned in the above quotation, as leading to confusion. In that case the court was considering whether a tax, levied for the payment of bonds issued for the construction of a free gravel road, was an indebtedness of a township, and in holding that it was not, spoke of it as an indebtedness of the taxpayers, when evidently in the light of other decisions of the same court, rendered not only before but after that date, a more accurate expression would have been, that such a tax was a liability of the taxpayers.

*447The opinion of the majority of the court calls attention to the fact, that the word debt in a broad and general sense includes whatever one owes, any claim .for money, liabilities of every sort, etc., and cites the definitions given by lexicographers and the decision of a court outside of this state in support thereof. Such fact, however, ought not to have a controlling influence in determining the meaning to be given the word indebtedness in the contract in suit, since it must be apparent from the numerous decisions cited, that any such meaning is the unusual or uncommon meaning of such word, and there is nothing in the contract to indicate that it was used in such broad and general sense. Moreover, where the courts of a state have determined the ordinary and usual meaning of a word, as has been done in this state respecting the word debt, persons using the same in contracts executed therein, will be presumed to have so employed it, where the contrary does not appear. Stephani v. Catholic Bishop, etc. (1878), 2 Ill. App. 249. Hence the fact that lexicographers, or a court in an isolated case, may have ascribed a wide range of meaning to the word “indebtedness” can be of no material aid in determining what meaning should be given the same in the contract in the instant case.

Liabilities arise from three different sources, viz.: from contracts, from torts, and from assessments, but as appears from the authorities cited above, only the first of these three classes of liabilities are commonly known and designated as debts. It is reasonable to assume that if it had been the intention of the parties to the contract in suit, that appellees should pay all the liabilities of the Big Four Coal Company, regardless of their source, that they would have used that term in expressing such intention, or some similar term equally inclusive, such as obligations, instead of the term in*448debtedness, which has a more restricted meaning as ordinarily used. These general terms of broad significance are in as common use, and their meaning is as well understood, as the word indebtedness, and the use of that term, instead of one of the others suggested, cannot be satisfactorily explained, except by assuming that their meaning was too broad and inclusive to express their agreement. This appears the more reasonable in view of the fact that the contract involves a large consideration, and bears evidence of careful preparation. Under these circumstances it will be presumed that the words used to express the intention of the parties were selected with discrimination. Schweinburg v. Altman (1911), 145 App. Div. 377, 130 N. Y. Supp. 37. However, it is suggested that the phrase “of every sort and character,” following the word “indebtedness” in the contract in suit, discloses an intention to enlarge the meaning of such word beyond its ordinary significance. We cannot adopt this view, as it would be unreasonable to assume that the parties, having avoided the use of the words of broad significance suggested above, which ordinarily would be used to express the intention for which appellants contend, that they employed the word and phrase quoted above for such purpose. Besides the rule ejusdem generis, which courts employ as an aid in ascertaining the meaning of statutes and contracts, forbids the adoption of the suggestion stated, as under it, such phrase must be restricted in its meaning to the first class of liabilities named above, to the exclusion of either of the other two classes. But if it could be said that the word “indebtedness” followed by the phrase “of every sort and character,” leaves the meaning of the contract, as to what liabilities appellees were to pay, in doubt, such fact would not aid appellants. It appears on the face of the contract, that the provision in question was inserted therein for the *449benefit of appellants, and therefore must be construed as having been worded and inserted by them, and if ambiguity exists, must be construed against their interest. 18 C. J. 546; McFarlane v. York (1909), 90 Ark. 88, 117 S. W. 773; Capital City Bank v. Hilson (1910), 59 Fla. 215, 51 South 853; American Fuel Co. v. Interstate Fuel Agency (1919), (C. C. A.) 261 Fed. 120; Lechner v. Strauss (1912), 50 Ind. App. 414, 98 N. E. 444.

For the reasons stated, I cannot concur in the opinion of the majority of the court, but hold that the court below did not err in sustaining appellees’ demurrer to the complaint, and that the judgment ought to be affirmed.

Remy, C. J., concurs.