Specht v. City of Louisville

Opinion op the Court by

Judge Lassing

Affirming.

This litigation calls in question the constitutionality of section 2998, Ky. St. 1909. Its validity is assailed upon two grounds: First, that it affects only adult persons and does not apply to the property of infants, persons under the disability of coverture, or insane persons; and, second, because the rate of interest charged on tax bills is usurious and in violation of sections 2218 and 2219, Kentucky Statutes. Section 2998 of the statutes, which is as follows: “All tax bills, uncollected in whole or in part, and which remain in the hands of the tax receiver on the first day of May succeeding the date on which they were listed with him for collection against any person owning property in his own right, shall be deemed a debt from such person to said city arising as by contract and may be enforced as such (except those *551against the persons under the disability of infancy, coverture or unsound mind) by all remedies given for the recovery of debt in any court of this commonwealth otherwise competent for that purpose; and those bills assessed against an administrator', executor or trustee shall be a charge against the whole succession of trust estates and may be in either case enforced accordingly, this being in addition to the other remedies hereinafter given. All tax bills remaining unpaid on the first day of May, succeeding the date .on which they were listed with the tax receiver for collection shall bear interest at the rate of one-half of one per cent, for every month, or fraction of a month, from date until the first day of the next succeeding May, and thereafter shall bear interest at the rate of one per cent, for every month, or fraction of a month, until paid”- — was, prior to its adoption-in 1906, section 2998 of the Kentucky Statutes of 1903, and from a comparison of the two acts it will be observed that, so far as the first objection raised by appellant is concerned, the acts are identical, in that in each act there is an express provision that the tax owing by the property owner shall be deemed a debt from such person to the city, arising as by contract, and may be enforced as such by all remedies given for the recovery of debt in any court of the commonwealth otherwise competent for that purpose.

There is an express provision in each act exempting from this method of procedure infants, married women, and lunatics. This exemption, however, is in their favor merely as to the method of procedure; whereas, the tax and interest charged for delay in its payment are the same against all property, whether owned by adults or infants, women, married or single, and per*552sons sane or insane. • The statute makes no difference whatever in levy of taxes or the rate of interest that shall be charged. The only difference is that a personal judgment may be taken against an adult under no disability; whereas, infants and persons under disability can, under the express provisions and terms of the act, have no personal judgment rendered against them, and the remedy must be a proceeding against the property itself. There is no provision that the property of an infant, or a married woman, or insane person should not be held liable to the payment of the same taxes and rate of -interest as that of an adult.

In the cases of Walston v. City of Louisville, 66 S W. 385, 23 Ky. Law Rep. 1852, and Woolley v. City of Louisville, 114 Ky. 556, 7 S. W. 893, 24 Ky. Law Rep. 1357, this court passed upon the constitutionality of this act prior to its amendments in 1906, and held it to be constitutional, and, so far as the first objection raised by appellant is concerned, the acts are identical. ■ No complaint can justly be made because the Legislature saw fit to define a different mode of procedure in enforcing the payment of tax claims against the property of infants and persons under disability from that which should be applied in enforcing similar claims against adults under no disability, so long as the tax sought to be collected against each is the same; and the act in question is undoubtedly so drawn as to apply equally to all property, for, in its concluding sentence, we find the following: ‘ ‘ All tax bills remaining unpaid on the first day of May, succeeding* the date on which they were listed with the tax receiver for collection shall bear interest at the rate of one- half of one per cent: for every month, or fraction *553of a month, from date until the first day of the next succeeding May, and thereafter shall hear interest at the rate of one per cent, for every month, or fraction of a month, until paid.” This is the only portion of said act which fixes the rate of interest that shall he paid, and it will be observed that it applies alike to all property without exception. We therefore conclude that the objection raised by appellant to the validity of this act, on the ground that it is not uniform in its application, is not well taken.

Appellant’s next contention is that as the act raises the tax claims which the city holds against the property owners to the dignity of a debt, and then seeks to enforce the collection of a rate of interest thereon in excess of 6 per cent., which by section 2218 of the statutes is established as the legal rate, it is in direct violation of section 2219, which provides that all contracts and assurances made for the loan or forbearance of money or other thing of value at a greater rate than the legal rate of interest, as provided for by section 2218, shall be void as to the excess of the legal rate. The trouble with, this argument is that a tax is neither a contract nor a loan nor a forebearance of money in the sense in which these terms are used in the statute referred to. It remains a tax, and it is treated as a debt merely for the purpose of defining its mode of collection. The interest charge is upon taxes remaining unpaid at a designated date and is in the nature of a penalty for their nonpayment, and it has frequently been held that it is a matter of legislative discretion as to what penalty shall he imposed by the Legislature for the nonpayment of taxes, and this legislative will has never been disturbed or interferred with so long as the penalty has not been *554fixed at a figure that could be considered unreasonable, unjust, or confiscatory.

In the two cases above referred to, of Walston v. City of Louisville, and Woolley v. City of Louisville, it was expressly held that the collection of an interest charge upon overdue taxes was in the nature of a penalty. It is true that the act in force when passed upon in those cases did not authorize the imposition and collection of 12 per cent, interest, but it did authorize the imposition and collection of interest at the rate of one-half of 1 per cent, for each month, or fractional part thereof, that the tax remained unpaid, which was a higher rate than authorized by section 2218, and the principle contended for by appellant in this case would therefore apply with equal force in those cases. The court having upheld the validity of the act, even though it 'authorized an interest charge in excess of 6 per cent., settled the principle for which the city here contends, to wit, that the imposition of sn interest charge on overdue taxes is in the nature-of a penalty, imposed upon the delinquent taxpayer because of his delinquency, and, being a penalty, the amount thereof is clearly a matter of legislative discretion. Nor does the fact that the act authorizes the imposition and collection of 12 per cent, interest on taxes remaining unpaid at a certain day in cities of the first class justify the charge that the act is special' legislation, for the Constitution, by express provision, requires that the G-eneral Assembly shall assign the various cities and towns in the state to the classes in which they properly belong. For governmental purposes, the organization and powers of the various classes into which the cities are divided are defined by general laws, and, so long as these laws are made applicable alike to all cities falling within the design*555ated class, they have uniformly been held to be general in their application. Louisville is a city of the first class, and is the only city in that class in this commonwealth. Hence, while all laws governing-cities of the first class must necessarily be applicable to the city of Louisville alone, they are nevertheless general laws, and this court has so recognized and held in the case of Walston v. City of Louisville, supra.

In framing these general laws for the regulation and government of the various classes into which the cities and towns of the state are divided, the members of the G-eneral Assembly realized that it was necessary to impose upon the taxpayer a burden in excess of the legal rate of interest, in order to enforce the speedy payment by the taxpayer of the taxes, for it can readily be seen that, if only the legal rate of interest were imposed upon the taxpayer for the nonpayment of his taxes when due, it would merely have the effect of making the city a lender of money to the various taxpayers until such time as suited their convenience to pay, and the city would be without means to carry on the various departments of its government. Hence there is incorporated in the charters of the cities of the various classes a provision whereby the taxpayer is called upon to pay an interest charge in the nature of a penalty upon all taxes that remain due and unpaid after a given period. This interest charge varies. In cities of some classes it is -more, while in others it is less, than in cities of the first class; but, being uniform in each class, it meets the requirements of the Constitution calling for uniformity.

The only appreciable difference between the act here complained of and the act which it amended and *556superseded is that in the act under consideration the rate of interest for the second year’s delinquency is increased from one-half of 1 per cent, for .each month, or fractional part thereof, that the tax remains unpaid, to 1 per cent. This change was found to be absolutely necessary in order, to enable the city to collect its revenue. So long «s the penalty for failure to pay amounted to but little, more than the rate at which money could be borrowed, the taxpayer did not pay his taxes, and the city was without means necessary to enable it to run its government. It became apparent that a more severe penalty would have to be imposed in order to speedily collect the taxes, and hence the increase in the rate of the interest charge; but this increase in rate called into play the application of no new principle, for the old rate was in excess of the legal rate, and the only complaint is that this present rate is usurious, not that it is inequitable, unjust, or confiscatory, and, this being.true, the-chancellor correctly held that the answer filed presented no defense.

Judgment affirmed.