Golden Valley County v. Estate of Greengard

Plaintiff brought this action to recover from *Page 175 the estate of Nathaniel Greengard, deceased, the amount of certain personal property taxes, which it is alleged were levied for the years 1918 to 1934, both inclusive, against a stock of merchandise and fixtures in a clothing store operated by the said deceased during said years, within Golden Valley county.

The complaint sets forth a separate cause of action for taxes for each of said years. The defendants interposed a general demurrer. The demurrer was sustained, and plaintiff has appealed.

The allegations in the complaint are identical as to each of the years from 1918 to 1934 inclusive, with the exception of dates and amount. Either a cause of action is alleged as to each year, or no cause of action is stated for any of the years. It will be necessary therefore to consider only one of the alleged causes of action. We shall consider the cause of action for the year 1919.

It is alleged "that during the years 1918 to 1934 both inclusive, Nathaniel Greengard, now deceased, operated a men's clothing store in the city of Beach, Golden Valley county, North Dakota;" "that during all of the years hereinbefore mentioned said N. Greengard, or said estate of N. Greengard, deceased, has had personal property subject to taxation within said county . . . and state. . . ."

"That during the year 1919 the said defendants, or their predecessors in interest in and to said clothing store and the property thereof, reported and stated to the duly qualified and acting assessor of the city of Beach, North Dakota, in which said Greengard's store is located, stock and fixtures of the value of $7,068 and that thereafter the taxes were duly levied against such valuation and the defendants and their predecessors in interest paid to Golden Valley county a tax in the amount of $198.02; that the actual valuation of the property of N. Greengard at Beach, North Dakota, that should have been reported and returned to the assessor was $15,156.65."

"That the report to the assessor was false and fraudulent and was known by the predecessors in interest of the defendants to have been false and fraudulent at the time the same was made, and that the plaintiff and its officers have just ascertained the facts with reference to such false and fraudulent statements."

It is further alleged that immediately upon ascertaining the facts the county auditor of Golden Valley county proceeded to enter in the *Page 176 assessment roll of property which has escaped taxation the amount of tax for the year 1919, with penalty and interest at the rate and in the amount for which said omitted property should have been assessed in said year 1919, namely, $115.60 taxes and $263.57 interest and penalty, making a total of taxes, interest and penalties for said year 1919 of $379.17; that the said county auditor corrected the books in accordance with the facts, and "added such omitted property and assessed it at its true and full value and figured taxes thereon at 50% of the true value as provided by law during the year 1919."

It is further alleged that due notice was given that said property was added to the assessment books; that the board of county commissioners duly reviewed the taxes so assessed, and equalized and confirmed the same, and that they have been duly entered upon the tax list of said county.

It is further alleged that the county commissioners have authorized the institution of this action for the collection of said taxes.

The appellant contends that Nathaniel Greengard made a false report to the assessor of his stock of merchandise and fixtures for the year 1919, and that as a result the greater portion of such property was not assessed, and that the county auditor of said plaintiff county was authorized and required to deal with that amount of the value of said stock and fixtures which had not been reported as property that had escaped taxation, and to proceed under chapter 198, Laws 1925 (Supp. §§ 2304a1-2304a4), as amended by chapter 280, Laws 1931, to correct the assessment, and add such unreported property to the assessment books, and assess it at its full and true value; and that the plaintiff county is entitled to recover the taxes which have been levied pursuant to assessment so made, together with interest and penalties thereon.

The respondent contends, on the other hand, that the statute authorizes a county auditor to assess only omitted property; that it does not authorize the auditor to revalue property, or assess again, and add to the value of, property that the assessor has assessed, even though the valuation placed thereon in the assessment made by the assessor is too low; that according to the allegations in the complaint here no property was omitted; that the entire stock of goods and fixtures was assessed, and the taxes levied pursuant to such assessment paid; that the *Page 177 purported assessment by the auditor was without authority of law, and that the taxes based thereon are invalid.

The authority of the county auditor to make the alleged assessments involved in this case is predicated upon chapter 198, Laws 1925, as amended by chapter 280, Laws 1931. The law, as enacted in 1925, provided:

"Section 1. Whenever the county auditor shall discover that taxable real or personal property has been omitted in whole or in part in the assessment of any year or years, or that any person has given to the assessor a false statement of his personal property, or that the assessor has not returned the full amount of all property required to be listed in his district, or has omitted property subject to taxation, he shall proceed to correct the assessment books and add such property and assess it at its full and true value.

"Section 2. The county auditor shall give notice by mail to the person owning such property or in possession thereof, or his agent, of his action in adding property to the assessment books and shall describe the property in general terms and notify such person to appear before him at his office at a specified time within fifteen (15) days after the date of such notice, to show cause, if any, why such property should not be added to the assessment rolls.

. . . . . . . . . . .

"Section 3. The board of county commissioners, at its next regular meeting after the assessment of such omitted property shall hear all grievances and complaints thereon and shall proceed to review and equalize such assessments.

"Section 4. The county auditor shall enter the valuation of such property as equalized by the county board and shall extend the taxes thereon, and upon completing such assessment and extending the taxes thereon, shall correct the current year's tax list in accordance with such assessment if the current year's tax list has not been certified to the treasurer for collection. In case the current year's tax list has been certified to the treasurer for collection, the county auditor shall certify to the county treasurer a tax list covering omitted property which hasbeen added to the tax list for the current year.

. . . . . . . . . . . *Page 178

"The county auditor of each county shall keep a book to be called `Assessment Roll of Property which has Escaped Taxation' in which he shall enter from time to time all property, real or personal, which shall have been omitted in the assessment of any previous year or years, or the assessment of which shall have been set aside by the judgment of any court, such property having thereby escaped taxation. If omitted property is assessed for a prior year or years, the county auditor shall enter the assessment of such property in the assessment roll of property which has escaped taxation at the rate and in the amount for which such omitted property should have been assessed in said year or years. Omitted property shall be assessed for each year during which it escaped assessment and taxation."

The effect of this statute, and the power conferred upon the county auditor thereby, was considered by this court in Marshall Wells Co. v. Foster County, 59 N.D. 599, 231 N.W. 542. In that case, a store building, in the village of McHenry, in Foster county, located on lots 7 and 8, had been erroneously assessed as an improvement upon, and a part of, lot number 5. Taxes were levied, and one who had purchased and become the owner of lots 7 and 8, and the building thereon, paid the taxes. Thereafter, the county auditor undertook to assess the building as a part of lots 7 and 8 as omitted property that had escaped taxation, and the county commissioners reviewed and equalized such assessment on the theory that the above quoted statutory provisions authorized them to do so. This court held that the acts of the county auditor and the county commissioners were without authority of law, and, hence, invalid. The ruling of this court is epitomized in the syllabus in that case thus: "Under chapter 198 of the Session Laws of 1925, the county auditor is authorized to assess and add to the assessment books, real or personal property which has been omitted in whole or in part in the assessment of any year or years; but this authority is expressly limited to omitted property and does not include the power to revalue property which has been listed and assessed by the assessor."

Following that decision, the Legislative Assembly, by chapter 280, Laws 1931, amended § 1 of chapter 198, Laws 1925, to read as follows: "Whenever the county auditor shall discover that taxable real or personal property has been omitted in whole or in part in the assessment *Page 179 of any year or years or that any building or other structure has been listed and assessed against a lot or tract of land other than the true site or actual location of such building, or that any person has given the assessor a false statement of his personal property or that the assessor has not returned the full amount of all property required to be listed in his district, or has omitted property subject to taxation, he shall proceed to correct the assessment books in accordance with the facts in the case and shall correct such error or omission in assessment and shall add such omitted property and assess it at its true and full value, and if a building or other structure, assessed as real estate is in the assessment thereof, described as though situated upon a lot or tract of land other than that upon which it is in fact situated, the auditor shall correct the description and add the assessment thereof to the assessment of the lot upon which it is actually located; provided, however, that the rights of a purchaser for value without actual or constructive notice of such error or omission shall not be prejudiced by such correction, addition or assessment."

In § 2 of the Act (Laws 1931, chap. 280), the legislature declared the reason for the amendment then made as follows:

"Whereas the Supreme Court of North Dakota has held that a building assessed against an erroneous description does not constitute property omitted from taxation;

"Therefore, an emergency is hereby declared to exist and this Act shall take effect and be in force from and after its passage and approval."

The only change made by the legislative assembly in 1931, in chapter 198, Laws 1925, was in § 1 thereof. The other provisions of said chapter 198, Laws 1925, remained precisely as they were. The language of the amendment made in 1931, as well as the positive declaration of the legislature, demonstrates to a certainty that the sole purpose of chapter 280, Laws 1931, was to change the rule of the statute as it had been announced in Marshall Wells Co. v. Foster County, supra, only in so far as it declared "that a building assessed against an erroneous description does not constitute property omitted from taxation," and to extend the provisions of the statute to a case where "any building or other structure has been listed and assessed against a lot or tracts of land other than the true site or actual location of such building," *Page 180 and in such case to confer power upon the county auditor to "correct the description and add the assessment thereof to the assessment of the lot upon which it is actually located," but this without prejudice to the rights of a purchaser for value without actual or constructive notice of the error or omission. Laws 1931, chap. 280.

It will be noted that the several provisions of chapter 198, Laws 1925, quoted above, all refer to omitted property. In Marshall Wells Co. v. Foster County, supra, this court said that the authority which the statute conferred upon the county auditor and the county commissioners "is expressly limited to omitted property and does not include the power to revalue property which has been listed and assessed by the assessor." Chapter 280, Laws 1931, did not in any manner change this rule, but recognized it, and retained it in force, except in so far as it prevented assessment of a building or structure that had been omitted in fixing the value of real estate. If the lawmakers had desired to change the rule announced in Marshall Wells Co. v. Foster County, supra, that the authority of the county auditor to assess and add property to the assessment books is limited to omitted property, and that the auditor has no authority to assess and revalue any property that has been listed and assessed by the assessor, even though the assessor may have overlooked and failed to consider some item or element of value in property listed and assessed by him, they would doubtless have done so. It would have been a simple matter to have provided that where some item or element of value in a property has not been considered and included in the assessment made by the assessor, the county auditor shall have the power to assess and add to the assessment the value of that which the assessor failed to assess. But, the lawmakers did not do this. On the contrary, they said, in effect, "we agree that the authority conferred upon the county auditor by the laws of this state is and should be expressly limited to omitted property and does not include the power to revalue property which has been listed and assessed by the assessor," with the single exception we desire to provide further that "if a building or other structure, assessed as real estate is in the assessment thereof, described as though situated upon a lot or tract of land other than that upon which it is in fact situated, the auditor shall correct the assessment upon which it is actually located;" but in such case "the rights of a purchaser for value without actual or constructive *Page 181 notice of such error or omission shall not be prejudiced by such correction, addition, or assessment."

Under the laws in force during all the time involved in this controversy, it was the duty of every owner of taxable personal property to list the same with the assessor, and he was required "when called upon by the assessor" to "make out and deliver to the assessor a statement verified by oath, of all the personal property in his possession or under his control, and which . . . he is required to list for taxation." Comp. Laws 1913, § 2102; Laws 1925, chap. 206. It was, and is, the duty of the assessor to "call at the office, place of business or residence of each person required . . . to list property and list his name, and . . . require such person to make a correct statement of his property." And each person, whose name and property is so listed, is required to "enter a true and correct statement of such property in the form prescribed, which statement shall be signed and verified by the oath of the person listing the property, and delivered to the assessor, who shall thereupon assess the value of such property and enter the same in his book." Comp. Laws 1913, § 2128. Section 2108, Comp. Laws 1913, provides that when, under the law, a merchant is "required to make out and deliver to the assessor a statement of his personal property, he shall state the value of such property pertaining to his business as a merchant." But the duty of the assessor does not end with procuring the statement. It was, and is, his duty "to determine the true and full value" of the property listed. Comp. Laws 1913, §§ 2103, 2128; Laws 1925, chap. 206. The assessor has authority to examine persons under oath in event he is of the opinion that a "full, fair and complete list of . . . property" has not been made. Comp. Laws 1913, § 2107.

The laws in force during all the time involved in this controversy provided: "The . . . president and auditor of each incorporated village, and the mayor, auditor and senior aldermen from the several wards of each city . . . shall meet on the second Monday of June . . . for the purpose of reviewing the assessment of property . . ., and they shall immediately proceed to examine, ascertain and see that all taxable property . . . has been properly placed upon the list and duly valued by the assessor; and in case any property, real or personal, shall have been omitted by inadvertence or otherwise, it shall be *Page 182 the duty of said board to place the same upon the list with the true value thereof, and proceed to correct the assessment, so that each tract or lot of real property, and each article, parcel or class of personal property shall be entered on the assessment list as the true value thereof; . . ." Comp. Laws 1913, § 2133. It must be presumed that the assessor and the members of the board of review performed their duties, and there is no allegation in the complaint in this case that they did not.

Chapter 198, Laws 1925, as amended by chapter 280, Laws 1931, authorizes a county auditor to assess and add to the assessment books only omitted property. Every provision of chapter 198, Laws 1925, as amended by chapter 280, Laws 1931, relating to the procedure to be followed by the auditor and the county commissioners in assessment and review of assessment, has reference only to omitted property. If the auditor discovers that the assessor has failed to return the full amount of all property required to be listed in his district, has omitted property subject to taxation, or that a false statement of personal property has been made by the person required to list the property, so that as a result certain property, subject to taxation, has not been assessed, then, and only then, is the county auditor authorized to act. It is not enough that there be a false statement — the false statement must have resulted in taxable property being omitted by the assessor. If a false statement of property is made, and taxable property omitted therefrom, and the assessor himself discovers the falsity and actually includes the omitted property in the assessment, the county auditor has no authority to act, because in such case, notwithstanding the false statement, there is no omitted property to assess and add to the assessment. It is the fact that there has been given to the assessor "a false statement of personalproperty" which has resulted in property being "omitted" from assessment that authorizes the auditor to "proceed to correct the assessment books and add such property and assess it at its full and true value."

A statement is a recital, a narrative. The Century Dictionary and Cyclopedia, Vol. 9. A statement of personal property is a recital — a list of such property. A statement of personal property is one thing, and a statement of the value of personal property another. It is the "false statement of personal property" (a statement from which property *Page 183 has been omitted) which authorizes the county auditor to proceed and assess and add the property that has actually been omitted. In the very nature of things, the value of a stock of merchandise is generally, if not always, a matter of opinion. Under the statute, it is the duty of the assessor to determine the value of each stock of merchandise listed for taxation. The value which a merchant places upon the stock in no sense dispenses with, or lessens, the duty of the assessor "to determine the true and full value" thereof, or the duty of the local board of equalization to review the assessment made by the assessor. These duties exist whether the assessor does, or does not, receive a statement from the owner of the property.

There is no allegation that the owner did not correctly list his personal property. The allegation is that he falsely reported the value of the stock to be less than it was. There is no allegation that the owner concealed any part of the stock, or otherwise prevented the assessor from viewing the property and determining the value thereof. According to the allegations of the complaint, the stock was assessed each year, taxes were levied, and such taxes have been paid.

The county auditor did not assess and add omitted property; he attempted to reassess property that had been assessed by the assessor, and reviewed by the local board of review.

The assessments in question here were unauthorized and furnish no basis for a cause of action. The decision of the trial court is correct. The order appealed from is affirmed.

NUESSLE and SATHRE, JJ., concur.