Reed v. His Creditors

39 La. Ann. 115

• Court: Supreme Court of Louisiana
• Decided: February 15, 1887
• Docket: No. 9628
• Status: Published

Opinions

The opinion of the Court was delivered by

Watkins, J.

In January, 1884, Charles H. Keed, syndic of his own estate, filed a final account and tableau of distribution, on which he stated that the total assets realized by sale of his property were $8,022.

This he proposed to distribute'—

1st — To the auctioneer, notary, in repairs, and insurance... .$ 515 00

State taxes, witli privilege........................... 183 00

City taxes, with privilege ........................... 612 50

Attorneys’ fees and cost............................. 1,007 20

2d — To Mrs. Hill’s mortgage of.......................... 10,765 38

According to this account, the debts, charges and taxes enumerated had absorbed all the assets, and nothing remained for distribution among ordinary creditors, a list of which is appended thereto. On this appears State taxes for 1875, 1876 and 1877, aggregating $450; and city taxes for 1874, 1875,1876, 1877,1878 and 1879, aggregating $1,085 —but without interest, cost or privilege, and not entitled to participate in the distribution.

The city of New Orleans opposed the homologotion of this account, alleging that there were taxes due her by the syndic for the years 1869 to 1883, inclusive, aggregating $4,827.20, and that said taxes, with interest, are secured by lien, privilege and mortgage on the property of the insolvent; that many of said taxes are in judgment; and all should have been placed upon said account and paid by preference out of the proceeds of sale — and her prayer is to that effect.

James D. Houston, State Tax Collector for the Upper District of New Orleans, likewise opposes the homologation of said account and tableau, alleging that taxes are due the State for the years 1869, 1875, 1876,1877 and 1878, amounting to $1,313.80, and that same are secured by privilege and mortgage, and are entitled to be paid out of the proceeds of sale by preference over all other claims.

The account and tableau were also opposed by E. M. Valletta, demanding $35 for compensation for services rendered while provisional syndic; and the Teutonia Insurance Company opposed, demanding $75 insurance premium due.

I.

The first question we are met with is the exception of Mrs. Hill to the capacity and authority of J. D. Houston, State tax collector, to appear in court and represent the State, and set up a claim to the proceeds of sale in payment of State taxes.

It appears from the evidence that, after sale of the property to Mrs. Hill, the syndic took a rule on the city of New Orleans, the Attorney General, James D. Houston tax collector, Mrs. D. G. Hill, and other persons who are mentioned in the certificate of mortgages annexed, and procured the cancellation and erasure of all the mortgages, privileges and liens therein enumerated, and the remission of same to the proceeds of sale.

In suppoit of his objection, counsel for the syndic cited Article 210 of the Constitution, and Alexandria vs. Hyman, 35 Ann. 301.

The answer to them is that in City of New Orleans vs. Wood, 37 Ann. 782, this Court held that “Article 210 is not self-operative;” and Alexandria vs. Iiyman only applies to suits against the taxpayer for the collection of taxes. Here we have quite a different case. The property, once subject to the State taxes claimed, has been disposed of at judicial sale to Mrs. Hill, the mortgage creditor of the insolvent, who is at the same time the tax delinquent. Upon his application, as the syndic of his own estate, he procured the cancellation and reference above mentioned, and filed his final account and omitted therefrom the taxes, which provoked this opposition.

The surrender, judicial sale and judgment of cancellation have placed the property assessed out of reach of seizure and sale by the collector. We can perceive no good reason why he is not entitled to make direct claim for the amount due.

In 13 Ann. 497, The State, through Thomas Askew, State Tax Collector, vs. The Southern Steamship Company, the Court said: “It appears to us that the right to collect the taxes presupposes a right to stand in judgment in suits of injunction, and even to institute an action in the name of the State whenever the taxes cannot he otherwise collected.

“ It is true that the law has indicated a more summary proceeding than suit for the collection of the taxes; still, as the sheriff is charged with their collection, for which he is compelled to give bond, we can see no sufficient reason why he should not be permitted to use the name of his principal, in a direct action, instead of seizing property, if it is evident that the seizure will occasion an injunction or other unnecessary delay. * * * * * * * *

“ It docs not lie in the mouth of a defendant to question the right to sue when he admits the propriety of the same, by the issue he tenders, and a denial of the right of the State to recover.” Budd vs. Houston, 36 Ann. 959; United States vs. Lee, 107 U. S. 196; Blackwell on Tax Titles, p. 553.

•The exception was properly overruled.

II.

Mrs. Hill further excepts to the alleged appearance of Thos. Duffy, civil sheriff', in opposition of the city, “ because he has no right to appear.”

'The opposition of the city is in her own name alone, though it is signed O. F. Buck, city attorney, and Blanc & Butler, “of counsel for civil sheriff'.”

On the trial of the merits, there was introduced in evidence a. contract between the mayor and city council, disclosing some right in the civil sheriff to collect arrearages of delinquent taxes due the city.

But this is not a suit for the enforcement of that contract, in any sense. It does not change the issue, nor, in any way, affect the status of the parties litigant.

III.

Mrs. Hill likewise urges as an exception to opponents’demands the prescription of two, three, ñve and ten years — both in respect to the taxes, and the privileges, liens and mortgages securing same.

The precepts of the Civil Code, under the title of Prescription, in our opinion, bear no relation to the limitation prescribed by statute in respect to the collection of the revenue.

First, because taxes are not debts in the ordinary acceptation of the term, but forced contributions, levied by the sovereign upon the property of the subject for the support and maintenance of government. City of Shreveport vs. Gregg & Ford, 28 Ann. 836; City vs. Davidson, 30 Ann. 541; City vs. Waterworks, 36 Ann. 436; Desty on Taxation, sec. 7; J. A. Morris vs. J. L. Lalaurie, 38 Ann.-, just decided.

Second, because the Constitution and laws have not provided that action shall be brought in the courts for the collection of taxes due the State. Alexandria vs. Hyman, 35 Ann. 301.

We do not doubt the correctness of the opinion of the Court, as expressed in Graham vs. Tignor, 23 Ann. 570. In that case the Auditor had brought suit on a series of notes defendants had executed for the purchase price of school lands. It was an “action” in the sense of R. C. C. 3540.

The State, in that case, occupied the position of an ordinary suitor. In this case the State appears through the tax collector (who is represented in this Court by the Attorney General) for the sole purpose of taking from the tax delinquent — an insolvent person — the taxes due the State; and out of a fund created by the insolvent's own act, assented to by his mortgagee, who purchased the property at judicial sale.

Clearly, the right of action by the State and city only arose when the judgment of the court was rendered requiring the cancellation of the privileges and mortgages securing their taxes, and their reference to the proceeds of sale.

The prescription urged here is against “the claim” of the Stale and city. We understand by this that it is statutory, and predicated upon the theory that, by the inaction and failure of the officers of the State and city to timely enforce the collection of the taxes, the right had lapsed.

We do not understand the gravamen of the opinion of the Court in the Succession of Zachary, 30 Ann. 1262, to favor that theory. It goes no further than Graham vs. Tignor, which it approves.

It says: “The corporation of the city of-New Orleans, as the State, is a body politic and, in law, an intellectual person; and, as ¡1 may acquire and be released by prescription, there is no reason it should be excepted from its effects, when it appeal's in court and claims as a creditor. In this instance its action is barred by the lapse of ten years.”

That was a suit for city taxes, which had not been sued to judgment as they have in this case.

But we think the concurring opinion of Chief Justice Manning more correct, and prefer to follow it.

He said: “T concur in the decide in this case, but I do not wish to be understood as assenting to the doctrine that general laws regulating prescription affect the rights of the State. The State is sovereign, and when she enacts laws fixing the time within which actions must be brought upon pecuniary obligations, or for the establishment of the rights of property, she is legislating for her citizens and is not imposiug restrictions upon herself, and such laws do not affect her own rights, unless she, in terms, includes herself within their operation.'''

Laws appertaining to prescription are stricti juris, and when sought to be applied to the State are strictisime jure.

At most, they constitute a bar to the assertion of rights judicially. They do not operate in pais. They are neither self-acting nor self-enforcing.

Prescription proceeds upon the theory that one, in whose favor a right once existed, has lost judicial recourse for its enforcement by reason of his own neglect, for such a length of time, that it would be against equity to permit its assertion.

Such an equity cannot arise in favor of the subject, as against the sovereign, by reason of the failure of her officers to perform their duties. Certainly not, unless the Legislature has so declared in unmistakable terms.

In State vs. Viator, 37 Ann. 735, this Court said: “The revenue laws hold tax collectors to a verv rigid accountability, and on the other hand give him exceptional facilities for collecting.

“ They are sui generis, and are not to be assimilated to those on any other subject.”

The statement of facts upon which our opinion is predicated discloses that there are no “current taxes” for the years since the adoption of the Constitution of 1879, involved. Only those denominated “ back taxes,” or “ delinquent taxes,” and such as come within the province of the. ordinance for the relief of delinquent taxpayers are involved. Hence, there arises no question pertaining to the proper construction of the Constitution, or the laws since enacted pursuant thereto.

The Constitution, and the ordinance for the relief of delinquents, dissevered “back taxes” from “current taxes.” They did not operate a repeal of prior revenue laws; but same were thereby most distinctly left in full force for, at least, all purposes of collecting the taxes that had been assessed under them.

This Court had occasion to place an interpretation upon one feature of this question in The State ex rel. Mrs. Jackson vs. The Recorder, 34 Ann. 178, in which these principles were announced, viz:

1st That “ under the express terms of Act 68 of 1870, and Act 42 of 1871,” taxes were secured by a mortgage as well as a lien and privilege.

2d. That Act 96 of 1877 did not affect the mortgages by which they were secured.

3d. That Act 77 of 1880, which provides that “all tax mortgages and tax privileges shall be prescribed by three years from the filing of the tax rolls,” has “no application to either privileges or mortgages for pre-existing taxes.”

In the more recent case of Davidson vs. Lindoff, 36 Ann. 765, Jackson vs. Recorder was affirmed.

Tn that case, city taxes for the years 1871 to 1879, inclusive, were involved. The Court say: “Section 20 of the city charter of 1879,” (1869 was clearly intended,) “provided ‘that the taxes assessed and levied by virtue of this act •* * * are hereby declared a lien and privilege upon said property, * * * and said lien and privilege shall exist in favor of the city of New Orleans *' * * until the same shall be fully paid; and same shall be paid in preference to all mortgages, or other incumbrances, other than taxes due the State.’ Under this law the tax privileges of the city of New Orleans were practically ■Impreseriptibie. It remained unaffected by any subsequent legislation until Act 96 of 1877. * * * * * * *

“ But, clearly, privileges existing for prior taxes are entirely outside of the language and meaning of the law.

“ Conceding then that the law applies to taxes of the city of New Orleans, after its passage, it is, nevertheless, merely a statute, of prescription, subject to interruption in the modes prescribed by law, and applicable only as a defense in bar of action muI judgment.

“ But here we find that, in every case, the city has sued and recovered judgment, with the recognition of the lien and privilege which had been recorded in the mode prescribed by law.”

This Court has repeatedly held that tax statutes have no retrospective operation, unless this purpose is specifically declared therein. 33 Ann. 39, City vs. Virgnole; 33 Ann. 258, Succession of Dupuy; 31 Ann. 781, City vs. R. W. L.; 29 Ann. 416, New Orleans vs. Day, 33 Ann. 858, City vs. Poydras Orphan Asylum.

These taxes are thus lemoved from the operation of those statutes.

The opinion in Davidson vs. Lindoff is conclusive as to the entire controversy, so far as it appertains to city taxes, all of which are evidenced by tax bills, in due form, and judgments regularly pronounced and recorded.

In respect to the State taxes, we find that the excerpt from the city charter, above quoted, is in very nearly the exact language of Section 37 of Act 42 of 1871, and Section 36 of Act 114 of 1869, and the opinion in Davidson vs. Lindoff is precisely applicable in all respects.

But, inasmuch as rhe taxes asserted in the tax collector’s opposition are only those of 1869, 1875,1876,1877 and 1878, those only of the last two years are prescriptible under Act 96 of 1877; but, as we liavc seen, tlie mortgage securing them is unaffected by it.

In addition to this, we find the State taxes of 1875, 1876 and 1877, and city taxes of 1874, 1875, 1876,1877, 1878 and 1879 — without privilege or mortgage — entered on the syndic’s account, on the list of ordinary debts; and this was not opposed by Mrs. Hill, and the account was duly homologated so far as not opposed. That is a clear and unmistakable acknowledgment of the liability of the insolvent for them.

The certificate of mortgages shows the timely inscription of the assessments in the book of mortgages, so as to perfectly preserve their effect against third persons.

The pleas of prescription were properly rejected.