Reid v. Multnomah County

196 P. 394, 100 Or. 310, 1921 Ore. LEXIS 90

• Court: Oregon Supreme Court
• Decided: March 22, 1921
• Status: Published

Opinion

BROWN, J.

1, 2. When the pertinent facts in this case are analyzed in the light of the statute relating to assessment and taxation, all intricate questions disappear. Were the promissory notes made and delivered by William Beid, plaintiff, to deceased in his lifetime, what they appeared to be? In other words, were these three certain promissory notes at the time of their assessment the written evidence of an indebt- ’ edness of $100,000 due and owing from Beid to the Pelton estate? We believe that both these inquiries should be answered in the affirmative. Assuming that these notes were what the law presumes them to have been; that is to say, that they were valid promissory notes made by Beid to Pelton for a valuable consideration, then, in that case, were they paid and canceled prior to March 1, 1913, as found by the lower court? We think this question should be answered in the negative. We are convinced that the lower court erred in finding that these notes had been satisfied prior to March 1, 1913. From the evidence, from the exhibits, and particularly from Beid’s statement made to the board of equalization, it is manifest that the three promissory notes aggregating $100,000, executed by William Beid to David C. Pelton in March, 1912, constituted proof of a valid indebtedness, and were unpaid at the hour of 1 o’clock a. m. on March 1, 1913. We have investigated the report of the doings of the administrator as exhibited by the evidence, and there is no suggestion contained therein that the promissory notes were paid or satisfied in any way prior to the settlement of the estate. The presumption is that the law has been obeyed, and if said notes had been paid during Reid’s term as administrator, he would have reported the same to the court: Section 799, par. 34, Or. L. Plaintiff Reid well understood this, and in his statement to the board of equalization filed September 13, 1913, said:

“Upon settling the estate of David 0. Pelton, deceased, the undersigned, William Reid, caused said promissory notes of $100,000 to be canceled, and he has arranged with Ellen Pelton and Etta Reid, his wife, sole heirs of the estate of David C. Pelton, deceased, respecting payment '* * by bim to them.”

Reid, after having been appointed administrator of the Pelton estate, took possession of said notes as such administrator, and in compliance with his duty as such caused them to be appraised as property of the estate. The inventory, as by law commanded, sets forth the fact that in accordance with the statute certain real and personal property situate in Multnomah County, Oregon, “has been exhibited by the administrator,” and that “we appraise the same at the sums set opposite each item in said inventory.” The three notes of Reid’s bearing date March 14, 1912, aggregating $100,000, were duly appraised. By his oath administrator Reid, as provided by Section 1117, Or. L., verified this appraisement. He paid the inheritance tax upon the appraised valuation of the personal property of the estate, which included the notes. His testimony in the court below establishes the fact that he obtained the money evidenced by these notes from his father-in-law, and used it in his purchase of Lots 1 and 2, Block 21, East Portland. His friend, T. V. Ward, testified that the money which Reid obtained from Pelton went into tbe lots. Reid swore upon the witness-stand that he was the owner of Lots 1 and 2, Block 21, East Portland, which were paid for, in part, with tbe money obtained from Pelton, and tbat Pelton at no time owned or bad any interest in tbat property (see statement). If tbe lots were plaintiff’s, the notes evidenced a just indebtedness due from him to the Pelton estate. Furthermore, as appears by the final account made by Reid as administrator, it is seen that be collected bis commission as such administrator upon $273,297.07, the appraised value of the personal property of the estate, which valuation included his indebtedness to the estate as evidenced by said promissory notes. Tbe estate of David C. Pelton, deceased, owned all tbe property that was assessed. The promissory notes executed by Reid in favor of Pelton represented actual value. An indebtedness was due and owing the Pelton- estate from tbe administrator, tbe written evidence of which consisted of tbe three promissory notes. Tbe record before us abundantly satisfies our minds upon tbat point. It is a presumption of law, satisfactory until successfully controverted by other evidence :

“That a promissory note * * was given or indorsed for a sufficient consideration.” Section 799, par. 21, Or. L.

Plaintiff Reid has not overcome this presumption. There are, however, many circumstances that add to, corroborate, and thus strengthen the presumption tbat tbe law makes relating to tbe sufficiency of tbe consideration for tbe notes. If these notes were tbe property of tbe Pelton estate and of tbe value of $100,000 when tbe inventory was caused to be made and filed by the administrator as provided by law; if they were the property of the Pelton estate and of the value of $100,000 for the purpose of the inheritance tax collected by the state; if, on May 14, 1913, at the time plaintiff filed his final account as administrator of the Pelton estate, they were the property of that estate and were worth $100,000 for the purpose of Reid’s commission as administrator, — then they were worth $100,000 for the purpose of assessment and taxation in Multnomah County on March 1, 1913.

3. It is our opinion that, under the terms of Section 4232, Or. L., providing that “all personal property situate or owned within this state, except such as may be specifically exempted by law, shall be subject to assessment and taxation,” and, under the provisions of Section 4234, Or. L., defining personal property as including “all debts due or to become due from solvent debtors, whether on account, contract, note, mortgage, or otherwise,” the indebtedness as evidenced by the Reid notes is assessable.

4. Section 4268, Or. L., is as follows:

“The assessor, * # shall, on or before the first Monday in March * * , proceed and assess all taxable property within his county * # . Except as otherwise provided by law, every person shall be assessed in the county where he resides at the hour of 1 o’clock a. m. on March 1st of the year when the assessment shall be made for all real and personal property owned by him within such county. * * ”

“All personal property not exempt from taxation shall be valued at its true value in cash * * Section 4269, Or. L.

“At the time prescribed by law the assessor in each county shall ascertain by diligent inquiry the names of all persons liable to taxation in his county who by law are assessable to him, and also all the taxable personal property * # which by law is assessable by him ® Section 4272, Or. L.

“Every assessor shall require any person liable to * * be assessed by him * * to furnish such assessor :

“1. A list of all the real estate of such person * * , showing the true cash value of every parcel of such real estate, or interest therein, owned by such person '* # .

“2. A list of all the personal property of such person, * * liable to taxation in his county; which list shall include a statement to be made by such person, * * showing the true cash value of such personal property, or of the several items thereof, owned by such person, * # or in which such person # # has any interest.

“The assessor shall require such person, * * to make oath that, to the best of his knowledge and belief, such list, whether of real or personal property, or both, contains a full and true account of all the real or personal property, or both, or of any interest therein, of such person, # * liable to be taxed in said county, and the true cash value of such real or personal property. * * . Should any such person, * * refuse to furnish and to swear to any such list, the assessor shall ascertain the taxable property of such person * * and shall appraise the same from the best information to be derived from other sources. Upon the failure of any such person * * to make such valuation, the assessor shall be deemed to be the authorised agent of such person * * for the purpose of making said valuation, and the same, as given in the assessment-roll, shall bave the same force and effect as if madé under oath by said person * * . The assessor may increase any valuation made by any such person * # for purposes of assessment and taxation.” Section 4273, Or. L.

“When any person is assessed as * # administrator, he shall be assessed for the real and personal property held by him in such representative character at the full value thereof.” Section 4277, Or. L.

“Each assessor shall give three weeks’ public notice in some newspaper printed in his respective county * * setting forth that on the second Monday in September the board of equalization will attend * * and publicly examine the assessment-rolls', and correct all errors in valuation * * - Section 4291, Or. L.

“The county judge, county clerk and assessor of the several counties of this state shall constitute a board of equalization to examine and correct the assessment-rolls # # and to increase or reduce the valuation of the property * * assessed * * .” Section 4292, Or. L.

“Any person who shall have petitioned for the reduction of a particular assessment * * , who shall be aggrieved by the action of such board, may appeal therefrom to the circuit court of the county. * * If, upon hearing, the court finds the amount at which the property was finally assessed by the board of equalization is its actual full cash value, and the assessment was made fairly and in good faith, it shall approve such assessment; but if it finds that the assessment was made at a greater or less sum than the actual full cash value of the property, or if the same was not fairly or in good faith made, it shall set aside such assessment and determine such value * * .” Section 4299, Or. L.

As will be noted from the statement, William Reid, as administrator of the estate of David 0. Pelton, deceased, while pretending to perform his duty as such administrator in complying with the revenue laws of this state, on April 11, 1913, listed the assessable property of the estate as comprised of an automobile and some office furniture, of the total value of $450. Under the law of this state as set forth herein, it became necessary for Henry E. Reed, the then assessor of Multnomah County, Oregon, upon the failure of administrator Reid to prepare a list containing the true valuation of the property of the estate which he was administering, to ascertain the taxable property of such estate for the purpose of arriving at the value thereof. It became his duty, as such assessor, to make a list of all the personal and real property of the estate. This duty the assessor performed. He searched the records of the probate court, and upon inquiry and from his best knowledge valued the money, notes, and accounts, for the purpose of assessment, at $80,890. On September 5, 1913, he served notice on William Eeid, as administrator of the estate of David C. Pelton, of the assessment thus. made. Eeid, administrator and plaintiff, appeared before the board and filed a petition in which he sought to have the assessment reduced by the elimination from the list of taxable property of his own indebtedness as shown by the three certain promissory notes executed by himself to the deceased during his lifetime. He admitted, when testifying in the lower court, that at the time he filed the list of taxable property with the assessor containing property of the value of $450 only, he had other personal property of the estate in his possession, namely, the note of Crossett Timber Company valued at $25,000; Stoddard note of $1,700; Carty note of $1,650; Independent Laundry Company note of $100; and that the cash value of these notes was about $20,000. His own admissions show that he intended to commit a fraud against the revenue law of this state, and the evidence as a whole shows that his indebtedness to the Pelton estate was taxable. Therefore, under our statute, the assessor and the board of equalization committed no error. The duty of making the valuation was cast upon the assessor. The law of our state is clear and plain on that subject.

5. Suggestion was made in the lower court that, the money obtained by plaintiff from deceased having been borrowed for the purpose of purchasing real estate, to assess the indebtedness represented by the notes given therefor would be inequitable, for the reason that it would result in a tax both upon the land and upon the money borrowed. At the time of the assessment in controversy, the indebtedness represented by these notes was assessable. It was not exempt. Notwithstanding the fact that the money was borrowed with the intention of paying for real estate, and that this real estate was subject to taxation, nevertheless the debt owed by the borrower to the lender as evidenced by the notes in this case was taxable. For the purpose of exemption we must look to the statute, and we find it there written that all real and personal property not specially exempted is taxable. It is commonplace law that statutes exempting property from taxation are to be strictly construed. It is true that in 1919 the legislature, by enacting Chapter 104, Laws of 1919, added paragraph 9 to Section 3554, L. O. L. (Or. L. 4268), exempting from taxation all notes secured by recorded mortgages on real property.

Plaintiff refers to the case of Silverfield v. Multnomah County, 97 Or. 483 (192 Pac. 413). He can draw no comfort from that case. This court held that Silverfield was not the owner of the merchandise assessed against him in the amount of ten thousand dollars. It further held that his filing an affidavit to that effect with the board of equalization did not preclude him from restraining collection of the tax under the facts in that case. It also ruled that the assessment on property not owned, was not maintainable as overvaluation of property owned by him.

6. The plaintiff says that the title to Lots 1 and 2, Block 21, Bast Portland, is clouded. It will be remembered that these are the lots which were, in part, purchased with the money obtained from Mr. Pelton. It has pleased the plaintiff to call these lots his, and he has testified that Pelton never owned any interest in them. Again, he has testified that the notes were simply given as evidence to show Mr. Pelton’s interest in the aforesaid lots. It was plaintiff’s wrongful conduct in the matter of the assessment involved in this litigation that caused the title to the lots to be clouded. He now seeks a court of equity to remove the cloud which his own act has cast upon his title. At the threshold he meets with a maxim of equity which rejects his suit. He who comes into a court of equity must come with clean hands.

It has been written that:

“Whenever a party who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him m limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.” 1 Pomeroy’s Equity Jurisprudence (4 ed.), § 397, and the following authorities under note b: Lewis v. Holdrege, 56 Neb. 379 (76 N. W. 890); Pineville Land & Lumber Co. v. Hollingsworth, 21 Ky. Law Rep. 899 (53 S. W. 279); in Ashe-Carson Co. v. Bonifay, 147 Ala. 376 (41 South. 816); in Allstead v. Laumeister, 16 Cal. App. 59 (116 Pac. 296); in Miller v. Kraus (Cal. App.), 155 Pac. 834; in Wellsville Oil Co. v. Miller, 44 Okl. 493 (145 Pac. 344); in Conners v. Conners Bros. Co., 110 Me. 428 (86 Atl. 843); Harton v. Little, 188 Ala. 640 (65 South. 951); Michigan Pipe Co. v. Fremont Ditch Co., 111 Fed. 284 (49 C. C. A. 324); City of Chicago v. Union Stock Yards & Transit Co., 164 Ill. 224 (45 N. E. 430, 35 L. R. A. 281); Scott v. Austin, 36 Minn. 460 (32 N. W. 89, 864).

Again we quote from this eminent law-writer:

“Any really nnconscientious conduct, connected with a controversy to which he is a party, will repel him from the forum whose very foundation is good conscience.” 1 Pomeroy’s Equity Jurisprudence (4 ed.), §404; Sanders v. Cauley, 52 Tex. Civ. App. 261 (113 S. W. 560); Pendleton v. Gondolf, 85 N. J. Eq. 308 (96 Atl. 47); Baird v. Howison, 154 Ala. 359 (45 South. 668).

A court of equity is impelled to deny its remedies to a complainant who has been guilty of bad faith, fraud, or tax-dodging in the immediate transaction which forms the basis of his suit.

This case is reversed and ordered remanded.

Reversed and Remanded.