Oase 80 — Action by the Board of 'Council of the City of Frankfort against the Frankfort .Safety Vault & Trust Co. to Recover Taxes on Mortgage Bonds.

May 27.

#### Board of Council of City of Frankfort v. Frankfort Safety Vault & Trust Co., &c.

APPEAL FROM FRANKLIN CIRCUIT COURT.

From a Judgment Sustaining a Demurrer to Plaintiff’s Petition, it Appeals

Affirmed.

Municipal Corporations — Mortgage Bonds — Suit to Recover Taxes —Insufficient Allegations — Presumption of Payment by Owner.

Held: 1. Kentucky Statutes, 1899, section 3422, provi'diee ¡that a city tax collector, iu all cases in which he is unable to find property to pay tiie taxes, .shall make a return at the end of his term of “No property found,” which, if true, Khali entitle him to credit therefor in his settlement with the city council. Section 3423 provides that if the collector fails -to collect all taxes, and to return “No property found” on those uncollected, ■his sureties- shall be liable therefor. .Section 34-24 provides that, after the- collector shall make1 his return of “No property found,” Jit shall be lawful for the city to' sue for the taxes. Held, that a city could sue for taxes on the collector’s return of “No property found,” though his term of office had not expired.

*6612. A petition by a city against a trust company for taxes due on mortgage bonds, wfhidh .alleges that the trust company, as trustee for unknown persons, owns, and controls the property, and both, individually andi as trustee for unknown persons is indebted for the amount of the taxes, but which does not allege that thia unknown persons have not paid the taxes, is demurrable, .as, in the .absence of a contrary allegation, it will be ■presumed that the actual owners have .paid the taxes, While if ithe company owns the property itself, it is mot liable to an assessment by the city, but is presumed to have been assessed, under Kentucky Statutes, 1899, sections 4977, 4978, by the State authorities.

T. H. CROCKETT, JOHN W. RAY, and IRA and W. H. JULIAN, FOR appellant.

POINTS AND AUTHORITIES.

1. Tax collector may make a valid return of “mo property found” before the end of his official term. Kentucky Statutes, ■secs. 3389 and 3424; Dana, &c. *y.*Banks, &c., 6 J. J. M., 229; Cooley on Taxation, 2d ed., p. 283; .Same was donfe in Boajrd of Councilman v. Deposit Bank of Frankfort, 466 and 1384, and in many other cases.

2. This suit in equity is maintainable independently1 of .any return by the tax collector. Present Comslt. Ky.„ sec. 14; Kentucky Statutes, sec. 4921; Dillon on Mumic. Corps., .see. 818; Louisville & Jeffersonville Ferry Co v. Commonwealth, 57 S. W., 624, 626; 'City of Newport v. Commonwealth, 59 iS. W., 845; Bath County v. Farmers’ Bank, 49 .S. W., 1115; Simpson County Bank v. City of Franklin, 19 Ky. Law Rep., 248; G-reer v. City of Covington, 83 Ky., 419.

JOHN B. LINDSEY, attorney for the F. *&*C. Railway Co.

The appellant does not by the averments of the petition proceed .against the Frankfort Safety Vault & Trust Company *as the trustee of the F. & 0. Railway Company.*Nor do the ■averments .of the petition set out any cause of action (against ithe railway company nor ask any relief against it, hence the demurrer to the petition was properly sustained, .and] the petition mot having been amended was properly dismissed with costs.

AUTHORITIES CITED.

23 Ky. Law Rep., 998, and authorities therein cited; American Wire & Nail Co. v. Bayless, 91 Ky., 94; Trimble v. Lewis, 14 Ky. Law Rep., 527; Kentucky Statutes, secs. 3(396, 3422.

*662T. L. EHEÍLEIN, foe appellee, Frankfort Safety Vault & Trust Company.

POINTS AND CITATIONS.

1. The judgment *balow*.should be affirmed because the appellant is prosecuting an appeal upon a partial transcript without notice of the filing of a schedule. Indeed, the .schedule hara not been filed at all before the clerk who granted t/ha appeal. Teirrill v. Roland, S6 Ky., 67; Brockle v. Brockle, 7 Ky. Law Rep., 760; Sacra’s Heirs v. Carter’s Exr., 22 Ky. Law Rep., 124; Mitchell v. .Stoddard County Bank, 23 Ky. Law Rep., 1562.

2. If the court should reach the conclusion that the first /point herein is not well taken, then no action can he maintained .for the recovery of taxes without express statutory authority, and the express statutory authority does not exist in this ease. Thompson v. Allen County, 115 U. S., 550; Baldwin v. Hewitt, Auditor, 88 Ky., 673; McLean .County Precinct v. The Bank, 81 Ky., 254; Jones v. Gibson, 82 Ky., 5.61; Grand Rapids Schools Furniture Co. v. Trustees, &e., 19 Ky. Law Rep., 1601.

3. Wherlel authority exists to maintain an action foort taxes upon a condition precedent, the right of notion, does mot exist until the condition has been completed. The condition in this case is a return of *nulla hona*to the clerk’s ofiioe and that 'return could only be made at the expiration of the term 'of office of the tax collector. Kentucky Statutes, secs. 3421, 3422, 342T4.

Opinion of the court by-

JUDGE NUNN

Affirming.

This action was brought by appellant against the appellees to recover taxes upon $160,000' mortgage bonds. The language of the petition, so far as is necessary to quote, is as follows: ' “The plaintiff says the Frankfort Safety Vault & Trust Company, both individually and as trustee for certain persons now unknown to plaintiff, is indebted to the city of Frankfort in the sum of $2,320, city taxes for the year 1899, and interest from August 1, 1899, until paid. The said indebtedness arose as follows: On the 10th day of January, 1899, said company, as trustees for certain persons now unknown to plaintiff, held, owned, and controlled in the city of Frankfort property situated in said city of the value of $160,000, subject to taxation for purposes of *663said city, which property has been legally and regularly assessed as of January 10, 1899, for taxation under ad valorem levies of said city for the year 1899. Said property consisted of one certain mortgage executed in trust by the Frankfort & Cincinnati Railway Company to the Frankfort Safety Vault & Trust Company, dated December 2, 1898, and bonds and other obligations secured thereby. The appellant made other allegations to the effect that the city assessor had failed to assess this property, and that the tax collector had reported the property for taxation to the city clerk, and that the council of the city had reported' the matter of assessment to the finance committee, which committee, after" investigation thereof, after notice to the Frankfort Safety Vault & Trust Company, recommended to the council that the list reported by the tax collector be confirmed, and that the council at a regular meeting confirmed the assessment, and the assessment was duly certified by the city clerk to the tax collector for collection; that he made an effort to collect it, but could not. find any property upon which to make a levy; that he tendered a tax receipt for same, and demanded payment, which was refused, and the collector made a return, in substance, of “No property found,” and on the 24th day of July, 1899, this action was filed.

The appellees demurred to the petition, and the special judge agreed on to try the demurrer sustained it for the reason, in his opinion, the action was prematurely brought, and, in his opinion, stated that the statute seemed to contemplate that the collector shall not make a return of “No property” until the expiration of his term of office. We are incluined to the opinion that the lower court was mistaken in its construction of the statutes. Section 3424 of the Kentucky Statutes of 1899 says: “After the collector *664shall make his return of no property found as to any unpaid taxes, it shall be lawful for the city to institute proceedings by petition, in any court having jurisdiction thereof, against such delinquent tax-payer for the satisfaction of such taxes. . . .” ' As will be seen, there is nothing in this section limiting the time of his making a return of “No property found” until his term of office expires, and such a construction would be unreasonable. To so construe it would give delinquent taxpayers every opportunity to dispose of, or get out of the reach of tax gatherers and courts, all the property subject to taxation. The two preceding sections of the statutes have reference to and deal with settlements with the collector and his sureties. Section 3422 provides that the collector, in all cases in which he shall be unable to find property to pay the taxes, shal1 make a return at the end of his official term of “no property found,” and, if this be true, then he shall receive credit for same in his settlement with the council. Section 3423 says, if the collector fails to collect all taxes, and to return, in substance, “No property found,” on those he fails to collect, then his sureties shall be liable on his bond to the city for the amount of such tax. From a careful reading of the last two sections, it is evident that they have no application to the time when the city may institute* proceedings against delinquent taxpayers for the collection of taxes. The court is of the opinion that, under the authority of 111 Ky., 667, 23 R., 908, 64 S. W., 470, the lower court should have sustained the demurrer, for the reasons in that opinion given.

The petition does not state who owned the mortgage, or any bond or bonds secured thereby, and there is no allegation that the owners of them had failed to pay the taxes thereon; and it must be presumed, without an allegation *665to the contrary, that the citizen has complied with his duty in the payment oí his taxes. The appellee trust company may have held them for others, but it must be presumed that the owners hatre paid the taxes. If the trust company owned the bonds or any part thereof, then it is not liable under an assessment made by the city assessor or tax collector. It is presumed to have been assessed under sections 4078 and 4077 by the auditor, treasurer and secretary of State.

Wherefore the judgment of the lower court is affirmed.