Title: Stroop v. Rutherford County
Citation: 567 S.W.2d 753
Docket Number: N/A
State: Tennessee
Issuer: Tennessee Supreme Court
Date: June 5, 1978

567 S.W.2d 753 (1978) Robert T. STROOP and wife, Mary H. Stroop, J.W. Robinson and wife, Callie M. Robinson, Claiborn J. Harrell and wife, Rebecca Bell Harrell, and Bobby Tarpley and wife, Reba C. Tarpley, suing Individually and on behalf of others similarly situated, Appellants, v. RUTHERFORD COUNTY, a Political Subdivision of the State of Tennessee, Ben Hall McFarlin, County Judge of Rutherford County, Tennessee, Ed Elam, County Court Clerk of Rutherford County, Tennessee, Allen J. Stockard, County Trustee for Rutherford County, Tennessee, and Homer Jones, Register of Deeds for Rutherford County, Tennessee, Appellees. Supreme Court of Tennessee. June 5, 1978. Kenneth W. Snell, Murfreesboro, James M. Sykes, Nashville, for appellants; Joe K. Walker, Springfield, of counsel. Larry K. Tolbert, Wm. T. Sellers, Murfreesboro, for appellees; Smith &amp; Sellers, Murfreesboro, of counsel. BROCK, Justice. The plaintiffs bring this action on behalf of themselves and others similarly situated to recover payments of privilege taxes levied *754 upon transfers of realty pursuant to an unconstitutional private act of the legislature, Chapter 172 of the Private Acts of 1969. Pursuant to the motion of the defendants, the trial court dismissed the complaint for failure to state a claim upon which relief could be granted. See Tenn.R. Civ.P. 12.02. The sole ground asserted in the motion to dismiss was that: The Chancellor did not sustain this ground but did grant the motion, stating: This appeal, then, presents two questions: (1) When a county, as distinguished from the state or a municipal corporation, exacts payment of a tax under an unconstitutional enactment, may the taxpayer recover such tax paid without a formal declaration of protest at the time of payment, provided, such payment is made involuntarily and under duress? (2) If protest is not required, do the facts stated in the complaint in this case, constitute a sufficient allegation of duress? We hold that a taxpayer need not make a formal protest at the time of payment in order to be entitled to recover county taxes illegally exacted. The legislature has provided a statutory procedure for the recovery of state and municipal taxes which have been illegally exacted, T.C.A., §§ 67-2301 through 67-2313, but these statutes do not govern actions to collect county taxes illegally exacted; the taxpayer is left to resort to his common law remedies for recovery of county taxes paid.[1]Holloway v. Putnam County, Tenn., 534 S.W.2d 292 (1976); Bell v. Clay County, 168 Tenn. 6, 73 S.W.2d 685 (1934); Little Rock and M.R.R. Co. v. Williams, 101 Tenn. 146, 46 S.W. 448 (1898); Cincinnati N.O. &amp; T.P.R.R. Co. v. Hamilton County, 120 Tenn. 1, 113 S.W. 361 (1908). One of the statutory requirements for the recovery of taxes paid to a municipality or the state is that the taxpayer make formal protest at the time of payment of such taxes. T.C.A., §§ 67-2303, 67-2313. But, we must turn to the common law to determine whether protest at the time of payment is necessary in order for the taxpayer to maintain a suit for recovery of taxes paid to a county. Although some of the older cases held to the contrary, the modern common law rule is that if the taxes in question were paid under compulsion or duress and not voluntarily it is not necessary that protest at the time of payment be shown in order for the taxpayer to maintain an action to recover such taxes. Merchants Despatch Transportation Corp. v. Ariz. State Tax Commission, 20 Ariz. App. 276, 512 P.2d 39 (1973); Southern Service Company v. Los Angeles County, 15 Cal. 2d 1, 97 P.2d 963 (1940); Howard v. Augusta, 74 Me. 79 (1882); Pere Marquette Ry. Co. v. Ludington, 133 Mich. 397, 95 N.W. 417 (1903); Atweel v. Zeluff, 26 Mich. 118 (1872); Koewing v. West Orange, 89 N.J.L. 539, 99 A. 203 (1916); Jaynes v. Heron, 46 N.M. 431, 130 P.2d 29 (1942); Mercury Mach. Importing Corp. v. City of New York, 3 N.Y.2d 418, 144 N.E.2d 400 (1957); Horgan v. Taylor, 36 R.I. 232, 89 A. 1058 (1914); State v. Akin Products Company, Tex.Civ.App., 279 S.W.2d 409 (1955), *755 aff'd, 155 Tex. 348, 286 S.W.2d 110 (1956); Swanton Village v. Town of Highgate, 128 Vt. 401, 264 A.2d 804 (1970); Great Northern Ry. Co. v. State, 200 Wash. 392, 93 P.2d 694 (1939); Annot., 142 A.L.R. 1198 (1943); 72 Am.Jur.2d 342-43 State and Local Taxation § 1082 (1974); 84 C.J.S. 1286-87 Taxation § 638 (1954). No published opinion of this Court appears to have decided this issue, although there are statements in some of the cases to the effect that protest at the time of payment is required in order for the taxpayer to maintain an action for recovery. Most of these statements appear in cases involving attempts to recover taxes paid to the state or to municipalities which, of course, by the terms of the statute, must have been paid under protest. The statements appear also in cases in which the contested issue was whether the taxes were paid as the result of duress or coercion, not whether payment under protest was a requirement. Actions to recover taxes which have been illegally exacted and paid involuntarily under coercion or duress are in the nature of actions for money had and received, a form of restitution. Holloway v. Putnam County, supra; 72 Am.Jur.2d 340, State and Local Taxation §§ 1077, 1078 (1974). Of course, one may not have restitution of a sum of money voluntarily paid, whether for taxes or some other demand. Id. at § 1080. Accordingly, one who desired to later contest the legality of a payment which he was forced to make has often resorted to the technique of formally protesting at the time of making such a payment in order to facilitate the task of later proving that the payment was not made voluntarily. In other words, entering a protest at the time of payment is one means, but not the only means, of providing proof that the payment was involuntarily made. 66 Am.Jur.2d 1049, Restitution and Implied Contracts § 111 (1973). We hold that if the taxpayer makes a payment of county taxes involuntarily and under duress, as discussed infra, he may maintain an action to recover the same, although he did not make formal protest at the time of payment. We now consider the question whether the complaint in this case sufficiently alleges that the taxpayers made their payments involuntarily and as the result of duress or coercion. The tax in question was imposed by Chapter 172 of the Private Acts of 1969 which provided: The complaint alleges that Chapter 172 of the Private Acts of 1969 is in violation of Article XI, Section 8, and Article I, Section 8, of the Constitution of Tennessee, in that, it is contrary to the general statutes of this State, T.C.A., §§ 67-4101 and 67-4102, Item S, and has been so declared by the Chancery Court for Rutherford County in a final decree in another case. The complaint alleges that plaintiffs paid the taxes in question under duress and compulsion, in that, upon presenting themselves at the Rutherford County Register's office for the purpose of recording deeds to parcels of real estate located in Rutherford County which they had sold or purchased, they were Plaintiffs further allege: In our opinion, these allegations sufficiently allege that the taxes in question were paid under duress and compulsion and not voluntarily. Bell v. Clay County, supra. See Trower v. San Francisco, 152 Cal. 479, 92 P. 1025 (1907); New Smyrna Inlet Dist. v. Esch, 103 Fla. 24, 137 So. 1 (1931); Coleman v. Consolidated Realty Company, 239 Ky. 788, 40 S.W.2d 387 (1931); Malin v. La Moure County, 27 N.D. 140, 145 N.W. 582 (1914). It has been aptly said that the terms "voluntary" and "involuntary," when used with reference to the payment of taxes, are not applied in their ordinary sense. Singer Sewing Machine Co. v. Teasley, 198 Ala. 673, 73 So. 969 (1916); Maxwell v. San Luis Obispo County, 71 Cal. 466, 12 P. 484 (1886). Thus, with respect to the payment of taxes, it has been recognized that a payment may be voluntary although it is made unwillingly and, on the other hand, it is held that it is not necessary for the taxpayer to be subject to physical force or that his volition be actually overriden in order that a payment may be deemed involuntary. Annot., When May Payment of Tax or Assessment be Regarded as Involuntary or Made Under Duress, 64 A.L.R. 9, 11 (1930). It has been further recognized that the rules of contract law which are applied to determine whether a payment was made or an obligation incurred under duress do not properly apply to the payment of taxes. Thus, in Chicago v. Klinkert, 94 Ill. App. 524, 527 (1901) the court said: Keeping in mind these precautions, we consider the general principles by which our decision must be determined. First, it is generally agreed that if a taxpayer pays an illegal tax demand, with full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity for making such payment at the time, such a payment must be deemed to be voluntary, and cannot be recovered back. City of Memphis v. W.M.S. Co., 46 Tenn. App. 153, 326 S.W.2d 828 (1959); 72 Am.Jur.2d 343 State and Local Taxation § 1081 (1974). See also Union Pacific Railroad v. Dodge County, 98 U.S. 541, 25 L. Ed. 196 (1879). In Bell v. Clay County, supra, this Court said that: The Court in the Bell case found that duress was sufficiently alleged, reciting the facts as follows: Sufficient duress has also been found when administrators or executors were denied the right to file probate papers or secure testamentary letters unless they paid a fee imposed by an unconstitutional enactment, since payment under such circumstances was deemed to be involuntary. Trower v. San Francisco, supra; Malin v. La Moure County, supra. We find that the decision of the Kentucky court in Coleman v. Consolidated Realty Co., supra, is the most persuasive authority which has come to our attention, for the reason that it involved an unconstitutional statute imposing taxes almost exactly like that involved in the instant case. The statute there was the Mortgage Recording Tax Act which levied a tax upon the privilege of having mortgages recorded and empowered the county clerk to refuse to record mortgages unless the tax was prepaid. We quote extensively from the Coleman case as follows: The case at bar is essentially identical to that decided by the Kentucky court in Coleman and by the Minnesota court in State ex rel. McCardy v. Nelson, supra. We agree with the conclusion reached in each of those cases that illegal taxes paid in order to obtain registration and recordation of deeds or other instruments of conveyance of real estate are paid under duress and coercion, rather than voluntarily, thus entitling the taxpayer to maintain an action to recover such taxes. This conclusion is consistent with the principles announced in Bell v. Clay County, supra, that taxes wrongfully collected by a county may be recovered "if paid under duress sufficient to create an urgent and immediate necessity" and that "[t]he payment of a sum of money to avoid the hazard of a disproportionately larger sum is sometimes treated as an involuntary payment, made under duress, so that a suit to recover the sum paid may be maintained." 168 Tenn. at 9, 73 S.W.2d at 685-86. See also 72 Am.Jur.2d 342 State and Local Taxation § 1081 (1974). Accordingly, we reverse the decree of the Chancery Court and remand this cause to that court for further proceedings consistent with this opinion. Costs are adjudged against appellees. HENRY, C.J., and FONES, COOPER and HARBISON, JJ., concur. [1] For a special exception, see T.C.A., § 67-933, which requires that public utilities and railroads protest payment of county, as well as state and municipal, taxes as a prerequisite to contesting validity of assessment of such taxes.