Court Opinion

ID: 3985356
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:41:36.317793+00
Date Added: 2024-06-11T14:18:15.802919
License: Public Domain

This is an appeal from an adverse judgment in a case brought by the car companies under our Declaratory Judgment *Page 430 
Act, Utah Code 1943, 104-64-1 et seq., to determine the right of the defendants and respondents herein to tax their cars. Although all the plaintiffs had separate causes of action, they joined in one action to avoid a multiplicity of suits, since the questions involved and the relief asked were the same in each instance.
All of the plaintiffs are non-residents and none of their cars were ever permanently within the state of Utah.
The tax commission had sought to collect taxes assessed since 1930 on cars belonging to the various plaintiffs. These cars consisted of tank, refrigerator, wine, poultry and beer cars which were leased by them to different railroad companies throughout the United States. The plaintiffs did not operate these cars and retained no control over them while they were being used by the railroads to transport commodities. The railroad company using the cars would route them through whatever states it desired. The cars were not leased in units but left on tracks convenient for the users and when a railroad needed a particular type of car it would take one or more as needed and pay the plaintiffs for the use on a mileage basis.
The plaintiffs had failed to pay the taxes assessed against their cars since 1930 and after numerous conferences between their representatives and the tax commission in which a compromise settlement of the taxes sought to be collected was discussed, this suit for a declaratory judgment was brought. After this action was brought naming the individual tax commissioners as well as the tax commission as defendants, the defendants sought to collect the taxes by attaching a car belonging to one of the plaintiffs which was found in the state of Utah, whereupon a temporary injunction was issued against the tax commission to restrain it from attaching plaintiffs' cars pending the outcome of this suit.
In their suit for a declaratory judgment plaintiffs alleged that the tax commission had no authority under Title 80 U.C.A. 1943, to tax their cars and if it was found that it did have this power, nevertheless that the manner in which *Page 431 
these cars were valued and assessed was in contravention of the United States Constitution and the Constitution of the State of Utah. They also pleaded that the tax commission was barred from enforcing the payment of any taxes due more than three years prior to the commencement of this action under the provisions of the Laws of 1937, Chap. 138, Sec. 1, now Sec. 104-2-24.10, U.C.A. 1943.
After trial the court found against plaintiffs on all points and dissolved the temporary injunction.
Plaintiffs assign as error the court's holding that there was statutory authority for the levying and assessment by the tax commission of taxes belonging to the American Car Corp. for the year 1932, the Northwestern Refrigerator Line Co. for the year 1933 and the Western Refrigerator Line Co. for the years 1931, 1932, and 1933. They contend that from March 24, 1931 until June 22, 1933, there was no statute authorizing the levying of taxes against car companies. They argue that whereas Sec. 5873, Laws of Utah 1917, expressly included car companies in property which was to be assessed by the state taxing board, the amendment of that section in the Laws of 1931, Chap. 53, did not include car companies. The amendment to Sec. 5873, Laws of Utah, 1917, as it appears in Laws of Utah 1931, Chap. 53, reads:
"All property owned by public utilities operated in this State and by pipe line, power, canal and irrigating companies operated in more than one county in the State, * * * must be assessed by the tax commission as hereinafter provided."
Sec. 5923 in Chap. 53, Laws of Utah 1931, provides that:
"By the first Monday in May the tax commission shall assess, * * * all property required by law to be assessed by it * * * the tax commission must apportion the total assessment of all property of such persons or companies to the several counties through or into which the property of such person or companies extends or operates, * * *, as follows: * * *
"4. The property of car companies * * *."
The power to tax is purely a legislative function and unless the legislature has provided for the taxation of the property any attempt to levy and assess a tax on property is *Page 432 
void. See Tamble v. Pullman Co., 6 Cir., 207 F. 30;City of New Orleans v. Stemple, 175 U.S. 309, 20 S.Ct.       1, 2 110, 44 L.Ed. 174; Western Leather  Finding Co. v.State Tax Commission, 87 Utah 227, 48 P.2d 526. A mere reading of the amendment to Sec. 5873 in the Laws of 1931 discloses that the property of car companies is not included in the list of property to be taxed, unless, as the tax commission argues, it is included in the term property owned by "public utilities." The statute itself does not define "public utilities," but as is stated in 43 Am. Jur., page 571:
"* * * the term `public utility' implies a public use and service to the public; and indeed, the principal determinative characteristic of a public utility, is that of service to, or readiness to serve, an indefinite public (or portion of the public as such) which has a legal right to demand and receive its services or commodities. The term precludes the idea of service which is private in its nature and is not to be obtained by the public * * *."
This property was clearly not owned by a public utility. The car companies involved in this suit do not purport to serve the public. They supply cars under contract to railroad companies and have no dealings with the public as such and the public has no right to demand any service from them. It is             3 apparent therefore that they are not public utilities. In Sinclair Refining Co. v. State Tax Commission et al.,102 Utah 340, 130 P.2d 663, in interpreting Sec. 80-5-3, R.S.U. 1933, which amended Sec. 5873, Laws of Utah 1931, this court said that car companies are not public utilities. It follows therefore that the court erred in holding that the taxes for the years 1931 to 1933 assessed against the car companies we have named above were valid.
Plaintiff further contends that there is no statutory authority for any of the taxes levied and assessed against any of the car companies after 1933, although Sec. 80-5-3, R.S.U. 1933, authorized the property of car companies to be assessed by the tax commission, because that section provides            4 only for such an assessment of "the property of car transportation companies, when they are operated as a unit in more than one county." They contend that this provision requires that the same company *Page 433 
which owns the property must also operate it as a unit in more than one county. Sec. 80-5-3, provides that:
"Pipelines, power lines and plants, canals and irrigation works, bridges and ferries, and the property of car and transporation companies, when they are operated as a unit in more than one county."
must be assessed by the tax commission. It is contended that the legislature meant by the phrase "the property of car and transportation companies, when they are operated as a unit" (italics ours), that the property of car companies, when such car companies are operated as unit in more than one county shall be assessed by the tax commission. The italicized word "they" referring to car companies and not to the property of such companies. This raises the question of whether the legislature intended to require the tax commission to assess the property of car companies only when such property was operated by the car company itself, but did not require such property to be so assessed when such property was operated by some other person, firm or corporation. Under the proposed construction there is no requirement that the property be operated at all. The only requirement under such construction is that the car company which owns the property must be operated as unit in more than one county. This would require the tax commission to assess not only movable property but stationary property, such as real estate and buildings, which was the property of such car company which was being operated as unit in more than one county. Obviously this was not the legislative intent. It would also be very unusual for the legislature to require the assessment by the tax commission where the property was owned and operated by the car company but not require it to be so assessed when it was owned by a car company and operated by a railroad company under a lease as a unit in more than one county. The basis of requiring the assessment by the tax commission is the fact that property is being operated as a unit in more than one county. Where it is stationed in one county, the county assessor can take care of it, and there is no occasion to require the assessment *Page 434 
by the tax commission. In view of the above we are convinced that the italicized word "they" does not refer only to car and transportation companies, but rather both from the standpoint of the punctuation and content of the section, refers to the property enumerated therein, viz., pipelines, power lines, and plants, canals and irrigation works, bridges and ferries, and the property of car and transportation companies. When any of such are operated as a unit in more than one county they are to be assessed by the tax commission. Under such construction the legislature intended that the tax commission should assess property of car companies which is operated as a unit in more than one county regardless of whether the car company which owned such property also operated it or it is being operated by some other company. It is immaterial which company operates it as long as it is being operated as a unit in more than one county.
What is the property of car and transportation companies which must be operated as a unit in more than one county in order to be subject to assessment by the State Tax Commission? Obviously the answer is rolling stock. That is the kind of property of car and transportation companies which can and does          5 ordinarily move from county to county. But what would have to happen to constitute the operation of such rolling stock as a unit in more than one county? If the rolling stock is owned by a car company and is operated by such company or by a railroad company under a lease as in this case, and such company which operates the property operates the same as a part of a railroad system which operates from one county to another, that is in more than one county as a part of one system, then such property is being operated as a unit in more than one county as that phrase is used in the statute and such property must be assessed by the State Tax Commission. This would be true even though all of the property belonging to such car company was operated exclusively within the limits of only one county during the entire period covered by the tax. In other words, if the company which *Page 435 
operates the rolling stock belonging to the car company operates such property as a part of a railroad system which covers more than one county, such property must be assessed by the State Tax Commission. On the other hand, if the rolling stock of a car company was operated by a railroad system which was limited in its operation to only one county, then such property would not be operated as a unit in more than one county and should be assessed by the county assessor of that county.
At this time we wish to call attention to a statement made by this court in Sinclair Refining Co. v. State Tax Commission, supra [102 Utah 340, 130 P.2d 664], in which in defining "car companies" we said:
"It is evident therefore that `car company' means one, not a railroad company which owns and operates cars used and moved on and over the rails and tracks of railroads or street railways." (Emphasis ours.)
If one were to fail to take into consideration the facts in that case it could be argued that this court has held that a "car company" must be one which both owns and operates its property. However, in that case, the company did both own and operate the property sought to be taxed and the question of whether the company in order to be considered a "car company" under the provisions of the act must both own and operate its property was not before this court.
Plaintiffs further contend that even if Sec. 80-5-3, R.S.U. 1933, does impose a tax liability against their property, nevertheless it is ineffective because as to rolling stock the legislature must provide the formula by which the average number of cars in the state during a taxing period can be ascertained and thus give the property a situs for taxing purposes, and also that the legislature must provide the formula for the valuation of such cars in conformity with the mandate of Art. XIII, Sec. 3 of the Utah Constitution, which, so much as is applicable here, reads:
"The Legislature shall provide by law a uniform and equal rate of assessment and taxation on all tangible property in the State, according to its value in money, and shall prescribe by law suchregulations *Page 436 
as shall secure a just valuation for taxation of such property, * * *." (Italics ours.)
Plaintiffs argue that the constitutional provision we have italicized above places exclusively in the legislature the power to provide a formula to ascertain the valuation of migratory property for tax purposes and to provide the formula to determine the average number of cars habitually present within the state so as to create a situs for taxation purposes.
We cannot subscribe to these contentions. The situs of personal property for taxation purposes is established by the presence, actual or constructive, within the taxing jurisdiction where it receives the protection of said jurisdiction. See Cooley on Taxation, 4th Ed., Vol. 2, Sec. 438.              6 Although the legislature may, if it wishes, create a situs for personal property for taxation purposes, the situs of personal property for taxation purposes does not depend upon legislative action.
Rolling stock is personal property but because of the very nature of its use the individual items are constantly changing and ordinarily do not remain in any particular jurisdiction long enough to create a taxable situs for the individual item for general property tax purposes, yet where there         7 are always present and being used within the taxing jurisdiction a certain number of these items a situs is established for such taxation purposes, and the value of the property is arrived at by determining the average number of such items which are present in the state. See Cooley on Taxation, 4th Ed., Vol. 2, Sec. 454; Union Refrigerator Transit Co. v.Lynch, 177 U.S. 149, 20 S.Ct. 631, 44 L.Ed. 708; AmericanRefrigerator Transit Co. v. Hall, 174 U.S. 70, 19 S.Ct. 599,43 L.Ed. 899; Pullman's Palace Car Co. v. Commonwealth ofPennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613; City ofCovington v. Pullman Co., 121 Ky. 218, 89 S.W. 116; Atlantic P.R. Co. v. Lesueur Co. Treas., 2 Ariz. 428, 19 P. 157, 1 L.R.A. 244; Union Refrigerator *Page 437 Transit Co. v. Lynch, 18 Utah 378, 55 P. 639, 48 L.R.A. 790.
Our constitutional provision that the legislature shall provide by law a uniform and equal rate of taxation on all tangible property and "shall prescribe by law such regulations as shall secure a just valuation for taxation of such property" does not mean that the legislature must               8 prescribe the formula which must be used by the tax commission in arriving at its assessments. The ascertainment of the amount of property to be taxed and its value is properly an administrative function. It is sufficient if the legislature provides the property shall be taxed and fixes the rate at which it may be taxed. See State v. Wells Fargo  Co., 38 Nev. 505,150 P. 836, wherein the contention was made that the intangible property sought to be taxed was not subject to taxation because the legislature had failed to adopt any rule or regulation governing the manner of determining the value of such property. Nevada had a constitutional provision similar to Art. XIII, Secs. 2 and 3, Utah State Constitution. The Nevada court in finding against this contention said, quoting from the case of State v.Central Pac. R. Co., 10 Nev. 47, 63:
"`No principal of valuation of property for purposes of taxation is prescribed by the laws of this state. The statutes define the different species of property, and provide that every species shall be assessed at its actual cash value. But as to the mode of ascertaining the cash value our law is silent. No subsidiary principles of valuation are laid down to guide the owner in making his statements in those cases where he is required to specify values; and the assessor is left equally unrestricted in making his estimates. It follows that owners and assessors must be guided by those general principles which everywhere determine the valuation of property, independently of statutory rules.'"
See also Commercial Electric Light  Power Co. v. Judson,21 Wn. 49, 56 P. 829, 57 L.R.A. 78; State v. Anderson,90 Wis. 550, 63 N.W. 746.
Our legislature has provided that all taxable property shall be assessed at its full cash value, Sec.         9 80-5-1, *Page 438 
R.S.U. 1933, which is defined in Sec. 80-3-1 (5) as meaning
"* * * the amount at which the property would be taken in payment of a just debt due from a solvent debtor";
it has provided that the state tax commission assess the property of car companies, Sec. 80-5-3; it has provided for uniform rates of levies, Secs. 80-9-1 to 80-9-9; it has provided for the equalization of the valuation of taxable property, Sec. 80-5-47. These provisions are sufficient to carry out the constitutional mandate that the legislature shall prescribe by law such regulations as will secure a just valuation for taxation of property. If these provisions are followed all property will bear an equal burden of taxation in proportion to its value.
Plaintiffs in their suit for a declaratory judgment had asked the court to find that if the assessments on their cars were valid, that neverthless, the commission was limited by the provisions of Sec. 104-2-24.10, U.C.A. 1943, which provides that an action for a liability created by the statutes of this state shall be commenced in three years. The court held that the state was not limited by a statute of limitations, and plaintiffs cite this holding as error.
There can be no doubt that if the tax commission had commenced an action to collect these taxes that Sec. 104-2-24.10 would have applied, since Sec. 104-2-31, U.C.A. 1943 provides that:
"The limitations prescribed in this article shall apply to actions brought in the name of or for the benefit of the state in the same manner as to actions by private parties."
This court has held that these provisions apply to taxes. SeeIn re Swan's Estate, 95 Utah 408, 79 P.2d 999; AttorneyGeneral of Utah v. Pomeroy, 93 Utah 426, 73 P.2d 1277, 114 A.L.R. 726; State Tax Commission v. Spanish Fork City,99 Utah 177, 100 P.2d 575, 131 A.L.R. 816. However, unless the seizure of this car for the purpose of sale, under *Page 439 
section 80-10-29, U.C.A. 1943, by the tax commission was "an action" as that term is used in section 104-2-24.10, the commission has not brought nor is it attempting to maintain an action in this case and it is not barred by that section. InCrismon v. Reich, 2 Utah 111, we held that in the absence of an express statutory provision to that effect the county assessor may not bring an action to collect taxes but is limited to the summary proceedings provided by statute for that purpose. It is immaterial here whether or not the tax commission may bring a separate action to collect this tax. Our problem is whether or not the proceeding to seize and sell one of the cars of one of the plaintiffs which the tax commission is attempting constitutes an action. If so, then such proceeding is barred by section 104-2-24.10 — otherwise it is not barred.
Sec. 104-2-47, U.C.A. 1943, defines the word "action" as used in the chapter on "Limitation of Actions" "as including a special proceeding of a civil nature." Such a proceeding is not defined by our statutes but from the cases cited in Words and Phrases, Perm. Ed., Vol. 39, commencing page 692, it       10, 11 apparently applies to proceedings in courts of justice or quasi-judicial bodies in which the rights of the parties thereto are determined, but which proceedings were not known as common law actions or proceedings in equity. The summary proceedings under Sec. 80-10-29, do not determine any rights or liabilities of the parties, those were determined in the assessment proceedings. Therefore, Sec. 104-2-24.10 does not bar these proceedings.
Section 80-10-1, U.C.A. 1943, provides that:             12-14
"Every tax has the effect of a judgment against the person, * * *."
A money judgment against the person, without the aid of an execution and without docketing the same in the county clerk's judgment docket, is not a lien against either the real or personal property of the judgment debtor. For effect of judgments in the district court see 104-30-15, in City Court, Sec. 20-4-20, in Justice Court, 104-75-30, in Federal Court, *Page 440 
52-5-1, U.C.A. 1943. To the effect that a general tax levied against personal property does not create a lien on either the property assessed or other personal property of the owner thereof. See Taylor Motor Car Company v. Salt Lake County,74 Utah 594, 281 P. 49. Section 80-10-2, U.C.A. 1943, expressly provides that:
"Every tax upon personal property is a lien upon the real property of the owner thereof, * * *."
This clearly indicates that the purpose of the above quoted provision of section 80-10-1, was not to create a lien on the real property of the owner of the assessed personal property. Sec. 80-10-1, is the first section in the chapter on "Collection of Taxes." Its purpose undoubtedly had to do with the means, manner and time of making such collection. It expressly provided that every tax has the effect of a judgment against the person, which indicated that every tax should be collected by the same means, in the same manner and within the same time as a judgment, unless otherwise expressly provided. This chapter expressly provides for collection of a tax against personal property, in a summary proceeding through seizure and sale of the personal property of the delinquent. For collection by county assessor, see Sec. 80-10-5, by county treasurer, see Sec. 80-10-47, and by tax commission see Sec. 80-10-29, U.C.A. 1943.
Sec. 104-37-1, U.C.A. 1943, provides for the issuance of an execution for the enforcement of a judgment at any time within eight years from entry, and section 104-37-6, U.C.A. 1943, provides for the execution of a judgment in certain cases after the expiration of the eight year period. In        15Youngdale v. Burton, 102 Utah 169, 128 P.2d 1053, 1054, we held that under these sections that within eight years "some form of proceeding in execution for collection" of a judgment might be instituted, but in case of a judgment for the recovery of money such proceeding in execution may not be had after the expiration of that period. This tax, being for the recovery of money, has the effect of a judgment for that purpose, the summary *Page 441 
proceedings provided for its collection is a form of execution for its enforcement, therefore under the above authority such proceeding may not be instituted after the expiration of the eight year period from the time the Tax Commision is empowered to enforce collection of the tax, to wit: Nov. 30th, as provided in sections 80-10-25, 26 and 27, U.C.A. 1943.
Plaintiffs further contend that the assessments of their cars were fraudulent per se because in their valuation no account was taken of their diverse ages but all were given the same valuation per car. We are not impressed with this argument in view of the fact that plaintiffs at no time before they    16, 17 commenced this action protested the valuation placed on their cars, as provided for in Sec. 80-7-12, U.C.A. 1943. Had any of the plaintiffs been of the opinion that their cars were being over-valuated they had an opportunity under this section to apply to the commission within the time allowed, to have the valuations corrected and they would have been entitled to a hearing of the matter. This they did not do. In our opinion the fact that cars of diverse ages were assessed at the same value is not sufficient evidence from which it must be inferred that the assessment was either arbitrarily or fraudulently made. This court is committed to the view that in the absence of fraud or bad faith on the part of the assessor, his valuation is conclusive unless changed by the Board of Equalization on application of the taxpayer, and that this remedy which the legislature had provided for the taxpayer is exclusive unless willfulness, arbitrariness, fraud or bad faith can be clearly shown. See Home Fire Ins. Co. v.Lynch, 19 Utah 189, 56 P. 681; Nutter v. Carbon County,58 Utah 1, 196 P. 1009; Cooley on Taxation, 4th Edition, Vol. 3, Section 1201.
Remanded with instructions to proceed in accordance with this opinion. Each party to bear its own costs.
PRATT, J., concurs.