Court Opinion

ID: 3833705
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:03:50.961641+00
Date Added: 2024-06-11T14:14:07.627386
License: Public Domain

On rehearing the contention is made "* * * that, in so far as this statute authorizes, or purports to authorize, the collection of a greater rate of interest than the bond on its face bears, that is, the seven per cent. on each assessment from date until maturity, and eighteen per cent. from maturity until paid," the same is contrary to the Constitution, art. 5, sec. 46r, which reads: *Page 495 
"The Legislature shall not, except as otherwise provided in this Constitution, pass any local or special law authorizing. * * * Sec. 46r, fixing the rate of interest."
Not so. As between the bondholder and the property owner these assessments are not founded on contract, but are a species of taxation, and hence cannot be said to be a debt. Neither is this eighteen per cent. interest as such, but a penalty prescribed for failure to discharge a duty imposed by law. And, it may be added, the same power which gives the state the right to impose a penalty for the nonpayment of general taxes gives the right to impose this eighteen per cent as a penalty for the nonpayment of these assessments when due.
Laws of Assessments (Hamilton) sec. 17:
"Taxation by special assessment is a compulsory charge upon real estate within a predetermined district, made under express legislative authority, for defraying in whole or in part the expense of a permanent public improvement therein, enhancing the present value of such real estate, and laid by some reasonable rule of uniformity based upon, in the ratio of, and limited by, such enhanced value."
And in the same volume, section 17:
"The theory of all taxation is, that taxes are imposed as a compensation for something received by the taxpayer. General taxes are paid for the support of government in return for the protection to life, liberty and property which government gives. Assessments of benefits accruing to property by reason of public improvements rest on the same principle. Both forms of taxation are for public purposes, and both are alike burdens upon property. The only substantial distinction between the two forms is, that general taxation is based upon value and subject to the constitutional rule of uniformity, while assessments are not."
McKeesport Borough v. Fidler, 147 Pa. 532, 23 A. 799, wasassumpsit by the borough to recover an assessment for the cost of constructing a sewer. The court said:
"Being a tax, the assessment cannot be collected as an ordinary debt by a common-law action, unless such remedy is given by statute. This view was fully adopted by the Supreme Court of the United States in the case of Lane County *Page 496 v. Oregon, 7 Wall. 71 [19 L.Ed. 101], in which explicit approval is given to various decisions of state courts, cited in the opinion, which hold that assessments of taxes do not create debts which can be enforced by suit. The case of Shaw v.Peckett, 26 Vt. 482, is one of those, in which the Supreme Court of Vermont said: 'The assessment of taxes does not create a debt that can be enforced by suit, or upon which a promise to pay interest can be implied. It is a proceeding in invitum.' Another of the cases cited was City of Camden v. Allen, 26 N.J. Law (2 Dutcher) 398. It was an action of debt to recover a tax brought by the municipality to which it was due. The Supreme Court of New Jersey said: 'A tax, in its essential characteristics, is not a debt, nor in the nature of a debt. A tax is an impost levied by authority of government upon its citizens or subjects for the support of the state. It is not founded on contract or agreement. It operates in invitum. A debt is a sum of money due by certain and expressed agreement. It originates in and is founded upon contracts express or implied.' "
The question here was raised and squarely passed upon inSeaboard Natl. Bank v. Woesten, 176 Mo. 49, 75 S.W. 464. That was a suit upon a special tax bill issued by the city of St. Louis for the reconstruction of a certain street in the city. The plaintiff sued as the assignee of the original contractor, to whom the tax bill was issued. There was judgment for plaintiff, and defendant appealed. The second error assigned was that the provisions of section 25, art. 6, of the charter of St. Louis, which allowed a recovery of fifteen per cent. interest per annum, if the tax bill was not paid within six months after demand, was unconstitutional, in that it violated section 53 of article 4 of the Constitution, identical with our Constitution, art. 5, sec. 46r, supra. The court said that the nature and character of the fifteen per cent. in question was set at rest in Town of Tipton v. Norman, 72 Mo. 380, andEyerman v. Blaksley, 78 Mo. 145. Quoting from the latter case, the court said:
" 'The provision of the charter allowing the holder of the tax bill fifteen per cent. per annum, if payment of the tax bill be not made within six months after payment is demanded and *Page 497 
refused, is of the nature of a penalty. It is not interest. Interest at ten per cent. per annum had been previously provided for, and, although the fifteen per cent. allowed by the ordinance in a certain contingency is denominated 'interest,' it is in reality a penalty to secure prompt payment, interposed for neglect of duty, and municipal corporations have the power to prescribe reasonable penalties for the neglect or refusal to discharge any duty imposed upon a citizen by a valid ordinance.' * * * Having thus reached the conclusion that the fifteen per cent. is a penalty and not interest, the constitutional contentions drop out of the case, for they depend upon the existence of the first postulate that it is interest. If it is not interest, but a penalty, the prohibition of section 53 of article 4 of the Constitution against the power of the General Assembly to pass any local or special law 'fixing the rate of interest' has no application. And the same is true as to the prohibition against the passage of a local or special law, where a general law could be made applicable. * * * The same power that gives the state a right to impose a penalty of one per cent. a month for failure to pay general taxes gives the city of St. Louis the right under its charter to impose a penalty of one and one-quarter per cent. a month for failure to pay a special assessment of benefits."
It follows that, not being interest, the imposition of the eighteen per cent. penalty is not in conflict with Const. art. 14, secs. 2 and 3, fixing the rate of interest, but is valid and enforceable.
HAYES, C. J., and KANE and WILLIAMS, JJ., concur; DUNN, J., disqualified. *Page 498