Court Opinion

ID: 9713351
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:14:00.660109+00
Date Added: 2024-06-11T18:23:18.249045
License: Public Domain

Smith, J.
(dissenting). We have here no minor tragedy. A family is losing its home. The' 'sovereign power is exercising a doctrine abhorred by equity, that of forfeiture. We speak not in condemnation. The statutes so permit. Possibly there is no other recourse available. That is not for our consideration. But we do have for consideration the validity of its exercise. When an officer of the government, as here, a stranger to the title, undertakes to sell that, which he owns not, we scrutinize his acts with a jealous eye. He has no rights except those vested in him by scrupulous adherence to statute made and provided. We are keenly aware of the inviolability of private property, the sacred attributes of the homestead, protected by the genius of the common law and the letter and spirit of our Constitutions. We are *283equally aware of the demands of our sovereign people that the tide of the tax moneys flow on and still on, unhaltingly and undiminished, that the powers of the government not waste or falter through the machinations of the wicked, or the wiles of the adroit. The statute, then, will he enforced to the letter. But it must be to the letter. Every “i” must be dotted and every “t” crossed. A sale founded on forfeiture receives no indulgence from a court of equity, tax moneys or no.
It is clear from the most rudimentary considerations that a taxpayer who has, in good faith, twice attempted to pay his taxes will not be permitted by the chancellor to lose his home for the nonpayment of these very taxes. True, his attempted payment was refused, both by the township treasurer, and, later, “down to the Court House” where he went to the wrong official to redeem. But the attempts should not be ignored by us, cannot be, in fact, if we are to do equity. With my Brother Black’s trenchant observations respecting the regrettable atrophy of equity I am in full accord. My own views on the subject will be found in another tax case, written contemporaneously herewith, Consumers Power Co. v. County of Muskegon, ante, 243. I agree with my distinguished Brother that upon the facts before us the sale was without warrant. Possibly, since we are in substantial agreement as to result, I might well cherish my views in silence. But the opposing view, that of the court below and that of Mr. Justice Kelly, that there is no way to grant these homeowners the relief prayed, betrays a misconception of the nature of taxes and penalties unjustified in our law and which, I fear, may sire additional misshapen progeny unless restrained.
The controversy in this case concerns a charge of $12, described as the “1947 taxes” (exhibit 8), and *284an additional charge which, under the statutes, could be collected “upon all taxes paid on or after said 10th day of January” (CL 1948, § 211.44 [Stat Ann 1950 Rev § 7.87]), here amounting to 36 cents. This additional sum required if payment is not made until after a certain date is accurately described by the trial court as a “penalty.”
What is the nature of the additional charge imposed for delinquent payment of taxes? Does it become a part of “the” tax imposed, so that the tax becomes (in our case) the indivisible sum of $12.36, which can be liquidated only by the payment of $12.36?
Clearly not. However the delinquency charge is denominated (interest, penalty, charge, or what not), it remains separable in theory and amount, although statutes (see CL 1948, §§ 211.40, 211.60 [Stat Ann 1950 Rev §§ 7.81, 7.104]) commonly permit the tax remedies (i. e., lien, sale) to be employed in its collection. Thus the Oregon court, in Livesay v. DeArmond, 131 Or 563, 569 (284 P 166, 68 ALR 422), analyzed the situation in these terms:
“It seems desirable to notice the distinction between a tax and any sums exacted by law for the failure to promptly pay it. Such exactions are often termed interest, yet the reasons which support them are unlike those upon which interest charges are founded. In the absence of some unusual provision in the statute authorizing the levying of a tax it is generally held that a tax is not a debt. * * * Therefore, an unpaid tax draws no interest unless legislation expressly directs a different result. * * * Prom Colby v. City of Medford, 85 Or 485, 527, 528 (167 P 487), we quote:
“ ‘In passing, it may be noted that when interest is charged on a delinquent tax it is not regarded as interest in the sense that it is a consideration for the forbearance of money, but it is deemed *285to be a penalty; and when interest, so called, is charged, it is sustained on the theory that it is a means to insure prompt payment of the tax and it is not a part of the tax. State v. Superior Court, 93 Wash 433 (161 P 77).’ ”
Likewise the Missouri court in State, ex rel. Crutcher, v. Koeln, 332 Mo 1229, 1237 (61 SW2d 750):
“With regard to what may be called the interest penalty this court en banc, in Seaboard National Bank v. Woeston, 176 Mo 49, 62 (75 SW 464), held, that the statute (now section 9941) does not change the character of the imposition; that it is not an ‘additional tax’ at all, for regarded as a tax it would or possibly might be illegal, as the amount of the taxes that the constitution permitted had already been levied; and that it is not ‘interest’ in any proper sense, because it is a penalty imposed for a failure to discharge a duty that can be lawfully demanded. * * * And the same rule applies to other burdens imposed by statute for the nonpayment of delinquent taxes, which being in the nature of penalties (citations omitted) clearly come within the broad scope of the word ‘penalties’.”
The holding of the Washington court in Henry v. McKay, 164 Wash 526, 533 (3 P2d 145, 77 ALR 1025) is in accord:
“The provision exacting payment of interest for delinquency in the payment of taxes does not make the interest a part of the tax, but pertains to the remedy employed to compel payment of the tax when due. The legislative power to exact from a property-owner interest for delay in discharging his obligation is upheld upon the ground — a proposition which needs no citation of sustaining authority — that the sovereign, the State, has the authority to tax the property.”
*286• Similarly, the Montana court in State, ex rel. Sparling, v. Kitsman, 99 Mont 521, 527-529 (44 P2d 747):
“It then becomes important to consider and decide whether the statutory penalties and interest imposed on a delinquent taxpayer by the laws of this State are to be considered as a part of the tax itself. The cases of Sanderson v. Bateman, 78 Mont 235 (253 P 1100), and State, ex rel. Kain, v. Fischl, 94 Mont 92 (20 P2d 1057), held that the penalties and interest were a part of the tax obligation. With that theory we do not now agree. * * *
“Having decided that interest charged against delinquent taxes is in fact a part of the penalty, we then proceed to the question of the nature of such a penalty. This court has defined ‘penalty’ as follows: ‘A penalty is a sum of money which the law exacts the payment of by way of punishment for doing some act which is prohibited, or the omission to do some act which is required to be done.’ * * * Can the penalty be considered as a part of the tax obligation? * # *
“We find ourselves in agreement with the principle announced by the California court in the late case of Islais Co. v. Matheson (Cal App), 35 P2d 1051, 1054. There it was said: ‘The imposition of the original severe penalties was simply an incident of the power of sovereignty. In the exercise of the taxing power the imposition of a penalty is not for the purpose of enhancing the State but for punishing the taxpayer for nonpayment * * * and the threat of such penalty is used as a means of inducing property owners to promptly pay the amount due. * * * A penalty is not part of a tax proper and is therefore subject to legislative control.’ ”
It thus seems clear that a distinction is necessarily drawn between (a) the tax itself and (b) additional charges to which the taxpayer will subject himself for nonpayment of (a). These latter charges are *287not levied or assessed with the taxes upon the property, and their inclusion as a “tax” might conceivably raise difficult questions with respect to constitutional limitations upon taxes that may be levied and collected, as was pointed out in State, ex rel. Crutcher, v. Koeln, supra. Such sums are, in fact, not a tax in any proper sense, but an additional charge imposed by the sovereign because of the delinquency. As such it is a separable liability, though enforced by lien.
With respect to such' separable liability, may the taxpayer pay only the tax and not the penalty? A caveat would seem in order, for confusion should not be permitted to arise at this point. If, for some reason, a taxpayer chooses, or elects, or can afford, only to pay the tax, it would seem obvious that he continues liable for any sums properly charged, remaining unpaid. This liability may be enforced in accordance Avith statutory procedure. But enforcement, in such case, is only for the sum due and unpaid, not (in this case) for gross sum of taxes and penalties. The difference between the 2 sums will normally be substantial and a far lesser amount will be required for redemption if there has been nonpayment only of the penalty.
As to the question posed, then, whether the taxpayer may pay only the tax, and not the penalty, we are cited to no section of the statute forbidding the acceptance of such payment, and in view of the need for tax revenues we are not disposed to imply that a tax tendered in full shall not be so received. Powerful analogy is found in the statutes of this State (which are common in the country) to the effect that the taxpayer may pay 1 of several taxes assessed against his land in any 1 year without paying the other tax items that make up his total liability for that tax year.
*288“Any person may pay the taxes or special assessments, or any 1 of the several taxes or special assessments, on any parcel or description of land, or on any undivided share thereof, and the treasurer shall note across the face of the receipt in ink any portion of the taxes or special assessments remaining unpaid.” CL 1948, § 211.53 (Stat Ann 1950 Rev § 7.97).
It has been an uneontroverted rule of the law of taxation throughout the United States that a taxpayer may pay any 1 of several tax items for which he is liable to the State, as long as he pays each in full. See the cases collected in 89 ALR 715. In Michigan, the right is also recognized and enforced in favor of the taxpayer. Chapin Mining Co. v. Uddenberg, 126 Mich 375. In further support of this proposition, see the more recent eases of Loew’s, Incorporated, v. Byram, 11 Cal2d 746 (82 P2d 1); Moore v. Missouri State Life Insurance Co., 43 Ariz 337 (31 P2d 99); Tondre v. Garcia, 45 NM 433 (116 P2d 584); Federal Land Bank of St. Paul v. Johnson, 67 ND 534 (274 NW 668).
Returning to the facts before us: It is conceded that there was due at the time that the plaintiffs forwarded the $12 to the township treasurer a total of $12.36 — consisting of $12 in taxes upon the 2 lots and 36 cents in penalties upon this amount. There is no denial that the township treasurer received the $12 from the plaintiffs with a direction that it be applied to the taxes as due before the addition of the penalties. The township treasurer testified as follows:
“I told her it would have to be whatever the figures were, and she said she wouldn’t pay that amount. She would pay what it was at first and I would have to take it. * * * So a couple of days after, I got a money order for the lesser amount and I mailed it back to her.”
*289The township treasurer was here in error. The $12 tendered should have been applied in payment of the $12 tax liability, as directed by the taxpayer. The treasurer’s error will not serve to deprive the taxpayer of his homestead. The law on this point is clear, and is well expressed in 84 CJS, Taxation, § 618, p 1237:
“A good and sufficient tender of taxes due has the same effect as actual payment, in preventing the lawful prosecution of any proceedings for the enforcement of the taxes, provided the tender is kept good.”
There is no need to burden this opinion with the multitude of cases supporting the text. They will be found in the treatise cited. A sale of land for taxes so tendered is without color of authority and void. Nor is the doctrine limited to a strict tender in the legal sense. Few laymen are equipped to undertake literal compliance, but all must pay taxes. Hence, the common holding that it is enough that the taxpayer make merely a good-faith application to pay the taxes to the proper officer. If such payment is prevented by the officer’s mistake or fault (as here) we have the equivalent of actual payment. It was Mr." Justice Boyles of this Court who held, over a decade ago, in accordance with well-settled authority, that “A good-faith attempt by the landowner to pay his taxes is equivalent to payment.” Palmer v. State Land Office Board, 304 Mich 628, 633.
There having been the equivalent of payment, the sale as made was entirely without statutory warrant. 3 Cooley, Taxation (4th ed 1924), § 1382, contains a concise and accurate statement of the principles involved :
“Tax sales are made exclusively under a statutory power. The power which the State confers to assess *290and levy taxes does not of itself include a power to sell lands in enforcing collection, but the power to sell must be expressly given. The officer who makes the sale sells something he does not own, and which he can have no authority to sell except as he is made the agent of the law for the purpose. But he is made such agent only by certain steps which are to precede his action, and which, under the law, are conditions to his authority. If these fail the power is never created. If one of them fails it is as fatal as if all failed. . Defects in the conditions to a statutory authority cannot be aided by the courts; if they have not been observed the courts cannot dispense with them, and thus bring into existence a power which the statute only permits when the conditions have been fully complied with.”
In accordance therewith, we have held since the earliest times. It was in Rowland v. Doty, Harr Ch (Mich) 3, 9, that we said:
“The right to sell, being founded solely on the nonpayment of the tax, does not and cannot exist whenever the tax has been paid. A sale, therefore, when no tax is in fact due,' is unauthorized, and the treasurer’s deed on such unauthorized sale conveys no estate or title whatever.”
And for modern exposition of the principle see McQuade v. State, ex rel. State Land Office Board, 321 Mich 235, 247, where it was held, in setting aside a scavenger sale, that:
“The legislature has outlined, in clear and unmistakable terms, the duties of public officials in connection with tax sales. The exercise of power or authority not authorized by the statute may not be passed over as merely irregular. The conclusion follows that the sale of the property involved in the present case was void.”
The case of Odgers v. Lentz, 319 Mich 502, discussing. CL 1948, § 211.70 (Stat Ann 1950 Rev § 7.115),, *291has no application npon these facts. The purported “sale” in the case before us was illegal and void. As we said in McQuade v. State, ex rel. State Land Office Board, supra (p 244):
“However, failure to file objections within the specified period after the sale does not preclude an attack thereon, if such sale-is void because of a want of jurisdiction to make it. This Court in Horton v. Salling, 155 Mich 502, held that a deed of State tax' land was void because the auditor general accepted interest on the State’s claim for taxes at a rate lower than that prescribed by the. statute. In support of its conclusions, Horton v. Helmholtz, 149 Mich 227, was cited. In holding that plaintiff was hot precluded under the provisions of section 70 of the general property tax law from seeking a decree in equity to quiet his title to the property there in question, it was said (p 505):
“ ‘The provision quoted from section 70 was designed to confer and limit, in tax cases, the general discretionary power, lodged in courts of equity to set aside sales, made in the same proceeding, for an inadequate price bid, or because of irregularities, and was not aimed at the authority of courts in general to hear and determine the validity of decrees and sales. This subject was discussed in the case of Spaulding v. O’Connor, 119 Mich 45. This sale being absolutely void, complainant might treat it so, and raise the question in ejectment (in a proper case) or by this proceeding.’ ”
The decree of the circuit court should be reversed and the case remanded for entry of decree not inconsistent herewith, with provision for refund of investment in the property by defendants, or any of them, together with interest thereon. . No costs.
Edwards, J., took no part in the decision'of this’ case: