Court Opinion

ID: 7993724
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:34:18.222001+00
Date Added: 2024-06-11T16:35:28.083531
License: Public Domain

Ethridge, Holden and Stevens, JJ.,
dissenting, express the following views:
The replication filed by the revenue agent in this case expressly charged that appellees “did knowingly, willfully, and fraudulently, with the intent, purpose, and design to cheat and defraud the state of Mississippi and the county of Yazoo of their revenue and to enable the said bank to escape the payment of taxes justly due from it to the state and county aforesaid,” make their tax returns which they now plead as res adjucUoatai. This replication charging willful and intentional fraud was demurred to, and it nec- ■ essarily follows that the fraud has been admitted. We are therefore confronted with the concrete proposition whether a taxpayer can be guilty of fraud, come into court! and by a solemn pleading admit the fraud, and successfully take advantage of it. We say he cannot.
This court, by Chief Justice Sharkey, in Niles et al v. Anderson et al., 5 How. 365, at page 386 of the opinion, said: “Any act, however solemn, even though it be a judgement of a court of competent jurisdiction, may be set aside, if procured by fraud. . . . Fraud vitiates everything into which it enters. . . . Fraud gives jurisdiction to the court and lays a foundation for relief; hence a general demurrer to a bill containing such an allegation cannot be allowed. So if the defendant should plead to the bill, he must still deny the fraud by answer as well as by averment in the plea.”
*399And in Allen v. Hopson, Freem. Ch. 276, it is said: “Fraud is equally cognizable at law as in equity.”
The judgment of a board of supervisors in tax mattersi is, of course, ordinarily binding upon both the state and the taxpayer. No one disputes this general proposition. But how can the judgment of a board of supervisors fixing the valuation of property for taxation be any more sacred or binding than the solemn judgment of a court of law, or the decree of a court of chancery? If fraud vitiates a solemn judgment at law, it will vitiate the judgment of an equalizing board.
In speaking of the jurisdiction of special tribunals in taxation matters, it is stated in Ency. of Pleading & Practice, vol. 21, p. 443,, as follows:
“The exclusiveness of jurisdiction in special tribunals is held to relate only to the correction of errors in particular matters provided for, and does not prevent a party from resorting to the ordinary tribunals for remedy against an assessor or the assessment when the assessor or special tribunal act corruptly or with malice.”
And in Ency. of Law (2 Ed.), vol. 27, p. 700, it is said: “Property which has been assessed but escaped taxation by reason of the assessment against it being illegal or void, if subject to taxation in fact, is, no doubt, assessable as omitted property under the statutes enacted for that purpose. It has also been held that where property has been grossly and fraudulently undervalued, and thus pro tanto escaped taxation, such statutes authorize the taxing officers to reassess it for the omitted value. In some jurisdictions the statutes expressly provide for reassessment in such cases.”
The principles announced by our own court in Adams v. Clarke, 80 Miss 134, 31 So. 216, are very pertinent and in fact should control the present appeal. Our court, by Chief Justice Whitfield, there said:
“Suppose a taxpayer as to money returns the amount of ‘money on hand, on deposit, or loaned,’ $500. The revenue agent discovers that the party had on hand in *400actual money 1,000, and assesses him for the additional $500. Is the first assessment res adjudicada? Manifestly not; the taxpayer has simply made a false list. He has omitted $500 of the money he did have; it has escaped taxation, and under Code, section 8768, the assessor can assess it, and under the act) of 1894 the revenue agent can cause it to be assessed as money ‘which has escaped taxation! ”
“Every dishonest return of taxes is not only a violation of the law, and beside a wrong to the state, but it is the grossest injustice to those who honestly pay their taxes. If all citizens would take care to pay as they should, the tax rate would be lowered, probably one-half, and property in the hands of corporations and individuals Avould equally respond to its just burdens. We have held the law aloft as to corporate efforts at evasion, and Ave shall mete out the same equal justice to the fraudulent individual taxpayer.”
The lofty banner of righteousness Avhich the gifted jurist raised in the Clark Case should be cheerfully followed by the court, and the rule of fair dealing enforced against all willful and fraudulent taxpayers. It may be conceded that as a practical question.it is difficult to prove willful fraud and corruption in tax assessments, but with these practical difficulties we have no concern in the present inquiry. No proof is necessary in the present" case, as che pleadings now stand. Fraud has been boldly admitted. The question of the fraudulent undervaluation of property came before the Supreme Court of Minnesota in the case of State v. Weyerhuaeser, 68 Minn. 353, 71 N. W. 265, and 72 Minn. 519, 75 N. W. 718, and the contentions of the taxpayer carried before the Supreme Court of the United States as reflected in Weyerhaueser v. State of Minn., 176 U. S. 550, 20 Sup. Ct. 485, 44 L. Ed. 583. In the course of the opinion of the Supreme Court of the United States by Mr. Justice McKenna it was said:
“If an officer omits to assess property, or grossly undervalues it, he violates his duty, and the property and its *401owners escape tlieir just share of the public burdens. . . It would be very strange if the state, against a gross undervalution of property, could not, in the exercise of its sovereignty, give itself a remedy for the illegal deficiency.”
Por the reasons thus briefly indicated, Ave unhesitatingly dissent from an affirmance in this case — the product of an equally divided court.