Court Opinion

ID: 3501137
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:08:07.700433+00
Date Added: 2024-06-11T14:05:20.377859
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 407 
The issue presented by the motion to dismiss in this case is whether a city may be compelled to pay to a school district taxes assessed against personal property in the district which the city treasurer, by negligence on his part, failed to collect. We allowed an appeal from the order of the trial court denying the motion. Reference to sections are to the Compiled Laws of 1929.
A school tax is spread upon the assessment roll of the city in a column by itself. Section 3428. When completed, a warrant for collection is appended thereto and delivery made to the city treasurer. Section 3429 reads as follows:
"The taxes thus assessed shall become at once a debt due to the township, ward or city from the persons to whom they are assessed, and the amounts assessed on any interest in real property shall, on the first day of December, become a lien upon such real property, and the lien for such amounts, and for all interest and charges thereon, shall continue until payment thereof. And all personal taxes shall also be a first lien on all personal property of such persons so assessed from and after the first day of December in each year and so remain until paid, which said lien shall take precedence over all other claims, incumbrances and liens upon said personal property whatsoever, whether created by chattel mortgage, execution levy, judgment or otherwise, and whether arising before or after the assessment of said personal taxes, and no transfer of personal property assessed for taxes thereon shall operate to divest or destroy such lien, except where such personal property is actually sold in the regular course of retail trade."
The duty then devolves upon the city treasurer to make collection. Section 3434 et seq. To do so, he *Page 409 
may seize and sell the personal property of the party assessed. If otherwise unable to collect a tax on personal property, he may bring suit in the name of the city and garnishee any debtor of the person assessed. Section 3438. At a time fixed in the statute, he must make return to the county treasurer of the moneys collected and the taxes he has been unable to collect. Section 3446. Quoting therefrom:
The said treasurer or collector shall also make a statement showing the taxes upon personal property remaining unpaid, and the names of the persons against whom assessed, and the amount against each; and in such statement shall set forth the amount of all moneys collected by him on account of taxes, which statement shall be verified by the affidavit of such treasurer, in which he shall state in substance that the sums mentioned in such statement as uncollected remain unpaid; that he has not, upon diligent inquiry, been able to discover any goods or chattels belonging to the person liable to pay such sums whereupon he could levy the same, and that the amount of moneys collected by him upon such tax roll is truly stated therein."
Taxes delinquent on real estate become a lien thereon when the tax roll is delivered to the treasurer, and it will be advertised and sold therefor as provided by the statute. For the collection of the delinquent personal taxes, the treasurer receives a warrant from the county treasurer under which he has "the same power to collect such taxes as under the original warrant." Section 3447.
The office of treasurer is one requiring action on the part of the person accepting it. The oath of office imposes upon him an obligation to faithfully discharge its duties. His bond also so provides. *Page 410 
When the tax roll is placed in his hands, it is his duty to "proceed to collect such taxes." Section 3434. While he may not take steps to enforce collection of the taxes on real estate before the 10th day of January thereafter, in case he is "apprehensive of the loss of any personal tax assessed upon his roll, he may proceed to enforce its collection at any time." Section 3434.
When, on settlement with the county treasurer, he receives a warrant for the collection of the personal tax returned delinquent, it becomes his duty to make every reasonable effort to do so. Those who have paid their taxes have a direct interest in his so doing. He may not sit idly by and receive such taxes as may be voluntarily paid by delinquent taxpayers. He must make an earnest effort to enforce collection under the power conferred upon him above referred to.
"A tax collector is liable not only for taxes collected and not turned over, but also for taxes which he might have collected by due diligence." 3 Cooley on Taxation (4th Ed.), § 1360.
"Failure of a tax collector to collect the legal taxes within the time required by law is a breach of the condition of his bond for which his sureties are liable, at least to the extent of such taxes as were lost through his remissness or neglect, although the sureties may show in mitigation of damages, if not in bar of the action, any circumstances which made it impossible for their principal to effect collections or which would be a sufficient legal excuse for his failure to do so." 37 Cyc. p. 1221.
The cases cited in the footnote (State v. Lott, 69 Ala. 147;People v. Smith, 123 Cal. 70 [55 P. 765]; State v. Dorsey, 3 Gill  J. [Md.] 75; Boykin v. *Page 411 State, 50 Miss. 375; Village of Montpelier v. Clarke, 67 Vt. 479
[32 A. 252], and Ballard v. Thomas  Ammon, 19 Gratt. [60 Va.] 14) clearly support the rule as stated.
The treasurer is charged with the duty to make collection of all the taxes spread upon the tax roll. He is charged with the amount thereof on the clerk's books, and, on settlement, receives credit for the taxes he has returned delinquent, based on his affidavit —
"that he has not, upon diligent inquiry, been able to discover any goods or chattels belonging to the person liable to pay such sums whereupon he could levy the same." (Section 3446.)
His neglect to collect the city tax is a breach of his bond given to the city, and his neglect to collect the State and county taxes is a breach of his bond filed with the county treasurer. The school district alone is not protected by a bond. No official or contractual relation exists between the city treasurer and the district. Is it then helpless and without remedy?
Section 3485 reads as follows:
"All losses that may be sustained by the default of any township officer in the discharge of any duty imposed by this act, shall be chargeable to such township. All losses by default of any county officer shall be chargeable to such county, and all losses by default of any State officer shall be chargeable to the State."
And section 3500:
"This act shall be applicable to all cities and villages where not inconsistent with their respective charters. With such exceptions, the provisions herein as to supervisors, township treasurers, and boards of review, shall include all assessing and collecting *Page 412 
officers, and all boards whose duty it is to review any assessment roll. The word township may include city, ward or village."
This provision was referred to with approval in CommonCouncil v. Smith, 99 Mich. 507; State Tax Com'rs v. Board ofAssessors, 124 Mich. 491, and State Tax Com'rs v. Cady,124 Mich. 683.
A default is defined as "The nonperformance of a duty, whether arising under a contract or otherwise" (1 Bouvier's Law Dictionary [Rawle's 1st Rev.], p. 527); as "The omission or failure to fulfil a duty, observe a promise, discharge an obligation, or perform an agreement" (Black's Law Dictionary [2d Ed.], p. 342); as "To fail in fulfilling a contract, agreement, or duty." "Neglect to do what duty or law requires" (Webster's International Dictionary).
In 18 C. J. p. 457, "defaulting official" is defined as "A statutory term which has been construed in its broad sense as including every official who fails to perform his full duty, and not limited merely to officers found guilty of collusion or defalcation." Annis v. McNulty, 51 Misc. Rep. 121 (100 N.Y. Supp. 951, 956), is cited in support thereof.
Under the Constitution (Art. 11, § 9), it is made the duty of the State legislature to "continue a system of primary schools, whereby every school district in the State shall provide for the education of its pupils without charge for tuition." The legislature has provided that a large part of the money needed for that purpose shall be collected and distributed in what is known as the "primary school fund." The balance must be obtained by a tax spread upon the property, both real and personal, in each district. The city as a whole has a direct interest in the maintenance of its schools, and the members of its council, representing it, should be *Page 413 
impressed with the necessity of seeing to it that the taxes spread upon its rolls for that purpose must, to the extent possible, be collected.
It cannot well be contended that the neglect of the treasurer to collect a school tax, payment of which might have been enforced by him, does not entail a loss upon the district. Suppose he had permitted the taxpayers in the district to have paid all of the taxes levied upon their property, either real or personal, except the school tax, as they might have done under section 3444, and made no effort thereafter to collect the school tax, could it well be said that a loss to the district had not been occasioned by his neglect and that the city was not chargeable therewith? The statute makes the city liable for any loss sustained by the default of its treasurer "in the discharge of any duty imposed by this act." (Section 3485.) Clearly, the duty rested upon the treasurer to collect the school tax. If he has not discharged that duty, he has breached the condition in his bond to the city, and, as loss to the district necessarily follows, such loss must be borne by the city under the provisions of the statute.
"The duty of collecting the taxes is as imperative on the collector as is the duty of honestly accounting therefor, when collected; and a failure to collect, within the period prescribed by law, the taxes which, under the law, he is required to collect, is a breach of the condition of his official bond, equally with a failure to pay over the taxes when collected." State v. Lott, supra (syllabus).
In Smith v. Jones, 136 Mich. 532, wherein it was sought to hold a township liable to a school district for funds embezzled by the township treasurer, the court said: *Page 414 
"The school district has no voice in the giving of the bond. The bond is to be executed to the township, with such sureties as the supervisor shall require and approve."
The section imposing the liability on the township for losses occasioned by default of its treasurer (now section 3485) was then quoted, and it was further said:
"By the act he is charged with the collection and payment ofall school-district taxes. The funds in question were lost by his default, and, under the above statute, the township is liable."
I find no authority bearing directly upon the construction which should be placed upon the language of this statute.State, ex rel. District Att'y, v. Sheriff, 45 La. Ann. 162 (12 So. 189), Williams v. Stern, 5 Q. B. Div. (1879) 409, are relied upon to support the claim that default as here used means simply the failure to account and pay over money collected. The first of these cases involved the right of the defendant to succeed himself as sheriff. Under the law of that State, he is also a tax collector. It was claimed that at the termination of his previous term he had not "obtained a legal discharge for such collections for public moneys with which he has been entrusted." The court called attention to the two provisions in the State Constitution relating thereto (p. 179):
"The requirement of article 171 is that tax collectors must 'obtain a discharge for the amount of collections,' while article 119 provides that they shall not be released from their contractual obligations until they have been discharged as tax collectors.' "
It was then said (p. 179): *Page 415 
"Article 171 pronounces the penalty of ineligibility to holdoffice for a collector's failure to comply with its behest, and article 119 indicates a pecuniary liability for his nonobservance of its provisions.
"The injunction of each, as well as the pain of each is distinct and different.
"To illustrate: If a collector punctually pays over to the proper authority all moneys he has collected, and obtains a receipt therefor, he is constitutionally eligible to office, notwithstanding the fact that it may be shown subsequently, by proof aliunde, that he had been derelict in making collection of taxes uncollected, and was consequently disentitled to be discharged as tax collector.
"To further illustrate: In case a tax collector collects taxes and uses the money, he may be proceeded against criminally for embezzlement; but, on the proof disclosing that the taxes had not been collected through his fault or negligence, the prosecution would of course fail and the State be relegated to civil action for reparation of loss sustained."
In the other case, the default therein referred to was in the nonpayment of money due under a bill of sale executed as security for money advanced.
If default on the part of the treasurer, as claimed, be established, and the loss of the district occasioned thereby be determined, in my opinion the city is liable to account to the school district for the amount thereof. The statute, as I construe it, so provides, and this provision is a wise one, as there is no other way in which a district may reimburse itself for such loss. It will be assumed that the city is protected by a sufficient bond, and it is no hardship to require it to make such payment and have recourse thereto for its protection against loss.
In its declaration plaintiff seeks to recover all of the school taxes levied and assessed in the city for *Page 416 
certain years. In its bill of particulars it makes claim for "school taxes levied and assessed on personal property in the city of Lansing and collected or which were not collectedthrough the default and neglect of the said defendant, itsservants and employees." Had the motion to dismiss been founded upon the variance between the declaration and bill of particulars, an amendment would doubtless have been sought and granted, and the declaration may yet be perfected in this respect before trial on the merits.
The appeal is dismissed, but without costs.
CLARK, C.J., and McDONALD, NORTH, WIEST, and BUTZEL, JJ., concurred with SHARPE, J.