Court Opinion

ID: 9601003
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:34:54.288987+00
Date Added: 2024-06-11T09:48:14.765762
License: Public Domain

Finley, J.
(dissenting) — As the majority opinion emphasizes, the fourteenth amendment to our state constitution *919provides that property of the United States and of the state, counties, school districts, and other municipal corporations shall be exempt from taxation. This proposition, of course, is universal and might very well be the law without specific constitutional provision. 2 Cooley, The Law of Taxation (4th ed.), § 621, p. 1312; 1 Desty on Taxation, § 15, p. 45 et seq.; see State v. Snohomish County, 71 Wash. 320, 128 Pac. 667. But at first glance, at least, itu seems a little startling to find it regarded as controlling in the present case. Is any sort of public body being charged with a tax here? Obviously not. The Puget Sound Power and Light Company, a private utility, has been assessed for payment of the tax in question and has, in fact, already paid it. It is difficult for me to believe that either the fourteenth amendment or its predecessor, Art. VII, § 2, which set forth the same exemption, was drafted with any thought of allowing private companies to avoid taxation in situations of the sort we now have before us. In my opinion, the amendment has no proper application to the case here on appeal.
To reiterate, the crux of the matter is simply this: In the case at bar, it is not sought to tax the personalty assessed as the property of the public utility districts, hut rather as the property of Puget Sound. The latter owned the personalty on January 1st of the year of assessment. Taxation of the then owner is the objective, and realistically that is the end result. It is proper, justified, and even required by the language of the pertinent statute, which reads as follows:
“For the purpose of taxation all real and personal property in the state shall be listed and assessed with reference to its value and ownership on the first day of January at 12 o’clock meridian in the year in which it is assessed.” Rem. Rev. Stat. (Sup.) § 11112-1 [P.P.C. § 979-61].
Such provisions are by no means uncommon among the statutes of the several states. They are uniformly construed to mean that taxes shall be charged to the individual owning the property assessed on the tax day. See Wangler Bro’s v. Black Hawk County, 56 Iowa 384, 9 N. W. 314; Blossom v. Van Court, 34 Mo. 390; Wildherger v. Shaw, 84 Miss. 442, 36 So. 539. The language of County of Martin v. Drake, 40 *920Minn. 137, 139, 41 N. W. 942, is typical. There the court stated;
“All tax laws have to fix upon some particular date in the year at which to determine the taxability' as well as the ownership and value of property, for purposes of assessment and taxation. Our revenue laws have fixed this at the 1st of May. . . . Personal property is assessed and taxed with regard to both its value and ownership at that date. . . . Every man must pay taxes on what he then owns, and at its then value, no matter how short a time he may have owned it, or how soon thereafter it is lost. All property, if in being as taxable property at that date, is liable to taxation for that year at its then value, although it may only have come into being the day before, and may be in whole or in part destroyed the day after.” v
With respect to real property, a rule that it must be assessed with reference to its ownership on a particular day has no practical significance. In the state of Washington, the only way in which taxes on realty may be collected is by the assertion of a lien on the land itself. Rem. Supp. 1943, § 11265 [P.P.C. § 979-493]. The lien follows the land, and if the owner on the tax day chooses subsequently to sell or otherwise dispose of his property, there is no way in which he may personally be held responsible at the time of levy. In the usual situation, at least, the taxing authority is in no degree hampered by this limitation. Real property is not transitory. Its attributes or characteristics are not greatly subject to change. Ordinarily, it may be readily identified and reached in satisfaction of the tax due.
But this is not necessarily true as to personalty. It often may be transferred out of the taxing jurisdiction, or destroyed, or concealed, or so commingled with other goods as to be unrecognizable. If the only remedy of the taxing authority were to assert a lien on the property assessed, it is apparent that there would be many situations where, because of the occurrence of one or more of the above events, it would be impossible ever to collect the tax due. For this reason, three remedies have been made available to the taxing authority in the event of nonpayment of taxes on personal property; First, as with realty, enforcement of a *921statutory lien on the specific items of property charged; second, enforcement of a statutory lien on other personal property owned by the same taxpayer; and third, enforcement of a statutory lien on his real property.
It will be seen that the two latter of these remedies involve proceedings against the owner of the personal property taxed, regardless of the fact that he may no longer be the owner at the time the proceedings are brought. To make such remedies effectual, it is necessary to establish a particular time when ownership of personal property, for tax purposes, is determined. Our legislature has specifically fixed January 1st as the pertinent date, irrespective of the date of levy. After January 1st, the owner may ship his property to Alaska; he may burn it; he may sell it to a tax-exempt public utility district; but he still remains liable for payment of the tax due on it. That is the necessary implication of the cases cited above, and the only reasonable interpretation of the words of our statutes.
Thus, in a very real sense, taxes on personal property remain the “personal obligation” of the owner of that property. The numerous Washington cases cited in the majority opinion have not erred in so stating. While the “personal obligation” label or concept may not precisely describe the situation in the sense that no action will lie to enforce the obligation, and the remedy of the taxing authority is strictly limited to the procedures set forth in the statutes, such considerations should not be material here. “A distinction is to be drawn,” says Judge Cooley, “between taxes which are personal obligations of the owner although he may not be sued therefor, and taxes which are not personal obligations of the owner for which he may not be sued.” 3 Cooley, Taxation (4th ed.) 2624, § 1327. As a source, this author cites Midland Guaranty & Trust Co. v. Douglas County, 217-Fed. 358, 362, where the court stated:
“It thus appears, while each piece of real estate is liable only for the taxes upon it, and the owner thereof is not personally liable therefor, the personal taxes become a personal obligation of the owner, but do not subject the owner *922ordinarily to a suit, not because he is not liable, but because, the law having provided adequate means for their collection, that remedy is exclusive.”
Actually, taxes are assessed against the owners of property, although it is common practice to speak of them as being assessed against the property itself. Gray, Limitations of Taxing Power and Public Indebtedness 582, § 1172. As Cooley expresses it, the individual and not the property pays the tax. 1 Cooley, Taxation (4th ed.) 93, § 24. When this is kept in mind, it will be seen that the constitutional provision exempting public property from taxation simply has nothing to do with a situation where the property in question —whatever its subsequent history — was privately owned on the tax day, and where the statute provides other remedies against the delinquent taxpayer than resort to the specific property assessed. Puget Sound, having owned the personalty here involved on January 1st, should be taxed on the theory that its tax obligation was a personal one and did not cease when the property was sold to the public utility districts any more than it would have ceased had the same personalty been sold to another private utility.
. The majority makes the decision turn on whether the taxing process — the administrative details or mechanics — had been completed on the respective dates on which title to the personal property passed to the various public utility districts (assuming that if the taxing process had been completed, the property would constitutionally be subject to the tax lien). Consideration of this might well be necessary if, in this case, the counties were attempting to follow the property and to enforce liens upon specific personalty assessed, owned, as it now is, by the tax-exempt public utility districts. At least that is the theory of State v. Snohomish County, 71 Wash. 320, 128 Pac. 667, which holds that the “concept of a tax” is not fully realized until a levy is made; that there can be no valid and effective lien for a tax until there is a valid tax in some specific amount; that therefore the lien on the property taxed remains inchoate until the levy; and that if, at that time, the property is in public *923ownership, the lien cannot attach by reason of the constitutional and common-law rule that public property is not a susceptible subject of taxation.
Whether the court in State v. Snohomish County was correct in holding that a tax lien will not attach to property until levy is actually made, is at least a debatable question. See Puyallup v. Lakin, 45 Wash. 368, 88 Pac 578; Puget Sound Power & Light Co. v. Seattle, 117 Wash. 351, 201 Pac. 449; Jersey City v. Montville, 84 N. J. L. 43, 85 Atl. 838; Santa Monica v. Los Angeles County, 15 Cal. App. 710, 115 Pac. 945; and particularly Public Utility District No. 1 of Lewis County v. Pierce County, 24 Wn. (2d) 563, 166 P. (2d) 933, wherein this court, construing the identical statutes with which we are here concerned, held that taxes on the property of an intercounty utility became a lien at the time when the property involved was listed with and valued by the county assessor. Such would seem to be the plain command of Rem. Rev. Stat., § 11265, which we held to be controlling in that case. It is true that the reasoning of the opinion in State v. Snohomish County, supra, suggests that when the legislature stated that a lien should exist from the time of listing, it could only have meant that an “inchoate” or “incipient” lien would attach, pending levy, when this lien would “ripen” or “mature.” But to adopt this rationale would seem to me to invoke an entirely theoretical concept in order to overrule what would otherwise appear to be clear legislative intent.
In the present case, however, it makes no difference when the lien attached, and we need not decide the point. The counties here are not attempting to seize public property in satisfaction of alleged liens. Assuming arguendo that a tax lien does not come into complete existence until levy is made, it is important to remember that the single factor which prevented the maturity of the lien in the Snohomish County case was that the only property to which it could attach was in the possession of the state. That is apparent from the portion of the decision quoted in the majority opinion. In this circumstance, a serious constitutional ques*924tion was, presented; as the court said in Bannon v. Burnes, 39 Fed. 892, 899 (cited in the Snohomish County case at pages 324 and 325 of the Washington Reports), where Kansas City was attempting to assert a tax lien on property which, after assessment but before levy, had been acquired by the Federal government:
“If the right of the state or its subordinate municipality be conceded to proceed to enforce by levy and sale a tax after the acquisition of the title by the government, the legal sequence would logically follow that the state could enter upon this territory, over which it had ceded jurisdiction to the United States, and oust the government officers, its judges, and ministerial officers, and deliver over the property to the purchaser, which is precisely what was sought to be accomplished by the institution of this action in the state court.”
No similar end is sought to be accomplished by the taxing authorities here. Even admitting that tax liens cannot attach until levy; and conceding further that a lien cannot attach to the assessed property at all if at the time of levy it is in the hands of a public body and consequently tax-exempt; still, no constitutional or other inhibition should prevent the statutory tax liens against the other property of the taxpayer from attaching. The question of the counties’ power to foreclose their tax lien against the property owned by public utility districts has nothing whatever to do with the liability of Puget Sound. By virtue of Rem. Rev. Stat. (Sup.), §11111-2, Puget Sound’s liability — resulting from the fact of ownership and based on the quantum of property owned — was fixed on January 1st; after that date, nothing remained to be accomplished except the grinding away of the administrative machinery of tax collection at an admittedly slow but practicable speed. It is true that the property assessed passed into tax-exempt hands during the tax procedure lag; but that fact is immaterial, since no attempt is here being made to foreclose on the property actually sold. To repeat an analogy, Puget Sound is in exactly the same position as if its property had been shipped to Alaska or burned. In neither of these cases could the coun*925ties have enforced their liens against the specific personalty assessed; but it is equally clear that in neither of them could the tax-date (January 1st) owner escape tax liability.
Wood v. McCook Water-Works Co., 97 Neb. 215, 217, 149 N.W. 417, is a case somewhat similar on its facts to the case at bar and deals adequately with the problem presented. In that case, the statute provided that personal property should be listed with reference to the quantity owned on April 1st. In May, the county assessed the plant of the McCook Water-Works Co. at a specified sum. On July 1st, the company sold and transferred its plant to the city of McCook. A levy against the property was made for state purposes on July 27th, and another for county, state, and school district purposes on August 3rd. The tax was not paid and the county brought an action to recover the amount due from the waterworks company. Defendant stated the question involved as follows:
“The property having been transferred into the hands of the city of McCook, where it was exempt from taxation, prior to the time the assessment was completed, and levy of tax made, and prior to the time when the tax would become a lien upon the property, was the attempted taxation void?’ ”
The court answered in the negative, and in the course of a discussion of the case of New York v. Commissioners, 104 U. S. 466, 26 L. Ed. 632, made the following comment (page 220):
“It will be observed that the court expressly holds that one who owns property subject to taxation at the time when it is returnable for assessment and taxation cannot escape liability for the tax by subsequently changing the character of his property by investing it in other property which would render it not subject to taxation. Suppose defendant, on July 1, had sold its property which had been assessed, and with the money obtained from the sale had purchased United States bonds, could it have escaped the payment of taxes? Clearly not. The fact that the assessment and the tax subsequently levied thereon had not become a lien upon the property, so as to make a purchaser thereof liable for the tax, is entirely immaterial. The city, of course, took the *926property free from any lien of the tax, but this did not relieve the defendant of its liability therefor(Italics mine.)
The logic of the Wood case is applicable here. In sum: Puget Sound, in common with other owners of personalty, became liable for the payment of county taxes on its operating properties on January 1, 1948, no matter what the amount of these taxes might subsequently prove to be. After January 1st, but before levy, Puget Sound sold the personalty to tax-exempt public utility districts. When tax liability in actual dollars and cents was finally determined, Puget Sound became liable to pay it, and payment could have been enforced at any time by foreclosure of a lien against its other property. Whether the constitutional and common-law rule forbidding the taxation of property in public ownership would have prevented the enforcement of the statutory lien against the personalty sold to the public utility districts, is a matter we need not consider; it is not involved in this case. Certainly, Puget Sound should not escape the tax liability it acquired as a private owner on January 1st, merely because, prior to the completion of the process of tax collection, the property, ownership of which furnished the basis for liability, was placed beyond the reach of the taxing authorities.
Without exaggerating, or intending to “parade the horrible” it can be suggested that at the present time the revenue and appropriation programs of some counties may be in a no less confused and difficult state than are those of the state of Washington. Such a suggestion is not too farfetched if we follow the newspapers and other sources of reliable public information. In other words, some counties may be faced already with a situation that presents, or closely approximates, a real financial problem. With sales of personal property to exempt agencies running into thousands of dollars, and the defense program of the Federal government on the upswing, we should not, without a clear showing that the law requires it, hamper unduly the operation of the taxing process the legislature has set up. In the protection of taxpayers, the constitution does not require *927and the courts need not impose unreasonable and unjustified restrictions upon those sometimes misunderstood and often maligned public servants who administer our tax laws.
It is my best judgment that the trial court should be affirmed.
Mallery, J., concurs with Finley, J.
October 4, 1951. Petition for rehearing denied.