Opinion
39004 Record No. 3653.
June 19, 1950
Present, Hudgins, C.J., and Gregory, Eggleston, Buchanan and Miller, JJ.
(1) Taxation — Relief from Erroneous Assessments — Adequate Remedy at Law — Code Sections 58-1145 to 58-1151 Not Confined to Correction of Assessments Merely Erroneous.
(2) Taxation — Relief from Erroneous Assessments — Statutory Remedy Mandatory Where Adequate.
(3) Taxation — Relief from Erroneous Assessments — Code Section 58-1130 Should Be Liberally Construed.
(4) Taxation — Relief from Erroneous Assessments — Adequate Remedy at Law — Code Section 58-841 Provides Ample Remedy Where Large Number of Taxpayers Aggrieved.
(5) Taxation — Relief from Erroneous Assessments — Adequate Remedy at Law — Action at Law for Recovery of Taxes Paid under Compulsion.
1. Certain owners of real estate and taxpayers in a county, suing in their own behalf and for the benefit of all other persons similarly situated, filed a bill in equity against the county and some of its officials, attacking the constitutionality of a county ordinance levying an annual tax upon real estate located therein to cover the cost of collecting garbage and trash. The bill alleged that the commissioner of revenue had assessed plaintiffs' real estate with a tax pursuant to the ordinance and that the treasurer was attempting to collect it. The relief requested was that the treasurer be enjoined from collecting the taxes already assessed, that the officials be enjoined from levying any further taxes under the ordinance and that they be required to repay to any taxpayers similarly situated any such taxes as might have been paid. Defendants demurred on the ground that plaintiffs had an adequate remedy at law. Their demurrer was improperly overruled, for plaintiffs could have proceeded under sections 58-1145 to 58-1151 of the Code of 1950, under which any person assessed with local taxes on real estate may within a prescribed time apply to the proper court for relief therefrom, and under which the tax-collecting officer may be restrained from their collection and the treasurer may be compelled to refund taxes erroneously paid. Relief thereunder was not confined, as plaintiffs argued, to the correction of an assessment which was merely erroneous.
2. Prior to the enactment of section 416 of the Tax Code (Code of 1950, section 58-1158), a taxpayer who felt aggrieved by the assessment of his property for taxation could, at his election, either institute a suit in equity to enjoin the collection of the tax or ask relief by motion under one of the appropriate statutes, but since the enactment of that section, where the statutory remedy is adequate it must be followed, and the previously existing remedy by injunction is cut off and cannot be pursued.
3. Section 58-1130 of the Code of 1950, which affords relief from erroneous assessment of State taxes, is remedial and should be liberally construed.
4. Under the facts of headnote 1, plaintiffs' bill alleged that "approximately eleven thousand" other persons similarly affected by the ordinance and levy desired relief therefrom and that a proceeding in equity was therefore necessary to avoid a multiplicity of suits, but plaintiffs could have proceeded under section 58-841 of the Code of 1950, which provides an ample remedy in cases in which a large number of the citizens of a county feel aggrieved by an alleged illegal tax. The fact that plaintiffs failed to avail themselves of the provisions of this section within the prescribed statutory period did not entitle them to injunctive relief. To hold otherwise would permit one aggrieved by an assessment to nullify the statutory method of procedure, to profit by his own neglect or wilfulness, and give him an election to which a diligent litigant would not be entitled.
5. Under the facts of headnote 1, plaintiffs could have paid the taxes under compulsion and protest and filed actions at law for recovery of the amounts paid.
Appeal from a decree of the Circuit Court of Elizabeth City county. Hon. Frank A. Kearney, judge presiding.
Reversed and dismissed.
The opinion states the case.
Ross A. Kearney and Percy Carmel, for the appellants.
J. Wilton Hope, Jr. and James Richardson, for the appellees.
Carl L. Todd and five other "owners of real estate and taxpayers in Wythe or Chesapeake Districts of Elizabeth City County," suing "in their own behalf and for the benefit of all other persons so similarly situated," filed their bill in equity in the court below against Elizabeth City county, its commissioner of revenue, treasurer, and certain other officials, attacking the validity and enforcement of an ordinance enacted by the board of supervisors of the county on June 9, 1948, levying an annual tax, beginning July 1, 1948, upon the real estate of the plaintiffs located in the above districts to cover the cost of collecting garbage and trash during such period. The bill alleged that pursuant to the ordinance the commissioner of revenue had assessed the lands of the plaintiffs with a tax or charge, and that the treasurer was attempting to collect the same.
It was further alleged that the levy was illegal and void in that, among other things, the ordinance had not been enacted "in accordance with the laws of the State of Virginia including the constitution in such cases made and provided," and that the taxes levied under the ordinance failed to meet the constitutional requirements and were invalid.
The record and briefs show that the enabling act for the ordinance is the Public Facilities District Law. Acts 1946, ch. 93, p. 113.
A further allegation was that "approximately eleven thousand" other persons similarly affected by the ordinance and levy desired relief therefrom, and that, therefore, a proceeding in equity was necessary to avoid "a multiplicity of suits" and to relieve the court of the burden of the trial of innumerable cases.
The prayer of the bill was that the treasurer of the county be enjoined from collecting "any charges for said garbage and trash collections under said ordinance as shown upon the landbooks;" that the officials of the county "be enjoined and restrained from laying any further tax or charge for the collection of any garbage or trash under the terms" of the ordinance; and that the proper officials of the county be required to "repay or cause to be repaid to its taxpayers so similarly situated" "such invalid taxes and charges" as may have been paid.
The defendants demurred to the bill on the ground that the plaintiffs had an adequate remedy at law, and that, therefore, a court of equity was without jurisdiction of the matter.
The demurrer was overruled and the defendants answered. After an ore tenus hearing the lower court entered a decree sustaining the validity of the ordinance and the levy and dismissing the bill. To review that decree the present appeal was allowed.
[1-3] In an assignment of cross-error the defendants urge that the lower court should have sustained the demurrer and dismissed the bill. We agree with this position.
Section 416 of the Tax Code provides: "No suit for the purpose of restraining the assessment or collection of any tax, State or local, shall be maintained in any court of this Commonwealth, except when the party has no adequate remedy at law."
Code of 1950, section 58-1158.
Prior to the enactment of this statute, a taxpayer who felt aggrieved by the assessment of his property for taxation could, at his election, either institute a suit in equity to enjoin the collection of the tax or ask relief by motion under one of the appropriate statutes. Commonwealth v. Tredegar Co., 122 Va. 506, 509, 95 S.E. 279; Commonwealth v. Carter, 126 Va. 469, 474, 102 S.E. 58.
This statute was first enacted by Acts 1916, ch. 64, p. 89. It was omitted from the Code of 1919, but was re-enacted by Acts 1922, ch. 333, p. 558, and incorporated in its present form in the Tax Code of 1928, section 416. Acts 1928, ch. 45, pp. 35, 231.
But, as we have said, since the enactment of section 416, where the statutory remedy is adequate it must be followed, and "the previously existing remedy by injunction is cut off" and cannot be pursued. Commonwealth v. Tredegar Co., supra (122 Va., at page 510).
In our opinion three adequate remedies at law were available to the plaintiffs:
(1) They could have proceeded under Tax Code, sec. 414, as amended, which provides a method whereby "Any person assessed with county or city levies or other local taxes" on real estate, on personal property, or with a local license tax, may within a prescribed time apply to the proper court for relief therefrom.
Code of 1950, sections 58-1145 — 58-1151.
The section further provides: "An order of exoneration under this section, when delivered to the tax-collecting officer, shall restrain him from collecting so much as is thus erroneously charged. If what was so erroneously charged has been paid, the order of the court shall compel the treasurer, or city collector, as the case may be, to refund to the applicant the amount specified in the order."
Relief under this section is not confined, as the plaintiffs argue, to the correction of an assessment which is merely erroneous. As we pointed out in Commonwealth v. Smallwood Memorial Institute, 124 Va. 142, 144, 97 S.E. 805, a similar statute affording relief from erroneous assessment of State taxes, and later embodied in Tax Code, see. 410, is remedial and should be liberally construed. In that case the petitioner was relieved of the payment of State taxes held to be unconstitutional and void. See also, Commonwealth v. P. Lorillard Co., 129 Va. 74, 105 S.E. 683.
Code of 1950, section 58-1130.
Taxpayers were granted relief under section 414 from local levies and assessments held to be unconstitutional and void, in Southern Ry. Co. v. Richmond, 175 Va. 308, 8 S.E.2d 271, 127 A.L.R. 1368 (as shown by the record, though not by the opinion); Williams v. Richmond, 177 Va. 477, 14 S.E.2d 287, 134 A.L.R. 833; Richmond v. Eubank, 179 Va. 70, 18 S.E.2d 397.
(2) The plaintiffs could have proceeded under section 290 of the Tax Code. This section provides:
Code of 1950, section 58-841.
"When any order for a levy is made by the board of supervisors, which, in the opinion of the attorney for the Commonwealth, is illegal, or from which he shall be required to appeal by any six freeholders of the county, the said attorney shall appeal therefrom, within thirty days after such order is made, to the circuit court of said county, and such appeal shall operate as a supersedeas. Without waiting the final decision of the appeal, the board may rescind its order and order a levy according to law; or if the court shall, on the hearing of the appeal, be of the opinion that the order is contrary to law, it shall reverse the same and direct the said board to enter such order as to the court may seem right. If money be collected under any such order, which is afterward rescinded or reversed, the treasurer shall forthwith repay such money to the person from whom it was collected. If he fail so to do, a motion may be made and judgment obtained, in like manner as in cases provided in section three hundred and sixty-one hereof."
In Turnbull v. Brunswick County, 122 Va. 645, 648, 95 S.E. 391, we said that this section provides an ample remedy in cases in which a large number of the citizens of a county feel aggrieved by an alleged illegal tax.
The fact that the plaintiffs failed to avail themselves of he provisions of this section within the prescribed statutory period does not entitle them to injunctive relief. See 51 Jur., Taxation, sec. 1225, p. 1045. To hold otherwise would permit one aggrieved by an assessment to nullify the statutory method of procedure. It would permit him to profit by his own neglect or wilfulness, and would give him an election to which a diligent litigant would not be entitled.
(3) The plaintiffs could have paid the taxes under compulsion and protest and filed actions at law for recovery of the amounts paid. Charlottesville v. Marks' Shows, 179 Va. 321, 330, 18 S.E.2d 890, 895, and authorities there cited.
For these reasons we are of opinion that the lower court should have sustained the demurrer and dismissed the bill of complaint. Having reached this conclusion we express no opinion upon the merits of the controversy.
The decree complained of is reversed and a final decree will be here entered dismissing the bill.
Reversed and dismissed.