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U.S. Supreme Court

Security Trust & Safety Vault Co. v. Lexington, 203 U.S. 323 (1906)

Security Trust and Safety Vault Company v. Lexington

No. 55

Argued October 23, 24, 1906

Decided December 3, 1906

203 U.S. 323


Before a special assessment, levied by legislative authority of a state -- in this case providing for back taxes in Kentucky -- can be actually enforced, or during the process of its enforcement, the taxpayer must have an opportunity to be heard as to its validity and extent; but this rule is met where the state court has afforded the taxpayer full opportunity to be heard on both of those questions, and, after such opportunity, has rendered a judgment providing for the enforcement of such amount of the tax as it finds actually due.

In so determining the amount due and reducing the amount assessed, the state court does not assume the legislative function of making an assessment, but merely, after hearing, judicially decides the amount of an assessment, made by the assessor under color of legislative authority.

Whether, under the constitution and laws of the state, the burden of showing the invalidity of a tax is on the taxpayer is not a federal question.

The plaintiff in error, which was plaintiff below, filed its chanroblesvirtualawlibrary

Page 203 U. S. 324

petition in the Fayette County Circuit Court, State of Kentucky, in equity, on February 3, 1899, for the purpose of obtaining an injunction restraining the defendants in error from the collection of certain back taxes accruing during the years 1894 to 1898, both inclusive, imposed in favor of the City of Lexington, and which the plaintiff asserted were illegally assessed. A temporary injunction was prayed for and granted restraining the collection of the tax, and upon the trial, the amount of the taxes was reduced, and, as so reduced, declared to be a lien on the property of the plaintiff in error as trustee, and judgment accordingly was entered, which judgment was, upon appeal to the Court of Appeals of the state, affirmed, and the plaintiff brings the case here by writ of error.

In the amended petition, it is averred that the plaintiff, as trustee, owned certain real estate in the City of Lexington, and that the tax collector of the city, asserting a claim for back taxes from 1894 to 1898, both inclusive, in favor of the city against the trust estate in the plaintiff's hands for $13,964.96, had, to satisfy the claim, levied on the real property held by it as trustee and described in the petition, and had advertised the same to be sold, and would sell the same, unless restrained by order of the court. It was averred that the claim for back taxes was for alleged omissions of personal property owned by the plaintiff as trustee which had not been assessed for city taxation for the years stated, and that the tax was based on alleged assessments imposed in December, 1898, for these years, made by the City Assessor of Lexington. The plaintiff denied that the pretended assessments made in 1898 for those years were any assessments at all, and alleged that there had been no assessment for the back taxes of those years or for any of them. It was averred that certain entries which had been made in the assessor's books for the years mentioned, purporting to assess the property for these back taxes, were interpolated among the assessments for those years, but were not legally made; that such entries were not assessments, nor any step in the valid assessment of back taxes in those years, and chanroblesvirtualawlibrary

Page 203 U. S. 325

were made by the city assessor without any notice to, or conference with, the plaintiff of his intention to make the same, or any assessment, and the plaintiff at no time either before or since said pretended assessment had been given or allowed any opportunity or privilege to make any complaint or show cause against the assessment before any competent officer or tribunal whatever. It was also averred that all the property of plaintiff as trustee, during each of the years covered by the claim for back taxes, had been duly assessed, and if it had been given the opportunity, plaintiff would have established the fact of such assessment and that it had been fully and legally paid.

The plaintiff averred that collection of taxes based on assessments made as above stated would be in violation of the Constitution of the United States and of the State of Kentucky forbidding that a citizen should be deprived of his property without due process of law.

The defendants, in their answer, averred that all of the property (with an exception not material) on which the defendants were claiming taxes as upon omitted property had in fact been omitted by the plaintiff from its assessment lists during the years mentioned, and that the lists made out by the plaintiff for those years had been imperfect and improper lists, and that there was omitted therefrom a large part of the personalty owned by the plaintiff as trustee. The defendants averred that all the omitted property was properly assessable for the respective years, and that there was due thereon, in 1898, as the back taxes on the said omitted property, the sum named, to-wit, $13,964,96, and the defendants denied that the valuation of the property, as fixed in the assessment, was any larger in proportion than the value of the assessment generally placed on similar property in the City of Lexington. After the assessment was made, it was averred that the delinquent tax collector demanded payment of the same, which was refused, and thereupon he levied upon the property on the thirty-first of December, 1898. The answer then set up the making of the assessment chanroblesvirtualawlibrary

Page 203 U. S. 326

on the property omitted, and showed that it was made, substantially as averred in the amended petition, by inserting in each of the books for the various years an additional assessment on account of omitted property, and that, after each of the entries of assessment in the various books had been made by the assessor, he signed his name after the words, "Assessed by me," and it is averred that the assessment was also recorded by the assessor in the back tax assessment book kept by the City of Lexington, and was by him reported to the Auditor of the City of Lexington on the day that the assessment was made, December 31, 1898. The defendants also averred that, more than thirty days prior to the time the assessment was made, the city, through its duly authorized officers and agents, had notified the plaintiff that it had omitted from its assessments for the years 1894 to 1898, both inclusive, a large portion of the estate held by it as trustee, and, at the time of giving such notice, the officers of the city had furnished and delivered, as a part of such notice, an itemized statement of the securities and other personal property belonging to the estate and held by the plaintiff on the respective dates for taxation for the respective years, and that payment of the taxes upon this omitted property was repeatedly demanded of the plaintiff by the city during a peor the respective years, and that payment of the taxes upon this omitted property was repeatedly demanded of the plaintiff by the city during a peor the respective years, and that payment of the taxes upon this omitted property was repeatedly demanded of the plaintiff by the city during a period of more than thirty days prior to the assessment, and the plaintiff refused to pay any additional taxes or to list the omitted property, and that ample time and opportunity were afforded plaintiff to show that the property had not been omitted from the yearly assessments, and the plaintiff failed to do so.

A reply and rejoinder were filed, and, upon the pleadings, the parties went to trial.

Judgment was given for the defendants, refusing the injunction and providing for the sale of the real estate to satisfy the amount due for back taxes as stated in the judgment. The total amount of back taxes due on the omitted property was by such judgment reduced from $13,964.96, the amount claimed by the defendants, to the sum of $8,626.63. chanroblesvirtualawlibrary

Page 203 U. S. 329

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