214 N.C. 167

BEMIS HARDWOOD LUMBER COMPANY, Plaintiff, v. GRAHAM COUNTY and A. F. GHORMLEY, County Accountant for GRAHAM COUNTY, Defendants.

(Filed 28 September, 1938.)

1. Taxation § 13—

Tax on property is a visitational tax and not an excise tax for tbe privilege of owning property.

2. Taxation § 32a— *

The lien for taxes attaches to realty on the first day of April of each year, the date on which land is required to be listed in the name of the owner. Ch. 291, Public Laws of 1937, secs. 701, 1401, 302.

3. Taxation § 32c: Vendor and Purchaser § 6 — Giving of option with right of entry in purchaser for certain purposes does not pass title.

Plaintiff executed to the United States Government an option on the lands in question which gave the Government certain privileges, including the right to enter upon the lands for examination of minerals, timber and other resources, pending the acceptance of the option, and which further provided that upon acceptance of the option and pending the vesting of title, the Government might use the lands for the purpose of national forests with certain limitations and restrictions. The Government accepted the option and exercised the privileges therein provided, and in February, 1937, the second year after its acceptance of the option, took steps for the transfer of the title by institution of condemnation proceedings as contemplated by the option. Belcl: Neither the option with the exercise of the privileges therein provided before acceptance, nor the surrender of the land to the Government under the stipulated restrictions for national forests purposes upon its acceptance of the option, had the effect of transferring ownership to the Government, and actual title not having passed until after 1 April, 1937, plaintiff, as owner, is liable for all taxes assessed for that year and the year prior thereto.

4. Eminent Domain § 25 — Title passes in condemnation proceedings when award is paid into court after confirmation of commissioners’ report.

While the value of lands taken in condemnation proceedings is fixed as of the date the petition is filed, title to the land does not pass until the award, as assessed by the commissioners, is paid into court after confirmation of the commissioners’ report, since the statute, O. S., 1723, provides that title shall pass at that time, and since petitioner may withdraw at any time prior thereto, and in proceedings instituted by the United States, the Federal practice requires that the proceedings shall conform, as nearly as may be, to the law of the State in which they are brought.

5. Taxation § 32c — Title in condemnation proceedings held not to have passed prior to 1 April, and land was not relieved of taxation.

Condemnation proceedings were instituted by the Federal Government in February, 1937. The commissioners’ report was confirmed on 25 June, 1937, and final decree of the court adjudging title to be divested from respondent and vested in the Federal Government was entered on 25 *168August, 1937. Held: Title was not divested, from respondent until the date of the final judgment, and respondent being the owner of the land on 1 April, 1937, is liable for the taxes assessed against the property for that year.

Appeal by defendants from Clement, J., at March Term, 1938, of GRaham.

Reversed.

This was an action brought by the plaintiff to recover of the defendants certain taxes paid under protest, and resulted in a recovery by the plaintiff in the amount of $209.15, taxes paid for the year 1937, with interest and costs.

Pertinent facts are as follows :

The plaintiff was the owner of certain lands in Graham County upon which the taxes were levied. On 15 May, 1935, plaintiff executed to the United States of America an option for the purchase of these lands, the said purchase depending upon the approval of the Attorney General of the United States as to the title. It was provided in the option that if the vendors were unable to show an established title, to the satisfaction of the Attorney General, the United States would, if it deemed advisable, institute proceedings for the condemnation of the lands.

The option permitted certain privileges to be exercised upon the lands by the United States pending the exercise of the privilege of purchase, among them that the optionee might enter the lands “for all proper and lawful purposes, including examination of lands, minerals, timber, and other resources,” and that, pending the vesting of title of the lands in the United States, the latter, if it elected to do so, might, upon the acceptance of the option, use, occupy, and administer the lands for the purpose of national forests, or the establishment thereof, subject to the limitations and restrictions provided in the option.

On 30 July, 1935, the plaintiff, or its predecessor in title, had notice from the Department of Agriculture of the election to purchase the land under the provisions of the option. After this notification the Lumber Company surrendered the property to the United States of America and exercised no rights thereover except such as were reserved in the option.

On 10 February, 1937, the United States of America began proceedings for the condemnation of the land by filing a petition in the United States District Court for the Western District of North Carolina, at Asheville, and the condemnation proceeded in due form down to the confirmation of the report of the commissioners on 25 June, 1937, and the final decree of the court adjudging the title to be divested from this plaintiff (respondent in the condemnation proceedings), and vested in the United States of America, on 25 August, 1937.

Under the assumption that the lands in question were not subject to the county tax as property of the plaintiff, because of the option and the *169pendency of tbe condemnation proceedings referred to, tbe plaintiff refused to list tbe lands for taxation during tbe year 1937; and, upon sucb failure, tbe lands were listed by tbe county authorities, as provided in tbe Machinery Act, and tbe taxes assessed. Tbe plaintiff paid tbe taxes under protest, demanded tbe return thereof in apt time, and, upon failure of tbe defendants to make refund within tbe ninety days provided by tbe statute, brought this suit for their recovery.

R. L. Phillips for plaintiff, appellee.

Morphew & Morphew for defendants, appellants.

Seawell, J.

Tbe Machinery Act, chapter 291, Public Laws of 1937, governing tbe listing and appraisal of property and tbe levy and collection of taxes, contains tbe following provisions :

“Section 701. Except as hereinafter specified, real property shall be listed in the name of tbe owner; and it shall be tbe duty of tbe owner to list tbe same.” (Tbe situation with which we are dealing does not come within tbe exception.)
“Section 1401. Date as of Which Lien Attaches. Tbe lien of taxes levied on property and polls listed pursuant to this act shall attach to real estate as of the day as of which property is listed, regardless of the time at which liability for tbe tax may arise or tbe exact amount thereof be determined.”
“Section 302. Date as of Which Assessment Is to Be Made. All property, real and personal, shall be listed, or listed and assessed, as the case may be, in accordance with ownership and value as of tbe first day of April, one thousand nine hundred and thirty-seven, and thereafter all property shall be listed or listed and assessed in accordance with ownership and value as of tbe first day of April of each year.”

Obviously section 1401, fixing the attachment of the lien as of April first, has reference to S. v. Fibre Co., 204 N. C., 295, 168 S. E., 207, cited in defendants’ brief, in which it was held that the date on which' the lien attached was “when the taxes become due,” that is, the first Monday in October of tbe year in which they are levied, while liability for tbe tax was held to arise on tbe first day of the fiscal year — 1 July. Therefore, a brief reference to S. v. Fibre Co., supra, becomes pertinent.

In fixing tbe date of the attachment of tbe lien, tbe opinion in that case was not advertent to tbe fact that the statute itself, O. S., 7987 (see Michie’s Code, same section), fixed tbe time at which tbe lien attached as tbe first day of June. This is recognized and approved by tbe Court in Bryan v. Craven County, 204 N. C., 729, 733, 169 S. E., 625, filed a little later and printed in tbe same volume. Apparently both tbe date for tbe attachment of tbe lien and that of tbe liability for the tax stated *170in S. v. Fibre Co., supra, came about through au inadvertent blending of the Machinery Act, which pertains to property taxes exclusively, with the current Revenue Act, which provides principally for the taxation of privileges, and fixes the period during which they may be exercised under the license granted. The provisions of the latter act were thus incorporated into the former, although the two acts are separate and distinct, and relate to different subjects.

The tax on property is a visitational tax, and is the taking of a part of the taxpayer’s wealth, represented by the property he owns, for the needs of Government. Under our present statute it is taken as a percentage of the ascertained value “according to ownership,” as of the day of the visitation — 1 April. It is not an excise tax for the privilege of owning property for the period of the fiscal year, or any other period.

Logically, therefore, the liability for the tax arises on the day the lien attaches to the property, and on the day the taxpayer is found to be in ownership thereof — 1 April — and we so hold. The purpose and effect of the statute above quoted was to reinstate the law in this respect as it existed prior to S. v. Fibre Co., supra, here considered.

Since none of the steps taken by the United States Government with respect to the property antedated 1 April (the date we consider the property became subject to the tax, if it did at all), except the taking of the option and the commencement of the condemnation proceeding, the controversy is narrowed down to the question of whether this plaintiff was the owner of the lands upon the first day of April, 1937, within the meaning of the pertinent provisions of the Machinery Act. The plaintiff was such owner unless (1) the giving and acceptance of the option, and the acts of the optionee upon plaintiff’s lands, or (2) the commencement of the condemnation proceedings, had divested him of such ownership and vested it in the United States of America. ¥e are of the opinion that neither of these occurrences had that effect.

(1) Neither the option, whether standing alone or fortified by the acts done upon the lands, as set out in the findings of fact, nor the surrender of the lands to the United States Government for the uses to which they were put, in our opinion, had the effect of transferring the ownership to the United States. At all times, in so far as the option is concerned, until actual title to the land was acquired, the United States had the right to withdraw from the situation and leave the lands in the hands of this plaintiff.

(2) Condemnation proceedings in this case were instituted by the United States of America in accordance with the Federal practice which requires that such proceedings shall conform, as nearly as may be, to the procedure provided by law in the State in which they are brought. Hut at any time between the date of filing the petition on 10 February *171and the signing of the final judgment on 25 August, 1937, the petitioner in this ease had the power to withdraw from the situation at will, and to decline to take the property. If, then, the ownership of this property was vested in the United States on the first day of April, it must have been constructively so, by operation of some principle or policy of law of such superior dignity as to require recognition in spite of the actual facts and contrary to the implications of the statute — C. S., 1723. The plaintiff contends there is such a principle under the laws of this State, and cites as controlling authority S. v. Floyd and S. v. Queen, 204 N. C., 293, quoting from this opinion the following:

“For compensation purposes the commencement of the proceeding marks the time of the taking. Consequently, the owner of the land cannot recover for any improvement placed thereon or for enhancement thereof due to other causes. The obvious reason for such conclusion is that the first judicial act in the condemnation process is in contemplation of law a setting apart of the property for public use. Therefore, if the proceeding is prosecuted to final conclusion the sovereign is deemed to be the owner from the commencement of the proceeding.” (Italics are ours.)

The statute cited provides that the title passes upon the confirmation of the report of the commissioners appointed to appraise the property and assess the damages, and when the award so assessed has been paid into court. Eelating to this matter the opinion continues, somewhat inconsistently, we think:

“While the State does not get a fee simple title until the payment of the award, notwithstanding, the status of the landowner and of the property is established when the clerk of the Superior Court, upon exceptions filed, confirmed the report of the commissioner of appraisals.”

And again:

“Nor is the fact that the Park Commission, even-after final judgment, had the power to decline to take the land, entitled to prevailing significance. Although clothed with such right, the commission did not exercise it, but pursued the proceeding to final conclusion(Italics are ours.)

The plaintiff relies strongly upon this case to support its present contention that it was not the owner of the lands on the first day of April and is not liable for the tax.

It may be conceded that the condemnation proceeding under consideration by the Court in that ease (chapter 48, Public Laws of 1927, and acts amendatory thereof), is sufficiently similar to that here considered to justify the application of S. v. Floyd, supra, if the Court were inclined to follow it. We think that without disturbing the result reached in that case, the principle upon which it was predicated should be re*172considered. However convenient it may be in other relations to refer a change in ownership to the filing of the petition as the date of the taking, such an interpretation not only contravenes the express terms of the statute under consideration, but it has no regard to the exigencies of the laws pertaining to taxation, or to the definition of ownership, in relation to tax liability, to which we feel compelled to adhere.

In Land Co. v. Commissioners, 174 N. C., 634, 94 S. E., 406, the Court gave the following definition of “owner” as within the meaning of a similar provision of the Machinery Act :

“By the owner is meant the person who has the legal right or estate to or in the land and not the one who by contract or otherwise has a mere equity thereon or a right to compel a conveyance of such legal title or estate to himself.”

Since, under chapter 221, Public Laws of 1927, and amendments thereto (Miehie’s 1935 Code, section 8037, et seq.), the State, or county, as the case may be, must finally depend for the collection of its taxes upon a foreclosure suit operating upon the title to the property, there is a fundamental reason for maintaining the integrity of this definition.

Where the statute itself is silent on the point, the theory that the “taking” of the land in a condemnation proceeding occurs the day the petition is filed may be regarded as a fiction of law commonly employed to fix the date as of which the value shall be ascertained for purposes of compensation. The opinions cited in the Floyd case, supra, as supporting are all addressed to that feature of condemnation. The further application of the principle as fixing the ownership of the property for purposes of taxation is unnecessary and impracticable. Under it, ownership must be determined on the principle of “relating back” in case title is finally taken — a matter easily determined after the event, but unpredictable on the first day of April, when the property must be listed “according to ownership.” No provision is made in the statute for postponement of the mandatory duties of officers and boards, nor does it make any provision for readjustment in case a wrong guess is made about the ownership.

There are, as we have before suggested, many statutes in the several states, and also in this State, under which the right of eminent domain may be exercised. In some of these, immediate appropriation and entry may be had by the petitioner. Such provisions are sometimes found in the charters of municipalities and public utilities and in statutes relating to the acquisition of easements for highways and streets. But under the statute relied on in this proceeding, not only is the entry of petitioner Into the lands for purposes other than that specifically granted by the statute not contemplated, but it is contrary to law. S. v. Wells, 142 N. C., 590, 55 S. E., 210. Where the right of entry before confirmation *173of tbe report of tbe commissioners and payment of award exists, it must be expressly conferred by tbe statute. S. v. Jones, 139 N. C., 613, 631, 52 S. E., 240; S. v. Jones, 170 N. C., 753, 87 S. E., 235; R. R. v. Ferguson, 169 N. C., 70, 85 S. E., 156; S. v. Lyle, 100 N. C., 497, 6 S. E., 379. Tbe fact tbat under tbis law tbe supposed owner could not exercise any of tbe rights of ownership at tbe critical date is sufficient, we think, to demonstrate tbe unreality of such ownership.

On examination of S. v. Floyd, supra, it will be found tbat it was unnecessary to a decision of tbe case to bold tbat tbe petitioner was tbe owner of tbe lands at tbe time of filing tbe petition, since tbe report of tbe commissioners bad been confirmed and tbe award bad been paid into court before tbe lands became chargeable with tbe tax. 'Without questioning tbe propriety of tbe result, S. v. Floyd, supra, is disapproved in so far as it expresses a view contrary to tbe conclusion we have reached in tbe case at bar.

Tbe lands described were properly listed to tbe plaintiff as owner on tbe first day of April, 1937, and became chargeable with tbe tax in its bands, and plaintiff bad no right to recover tbe tax paid by it under protest.

In some respects tbe record in tbis case presents anomalies. Tbe plaintiff complains only for a return of tbe 1937 taxes paid under protest, and tbe answer is addressed to such claim; but tbe thirteenth finding of fact, made upon what evidence we are unable to say, is as follows :

“Tbat for tbe year 1936 tbe defendant, Graham County, listed tbe said lands against tbe plaintiff, Bemis Hardwood Lumber Company, and assessed taxes thereon at a valuation of $. and levied a rate of $. per hundred, amounting to $300.15.”

Tbe following paragraphs of tbe findings obviously relate to tbe taxes of 1937, alleged to have been paid under protest. It was tbe evident intention of tbe court to deduct $10.00 from tbe total levied taxes of $300.15, because of tbe taxability of certain rights reserved by tbe plaintiff, and again we cannot allocate tbis finding to any evidence in tbe cause as fixing a liability for $10.00 tax. Instead, however, of deducting $10.00, which would leave $290.15, tbe recovery was for $209.15.

Tbe judgment itself makes no reference to tbe taxes of 1936. Tbe plaintiff excepted to tbe judgment and gave notice of appeal, but made no assignments of error and no reference to tbe appeal in its brief.

In order tbat there may be no misunderstanding of tbe matter, however, we bold tbat on tbe foregoing reasoning and authority tbe lands in question were chargeable with tbe 1936 taxes, and tbe plaintiff is entitled to no relief in tbat respect.

Tbe judgment is

Beversed.

Bemis Hardwood Lumber Co. v. Graham County
214 N.C. 167

Case Details

Name
Bemis Hardwood Lumber Co. v. Graham County
Decision Date
Sep 28, 1938
Citations

214 N.C. 167

Jurisdiction
North Carolina

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