Hendrickson v. Apperson/Opinion of the Court

Seeking to enforce a long-standing judgment against Taylor county, respondent instituted this proceeding (May, 1916) in the United States District Court at Louisville against County Judge Hendrickson and justices of the peace constituting the fiscal court. The judgment was based on bonds authorized by a special act of the Kentucky Legislature approved in 1878 and entitled, 'An act for the benefit of Taylor county, empowering it to compromise its debts, issue bonds, and levy and collect taxes to pay the same' (1 Acts 1877-78, p. 554); they had been used to compromise and take up others issued under an act of 1869, entitled 'An act to incorporate the Cumberland & Ohio Railroad Company' (1 Acts 1869, p. 463).

He asked a—

'writ of mandamus, commanding and requiring the defendants to     levy a tax upon each one hundred dollars of property assessed      for valuation in said county for the year 1916, sufficient to      pay plaintiff's aforesaid judgment, interest and costs, and      that they be required to include in the order making the levy      for ordinary county purposes the aforesaid levy for the      purpose of paying the aforesaid judgment, and to further      direct the said W. T. Hendrickson, as county judge of Taylor      county, that when he next appoints a collector whose duty it      shall be to collect any or all items by a levy made by the      fiscal court of Taylor county for any purpose, he shall      embrace in said order of appointment a direction to the      officer appointed to collect both the levy made to pay this      judgment and the levy made and to be made for any item which      may be levied by said fiscal court, and that said county      judge shall continue to so embrace said directions in the      same order of appointment until a collector is appointed who      shall qualify as such collector, and said * county judge shall exact of him but one and a single bond to      cover the collection of the levy made to pay this judgment,      as aforesaid, and the item or items of any levy made by the      fiscal court of Taylor county for any other purpose.'

'That under the statutes of Kentucky, as construed by the     Court of Appeals of Kentucky, the county court of Taylor      county has a discretion as to whether it will appoint one      person to collect all moneys due the state and the county,      and taxing districts therein, or as to whether it will      appoint separate collectors and designate in the order of      appointment of each collector what he shall collect,      including the right and discretion to appoint one collector      to collect taxes levied by the fiscal court of the county for      ordinary county purposes, and another collector to collect      taxes levied by the fiscal court for other purposes, such as      the payment of judgments against the county, and to direct in      each order of appointment what taxes the appointee thereunder      shall collect, and for the collection of which he should be      required to give bond. And they respectfully submit that this     honorable court cannot, by its judgment, control the      aforesaid discretion of the county court of Taylor county,      given it by the statutes of Kentucky as construed by the      Court of Appeals of Kentucky.'

Having heard the cause on demurrer to the answer, the trial court directed that appropriate levies be made during 1916, 1917, and 1918, to raise funds to satisfy respondent's judgment at the same time and by the same order which should provide for other county taxes; and further:

'That said defendants and their successors in office, as the     fiscal court of Taylor county, be, and they are hereby,      ordered to place the tax bill for each of the aforesaid      levies for collection in the hands of the sheriff of Taylor      county, and his successor in office, if any, and upon default of said sheriff to execute bond and qualify for      said office, then W. T. Hendrickson, county judge, and his      successor in office, if any, constituting the county court of      said county, is directed when he next appoints a collector      whose duty it shall be to collect any or all items of any      levy made, or which may hereafter be made by the fiscal court      of Taylor county for any purpose, to embrace in said order of      appointment a direction to such officer appointed to collect      both the levy made or which may hereafter be made to pay this      judgment and the levy made or which may hereafter be made for      any and all items which are levied or which may be levied by      said fiscal court; and said county judge, acting as said      county court, shall continue to so embrace such directions in      the same order of appointment until a collector is appointed      who shall qualify as such collector by executing proper bond;      and said county judge shall exact of him but one and a single      bond to collect the levy made, or which may hereafter be made      to pay this judgment as aforesaid, and the item or items for      any levy made, or which may hereafter be made by said fiscal      court for any other purpose. * *  * '

The Circuit Court of Appeals affirmed the action of the District Court, but upon a different view, following Tucker et al. v. Hubbert, 196 Fed. 849, 117 C. C. A. 365, and Graham v. Quinlan, 207 Fed. 268, 124 C. C. A. 654.

Petitioners maintain that section 4131, Kentucky Statutes, as amended in 1906 and construed by the Court of Appeals (Commonwealth, etc., v. Moody, 150 Ky. 571, 150 S. W. 680), empowers the Taylor county court to appoint one collector of all county taxes, or, if so advised, to designate more than one and direct each to collect certain taxes, under a bond covering only those specified, and that such discretion cannot be interfered with by mandamus.

Respondent maintains that, properly construed, section 4131 permits appointment of only one such collector, and that if the 1906 amendment (Acts 1906, c. 22, art. 8, § 3) means what petitioners assert, it impairs his contract with the county, contrary to the federal Constitution. Article 1, § 10.

It is stated, without contradiction, that prior to 1906 section 4131 embodied the applicable statutory provision concerning a collector in effect when the refunding bonds were issued. See Kentucky General Statutes (1873) c. 92, art. 8, § 2; Kentucky Statutes of 1894, § 4131.

'Section 4131. On the failure of the sheriff or collector to     execute bond and qualify as hereinbefore provided, he shall      forfeit his office, and the county court may appoint a      sheriff or collector to fill the vacancy until a sheriff or      collector is elected, or it may appoint a collector for the      county of all moneys due the state, county or taxing district      authorized to be collected by the sheriff, or it may appoint      a separate collector of all the moneys due the state, county      or any taxing district thereof during the vacancy in the      office of sheriff; and in the event the county court fails      for thirty days to appoint a collector of money due the      state, the auditor of public accounts may appoint a collector      thereof. Such collectors shall, within ten days after their     appointment, execute bond as required of the sheriff, to be      approved by the county court, and if the bond be not executed      within said time the appointment of another collector may, in      like manner, be made and qualified.'

'But such collector shall only be required to give bond for     and collect such taxes or moneys as may be mentioned or      provided for in the order of the county court appointing      him.'

In Commonwealth, etc., v. Wade's Adm'r, etc. (Oct. 1907) 126 Ky. 791, 104 S. W. 965, the Court of Appeals held, that, under the original section, where there was no sheriff only one person could be appointed to collect all county taxes. In Commonwealth, etc., v. Moody (Nov. 1912) 150 Ky. 571, 150 S. W. 680, the same court construed the amendment, and held, we are constrained to conclude, notwithstanding some grave doubts, that it authorized appointment of special collectors, each charged with the duty of collecting only some designated part of assessed county taxes. And, of course, this construction by the state's highest court must be accepted.

But, so construed, we are of opinion that the amendment would impair the contract under which the bonds were issued, and upon which respondent has a right to rely. It cannot, therefore, be permitted to defeat the remedy theretofore available to him.

The doctrine of this court here to be applied has long been established.

In Von Hoffman v. City of Quincy, 4 Wall. 535, 550, 552, 553 (18 L. Ed. 403), through Mr. Justice Swayne, we said:

'It is also settled that the laws which subsist at the time     and place of the making of a contract, and where it is to be      performed, enter into and form a part of it, as if they were      expressly referred to or incorporated in its terms. This     principle embraces alike those which affect its validity,      construction, discharge, and enforcement. * *  * Nothing can      be more material to the obligation than the means of      enforcement. Without the remedy the contract may, indeed, in     the sense of the law, be said not to exist, and its      obligation to fall within the class of those moral and social      duties which depend for their fulfillment wholly upon the      will of the individual. The ideas of validity and remedy are     inseparable, and both are parts of the obligation, which is      guaranteed by the Constitution against invasion. The     obligation of a contract 'is the law which binds the parties      to perform their agreement.' The prohibition has no reference      to the degree of impairment. The largest and least are alike     forbidden. * *  * It is competent for the states to change the form of the remedy, or to modify it otherwise, as they      may see fit, provided no substantial right secured by the      contract is thereby impaired. No attempt has been made to fix     definitely the line between alterations of the remedy, which      are to be deemed legitimate, and those which, under the form      of modifying the remedy, impair substantial rights. Every     case must be determined upon its own circumstances. Whenever     the result last mentioned is produced the act is within the      prohibition of the Constitution, and to that extent void.'

'The obligation of a contract, in the constitutional sense,     is the means provided by law by which it can be enforced-by      which the parties can be obliged to perform it. Whatever     legislation lessens the efficacy of these means impairs the      obligation. If it tend to postpone or retard the enforcement     of the contract, the obligation of the latter is to that      extent weakened.' Louisiana v. New Orleans, 102 U.S. 203,      206 (26 L. Ed. 132). And see Seibert v. Lewis, 122 U.S. 284,     294, 295, 7 Sup. Ct. 1190, 30 L. Ed. 1161.

Considered in the light of Taylor county's notable and repeated successful efforts to avoid payment of adjudicated indebtedness and also in connection with the present controversy, we think it clear that the right to have any tax levied to discharge respondent's claim collected along with taxes for general county purposes was a substantial and valuable one. The circumstances indicate a deliberate design upon the part of county officials to deprive its creditors of an efficacious remedy provided by law and incorporated into its contracts. To give the amendment the effect claimed would render easier of accomplishment well-defined plans obviously designed to defeat proper judicial process and in notorious operation long before its passage. There is here something more than provision for the ordinary and orderly readjustment of administrative matters evidently intended to facilitate public business. Actual conditions cannot be ignored, and certainly we ought not, through assumptions out of harmony with patent facts and overnice refinements, to facilitate the practical destruction of admitted legal obligations.

The declarations of the Court of Appeals of Kentucky in Commonwealth, etc., v. Wade's Adm'r, etc., 126 Ky. 801, 802, 104 S. W. 965, 967, are illuminating. Referring to the appointment of a separate collector charged with the sole duty of collecting a special tax ostensibly levied to satisfy a judgment against Taylor county, it said:

'There can be little doubt that the fiscal court, by what     they did in the matter, were undertaking to nullify the      judgment of the circuit court. The appointment of the special     collector, Trotter, of whom nothing was ever afterward heard,      and who in no way attempted to qualify as collector, or      discharge the duties of that office, point to the fact that      this was an arrangement by which the fiscal court could      seemingly comply with the judgment, but without, in fact,      accomplishing anything. This unlawful purpose could only be     successful by the failure of the regular collector of the      revenue to do his duty in the premises, and to collect the      taxes provided for by the special levy. Such juggling with     the decrees and judgments of the courts cannot be tolerated. Ours, as has often been said, is a government of laws, and,     if the judgments of the courts enforcing the law may be thus      nullified or disregarded either by overt act or culpable      negligence, government is at an end. The county is as     amenable to the law as an individual, and it is the high duty      of its officials to enforce the law wherever and whenever      they are its ministers. * *  * It seems to us high time that      it should be taught as a practical lesson, as well as a      theory, that there are none so high as to be above the      restraints of the law, or so low as to be beneath its      protection.'

The argument for petitioner, that the Refunding Act of 1878 provided an exclusive remedy through application to the circuit court in case the county court should fail in its duty, is not well founded. The decisions of the Court of Appeals in Muhlenburg County v. Morehead, 46 S. W. 484, 20 Ky. Law Rep. 376, and Pennington v. Woolfolk, 79 Ky. 13, make it quite plain that an 'attempt to impose on the circuit court or judge thereof the duty of levying and collecting taxes is unconstitutional and void' under the jurisprudence of Kentucky.

Affirmed.