Opinion
No. 27854.
April 15, 1929.
1. PENALTIES. "Statutory penalty" in civil sense is pecuniary punition, imposed for doing some prohibited act or omitting to do some required act.
In a civil sense, a "statutory penalty" is a pecuniary punition, imposed for doing some act which is prohibited or for omitting to do some act which is required to be done.
2. LEVEES AND FLOOD CONTROL. Law authorizing recovery of ten dollars for each bale of cotton removed without paying tax, and without consent of levee board, imposed statutory penalty ( Laws 1906, chapter 128, section 5).
Laws 1906, chapter 128, section 5, authorizing board of Mississippi levee commissioners to recover tax of ten dollars on each bale of cotton removed without paying tax thereon, and without consent of levee board, held to impose a statutory penalty by reason of such default.
3. PENALTIES. Intrinsic nature of exaction controls in determining whether statute imposes penalty, regardless of name or designation.
Determination of question as to whether statute imposes a penalty is not controlled by the name or designation which the legislature has given to it, but the intrinsic nature of the exaction will control, and it will be regarded as a penalty when by its very nature it is a penalty.
4. LEVEES AND FLOOD CONTROL. Board of levee commissioners, acquiescing in general practice of making remittances of cotton tax through banks, could not thereafter recover statutory penalty ( Laws 1906, chapter 128, section 5).
Where board of levee commissioners had for a period of several years acquiesced in practice of making remittances of cotton tax under Laws 1906, chapter 128, section 5, to and through banks without having consented to removal of cotton before payment of tax, it was not entitled to recover statutory penalty thereunder, regardless of whether such practice was authorized by an order spread on the minutes of the board.
APPEAL from chancery court of Bolivar county, First district, HON. HARVEY McGEHEE, Chancellor.
Valentine Valentine, for appellant.
This suit is for the recovery of a penalty. The act itself in its title recites that it is enacted for the purpose, among others, of "providing penalties for evading the cotton tax," and the heading to sec. 5, reads thus: "Unlawful to remove cotton before tax has been paid; penalty for this offense." The act then proceeds to declare the act of removing cotton from the levee district, which had been grown therein, without first paying the levee tax, to be a misdemeanor, and prescribes a fine and imprisonment upon conviction thereof. From this it is clear that the alleged tax of ten dollars per bale is prescribed as an additional penalty to the penalty of fine and imprisonment. In Miss. Levee Commissioners v. Refuge Cotton Oil Co., 91 Miss. 480, the court, in effect, held that the ten dollars per bale here sued for was a penalty, the court there saying: "The tax, or penalty, which ever it may be, of ten dollars per bale, and the fine and imprisonment, are so severe as also to show that they were never intended to be applied to those who dealt in Grabboll or delinted cotton." This is the only case we have been able to find which construes the statute in question or one similar to it. That the statute is a penal statute seems to be concluded by McBride v. State, 70 Miss. 716, and Hodge v. Muscatine County, 106 U.S. 279.
The tax, or penalty, which ever it may be, of ten dollars per bale cannot be imposed if the person removing the cotton without first paying the levee tax did not do so "without the consent of the levee board of said district." It is conceded that the levee board did not expressly consent to the removal of the cotton in question without the levee tax being first paid, but it is earnestly insisted that it impliedly consented thereto under the custom shown by the pleadings and the agreed statement of facts to have been in vogue during all of the time from the year 1922 to the year 1927. The appellant knew of this custom and relied on it in shipping his cotton from the levee district without paying the regular tax on same and in thereafter paying the amount of this levee tax to the Bolivar county bank. He certainly then had no such criminal intent as would be necessary to conviction on a prosecution under the act involved. The appellee, whether it was aware of the fact officially or not, had for five years permitted the practice referred to, and had regularly received into its treasury the monies so paid to the Bolivar County Bank as levee tax on cotton which had been grown in and previously shipped by them from the district. Under these circumstances it would seem to be unconscionable to hold that the appellant had subjected himself to this severe penalty by merely following a custom which all shippers of cotton from the levee district followed and on which he himself relied. That the board could give its implied consent is sustained by the authorities. See Methodist Episcopal Church v. Vicksburg, 50 Miss. 601; Jones Bayou Drainage District v. Sillers, 129 Miss. 13, 91 So. 693.
Walter Sillers, Jr., Louis C. Hallam and J.C. Roberts, for appellee.
Appellant first urges upon the court that the ten dollars per bale imposed by chap. 128, Laws of 1906, and here sued for, is a penalty and not a tax, and hence that he is not liable except for the amount of the regular tax on the one lot of cotton which he admits that no tax at all has been paid by him. The court expressed no opinion on the subject in Miss. Levee Commissioners v. Refuge Cotton Oil Co., 91 Miss. 480, but, on the contrary, elected to pretermit that question. This is clearly shown by the very excerpt from the court's opinion quoted in the appellant's brief. "The tax or penalty, which ever it may be," says the court. The title of an act of the legislature and the heading of a section of an act are no part of the act itself, and in order to ascertain what the law is, one must look to the body of the act. Thus only can the legislative intent be legally discovered. The tax of one-fourth of one cent per pound is the tax fixed by the levee board. This tax of ten dollars per each bale is a tax imposed by the legislature itself. The effect of this enactment is precisely as if the legislature had in the first instance prescribed a tax of ten dollars per bale on all cotton grown in the levee district and had then provided that this tax should be decreased to the amount per pound which the levee board should prescribe, provided such tax which the levee board might fix be paid before the cotton left the district. We cannot agree with counsel for appellant that the cases of McBride v. State, 70 Miss. 716, and Hodge v. Muscatine County, 196 U.S. 279, 49 L.Ed. 477, establish the fact that the ten dollars per bale here sued for is a penalty. As we view the opinions in these cases they hold directly to the contrary. The statute construed in the McBride case makes no mention whatever of a tax. It calls the act of selling or giving away intoxicating liquors an "offense," and for that offense permits a recovery. But sec. 1109, Code of 1880, from which that section was in part formulated, provided a "retail tax" for selling or giving away such liquors, and this court very properly held that under that section the sheriff had the right to assess and collect the tax. That was a privilege tax, and so in the case at bar, the ten dollars per bale fixed by the Act of 1906 is in the nature of a privilege tax assessed, not against the cotton removed, but against the person removing it, for the privilege of removing the cotton without first paying the regular tax fixed by the levee board. The fact that so removing the cotton is also made a criminal offense in no way alters the case. That the legislature may tax an unlawful business, see State v. Romback, 112 Miss. 737, 73 So. 731; Hodge v. Muscatine County, 196 U.S. 276, 49 Fed. 477; State v. Clark, 189 Iowa 502, 178 N.W. 423; Taft Co. v. Alber, 185 Iowa 1075, 171 N.W. 721.
It is said by the appellant that although the levee board did not expressly consent to the removal of this cotton from the district before the regular tax had been paid, yet by its acts and conduct during a period of five years, it impliedly consented thereto. It is clear from the agreed statement of facts that the levee board knew nothing about this course of conduct and did not know that the Bolivar County Bank was collecting the regular tax, and it is clearly shown that the Bolivar County Bank did not remit the funds so collected by it to the appellee as a board, but that it either remitted to the cotton tax collector, or to the Greenville Bank, or to the secretary-treasurer, a mere employee of the levee board, and that when these remittances were made no data accompanied them to show on what cotton the taxes applied, or that the cotton had already been shipped from the levee district before the tax was paid. Surely the appellee could not either expressly or impliedly consent to the doing of a thing of which it had no knowledge. It is not sufficient for the appellant to show that he had knowledge of this custom and relied upon it, but it was incumbent upon him to go further and show that the levee board itself had such knowledge. There is nothing in the statute about intent, hence the question of, with what intent the act was done, is immaterial. It may be, as contended by appellant, that the implied consent of the levee board to the removal of cotton from the levee district prior to the payment of the regular cotton tax thereon might be inferred from acts and conduct of the levee board; but we do not believe that a decision of that question is necessary or proper in this case, for under no circumstance would consent be implied unless the levee board had full knowledge of all the facts and circumstances in connection with the matter. We do not see that the case of Methodist Church v. Vicksburg, 50 Miss. 601, is at all helpful to the appellant. That case was one of implied contract. No contract is involved in this case.
In the case at bar the appellee knew nothing of the agreement between Dr. Ware, its tax collector, and the Bolivar County Bank, and the only person that was connected with the levee board who did know anything about it was the secretary-treasurer, and he knew only because the Bolivar County Bank made remittance to him. Of course, the levee board cannot be bound by any knowledge which its secretary-treasurer had, as he was a mere employee of the board. Board of Miss. Levee Commissioners v. Foot, Davis Co., 111 Miss. 10. We believe that the statute involved, when it refers to the consent of the levee board, really means that any person desiring to move specific cotton from the levee district without first paying the tax must first secure the express consent of the levee board, evidenced by order entered on the minutes of the board, as to that particular cotton. It is of course against the policy of the law that one should be given a carte blanche leave to remove cotton from the levee district for an indefinite time without paying the taxes as the cotton is removed, and to thereafter permit him to pay the cotton tax at such period of time after the cotton is removed as he may see fit. The policy of the law is that the taxes shall be paid when they are due, and the power which the statute gives to the levee board to authorize the removal of cotton from the district without the tax being first paid is a power which should be exercised with care and caution and because of some necessitous circumstance connected with the particular case.
Under section 5, chapter 128, Laws of 1906, it is provided that: "It shall be unlawful for any one to remove or cause to be removed from the Mississippi Levee District any cotton grown therein without first paying the levee tax thereon, and any one so removing such cotton without paying such tax and without the consent of the levee board of said district, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined; . . . and in addition the board of Mississippi levee commissioners shall be entitled to recover from the person so removing such cotton a tax of ten dollars ($10) for each bale . . . on all cotton so removed. . . ."
The regular levee tax fixed and assessed for the years 1926 and 1927 was one-fourth of one cent per lint cotton pound. Appellant (1) on July 2 and 6, 1927, shipped three bales of cotton on which the regular tax has never been paid; (2) on May 18, 1927, he shipped two bales on which the regular tax was paid direct to appellee's cotton tax collector on July 18, 1927; (3) on March 1, 1927, he shipped eight bales on which the regular tax was paid on the day of shipment; and (4) on March 31, 1927, he shipped ten bales on which the regular tax was paid on April 9, 1927. The last two payments were made to the Bolivar County Bank, which later remitted same to appellee's cotton tax collector.
The principal argument at the bar is addressed to the question whether the quoted statute imposes a penalty or simply a tax. In the civil sense, a statutory penalty is a pecuniary punition imposed by statute for doing some act which is prohibited, or for omitting to do some act which is required to be done. In the popular mind, the idea of a penalty is always present when a certain regular tax is laid, and is coupled with a requirement that it shall be paid on or before a definite time, and a much larger or greatly increased tax is exacted in default of payment on or before the said certain time, even if the default be but for a day. There is a default, and a greatly increased exaction follows as a result — there is a penalty for the default. And this popular idea is accurate enough in point of law, so far as concerns the case and the statute here being considered. It is true the statute denominates the greatly increased payment, when paid after removal, as a tax; but the determination of the question whether a statute imposes a penalty is not controlled by the name or designation which the legislature has given to it, nor by the fact that the legislative act may describe it as a further sum or an additional tax, or simply a tax, if it is yet greatly in excess of the amount of the regular tax and is imposed by reason of the default of the tax debtor. The intrinsic nature of the exaction will control, and it will be regarded as a penalty when by its very nature it is a penalty. 21 R.C.L., p. 210; Helwig v. U.S., 188 U.S. 605, 23 S.Ct. 427, 47 L.Ed. 614.
It will be observed that the statute, strictly construed, imposes the penalty, not for removing the cotton upon which the regular tax has not first been paid, but for doing so without the consent of the levee board of the district. These words imply that the levee board may consent, else the words are surplusage. It may be assumed that it was meant thereby to allow the revenue administration of the board to conform to every-day practical customs and conveniences; as, for instance, where a shipper obtains his bill of lading, and, attaching thereto a draft on the consignee, deposits the same in bank to his credit, less the cotton tax which the bank is directed to pay to the cotton tax collector out of the proceeds — particularly so in view of the fact that, when such tax collections are deposited in bank, they become public trust funds, entitled to priority of payment. There is an agreed statement of facts in the record, and it is the contention of appellant that this agreed statement shows such a consent by general course of conduct on the part of the levee board as to relieve him of the said penalty, except as to the three bales mentioned in item one.
It it difficult to construe the agreed statement of facts. It is made up of several broad statements of general practice and custom in respect to the material matters in issue, which statements are followed by averments of exception and qualification in such a manner that it is not clear just what the parties have agreed upon as to the real facts. It is, however, a fair construction of the agreement that the board did, throughout this period, and for a period of several years theretofore, receive remittances of the cotton tax made to and through the Bolivar County Bank, as well as other local banks, and that this method of settlement was a practice sufficiently prevalent as to make it, as we think, unjust to shippers relying thereon now to apply the penalty; it being admitted by the agreement that appellant did rely thereon.
It is contended by appellee that these practices were not authorized by the board by an order spread on its minutes, and that, moreover, the members of the board did not have direct, personal knowledge of what had been going on in respect to the practice relied on by appellant. It may be conceded that all matters of general and vital policy ought to go on the minutes of the board. Nevertheless, it could hardly be fairly contended with respect to statutory penalties that a board, failing to make an entry on its minutes, could permit a general administrative custom to prevail as if there had been a formal recorded recognition of it, and, when the custom had been acted upon, then afterwards go out and collect large penalties upon the basis of its own default in failing to complete its minutes so as to show, in words, on paper, what it had been doing by acts open to the eyes of all who observed. And, as to the point that the members of the board had no direct, personal knowledge, it is sufficient to say that there were facts sufficient to put them on notice.
We think, therefore, that the decree is erroneous in so far as it affixes the penalty upon the last two items of eighteen bales paid through the bank, and to that extent it is reversed. Regarding the two bales mentioned in item 2, we do not find sufficient of tangible definiteness in the agreed statement of facts to bring these within the defense.
Affirmed in part, and reversed in part.