Middleton v. Wilmington, Brunswick & Southern Railroad, 224 N.C. 309 (1944)

May 10, 1944 · Supreme Court of North Carolina

224 N.C. 309

E. F. MIDDLETON, EDWIN MEDLOCK, JOHN MALLARD, INEZE DRAKE, et al., v. WILMINGTON, BRUNSWICK & SOUTHERN RAILROAD COMPANY.

(Filed 10 May, 1944.)

Taxation § 38c—

Taxes paid voluntarily and without objection or compulsion cannot be recovered, even though the tax be levied unlawfully. A compliance with G. S., 105-403, is a prerequisite to a right of action for the recovery of taxes or any part thereof.

Appeal by claimant, Machine Tool & Equipment Corporation, from Burney, J., at October Term, 1943, of New Hanover.

This is a receivership proceeding, instituted in 1933.

On 26 May, 1933, the United States of America, through the then Undersecretary of the Treasury, made and filed its proof of claim with the receiver of the Wilmington, Brunswick & Southern Railroad Company, in the sum of $90,000.00, evidenced by a promissory note, dated 15 January, 1921, payable five years after date, extended by agreement to 15 January, 1928. Tbe claim included accrued and unpaid interest from 1 January, 1930, to 10 April, 1933, in tbe sum of $17,676.80, a total of $107,676.80, wbicb indebtedness was secured by tbe hypothe-cation of First Mortgage Bonds in tbe principal sum of $168,000.00 issued by tbe Wilmington, Brunswick & Southern Railroad Company, 1 January, 1911.

Tbe appellant, Machine Tool & Equipment Corporation, purchased this claim from tbe United States of America, on 22 April, 1943, and filed with tbe receiver a supplemental proof of claim as assignee of tbe claim of tbe United States of America, dated 29 June, 1943.

Tbe indebtedness of tbe Wilmington, Brunswick & Southern Railroad Company and tbe receiver, on 18 February, 1943, exceeded tbe sum of $213,000.00.

A referee was appointed 18 February, 1943, to bear and pass upon all claims against said Railroad Company, and to determine tbe priorities thereof. Among tbe claims considered by tbe referee were those of Brunswick County and tbe town of Southport, for unpaid taxes, penalties and interest, duly assessed on tbe property and franchise of tbe railroad, during tbe years 1930 to 1943, inclusive. A claim for taxes due Brunswick County, including penalties and interest, aggregating $10,875.65, was allowed. A claim for taxes due tbe town of Southport, including interest and penalties, aggregating $1,107.16, was allowed.

All tbe assets of tbe said Railroad Company were sold at public auction pursuant to an order of court, for tbe sum of $72,500.00, to tbe appellant or its assignee, except $4,000.00 of real estate situate in tbe town of Southport, and tbe sale was confirmed at tbe August Term, 1943, of tbe Superior Court of New Hanover County, by bis Honor, Burney, Judge.

A bearing on tbe report of tbe referee and tbe exceptions filed thereto by tbe appellant, was held before bis Honor, Burney, J., 22 October, 1943, and on said date tbe court signed an order, overruling tbe exceptions and confirmed and approved tbe findings of fact and conclusions of law of tbe referee in respect to tbe allowance of tbe aforesaid claims.

Tbe Machine Tool & Equipment Corporation excepted to tbe order of tbe court approving tbe tax claims of tbe county of Brunswick and town of Southport, and appealed to tbe Supreme Court.

Irwin Geiger for appellant, Machine Tool •& Equipment Corp.

E. J. Prevaite for appellee, Brunswick County.

J. W. Ruarle for appellee, town of Southport.

DeNNY, J.

Tbe appellant contends tbat tbe court, notwithstanding tbe provisions of G. S., 105-403; C. S., 1976, should not bave allowed tbat portion of tbe respective claims for taxes filed by tbe county of Brunswick and tbe town of Southport which consisted of penalties and interest accrued on taxes assessed prior to receivership and which accumulated during tbe period when tbe property so assessed was in tbe custody of tbe court".

Upon tbe threshold of this appeal we are confronted with motions, interposed in this Court on behalf of tbe county of Brunswick and tbe town of Southport, to dismiss tbe appeal, on tbe ground tbat tbe question purported to be presented to tbe court is moot. Tbe motions are based upon tbe following, which appears in tbe agreed statement of tbe case on appeal: “Immediately after tbe rendition (of tbe order) of Burney, J., dated 22nd October, 1943, tbe appellant paid to Brunswick County and tbe City of Southport their entire claims for taxes, interest and penalties and tbe costs of this action.”

It does not appear of record tbat tbe taxes, penalties and interest, involved herein, were paid under protest or tbat tbe appellant has complied with tbe provisions of tbe statute, G. S., 105-406; O. S., 7979, which is a prerequisite to a right of action for tbe recovery of taxes or any part thereof. Hunt v. Cooper, 194 N. C., 265, 139 S. E., 446; Blackwell v. Gastonia, 181 N. C., 378, 107 S. E., 218; Teeter v. Wallace, 138 N. C., 264, 50 S. E., 701; R. R. v. Reidsville, 109 N. C., 494, 13 S. E., 865. Taxes paid voluntarily and without objection or compulsion cannot be recovered, even though tbe tax be levied unlawfully. Maxwell, Comr. of Revenue, v. Hans Rees’ Sons, 199 N. C., 42, 153 S. E., 850.

In view of tbe disclosure in tbe record to tbe effect tbat tbe appellant has paid tbe taxes, penalties and interest involved herein, in tbe absence of a showing tbat tbe appellant has preserved its right to maintain actions for tbe recovery of tbe portion of tbe taxes to which it might be entitled, in tbe event of a favorable determination of tbe question presented, tbe motions to dismiss must be allowed.

Appeal dismissed.