
    DuBois, County Treasurer, v. Baker.
    (Decided June 10, 1935.)
    
      Mr. Paul A. Badm, for plaintiff in error.
    
      Mr. Eli G. Frankenstein, for defendant in error.
   Hamilton, J.

Joseph H. DuBois, treasurer of Butler county, Ohio, filed his petition in the Court of Common Pleas of that county, seeking to collect delinquent taxes in the sum of $199.71 from Lillie Baker, defendant in error. The Home Loan & Building Association, claiming a mortgage lien on the premises, was made a party defendant.

The petition alleges that the above sum is due for taxes, assessments and penalties, with interest, and is a lien against the real estate described in the petition. The treasurer prays for a determination of the amount of taxes, assessments, penalties, and interest due; for a determination of the respective .claims of the defendants ; that the priorities of said claims be adjusted, and that an order of sale issue to satisfy the lien for taxes.

Lillie Baker, the defendant below, by way of amended answer denies that she is indebted to the plaintiff in the sum named for taxes, and denies that she is indebted to the plaintiff for any sum whatsoever. Defendant alleges that the property is exempt from all state taxes, alleges that she is not the owner in fee simple of the lands described, and alleges that she is in possession of the property by virtue of a 99 year lease to her, renewable forever. She alleges in substance that the property described in plaintiff’s petition is a part of lands located in Oxford township, Butler county, Ohio, and that they are all part of the college lands of Miami University. She further alleges that her lease is made pursuant to an act of Congress, dated March 3, 1803 (3 Stats, at L., 541), and an act of the General Assembly of Ohio passed February, 1809, entitled “An Act to Establish the Miami University” (7 Ohio Laws, 184), and the act amendatory thereto, passed in 1810 (8 Ohio Laws, 94). She alleges that the íease referred to is silent on the subject of taxes, but that it is subject to all the privileges and immunities granted by the several acts and laws aforesaid, and liable to all the restrictions, penalties and forfeitures imposed by such acts and laws.

Defendant further alleges that the law of the state of. Ohio on the subject of the described lands is that the lands are exempt from state taxes.

She further sets up the act of Congress of March 3, 1803, establishing the Northwest Territory, and the several acts of the General Assembly of Ohio establishing Miami University.

She alleges, further, that the grant of this land was made to the state of Ohio in trust by the federal government, and dedicated by the state of Ohio in the Act of 1809 for the establishment of Miami University, and that the state of Ohio made and created the trustees of Miami University as the agents and trustees of the state of Ohio to carry out the purposes of the act.

Defendant alleges that she holds possession of the lands described in the plaintiff’s petition by virtue of the lease from the trustees of Miami University, which lease specifically provides that it is made in pursuance of an act of Congress, dated March 3, 1803, and an act of the General Assembly of the state of Ohio passed in the year 1809, and she therefore claims that the property held by her is by virtue of these acts specifically exempt from all taxes by virtue of the laws of the United States, the laws of the General Assembly of Ohio, and the contract in the form of the 99 year lease entered into between the state of Ohio, acting through its authorized agents, the trustees of Miami University, and this defendant, and prays that the petition of the plaintiff be dismissed.

To this amended answer plaintiff demurred, which demurrer was overruled.

The treasurer thereupon filed his reply and amended reply. In the amended reply plaintiff denies the allegations contained in the amended answer to the effect “that there are no taxes, assessments or penalties due on the property described in plaintiff’s petition for the reason that said described lands are specifically exempt from all state taxes.” He admits that the defendant Baker is in possession of the land by virtue of a 99 year lease, renewable forever, and that the lease is substantially in the form set out in the amended answer.

Plaintiff in his reply admits the allegations of the amended answer beginning with the fourth paragraph on page two of the amended answer to and including the last paragraph on page three of the amended answer, these paragraphs referring to the several laws passed,

Plaintiff denies that the legal title to the land is in the United States, or that the fee simple title to the lands is in the state of Ohio as trustee; and denies that the property held by defendant is specifically exempt from all state taxes by virtue of any laws of the United States or of the state of Ohio, or by virtue of the contract of lease from the trustees of Miami University to the defendant.

Plaintiff in his reply further alleges that Section 10 of “An Act to Establish the Miami University,” passed February 17, 1809, provides for the vesting of the lands in Oxford township in the corporation for the sole use, benefit and support of Miami University, and gives the power of sale at auction to the trustees of such university, and contains the following provision: “And the said tenants or lessees shall enjoy and exercise all the rights and privileges which they would be entitled to enjoy, did they hold the said lands in fee simple, any law to the contrary notwithstanding.”

Plaintiff states that Section 15 of the act provides: “That the Legislature of this state may grant any further and greater powers to, or alter, limit or restrain in any of the powers by this Act, vested in the said corporation, as shall be necessary to promote the best interest of the said university, with all necessary powers and authority for the better aid, preservation and government thereof.”

Plaintiff further alleges in his reply that there are included in the amount claimed in his petition state taxes levied by the General Assembly of Ohio for state purposes, in the sum of $28.78, and admits that these taxes levied for state purposes are exempt, and consents that the amount claimed in his petition be reduced in the sum of $28.78. He thereupon alleges that the remainder of $170.93 represents taxes levied by the authority and action of the various subdivisions of Butler county, naming the various districts; that they are taxes which have been levied for county, township and local purposes, and that none of the taxes claimed by him on such property are those which are levied directly by the General Assembly of Ohio for any state purposes.

Then follow the further allegations of the reply that the defendant Lillie Baker has paid all the taxes and assessments from the time she purchased this property in 1909 until 1920, and that at no time up to the time of the filing of her answer did she ever make any claim that the taxes were exempt; that the taxes paid by her were paid voluntarily and not under protest; and that for a period of approximately 90 years prior to 1920 her predecessors in title have paid the taxes levied against such land for local purposes voluntarily and without any claim that the lands were exempt from such taxes, and, further, alleges that the defendant should now be estopped to claim the exemption.

The defendant demurred to this reply on the ground that such amended reply is on its face insufficient in law, and for the further reason that the amended reply does not contain matter sufficient to avoid the defense set up in defendant’s answer.

On hearing, the trial court sustained the demurrer to the reply, and the plaintiff, not desiring to plead further, suffered judgment to be rendered against him dismissing his petition. From that judgment error is prosecuted to this court.

The defendant’s first claim is that the land belongs to the United States of America in fee simple, and therefore under the ordinance of 1787 is exempt from any land tax. It is unnecessary to discuss the proposition that if the land belongs in fee to the United States of America the local authorities cannot assess it for taxation.

The answer sets out the act of the federal government of 1803, wherein it bears on the subject, and sets up Section 4 of that act, which provides: “That one complete township, in the state of Ohio, and district of Cincinnati, or so much of any one complete township, within the same, as may then remain unsold, together with as many adjoining sections as shall have been sold in the said townships, so as to make in the whole thirty-six sections, to be located under the direction of the legislature of the said state, on or before the first day of October next, with the register of the land office of Cincinnati, be, and the same is hereby, vested in the legislature of the state of Ohio, for the purpose of establishing an academy, in lieu of the township already granted for the same purpose, by virtue of the act, entitled ‘An Act authorizing the grant and conveyance of certain lands to John Cleves Symmes and his Associates;’ provided, however, That the same shall revert to the United States, if, within five years after the passing of this act, a township shall have been secured for the said purpose, within the boundary of the patent, granted by virtue of the above mentioned act, to John Cleves Symmes and his associates.”

Now, so far as the allegations of the answer are concerned, it must be taken that the reverter provided for in the act did not materialize. It further shows that the federal government acknowledged the full parting of the title to the property with the exception of the right of reversion.

No claim having been set up by the United Statés, no exemption of the payment of local taxes can be successfully maintained on that issue.

Next, it is claimed that if the title is not in the United States of America it is in the state of Ohio, and, therefore, the county of Butler cannot levy taxes on lands which are the property of the state of Ohio.

The answer to this is that in the act establishing the Miami University the state gave to the university corporation the power of sale and lease of the property, the sale of which could confer full and complete title, and provided that the tenants or lessees should enjoy all the rights and privileges which they would be entitled to enjoy if they held the land in fee simple, any law to the' contrary notwithstanding.

Section 15 of the act did reserve to the Legislature of the state of Ohio the right to grant any greater and further powers, or to alter, limit or restrain any of the powers by this act vested in such corporation, as shall be necessary to promote the best interests of the university.

Thus did the state give to the corporation the right to contract away the property, and when it did so the parties to the contract are protected by the Constitution if the lands were sold and became privately owned.

Under the decision in the case of Armstrong v. Treasurer of Athens County, 10 Ohio, 235, the exemption provided for in the law would not give the purchaser exemption as against taxation. So that whatever rights or reservations the Legislature may have reserved to itself could not be considered such as would preclude taxation as state property. The act provides only for exemption from state taxes, and, therefore, it must be held that if there are such taxes not included in the phrase “state taxes,” the Legislature has not reserved that exemption to itself.

This brings us to the point that is mainly stressed by counsel in their briefs and is practically conceded by counsel for plaintiff, plaintiff in error here: that if the local taxes are included under the phrase “state taxes,” all of this property in question is exempt from all taxes.

It must be borne in mind that the establishment of Miami University, and the passage of the laws creating the same, took place in the early history of the state, when townships were in the making and all taxes were assessed by the state for the benefit of the state government. It must have been considered then that subdivisions of the state would be created, and that towns and municipalities would be created, none of which could exist without local taxes being assessed against the property and the property owners of the respective subdivisions. The Legislature must have known that such local taxes would be necessary, and proceeded, therefore, to exempt only state taxes.

Counsel argues that the only taxing power in the state is in the Legislature. We cannot agree with this, since we have had local taxes in the form of occupational taxes and other local taxation; we have also had the issuing of municipal bonds and the levying of a tax by the local authorities to pay the same. Counsel evidently confuses the levying of taxes with the power to authorize the levy of taxes. There undoubtedly must be some legislative or constitutional authorization for the subdivisions to levy taxes. The question here is not one of the power to levy taxes. The question is a question of exemption of property, which is claimed not to be subject to taxation, under power granted by the Legislature.

The Legislature provided in the act creating Miami University that the property selected for it should not be subject to state taxes; but in the act itself it provided for a reservation of territory for the establishment of a township, which it must have known could not operate without taxation.

Our conclusion is that the term “state taxes” meant state taxes, and not local taxes, which are clearly distinguishable in their allocation. This is suggested in the case of Armstrong v. Treasurer of Athens County, supra, where a similar question arose with reference to the Ohio University at Athens. The court in the course of the opinion states:

“Now what is the nature and extent of this exemption? Is it a privilege attached to, and running with the land? It seems to us that it can not be so considered, because the land itself is not exempted from any burden. It is still liable to county taxation.”

It is urged that one of the allegations of the reply, referred to as an estoppel, cannot apply, and presents no defense to the answer.

It must be borne in mind that the term “state taxes,” as presented here, is a matter for construction. We have construed the term to mean taxes levied and collected by the state for state purposes, and not as intended to include local taxation. This being a matter for construction we may turn to the construction placed upon it by the parties holding these leaseholds; in this case the defendant and her predecessors. The reply states that for 90 years the taxes have been paid without protest. In fact up to the time of the filing of the answer in this case there never was any challenge to the right to collect the taxes, and the answer herein constituted the first challenge. This proposition of acquiescence in certain construction of statutory law is presented in the case of Given v. Wright, Collector, 117 U. S., 648, 29 L. Ed., 1021, 6 S. Ct., 907. The syllabus is as follows:

“An exemption from taxation granted by the government to an individual is a franchise, which can be lost by acquiescence under the imposition of taxes for a period long enough to raise a conclusive presumption of a surrender of the privilege; and such acquiescence for a period of sixty years (and, indeed, for a much shorter period) raises such a presumption.”

The opinion in the ease of Given v. Wright, by Mr. Justice Bradley, states, at page 656:

“We have carefully read the evidence in this case, and are satisfied that the lands .were regularly assessed for taxes, and that the taxes were paid without objection from 1814, or about that time, down to 1876, the time of the assessment complained of — a period of sixty years. If an exemption from taxation can be lost in any case, by long acquiescence under the imposition of taxes, it would seem that an acquiescence of sixty years, and, indeed, a much shorter period, would be amply sufficient for this purpose, by raising a conclusive presumption of a surrender of the privilege. An easement may be lost by nonuser in twenty years, and even in a less time if it is affected by positive acts of invasion. A franchise may be lost in the same way, nonuser being one of the common grounds assigned as a cause of forfeiture. * * * Exemption from taxation being a special privilege granted by the government to an individual, either in gross, or as appurtenant to his freehold, is a franchise. Nonuser for sixty, or even thirty years, may well be regarded as presumptive proof of its abandonment or surrender. * * * It is not merely a case of nonuser, but one of disaffirmance of the privilege for this long period.”

This rule of law has been approved in N. Y. Electric Lines Co. v. Empire City Subway Co., 235 U. S., 179, 194, 59 L. Ed., 184, 35 S. Ct., 72; Jetton, Revenue Agent, v. University of the South, 208 U. S., 489, 503, 52 L. Ed., 584, 28 S. Ct., 375; McCullough v. Virginia, 172 U. S., 102, 119, 43 L. Ed., 382, 19 S. Ct., 134. See also Industrial Commission v. Brown, 92 Ohio St., 309, 311, 110 N. E., 744, L. R. A. 1916B, 1277; and State, ex rel. Automobile Machine Co., v. Brown, Secy. of State, 121 Ohio St., 73, 75, 166 N. E., 903.

In the case here under consideration we have a disaffirmance of the privilege, if one existed, for ninety years.

Our conclusion is that this disaffirmance of the privilege, if such ever existed, is presumptive proof of its abandonment and surrender. We have, therefore, two main reasons for holding that the fair construction of the phrase “state taxes” refers to taxes levied by the Legislature for state purposes, as contradistinguished from local taxes, and therefore removes the property from the exemption granted under the head of state taxes. Finally it may be said in conclusion that the long acquiescence in the payment of the taxes, for ninety years, is a disaffirmance of the privilege of exemption, if one was given.

The judgment sustaining the demurrer to the reply will be reversed, and the cause will be remanded to the Court-of Common Pleas of Butler county with instructions to overrule the demurrer, to reinstate the amended reply, and for further proceedings according to law.

Judgment reversed and cause remanded.<

Ross, P. J., and Matthews, J., concur.  