SUTTLES v. J. B. WITHERS CIGAR CO

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Docket Number

14253.

Attorney(S)

Ralph H. Pharr, E. H. Sheats, and W. S. Northcutt, for plaintiff in error. Benton E. Gaines, Noah J. Stone, Craighead, Dwyer Lavender, J. B. McCallum, W. O. Slate, J. C. Savage, E. L. Sterne, J. C. Murphy, F. A. Hooper Jr., Arnold S. Kaye, J. Herbert Johnson, Grigsby H. Wotton, and MacDougald, Troutman Arkwright, contra.

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Smart Summary

Factual and Procedural Background

J. B. Withers Cigar Company filed an equity suit against Mrs. John R. (Lillian) Kirkpatrick Jr., resulting in the defendant's property being placed under a receiver's control and sold at public auction on December 3, 1941. Orders related to the sale divested all liens from the assets and transferred them to the sale proceeds. On December 31, 1941, the court entered an order requiring all parties claiming an interest in the defendant's assets to intervene by March 16, 1942, or be forever barred from participating in the distribution of funds. This order was published twice monthly for two consecutive months in the Fulton County Daily Report. On March 25, 1942, T. E. Suttles, tax-collector of Fulton County, sought to intervene to establish a lien for unpaid state and county taxes on the funds held by the receiver. At the hearing, it was shown that Suttles had no actual notice of the published order but had unpaid tax executions against the defendant's property. The receiver held sufficient funds to pay these tax executions. The court ultimately entered a decree barring the tax-collector from intervening and discharging the fund of any liability to him. The tax-collector excepted to this ruling.

Legal Issues Presented

Whether a party who fails to intervene by a court-ordered deadline, established and published pursuant to the 1939 Georgia act limiting intervention in equity cases administering assets, is barred from participating in the distribution of those assets, even if they had no actual notice of the order.
Whether the 1939 act applies to a tax-collector seeking to assert a lien for unpaid state and county taxes against funds in court derived from the sale of property subject to such taxes.
Whether the 1939 act violates paragraph 1 of section 1 of article 4 of the Georgia Constitution, which prohibits the legislature from restraining or limiting the right of taxation.
Whether the 1939 act violates the due-process clause found in paragraph 3 of section 1 of article 1 of the Georgia Constitution by barring intervention without actual notice or a named party in the bar order.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Columbus Iron Works v. Sibley, 164 Ga. 121 (137 S.E. 757)	Establishing precedent for court orders fixing deadlines for intervention in equity cases administering assets.	Referenced as one of the principal Georgia cases governing bar orders pre-dating the 1939 act.
Industrial Realty Co. v. International Reinsurance Corporation, 183 Ga. 605 (189 S.E. 49)	Similar to above, precedent on intervention deadlines in equity asset administration cases.	Used to contextualize the statutory framework superseding prior case law.
Withers v. Hatcher, 185 Ga. 380 (195 S.E. 183)	Addressing intervention and participation in distribution of assets in equity cases.	Supports the legal background before the enactment of the 1939 statute.
Gainesville National Bank v. Martin, 187 Ga. 559 (1 S.E.2d 636)	Further precedent on intervention deadlines and bar orders in equity proceedings.	Part of the foundational case law that the 1939 act modifies.
Pennoyer v. Neff, 95 U.S. 714 (24 L. ed. 565)	Due process requirements for judgments in rem and service by publication.	Supports the constitutionality of service by publication and bar orders without actual notice.
Hicks v. Hicks, 193 Ga. 446 (18 S.E.2d 754)	Legitimacy of judgments by service of publication including those affecting custody and property rights.	Used to reinforce that due process is not violated by substitute service in equity proceedings.

Court's Reasoning and Analysis

The court analyzed the applicability of the 1939 Georgia statute which mandates that in equity cases administering assets, courts must enter and publish an order fixing a deadline for intervention, after which no party may intervene. The court held that this statute applies to all parties interested in the assets, including tax-collectors, regardless of actual notice, as constructive notice through publication suffices. The tax-collector’s claim for unpaid taxes, although of high dignity, did not exempt him from the statute’s requirements. The court rejected the argument that the statute did not apply to the State or its tax-collector, citing Code § 92-7702, which extends ordinary execution limitation laws to tax executions. Regarding constitutional challenges, the court found that the statute does not violate the constitutional provision prohibiting the legislature from restraining taxation rights because it regulates procedural aspects of equity cases rather than taxation itself. Finally, the court held that the statute does not violate due process, as judgments in rem may be rendered upon service by publication, which is constitutionally sufficient notice. The court cited established precedents confirming that substitute service and bar orders in equity are consistent with due process principles.

Holding and Implications

Judgment affirmed.

The court held that the 1939 Georgia statute limiting the time for intervention in equity cases administering assets bars any party, including tax-collectors, who fail to timely intervene, even without actual notice. The statute is constitutional and applicable to tax claims against funds held by a receiver. Consequently, the tax-collector was barred from asserting his lien against the fund, and the fund was discharged of liability for the tax claims. This decision directly affects the parties by finalizing the distribution of the fund free of the tax-collector’s claim and does not establish new precedent beyond affirming the statute’s validity and application.

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SUTTLES, tax-collector, v. J. B. WITHERS CIGAR COMPANY et al.

1. Where in an equity case assets are being administered, and an order has been entered and published in compliance with the act approved March 24, 1939 (Ga. Laws 1939, pp. 344 et seq.; Code Ann. § 37-410), one who does not seek to intervene until after the time fixed therefor is barred from intervening and from participating in the distribution of the funds in court, even though he had no actual notice of the order, and his claim be one of the highest dignity, constructive notice of which was charged to every one.

2. The provisions of the act of 1939, just referred to, are applicable to a tax-collector who seeks to intervene for the purpose of having a portion of the fund in court applied on executions for state and county taxes assessed against property the sale of which by the court's receiver produced the fund.

3. The act of 1939, supra, is not violative of par. 1 of sec. 1 of art. 4 of the constitution of this State, which in effect declares that the General Assembly shall have no right to restrain or limit the right of taxation.

4. Nor is the act violative of the due-process clause contained in par. 3 of sec. 1 of art. 1 of the constitution.

No. 14253. SEPTEMBER 22, 1942.

J. B. Withers Cigar Company filed a suit in equity, returnable to the January term, 1942, of Fulton superior court, against Mrs. John R. (Lillian) Kirkpatrick Jr., individually and doing business. The defendant's property was placed in the hands of a receiver, and on December 3, 1941, was sold at public outery. By the terms of the orders relating thereto, all liens had been divested from the assets and transferred to the proceeds of the sale. On December 31, 1941, the following order was entered in said case:

"To all parties concerned and all parties claiming an interest in the assets of the defendant being administered in the above-styled cause, or which may hereafter be administered in said cause:

"You are hereby required to intervene in the above and foregoing cause not later than the 16th day of March, 1942, or be forever barred from intervening in said case, and participating in the distribution of the assets or proceeds therefrom being administered or to be administered therein. In order to conserve the cost of the proceeding, any creditor who filed an itemized statement of his account with J. W. Simmons, clerk of this court, shall be considered to have filed a sufficient intervention as to the account so itemized; and said clerk is hereby authorized and directed to accept such statements and file them with the papers in this case subject to further order of this court.

"Let a copy of this order be published in the Fulton County Daily Report twice monthly for two consecutive months prior to the effective date hereof. The receiver in said case is directed to see to the advertising hereof, and pay the cost thereof from the monies in his hand. This the 31st day of December, 1941."

On March 25, 1942, T. E. Suttles, tax-collector of Fulton County, sought to intervene. His intervention was amended on April 21, 1942. He thereby sought to have the ad valorem taxes described therein set up and established as a lien on funds in the hands of the receiver. At the hearing it was shown that Suttles never saw any of the advertisements published pursuant to the order above set out; that there were in his hands certain unpaid executions for state and county taxes, issued against the defendant and assessed against defendant's property. It was shown that the advertisement referred to above was published in the Fulton County Daily Report twice a month for two consecutive months before March 16, 1942. It was admitted that none of the funds which came into the hands of the receiver from the proceeds of the sale by him of property on December 3, 1941, had been disbursed, except expenses; and the receiver holds the proceeds of said sale subject to all legal claims that may be adjudicated against the fund. Said funds are sufficient in amount to pay the tax executions. A decree was entered, which, after making the tax-collector a party, adjudicated that the tax claims were forever barred and by final order wholly discharged the fund in court of all liability therefor, and denied the application of the tax-collector to require payment thereof from said fund. He excepted.

ATKINSON, Presiding Justice.

1. The four principal Georgia cases dealing with the orders issued by courts of equity, for the purpose of fixing a date beyond which intervenors would be barred from participating in funds being administered and distributed, are Columbus Iron Works v. Sibley, 164 Ga. 121 ( 137 S.E. 757); Industrial Realty Co. v. International Reinsurance Corporation, 183 Ga. 605 ( 189 S.E. 49); Withers v. Hatcher, 185 Ga. 380 ( 195 S.E. 183); Gainesville National Bank v. Martin, 187 Ga. 559 ( 1 S.E.2d 636). These decisions were rendered before the act March 24, 1939 (Ga. L. 1939, pp. 344 et seq.), entitled "An act to provide for limitation of time in which parties may intervene in any case in equity," etc. That act (§ 1) not only requires that in all equity cases wherein assets are being administered the court shall, sixty days before the trial term, enter an order entitled in the cause and addressed to all parties concerned, requiring all parties claiming an interest in said assets to intervene not later than a certain date, but the date so fixed by the court must not be less than sixty days nor more than ninety days therefrom. It is further provided that the order so passed shall be published in the manner therein pointed out. Section 2 is as follows: "Be it further enacted by the authority aforesaid, that after said order has been so passed and published, and after the expiration of the time for intervening, as fixed by the order, all parties interested in said assets shall be forever barred from intervening in the case." By the terms of section 2 the tax-collector was barred, since it declares that "all parties interested in said assets shall be forever barred from intervening in the case." Neither the fact that all parties and intervenors might be chargeable, as a matter of law, with notice that the taxes had not been paid, nor that taxes are under our laws of the highest dignity, obviated the necessity of the filing of an intervention as required by the statute. Nor does the fact that the tax-collector was not an actual party to the record take him out of the class of "parties interested" in the assets, so as to make the provision inapplicable to him.

2. It is argued that the statute does not apply to plaintiff in error, whose claim is for taxes due to the State and the county, because the statute of limitations does not apply as against the State unless the statute which seeks to impose the limitation specifically by its terms names the sovereign. It is perhaps a sufficient answer to this contention to cite the Code, § 92-7702, as follows: "All laws in reference to a period of limitation as to ordinary executions for any purpose, or to the length of time or circumstances under which they lose their lien in whole or in part, are applicable to tax executions." The act in question provides for circumstances under which all creditors may by inaction lose their rights, including creditors holding executions. It is therefore applicable to tax executions.

3. The plaintiff in error attacks the constitutionality of the act of 1939, in that it is contrary to par. 1 of sec. 1 of art. 4 of the constitution (Code, § 2-2401), which in effect declares, among other things, that the General Assembly shall have no right to restrain or limit the right of taxation. This provision of our organic law has no relation to the right of the legislature to give legislative sanction to bar orders, and make them applicable to the State. The constitution is not violated by the enactment under challenge, even though, properly construed in the light of the Code section quoted in the preceding division, it is made applicable to a tax-collector seeking to have part of the fund applied to state and county tax executions in his hands.

4. Finally it is contended that the act violates par. 3 of sec. 1, of art. 1 of the constitution (Code, § 2-103), which declares that no person shall be deprived of life, liberty, or property, except by due process of law, in that the intervenor was not named in the bar order, had no notice of it or of the advertisement, and has never had his day in court. The judgment barring him from his right to participate in the fund in court is a judgment in rem. Judgments of that character may be provided on substitute service, such as service by publication, and do not on that account run afoul of the due-process clause. Pennoyer v. Neff, 95 U.S. 714 ( 24 L. ed. 565). Most of the judgments in attachment cases are based on the notice the defendant is supposed to receive by reason of the fact that his property is seized. Nearly all the judgments by the court of ordinary are rendered after service by publication. Many divorces are granted against non-residents on the same kind of service; and in such a proceeding the court has power to award the custody of the children, if they are within the territorial jurisdiction of the State. Hicks v. Hicks, 193 Ga. 446 ( 18 S.E.2d 754), and cit. The act is not violative of the due-process clause.

Judgment affirmed. All the Justices concur.