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244 U. S.
Opinion of the Court.
result of following a method substantially erroneous because not in accordance with the governing statute, it is error for the court to presume that a like valuation would have been reached by follow
ing the correct method. 230 Fed. Rep. 191, reversed in part and affirmed in part.
The case is stated in the opinion.
Mr. Helm Bruce, with whom Mr. Henry L. Stone, Mr. William A. Colston and Mr. Edward S. Jouett were on the briefs, for the Louisville & Nashville Railroad Company.
Mr. Charles Carroll, Mr. Marvel M. Logan, Attorney General of the State of Kentucky, and Mr. John L. Rich, with whom Mr. Charles H. Morris, Assistant Attorney General of the State of Kentucky, was on the briefs, for Greene et al.
MR. JUSTICE PITNEY delivered the opinion of the court.
These cases are an appeal and a cross-appeal from a final decree of the District Court in a suit that was commenced by the Louisville & Nashville Railroad Company, a Kentucky corporation, against Henry M. Bosworth and others, then constituting the Board of Valuation and Assessment of that State (Bosworth being also Auditor of Public Accounts), and against the Attorney General of the State and his assistants, seeking to restrain the taking of any steps toward enforcing state and local taxes upon the basis of an assessment of the “franchise" of the company for the year 1913 made by the Board of Valuation and Assessment at the sum of $45,658,630, or upon the basis of any greater valuation than $22,899,200; and this upon the ground that the assessment was unlawful and not in accordance with the statute, was the result of an abuse of power by the Board of Valuation and Assessment, and if enforced would result in a taking
Opinion of the Court.
of plaintiff's property without due process of law and a denial of the equal protection of the laws, contrary to $ 1 of the Fourteenth Amendment. By a supplemental bill, Robert L. Greene and others were brought in as successors in office of the original defendants. There being no diversity of citizenship, the jurisdiction was rested upon the ground that the suits arose under the cited provisions of the Federal Constitution; but plaintiff relied also upon the provisions of the constitution and laws of the State. A chief ground of complaint, based upon the equal protection provision of the Fourteenth Amendment, and also upon the requirement of equal taxation prescribed by $$ 171, 172, and 174 of the state constitution,' was that the plaintiff had been subjected to illegal discrimination, in that its property had been assessed at more than its actual value, whereas the property of all other taxpayers in the State was assessed uniformly and intentionally at much less than actual value, in fact at not exceeding 60 per cent. thereof. It was alleged, besides, that the method of assessment followed by the Board of Valuation was inconsistent with the provisions of the statutes of Kentucky, and for that further reason the assessment was illegal.
A previous suit of the same character had been brought by the same plaintiff in the same court for relief against the assessment for the year 1912, in which, after a hearing on motion for preliminary injunction and demurrer to the bill, the court delivered a very elaborate opinion, allowing a temporary injunction upon condition that plaintiff should pay franchise taxes to the State and subordinate taxing districts upon a valuation of $22,899,200. Louisville & N. R. Co. v. Bosworth, 209 Fed. Rep. 380, 465.
Following this precedent, the court, upon the filing of
1 Set forth in full in the opinion in Greene v. Louisville & Interurban R. R. Co., ante, p. 499.
the bill in the present case, allowed a preliminary injunction upon the payment of taxes based upon the same valuation. The cause proceeded to final hearing, and the court, having found plaintiff to have been subjected to discrimination by the valuing of other property at approximately 60 per cent. of actual values, but having overruled the other grounds of relief asserted, applied an equalizing factor to the valuation of plaintiff's franchise, with the result of finding $25,808,493.60 to be the amount at which it was legally taxable, or $2,909,293.60 in excess of the amount upon which payment was made at the inception of the suit. Therefore a final decree was made enjoining defendants from enforcing the assessment complained of, on condition that plaintiff should pay taxes, state and local, on the excess amount named. 230 Fed. Rep. 191, 232.
Plaintiff appealed to this court upon the ground that it ought not to be required to pay franchise taxes upon any amount in excess of $22,899,200. Defendants took a cross appeal upon the ground that plaintiff was entitled to no relief. The cases were argued together with kindred cases this day decided, viz., Nos. 617 and 618, Greene v. Louisville & Interurban R. R. Co., ante, 499, and Nos. 642–645, Illinois Central R. R. Co. v. Greene, post, 555.
There are numerous assignments of error by each party, but, without specifying these, the questions raised will be disposed of in the order of convenience. Of course, the federal jurisdiction, having been invoked upon substantial grounds of federal law, extends to the determination of all questions involved in the case, whether resting upon state or federal law. Siler v. Louisville & Nashville R. R. Co., 213 U. S. 175, 191; Ohio Tax Cases, 232 U. S. 576, 586.
It may be premised that plaintiff owns and operates a great system of railroads extending throughout Kentucky and twelve other States, embracing (in the year in question) roads operated on its own account to the extent of
4,478.61 miles, of which 1,574.47 miles, or 35.15 per cent., were in Kentucky, and an aggregate of roads owned, operated, and controlled, extending to 7,907.83 miles, of which 1,952.45 miles, or 24.69 per cent., were in Kentucky. It is subject to taxation in Kentucky upon its tangible property as assessed by the State Railroad Commission, and, in addition, to taxation state and local upon its intangible property or "franchise” under $ 4077, Ky. Stats., and succeeding sections (set forth below in the margin), the valuation to be fixed by the Board of Valuation and Assessment.
(1) Defendants contend that the District Court was without jurisdiction because the suit was in effect a suit against the State of Kentucky. It is said that the sole basis of a suit to enjoin state officers from the performance of duties pursuant to a statute must be that the statute itself is unconstitutional; that, since the statute in question here is constitutional, an action may not be maintained in a court of the United States (there being no diversity of citizenship) for what is done by subordinate officers of the State in executing the statute in an unconstitutional manner; and that for misconduct of this sort there is no remedy except in the state courts. These contentions are disposed of adversely in Greene v. Louisville & Interurban R. R. Co., ante, 499.
(2) It is contended that the plaintiff has an adequate remedy at law under $ 162, Ky. Stats. This likewise is negatived by the case just mentioned.
(3) It is urged that, although it be true that the local assessors in each county assessed other property at less than its cash value, plaintiff is not entitled to relief for this reason if its property was not assessed at more than its fair cash value, even though it was assessed at a higher percentage than other property. To this the same answer may be made. The facts found in this case bring it within the ruling that, in the case last mentioned, was made upon
admitted facts, because of the provisions of the constitution and laws of the State. In this case, as in that, we find it unnecessary to pass upon the merits of the question whether a like result would be reached by the application of the "equal protection" clause of the Fourteenth Amendment.
(4) It is contended that although there be jurisdiction to enjoin the apportioning of the assessment among the counties, cities, and towns for the purpose of local taxation, it was erroneous to enjoin state taxation based upon the same assessment. So far as this is bottomed upon the theory that the suit is a suit against the State, it is disposed of by the decision cited. It is argued, however, that while this court has held that in a proper case a bill may be brought to restrain apportionment and certification to the counties of a tax imposed by a state board in violation of federal rights (Fargo v. Hart, 193 U. S. 490), yet Coulter v. Weir, 127 Fed. Rep. 897, 906, 912—a case that arose out of the same provisions of the Kentucky statutes that are here involved—is an authority in opposition to granting relief against the state taxes, and that it was approved by this court in Coulter v. Louisville & Nashville R. R. Co., 196 U. S. 599, 608. What was said upon the subject in the case last mentioned was not a part of the matter decided, as a reference to the opinion clearly shows; for the decision in favor of defendants proceeded upon the ground that the evidence was insufficient to sustain the bill. Coulter v. Weir, supra, is easily distinguishable. There, the Auditor of Public Accounts was the sole defendant. The Circuit Court of Appeals, after citing Poindexter v. Greenhow, 114 U. S. 270, 286-288; Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, 390; Scott v. Donald, 165 U. S. 107, 112; Smyth v. Ames, 169 U. S. 466, 518; Fitts v. McGhee, 172 U. S. 516, 529; and Taylor v. Louisville & Nashville R. R. Co., 88 Fed. Rep. 350, and quoting from the opinion in the Taylor Case to the effect