134

ted to the comptroller general a statement regarding what he considered the value of the railroad property in question, together with a tabulated statement of the dividends which the Georgia railroad had received from the stock, at the same time protesting that the stock was not liable for taxation, and refusing to make any return of it for that purpose. The comptroller general thereupon, according to his affidavit, ‘assessed the same from the best information obtainable.' It is insisted with great earnestness and ability that the levy of executions under these circumstances, without giving notice to the railroad company or allowing it any opportunity to be heard as to the basis of valuation upon which the assessment was made, amounted to a seizure of its property without due process of law. It is not claimed that the comptroller general has violated the provisions of any existing statute, but that the laws of Georgia do not provide for the collection of taxes on omitted property after a return has been made by the taxpayer and accepted by the comptroller general." [124 Ga. 612.]

The first and perhaps principal question argued in the case arises upon the contention of the plaintiffs in error that the method of assessment provided for the taxation of property in such cases as the present, as laid down in the statutes of the state of Georgia, as construed by the supreme court of the state, do not afford the taxpayer due process of law. The pertinent sections of the Political Code of Georgia are copied in the margin.†

*Of the system of taxation thus provided' the supreme court of Georgia, in a sum. mary of its provisions, says:

"The Political Code, § 812, prescribes the method by which 'corporations, companies, persons, agencies, or institutions,' shall make returns of their property to the comptroller general for taxation, and provides that 'such returns shall be carefully scrutinized by the comptroller general, and if, in his judgment, the property embraced therein is returned below its value, he shall assess the value, within sixty days thereafter, from any information he can obtain, and if he shall find a return of . matters required to be returned as aforesaid, below the true amount, or false in any particular, or in anywise contrary to law, he shall correct the same and assess the true amount, from the best information at his command, within sixty days. In all cases of assessment, or of correction of returns, as herein provided, the officer or person making such returns shall receive notice and shall have the privilege, within twenty days after such notice, to refer the question of true value or amount, as the case may be, to arbitrators, their award shall be final.' Section 813 is as follows: 'In cases of failure to make return, the comptroller general shall make an assessment from the best information he can procure, which assessment shall be conclusive upon said corporations, companies, persons, agencies, or institutions.' By 814 it is provided that 'in all cases of default of payment of taxes upon returns or assessments, the comptroller general shall

and

†Section 804. Returns to Comptroller, | an itemized account of gross receipts and How Made. The returns of all companies or persons required to be made to the comptroller general must be in writing and sworn to by the presiding officer, etc.

Section 805. Returns and Taxes, etc. The returns of all railroad and insurance and express companies, and agents of foreign companies, authorized in this state, shall be made to the comptroller general by the first day of May in each year, and the taxes thereof paid to the state treasurer by the first day of October, and not later than December twentieth of each year.

expenditures, to show how the income returned is ascertained, and such returna shall be carefully scrutinized by the comptroller general, and if, in his judgment, the property embraced therein is returned below its value, he shall assess the value, within sixty day thereafter, from any information he can obtain, and if he shall find a return of gross receipts, or business, or income, as above defined, or other matters required to be returned as aforesaid, below the true amount, or false in any particular, or in anywise contrary to law, he Section 812. Returns to Comptroller Must shall correct the same and assess the true be Itemized. Whenever corporations, com- amount, from the best information at his panies, persons, agencies, or institutions command, within sixty days. In all cases are required by law to make returns of of assessment or of correction of returns, property, or gross receipts, or business, or as herein provided, the officer or person income, gross, annual, net, or any other making such returns shall receive notice kind, or any other return, to the comptrol- and shall have the privilege within twenty ler general, for taxation, such return shall days after such notice, to refer the question contain an itemized statement of property, of true value or amount, as the case may each class or species to be separately be, to arbitrators,-one chosen by himself named and valued, or an itemized account and one chosen by the comptroller general of gross receipts, or business, or income, as with power to choose an umpire in case above defined, or other matters required to of disagreement, and their award shall be be returned, and in case of net income only,' final. 28 S. C.-4.

Section 847. Defaulters to be Doubly Taxed. If a person fails to make a return, in whole or in part, or fails to affix a value to his property, it is the duty of the receiver to make the valuation and assess the taxation thereon, and in all other respects to make the return for the defaulting person from the best information he can obtain, and, having done so, he shall double the tax in the last column of the digest When there is no return by which to assess against such defaulters, after having placed the proper market value or specific return the tax the comptroller general shall, from in the proper column; and for every year's the best information he can procure, assess default the defaulter shall be taxed double in his discretion. until a return is made.

In the late case of Security Trust & S. V. Co. v. Lexington, 203 U. S. 323, 51 L ed. 204, 27 Sup. Ct. Rep. 87, decided at the last term of this court, the subject underwent consideration, and it was there held that, before an assessment of taxes could be made upon omitted property, notice to the taxpayer, with an opportunity to be heard, was essential, and that somewhere during the process of the assessment the taxpayer must have an opportunity to be heard, and that this notice must be provided as an essential part of the statutory provision, and not awarded as a mere matter of favor or grace. In that case it was further held that where the procedure in the state court gave the taxpayer an opportunity to be heard upon the value of his property and extent of the tax in a proceeding to enjoin its collection the requirement of due process of law was satisfied.

the tax gatherer, always provided that he | Rep. 485; Hagar v. Reclamation Dist. No. makes a return to the proper officer of the 108, 111 U. S. 701, 28 L. ed. 569, 4 Sup. property that he owns. It presupposes that Ct. Rep. 663. the taxpayer will disclose to the officer all of his taxable property, and it requires him to know whether his property is taxable or not. The requirement of candor in disclosing the ownership of property is really at the foundation of our tax system. So long as the citizen complies with that requirement, he is afforded every opportunity to dispute with the state the question of the value of his property and the amount of tax to be levied thereon. When he fails to return, in whole or in part, fraudulently or through an honest mistake, he then and there becomes a defaulter, and the door of opportunity is closed to him, so far as the right to have the mutual rights between himself and the taxing power adjusted by arbitration is concerned. In other words, ample 'machinery' is available to the citizen who makes full returns; deprivation of the right to be further heard is one of the penalties visited upon the defaulter. The collecting officer must ascertain as best he can the amount of property to be taxed, as well as its value, and take summary means for its collection. This, it seems to us, is the scheme of taxation contemplated by the laws of this state. Whether or not it is consistent with a wise public policy we do not undertake to determine. That it is not unconstitutional we are fully satisfied."

Applying the principles thus settled to the statutory law of Georgia, as construed by its highest court, does the system provide due process of law for the taxpayer in contesting the validity of taxes assessed under its requirements?

Under the scheme provided for, if the property is withheld from return, the comptroller, without notice or opportunity for hearing, must proceed to value the propIt would be impossible to reconcile the erty, and his valuation is final and condifferent holdings in the state courts upon clusive, unless the taxpayer can show-a this subject. One class holds that upon very unlikely contingency-that the taxing the assessment of omitted property the tax officer has acted in bad faith in making payer has no right to be heard, having by the assessment. Against the assessment his failure to return submitted himself to thus made there is no relief in the courts "the doom of the assessor." Another class of the state upon proceedings brought to holds that in such cases there must be an collect the taxes or by bill to enjoin their opportunity to be heard before the tax- collection. The penalty of failure to repayer can be thus assessed, and that to deny turn, no matter how honest or well groundhim such right as a penalty for failure to ed the taxpayer may have been in his bereturn is a denial of due process of lawlief that the property was not subject to secured to the taxpayer by many state Con- taxation, compels him to submit to the final stitutions as well as the 14th Amendment and conclusive assessment made by the taxof the Constitution of the United States. ing officer. Of course, this court, as the ultimate arbiter of rights secured by the Federal Constitution, is charged with the duty of determining this question for itself.

Former adjudications in this court have settled the law to be that the assessment of a tax is action judicial in its nature, requiring for the legal exertion of the power such opportunity to appear and be heard as the circumstances of the case require. Davidson v. New Orleans, 96 U. S. 97, 24 L. ed. 616; Weyerhaueser v. Minnesota, 176 U. S. 550, 44 L. ed. 583, 20 Sup. Ct.

It may be conceded that, under the provisions of § 855, the duty to return property omitted in former years is a contin uing one, and that, under § 812 of the Political Code, upon such return the system of arbitration of value may be open to the taxpayer; but if. for good reason, the taxpayer contests the taxability of his property, and does not return it, the door of opportunity is closed upon him.

As in the present case, courts may differ as to the taxable character of the property, but the taxpayer must concede

its taxability, or be forever concluded by | Evidence was heard in reference to the a determination of its value judicial in its method adopted by the comptroller gennature (Hagar v. Reclamation Dist. No. eral in reaching the valuation placed by 108, 111 U. S. 701, 710, 28 L. ed. 569, 572, him upon the stock, and there was a finding 4 Sup. Ct. Rep. 663), in a proceeding where in the final decree that the valuation was he has no legal right to a hearing. not excessive. As has been said, there was evidence justifying this finding of fact. Under the circumstances, even if there was any error in refusing to strike the prayer of the amendment to the answer, the error was not of such a character as to require a reversal of the judgment."

But it is contended that plaintiffs in error had an opportunity to be heard, and were in fact heard, upon the question of the value of their property upon an issue made by an amendment to the answer in the superior court, after the case went back from the supreme court, tendering an issue and asking the court to pass upon the value of the property.

Upon this subject we think the decision of the supreme court does not leave in doubt the effect of such hearing upon this issue. For it is said (125 Ga. 605):

That is to say, the supreme court had already decided that the taxpayer, being in default of return, was not entitled to be heard upon the valuation of his property, except for the purpose of attacking the assessment for "fraud or corruption" in the assessing officer, and the testimony did not show such excessive valuation as, within the rule laid down in both decisions, would avoid the action of the comptroller general.

"As to those years in which the plaintiff had an opportunity to return its property for taxation and failed to do so, and for which the property has been assessed by the comptroller general, whether the propThe record discloses that for many years erty has been excessively assessed cannot this class of property was not regarded now be inquired into. Under the former as taxable in Georgia, and was not returned ruling in this case it is concluded by the failure to return the property at the time required by law, and must bear the burden of the assessment made in conformity to law. There was neither averment nor proof that the assessment was the result of fraud or corruption on the part of the comptroller general. If there had been, a different question would have been presented."

And further, in the same opinion (125 Ga. 616):

"The plaintiffs contend that the valuation placed by the comptroller general upon the stock was excessive. The defendant contended that, as the plaintiff was a defaulter, the valuation of the comptroller general was conclusive under the law. In an amendment to the answer, the defendant alleged that the valuation placed upon the stock by the plaintiff was not its true market value, 'but, on the contrary, the true market value is as assessed by the comptroller general,' and concluded the amendment with a prayer 'that the court may so find and decree.' The plaintiff objected to the allowance of this amendment on the ground that the court was without jurisdiction to assess or revalue the same for the purpose of taxation, and that the prayer was vague and indefinite. The court ruled that it could not in this case decide or fix the value of the stock for the purpose of determining the amount for which the execution should proceed, but that it would hear evidence with a view of determining whether the assessment was excessive, and refused to strike the prayer.

for taxation in the state. But it is contended that the taxpayer here stands in the attitude of one acting contumaciously, and denying the validity of the tax after this court had practically decided its validity against the plaintiffs in error in Wright v. Louisville & N. R. Co. 195 U. S. 219, 49 L. ed. 167, 25 Sup. Ct. Rep. 16. But, as we have seen, the supreme court of Geor gia has expressly eliminated the element of bad faith in the taxpayer from the findings upon which its decision rests. The Wright Case was held not to have concluded the contention that plaintiffs were denied the equal protection of the laws, in that no other person or corporation in Georgia was assessed upon stock in a foreign corporation, nor the validity of the claim that the stock was not held in Georgia, nor other grounds alleged in the petitions, except so far as the Georgia railroad was concerned for the year 1900. 124 Ga. 607, 53 S. E. 251. We must decide the case in view of its relations to a taxpayer not fraudulently concealing his property, and honestly contending, with reasonable grounds for the contention, that it is not taxable under the laws of the state.

As we have seen, the system provided in Georgia by the statutes of the state as construed by its highest court requires of the taxpayer that he return all his property, whether its liability is fairly contestable or not, upon pain of an ex parte valuation, against which there is no relief in the tax proceedings or in the courts, except in those cases where fraud or corruption can be shown in the action of the assessing officer.

Reluctant as we are to interfere with | Argued October 24, 25, 1907. Decided Nothe enforcement of the tax laws of a state, we are constrained to the conclusion that

this system does not afford that due process of law which adjudges upon notice and opportunity to be heard, which it was the intention of the 14th Amendment to protect against impairment by state action.

The judgments of the Supreme Court of Georgia are reversed and the cases remanded for further proceedings not inconsistent with this opinion.

(207 U. S. 120)

WILLIAM F. D. TAYLOR, Petitioner,

V.

UNITED STATES. (No. 238.)

UNITED STATES, Plff. in Err.,

V.

NEIL MACDONALD. (No. 404.)

wrongfully permitting land

vember 18, 1907.

States Circuit Court of Appeals for the Second Circuit to review a judgment affirming a conviction in the Circuit Court for the Southern District of New York of wilfully permitting an alien to land at another place than that designated by the immigration officer. Reversed. Also

N WRIT of Certiorari to the United

IN

N ERROR to the Circuit Court of the United States for the Eastern District of Louisiana to review a judgment quashing an indictment for permitting an alien to land at a place other than that designated by the immigration officer. Affirmed.

See same case below, in No. 238, 152
Fed. 1.

The facts are stated in the opinion.
Messrs. Lucius H. Beers and William
G. Choate for petitioner in No. 238.
Assistant Attorney General Cooley for
the United States.

Assistant Attorney General Cooley and
Attorney General Bonaparte for plaintiff in
error in No. 404.
Putnam and

Messrs. Harrington

Aliens ing. 1. The ordinary case of a sailor deserting while on shore leave is not comprehended by the provisions of the immigration act of March 3, 1903 (32 Stat. at L. 1213, 1217, chap. 1012), § 18, making it the duty of any officer in charge of any vessel bring Rouse, Grant, & Grant for defendant in ing an alien to the United States to adopt precautions to prevent the landing of such alien at any time or place other than that designated by the immigration officers, and punishing him if he lands or permits to land any alien at any other time or place, notwithstanding the omission from this section of the word "immigrant" which had

followed the word "alien" in the earlier
acts.
Error to circuit court — criminal case.

2. The United States may bring error under the act of March 2, 1907 (34 Stat. at | L. 1246, chap. 2564, U. S. Comp. Stat. Supp. 1907, p. 209), to review a judgment of a Federal circuit court, quashing an indictment for violating the immigration act of March 3, 1903, § 18, by wilfully permitting an alien to land at another place than that designated by the immigration officers, because the indictment disclosed that the alien in question was a seaman. Aliens wrongfully permitting landing.

error.

*Mr. Justice Holmes delivered the opinion of the court:

The first of these cases comes up on certiorari to review a judgment of the circuit court of appeals for the second circuit, affirming a conviction of the petitioner under the immigration act of March 3, 1903, chap. 1012, § 18, 32 Stat. at L. 1213, 1217.† That section makes it the duty of any officer in charge of any vessel bringing an alien to the United States to adopt due precautions to prevent the landing of such alien at any

Sec. 18. That it shall be the duty of the owners, officers, and agents of any vessel bringing an alien to the United States to adopt due precautions to prevent the landing of any such alien from such vessel at any time or place other than that designated by the immigration officers, and any 3. The fact that an alien seaman desert- such owner, officer, agent, or person in ing while on shore leave was a stowaway charge of such vessel, who shall land or under order of deportation does not bring permit to land, any alien at any time or the case within the provisions of the immi-place other than that designated by the imgration act of March 3, 1903, § 18, making migration officers, shall be deemed guilty it the duty of any officer in charge of any of a misdemeanor, and shall, on conviction, vessel bringing an alien to the United States be punished by a fine for each alien so perto adopt precautions to prevent the landing mitted to land of not less than one hundred of such alien at any time or place other nor more than one thousand dollars, or by than that designated by the immigration of-imprisonment for a term not exceeding one ficers, and punishing him if he lands or per-year, or by both such fine and imprisonmits to land any alien at any other time or ment, and every such alien so landed shall place. be deemed to be unlawfully in the United States and shall be deported, as provided by law.

[Nos. 238, 404.]