Rowley v. Chicago & N. W. Ry. Co.

SYMES, District Judge

(dissenting).

I regret I am unable to agree with the court on the one question of jurisdiction. The bill of complaint simply discloses a dispute as to the proper method of arriving at the value of plaintiff’s property. The most that can be said is that the method adopted by the state board of equalization was illegal. True, fraud and systematic undervaluation of other classes of property are charged, but are wholly unsupported by the evidence, and were properly found to be without merit. No facts are shown to support the conclusion pleaded, that no plain, speedy, or adequate remedy at law exists, or that great and irreparable loss will be suffered. It is not alleged that plaintiff has tested or exhausted the legal remedies available under the state statutes, or that a multiplicity of suits are probable or possible.

Two recent cases in the United States Supreme Court, Matthews v. Rodgers, 284 U. S. 521, 53 S. Ct. 217, 219, 76 L. Ed. 447, and Stratton v. St. Louis Southwestern Railway Co., 284 U. S. 530, 52 S. Ct. 222, 76 L. Ed. 465, are decisive. In the former Justice Stone says: “The scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts, and a proper reluctance to interfere by injunction with their fiscal operations, require that such relief should be denied in every ease where the asserted federal right may be preserved without it. Whenever the question has been presented, this Court has uniformly held that the mere illegality or unconstitutionality of a state or municipal tax is not' in itself a ground for equitable relief in the courts of the United States.” And further, that if there is an adequate remedy at law, it must be pursued. He then examines the law of the state involved (Mississippi), and finds that there is a plain remedy afforded by the applicable statutes of the state.

The Stratton Case, supra (coming up from Illinois), involves the same question. The court finds the existence of a right to recover the tax if illegal or inequitable, and refuses relief, saying, page 534 of 284 U. S., 52 S. Ct. 222, 223: “There being a legal remedy for the recovery of the tax, no case is made for invoking the jurisdiction of equity to enjoin collection of it, in the absence of allegations setting up special circumstances which would render the legal remedy inadequate.” These very late cases show the tendency of that court to narrow the grounds of federal jurisdiction in eases of this nature.

Section 115-311, Rev. St. Wyo. 1931, makes it the duty of the county commissioners to direct the treasurer to refund erroneous or illegal taxes without suit, and section 89-4291, Rev. St. Wyo. 1931, gives the aggrieved taxpayer a right of action to enjoin an illegal levy or assessment, or to recover back taxes wrongfully exacted or paid. As simple a method as- could be asked. See Carton v. Board of Commissioners, 19 Wyo. 416, 69 P. 1913. The good faith of the state officers will be presumed. Sunday Lake Iron Co. v. Wakefield, 247 U. S. 359, 38 S. Ct. 495, 62 L. Ed. 1154. So we have a situation where the most that can be contended by the railroad is that the board of equalization made an honest mistake in valuing the plaintiff’s property. This does not amount to discrimination. Sunday Lake Iron Co. v. Wakefield, supra.

Among the eases cited by appellee is Union Pacific R. R. Co. v. Board of Com’rs of Weld County, 247 U. S. 282, 38 S. Ct. 510, 62 L. Ed. 1110. Justice Van Devanter wrote the opinion in that case and in Singer Sewing Mach. Co. v. Benedict, 229 U. S. 481, 33 S. Ct. 942, 57 L. Ed. 1288. Both arose in Colorado. In the earlier case, Singer Sewing Mach. Co. v. Benedict, supra, he observed that the revenue laws of Colorado contained a section imposing upon the county commissioners in all cases the duty of refunding to the taxpayer without abatement or discount, any tax interest or costs or any portion thereof, which is found to be erroneous or illegal, and that this by neeessary implication, confers upon the taxpayer a correlative and substantive right to have the same so refund*531ed. That this constituted an adequate remedy at law, and therefore relief by injunction was not admissible. Later, when Union Pacific R. R. Co. v. Board of Com’rs of Weld County, supra, came up to the Supreme Court, he found a new statute, the effect of which had not yet been determined by the state Supreme Court, and which might be construed as prohibiting the commissioners from refunding illegal taxes without the approval of the state tax commission, and as wilhdrawing the right of action referred to; that, therefore, the existence of an adequate remedy at law' was uncertain and debatable, and equitable jurisdiction and an injunction could not be properly declined.

When we consider the similar Wyoming statute, the simple and complete remedy it affords, and the decisions of the state court, it would seem the Singer Sewing Mach. Co. Case, supra, and not the Union Pacific Co. Case, supra, is the authority applicable to the facts hero. The distinction is clearly pointed out in Greene v. Louisville & I. R. R. Co., 244 U. S. 499, at page 519, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88.

Section 384, tit. 28 ÜSCA (Rev. St. § 723, now Jud. Code § 2,67), forbids suits in equity, w'here a plain, adequate, and complete remedy exists at law. Justice Stone in Matthew's v. Rodgers, supra, says this applies with peculiar force to suits in the federal court to enjoin collection of a state tax. Admittedly, the o-nly possible ground for plaintiff coming here is the fear that it will have to bring a separate suit against each of the four counties involved.

Pacific Exp. Co. v. Seibert (C. C.) 44 F. 310, 312 (an old ease in the Western District of Missouri), affirmed 142 U. S. 339, 12 S. Ct. 250, 35 L. Ed. 1035, involved a state tax alleged to violate the Federal Constitution. A penalty of $100 a day for each day’s delay in payment was provided, recoverable in separate actions. Judge Caldwell, speaking for himself and Judge Philips, said: “A very clear case must he made out before a federal court will enjoin the collection of a state tax. “ * * It must also appear that its collection will be attended with a multiplicity of suits, or the destruction of a franchise, or cast a cloud upon the title to real estate, or some other recognized head of equity jurisdiction must be shown.” And in speaking of a multiplicity of suits, he said, page 315 of 44 F.: “It is real and not imaginary suits, it is probable and not possible danger of multiplicity of suits, that will warrant the assumption of jurisdiction on that ground. While it is tine, as the plaintiff contends, that the state might bring a separate suit for each day’s penalty, the court would hardly he justified in acting on the assumption that it would do so. The state is not to he looked ujzon in the light of a barrator, and the court will not impute to it, or to its officers acting for and in its name a litigious or vindictive spirit, or a purpose needlessly to vex and harass the citizen with lawsuits * 'fe * azzd, until the fact is shown to bo otherwise, will act on the assumption that a state will not bring any more suits than are fairly necessaiy to establish and maintain its rights.”

In Equitable Guarantee & Trust Co. v. Donahoe, 8 Del. Ch. 422, 45 A. 583, 585, the Chancery Court of Delaware, under a state statute similar to the federal statute, supra, had our question before it. The chancellor, after discussing the origin of this branch of equity jurisdiction, says: “Is there imminent and threatened a multiplicity of suits of such a nature and between such parties as to satisfy the court that the legal remedies are not sufficient 1” Azid approves the quotation from the Pacific Exp. Co. Case, supra.

In an old ease in Massachusetts, Fellow's v. Spaulding, 141 Mass. 89, 6 N. E. 548, the court was urged to take jurisdiction to prevent a multiplicity of suits, in each of which the same question of law would be present, but declined, saying there is no reason why one suit, the others being continued to abide the result, should not settle all the eases.

In Boise Artesian Hot & Cold Water Co. v. Boise City, 213 U. S. 276, 286, 29 S. Ct. 426, 430, 53 L. Ed. 796, the Supreme Court says it has refrained from interfering in all eases where the federal rights of the persons could bo preserved unimpaired, and discussing the question of multiplicity of suits says: “Where the multiplicity of suits to be feared consists in repetitions of suits by the same person against the plaintiff for causes of action arising out of the same facts and legal principles, a court of equity ought not to interfere upon that ground unless it is clearly necessary to protect the plaintiff from continued and vexatious litigation.” And: “Perhaps it might be necessary to await the final decision of one action at law.” Citing cases.

And Corpus Juris, vol. 21, p. 74, says: “While the prevention of a multiplicity of suits is an independent and substantive ground of equity jurisdiction and not merely a makeweight where other equities are present, it does not alone create a cause of *532action where none otherwise exists.” The subject is also discussed by Pomeroy (4th Ed.) vol. 1, beginning at § 243.

In Wilson v. Ill. So. Ry., 263 U. S. 574, 44 S. Ct. 203, 204, 68 L. Ed. 456 (also cited by appellee), federal jurisdiction was sustained, not only because a multiplicity of suits against the taxing bodies would result, “but there would be insuperable difficulty in determining what the proper assessment against the whole road should be and in apportioning the due share to the county concerned. This difficulty would recur in each of the five counties with not improbably different results in each.” Therefore there was no adequate remedy at law.

In the ease at bar no such allegations are made, and, as pointed out, the assessment is fixed by one body; there is authority to repay the tax, if illegal, without a suit, which we as-' sume the proper officials would do. In addition the taxpayer has a right of action to enjoin or recover.

Keokuk Bridge Co. v. Salm, 258 U. S. 122, 42 S. Ct. 207, 66 L. Ed. 496, was a suit by a private property holder, and the only question was overvaluation. The Supreme Court denied jurisdiction because the remedy afforded by the state statute had not been availed of.

The authorities are, of course, too numerous to mention. In all, the Supreme Court after observing that it is only in extreme cases that the federal court will enjoin the collection of a state tax, proceeds to inquire whether, under the remedy afforded the aggrieved taxpayer, the question can be clearly presented and speedily determined, either in a court of law by an administrative body, or both. If it can jurisdiction is declined. The mere fact that there may be a possibility, as distinguished from a probability of more than one action being required, does not alter the rule.

Following appellee’s argument to its logical conclusion, appellee could have its tax controversies passed upon by the federal court merely because its railroad ran through four counties in Wyoming, while another railroad with the same grievance, whose line traversed only one county of the same state would be denied federal jurisdiction. Federal jurisdiction does not depend upon any such fortuitous circumstance.

The method of valuation adopted was illegal and should be condemned. I doubt, however, the right of the court to determine the method to be followed in arriving at a valuation, or in actually fixing the figure. This is an administrative and not a judicial function. The Constitution of Wyoming, art, 15, § 11, provides that all property, except as in this constitution otherwise provided, shall be uniformly assessed for taxation, and the Legislature shall prescribe such regulations as shall secure a just valuation for taxation of all property real and personal and, admittedly, an honest but mistaken effort to do this was made. It is still the duty of the board to make the valuation and, according to the authorities, they can use the rejected mileage basis as a factor, if proper allowance is made for the difference in value between a mile of track in Wyoming, and that of other parts of the system; or the board may adopt a method other than that adopted by the lower court, provided it secures a just valuation.

Pleasant et al v. Missouri-Kansas-Texas R. Co., 66 F.(2d) 842 (C. C. A. 10th), was a suit to enjoin collection of state taxes. It was held that courts do not supervise the actions of assessing bodies, or sit to correct their errors of judgment.

The State Railroad Tax Cases, 92 U. S. 575, 23 L. Ed. 663, is a leading ease. Justice Miller there says that while they do not lay down any absolute limitation of the power of a court of equity to restrain the collection of illegal taxes, that if the grievance can be remedied by a suit at law, either before or after the payment of taxes, a court of equity will not interpose by injunction to stay collection of the tax (page 614 of 92 U. S.); and goes on to say that the court has no power to apportion the tax, to make another assessment, or to direct another to be made by the proper officers; that these officers, and the manner in which they exercise their functions, are wholly beyond the power of the court. And further on: That while a court of equity may enjoin a tax complained of in whole or in part, it has not the power of doing complete justice by making, or causing to be made a new assessment on any principle it may decide to be the right one.

See, also, Ex parte State of Oklahoma, 37 F.(2d) 862 (C. C. A. 10th).

It would therefore seem that under the fule of the Stratton Case, supra, no special circumstances are shown that render the legal' remedy inadequate.