Great Northern Railway Co. v. Weeks

Mr. Justice Stone,

dissenting.

I think the judgment should be affirmed.

The decision of the Court turns on the constitutionality of the valuation, for 1933 taxation, of so much of petitioner’s railroad as is located in North Dakota.

The Court finds that the, valuation of the railroad within the state is not so disproportionate to the value of petitioner’s entire railroad system as to transcend due process. See Fargo v. Hart, 193 U. S. 490, 500; compare Rowley v. Chicago & Northwestern Ry., 293 U. S. 102, 109-111. It does not find, and there is no contention, that there has been any discrimination in the valuation of petitioner’s property as compared with that of other property in the state. Its decision that the tax is invalid rests on the single ground that, the valuation is excessive.

This conclusion is based on an elaborate examination, of the evidence produced before the trial court, evidence which it is assumed affords the only basis for the valuation of the Board of Equalization. Emphasizing as the important, if not controlling factors, in determining taxable value, the depressed market value of' the securities of the entire railroad, representing its property in many states, its diminished earnings, its capitalized value based *154on what it considers, for this purpose, a fair rate of return, the Court concludes that, as prices of securities and earnings were much lower in 1933 than in 1932 and earlier years, the valuation of the railroad property in North Dakota for that year should have been correspondingly reduced. And because the decline in value found by this formula is substantial, something like 20%, and as the Board placed the same valuation on the property in 1933 as-in 1932, it is declared that the valuation is so arbitrary as to make any tax based upon it a violation of due process.

We may lay aside any consideration of the numerous uncertain and imponderable elements involved in valuation of a railroad which may well make the use of such a formula untrustworthy in times like the present, see Rowley v. Chicago & Northwestern Ry., supra, 109; which would seem to make it impossible for a court to say that the rejection of the results of such a formula by the taxing officials involved anything more than the exercise of an authorized judgment, which courts cannot pronounce arbitrary merely because it does not conform to their own.

The'feature of the decision which is especially a matter of concern is that for the first time this Court is setting aside a tax as a violation of the Fourteenth Amendment on the ground that the assessment on which it is computed is too high, without any showing that the assessment is discriminatory or that petitioner is in any way bearing an undue share of tifié tax burden imposed on all property owners in the state.

Assessment for taxation is a quasi-judicial act and the tax assessment has the quality of a judgment. Hagar v. Reclamation District, 111 U. S. 701, 709; Gallup v. Schmidt, 183 U. S. 300; Londoners. Denver, 210 U. S. 373, 386; Turner v. Wade, 254 U. S. 64. Even if the valuation of the Board be erroneous, the errors of a state *155judicial officer, however gross, whether of law or of fact, are not violations of the Constitution and are not open to review in the federal courts merely-because they are errors. If overvaluation, even though gross or intentional, were, without more, held to infringe the Fourteenth Amendment, every taxpayer would be at liberty to ask the federal courts to review a state tax assessment upon the bare allegation that it is grossly excessive, and without showing that it does more than subject him to taxation on the same basis as every other taxpayer.

It has long been recognized that discrimination between taxpayers, if intentional or so persistent as to be systematic, is a denial of equal protection, whether the discrimination is in the application of different rates to property in the same class or in inequality in its valuation. Iowa-Des Moines Bank v. Bennett, 284 U. S. 239, 245; Cumberland Coal Co. v. Board of Review, 284 U. S. 23, 25ff; Chicago G. W. Ry. Co. v. Kendall, 266 U. S. 94, 98, 99; Sioux City Bridge Co. v. Dakota County, 260 U. S. 441, 445; Raymond v. Chicago Traction Co., 207 U. S. 20, 37. But to hold that a tax is unconstitutional because based upon an assessment which is too high, as compared with the value of the same property for purposes of con-., demnation, overlooks the principle upon which property taxes are laid and collected. Taxation is but a method of raising revenue to defray the expenses of government, and of distributing the burden among those who must bear it. The taxpayer cannot complain of the tax burden which he has to bear, who shows no inequality in the application of it. And plainly he does not show inequality merely by proving that the valuation of his property for taxation is_ much higher than its market or its condemnation val-ue.

The burden of a property tax like the present is distributed by applying a rate of tax to the assessed valuation of all taxable property. Variation of either, without *156discrimination, affects the amount of the tax but not the equality of its distribution. The activities and expenses of government, over which the state has plenary control,' do not cease in time of depression. They may increase. The state may meet those expenses by raising the valuation of taxable property, or by raising tax rates, or both, without infringing any constitutional immunity. Here the state, so far as appears, is raising the needed revenue and distributing the burden as in previous years, by continuing old valuations. ■ However high those valuations may be, if not discriminatory, they impose no unequal share of the tax burden on petitioner and cannot be said to be arbitrary or oppressive in the constitutional sense.

Recently we held that a claim that the rate of a nondiscriminatory tax is excessively high presents no constitutional question. Magnano Co. v. Hamilton, 292 U. S. 40, 44. No reason has been advanced at the bar, or given in the opinion of the Court, why a tax valuation, excessive when compared with condemnation or' market value, should have any different legal consequences. In neither case is inequality of the tax burden ■ established. It is for that reason that this Court has held, without exception, that valuation of property for tax purposes, .however excessive, not shown to be discriminatory, infringes no constitutional immunity. Rowley v. Chicago & N. W. Ry., supra, 111; Southern Ry. Co. v. Watts, 260 U. S. 519, 526; and see Cumberland Coal Co. v. Board of Review, 284 U. S. 23, 25ff; Sunday Lake Iron Co. v. Wakefield, 247 U. S. 350.

Cases setting aside an excessive allocation of railroad system value to the taxing state, Fargo v. Hart, supra; Rowley v. Chicago & Northwestern Ry., supra, or setting aside improper valuation made for purposes of condemning property, Monongahela Navigation Co. v. United States, 148 U. S. 312, or for determining whether public utility rates are confiscatory, Southwestern Bell Telephone *157Co. v. Public Service Comm’n, 262 U. S. 276, 287, 288; Bluefield Waterworks Co. v. Public Service Comm’n, 262 U. S. 679, 692; McCardle v. Indianapolis Water Co., 272 U. S. 400, 408, 412, do not support the decision now made. In such Rases the complainant, because the valuation is too high or too low, suffers a harm from which the Constitution guarantees immunity. But the Constitution guarantees no immunity from taxation even though the tax, because of its amount, may be burdensome, see Magnano Co. v. Hamilton, supra, or because it is as high in a year of depression and falling property values as in years of prosperity. Beyond this, petitioner does not show that it is harmed, or present any case for invoking the protection of the Constitution.

Me. Justice Brandéis and Mr. Justice Cardozo join in this opinion. ¡