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

MURGER, District Judge

(dissenting). To obtain the relief which the appellant sought, it was incumbent upon the appellant to show, not only that it was assessed at more than the true value of its property, but also that this assessment was fraudulently made, or was in pursuance of some fundamentally wrong theory. The principle is stated in Sunday Lake Iron Co. v. Wakefield, 247 U. S. 350, 353, 38 S. Ct. 495, 62 L. Ed. 1154, as follows:

“It is also clear that mere errors of judgment by officials will not support a claim of discrimination. There must be something more — something which in effect amounts to an intentional violation of the essential principle of practical uniformity. The good faith of such officers and the validity of their actions are presumed; when assailed, the burden of proof is upon the complaining party. Head Money Cases, 112 U. S. 580, 595 [5 S. *450Ct. 247, 28 L. Ed. 798]; Pittsburgh, etc., Ry. Co. v. Backus, 154 U. S. 421, 435 [14 S. Ct. 1114, 38 L. Ed. 1031]; Maish v. Arizona, 164 U. S. 599, 611 [17 S. Ct. 193, 41 L. Ed. 567]; Adam's Express Co. v. Ohio, 165 U. S. 194, 229 [17 S. Ct. 305, 41 L. Ed. 683]; New York State v. Barker, 179 U. S. 279, 284, 285 [21 S. Ct. 121, 45 L. Ed. 190]; Coulter v. Louisville & Nashville R. R. Co., 196 U. S. 599, 608 [25 S. Ct. 342, 49 L. Ed. 615]; Chicago, Burlington & Quincy Ry. Co. v. Babcock, 204 U. S. 585, 597 [27 S. Ct. 326, 51 L. Ed. 636].”

And it is restated in Chicago, G. W. Ry. v. Kendall, 266 U. S. 94, 98, 45 S. Ct. 55, 57 (69 L. Ed. 183). “It is not enough, in these cases, that the taxing officials have merely made a mistake. It is not enough that the court, if its judgment were properly invoked, would reach a different conclusion as to the taxes imposed. There must he clear and affirmative showing that the difference is an intentional discrimination- and onq adopted as a practice.” Sioux City Bridge v. Dakota County, 260 U. S. 441, 447, 43 S. Ct. 190, 67 L. Ed. 340, 28 A. L. R. 979; Southern Ry. Co. v. Watts, 260 U. S. 519, 526, 527, 43 S. Ct. 192, 67 L. Ed. 375.

The evidence does not disclose an intentional overvaluation of the appellant’s property. There is no direct testimony as to the methods used by the tax commission in arriving at the amount of the assessment. On the hearing of this case in the court below appellant offered the testimony of witnesses in endeavoring to show the value of the railway property in South Dakota, but no testimony was offered to show that the tax commission was intentionally wrong in reaching its conclusions. There was testimony that some kind'of a protest was made to the tax commission by the tax commissioner of appellant, in which he claimed that the proposed assessment was excessive. A witness for the appellant testified that he presented the tax commissioner with some statistical tables, which he claimed showed the value of the entire railway system, based upon the par and upon the market value of its stocks and bonds, and also based upon the amount of the rental paid by the United States for the use of the property in 1918, 1919, and 1920, when capitalized at the rate of 6 per cent, per annum, and also partly based upon an amount found as a tentative value of the.railway by- the Interstate Commerce: Commission, in a proceeding known as Ex parte 74. From these ba¡ses the witness deduced values of the railway-jn Soujjh,Dakota,, by the use. of three theories., ,whj<?h he called apportionments according to i “gross railway operating revenues,” “transportation train miles,” and “use of property,” and these figures were before the tax commission as part of the appellant’s claim of the true basis for assessment. The tax commission was informed that the railway company claimed that it had operated its lines within the state at a loss for the five preceding years. The tax commission also had before it the annual report the appellant had made 'for the year 1921, purporting to show the appellant’s estimates of its value in South Dakota.

The record does not show that appellant asked any express rulings on any deductions demanded from the tax commission, as it might have done (Chicago, B. & Q. Ry. Co. v. Babcock, 204 U. S. 585, 594, 27 S. Ct. 326, 51 L. Ed. 636), in order to ascertain the theory or basis of the assessment. This evidence is insufficient to show any fraudulent or intentionally wrong action of the tax commission. It discloses merely a difference of judgment as to values between its conclusion and that of appellant. It is not revealed what sources of information were accessible to or were used by the tax commission in reaching its decision. The tax commissioners had the right to use their own judgment and knowledge. Chicago, B. & Q. Ry. Co. v. Babcock, 204 U. S. 585, 596, 598, 27 S. Ct. 326, 51 L. Ed. 636. They also had the right to consider the fact that, while the appellant’s statistician who appeared before them expressed the opinion, in the tables which he had prepared by the methods mentioned, that the total value of the railway in South Dakota was $19,-387,337, and the value per mile was $17,014, the report which the appellant had made to the tax commission for the year ending December 31,1921, showed an average value per mile in South Dakota of $38,707. It is true that a note attached to this report stated that this value was based on the estimated cost of reproduction new, making no deductions for depreciation. Only a portion of this report is shown in this record, and the date to which this estimated valuation was to apply is not shown, but there is testimony in this case that this valuation relates to a period about the year 1914. The tax commission had the right to infer that values in 1922 were generally higher than in 1914. Lincoln Gas Co. v. Lincoln, 250 U. S. 256, 268, 39 S. Ct. 454, 63 L. Ed. 968; Banton v. Belt Line Ry., 268 U. S, 413, 422, 45 S. Ct. 534, 69 L. Ed. 1020.

■ Appellants witnesses in this case show that $8,800,000 worth of additions and betterments and of new railway acquired or con*451structed has been added since 1908, but the dates of these additions are not shown. One of appellant’s witnesses testified on this trial that $10,000,000 should be deducted for depreciation. It does not appear whether the tax commission had the benefit of this testimony. The cost of reproduction new, as of the date of the valuation, is evidence that the tax commission had the right to consider. Standard Oil Co. v. So. Pacific Co., 268 U. S. 146, 156, 45 S. Ct. 465, 69 L. Ed. 890. The amount of depreciation, the amount of increase of value in 1922 over 1914, the value of the additions and of newly constructed or purchased lines would have been of service, if presented to the tax commission.

There was testimony on the trial of this ease that the Interstate Commerce Commission had made a tentative appraisal of the value of appellant’s property as of 1914 except as to land, and as of 1917 as to land, and found it to bé the sum of $34,928,069, and that appellant had protested that this was an undervaluation in the sum of $6,651,550. There was also testimony that the appellant had made a report to the Board of Railway Commissioners of South Dakota as of the date of December 31, 1921, showing an investment by appellant in road and equipment in South Dakota of $52,460,211.63, and an average per mile of $42,634.98. It is not disclosed whether or not any of these reports were presented to the tax commission. There was other testimony given on behalf of both appellant and appellees, but it related only to the question of the proper value of the appellant’s property.

The only method by which the appellant seeks to show a fraudulent or intentional overvaluation of its property is by showing that its computations of the value in South Dakota were not accepted by the tax commission. It is not shown that the commission did not have other sources of information, nor is it shown that they adopted any wrong method. The tax commission made its valuation for assessment pursuant to constitutional and statutory authority requiring it to act, and its decision is not to he overthrown merely by showing that it erred in its conclusion. “The general rule is well settled that, ‘whenever a question of fact is thus submitted to the determination of a special tribunal, its decision creates something more than a mere presumption of fact, and if such determination comes into inquiry before the courts it cannot be overthrown by evidence going only to show that the fact was otherwise than as so found and determined.’ Pittsburgh, Cincinnati, etc., Railway v. Backus, 154 U. S. 434 [14 S. Ct. 1114, 38 L. Ed. 1031]; Western Union Telegraph Co. v. Taggart, 163 U. S. 1 [16 S. Ct. 1054, 41 L. Ed. 49]. Adams Express Co. v. Ohio, 165 U. S. 194, 229, 17 S. Ct. 305, 312 (41 L. Ed. 683).