Spencer v. Babylon R.

LEARNED HAND, District Judge

(after stating the facts as above). [1] The appeal of the county treasurer must be dismissed. The general rule is well settled that unless there is a separable controversy, or unless there is some sum to which the appealing party is entitled in any event, he may not accept the benefit of the decree and later appeal. Chase v. Driver, 92 Fed. 780, 34 C. C. A. 668; Albright v. Oyster, 60 Fed. 644, 9 C. C. A. 173. There was here no separable controversy, such as existed in Goepel v. Kurtz, 216 N. Y. 343, 110 N. E. 769, Carson L. Co. v. St. Louis & S. F. R. Co., 209 Fed. 191, 126 C. C. A. 139, and Snow v. Hazlewood, 179 Fed. 182, 102 C. C. A. 448, for the whole claim turned upon the proper amount of the assessment for special franchises. Nor was there any sum concededly due to the county treasurer, since the receiver contended from the outset that there was no basis for any special franchise tax whatever. Indeed, if the receiver should have succeeded in his contention below or in this court, the county treasurer would have to restore the payment which he has already collected. Nor do we think that the provision in the opinion, not the decree, covered this question, assuming that the court below could affect the right to appeal in any way, a point we do not decide. The opinion only provided that an appeal by the municipal authorities should not stay their-rights to collect their taxes. What effect the collection of the taxes should have upon the right to appeal was a very different matter, and one which the District Court did not attempt to determine whatever its power. Indeed, the whole point is irrelevant, as the opinion of the court is not a part of the decree, and the provisions of the decree touching appeals has nothing to do with the question..

[2] Coming, now, to the appeal of the receiver, we think that the whole proceedings to review the assessments were in fact without jurisdiction, and that they should not have been attempted over the objection of the county treasurer. As to the taxes of 1915 and 1916, they were assessed after the time when the custody of the res had passed from the District Court (the assessment and probably the levy for 1914 was before December 13, 1913). Assuming, as we may, that that court had the right, after December 13, 1913, to reserve the issuance of receiver’s certificates to pay for assessments for taxes and other receiver’s expenses incurred during pendency of the receivership, and even assuming that as an incident to that reservation it had the power to enjoin the assertion of these taxes in so far as it might he necessary to a complete disposal of the controversy, nevertheless the reservation could not extend beyond those matters which were left undecided at the time the court lost custody and none of the subsequent taxes under any construction lay within the further power of the court. We do not agree that, having lost custody, the court could reserve a general jurisdiction under a reserved power to resume possession at some future time.

[3] We think, moreover, that the District Court was also without jurisdiction in its review of the assessments for special franchises for the years 1910-1914. Under the statute of New York the power to assess special franchises is vested in the state board of tax commissioners, an official body with sole jurisdiction for that purpose. New York Tax Law (Consol. Laws, c. 60) §§ 43, 44, 45. An adequate means of review of their assessment is provided in that statute by certiorari in the Supreme Court of the state, under section 46. Now there was no question in the case at bar of the jurisdiction of the state hoard of tax examiners, or of any irregularity in the assessment, levy, or extension on the rolls by which the tax was imposed. The law of New York gives an assessment once made with jurisdiction the force of a judgment which cannot be collaterally attacked. Swift v. Poughkeepsie, 37 N. Y. 511; U. S. Trust Co. v. New York, 144 N. Y. 488, 39 N. E. 383. No error as to the actual value of the property assessed is open for reconsideration (People ex rel. Insurance Co. v. Coleman, 107 N. Y. 541, 14 N. E. 431; New York v. Chase, etc., Co., 206 N. Y. 3, 99 N. E. 143), though this limitation does not, of course, apply any more than in the case of a judgment, if the assessors had no jurisdiction (Bruecher v. Portchester, 101 N. Y. 240, 4 N. E. 272). Article 13 of the Tax Daw (sections 290-294) gives full relief against overvaluation and inequality of assessment, and it is through it alone that the assessment may be assailed.. The state of New York having the power, subject, of course, to constitutional limitations, 1o levy its taxes by such officers as it sees fit, no court may set aside the acts of the assessors and reassess the property, since that is not a judicial act, and a judge has no more power to do it than a layman, whether the question arise at law or in equity.

The only ground for the exercise of such a power is as an incident to the right to set aside the assessment as unconstitutional. This the Supreme Court, in Raymond v. Chicago Union Traction Co., 207 U. S. 20, 28 Sup. Ct. 7, 52 L. Ed. 78, 12 Ann. Cas. 757, and Greene v. Louisville & Interurban R. R. Co., 244 U. S. 499, 37 Sup. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88, did, holding that an assessment may be reopened, and furthermore that the property may in effect he reassessed, by compelling the plaintiff to consent to a fair assessment upon its property. These cases, however, both proceed upon the assumption that the arbitrary and discriminating action of the assessors was in violation of the Fourteenth Amendment. They each arose on independent bill in equity, explicitly laid upon the violation of the United States Constitution, and we do- not read them as indicating that an assessment regularly made may be reviewed upon the mere allegation that the assessment was erroneous, even though the error proceeded from a deliberate effort to overvalue the plaintiff’s property, which might properly be deemed a fraud. In the case at bar there was no suggestion of any unconstitutional conduct of the state board of tax commissioners, nor indeed the least ground for such an assertion. At most the facts justified an error in the way in which the assessment was made. ■ ■

Moreover, in each of the cases cited there were no means provided in the state statute by which the action of the assessors could be judicially reviewed as can be done in New York by certiorari. Now it is true that the Supreme Court mentioned this fact only upon the question of the plaintiff’s right to equitable relief, but we think that the distinction may be taken as going deeper. While there niay be unconstitutional discrimination merely through their administration of a valid statute by officials, the action prohibited by the Fourteenth Amendment must be that of the state, and it cannot be said, at least under ordinary circumstances (Ex parte Royall, 117 U. S. 241, 6 Sup. Ct. 734, 29 L. Ed. 868), when the state has itself provided means for the correction of just such miscarriages, that the initial action of its officials is its own until the final result has confirmed it and made idle further appeal to the state authorities. Therefore we should be slow, if the receiver or the defendant had indeed based its claim upon the Fourteenth Amendment, to admit any jurisdiction to review an assessment in the face of section 46 of the New York Tax Eaw.

What we have said about the assessment of the special franchises applied equally to the equalization, since under section 45a, subdivisions 1 and 2 (as added by Laws 1911, c. 804), prior to 1916, the state board was itself to equalize the assessment, and the supervisors must enter that sum upon the rolls. As equalizer the state board was as exempt from judicial rqview as it was as assessor. In so far, therefore, as the District Court attempted any review of the special franchise assessments as fixed, and necessarily as equalized, by the state board of tax commissioners, we think that it .exceeded its jurisdiction. This point the county treasurer raised originally, and could certainly raise it here, if his appeal were before us. Upon the receiver’s appeal we think the point is still open, because the question is not one which the consent of the parties can cure; rather it goes to the assertion of a jurisdiction over a subject-matter which under these circumstances the District Court did not and could not exercise.

We may assume that it was open to the District Court to correct any errors upon the face of the rolls, taking the assessments as they stood as to the taxes before 1915, and that the court had jurisdiction to that end. However, aside from the correction of the assessment, the receiver raises no question of the orders of May 8, 1917, except the validity of the taxes on the private right of way for 1912, and the penalties and interest charges. As to the objection to the regularity of the private right of way taxes for 1912, we find upon the assessment rolls for that year the apportionment of the assessments between the several school districts (page 33). The apportionment of the special franchise tax was made by an independent certificate. This apportionment of the private right of way assessment upon the roll itself seems to us to have been sufficient under the amendment to section 40 of the 'Pax Law passed in 1912 (Laws 1912, c. 271). It is true that no certificate as required to section 40 appears in the record, but we assume that the assessment rolls were signed as a whole and when the prescribed apportionment was made upon the roll itself the general certificate was sufficient.

[4] There remains only the question of penalties and interest. The order of July 12, 1916, allowed only interest upon the taxes as reassessed, but the modified order of May 8, 1917, changed this by allowing the statutory penalties and the interest. We see no reason why the penalties and interest should not have been allowed upon the taxes on both private rights of way and special franchises. The court had jurisdiction to reassess neither, and the amounts remained as fixed on the rolls. The defendant litigated their validity at its peril. The power of the District Court was limited to declaring void such taxes as were levied without jurisdiction, and perhaps such as were illegal upon the face of the rolls. It was therefore inevitable that penalties and interest should have been allowed. As to the S per cent, penalty, this, it is true, depended, under section 73 of the Tax Law, upon a notice from the county treasurer to the collector of taxes; but we are to presume that the authorities did those things rightly which should have been done, and that after the taxes had been levied and remained unpaid for 30 days the notice was given.

In disposing of the cause we must dismiss the receiver’s appeal in respect of those assignments of error which raise matters over which the District Court had no jurisdiction. We can neither affirm nor reverse the orders in these respects, and yet the case is not one under section 5 of the Act of March 3, 1875 (18 Stat. 472, c. 137 [Comp. St. 1916, § 1019]), where we must dismiss the whole proceedings, since the court had jurisdiction to consider the validity of the taxes in some respects. We might, it is true, vacate the injunction and restore the taxes to the original sums upon the assessment rolls; but that we could do only upon the county treasurer’s appeal, which is not before us. In such respects as the District Court had jurisdiction, we affirm the orders.

Therefore we dismiss the receiver’s appeal upon his fourth and fifth assignments of error, and we affirm the orders upon the first, second, third, and sixth assignments of errors. We dismiss the county treasurer’s appeal. The orders of May 8, 1917, will therefore stand, but their effect upon the rights of the parties, in any collateral proceedings in other courts, we do not assume to consider.