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Conn v. Jones

Supreme Court of Ohio
Jun 15, 1926
115 Ohio St. 186 (Ohio 1926)

Opinion

No. 19329

Decided June 15, 1926.

Taxation — Levy and collection may be enjoined where property claimed exempt — Section 12075, General Code — Property owner need not exhaust administrative remedies, when — Sections 5616, 5611-1 and 5611-2, General Code — Concurrent remedies.

Under Section 12075, General Code, a property owner may apply for an injunction to restrain the levy Or collection of a tax, upon the ground that the property to be taxed is exempt from taxation, without proceeding under Sections 5616, 5611-1 and 5611-2, General Code. In such case these sections provide a concurrent and not an exclusive remedy. ( Bashore v. Brown, 108 Ohio St. 18, 140 N.E. 489; Cuyahoga Falls v. Beck, 110 Ohio St. 82, 143 N.E. 661; Hammond v. Winder, 112 Ohio St. 158, 147 N.E. 94, distinguished.)

ERROR to the Court of Appeals of Van Wert county.

In this case the plaintiffs in error, as trustees under the will of George H. Marsh, deceased, brought an action in the court of common pleas to enjoin the collection of taxes assessed by the county auditor upon real and personal property belonging to what is known as the Marsh foundation, and to enjoin the auditor from threatened proceedings to sell or forfeit the lands as if delinquent.

In the court of common pleas the court found as follows: "This cause, coming on this day for hearing, was submitted to the court upon the pleadings and evidence, and on consideration thereof the court find that in the years 1922 and 1923, at the time the auditor placed the property of plaintiffs on the tax duplicate for taxation, plaintiffs were not an institution whose property was then being used exclusively for charitable purposes, and that said property in the years 1922 and 1923 was not being used for charitable purposes, and was therefore subject to taxation for those years, and the court further find that the plaintiffs at the date of filing their petition herein, to-wit, January 2, 1924, were an institution whose property at that time was being used, and has ever since been used, exclusively for charitable purpose, and then was and ever since has been exempt from taxation. It is therefore ordered, adjudged, and decreed that the temporary restraining order heretofore allowed herein be, and the same hereby is, dissolved and that the defendants be permitted, and they are hereby directed, to proceed with the collection of the taxes levied on said property for the years 1922 and 1923, but without penalty; and that the defendants, and their successors in office, be and they hereby are forever enjoined from placing any property of the plaintiffs, real, personal or mixed, on the tax list or duplicate for taxation at any time after said year 1923."

The case was taken to the Court of Appeals on appeal, which held: "The court finds for the defendants on the ground that Sections 5579 et seq. of Chapter eleven, Title one, Part Second, of the General Code, provide and afforded to the plaintiffs full and complete administrative remedies for the correction of the wrong complained of in the petition, and, not having pursued those remedies, plaintiffs are not entitled to relief by injunction; and upon that ground only, and without deciding the question touching the exemption of the property from taxation, it is considered and adjudged that the petition of the plaintiffs be, and the same hereby is, dismissed * * *."

The statutes involved in the discussion of the questions decided by the Court of Appeals are Sections 12075, 5616, 5611-1 and 5611-2, which read as follows:

Section 12075: "Common pleas and superior courts may enjoin the illegal levy or collection of taxes and assessments, and entertain actions to recover them back when collected, without regard to the amount thereof, but no recovery shall be had unless the action be brought within one year after the taxes or assessments are collected."

Section 5616: "Any person, board or officer authorized by this act to file complaints with the county board of revision may complain to the tax commission of Ohio at any time prior to the thirty-first day of December in any year, of the determination of a county auditor respecting the liability of any property to taxation in that year, or its exemption therefrom. The commission shall hear such complaint and determine whether the property complained of is subject to taxation and certify its findings to the county auditor, who shall correct the tax list and duplicate accordingly."

Section 5611-1: "Whenever the tax commission of Ohio determines the valuation, or liability, of property for taxation, whether in case of an original valuation or other original proceeding of such board, or in case of a determination of an appeal from the decision of a county board of revision, it shall, by registered mail, certify its action to the person in whose name the property is listed, or sought to be listed, at the same time and in the same form in which such action is certified to the county auditor, and such determination shall become final and conclusive for the current year, unless reversed, vacated, or modified as hereinafter provided."

Section 5611-2: "The proceeding to obtain such reversal, vacation, or modification shall be by petition in error filed in the court of common pleas, instituted by the person or persons in whose name the property is listed for taxation, or by any person or official authorized to file a complaint against any valuation or assessment under the provisions of Section 5609 of the General Code. In case of original proceedings or valuations by the tax commission of Ohio, such proceedings shall be instituted in the common pleas court of the county in which the property is located, or if located in more than one county, then in the county in which the greater amount of the property in question is located as shown by the apportionment of such commission, and in such case the court shall review the determination of the commission as to all the property in each such county and the apportionment of the value thereof. In case of a determination of an appeal from the decision of a county board of revision such proceeding shall be instituted in the common pleas court of the county ill which such complaint was originally filed."

The property involved consists of some $240,000 real property, and about $2,500,000 personal property. The taxes were assessed for the year 1922 and 1923, and amounted, with penalties charged thereon for nonpayment, to over $100,000.

The personal taxes for 1922, amounting to $45,547.72, were not assessed until August, 1923, the auditor proceeding under Section 5399, General Code, as if the personalty were taxable property the plaintiffs had omitted to return as of April 9, 1922. The 1922 taxes were, in August, 1923, certified to the treasurer for collection. At about the same time, the auditor put the personal property on the duplicate for taxation for the year 1923. The plaintiffs had omitted to return the property for taxation each of those years because they claimed it was exempt, and all the taxes in question were assessed without their consent.

The action was brought on the ground that the property during those years was exempt from taxation under that provision of Section 5353 of the General Code relating to "property belonging to institutions of public charity only," which reads:

"Lands, houses and other buildings belonging to a county, township, city or village, used exclusively for the accommodation or support of the poor, or leased to the state or any political subdivision thereof for public purposes, and property belonging to institutions of public charity only, shall be exempt from taxation."

The Marsh foundation is an institution created by the will of George H. Marsh, deceased, to establish and maintain a home and school for orphan and other children of Van Wert and other counties of northwestern Ohio. The plaintiffs are the trustees under that provision of the will.

Further facts are stated in the opinion.

Messrs. Conn, Hoke Wright, and Messrs. Wilson Rector, for plaintiffs in error.

Mr. C.C. Crabbe, attorney general, Mr. Wilbur E. Benoy, and Mr. John. I. Miller, prosecuting attorney, for defendants in error.


This case does not involve an application to enjoin a tax levy or tax collection because of a claimed illegality or injustice in the amount of an assessment. For that reason the holdings in City of Cuyahoga Falls v. Beck, 110 Ohio St. 82, 143 N.E. 661, Bashore v. Brown, Treas., 108 Ohio St. 18, 140 N.E. 489, and Hammond, Treas. v. Winder, Recr., 112 Ohio St. 158, 147 N.E. 94, do not apply. Thus it was conceded in the Cuyahoga Falls case that the statute had been duly followed, that the proceedings were entirely regular, and that the city had the power to levy the assessment, but it was contended that the assessment was illegal in amount only, being in excess of the 33-1/3 per cent. limitation. This case, on the contrary, involves the very power to levy the tax itself; the plaintiffs in error urging that they are exempt from taxation upon the ground that the Marsh foundation is an institution of public charity only.

Before the original enactment providing that the courts of common pleas should have jurisdiction to enjoin the illegal assessment of taxes, the Ohio decisions held that an injunction would not lie against the collection of illegal taxes, where the plaintiff had an adequate remedy at law by way of a suit for damages against the officer making the collection. After the statute was enacted, this court, in Stephan, Treas., v. Daniels, 27 Ohio St. 527, considered this statute, and said of it (page 536):

"It gives a remedy by injunction, on the application of a single person taxed, when none existed before. In his application he need not aver and show, as under ordinary rules in equity, that great or irreparable injury is about to be done for which he has no adequate remedy at law, but only that the tax is illegal which is about to be assessed or collected."

In Steese v. Oviatt, Treas., 24 Ohio St. 248, at page 253, the court said: "The act of May 1, 1856 (S. C., 1151), gives to the courts jurisdiction to restrain the collection of taxes illegally assessed; but the jurisdiction thus conferred is an equitable jurisdiction, and is to be exercised upon equitable principles. Proceeding under the statute, the party complaining is not required to show a case of threatened irreparable injury, or the absence of a remedy by ordinary legal proceedings; but he must exhibit a case in which, upon the merits, he is entitled to the equitable relief demanded."

These opinions were later confirmed in their holding by various federal cases, among them Lander, Treas., v. Mercantile Nat. Bank of Cleveland, 118 F., 785, 55 C.C.A., 523; Cummings v. National Bank, 101 U.S. 153, 25 L.Ed., 903; Grether v. Wright, 75 F., 742, 23 C.C.A., 498. In the Lander case the question was whether the bank had not exhausted its remedy at law; it being contended that until it did exhaust that remedy it could not proceed in injunction. The court decided in favor of the bank upon the ground that Section 5848, Revised Statutes, which was the precursor of Section 12075, General Code, expressly authorized suits to enjoin the illegal levy of taxes or assessments, or collection thereof. At page 791 (55 C. C. A., 529) the court said:

"It is further argued by the appellants that the bank did not exhaust its remedy at law by further proceedings under the Ohio Statutes. The Revised Statutes of Ohio (Section 5848) expressly declare that suits may be brought to enjoin the illegal levy of taxes or assessments or the collection thereof. It has been held in authoritative decisions that this statute will be enforced on the equity side of the federal courts. Grether v. Wright, 23 C.C.A., 498, 75 F., 742; Cummings v. Bank, 101 U.S. 153, 25 L.Ed., 903."

In Cummings v. National Bank, 101 U.S. 153, 25 L.Ed., 903, a tax case which went from the courts of this state to the Supreme Court of the United States, it was claimed that the plaintiff was not entitled to an injunction because it had a plain, adequate, and complete remedy at law. The court holds, upon page 157:

"But the statute of the state expressly declares that suits may be brought to enjoin the illegal levy of taxes and assessments or the collection of them. Section 5848 of the Revised Statutes of Ohio 1880; Vol. LIII, Laws of Ohio, 178, Sections 1, 2. And though we have repeatedly decided in this court that the statute of a state cannot control the mode of procedure in equity cases in federal courts, nor deprive them of their separate equity jurisdiction, we have also held that, where a statute of a state created a new right or provided a new remedy, the federal courts will enforce that right either on the common law or equity side of its docket, as the nature of the new right or new remedy requires. Van Norden v. Morton, 99 U.S. 378 [ 25 L.Ed., 453]. Here there can be no doubt that the remedy by injunction against an illegal tax, expressly granted by the statute, is to be enforced, and can only be appropriately enforced on the equity side of the court."

Grether v. Wright, 75 F., 742, 23 C.C.A., 498, decided in the Ohio Circuit Court of Appeals, holds that under Revised Statutes, Section 5848, an appeal may be brought in the United States court to restrain a tax on the sole ground of its illegality, in spite of the fact that Section 723 of the Revised Statutes of the United States (U.S. Comp. St., Section 1244), provides that suits in equity shall not be sustained in the courts of the United States in any cases where there is a plain, adequate, and complete remedy at law.

The same principle is to be found in Musser, Aud., v. Adair, 55 Ohio St. 466, 45 N.E. 903.

In every one of the cases above quoted, the plaintiff had a remedy at law either by paying the taxes and bringing suit to recover them back or by appealing to the state auditor for a remission of taxes.

The apparent conflict in the decisions arising between the line of cases ending with Hammond v. Winder, 112 Ohio St. 158, 147 N.E. 94, and the line of cases indicated, is simply explained when we note that the cases in which injunction is denied are cases concerning valuation, or amount of assessment, and the cases in which injunction is granted are cases which contest the very power to lay the tax. This distinction was observed in the case of McKnight v. Dudley, 148 F., 204, 78 C. C. A., 162, which holds as follows:

"But it is insisted the court below was without jurisdiction, that the action of the auditor was final and could not be reviewed in a suit to restrain the collection of the taxes thus assessed. We recognize the existence in Ohio of the general rule that the decisions of taxing officers and tribunals charged with the duty of valuing property for taxation are final and conclusive. Wagoner v. Loomis, 37 Ohio St. 571. But this is not a case of valuation. There is no attempt to review the action of the auditor in valuing property. The attempt is to set aside his action in placing certain property on the duplicate for taxation. Mrs. Dudley's credits were taxable in Lawrence county from 1894 to 1899, only in case she was during those years a resident thereof. Rev. St., 1906, Section 2735. The dispute as to her residence therefore raised the question of the legality of the taxes assessed by the auditor. It was not the valuation placed upon the credits, but their inclusion, the right to tax them at all, which was assailed. The legality of the levy being involved, it was open to the complainant below to avail herself of the remedy afforded by Section 5848 of the Revised Statutes of Ohio. Rev. St., 1906, Section 5848; Musser v. Adair, 55 Ohio St. 466, 45 N.E. 903; Hagerty v. Huddleston, 60 Ohio St. 149, 165, 53 N.E. 960; Cummings v. Bank, 101 U.S. 153, 25 L.Ed., 903; Grether v. Wright, 75 F., 742, 23 C.C.A., 498."

These decisions are controlling upon this court, and fully answer the contention of the defendants in error that, under Section 5616 et seq., the plaintiffs in error were remitted to their statutory remedy, and cannot now apply for relief under Section 12075. When the question raised is as to the very power to lay the tax, and not as to the valuation of the property, nor as to the amount of the assessment, injunction will lie under Section 12075. That section gives a remedy against the levy of an unauthorized tax concurrent with the remedy contained in Sections 5616, 5611-1, and 5611-2, General Code. Otherwise Section 12075 is utterly deprived of vitality.

Defendants in error, however, claim that under the statutes above quoted the tax commission has the sole power originally to determine the liability of property for taxation, and hence Section 12075 is repealed by implication.

Now the statute does not expressly state that the power to determine liability of property for taxation rests in the first instance with the commission only. Obviously, the commission must determine the liability of property to taxation in order to perform its administrative functions. It must, in a preliminary way, decide what property is subject to taxation, and within what classes particular pieces of property fall. The contention of the defendants in error, however, seems to be that Sections 5616, 5611-1, and 5611-2 take from the courts the power given them under Section 12075 to determine in the first instance whether property is liable to taxation, and vest that power in the tax commission alone, and that the only way in which the courts secure jurisdiction of the question is by petition in error from the decision of the tax commission.

If that were the case, the statute would necessarily have made it mandatory upon a person dissatisfied with the tax to complain to the tax commission, but Sections 5616, 5611-1, and 5611-2, make no such requirement. They merely give the plaintiff an opportunity to complain to the tax commission, and thereby offer him a choice of remedies when he claims that there is no power to levy the tax which is placed upon his property. We cannot emphasize too strongly the fact that this contest is over the very right to tax. The claim here is not that the tax is illegal because of a failure to comply with any provision of the statute. The claim here is not that the proceeding was properly begun and properly carried on, and that the tax is excessive, but the claim is that the proceeding in its very inception is void. It was admitted in the Bashore, Cuyahoga Falls, and Winder cases that some part of the tax was legal. Here the claim is that the entire tax is invalid, because no part of it was authorized by law.

The liability of property to taxation has necessarily to be determined by any officer charged with the duty of levying the tax. Thus he may have to decide whether municipal bonds were outstanding January 1, 1913, whether the owner of personal property is a resident of the state, or whether property has been brought into the state after the tax day. In these and similar questions the tax commission has the right, in the exercise of its functions, to determine the liability of property for taxation. But, when the legality of the tax is contested upon the ground that the property is exempt from taxation, the tax commission is not empowered to determine that purely judicial question to the exclusion of the courts, acting under the provisions of Section 12075, General Code. Hence the mere fact that the statute says that the tax commission may determine such liability does not by implication repeal the provision of Section 12075 and supersede the judicial remedy established in that section. We therefore hold that for the case herein presented, Section 12075 gives a remedy concurrent with the remedies contained in Sections 5616, 5611-1, and 5611-2, and that the Court of Appeals should have allowed the injunction prayed for.

The argument that the decision herein is untenable on the ground that injunction cannot be invoked where legal remedies have been provided completely ignores the foregoing decisions of this court, none of which has been overruled, and completely ignores the rules stated in the United States authorities that, when a remedy by injunction against an illegal tax is expressly granted by the statute, an injunction may be obtained upon the sole ground that no right to tax exists, irrespective of the question whether the concurrent statutory remedies have been employed.

Several parcels of real property and considerable personal property are described in the petition as being held in trust for the purposes of the Marsh foundation. The petition alleges that all the property of the Marsh foundation is used exclusively for charitable purposes. This allegation is denied in the answer. The record contains no testimony, and does not show what portion of the property is used exclusively for charitable purposes, if any, nor what portion of the property, if any, is employed for commercial purposes. If any of the property in question is employed for other purposes than those of an institution of public charity only, it is not exempt from taxation, even though the income arising from such use is devoted wholly to the purposes of charity. Rose Institute v. Myers, Treas., 92 Ohio St. 252, 110 N.E. 924, L.R.A., 1916D, 1170.

Since the Court of Appeals decided only one feature of the case, namely, that with regard to the application of Section 12075, General Code, to this controversy, the judgment will be reversed and the cause remanded for further proceedings upon the question as to what, if any, of the property constituted an institution of public charity only at the times set forth in the petition.

Judgment reversed.

MARSHALL, C.J., DAY, KINKADE and ROBINSON, JJ., concur.

MATTHIAS, J., not participating.


The decision of this court upon this subject will bring about great confusion. We have ample proof of that fact, since the Court of Appeals, in the instant case, denied injunctive relief because of the previous decisions of this court. The appellate court, finding that the taxpayer had full, adequate relief before the tax commission respecting the liability of his property to taxation, under the taxing chapter (Section 5579 et seq., General Code), said:

"In short, we are of opinion that this chapter provides or affords to the plaintiff, full and complete administrative remedies for the correction of the wrong complained of, and having failed to pursue these remedies, he cannot be given the relief of injunction as prayed for herein. Hammond v. Winder, 112 Ohio St. 158 [ 147 N.E. 94] and cases therein cited."

It must be conceded that the trustees of the Marsh estate are furnished full, complete, and adequate statutory remedies by filing their complaint with an appeal to the tax commission, and by having a hearing and determination thereof under Sections 5610 and 5611-1, General Code. That this is true is conceded by the majority opinion. Furthermore, the tax commission's decision is subject to judicial review under Section 5611-2, General Code.

In the case of Hammond, Treas., v. Winder, Recr., 112 Ohio St. 158, 147 N.E. 94, this court, finding there was a complete administrative remedy furnished the taxpayer by statute, stated the law thus, as found in the syllabus:

"Such taxpayer must pursue the administrative remedies so provided. Failing to do so, he cannot avail himself of the provisions of Section 12075, General Code, by seeking to enjoin the collection of taxes resulting from the increased valuations."

This was not the announcement of a new principle, for this court had previously decided that Section 12075, General Code, could not be invoked where such administrative remedies had been provided. Bashore v. Brown, Treas., 108 Ohio St. 18, 140 N.E. 489; City of Cuyahoga Falls v. Beck, 110 Ohio St. 82, 143 N.E. 661.

In Meeker v. Scudder, 108 Ohio St. 423, 140 N.E. 627, this court held, all judges concurring, that, the statutes of Ohio having conferred upon the Ohio state medical board administrative remedies with reference to applicants for a license to practice, or practitioners of, chiropractic, together with the right of appeal to the court, there being thus provided a full and adequate remedy at law, there was no right to an action in equity by way of injunction to a party who had not exhausted his rights under such appeal.

An effort is made to distinguish the foregoing cases.

It is now held that Section 12075, General Code, gives a concurrent remedy against the levy of an illegal tax, and can be used to challenge its validity.

A challenge to the amount of the tax is a challenge of illegality. Bashore v. Brown, Treas., supra, was plainly a case urging not only the illegality of the tax or assessment, but impeaching the amount caused by the claimed illegality. So also in the Cuyahoga Falls case, supra, there was a denial of power to make the assessment. But that there is no distinction between amount and liability, which is a mere play on words, is disclosed by the statute itself (Section 5611-1, General Code), which empowers the commission not only to determine the "valuation," but the "liability" as well. That statute reads: "Whenever the tax commission of Ohio determines the valuation, or liability, of property for taxation," it certifies its action to the taxpayer and the county auditor, which determination, either of liability or amount, may be reversed, vacated, or modified as provided in the section following.

Every wrongful valuation of property imports illegality. This is plainly shown in the recently reported case of Commissioners of Franklin Co. v. Commercial Natl. Bank, 113 Ohio St. 37, 148 N.E. 344. In that case the legality of the tax only was involved; the amount thereof being incidental to the suit. The question of the legality depended upon the construction of Section 5412, General Code. In fixing the valuation of bank shares, the county auditor had fixed the valuation of the real estate at its book value. Complaint was lodged with the board of revision, which adopted the same construction. An appeal was taken to the tax commission by the bank, which placed the valuation of the real estate at its duplicate and not its book value. Error was taken to the common pleas court, which reversed the tax commission, adopting the theory of the book value. The bank prosecuted error to the Court of Appeals. That court reversed the common pleas court, and sustained the action of the tax commission, fixing the value of the real estate at its duplicate value. That judgment was affirmed; every member of this court concurring in the judgment, except Allen, J. That case decides the principle that there is no difference between the question of the legality of the tax and the amount of the tax. Furthermore, it sanctions the administrative proceedings by which the taxpayer can obtain a full and complete remedy by first appealing to the taxing boards for relief, and thereafter applying to the various courts for a review of the decision of the taxing tribunals.

In substantially every jurisdiction in this country it has been held that, where full and complete statutory remedies have been provided for the correction of a tax, the taxpayer may not invoke the extraordinary remedy by way of injunction to test its validity, especially where a judicial review of the determination of the tax commission has been provided. Many of these cases have been cited in Hammond v. Winder, supra, in addition to those cited from the decisions of the United States Supreme Court.

In the instant case the legal liability of the Marsh foundation, including its right to exemption, was fully established by this court in the case of Rose Institute v. Myers, Treas., 92 Ohio St. 252, 110 N.E. 924, L.R.A., 1916D, 1170.

As shown in the statement of facts, the only question which the commission would have to determine, or which the courts must later determine, was whether the foundation property during certain years was or was not used for charitable purposes. It is purely a question of fact, relating to the amount of tax which the foundation should pay. The taxing authorities of this state, including the state tax commission, were created for the purpose of determining those questions, and are peculiarly adapted, in the first instance, to review all questions relating to the taxation of property.

It must be conceded that the action of the tax commission is subject to court review under Section 5611-2, General Code, and the constitutionality of that section has been upheld in the case of Stanton, Pros. Atty., v. State Tax Commission, 114 Ohio St. 658, 151 N.E. 760, decided only last month. It is said that Section 12075 gives a remedy concurrent with the remedies contained in Sections 5616, 5611-1, and 5611-2. This court has so often decided that, where legal remedies have been provided, injunction cannot be invoked that it is unnecessary to refer to the many decisions supporting the principle. As stated in 14 Ruling Case Law, 341:

"Where there is a choice between the ordinary process of law and the extraordinary remedy by injunction, and the legal remedy is sufficient, an injunction will not be granted."

The principle announced in this text is supported by a wealth of authorities cited under the text. That has long been the principle adopted in this state, and has been recently re-enforced by the Bashore, the Cuyahoga Falls, and the Hammond cases, supra. The claim of concurrent remedies, in those cases, was denied by this court. In each of them the taxpayer was relegated to his statutory remedies, and the employment of the injunctive remedy provided in Section 12075, General Code, was not permitted.

The majority opinion endeavors to fortify its position by the citation of early state and federal authorities. However, it can readily be seen that these authorities cannot possibly apply at this day, for, since those early decisions were rendered, Ohio has provided full, complete, and adequate administrative remedies wherein a taxpayer may be heard before the various taxing boards, and later before courts provided for a review of their decisions. This is admitted, since the majority opinion holds that the taxpayer has concurrent remedies, one of which is the right to invoke the jurisdictions of the taxing boards under our tax statutes.

In this case there is no question as to the constitutionality of the law, nor of the fact that the taxpayer had proper notice under the law. Furthermore, not only does a taxpayer have a full and adequate remedy provided by statute, but he also has the right of appeal to the courts under Sections 5611-1 and 5611-2, aforesaid. Since these remedies did not exist at the time the early federal decisions, cited in the majority opinion, were rendered, it may be well to refer to later and more recent decisions of the United States Supreme Court in various cases where adequate administrative remedies were provided.

In Farncomb v. City of Denver, 252 U.S. 7, 40 S.Ct., 271, 64 L.Ed., 424, the Colorado statute had provided for an opportunity to be heard before a board of equalization "respecting the justice and validity of local assessments." This case challenged the constitutional validity of the Colorado law; it challenged the power to tax in any amount under that law. This was a suit in injunction. Mr. Justice Day, in delivering the opinion of the court, said, at page 11 ( 40 S.Ct., 273):

"Plaintiffs in error did not avail themselves of the privilege of a hearing as provided by this section, but after the assessing ordinance had been passed began this proceeding in the district court to test the constitutionality of the law. * * * As the plaintiffs in error had an opportunity to be heard before the board duly constituted by Section 300 [Denver City Charter], they cannot be heard to complain now."

In the case of Milheim v. Moffat Tunnel Improvement District, 262 U.S. 710, at page 723, 43 S. Ct., 694, 67 L.Ed., 1194, Mr. Justice Sanford said:

"Where a city charter gives property owners an opportunity to be heard before a board respecting the justice and validity of local assessments for proposed public improvements and empowers the board to determine such complaints before the assessments are made, parties who do not avail themselves of such opportunity cannot be heard to complain of such assessments as unconstitutional."

McGregor v. Hogan, Sheriff, 263 U.S. 234, 44 S.Ct., 50, 68 L.Ed., 282, was a suit to enjoin the enforcement of an execution for taxes assessed against McGregor's property. The Georgia law required a dissatisfied taxpayer to give notice to the board of county tax assessors and to demand an arbitration under the law. The taxpayer, McGregor, declined to avail himself of the arbitration to which the act entitled him. Mr. Justice Sanford, speaking for the court, said:

"Having thus failed to avail himself of the hearing granted by the act he was properly held by the Supreme Court of Georgia to have no just ground of complaint. Where a city charter gives property owners an opportunity to be heard before a board of assessors with respect to the justice and validity of local assessments for proposed public improvements and empowers the board to determine such complaints before the assessments are made, parties who do not avail themselves of such opportunity cannot thereafter be heard to complain of such assessments as unconstitutional."

In the case of First Nat. Bank of Greeley v. Board of County Commrs. of Weld Co., 264 U.S. 450, 44 S.Ct., 385, 68 L.Ed., 784, the same principle was upheld.

The more recent federal case upon the subject is that of Gorham Mfg. Co. v. State Tax Comm. of N.Y., 266 U.S. 265, 45 S.Ct., 80, 69 L.Ed., 279. That there is no distinction between the application of this principle to the amount of the tax as well as to its invalidity is shown in the syllabus of that case, which reads as follows:

"A taxpayer who has not exhausted the remedy provided before an administrative board to secure the correct assessment of a tax will not be heard to assert its invalidity in a suit to enjoin its collection."

The New York law is very similar to ours. A state tax commission had been created with power to hear and determine applications for revision of corporate taxes. The New York law provided that the decision of the commission might be reviewed by the Supreme Court of New York, and that an appeal might be taken to the Court of Appeals from the determination of the former court. The suit was one in injunction. Mr. Justice Sanford, after alluding to the fact that the plaintiff company had failed to avail itself of the administrative remedy provided by statute for the revision and correction of the tax, said, in the course of his opinion, at page 269 ( 45 S.Ct., 81):

"A taxpayer who does not exhaust the remedy provided before an administrative board to secure the correct assessment of a tax cannot thereafter be heard by a judicial tribunal to assert its invalidity. * * * Under these circumstances we think that the Company, having failed to avail itself of the administrative remedy provided by the statute for the correction of the tax, was not entitled to maintain a bill in equity for the purpose of enjoining its collection."

I have already alluded to the fact that the Ohio tax commission has been given full jurisdiction under Section 5611-1, General Code, to determine "the valuation, or liability, of property for taxation." In the instant case the only question that the commission had before it was one respecting the liability of the property for taxation. The legal liability and exemptions of charitable institutions had already been settled by our previous decision in Rose Institute v. Myers, 92 Ohio St. 252, 110 N.E. 924, L.R.A., 1916D, 1170. The only question to be determined by the commission was whether this property, during the years mentioned, was actually used for charitable purposes. I do not now claim, nor have I ever, that Section 12075, General Code, was ever repealed. It simply became inoperative in cases where the state law had provided for full and adequate remedies for the relief of the taxpayer before the taxing boards of the state. If such relief is not provided, certainly that section has as much validity as it ever had. Responding to the progress of the times, the Legislature has created a system for taxation review, with full opportunity, wherein the taxpayer may obtain relief, and has also provided for judicial inquiry into the determination of the state tax commission. If this decision means what I think it does, I fear that it will emasculate important statutory functions of the state commission and leave it functus officio. The judgment of the Court of Appeals was right, and should be affirmed.


Summaries of

Conn v. Jones

Supreme Court of Ohio
Jun 15, 1926
115 Ohio St. 186 (Ohio 1926)
Case details for

Conn v. Jones

Case Details

Full title:CONN ET AL., TRUSTEES v. JONES, TREASURER, ET AL

Court:Supreme Court of Ohio

Date published: Jun 15, 1926

Citations

115 Ohio St. 186 (Ohio 1926)
152 N.E. 897

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But we distinguish those cases because they questioned the legal authority to collect a tax and did not…