Argued April 8, 9, 1907. Decided October 21, 1907.
The provisions of the Fourteenth Amendment are not confined to the action of the State through its legislative, executive or judicial authority, but relate to all instrumentalities through which the State acts; and so held that the action of a state board of equalization, the decisions whereof are conclusive, except as proceedings for relief may be taken in the courts, is reviewable in the Federal courts at the instance of one claiming to be thereby deprived of his property without due process of law and denied the equal protection of the law. Action of a board of equalization resulting in illegal discrimination held in this case not to be action forbidden by the state legislature and therefore beyond review by the Federal courts under the Fourteenth Amendment. Barney v. City of New York, 193 N.Y. 430, distinguished. Where a corporation has paid the full amount of its tax as based upon the same rate as that levied upon other property of the same class, equity will restrain the collection of the excess illegally assessed, there being no adequate remedy at law, when it appears that it would require a multiplicity of suits against the various taxing authorities to recover the tax and that a portion of it would go to the State against which no action would lie, and where the amount is so great that its payment would cause insolvency, and a levy upon the property — in this case a street car system — would embarrass and injure the public. 114 F. 557, affirmed.
Mr. David K. Tone and Mr. James Hamilton Lewis, with whom Mr. Edward J. Brundage, Mr. Harry A. Lewis, Mr. William F. Struckmann, Mr. William H. Stead and Mr. George B. Gillespie were on the brief, for appellants:
Equality and uniformity of taxation is not a right guaranteed by the Federal Constitution. State Railroad Tax Cases, 92 U.S. 575, 618; Davidson v. Board of Admrs. of New Orleans, 96 U.S. 97; Kelly v. City of Pittsburgh, 104 U.S. 78; Merchants Mfrs. Nat. Bank v. Pennsylvania, 167 U.S. 461, 464; Henderson Bridge Co. v. City of Henderson, 173 U.S. 592; Magoun v. Ill. Trust Sav. Bank, 170 U.S. 283, 293, 295; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 562; State of Missouri ex rel. Hill v. Dockery, 191 U.S. 165, 170; Travelers Ins. Co. v. Connecticut, 185 U.S. 364, 371.
Where the constitution and the laws of a State are just and fair, and the sole grievance of which a party complains, is that the officers of the State, charged with executing those laws, have deprived that party of his property, contrary to the constitution and the laws of the State, and in violation of the terms thereof, no Federal question is presented, for, under the above circumstances, it will be presumed that the state courts will give full relief against the illegal and unauthorized acts of the officers of the State. Illinois Central R.R. Co. v. Hodges, 113 Ill. 323; New Haven Clock Co. v. Kochersperger, 175 Ill. 383; Coxe Bros. Co. v. Raymond, 188 Ill. 571; Siegfried v. Raymond, 190 Ill. 424.
The mere unauthorized acts of state officers, when performed contrary to state law fail to give Federal jurisdiction as has been frequently pointed out by this court when determining under what circumstances criminal prosecutions may be removed from a state court into a court of the United States by reason of the denial by the State of the rights and immunities guaranteed to accused persons under the Fourteenth Amendment.
In finding what constitutes state action within the meaning of § 641, Rev. Stats., this court has necessarily determined what constitutes state action within the meaning of the Fourteenth Amendment. Strauder v. West Virginia, 100 U.S. 303.
Under Barney v. City of New York, 193 U.S. 430, appellee's bill of complaint should be dismissed for want of jurisdiction. See also Manhattan Ry. Co. v. New York, 18 F. 195; Kierman v. Multnomah County, 95 F. 849; Re Storti, 109 F. 807.
Equally untenable is the claim in appellee's bill of complaint, that under the circumstances there described the appellee was deprived of its property without due process of law because it had no opportunity to be heard at the time the assessment complained of was levied against it.
Even the ex parte orders and directions of the executive and ministerial departments of the Federal Government affecting property and property rights, constitute due process of law if the party aggrieved may go into a court of equity and obtain redress against the unauthorized or wrongful acts of such officers. Clearing House v. Coyne, 194 U.S. 497.
Courts of equity in Illinois furnish complete redress in case the state board of equalization has exceeded its authority, or if its action is palpably wrong. Illinois Central Railroad Company v. Hodges, 113 Ill. 323.
There is no competent evidence in this record tending to sustain the material allegations of appellee's bill of complaint with reference to the assessment complained of.
The testimony of the individual members of the state board of equalization in reference to the operation of their minds at the time they made the assessment complained of was incompetent, and should have been excluded by the Circuit Court. The recorded judgments of judicial and quasi-judicial bodies, cannot be impeached by the subsequent testimony of the members of said bodies, as to how their conclusions were arrived at. Wright v. Chicago, 48 Ill. 285; Quick v. Village of River Forest, 130 Ill. 323; Ryder Estate v. Alton, 175 Ill. 94; Washington Park Club v. Chicago, 219 Ill. 323; Insurance Co. v. Pollak, 75 Ill. 292; Stock Exchange v. Gleason, 121 Ill. 502; Packet Co. v. Sickles, 5 Wall. 580; Fayerweather v. Ritch, 195 U.S. 276.
The extracts from the reports of the Railroad and Warehouse Commissioners and from the reports of the Board of Agriculture for the State of Illinois were incompetent. Hegler v. Faulkner, 153 U.S. 109; Chaffee v. United States, 18 Wall. 516; Swift v. State of New York, 89 N.Y. 52; Culver v. Caldwell, 137 Ala. 125; Gordon v. Bucknell, 38 Iowa 438; State v. Krause, 58 Kan. 651; Wellington v. Railroad Co., 158 Mass. 185; Jones v. Guano Co., 94 Ga. 14; State v. Wells, 11 Ohio 261.
The figures taken from the books of the Union Stock Yard and Transit Company and from Brown's Directory of American Gas Companies were not competent evidence and should have been excluded.
Private publications, whether written or printed, are incompetent as evidence, unless accompanied by the testimony of the person who compiled the information, to the effect that the compilations therein made are true, of his own personal knowledge. Seymour v. McCormick, 19 How. 96; Langley v. Smith, 3 N.Y. St. Rep. 276; State v. Daniels, 44 N.H. 383; Richardson v. Stringfellow, 100 Ala. 416; Cooke v. Slate Co., 36 Ohio St. Rep. 135; Spalding v. Hedges, 2 Pa. 240.
If the contention of appellee be sound, that the reassessment of 1900 was void and illegal because the board had exhausted its power in making the first assessment, then appellee had an adequate remedy at law, for it could have paid the void assessment and then have recovered the money back.
The Supreme Court of Illinois held that the first assessment was fraudulent and void, and affirmed the judgment of the state circuit court directing the making of the second. A construction placed by the highest court of the State upon the taxing laws of that State is binding upon a Federal court. State Railroad Tax Cases, 92 U.S. 575, 618.
Where a tax is illegal and void and can be paid under protest and then recovered back from the collector, the aggrieved party has an adequate remedy at law, and a court of equity will not assume jurisdiction. Shelton v. Platt, 139 U.S. 591.
Overvaluation of property by an assessing body, unaccompanied with fraud or bad faith, furnishes no ground for equitable intervention. State Railroad Tax Cases, 92 U.S. 575; Railroad Co. v. Backus, 154 U.S. 421; Maish v. Arizona, 164 U.S. 599.
Mr. William G. Beale for The Chicago Edison Company and The Chicago Telephone Company, with whom Mr. Gilbert E. Porter, Mr. Buell McKeever, Mr. Waldo F. Tobey, Mr. Charles S. Holt and Mr. William P. Sidley were on the briefs; Mr. James F. Meagher for The People's Gas Light and Coke Company; Mr. John P. Wilson for The Chicago City Railway Company. Mr. John S. Miller and Mr. Merritt Starr filed a brief for the South Chicago City Railway Company; Mr. William W. Gurley, Mr. Arthur Dyrenforth, Mr. Isaac M. Jordan and Mr. Howard M. Carter filed a brief for The Chicago Consolidated Traction Company; and Mr. William W. Gurley, Mr. Arthur Dyrenforth and Mr. Howard M. Carter filed a brief for The Chicago Union Traction Company:
Although to make out a case under the Fourteenth Amendment it must be shown that the act complained of is the act of the State; the prohibitions of the amendment refer to all instrumentalities of the State — to its legislative, executive and judicial authorities and, therefore, whoever by virtue of public position under a state government deprives another of any right protected by the amendment against deprivation by the State violates the constitutional inhibition and, as he acts in the name of the State and for the State, and is clothed with the State's power, his act is that of the State. Were that not so, the constitutional prohibition would have no meaning and the State would be placed in the position of having clothed one of its agents with power to annul or evade the Constitution of the United States. Ex parte Virginia, 100 U.S. 339-347; C., B. Q.R.R. v. Chicago, 166 U.S. 226; Scott v. McNeal, 154 U.S. 34; Regan v. Farmers Loan Trust Co., 154 U.S. 362; Neal v. Delaware, 103 U.S. 370; Coulter v. L. N. Ry. Co., 196 U.S. 599; Williams v. Mississippi, 170 U.S. 213; Chi Lung v. Freeman, 92 U.S. 275; Soon King v. Crowley, 113 U.S. 703; Arrowsmith v. Harmoning, 118 U.S. 194; Yick Wo v. Hopkins, 118 U.S. 356; Railroad and Telephone Cos. v. Board of Equalizers, 85 F. 302; Nashville, C. St. L. Ry. v. Taylor, 86 F. 168; Taylor v. L. N.R. Co., 88 F. 350; Louisville Trust Co. v. Stone, 107 F. 305.
The collection of the taxes extended upon the reassessment of the capital stock of appellee made by the state board of equalization, will deprive appellee of its property without due process of law. Every step, regulation and provision in any proceeding under the law of a State making for the protection of a person's rights or property must be observed. C., B. Q.R.R. v. Chicago, 166 U.S. 226.
The action of the state board did not constitute due process of law. The members of the state board did not exercise their judgment. The exercise of such judgment is an indispensable element of due process. In considering whether due process has been had, this court has frequently said it is the substance that the law regards, not the form. An exercise of the judicial officer's judgment, in whatever legal form it may have been made, is the substance of a trial, or of an assessment. C., B. Q.R.R. Co. v. Paddock, 75 Ill. 616.
The state board of equalization did not equalize the assessment so made with the assessments of other property in the State of Illinois. Equalization is the primary duty of the board, both with reference to assessments within the original jurisdiction of the local assessors and assessments within the original jurisdiction of the state board of equalization. Railroad Co. v. Taylor, 86 F. 184; Law v. People, 87 Ill. 405; Railroad and Telephone Cos. v. Board of Equalizers, 85 F. 302 (305, 306).
The reassessments made by the state board are so grossly excessive as to amount to fraudulent assessments. People ex rel. Goggin v. Board of Equalization, 191 Ill. 529.
Other corporations of the same class were not assessed on the same basis.
Discrimination and unauthorized classification are contrary to the principle of equality in taxation prescribed by the constitution and statutes of Illinois and a discriminating assessment does not constitute a due observance of the regulations of the law of the land made for the protection of appellee's rights, under the definition of due process above referred to. Cummings v. Bank, 101 U.S. 153.
The claim that the action of the state board of equalization in making the assessment under consideration was the action of the State, and if carried out would violate the provisions of the Fourteenth Amendment to the Constitution of the United States, by taking property of the appellee without due process of law, and by failing to give it the equal protection of the laws, constitutes a Federal question beyond all controversy. How that question should be decided is another matter which we will proceed at once to discuss.
The state board of equalization is one of the instrumentalities provided by the State for the purpose of raising the public revenue by way of taxation. In regard to corporations of the class of which the appellee and the other corporations involved here are members, it is the duty of that board to make an original assessment upon them. From the decision of the board in making such assessment no appeal is provided for, and such decision is therefore conclusive, except as proceedings for relief may thereafter be taken in the courts. As to the assessments of local assessing bodies, the board is one of review, but its decisions are equally conclusive, as in the case of original assessments. Acting under the constitution and laws of the State, the board therefore represents the State, and its action is the action of the State. The provisions of the Fourteenth Amendment are not confined to the action of the State through its legislature, or through the executive or judicial authority. Those provisions relate to and cover all the instrumentalities by which the State acts, and so it has been held that, whoever by virtue of public position under a state government, deprives another of any right protected by that amendment against deprivation by the State, violates the constitutional inhibition; and as he acts in the name of the State and for the State, and is clothed with the State's powers, his act is that of the State. Chicago, Burlington Quincy R.R. v. Chicago, 166 U.S. 226. Following the above case the Federal courts throughout the country have frequently reviewed the action of taxing bodies when under the facts such action was in effect the action of the State, and therefore reviewable by the Federal courts by virtue of the provisions of the amendment in question. See Nashville c. Ry. v. Taylor, 86 F. 168; Louisville Trust Co. v. Stone, 107 F. 305. In the last case, which related to enjoining the collection of alleged illegal taxes by reason of discrimination, the court said: "It may be conceded that, if the allegations of the bill are made out, there exists, in respect to the property of complainant and others similarly situated, a systematic, intentional, and illegal undervaluation of other property by taxing officers of the State, which necessarily effects an unjust discrimination against the property of which the plaintiff is the owner, and a bill in equity will lie to restrain such illegal discrimination, and that in such cases Federal jurisdiction will arise because of the equal protection of the laws guaranteed by the Fourteenth Amendment."
The case before us is one which the facts make exceptional. It is made entirely clear that the board of equalization did not equalize the assessments in the cases of these corporations, the effect of which was that they were levied upon a different principle or followed a different method from that adopted in the case of other like corporations whose property the board had assessed for the same year. It was not the mere action of individuals, but, under the facts herein detailed, it was the action of the State through the board. There is here no contention of illegality simply because of assessing the franchises of these corporations at a different rate from tangible property in the State, which the State might do, Coulter v. Railroad, 196 U.S. 599, but it is asserted that the board assessed the franchises and other property of these companies at a different rate and by a different method from that which had been employed by the board for other corporations of the same class for that year. The result is an enormous disparity and discrimination between the various assessments upon the corporations. The most important function of the board, that of equalizing assessments, in order to carry out the provisions of the constitution of the State in levying a tax by valuation, "so that every person shall pay a tax in proportion to the value of his, her or its property," was, in this instance, omitted and ignored, while the board was making an assessment which it had jurisdiction to make under the laws of the State. This action resulted in an illegal discrimination, which, under these facts, was the action of the State through the board. Barney v. City of New York, 193 U.S. 430, holds that where the act complained of was forbidden by the state legislature, it could not be said to be the act of the State. Such is not the case here.
We are also of opinion that the case is one over which equity has jurisdiction. In Cummings v. National Bank, 101 U.S. 153, this court held that the case was one properly brought in equity. It was to restrain the collection of a tax. While the court held that the position of the bank as trustee entitled it to maintain an action in equity and also under the statute of Ohio, it was further held (page 157): "Independently of this statute, however, we are of opinion that when a rule or system of valuation is adopted by those whose duty it is to make the assessment, which is designed to operate unequally and to violate a fundamental principle of the Constitution, and when this rule is applied not solely to one individual, but to a large class of individuals or corporations, that equity may properly interfere to restrain the operation of this unconstitutional exercise of power." We have in the case at bar similar facts. A system of valuation was adopted and applied to a large class of corporations, differing wholly from that applied to other corporations of the same class, and resulting in a discrimination against the appellee of the most serious and material nature. It is not a question of mere difference of opinion as to the valuation of property, but it is a question of difference of method in the manner of assessing property of the same kind. Although the law itself may be valid and provide for a proper valuation, yet if, through mistake on the part of the State, through its board of equalization and while acting as a quasi-judicial body, the board erred in the method to be pursued in relation to the corporations now before us, the mistake is one which may be corrected in equity.
In all these cases, however, where there is jurisdiction to tax at all, equity will not grant an injunction to restrain the collection, even of an illegal tax, without the payment on the part of the taxpayer of the amount of a tax fairly and equitably due. Bank v. Marye, 191 U.S. 272, and cases cited. Acting upon this principle, the Circuit Court refused to issue the injunction until the appellee paid the amount which the court found to be a fair and just amount due from the appellee for the tax of the year 1900, based upon a tax at the same rate as that levied upon other property and on corporations of the same class within the State. The sum to be paid by the appellee herein, as decided by the circuit judge, was $134,350.03. That sum was paid instead of $1,019,211.78, called for by the warrant in the hands of the collector.
Finally it is objected that the appellee had a complete and adequate remedy at law by paying the amount of the warrant, and then suing the collector to recover the same back as money paid under duress, although upon a void warrant. Undoubtedly if there be a complete and adequate remedy at law in such a case as this, the remedy in equity will not be recognized. Assuming the tax to be void, equity will not restrain by injunction its collection, unless there be some other ground for equitable interposition. Shelton v. Platt, 139 U.S. 591; Allen v. Palace Car Co., 139 U.S. 658; Express Co. v. Seibert, 142 U.S. 339. In the cases in 139 U.S., supra, it was recognized that no ground appeared for the interposition of a court of equity, because of the existence of a statute in the State of Tennessee providing for paying the amount of the alleged illegal tax to the officer holding the warrant, and granting to the taxpayer a right to commence an action to recover back the tax thus paid, the statute providing that the officer should pay the amount received into the state treasury, where it was to remain until the question was decided, and, if it was decided in favor of the taxpayer, provision was made for the repayment of the amount by the State. The other averments, beside that of the illegality of the tax, made in these two cases, were held not to constitute a ground for the interposition of a court of equity by restraining the collection of the tax. In the case in 142 U.S., supra, the court held that there was no ground to warrant the interposition of a court of equity. The case was decided upon the ground that the averment of illegality of the tax was not sustained. There is no statute of a similar kind in Illinois which has been called to our attention, but some of the cases in that State hold that such a suit may be maintained against the collector when the money was paid under protest.
In the case at bar it is averred that it is the duty of the collector, having received the money on his warrant, to pay the sum so received in the proportions designated in his tax books to the city treasurer of the city of Chicago, the county treasurer of the county of Cook, the treasurer of the sanitary district, and other officers and authorities entitled to receive the same, and if the plaintiff instituted suit to recover back the taxes so paid to the town or county collector he would be obliged to bring separate suits against each one of the several taxing bodies receiving its proportionate share of the tax, thereby necessitating a multiplicity of suits, and the proportion of the tax which would go to the State of Illinois could not be collected back by any legal proceeding whatsoever; and if repayment could be compelled from the city of Chicago and other taxing bodies, such repayment would not cover the cost, including commissions deducted for the collection of the tax, and in that way it was averred that the appellee would be subjected to great and irreparable injury, for which there was not a complete or adequate remedy at law. There was also the allegation, already referred to in the foregoing statement, that if compelled to pay this enormous tax it would be rendered insolvent. We think all these allegations combined take the case out of the class where relief is prayed for, founded simply upon the unconstitutionality of the law under which the tax is levied, or upon the illegality for any other reason, of the tax itself, and bring the case within the jurisdiction of a court of equity. And, in addition, there is the allegation that a levy upon the property of the appellee would interfere with the operation of the street car system in the city of Chicago, operated by the appellee, and would greatly embarrass and injure the public who have to use the cars.
Upon the whole, we think it is apparent that no adequate remedy at law exists in this case, and that the judgment enjoining the collection of the balance of the tax levied against the appellee, above that which has been paid under the direction of the Circuit Court, must be
Notwithstanding my unfeigned deference to the judgment of my brethren I cannot but think that the Circuit Court was wrong in taking jurisdiction of this case. We all agree, I suppose, that it is only in most exceptional cases that a State can be said to deprive a person of his property without due process of law merely because of the decision of a court without more. The discussion in Chicago, Burlington Quincy R.R. v. Chicago, 166 U.S. 226, concerned a judgment assumed to be authorized by a statute of the State, and in that case the judgment of the state court was affirmed, so that no very extensive conclusions can be drawn from it. So far as I know this is the first instance in which a Circuit Court has been held authorized to take jurisdiction on the ground that the decision of a state tribunal was contrary to the Fourteenth Amendment.
It seems to me that the appellee should not be heard until it has exhausted its local remedies; that the action of the state board of equalization should not be held to be the action of the State until, at least, it has been sanctioned directly, in a proceeding which the appellee is entitled to bring, by the final tribunal of the State, the Supreme Court. I am unable to grasp the principle on which the State is said to deprive the appellee of its property without due process of law because a subordinate board, subject to the control of the Supreme Court of the State, is said to have violated the express requirement of the State in its constitution; because, in other words, the board has disobeyed the authentic command of the State by failing to make its valuations in such a way that every person shall pay a tax in proportion to the value of his property. I should have thought that the action of the State was to be found in its constitution, and that no fault could be found with that until the authorized interpreter of that constitution, the Supreme Court, had said that it sanctioned the alleged wrong. Barney v. New York, 193 U.S. 430.
As I think that the Circuit Court ought to be ordered to dismiss this case, I shall not discuss the merits. But I cannot forbear adding that, so far as the appellee is complaining that it has been compelled to pay the full amount of the tax due from it, and is founding its complaint on the fact that other parties are escaping their liabilities whether through mistake or still uncorrected fraud, it seems to me to show no sufficient ground for relief, unless exceptional reasons exist not adverted to in the judgment of the court.
MR. JUSTICE MOODY concurs in this dissent.