Me. Justice Day
delivered'the opinion of the court.
These cases are writs of error to the Supreme Court of the State of Georgia, in suits brought to enjoin the collection of certain taxes. In the view we take of them they may be considered together.
Actions were begun by the plaintiffs in error, in the Superior Court of Fulton County, to enjoin the enforcement of executions in the hands of the sheriff, issued for taxes assessed by the comptroller-general on shares of the corporate stock of the Western Railway of Alabama, an Alabama corporation, which stock was alleged to be held and owned by the plaintiffs in error. ■
The Superior Court refused to award an injunction.
Upon writs of error the. Supreme Court affirmed the judgments of the. court below. 124 Georgia, 596, 630.' The cases were remitted to the Superior Court of Fulton County, and that court rendered final decrees in favor of the defendants below, holding the tax executions to be lawful. The cases were again taken to the Supreme Court of Georgia and there affirmed. 125 Georgia, 589, 617.
The question of the taxability of these shares was a matter of litigation in the Federal courts of the Georgia District, and it was held such shares were not taxable. 116 Fed. Rep. 669
affirmed in the Court of Appeals, 117 Fed. Rep. 1007. The latter case was reversed and the stock held taxable'in the case of
Wright
v.
Louisville & Nashville Railroad Company,
decided by this court at the October term, 1904. 195 U. S. 219.
Thereupon says the Supreme Court of Georgia (124 Georgia, 612):.
“ On January 27, 1905, the comptroller-general wrote to the president of the Georgia Railroad and Banking Company the following letter: ‘The Supreme Court of the United States having recently held, as you doubtless are aware, that the shares of stock of the Western Railway of Alabama owned by the Georgia Railroad and Banking Company are taxable in Georgia, it becomes my duty to assess these shares of stock for taxation if or each of the years in which they are in default for their taxes. This assessment is required to be made by the comptroller-general from “the.best information obtainable.” I desire to proceed to the discharge of this duty intelligently, and therefore respectfully request yop to furnish me any data in your possession which will enable me to make perfectly fair, just, and legal assessments of this property. From your long connection with the property as president of the Georgia Railroad and Banking Company, and , your familiarity with-its value, you doubtless are in possession of information which will very greatly aid me in making an equitable assessment of the property. I trust, therefore, you will submit at your earliest possir ble convenience any facts or suggestions bearing upon, this line which you may deem proper. I would be glad to have any data which you may submit with reference to its value for each year, beginning with the year 1883, the year I am informed your corporation became the owner of these shares of stock. I expect to proceed with this matter some time the early part of next week if possible.’ Other correspondence took place, between the comptroller-general and various officers of the Georgia Railroad, including the general counsel, who eventually submitted to the comptroller-general a statement regarding what he considered the value of the railroad property in ques
tion, together with a tabulated statement of the dividends which the Georgia Railroad had received from the stock, at the same time protesting that the,stock was not liable for taxation, and refusing to make any return-of it for that purpose. The comptroller-general thereupon, according,to his affidavit,
‘
assessed the same from the best information obtainable.’ It is insisted with great earnestness and ability that the levy of executions under these circumstances, without giving notice to the railroad company or allowing it any opportunity to be heard as to the basis of valuation upon which the assessment was made,, amounted to a seizure of its property without, due process of law. It is not claimed that the comptroller-general has violated the provisions of any existing statute, but that the laws of Georgia- do not' provide for the collection of taxes on omitted property after a return has been made by the taxpayer and accepted by the comptroller-general.”
The first and perhaps principal question argued in the case arises upon the contention of the plaintiffs in error that the method of assessment provided for the taxation of property in such cases as the-present, as laid down in the statutes of the State of Georgia, as construed by the Supreme Court of the State, do not afford the taxpayer due process of law. The pertinent sections of the Political Code of Georgia are copied in the margin.
Of the. system of taxation thus provided' the Supreme Court of Georgia in a summary of its provisions says (124 Georgia, 613):
“The Political Code, section 812, prescribes the method by. which -‘ corporations, companies, persons, agencies, or institutions,’ shall make returns of their property to the comptroller-general for taxation; and provides that ‘such returns shall be carefully scrutinized by the comptroller-general, and if in his judgment the.property embraced therein is returned below its value, he shall assess the value; within sixty days thereafter, from any information he can obtain, and if he shall find a return of . . • ( matters required to be returned as aforesaid, be- .. low the true amount, or false in any particular, or in anywise contrary to law, he shall correct the same and assess the true •amount, from the best information at his command, within sixty days. In all- cases of assessment, or of correction of returns, as herein provided, the officer or person making such
returns shall receive notice and shall have the privilege, within twenty days after such notice, to refer the question of true value or amount, as the case may be, to arbitrators, . . . and their award shall be final.’ Section 813 is as follows: ‘In cases of failure to make return, the comptroller-general shall make an assessment .from the best information he can procure, which assessment shall be conclusive upon said corporations, companies, persons, ageneies, or institutions.’ By section 814 it is provided that ‘ in all cases of default of payment of taxes upon returns or assessments., the comptroller-general shall enforce collections in the manner now provided by law.’ ‘If any corporation, company, person, agency, or institution, who are required to make their returns to the comptroller-general, shall fail to return the taxable property or specifics, or pay annually the taxes for which they are liable to the state treasury, the comptroller-general shall issue against them an execution for the amount of taxes due, according to law, together with the cost and penalties.’ Section 874.. ‘ When there is no return
by which to assess the tax,, the comptroller-general shall, from the best information he can procure, assess in his discretion.’ Section 879. These sections of the Political Code are thus set out in order that we may have before us at the outset the various statutes bearing on the power of the comptroller-general to collect taxes on property which has not been returned. And at this point we will take occasion to say that in our opinion all considerations of-the good faith of the railroad company should be eliminated from this discussion. It may be conceded that the officials of the company honestly believed that this stock, was not taxable, and that there has never been on their part the slightest effort to conceal the Georgia Railroad’s ownership of it, or to deceive the comptroller-general in any way. In no jurisdiction has the maxim ‘
Ignorantia legis nerni- ■ nem eAcusat’
been more* rigidly applied than in Georgia. The railroad company was bound to know that this stock was • taxable, and its mistaken, though honest, belief to the contrary furnishes no excuse for non-payment.”
In view of this statute as thus construed the question made is, whether due process of law is afforded where a taxpayer, without fraudulent intent and upon reasonable grounds, withholds property from tax returns with an honest belief, that it is' not taxable, and the assessing officer proceeds to assess the omitted property without opportunity to the taxpayer to be heard upon the validity of the tax or the amount of the assessment, either in the tax proceedings or afterward upon a suit to collect taxes, or by independent suit to enjoin their collection.
Considerable discussion was had in the oral argument of the case concerning the effect of the rulings of the Supreme Court of Georgia in construing the sections of the Political Code governing this subject. .
A perusal of the opinions delivered in these cases leaves no doubt in our minds that the Supreme Court of Georgia has held the taxing scheme of the State of Georgia, as laid down in its. statutes, to be that, while it provides for a method of valuation in case of the return of. property for taxation, it does not in
tend to give to the taxpayer who fails to return property legally liable to be assessed any opportunity to be heard as to the value of the property or the amount of the assessment. But the failure to return places it within the power and duty of the collector to make an assessment final and conclusive upon the taxpayer without hearing, for in its latest utterance upon the subject (124 Georgia, 617), that learned court said:
“The Georgia law affords to every citizen, individual or corporate, ample facilities for the preservation of his rights as against the tax gatherer, always provided that he makes a return to the proper officer of the property that he owns. It presupposes that the taxpayer will disclose to the officer all of his taxable property, and it requires him to know whether his property is taxable or not. The requirement of candor in disclosing the ownership of property is really at the foundation of bur tax system. So long as the citizen complies with that requirement, he is afforded every opportunity to dispute with the State the question of the value of his property and the amount of tax to be levied thereon. When he fails to return, in whole or in part, fraudulently or through an honest mistake, he then ' and there becomes a defaulter, and the door of opportunity is closed to him, so far as the right to have the mutual rights between himself and the taxing power adjusted by arbitration is concerned. In other words) ample ‘machinery’ is available to the citizen who makes full returns; deprivation of the right to be further heard is one of the penalties visited upon the defaulter. The collecting officer must ascertain as best he can the amount of property to be taxed, as well as its value, and take summary means for its collection. This, it seems to us, is the scheme of taxation contemplated by the laws of this State. Whether or not it is consistent with a wise public policy we do not undertake to determine. That it is not unconstitutional we are fully satisfied.”
It would be impossible to reconcile the different holdings in the state courts upon this subject: One class holds that upon the assessment of omitted property the taxpayer-has no right
to be heard, having by his failure to return submitted himself to “the doom of the assessor.” Another class holds that in such cases there must be an opportunity to be heard before the taxpayer can be thus assessed, and that to deny him such right as a penalty for failure to return is a denial of due process of law secured to the taxpayer by many state constitutions as well as the Fourteenth Amendment of the Constitution of the United States.
Of course,,this court, as the ultimate arbiter of rights secured by the Federal Constitution, is charged with the duty of determining this question for itself.
• Former adjudications in this court have settled the law to be that the assessment of a tax is action judicial in its nature, requiring for the legal exertion of the power such opportunity to appear and be heard as the circumstances of the case require.
Davidson
v.
New Orleans,
96 U. S. 97;
Weyerhauser
v.
Minnesota,
176 U. S. 550;
Hager
v.
Reclamation District,
111 U. S. 701.
In the late case of
Security Trust & Safety Vault Company
v.
The City of Lexington,
203 U. S. 323, decided at the last term of this court, the subject underwent consideration, and it was there held that before an assessment of taxes could be made upon omitted property notice to the taxpayer with an opportunity to be heard was essential, and that somewhere during the process of the assessment the taxpayer must have an opportunity to be heard, and that this notice must be provided as an essential part of the statutory provision and not awarded as a mere matter of favor or grace. In that case it was further held that where the procedure in the state court gave the taxpayer an opportunity to be heard upon the value of his property’and extent of the tax in a proceeding.to enjoin its collection the requirement of due process of law was satisfied.
■ Applying the principles thus settled to the statutory law of Georgia, as construed by its highest court, does the system provide due process of daw for the taxpayer in contesting the validity of taxes assessed under its requirements?
Under the scheme provided for, if the property is withheld
from return, the comptroller, without notice or opportunity for hearing, must proceed to value the property, and his valuation is final and conclusive, unless the taxpayer can show—a very unlikely contingency—that the taxing -officer has acted in bad faith in making the assessment. Against the assessment thus made there-is no relief in the courts of the State upon proceedings brought to collect the taxes or by bill to enjoin their collection. The penalty of failure to return, no. matter how honest or well grounded the taxpayer may have been in his belief that the property was not subject to taxation, compels him to submit to the final and conclusive assessment made by the taxing officer.
It may be conceded that under the provisions of § 855 the duty to return property, omitted in former years is a continuing one, and that under § 812 of the Political Code upon such return the system of arbitration of value may be. open to the taxpayer, but if for good reason the taxpayer contests the taxability, of his property and does not return it the door of opportunity is closed upon him'.
As in the present case, courts may differ as to the taxable character of the property, but the taxpayer must concede, its taxability, or be forever concluded by a determination of its value judicial in its nature
(Hager
v.
Reclamation District,
111 U. S. 701, 710) in a proceeding where he has no. legal right to a hearing.
But it is contended that plaintiffs in error had an opportunity to be heard, and were in fact heard, upon the question of the value of their property upon an issue made by an amendment to the answer in the Superior Court, after the case went back from the Supreme Court, tendering an issue and asking the court to pass upon the value of the property.
Upon this subject we think the decision of the Supreme Court does not leave in doubt the effect 'of such hearing upon this issue. For it is said (125 Georgia, 605):
“ As to those years in which the plaintiff had an opportunity to return its property for taxation and failed to do so, and for
which the property has been assessed by the comptroller-general, whether the property has been excessively assessed cannot now be inquired into. Under the former ruling in this case it is concluded by the failure to return the property at the time required by law, and must bear the burden of the assessment made in conformity to law. There was neither averment nor proof that the assessment was the result of fraud or corruption on the part of the comptroller-general. If there had been, a different .question would have been presented.” And further in the same opinion (125 Georgia, 616):
“The plaintiffs contend that the valuation placed by the comptroller-general' upon the stock was excessive. ' The defendant contended that, as the plaintiff was a defaulter, the valuation of the comptroller-general was conclusive untier the slaw. . In an amendment to the answer the defendant alleged • that the valuation placed upon the stock by the plaintiff was, not its true market value, 'but on the contrary the true market value is as assessed by the comptroller-general,’ and concluded the amendment with a prayer ' that the court may so. find and decree.’ The plaintiff objected to the allowance of this amendment, on the .ground that the court was without jurisdiction to assess or re-value the same for the purpose of taxation, and that the prayer was vague and indefinite. The court ruled that it could not in this case decide or fix the value of the stock for the purpose of determining the amount for which the execution should proceed, but that it would hear evidence with a view of determining whether the assessment was excessive, and refused to strike the prayer. Evidence was heard in reference to the method adopted by the comptroller-general in reaching the valuation placed by him upon the stock,’ and there was a finding, in the'final decree, that the valuation was not excessive. As has been said, there was evidence justifying this finding of fact. Under the circumstances, even if there was any error in refusing to strike the prayer of the amendment .to the answer, the error was not of such a character as to require a reversal of the judgment.”
That is to say, the Supreme Court, had already decided that the taxpayer being in default of return was not entitled to be heard upon the valuation of his property, except for the purpose of attacking the assessment for "fraud or corruption” in the assessing officer, and the testimony did not show such excessive valuation as within the rule laid down in both decisions would avoid the action of the comptroller-general.
The record discloses that for many years this class of property was not regarded as taxable in Georgia, and was not returned for taxation in the State. But it is contended that- the taxpayer here stands in the attitude- of one acting contumaciously, and denying the validity of the tax after this court •had practically decided its validity against the plaintiffs in error in
Wright
v.
Railroad Co.,
195 U. S. 219. But, as we have seen,-the Supreme Court of Georgia has expressly eliminated the element of bad faith in the taxpayer from the findings upon which its decision rests. The
Wright case
was held not to have concluded the contention that plaintiffs were denied' the equal protection of the laws, in that no other person or corporation in Georgia was assessed upon stock in a foreign corporation, nor the validity of the claim that the stock was not held in Georgia, nor other grounds alleged in the petitions, except so far as the Georgia Railroad was concerned- for the year 1900. 124 Georgia, 607. We must • decide the case in view of its relations to a taxpayer not fraudulently concealing his property and honestly contending, with reasonable grounds for tha contention, that it is not taxable -under the laws of the State.
As we have seen, the system provided in Georgia- by the statutes of the State as construed by its highest court requires of the taxpayer that he return all his property, whether its liability is fairly contestable or not, upon pain of an
ex parte
valuation, against which there is no relief in the tax proceédings or in the courts, except in those cases where fraud or corruption can be shown in the action of the assessing officer.
Reluctant as we are to interfere with the enforcement of
the tax laws of a State, we are constrained to the conclusion that this system does not afford that due process of law which adjudges upon notice and opportunity to be heard, which it was the intention of the Fourteenth Amendment to protect against impairment by state action.
The judgments of the Supreme Court of Georgia are reversed and the cases remanded for further proceedings not inconsistent with this opinion.