Western Union Telegraph Co. v. Howe

180 F. 44, 103 C.C.A. 398, 1910 U.S. App. LEXIS 4743

Opinion

RINER, District Judge.

This was a bill in equity brought by the appellant, hereafter called the Telegraph Company, in the Circuit Court of the United States for the District of Kansas, against Samuel T. Howe, S. C. Crummer, and W. S. Glass, members of the State Tax Commission, hereafter, called the Tax Commission, and J. M. Nation, Auditor of the state of Kansas, by which it was sought to enjoin the Tax Commission from equalizing, and the Auditor from certifying, to the various taxing districts in Kansas an assessment made by the Tax Commission upon the Telegraph Company’s property which it alleged in the bill was grossly excessive and made with the fraudulent intent of discriminating in the matter of assessment against the Telegraph Company and certain other corporations. Defendants demurred to the bill. Before the demurrer was disposed of, the Telegraph Company, by leave of the court, filed an amended and supplemental bill. A demurrer was filed to the ámended and supplemental bill, and, after argument, sustained by the Circuit Court and the bill dismissed.

After setting out the necessary jurisdictional allegations, it was further alleged in the amended bill that the Telegraph Company had filed an acceptance with the Postmaster General of the United States as .required by an act of Congress (Act July 24, 1866, c. 230, 14 Stat. 221), entitled: “An act to aid in the construction of telegraph lines and to secure to the government the use of the same for postal, military and other purposes”; that the lines of telegraph communication constructed by the Telegraph Company in the state of Kansas were an essential part of the interstate telegraphic communication of the United States. It was further alleged in the amended bill that the Tax Commission had made a grossly excessive appraisement of the Telegraph Company’s property in Kansas; that the Telegraph Company had complied with the statute requiring it to make a statement or return to the Tax Commission; that such return was verified by its superintendent for the state of Kansas, and, as made, showed that the amount $858,100.30 was the true and actual value of the property of the Telegraph Company in the state of Kansas; that the State Tax Commission, without any investigation of the truth or falsity of the return made by the Telegraph Company, and without any examination of the property with a view to determining its value, arbitrarily “and of set purpose,” and hence fraudulently, increased the assessed value of the Telegraph Company’s property in the state of Kansas to the sum of $3,159,322. The bill prayed that the Tax Commission be enjoined from acting upon the assessment so made by it, and from using said assessment as a basis for equalizing the valuation and assessment of the Telegraph Company’s property; that the assessment be annulled and set aside and declared void, and that a true assessment of its property be made. A payment of $10,000 was made in court by the Telegraph Company for the benefit of the various taxing districts in the state, which it claimed, under the allegations of the bill, covered all just and legal taxes due from the Telegraph Company upon its property in the state of Kansas. The Circuit Court issued a temporary restraining order, but, upon the final hearing of the demurrer to the amended bill, set the restraining order aside and dismissed the amended bill.

A valid assessment is, of course, indispensable' as a prerequisite to levying a valid tax. American & English Encyclopedia of Daw, 660. To determine the question presented by this record it will be necessary to briefly notice the provisions of the Constitution of Kansas and the legislation of that state relating to the assessment and levying of taxes. The word “assessment” as used in the Constitution (section 1, art. 11) means valuation of property by the proper officers for the purposes ©f taxation. Hines et al. v. City of Leavenworth, 3 Kan. 187. In other words, it is the official listing of property for the purpose of constituting a basis upon which taxes are to be levied.

By an act of the Legislature approved March 8, 1905 (Laws 1905, c. 502), entitled “An set to amend article 5, chapter 107, of the General Statutes of 1901, being sections 7530, 7531, 7532, 7533, 7534, 7535, 7536, 7537, 7538, 7539 and 7540 of the same, and to provide for the assessment of taxes on the property of telegraph, telephone and pipe-line companies, defining what constitutes such companies, requiring annual reports, and providing a penalty for neglect or refusal to make same, and repealing the sections mentioned,” it is provided that every telegraph company doing business within the state, in the. form and manner prescribed by statute shall make and file with the Auditor of State a verified return setting forth certain facts concerning the company’s property to be assessed. Among other things a telegraph company is required to state the name of the company, the state in which it was organized, the location of its principal office, the name and address of its president, secretary, auditor, treasurer, and superintendent, the name and postoffice address of its chief officer or managing agent in Kansas, the par value of its shares of stock, and a detailed statement of the real estate owned by the company in the state of Kansas, where situated, and the value thereof, the whole length of its lines within the state, including all lines controlled and used by it under lease or otherwise, the number of miles in each county, together with a correct inventory of all other property owned by the company in Kansas on the 1st day of March, where situated and the value thereof, and the total gross receipts of the company for the year ending the 1st day of the next preceding January from whatever source derived within the state of Kansas. This act also provides that any company interested in any assessment at any time after the meeting of the Tax Commission as a board of assessors, and before the determination by the Tax Commission of the valuation for the purposes of taxation of the property of any telegraph company, may, on written application, appear before the Tax Commission and be heard in regard to the matter of the assessment and valuation of its property. It'is further made the duty of the Tax Commission to report to the Auditor of State the total value of the property of telegraph companies in Kansas as assessed by it, and to file with the-Auditor of State all statements añd other papers connected with the assessment and valuation. From the total assessed value of the property of any telegraph company it is made the duty of the Auditor of State to deduct the value of any real estate situated in Kansas owned by such company; the value of the property of such company, after deducting the assessed value of real estate, is to be apportioned by the Auditor of State among the several counties through or into which the lines of such company may run, so that each county will be assigned such a part of the entire valuation of the property within the state as will equal the relative value of the property of the company within the county to that in the state, and in proportion to the length •of the lines owned by the company in such county might bear to the length of its entire lines in the state. After the assessment of the property of the Telegraph Company by the Tax Commission and before it has been certified by the Auditor of State to the several counties, it is made the duty of the Tax Commission, on application of any interested person or company, or on its own motion, to correct the assessment or valuation of the property of any such company in such manner as in its judgment will make the valuation thereof just and equal. Prior to March 6, 1907, the board of appraisers consisted of the Auditor, the Lieutenant Governor, the Secretary of State, the Attorney General, and the State Treasurer. By an act of the Legislature of Kansas approved on the date last mentioned (Laws 1907, c. 408) a state board was created to be known as the Tax Commission, composed of three persons to be appointed by the Governor by and with the advice and consent of the Senate, and this commission succeeded to, and took the place of, the Board of Railroad Assessors and the State Board of Equalization.

The last-named act necessarily worked an implied repeal of section 3 of the law of 1905 because -it substituted the Tax Commission for the board of appraisers or assessors as provided for in that section. Taking the substance of the act from its title, it created a Tax Commission and defined its powers and duties, fixed the compensation of its members and employés, abolished the Board of Railroad Assessors and the State Board of Equalization, and provided penalties for the violation of certain provisions therein; repealed certain sections of the general statutes of Kansas therein mentioned, “and all acts and parts of acts in so far as they conflict with this act,” and made certain appropriations for the purpose of carrying the act into effect. It is undoubtedly true that the act of 1908, being chapter 81 of the Session Laws of that year, was inoperative as to section 3 of the act of 1905, for the reason already suggested. It is to be noticed that the Telegraph Company is seeking by its bill to enjoin the preliminary work of assessment by the Tax Commission before that commission had completely exercised its quasi judicial discretion by equalizing the assessments throughout the state. Under the act of 1907, the commission is required to keep full minutes of its proceedings; the law of 1908 provides for the meeting of the Tax Commission on the •second Monday in April for the purpose of assessing the property of telegraph companies, and in determining the value of such property for taxation, the board is' directed by the statute to be guided by the value of other personal property within the state. The law of 1908 provides that the Tax Commission shall sit as a board of equalization on the second Wednesday of July in each year. It will thus be seen that ample provision is made for a hearing before the Board of Equalization by any person or corporation feeling aggrieved by the assessment made by the Tax Commission.

As we have pointed out, under the law of 1908 the commission is required to meet as a board of equalization on the second Wednesday in July of each year, and that an official record is kept of the assessments made at the April meeting and if the taxpayer is not satisfied he may apply to have the assessment corrected; but the board is not required to disclose the method employed by it in arriving at the value of the property assessed. The statute requires it to make an assessment of all telegraph lines and property at their true cash market value, and this it may ascertain in such manner as to it may seem fit. While no specific notice of an increase is required by the statute, the taxpayer is at liberty to examine the public record made by the commission at its April meeting, and if his assessment has been increased, he has the right to appeal to the Board of Equalization at its July meeting. As said by Mr. Justice Holmes, in Chicago, Burlington & Quincy Railroad Company v. Babcock, 204 U. S. 585, 27 Sup. Ct. 326, 51 L. Ed. 636: “Again, this board necessarily kept and evidently was expected by the statute to keep a record. That was the best evidence, at least, of its decisions and acts. If the roads had wished an express ruling by the board upon the deductions which they demanded, they could have asked for it and could have asked to have the action of the board or its refusal to act noted in the record. It would be time enough to offer other evidence, when such a request had been made and refused. Fargo v. Hart, 193 U. S. 490, 24 Sup. Ct. 498, 48 L. Ed. 761; Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v. Backus, 133 Ind. 513, 33 N. E. 421, 18 L. R. A. 729; Havemeyer v. Board of Review, 202 Ill. 446, 66 N. E. 1044.” Here the equity powers of the court are invoked to relieve against anticipated injury consequent upon an anticipated fraudulent assessment before the assessment is completed, and the effect of an injunction would be to take away from the Tax Commission all power of discretion and judgment in arriving at a fixed and proper valuation.

The Telegraph Company did not pursue the remedy afforded by law to have its assessment corrected by the State Board of Equalization, but on the contrary brought its suit before the board had an opportunity to complete the exercise of its'quasi judicial discretion by equalizing the various assessments throughout the state, and completing the assessment of this property. The result is that this suit is premature.

The decree of the Circuit Court is accordingly affirmed.