Ritterbusch v. Atchison, T. & S.F. Ry. Co.

• Decision Date: 15 July 1912
• Docket Number: 3,704.,3,703
• Citation: 198 F. 46
• Parties: RITTERBUSCH, County Treasurer, et al. v. ATCHISON, T. & S.F. RY. Co. [1] ATCHISON, T. & S.F. RY. CO. v. RITTERBUSCH, County Treasurer, et al.
• Court: U.S. Court of Appeals — Eighth Circuit

198 F. 46

RITTERBUSCH, County Treasurer, et al. v. ATCHISON, T. & S.F. RY. Co. ^[1]

ATCHISON, T. & S.F. RY. CO. v. RITTERBUSCH, County Treasurer, et al.

Nos. 3,703, 3,704.

Circuit Court, of Appeals. Eighth Circuit.

July 15, 1912

Syllabus by the Court

An averment of payment or tender of the amount justly due is indispensable to the sufficiency of a bill to enjoin the collection of unjust taxes.

But where the allegations of the bill show that all the taxes assailed are void and inequitable, or that the void and inequitable part is so inextricably mingled with the part justly due that the two cannot be approximately separated, no such averment is necessary.

Averments upon this subject in a bill that the scheme of taxation is such that the complainant and other public service corporations are deprived of notice of and opportunity to be heard upon, and of appeals from, the assessment of their property, and of an equalization of the assessments of their property with those of others, while other taxpayers enjoy these advantages, that the taxing officers have assessed their property at its full value and that of other taxpayers at 63 1/2 per cent. of its value, that the levy of taxes for 12 out of 19 1/2 months is without authority, and the taxes for this period are so mingled with those of the other 7 1/2 months that they cannot be separated, that the complainant has paid under protest more than half the taxes for the 19 1/2 months, and is willing to give bond to secure, and that this amount so paid shall stand as security for, the payment of any taxes justly due, are ample to sustain the bill for an injunction.

Where a case is set down for hearing on bill, answer, and replication, only those averments of the answer which are responsive to the bill are taken as true. All allegations in avoidance or justification are denied by the replication and are taken as untrue.

The board of equalization of the state of Oklahoma was without authority on October 1, 1908, to fix the rate of taxation or to levy taxes for the expenses of the state for the year ending June 30, 1909.

Objections to the introduction of an entire deposition are untenable, if any part of it is admissible in evidence.

One who would enforce a penalty for a failure to pay a claim, such as 18 per cent. per annum interest on delinquent taxes, must demand the true amount of the claim. No penalty is incurred by a demand of a larger amount.

Subject to the established principles and rules of equity jurisprudence, the terms on which a court of equity will grant its relief, such as the rate of interest on taxes justly owing to be paid by a complainant as a condition of an injunction against the collection of those that are void, is discretionary with the chancellor.

The courts of the United States take judicial notice of the Constitutions and laws of the states.

Charles West, Atty. Gen. (C. J. Davenport, on the briefs), for Ritterbusch and others.

S. T Bledsoe (J. R. Cottingham, on the brief), for Atchison, T. &amp S.F. Ry. Co.

Before SANBORN, HOOK, and SMITH, Circuit Judges.

SANBORN Circuit Judge.

The county treasurer and sheriff of Logan county, Okl., appeal from a decree which enjoins them from collecting the state taxes upon the property of the Atchison, Topeka & Santa Fe Railway Company in that county for the year ending June 30 1909, which were fixed and levied by the state board of equalization on October 1, 1908. The railway company appeals from the same decree.

The railway company brought suit against the county treasurer and sheriff, who will hereafter be called the defendants, to enjoin the collection of the taxes on its property for the 19 1/2 months between November 16, 1907, the date when Oklahoma became a state, and June 30, 1909, for school districts, townships, cities, counties, and the state, and after the railway company had paid more than one-half the taxes a temporary injunction was granted against the collection of the remainder of these taxes. Before the final decree was rendered, which is challenged by this appeal, a compromise and settlement of the controversy over all these taxes, except those levied for state purposes, was made, and upon the payment by the railway company of the agreed amount a perpetual injunction against the collection of any of these taxes for the year 1908 was decreed. The case then proceeded to final hearing and decree on the merits of the issue whether or not the state taxes for the 19 1/2 months were lawfully made and ought to be paid. The court below held that the levy was lawful for the period between November 16, 1907, and June 30, 1908, but unauthorized and void for the fiscal year ending June 30, 1909. The railway company paid the taxes for the former period, and the perpetual injunction was then granted against the collection of any more taxes for state purposes for the 19 1/2 months. We turn to the consideration of the alleged errors assigned by the defendants.

They first contend that the court erred in overruling the demurrer to the original bill and issuing the preliminary injunction, because the bill contained no averment that the railway company had paid that part of the taxes which it conceded to be due, or that part which could be seen to be due on the face of the bill, or could be shown by affidavits to be due, before the preliminary injunction was granted (State Railroad Tax Cases, 92 U.S. 575, 616, 23 L.Ed. 663), but the bill contained an allegation that the entire sum the defendants sought to collect was $57,878.48, and that for the sole purpose of preventing the issue of a warrant and the seizure of its property the railway company had paid $29,715.73 of this amount under a written protest and with a notice that it would bring this suit to recover it. And where a complainant claims and shows by the averments in his bill that the entire tax is void, or that a substantial part of it is inequitable, and it is impossible to determine what portion, if any, is valid, no tender or payment of any part of the taxes, and hence no averment of any such tender, is essential to sustain a bill to enjoin their collection. Fargo v. Hart, 193 U.S. 490, 502, 24 Sup.Ct. 498, 48 L.Ed. 761.

There were averments in this bill to the effect that the taxes for 12 of the 19 1/2 months were levied without any legislative authority, that they were so commingled with those for the other 7 1/2 months that it was impossible to separate them, that the scheme of taxation adopted by the state denied to the complainant and other public service corporations notice of and an opportunity for a hearing upon the assessment of their property, and an opportunity to have their property equalized with that of other taxpayers, opportunities which were accorded to other taxpayers, and that the taxing officers assessed their property at its full value and the property of other taxpayers at 63 1/2 per cent. of its value, whereby they were deprived of the equal protection of the laws and their property was about to be taken without due process of law. The bill also contained an allegation that the complainant was willing to pay into court any amount justly owing, to secure the payment of that amount by a bond, and to let the $29,715.73, which it had already paid, stand as security therefor. These allegations of the bill brought it far within the rule of equity requiring allegations of the tender, payment, or security for the payment of the part of taxes justly due, and there was no error in the overruling of the demurrer and the issue of the temporary injunction.

The state of Oklahoma came into existence on November 16, 1907. The Legislature of that state, evidently under the belief that there was no legislation under which taxes could be lawfully collected for state, county, and other public purposes, passed an act, approved April 17, 1908 (Laws 1907-08, c. 71), entitled 'An act providing for the assessment for taxation for state, county, city, town, township and school purposes for the fiscal year ending July 1, 1908, and for the deficiency for the fiscal year ending July 1, 1908, providing for the levy of such tax and declaring an emergency,' whereby it provided that (section 7) 'there is hereby levied an ad valorem tax upon all property in this state which may be subject to taxation upon such basis, a tax sufficient, in addition to income from all other sources to pay the expenses of the state government for the fiscal year ending on the 30th day of June, 1908, and to pay the deficiency for the fiscal year ending on the 30th day of June, 1908: Provided, however, that the total amount of such levy shall not exceed one and one-half mills on the dollar of valuation,' and that the state board of equalization should meet and compute the amount necessary to be levied for this period and these purposes, which should be certified to the county clerks of the respective counties to be entered on the tax rolls. Pursuant to this act the board on October 1, 1908, made the computation and adjudged that there should be a levy of 1 1/4 mills upon a dollar of the valuation of all the taxable property in the state to pay seven specific items of state expenses, one of which was $1,140,000 expense of the state for the full fiscal year from July 1, 1908, to June 30, 1909.

It seems to be too plain for discussion that no authority was here granted to this board to compute and levy any tax to pay any of the expenses of the state for the year ending June 30 1909. The power is expressly limited to fixing the rate and levying the taxes for the expenses and deficiency for the year ending June 30, 1908. Counsel for the state contended, however, that this levy for the year 1909 was authorized by the laws of the territory of Oklahoma on this subject, which ...