244 U.S. 499 (1917), Greene v. Louisville & Interurban Railroad Company

Citation:244 U.S. 499, 37 S.Ct. 673, 61 L.Ed. 1280
Party Name:Greene v. Louisville & Interurban Railroad Company
Case Date:June 11, 1917
Court:United States Supreme Court

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244 U.S. 499 (1917)

37 S.Ct. 673, 61 L.Ed. 1280



Louisville & Interurban Railroad Company

United States Supreme Court

June 11, 1917




Equity has jurisdiction to enjoin unlawful tax proceedings which cloud the plaintiff's title and threaten irreparable injury and a multiplicity of suits.

The principle settled in Ex Parte Young, 209 U.S. 123, to the effect that a suit to restrain state officials from enforcing an unconstitutional state statute in violation of plaintiff's rights and to his irreparable damage is not a suit against the state, applies also when the statute itself is constitutional, but the attempted administration of it is not.

In a case in which the jurisdiction of the district court is properly invoked upon a substantial controversy arising under the Constitution of the United States, the jurisdiction of that court, and of this Court on appeal, extends to the determination of all questions involved, including questions of state law, irrespective of the disposition that may be made of the federal question and of whether it be found necessary to decide it at all.

Where the relief to which plaintiff might be entitled under the Fourteenth Amendment is the same as that allowed him by the federal court upon a proper construction and application of the state constitution and laws, the question whether the acts complained of violate the Amendment need not be decided.

Under the so-called franchise tax provisions of Kentucky (Ky.Stats., §§ 4077-4079) relating to railroad and other corporations exercising special or exclusive privileges or franchises, what is termed the "capital stock of the corporation" (§ 4079) includes its entire property,

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tangible and intangible, and what is termed a "franchise tax" is nothing else than a tax upon the intangible property of the corporation in Kentucky.

Semble that no provision is made by the Kentucky statutes for taxing franchises under §§ 174 and 181 of the state constitution.

The provision in § 182 of the Kentucky Constitution, permitting the General Assembly to provide by law "how railroads and railroad property shall be assessed, and how taxes thereon shall be collected," relates only to the mode of assessment and collection, and does not authorize a departure from the uniformity in valuation and rate required by §§ 171 and 174.

Discrimination resulting from an assessment of the intangible property of a railroad corporation by the Board of Valuation and Assessment at 75 percent of its actual value, while the property of individuals and other classes of corporations, taxed at the same rate, is generally and systematically assessed by other and independent taxing authorities of the state at not more than 60 percent of actual value, is violative of the provisions of the Kentucky Constitution requiring uniform taxation in proportion to value and an identical rate as between corporate and individual property (§§ 171, 174), and this has been recognized by the supreme court of the state.

A decision of the state supreme court holding that such discrimination is not subject to correction in the courts of the state, and that the equality and uniformity provisions of the state constitution may be enforced only by selection of proper assessing officers, is not binding upon the federal courts.

The courts of the United States, their jurisdiction being properly invoked, may afford relief against discriminatory state taxation contravening the state constitution when the discrimination results from divergent action of different assessing boards whose assessments are not subject to any process of equalization established by the state, and where the diverse results are the outcome not of express agreement, but of intentional, systematic, and persistent undervaluation by one body of officials, presumably known to and ignored by the other body, so that, in effect, the two bodies act in concert.

Sections 171 and 174 of the Constitution of Kentucky require uniform taxation according to value, and an identical rate as between corporate and individual property, and the provision of § 174 that " all corporate property shall pay the same rate of taxation paid by individual property" means that not only the percentage of the rate, but the basis of the valuation, shall be the same.

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Uniformity in taxing implies equality in the burden of taxation, and this equality cannot exist without uniformity in the basis of assessment, as well as in the rate of taxation.

The principal, if not the sole, reason for adopting "fair cash value" as the standard for valuations is as a convenient means of securing equal taxation, and since, when the standard is systematically departed from in respect of certain classes of property, its observance in respect of others (the tax rate being uniform) would serve to frustrate its very object, it follows that in such cases the duty to assess at full value is not supreme, but yields to the duty to avoid discrimination.

Section 162, Kentucky Statutes, does not afford an adequate legal remedy against discriminatory assessments for both state and local taxes, because, as construed by the Kentucky Court of Appeals, it does not authorize correction of erroneous assessments, and also because it applies only to state, and not to local, taxes. Singer Sewing Machine Co. v. Benedict, 229 U.S. 481, distinguished.

When the bill seeks relief as to state and local taxes based on the same assessment, and an adequate legal remedy exists as to the former class only, equity will retain and dispose of the entire case, doing justice completely and avoiding multiplicity of suits.

A railroad company whose intangible property is assessed by the Board of Valuation and Assessment, and which is subjected to discrimination through undervaluation of other property by county assessors, is not afforded an adequate remedy through §§ 4115-4120, 4123, Ky.Stats., providing for readjustment of the latter class of assessments through the County Board of Supervisors.


The cases are stated in the opinion.

PITNEY, J., lead opinion

MR. JUSTICE PITNEY delivered the opinion of the court:

These are companion cases, involving similar questions, were argued together, and may be disposed of in a single

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opinion. Appellees are corporations organized under the laws of the State of Kentucky, one of which (the Louisville & Interurban Railroad Company) operates, as a common carrier, passenger and freight lines of railroad in three of the counties of that state and in various municipalities and taxing districts in those counties, while the other (the Louisville Railway Company) operates, as a common carrier, passenger and freight lines of street railway in the City of Louisville and in Jefferson County, outside of that city. They filed their several bills of complaint in the district court against Henry M. Bosworth and others, then constituting the Board of Valuation and Assessment of the Kentucky (Bosworth being also auditor of public accounts), and against the attorney general of the state and his assistants, suing them all, both individually and in their official capacities, for an injunction to restrain steps looking to the certification and enforcement of what are called "franchise taxes" attempted to be assessed upon the respective complainants for the year 1915 under § 4077 and succeeding sections of the Kentucky Statutes, upon the ground of discrimination in the valuation of the franchises, they having been assessed, as alleged, on the basis of 75 percent of actual values, while taxable property in general was assessed systematically and intentionally at not more than 52 percent of actual values. There being no diversity of citizenship, the jurisdiction of the district court was invoked, under the first paragraph of § 24, Judicial Code, upon the ground that the suits arose under the "due process" and "equal protection" clauses of the Fourteenth Amendment of the Constitution of the United States, and that the matter in dispute in each case was in excess of the jurisdictional amount. Plaintiffs also relied upon certain provisions of the constitution of the state that require uniform taxation of property according to value and at the same rate for corporate as for individual property. By supplemental bills,

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the successors in office of the original defendants were made parties in both their individual and official capacities. In each case, there was a motion to dismiss, equivalent to a general demurrer to the bill, upon the following grounds: (1) that there was no federal question involved, and therefore the court was without jurisdiction; (2) that the bills stated no cause of action under the laws of the state or of the United States; (3) that the plaintiffs had an adequate remedy at law; (4) that the bills showed no equity on their face, and (5) that the suits were suits against the State of Kentucky. After a hearing, the court overruled these motions, defendants declined to plead further and made no objection to the submission of the cases for final decrees, the allegations of the bills, not being denied, were taken as true, and final decrees were made granting relief against the enforcement of the disputed assessments and restraining the imposition of franchise taxes upon plaintiffs for the year 1915, based on assessments to their franchises at greater values than those conceded in the respective bills of complaint, which were 60 percent of actual values. The court, in reaching this conclusion, followed its own previous decisions in Louisville & N. R. Co. v. Bosworth, 209 F. 380, 230 Fed.191. Defendants appealed...

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