Baltimore & OR Co. v. Board of Public Works

• Decision Date: 02 December 1936
• Citation: 17 F. Supp. 170
• Court: U.S. District Court — Northern District of West Virginia
• Parties: BALTIMORE & O. R. CO. v. BOARD OF PUBLIC WORKS OF WEST VIRGINIA et al.

17 F. Supp. 170

BALTIMORE & O. R. CO. v. BOARD OF PUBLIC WORKS OF WEST VIRGINIA et al.

District Court, N. D. West Virginia.

December 2, 1936.

John J. Cornwell, of Baltimore, Md., and J. O. Henson, of Martinsburg, W. Va. (John J. Cornwell, of Baltimore, Md., and J. O. Henson and Stephen Ailes, both of Martinsburg, W. Va., on the brief), for complainant.

Homer A. Holt, Atty. Gen., of West Virginia, and J. F. Bouchelle, Asst. Atty. Gen., of West Virginia, for defendants.

Before PARKER and SOPER, Circuit Judges, and BAKER, District Judge.

PARKER, Circuit Judge.

This is a suit by the Baltimore & Ohio Railroad Company against the Board of Public Works of West Virginia, the Secretary of State, Auditor, Treasurer, Tax Commissioner and Attorney General of that state and the sheriffs of the various counties in which the railroad company has property. The purpose of the suit is to enjoin the assessment or collection of taxes on a valuation of plaintiff's property alleged to be excessive and discriminatory; to enjoin the institution of suit or other proceeding for the collection of the state privilege tax, alleged to be unconstitutional; and to have the privilege tax declared unconstitutional and invalid as a means of removing the cloud which it is alleged to cast upon the title of plaintiff's property. As interlocutory injunction is asked, a court of three judges has been constituted pursuant to section 266 of the Judicial Code, as amended (28 U.S.C.A. ß 380).

The bill of complaint as amended alleges that plaintiff's property in the state of West Virginia has been assessed for taxation by the Board of Public Works at $85,000,000; that this valuation is in excess of the true and actual value of the property; that it is discriminatory when compared with the valuation of other railroad property within the state and other real and personal property within the state; and that the assessment and collection of taxes on the basis of such assessment would deprive plaintiff of property without due process of law and deny it the equal protection of the laws in violation of the Fourteenth Amendment to the Constitution of the United States. The amended bill avers also that the privilege tax imposed by the statutes of West Virginia of 65/100 per cent. of plaintiff's property valuation and 4 per cent. of its net income is a mere subterfuge for the imposition of an additional discriminatory property tax, and that it is void both because it is confiscatory in violation of the Fourteenth Amendment and because it constitutes a burden on interstate commerce. It is averred that this privilege tax, which is declared a lien upon plaintiff's property by the statute, constitutes a cloud upon its title which the court should remove.

Motions have been made to quash the service of the subp‚Änas and dismiss the bill on the ground that the sheriffs are not necessary or proper parties to the suit and that none of the other defendants is a resident of the Northern District of West Virginia. Other motions to dismiss raise the question of plaintiff's right to come into equity in view of the fact that it has failed to exhaust its administrative remedies with respect to the valuation of its property, and that it has an adequate remedy at law with respect to the other matters of which it complains. Five questions are presented for our consideration by the motion to dismiss: (1) Whether the sheriffs who have been made defendants are necessary or proper parties to the suit (if they are, the venue must be sustained, as a number of the sheriffs reside within the district); (2) if not, whether the venue can be sustained on the ground that certain of the other defendants were residents of the Northern District when elected to office and still vote in that district, although living with their families at the capitol of the state in the Southern District; (3) whether plaintiff has exhausted its administrative remedies with respect to the assessment of its property; (4) whether plaintiff stands in danger of irreparable injury or is without a remedy at law with respect to the enforcement against it of the privilege tax; and (5) whether the court has jurisdiction to declare the privilege tax invalid in order that it may remove the alleged cloud from the title of plaintiff's property. We think that all of these questions must be answered in the negative.

As to the first question, it is clear from the statute that, if injunction is granted against the State Auditor as prayed, the sheriffs can do nothing which would affect the plaintiff. Only in the event that the plaintiff fails to pay its property tax into the state treasury by May 1st of the following year, are the sheriffs charged with any duties with respect to the taxes and then only on the certification by the State Auditor. Code of W.Va. c. 11, art. 6, ß 18, as amended by Acts 1933, c. 39; Norfolk & W. Ry. Co. v. Board of Public Works (D. C.) 3 F.Supp. 791. If the Auditor is enjoined from making the certificate, there is no reason to apprehend injury from action on their part and no occasion for making them parties to the suit. Under such circumstances, the sheriffs joined as defendants are to be treated as mere nominal parties, and the question of jurisdiction is not affected by their presence. See Stewart v. B. & O. R. Co., 168 U.S. 445, 449, 18 S.Ct. 105, 42 L.Ed. 537; Jackson v. Jackson (C.C.A.4th) 175 F. 710, 716; Holbrook Irri. Dist. v. Arkansas Valley, etc., Land Co. (C.C.A.10th) 54 F.(2d) 840; Sioux City & D. M. Ry. Co. v. Chicago, M. & St. P. Ry. Co. (C.C.) 27 F. 770.

So far as the privilege tax is concerned, the sheriffs are not charged with any duties whatever with respect thereto. In case it is not paid, it is enforceable only by a suit in equity in the name of the state to be instituted by the Attorney General. Act of May 26, 1933, Acts 1933, 1st Ex.Sess. c. 33, art. 12-A, ß 11.

On the second question, it appears that the state auditor and certain other of the state officials who are defendants were residents of the Northern District of West Virginia at the time of their election to office, but that they now reside with their families at the state capitol in the Southern District, although in their announcements for re-election they refer to their residences as being in the counties from which they were originally elected, and have continued to vote in those counties. These officials are required by statute to reside at the state capitol. Code of W.Va.1931, c. 6, art. 5, ß 4. And if the suit were instituted against them in their official capacities, there would be little question but that exclusive jurisdiction would reside in the district of their official residence. Butterworth v. Hill, 114 U.S. 128, 5 S.Ct. 796, 29 L.Ed. 119; Senitha v. Robertson (C.C.A.4th) 45 F.(2d) 51; Canon v. Robertson (D.C.) 32 F.(2d) 295; Hammer v. Robertson (D.C.) 291 F. 656. And we do not think that any different rule should be applied where the suit is not to enforce an official duty, but to enjoin the official from doing an act under color of his office which is beyond his official powers because violative of constitutional provisions. There is just as much reason for holding the official to be a resident or inhabitant of the district of his official residence in the one case as in the other; and the inconvenience and disturbance to the public business which would result from permitting an official to be sued away from the district of his official residence is just as great. To hold that, when an official is sued to enforce an official duty, he must be sued in the district of his official residence, but that, when he is sued to restrain him from acting as an official beyond the bounds of duty, he must be sued in some other district, because he was elected to office from that district and presumably intends to return thereto after his term of office has expired, would be to draw a distinction without basis in principle and one which would not commend itself to men of practical minds.

The mere fact that the official may have an intention of ultimately returning to his original domicile, and may be permitted by state law to vote there, should not be held to make him a resident of that locality for purposes of suit with respect to a matter connected with the administration of his office. Mere voting right is not conclusive. Johnson v. Hoile, 205 App.Div. 633, 199 N. Y.S. 875. Residence and not domicile is the jurisdictional test of the statute; and we think that residence may not be ignored in favor of theoretical domicile, where the residence, as here, is that required by statute of an official and the suit relates to official conduct, even though it be alleged to transcend the legal bounds of official action.

Since, therefore, the sheriffs are merely formal parties and all of the other defendants have their official residences in the Southern District of West Virginia, exclusive jurisdiction to entertain the suit was in the court of that district. 28 U.S.C.A. ß 112; 2 Cyc.Fed.Proc. 352; U. S. Exp. Co. v. Allen (C.C.) 39 F. 712; Railroad Comm. v. Burleson (D.C.) 255 F. 604.

It is argued that the suit is of a local nature because the privilege tax is made by statute a lien on the property of the railroad company; but the suit may not properly be considered one to remove the lien as a cloud from title. If it were, it would be a suit against the state. Appalachian Electric Power Co. v. Smith (C.C.A.4th) 67 F. (2d) 451, 456; Wood v. Phillips (C.C.A.4th) 50 F.(2d) 714, 717; Sanders v. Saxton, 182 N.Y. 477, 75 N.E. 529, 530, 1 L.R.A.(N.S.) 727, 108 Am.St.Rep. 826, 828. And such a suit could not be maintained. Constitution of U. S. Amendments, art. 11; In re Ayers, 123 U.S. 443, 505, 8 S.Ct. 164, 31 L.Ed. 216. Suit to enjoin the collection of a tax is sustained, not as an attack on the right of the state in the tax or the lien provided for its enforcement, but as a suit against the individual occupying a...