Louisville & Nashville R. Co. v. PUBLIC SERV. COM'N OF TENN.
Decision Date | 01 February 1966 |
Docket Number | No. 4310.,4310. |
Citation | 249 F. Supp. 894 |
Parties | LOUISVILLE AND NASHVILLE RAILROAD COMPANY v. PUBLIC SERVICE COMMISSION OF TENNESSEE, State Board of Equalization of Tennessee, et al. |
Court | U.S. District Court — Middle District of Tennessee |
David M. Keeble, Hooker, Keeble, Dodson & Harris, Nashville, Tenn., W. L. Grubbs and Philip M. Lanier, Louisville, Ky., for plaintiff.
Milton P. Rice, Asst. Atty. Gen. of Tennessee, Nashville, Tenn., and Eugene W. Ward, Morristown, Tenn., for defendants.
This action presents the question whether a federal court may intervene to grant injunctive relief to a taxpayer whose property, in violation of state law, has been substantially over-assessed in relation to other taxpayers in the state. Since tax laws are ancient and unrelenting, they have spawned much litigation, and the Court is not without some guidelines in the decision of the present controversy.
Jurisdiction is invoked on the grounds of (1) federal question jurisdiction (commerce clause and Fourteenth Amendment), and (2) diversity jurisdiction. The first is denied by the defendants, and the second is admitted. Because the Court has concluded that jurisdiction exists under the equal protection clause, it is not necessary to determine whether or not relief could be granted if diversity were the sole basis of jurisdiction. The Court notes, however, that such relief might well be barred by the holding in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) and subsequent cases.
In Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), for example, the Court stated that:
See also, Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 532, 69 S.Ct. 1233, 1234, 93 L.Ed. 1520 (1949) () And see, Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); Allstate Insurance Company v. Charneski, 286 F.2d 238, (7th Cir., 1960); Berger v. State Farm Mutual Automobile Co., 291 F.2d 666 (10th Cir., 1961); and Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir., 1963). Cf., Byrd v. Blue Ridge Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958); and Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). It is admitted that if the plaintiff brought suit in a Tennessee state court, relief would be barred by the Tennessee rule that a taxpayer cannot sue to have his own taxes reduced; he may sue only to have the taxes of his neighbors increased, and then, only if he can first show that his property is assessed in excess of actual cash value. See e. g., Carroll v. Alsup, 107 Tenn. 257, 284, 64 S.W. 193, 200 (1901); McCord v. Nashville. Chattanooga & St. L. Ry., 187 Tenn. 277, 213 S.W.2d 196 (1948); Mayor and Aldermen of the Town of Morristown v. Burke, 207 Tenn. 180, 338 S.W.2d 593 (1960); and Biltmore Hotel Court v. City of Berry Hill, Tenn., 390 S.W.2d 223 (1965). A citizen of Tennessee, then, could not win this action in a state court under existing state law, and he could not, because of lack of diversity, bring the action in a federal court. No sufficient reason appears why a non-citizen of this state should be able to invoke diversity jurisdiction in a federal court to reach a result on a state question which state citizens could not reach.
In Tennessee, all railroad and utility property is assessed by the Public Service Commission. All other property is assessed by county assessors and local officials. Both the Commission and county assessors are required by state law to assess all property within their respective jurisdictions at its actual cash value. (See Appendices "A" and "B.") The assessment roles of all property assessed by county assessors are brought before the respective county boards of equalization, whose duty it is to equalize the assessment of all property within the county by assessing all property at its actual cash value. (See Appendix "B.") The equalized assessments of the county boards, and the assessments of the Public Service Commission, are reviewed by the State Board of Equalization, whose duty it is to equalize the various county board assessments and the Public Service Commission assessments upon the basis, for all property, of actual cash value. (See Appendix "B."). The State Board of Equalization then certifies back to each county the final equalized assessment of the properties assessed by that county, and to the Public Service Commission the final equalized assessment of the properties assessed by the Commission. The latter certification was made with respect to plaintiff's property on November 23, 1965. Because of the pendency of this action and the issuance of a temporary restraining order, the Public Service Commission has not yet certified to the various counties and municipalities in which the plaintiff's property is located, the final assessed value of plaintiff's property. Following certification to the counties and municipalities, the taxes based upon the certified assessments will become due and payable.
The plaintiff in this civil action seeks to restrain the Public Service Commission from certifying assessments for the years 1965-66 on all of the property of the plaintiff located in the state. It alleges that if the certification is not enjoined, the plaintiff will have to pay taxes to 54 counties and to at least 104 municipalities and will be without an adequate remedy under state law to obtain relief from what it claims is an illegal assessment of its property.
Plaintiff alleges that property assessed by the Public Service Commission is assessed at actual cash value, and that property assessed by county assessors is assessed at a state-wide average of 30% of actual cash value, with assessments ranging from a low of 7% to a high of 50%. It is alleged that this practice is systematic and intentional, and of long-standing. The defendants admit that property assessments are not uniform throughout the state, that assessments have been at less than 100% of actual cash value, and that "railroad and utility properties, being centrally assessed by the Public Service Commission, are generally assessed at a level considerably higher than the level at which locally assessed properties are assessed." The defendants, however, would hold the plaintiff to strict proof both of the exact percentage of the plaintiff's assessment, and the exact percentage at which local properties are assessed. Nevertheless, even by the defendants' own admission, the plaintiff's property is assessed at not less than 55 or 65% of its actual cash value; and the evidence before the Court clearly demonstrates that all other properties are assessed at a state-wide average of not more than 30% of their actual cash value. (See Appendix "C.")
Defendants concede that the Public Service Commission is required by law to assess plaintiff's property at its actual cash value. They contend, however, that the Commission disregarded state law and assessed plaintiff's property at only 60 to 70% of actual cash value. Since the State Board of Equalization reduced the Commission's assessment by approximately 5%, defendants claim that plaintiff's final, equalized assessment is only 55 to 65% of actual cash value. This claim is based upon the fact that the Commission's assessment calculations included a "judgment factor." Defendants claim that this judgment factor was applied after the Commission had first determined actual cash value. Plaintiff claims that the judgment factor was applied in order to determine the actual cash value. The transcript of the hearing before the State Board would seem to support plaintiff's position. At the hearing, the following exchange took place:
It is not necessary, however, to determine whether or not the Commission assessed the plaintiff's property at actual cash value, since a final, equalized assessment of even 55% (which is the lowest assessment claimed by the defendants) is substantially higher than the average assessment percentage of locally assessed property, either state-wide or in the 54 counties through which plaintiff operates. By referring to the Tennessee Taxpayers Association Report in Appendix "C," and calculating the average assessment ratio of the 54 counties through which the plaintiff...
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