Atchison, T. & SF Ry. Co. v. Lennen, 80-4172

• Decision Date: 07 July 1981
• Docket Number: 80-4176,No. 80-4172,80-4181 and 80-1690.,80-4173,80-4172
• Citation: 531 F. Supp. 220
• Parties: The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Plaintiff, v. Michael LENNEN, et al., Defendants. UNION PACIFIC RAILROAD COMPANY, et al., Plaintiffs, v. The DEPARTMENT OF REVENUE OF the STATE OF KANSAS, et al., Defendants. CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, et al., Plaintiffs, v. Michael LENNEN, et al., Defendants. MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, Plaintiff, v. Michael LENNEN, et al., Defendants. BURLINGTON NORTHERN, INC., et al., Plaintiffs, v. Philip W. MARTIN, et al., Defendants.
• Court: U.S. District Court — District of Kansas

531 F. Supp. 220

The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Plaintiff, v. Michael LENNEN, et al., Defendants.

UNION PACIFIC RAILROAD COMPANY, et al., Plaintiffs, v. The DEPARTMENT OF REVENUE OF the STATE OF KANSAS, et al., Defendants.

CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, et al., Plaintiffs, v. Michael LENNEN, et al., Defendants.

MISSOURI-KANSAS-TEXAS RAILROAD COMPANY, Plaintiff, v. Michael LENNEN, et al., Defendants.

BURLINGTON NORTHERN, INC., et al., Plaintiffs, v. Philip W. MARTIN, et al., Defendants.

Nos. 80-4172, 80-4173, 80-4176, 80-4181 and 80-1690.

United States District Court, D. Kansas.

July 7, 1981.

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Laurence E. Garrett, J. B. Reeves, Topeka, Kan., for plaintiff in 80-4172.

James P. Buchele, U. S. Atty., Topeka, Kan., for plaintiffs in 80-4172, 80-4173 and 80-4181.

Carol B. Bonebrake and John P. Quinlan, Dept. of Revenue, Topeka, Kan., Regan & McGannon, Wichita, Kan., for defendants in all cases.

Chester A. Arterburn, Jr., Sabatini, Waggener, Vincent & Arterburn, Topeka, Kan., for plaintiffs in 80-4173.

Mark L. Bennett, Jr., Davis & Bennett, Topeka, Kan., for plaintiffs in 80-4176 and 80-4181.

Alan F. Alderson, Steven C. Montgomery, Clarence J. Malone, Dept. of Revenue, Topeka, Kan., for defendants in 80-4176.

Robert C. Foulston, Stanley G. Andeel, Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan., for plaintiffs in 80-1690.

Patrick J. Regan, James J. McGannon, Wichita, Kan., for defendants in 80-1690.

Wm. D. Rustin, Co. Counselor, Paul M. Buchanan, Asst. County Counselor, Wichita, Kan., Wendell J. Barker, Ottawa, Kan., Wm. F. Stahl, Junction City, Kan., Robert J. O'Connor, Jeff A. Roth, Wichita, Kan., Bert R. Hopper, Seward County Counselor, Smith, Greenleaf & Brooks, Liberal, Kan., Douglas L. Baker, Pittsburg, Kan., John E. Lang, Pottawatomie County Counselor, Westmoreland, Kan., Robert J. Frederick, Kearny County Atty., Lakin, Kan., Tom R. Smith, Liberal, Kan., Gale & Gale, Robert H. Gale, Jr., Syracuse, Kan., Douglas S. Brunson, Kiowa County Atty., Greensburg, Kan., Grant M. Glenn, Donald J. Horttor, Cosgrove, Webb & Oman, Topeka, Kan., Gordon A. Harness, Comanche County Atty., Coldwater, Kan., Thomas L. Wilson, Woodson County Atty., Yates Center, Kan., B. A. Lightfoot, Hodgeman County Atty., Jetmore, Kan., Hathaway & Kimball, Ulysses, Kan., John L. Weingart, Asst. Brown County Atty., Hiawatha, Kan., Daniel L. Love, Ford County Atty., Dodge City, Kan., Wm. Rex Lorson, Saline County Atty., Salina, Kan., Larry T. Solomon, Kingman, Kan., Mickey Carl Moorman, Meade County Atty., Meade, Kan., for county defendants.

MEMORANDUM

ROGERS, District Judge.

On June 17, 1981, this court issued an order ruling upon several motions filed in the above-captioned cases. In that order, the court promised that a more detailed memorandum would follow. This memorandum discusses the rulings made by this court in our previous order.

Background

A summary of the rather complicated and extended procedural background of this litigation is necessary to fully understand the instant memorandum. On June 30, 1980, the Atchison, Topeka and Santa Fe Railway Company filed a complaint in this court alleging that the State of Kansas was discriminating against rail transportation property in assessing and collecting property taxes in violation of 49 U.S.C. § 11503. Named as defendants in the action were the Department of Revenue of the State of Kansas; Michael Lennen, Secretary of Revenue of the State of Kansas; and Philip W. Martin, Director of Property Valuation of the Department of Revenue of the State of Kansas (hereinafter referred to as the "State defendants"). Jurisdiction was asserted under the provisions of 49 U.S.C. § 11503(c); 28 U.S.C. §§ 1331 and 1337; Article I, Section 8, Clause 3 (Commerce Clause) and Article VI, Clause 2 (Supremacy Clause) of the Constitution of the United States. Attached to the complaint were several exhibits. These exhibits consisted of the results of sales assessment ratio studies conducted by Dr. Wilfred Pine, a professor at Kansas State University, which purported to show that real property in Kansas is assessed at a lower ratio to fair market value than is rail transportation property.¹ Based upon these exhibits, plaintiff sought to enjoin the defendants and the county treasurers of the 68 counties of the State of Kansas in which their rail property was located from collecting property taxes in excess of what the plaintiff believed it owed for the first half of its 1980 property taxes.

On the same day, the Union Pacific Railroad Company² filed a similar complaint in this court. Subsequently, separate similar actions were filed by the Chicago, Rock Island and Pacific Railroad Company and the Missouri-Kansas-Texas Railroad Company. On September 22, 1980, these actions were consolidated by this court for purposes of discovery and trial (hereinafter referred to collectively as the "Topeka railroads").

On September 3, 1980, seven railroads³ filed a complaint with the clerk of this court in Wichita alleging that the State of Kansas had illegally assessed and collected property taxes from them in 1979 in violation of 49 U.S.C. § 11503 (hereinafter referred to collectively as the "Wichita railroads"). Furthermore, the complaint alleged that the State of Kansas was discriminating against rail transportation property in assessing and collecting property taxes in 1980, also in violation of 49 U.S.C. § 11503. The same defendants were named as those named in the lawsuits brought by the Topeka railroads. Jurisdiction was asserted pursuant to 49 U.S.C. § 11503(c). The Wichita railroads sought injunctive relief from their payment of 1980 taxes and sought a refund for their alleged illegal payment of 1979 taxes.⁴

On November 20, 1980, this court held a hearing upon the Topeka railroads' motion for preliminary injunction. The Topeka railroads sought to enjoin the defendants and their agents, including the county treasurers of the 98 counties of the State of Kansas in which their rail transportation property was located, from collecting property taxes in excess of what plaintiffs believe they owed for the first half of their 1980 property taxes. In addition, the railroads moved for an order, pursuant to Rule 67 of the Federal Rules of Civil Procedure, allowing them to deposit the amount of property tax in excess allegedly owed by them with the clerk of this court. On December 3, 1980, this court denied the motion for preliminary injunction. We found that the evidence presented by the plaintiffs had demonstrated a "good chance" of success on the merits but noted that numerous factual issues remained to be examined. The court further found that the plaintiffs had not sufficiently shown that they would be subjected to irreparable harm if the injunction was denied because the "speedy and efficient" tax protest and refund procedures available under Kansas law remained usable to the plaintiffs. It was this court's concern over the potential harm that could be caused the local governments of Kansas, if the railroads' taxes were not timely paid, that led the court to conclude that the motion for preliminary injunction should be denied. After a motion for reconsideration was denied, plaintiffs appealed this court's order to the Tenth Circuit Court of Appeals.

On December 11, 1980, the Tenth Circuit granted the Topeka railroads a temporary injunction pending the resolution of the appeal. The court declared:

It is ordered that Defendants, their successors, their agents or employers, and all in active concert or participation with them, including the county treasurers of 98 counties of the State of Kansas listed on the attachment hereto, are enjoined and restrained until the further order of this court from collecting the first half of Plaintiffs' 1980 property taxes as assessed and levied and due on or before December 20, 1980, pursuant to K.S.A. 79-2004 which amounts are in dispute in this litigation.

This order caused some confusion⁵ because of the uncertainty of the phrase "which amounts are in dispute in this litigation". In our order denying the injunction, this court had not specifically arrived at a ratio that seemed correct. The figure, upon which the later calculations of the amounts in dispute were made, had been determined by the railroads and the defendants had not seriously countered the specific amount, due to their legal arguments that the ratio used by Dr. Pine was improper. Nonetheless, the Topeka railroads were allowed to pay 58% of their taxes into the registry of this court and required to pay the remaining portion of their taxes to the counties.

On December 16, 1981, the Wichita railroads' motion for a preliminary injunction came on for hearing before Chief Judge Frank G. Theis in Wichita. At that hearing, the Wichita case was transferred to Topeka for further proceedings before this court. Thereafter, we heard evidence on the Wichita railroads' motion for preliminary injunction and the matter was taken under advisement. On December 17, 1981, this court issued an order granting the Wichita railroads a temporary injunction pending the outcome of the appeal taken by the Topeka railroads. This court found that the evidence presented by the Wichita railroads on the merits was "far stronger than that the court relied upon in its earlier decision regarding the Topeka railroads," but continued to find that plaintiffs had not made a sufficient showing of irreparable harm. However, in the interest of judicial economy, the court decided to grant the plaintiffs a temporary injunction and await a decision by the Tenth Circuit on the appeal taken by the Topeka railroads. The court restrained the defendants and their agents from collecting any portion of the Wichita railroads' 1980 first half taxes. The court found that all of the Wichita railroads' first half 1980 taxes were in dispute because of their claims for...