Adams County v. Northern Pac. Ry. Co.

Citation115 F.2d 768
Decision Date23 October 1940
Docket NumberNo. 9345.,9345.
CourtU.S. Court of Appeals — Ninth Circuit





A. O. Colburn, of Spokane, Wash., and Edwin C. Ewing, of Seattle, Wash., for appellants Adams County et al.

R. G. Sharpe, Sp. Asst. Atty. Gen. of Washington, E. W. Anderson, of Olympia, Wash., and B. Gray Warner, of Seattle, Wash., Ralph E. Foley, of Spokane, Wash., S. J. Krause, of Montesano, Wash., Thor C. Tollefson, of Tacoma, Wash., and Howard E. Phillips, of Davenport, Wash., for King County et al.

L. B. daPonte, Gen. Counsel, Northern Pac. Ry. Co., of St. Paul, Minn., and Robert S. Macfarlane, Western Counsel, and Dean H. Eastman, both of Seattle, Wash., for Northern Pac. Ry. Co.

Ralph J. Anderson, Sp. Asst. Atty. Gen. and Counsel for State Board of Equalization of Montana, for amicus curiae on behalf of State of Montana.

Earl Warren, Atty. Gen., and H. H. Linney, Deputy Atty. Gen. of California (Roger J. Traynor, of Berkeley, Cal., of counsel), for State of California as amicus curiae.

Before WILBUR, HANEY, and STEPHENS, Circuit Judges.

WILBUR, Circuit Judge.

Plaintiff, a Wisconsin corporation, owning and operating railway property in each of twenty-three counties of the State of Washington, sought an injunction in the District Court of the United States for the Eastern District of Washington restraining the collection by each of these counties of unpaid taxes upon the plaintiff's operating property alleged to amount to more than $3,000 for each of the assessment years, 1935 and 1936.


The complaint was based upon assessments for said years by the State Tax Commission and charged that the valuation in each assessment was grossly excessive, fraudulent and discriminatory, in violation of the Constitution (Fourteenth Amendment) and laws of the State of Washington, and of the Fourteenth Amendment and the commerce clause of the Constitution of the United States, art. 1, § 8, cl. 3. After the complaint was filed and in reliance upon a Washington statute (ch. 106, p. 306, Laws of Washington for 1931) the Tax Commission, on June 8, 1937, adopted a resolution reciting that these assessments were apparently erroneous and excessive, and declared its intention to reassess the plaintiff's operating property for the years 1935 and 1936. The Commission gave the statutory notice of hearing. A hearing was held and on September 2, 1937, the Tax Commission entered its order reassessing plaintiff's operating property for the years 1935 and 1936. Although the reassessment purported to have been made by a different method from that followed in the original assessments the valuation for each year was fixed at the same amount as before, being $90,000,000 for 1935 and $88,500,000 for 1936. The members of the Tax Commission, sitting as a Board of Equalization, in accordance with the laws of the state, equalized these valuations at $39,489,470, and $39,238,513, respectively, the same figures at which the original assessments had been equalized. The tax was levied accordingly, being $1,401,549.12 for 1935 and $1,334,576.69 for 1936. The actual value was apportioned to the various counties upon the basis of track mileage and equalized in each county by the percentage of value used for assessment of other property, as required by law.

Thereafter on September 18, 1937, the court permitted plaintiff to file a supplemental complaint alleging material facts occurring after the filing of the complaint. This the plaintiff did, setting forth the reassessment, alleging that it was in substance identical with the original assessment and attacking it upon the same grounds. After hearing and overruling objections to the sufficiency of the complaint and supplemental complaint, the court re-referred the issues to a special master who, after hearing the parties and taking testimony, found the primary value of the plaintiff's operating property in the state to have been $63, 073,445 for the year 1935 and $58,692,565 for 1936. He placed the corresponding equalized values at $27,497,314 and $25,857,280. Upon that basis he found the taxes justly due for the years 1935 and 1936 amounted to $976,765.67 and $880,565.22, respectively. The court approved the master's findings and, upon condition of payment by the plaintiff of the proportion of the taxes there found by the court to be reasonable, perpetually enjoined defendant counties, excepting two of them as to which the case was dismissed for want of the jurisdictional amount in controversy, from attempting to collect any additional sum from plaintiff on account of taxes for 1935 and 1936.

From this decree the defendant counties appeal. Upon the ground that the court made the injunction dependent upon the payment of a portion of the tax larger than the plaintiff admits to be justly due it has taken a cross-appeal from that portion of the decree fixing the amount of the tax to be paid as a condition to the obtaining of injunctive relief.


At the outset we are confronted with a question of pleading. It is contended by defendants that the reassessment could not properly be attacked in a supplemental complaint, but, if vulnerable to attack, should have been treated as a new cause of action and made the basis of a new complaint in an independent action. Upon this point it is sufficient to observe that the Supreme Court has treated the filing of a supplemental complaint as a matter depending not so much upon strict law as upon the sound discretion of the court and we are not prepared to say that the trial court abused its discretion in permitting the filing of the supplemental complaint in this case. Cf. Missouri Rate Cases, 230 U.S. 474, 33 S.Ct. 975, 57 L. Ed. 1571.

The jurisdiction of the trial court was predicated upon diversity of citizenship and the presence of federal questions and of claims in jurisdictional amounts. There is no question of jurisdiction over the action stated in the complaint upon the original assessments; but a jurisdictional question of some difficulty is presented with respect to the charge in the supplemental complaint based upon the reassessment. This arises owing to an amendment to section 24 of the Judicial Code, which was adopted on August 21, 1937, 28 U.S.C.A. § 41(1), after the filing of the complaint but before the order permitting the supplemental complaint. This amendment provides that "no district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State."

The amending act provides that it shall not affect suits commenced in the district courts prior to its passage and that "all such suits shall be continued, proceedings therein had * * * in the same manner and with the same effect as if it had not been passed" (28 U.S.C.A. § 41, sub. (1a) (b) c. 726, § 2, 50 Stat. 738). As the Supreme Court has approved a supplemental complaint in a rate case where a new rate statute was passed after the original complaint was filed attacking a previous statutory rate (Missouri Rate Case, supra) it would seem that a supplemental complaint would be appropriate in the case at bar, and we so hold. There is, however, one element in the Missouri Rate Case, supra, not present in the case at bar, namely, the saving of penalties under the old statute in the new one.

Assuming, however, that this conclusion may be erroneous because of the difference noted and that the supplemental complaint is in effect a new and original complaint, we must consider whether or not there was jurisdiction when the new complaint was filed under the provisions of the jurisdictional statute as amended (28 U.S.C.A. § 41, sub. (1), supra), which permit federal jurisdiction only in case there is no "plain, speedy, and efficient remedy * * * at law or in equity" in the courts of the state of Washington to which the plaintiff might have resorted. The defendant counties contend that the plaintiff had a choice of several such remedies in the state courts.

Arguments supported to some extent by adjudicated cases have been presented by counsel to the effect that certiorari (Lewis v. Bishop, 19 Wash. 312, 53 P. 165), a suit to enjoin the Tax Commission from certifying its reassessment to the county assessor (Fargo v. Hart, 193 U.S. 490, 503, 24 S.Ct. 498, 48 L.Ed. 761) and, in case such certification has been made, a suit to enjoin the assessor from spreading the reassessment upon the tax rolls of their respective counties (Denny v. Wooster, 175 Wash. 272, 276, 277, 27 P.2d 328) were all available to the plaintiff if it desired to attack the assessment as being either illegal or excessive. In the view we take of the matter it is unnecessary to consider these remedies in detail; for, whatever may formerly have been the law as to their availability in the state courts all of them, by necessary implication, have been superseded by the single remedy prescribed by chapter 62, p. 201, Laws of 1931 of the State of Washington.

Section 2 of said chapter provides in substance that in all cases of the levy of taxes which are deemed unlawful or excessive the person, firm or corporation from whom such tax is demanded may pay the amount demanded under a written protest and bring an action in any court of competent jurisdiction to recover such tax or any portion thereof so paid under protest. The taxpayer can recover in one action from all the counties involved in the protested tax. Section 7 of the same chapter provides that "except as permitted by this act, no action shall ever be brought attacking the validity of any tax, or any portion of any tax". The intention of the legislature to make the refund action the exclusive remedy in case of a...

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