Alterman Transport Lines, Inc. v. PUBLIC SERV. COM'N OF TENN.

• Decision Date: 10 October 1966
• Docket Number: Civ. A. No. 4417.
• Citation: 259 F. Supp. 486
• Parties: ALTERMAN TRANSPORT LINES, INC., et al., v. PUBLIC SERVICE COMMISSION OF TENNESSEE et al.
• Court: U.S. District Court — Middle District of Tennessee

259 F. Supp. 486

ALTERMAN TRANSPORT LINES, INC., et al., v. PUBLIC SERVICE COMMISSION OF TENNESSEE et al.

Civ. A. No. 4417.

United States District Court M. D. Tennessee, Nashville Division.

October 10, 1966.

COPYRIGHT MATERIAL OMITTED

David S. Cordish, Cordish & Cordish, Baltimore, Md., and J. G. Lackey, Jr., Stephenson, Lackey & Holman, Nashville, Tenn., for plaintiffs.

Milton P. Rice, Asst. Atty. Gen., State of Tennessee, and Eugene W. Ward, Gen. Counsel, Public Service Commission, Nashville, Tenn., for Public Service Commission and State Board of Equalization.

Seymour Samuels, Jr., Dept. of Law, Nashville, Tenn., for Metropolitan Government of Nashville and Davidson County.

William H. Williams, Shelby County Atty., Memphis, Tenn., for Shelby County.

Patrick Johnson, Sr., and William W. O'Hearn, Memphis, Tenn., for the City of Memphis.

Earl S. Ailor, Knox County Legal Dept., Knoxville, Tenn., for Knox County.

W. P. Boone Dougherty, Deputy Director of Law, Knoxville, Tenn., for City of Knoxville.

James F. Turner, Chattanooga, Tenn., for Hamilton County.

Eugene N. Collins, City Atty., and Ellis K. Meacham, Deputy City Atty., Chattanooga, Tenn., for City of Chattanooga.

Before HARRY PHILLIPS, Circuit Judge, and WILLIAM E. MILLER and FRANK GRAY, Jr., District Judges.

WILLIAM E. MILLER, District Judge.

Plaintiffs are corporations engaged in the business of transportation of goods by motor carrier in interstate commerce. In the conduct of such business, their trucks travel within the state of Tennessee. Plaintiffs' action names as defendants the Public Service Commission of Tennessee, the State Board of Equalization, and specified municipalities and counties as representatives of all the municipalities and counties of the state. The chief purpose of the action is to contest the validity of the taxing statutes, Tenn.Code Ann. §§ 67-901 to 67-934, under which plaintiffs presently are subject to yearly ad valorem taxes. As the plaintiffs seek an injunction restraining the enforcement of the statutes on the ground of unconstitutionality, a three-judge court was constituted pursuant to 28 U.S.C.A. § 2281.

Under the Tennessee taxing statutes, plaintiffs are classified as "irregular route motor carriers."¹ Such carriers are required to submit to the Public Service Commission, the state agency charged with the responsibility of assessing utility property, specified information including the number of miles traveled each year both within and without Tennessee.² Penalties may be invoked by the Commission for failure to comply with these reporting procedures. Ad valorem taxes on carriers are payable to the various counties and municipalities through which "irregular route carrier" trucks pass, determined in accordance with local rates of taxation.

The Tennessee Board of Equalization, after assessments have been made by the Public Service Commission, and by the various local assessing authorities for non-utility property, has the responsibility of equalizing the various assessments according to the terms of the Tennessee Constitution which provides that all property shall be assessed at actual cash value. In the case of utility property, the Board certifies the equalized assessment back to the Commission which then certifies to each local taxing authority the value of taxable property to be considered within the local jurisdiction. The distributable property of irregular route carriers in Tennessee is allocated to local taxing authorities on a proportional basis according to the ratio of mileage traveled within the local jurisdiction to the total mileage traveled by the carrier in the state. This is the system of taxation which plaintiffs now challenge.

Basically, plaintiffs' position is that the Tennessee statutes under which they are taxed are unconstitutional for the reason that the property so taxed has not been within the state long enough to acquire a tax situs. The statutes are also said to be unconstitutional in their application under the recent ruling in Louisville & Nashville RR. Co. v. Public Service Commission, 249 F.Supp. 894 (M.D.Tenn.1966), since property assessed by the Public Service Commission is systematically assessed at a much higher rate than that assessed by local authorities. For relief, plaintiffs have requested an injunction against enforcement of the statutes on grounds of unconstitutionality, an injunction against the Commission and Board of Equalization prohibiting them from certifying, making, or distributing assessments against plaintiffs under these statutes, a declaration that assessments already made are void, recovery of all monies paid under the statutes, and a declaration of rights under 28 U.S.C.A. § 2201. Defendants have interposed motions to dismiss and for summary judgment upon which this action was heard April 28, 1966. At that time hearing was also held on plaintiffs' application for a temporary injunction. Defendants have based their motions largely on the grounds of lack of federal jurisdiction.

Plaintiffs have sought to invoke the jurisdiction of this Court on many and varied grounds. They have alleged that jurisdiction exists because of diversity of citizenship, the presence of a federal question, the fact that the action arises under an Act of Congress regulating Commerce as contemplated by 28 U.S. C.A. § 1337, and the fact that the practices complained of are violations of plaintiffs' rights under the Civil Rights Act, 28 U.S.C.A. § 1343(3). Plaintiffs characterize the action as a class action under Rule 23.

Under 28 U.S.C.A. § 1337, district courts have jurisdiction of actions arising under Acts of Congress regulating Commerce. Plaintiffs allege that this action arises under such an Act since compliance with the Tennessee statute is claimed to involve violations of various portions of the Code of Federal Regulations relating to highway safety as provided for in the Interstate Commerce Act of 1940. 54 Stat. 899 (1940). They allege that to comply with the reporting provisions of the Tennessee statutes as to mileage traveled they have been compelled to stop their trucks in the middle of the night on lonely roads to search for boundary markers between the cities and counties of the state. This, it is alleged, results in the trucks constituting a menace to safety and the drivers often violating federal safety standards since it would not be practical to take the time to comply with all of the federal regulations relating to stops along the highways. Plaintiffs thus contend that the statutes constitute an unconstitutional burden on interstate commerce.

Despite plaintiffs' allegations that they are violating provisions of various Interstate Commerce Acts, it does not appear that they are forced to do so by the statutes in question. In addition, no restriction on interstate commerce appears as a necessary effect of the statutes. The Tennessee statutes require that motor carriers report the number of miles traveled within each of the local political subdivisions of the state. There is no provision as to how this should be accomplished. The method of compliance allegedly chosen by plaintiffs cannot be deemed a result of the challenged statutes unless it is demonstrated that this method is the only practical way that the required reporting may be accomplished. An allegation to this effect, conclusory in character, will not suffice to constitute a basis for jurisdiction, particularly if it appears to be unreasonable on its face. Since in normal travel it must be presumed that motor carriers use established routes and do not travel at random, the reason for frequent and repetitive stops to determine local boundary lines cannot be perceived. There is, furthermore, no allegation to the effect that the Public Service Commission requires such accurate reporting as would necessitate roadside measurements.³ The controlling factor is not the conduct or action of the plaintiffs but the requirements or exactions of the defendants imposed in compliance with the statutes. Where it is not fairly demonstrated that the actions of the defendants were taken under compulsion or pursuant to the mandate of the statutes, this Court must hold that there is no basis for jurisdiction under 28 U.S.C.A. § 1337.

Certain restrictions upon a federal court are applicable when it is asked to enjoin the enforcement of a state taxing statute. For example, federal courts are prohibited from enjoining the enforcement of such statutes where there is a plain, speedy and efficient remedy in the state courts. 28 U.S.C.A. § 1341. As to one basis for this action; that of lack of situs, the Tennessee courts have demonstrated that adequate state remedies exist to challenge on this ground the validity of the statutes or any assessments made pursuant to them.⁴ Howard Sober, Inc. v. Clement, 52 Tenn.App. 115, 372 S.W.2d 202 (1960); Jack Cole Co. v. Ellington, 52 Tenn.App. 120, 372 S.W.2d 204 (1961); E & L Trans. Co. v. Ellington, 212 Tenn. 671, 371 S.W.2d 456 (1963). Were this the only ground for plaintiffs' action, this Court would be required to hold that it was precluded from exercising jurisdiction. As to the adequacy of state remedies, the case here is distinguishable from Louisville & Nashville R.R. Co. v. Public Service Commission, supra. In that case it was pointed out on the basis of a number of rulings of the Supreme Court of Tennessee that before a taxpayer could complain that his own property was assessed at a higher valuation than the property of his neighbor, in violation of the uniformity requirement of the state constitution, he must be able to allege and show that his own property was assessed at more than its actual cash value. This roadblock was one which cut across all procedural avenues—whether a suit for tax refund after payment under protest, an application to the courts to review by certiorari the findings of the Equalization Board, or a suit in equity to enjoin the challenged...