Aultman & Taylor Co. v. Brumfield

• Decision Date: 31 May 1900
• Docket Number: 5,901.
• Citation: 102 F. 7
• Parties: AULTMAN & TAYLOR CO. v. BRUMFIELD, Treasurer.
• Court: U.S. District Court — Northern District of Ohio

102 F. 7

AULTMAN & TAYLOR CO. v. BRUMFIELD, Treasurer.

No. 5,901.

United States Circuit Court, N.D. Ohio, Eastern Division.

May 31, 1900

Wm. A Lynch, Harter & Krichbaum, Bell & Brinkerhoff, Cummings &amp McBride, and Bricker & Workman, for complainant.

Brucker & Cummins, Douglass & Mengert, and J. B. Jones, for respondent.

Before LURTON, Circuit Judge, and RICKS, District Judge.

LURTON Circuit Judge.

The complainant is a manufacturing corporation organized under the laws of Ohio. The respondent is a citizen of the state of Ohio, and is the treasurer of Richland county, Ohio. In January, 1899, the auditor of Richland county, acting under sections 2781 and 2782 of the Revised Statutes of Ohio, made a back assessment against the complainant corporation upon personal property alleged to have been omitted from its tax returns for the years 1893, 1894, 1895, 1896, 1897, and 1898. The aggregate of the back assessment for the several years with penalties, amounts to more than $250,000. These assessments were certified by the auditor to the county treasurer, who placed them for collection upon the personal tax duplicate of the county. Two courses were then open to the treasurer for the collection of the tax thus assessed. He might have issued a distress warrant under section 1095 of the Revised Statutes of Ohio, or he might bring an action at law against the tax debtor in the court of common pleas for the recovery of a judgment against him, as provided by section 2859 of the Revised Statutes of Ohio. If he resorted to the first course, and the taxpayer had reason to believe that the assessment was illegal, it was open for the latter to enjoin the collection of the tax, under section 5848 Rev. St. Ohio. Whitbeck v. Minch, 48 Ohio St. 210, 31 N.E. 743; State v. Jones, 51 Ohio St. 492, 517, 37 N.E. 945; Railroad Co. v. Wagner, 43 Ohio St. 75, 1 N.E. 91; Groesbeck v. City of Cincinnati, 51 Ohio St. 365, 37 N.E. 707. The county treasurer, in respect to the back tax assessed against complainant, did not resort to a distress warrant, but instituted suit in the common pleas court of Richland county, Ohio, and sought to recover judgment against it, and to collect same by execution. Section 2859, Rev. St. Ohio, provides that, in a suit against a tax debtor assessed under sections 2781, 2782, Id., 'the tax duplicate shall be received as prima facie evidence on the trial of said suit of the amount and validity of such taxes appearing due and unpaid thereon. ' The complainant was duly served with process, and required to appear and defend the said suit, and did so appear and plead. In this situation, and while said suit was pending and undecided, this bill was filed. The complainant in its bill denies that it had omitted to make true returns of its personal property subject to taxation for either of the years for which it has been back assessed, denies that it made false returns, and, in the most strenuous terms, avers that the assessment thus made by the county auditor was unjust, arbitrary, and illegal. It also sets out certain matters which occurred in the auditor's office pending his action, which operated to mislead complainant as to the purpose of the auditor, and by which it was cut off from making a full defense.

Section 1071, Rev. St. Ohio, provides that the county auditor shall receive, as compensation, 4 per centum of any taxes collected and paid into the county treasury on property omitted, and placed by him upon the tax duplicate, under sections 2781 and 2782, already cited. Complainant avers that, in a proceeding started before the auditor by the tax inquisitor for the correction of the return of a taxpayer for the purpose of back-assessing omitted property, the county auditor acts in a quasi judicial capacity, and is required to hear and weigh evidence, and decide all questions of both fact and law in issue between the tax inquisitor and the taxpayer. Upon this promise complainant avers that sections 2781 and 2782, under which the county auditor can alone act, are in conflict with that provision of the fourteenth amendment to the constitution of the United States, which provides that 'no state shall deprive any person of life, liberty or property without due process of law. ' In short, the contention is that the county auditor is given a direct interest in finding against the supposed delinquent taxpayer, and no compensation if he finds for him, and that an assessment which results from the prejudiced or interested action of the county auditor is not 'due process of law.' Upon the theory that the law of Ohio, under which these assessments were made, is obnoxious to the constitution of the United States, as not providing for due process of law, the complainant has sought the interposition of a court of the United States.

The objection thus made to the competency of the county auditor, by reason of the mode in which he is compensated, was presented to the supreme court of Ohio, and decided in favor of the validity of the law, in the case of Probasco v. Raine, 50 Ohio St. 378, 34 N.E. 536. The same question came before this court in Meyers v. Shields (C.C.) 61 F. 713, where the opinion was by RICKS, District Judge, where the law was held invalid, as not constituting due process. In Meyers v. Shields, cited above, the jurisdiction of this court was clear. The bill in that case was filed before jurisdiction had attached in any state court, and no question arose as to the power of this court to enjoin an action in a state court for a judgment upon the back assessment there complained of. Neither was there any doubt as to the efficiency of a remedy in this court which did not include an injunction against a prior and pending suit in a court of the state in which the validity of the same assessment was involved. The views of Judge RICKS, as to the invalidity of sections 2781 and 2782 of the Revised Statutes of Ohio, are fully expressed in his opinion in Myers v. Shields, cited above, and to the opinion there announced he still adheres; but, in the view we have as to the equitable jurisdiction of this court to grant any practical or efficient relief without enjoining the pending suit in the court of common pleas, we find it unnecessary to consider the merits of the case, or pass formally upon the constitutional question upon which the jurisdiction of this court is invoked.

The prayer of the complainant's bill is that the defendant, who, as treasurer of Richland county, is the plaintiff in the action now pending in the court of common pleas, be enjoined and perpetually restrained from proceeding with his said action, and from in any manner collecting, or attempting to collect, the tax so assessed against the complainant. An injunction pendente lite was granted by one of the judges of this court upon the filing of the bill, by which the action of the state court has been stopped, and issues have been made upon all the questions of fact and law upon which the justice or validity of all the tax assessed depends. The case comes on now for a final hearing, and also upon preliminary motions by the defendant to dissolve the interlocutory injunction, and to dismiss the bill for want of jurisdiction in consequence of the prior jurisdiction acquired by the court of common pleas.

It is very plain that unless this court can stop the proceeding in the state court, and draw to itself jurisdiction over the whole subject, no efficient relief can be afforded the complainant. But this is precisely what this court is forbidden to do by section 720 of the Revised Statutes of the United States. That section is as follows:

'The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a state, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy.'

This section is from the judiciary act of 1793. In view of our complex system of governments and courts, it gives legislative sanction to a rule of action long recognized by courts of concurrent jurisdiction, that a court first acquiring jurisdiction shall retain it, and decide every question which occurs in the cause, and that the right to exercise such jurisdiction will not be taken away by proceedings subsequently started in another court. Peck v. Jenness, 7 How. 612, 624, 12 L.Ed. 841. 'These rules,' said Mr. Justice Grier, in the case cited above 'have their foundation, not merely in comity, but on necessity; for if one may enjoin, the other may retort by injunction, and thus the parties be without remedy, being liable to a process for contempt in one, if they dare to proceed in the other. ' The statute has many times been given application, and the necessity for its observance impressed upon subordinate courts. Peck v. Jenness, 7 How. 612, 12 L.Ed. 841; Diggs v. Wolcott, 4 Cranch, 179, 2 L.Ed. 587; Haines v. Carpenter, 91 U.S. 254, 23 L.Ed. 345; Dial v. Reynolds, 96 U.S. 340, 24 L.Ed. 640; Association v. Hurst, 7 C.C.A. 598, 59 F. 1. It is true that there are cases in which an injunction has been sanctioned in which proceedings in a state court have been stayed, but it will be found, upon examination, that in every such instance the injunction was for the purpose of protecting the subject-matter of the litigation over which the court issuing the injunction had first acquired jurisdiction. French v. Hay, 22 Wall. 250, 24 L.Ed. 857; Dietzsch v. Huidekoper, 103 U.S. 494, 26 L.Ed. 497; Providence & N.Y. Steamship Co. v. Hill Mfg. Co., 109 U.S. 578, 599, 600, 3 Sup.Ct. 379, 617, 27 L.Ed. 1038; Moran v. Sturges, 154 U.S. 256, 270, 14 Sup.Ct. 1019, 38 L.Ed. 981; Iron Mountain R. Co. v. City of Memphis, 37 C.C.A. 410, 96 F. 113. There can be, of course, no pretense that the jurisdiction of this court first...