Baker v. Atchison, T. & SF Ry. Co.

• Citation: 106 F.2d 525
• Decision Date: 11 December 1939
• Docket Number: No. 1820.,1820.
• Parties: BAKER, County Treasurer, et al. v. ATCHISON, T. & S. F. RY. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

106 F.2d 525 (1939)

BAKER, County Treasurer, et al. v. ATCHISON, T. & S. F. RY. CO.

No. 1820.

Circuit Court of Appeals, Tenth Circuit.

August 22, 1939.

Rehearing Denied October 12, 1939.

Writ of Certiorari Denied December 11, 1939.

Henry E. Lutz, Asst. Atty. Gen. (Byron G. Rogers, Atty. Gen., on the brief), for appellants.

W. W. Grant, of Denver, Colo. (Morrison Shafroth, of Denver, Colo., and Charles H. Woods, of Chicago, Ill., on the brief), for appellee.

Elmer L. Brock and E. G. Knowles, both of Denver, Colo. (J. L. Rice, of Denver, Colo., on the brief), amici curiae.

Before PHILLIPS, BRATTON, and WILLIAMS, Circuit Judges.

Writ of Certiorari Denied December 11, 1939. See 60 S.Ct. 296, 84 L.Ed. ___.

BRATTON, Circuit Judge.

The Atchison, Topeka and Santa Fe Railway Company instituted this suit against the respective treasurers of Baca, Bent, Douglas, El Paso, Fremont, Las Animas, Otero, Prowers, and Pueblo Counties, in Colorado, to enjoin the collection of a portion of the ad valorem taxes laid against its property situated in such counties for the year 1937, to expunge such taxes from the records, and to remove cloud from title resulting from the imposition of such taxes. Reference will be made to the parties as they appeared in the trial court.

The bill alleged that plaintiff seasonably filed with the State Tax Commission a sworn statement setting forth the facts required by law bearing on the value of its property; that the commission ascertained and determined that the true and full cash value of such property for purposes of taxation was $18,750,810; that such value was duly apportioned among the several counties through which plaintiff's lines of railroad ran, and the respective amounts were certified to the assessors thereof; that the State Board of Equalization increased by twenty per cent the values of all railroad property throughout the state as fixed by the commission; that the property of plaintiff was thus increased to $22,500,972; that such increased values were apportioned, certified to the assessors, and extended on the assessment rolls; that such increase in value occasioned an increase of $110,418.05 in taxes assessed against the property of plaintiff; that for many years prior to 1937 the tax authorities in Colorado had systematically, intentionally, and arbitrarily overvalued the property of plaintiff and that of other railway companies as compared with the valuation of other kinds of property; that the action of the board of equalization was not taken in the exercise of judgment guided by recognized standards in the assessment of railroad properties but was arbitrary, unlawful, and capricious, and in furtherance of such custom and system; that such discrimination violated the due process and equal protection clauses of the Fourteenth Amendment to the Constitution of the United States; that plaintiff had either paid on account or tendered to the various defendants the taxes based on the valuation fixed by the tax commission; and that plaintiff had no plain, speedy, and efficient remedy at law or in equity in the courts of the state. Defendants interposed a joint and several motion to dismiss the cause for want of jurisdiction in that plaintiff had a plain, speedy, and efficient remedy at law, or if such remedy was inadequate or inefficient, plaintiff had a plain, speedy, and efficient remedy in equity in the courts of the state. The court denied the motion and ordered defendants to elect within twenty days whether they would stand on their motion or plead further. They elected to stand, and a final decree was entered perpetually enjoining them from collecting or attempting to collect that part of the taxes in excess of the amount based on the valuation of the tax commission, expunging such taxes from the records, and removing cloud from title. Defendants appealed.

The State Board of Equalization of Colorado is vested with power to raise or lower classes or sub-classes of property in the process of equalizing values but not individual items within a class or sub-class. Board of Commissioners v. Union Pac. R. Co., 89 Colo. 110, 299 P. 1055; Union Pac. R. Co. v. Board of Commissioners, 10 Cir., 35 F.2d 785. It is not contended that the laws of the state fail to authorize the board to increase the valuation of railroad property as a class in the equalization of values. The action of the board in making the increase in question is challenged solely on the ground that the valuation thus fixed was out of reasonable proportion to that of other kinds of property and therefore constituted a discrimination in violation of the due process and equal protection clauses of the Fourteenth Amendment. U. S.C.A.Const.

The merits of the controversy are not presented for determination. The question at hand is whether the United States Court for Colorado had jurisdiction of the suit. Section 24(1) of the Judicial Code, as amended by the Act of August 21, 1937, 50 Stat. 738, 28 U.S.C.A. § 41(1), provides that no United States district court shall have jurisdiction of a suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax levied pursuant to the laws of a state where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such state. The statute was considered in the case of Kohn v. Central Distributing Co., Inc., 306 U.S. 531, 59 S.Ct. 689, 83 L.Ed. 965. There plaintiffs as holders of a chattel mortgage covering certain whiskey brought suit in the federal court to restrain proceedings pending in the state court for the collection of an asserted tax, contending that the statutes of the state under which the tax was assessed and sought to be enforced violated the state constitution and the commerce, contract, and due process clauses of the Constitution of the United States. The court held that the effort to invoke the equity jurisdiction of the federal court encountered the statutory prohibition contained in section 24 of the Judicial Code, as amended. The court decided Driscoll v. Edison Light and Power Company, 307 U.S. 104, 59 S.Ct. 715, 83 L.Ed. ___, on the same day. The appeal in that case was from a decree granting a permanent injunction against the enforcement of the rates of a utility company. The court on its own motion raised the question of lack of jurisdiction under the provisions of section 24(1) of the Judicial Code, as amended by the Act of May 14, 1934, 48 Stat. 775, 28 U.S.C.A. § 41(1), commonly called the Johnson Act, which provides that a federal court shall not have jurisdiction of a suit to enjoin the enforcement or execution of an order of an administrative board or commission of a state, or any rate-making body of a political subdivision thereof where jurisdiction is founded solely on diversity of citizenship, or repugnance of the order to the Constitution of the United States, where such order affects rates chargeable by a public utility, does not interfere with interstate commerce, and has been made after reasonable notice and hearing, and where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such state, the inhibitory language thus being substantially identical with that contained in the Act of August 21, 1937, supra. It was conceded in oral argument that no remedy existed in the courts of the state which would satisfy the Johnson Act. The court referred to certain state statutes, stated that in the absence of an authoritative determination by the state courts it could not be said that the remedy in the state courts was plain, speedy, and efficient, and that for such reason the United States court was not deprived of equity jurisdiction. While jurisdiction in the latter case was sustained, the two cases admonish us that a federal court lacks jurisdiction of a suit of this kind where there is a plain, speedy, and efficient remedy at law or in equity in the state courts.

Does plaintiff have such a remedy in the courts of Colorado? Section 281, chapter 142, Colorado Statutes Annotated 1935 provides that in all cases where any person shall pay any tax, interest, or cost, that shall afterwards be found to be erroneous or illegal, whether due to erroneous assessment, improper or irregular levying, or clerical or other errors or irregularities, the board of county commissioners shall refund the same to the taxpayer without abatement or discount. But it is contended that the statute applies only to illegal taxes and is without application to taxes which are merely excessive due to an overvaluation of property. It is sought to draw a determinative distinction between taxes which are illegal and taxes which are based on an overvaluation of property, it being asserted that the statute may be invoked in respect to the former but not the latter. The statute was reviewed in Singer Sewing Machine Co. v. Benedict, 229 U.S. 481, 33 S.Ct. 942, 57 L.Ed. 1288. There the taxpayer made a return of taxable personal property at a specified valuation. The assessor added other property which increased the total assessment. The taxpayer tendered payment of the amount of taxes on the property returned but declined to pay the further amount attributable to the additional assessment. The tender was refused and the suit was to enjoin collection of the amount attributable to the additional assessment. After reviewing certain decisions of the supreme court of the state in which it was held that illegal or void taxes may be paid and recovered under the statute, the court determined that the statute afforded the taxpayer an adequate remedy at law, and that there was no basis for relief in equity. The statute was again considered in Union Pac. R. Co. v. Weld County, 247 U.S. 282, 38 S.Ct. 510, 62 L.Ed. 1110, a case indistinguishably similar to this one. There the railroad company charged that its property had been assessed at one-third of its value while most of the other property had been assessed at only...