Bd. of Com'rs of Johnson Cnty. v. Johnson

CourtSupreme Court of Indiana
Citation89 N.E. 590,173 Ind. 76
Docket NumberNo. 21,317.,21,317.
Decision Date27 October 1909


Appeal from Circuit Court, Johnson County; E. L. Branigan, Special Judge.

Petition by Grafton Johnson and others to the Board of Commissioners of Johnson County for a refundment of excessive taxes paid. The petition was rejected, and on appeal to the circuit court judgment was rendered in favor of petitioners, and the Commissioners appeal. Affirmed.James Bingham, W. H. Thompson, Edward M. White, Alexander G. Cavins, and George I. White, for appellants. E. A. McAlpin, for appellees.


Appellees, as copartners conducting a private banking business, after March 1, 1905, made a tax return in accordance with Acts 1903, pp. 64, 65, c. 29, § 27, and thereunder claimed the right to deduct their deposits from all taxable property owned by them, except real estate, and listed under the first six clauses of that section, upon which basis the amount of property upon which they were taxable would have been $1,483.92, and the taxes $33.98. Under the fifth subdivision of section 27, they listed $6,000 par value of preferred stock in a domestic corporation as exempt from taxation. The county board of review added this sum to the $1,483.92, and upon appeal the State Board of Tax Commissioners raised the assessment to $25,760, which appears to have been arrived at by deducting deposits from items scheduled under clause 4, and refusing credit for deposits against items scheduled under the first, second, third, fifth, and sixth clauses of section 27, supra, and upon that basis taxes were entered upon the tax duplicate to the amount of $589.90, which appellees paid, including $33.98, admitted by them to be just. Then they filed a petition before the board of commissioners for a refunding order for $555.92, the alleged excess of unlawful taxes. The petition was rejected, and an appeal taken to the circuit court, where a demurrer was filed by the board and overruled, and, refusing to plead further, judgment was rendered for the $555.92 and interest, from which this appeal is prosecuted.

The complaint sets out the history of the transaction in detail, alleging that no evidence was heard by the county board of review, or the Board of State Tax Commissioners, and that the assessment was based wholly upon the assessment returned by appellees, which is alleged to have been true, and the value as stated true, and so taken by the taxing officers, and boards, and is set out. The petition alleges: That no taxpayers other than themselves, similarly situated, and engaged in the same business, were refused the right to deduct from all of their property their deposits, held on the 1st day of March, 1905; that the assessment was made solely by refusing to allow deduction of deposits from any property except bills receivable, and other credits; that this was a wrongful and unjust discrimination against them; that the attempt to assess and collect the sum of $555.92 was an attempt to take their property without due process of law, and a denial of the equal protection of the law, in violation of section 1, art. 14, of the amendments to the federal Constitution, and to deprive them of the benefits of paragraph 8, § 8, art. 1, of the Constitution of the United States. Two questions arising upon the demurrer to the complaint are presented by appellant: First, as to the construction and validity of section 27; and, second, as to the conclusiveness of the assessment made by the Board of State Tax Commissioners. If the assessment made by the State Board is conclusive, it will be unnecessary to examine the first proposition.

We have not been able to bring our minds to the conclusion that the assessment by the State Tax Commissioners is final. The statute does not so provide, and while with respect to the subject of valuation its conclusions ought to be, and are, final, it ought not to be, and is not true, that that tribunal, large as its powers necessarily are, can arbitrarily, and in the face of the statute, assess property which is not assessable or taxable. There is a very wide distinction between the taxable valuation of property, and its taxable character, and that, as we conceive it, is the true distinction, and the one actually made by the cases. The point involved in Cleveland, etc., Co. v. Backus, 133 Ind. 513, 33 N. E. 421, 18 L. R. A. 729, so far as it is applicable here, was not whether the railway property was assessable, but as to its valuation by the method of classification provided by the statute, and adopted by the commissioners. There are expressions used in the opinion in Youngstown Bridge Co. v. Kentucky & Indiana Bridge Co. (C. C.) 64 Fed. 441, and McLeod v. Receveur, 71 Fed. 455, 18 C. C. A. 188, which would seem to bear out appellant's contention; but a careful consideration on the facts in those cases do not justify that conclusion. In the former case the Board of Equalization, as it was then called, had assessed a bridge, partly in Indiana and partly in Kentucky, and it was insisted that the valuation was too great, owing to the fact that a greater portion of the bridge was in the state of Kentucky, and was not the subject of valuation in Indiana, and it was purposed to impeach the valuation by showing that the board had committed an error in fact, or a mistake in judgment, as to the property within the jurisdiction of the taxing power of Indiana, and it is said in the opinion that the first question to be determined by the board is as to what property is properly subject to taxation by it. Whilst the board has large powers, it is still a tribunal of restricted powers, and the subject of its jurisdiction, what it may assess, is fixed by statute, and it can exercise no powers beyond that; but it is insisted that if it exercises a purely arbitrary power, and selects for assessment and valuation property wholly beyond its jurisdiction, there can be no relief. We cannot accede to that proposition, and in the particular case last cited we do not understand the facts as making that case. There could be no separation of the subject-matter by which it could clearly be determined that the board had exceeded its jurisdiction to assess, for the reason that it could not be determined that the board had placed a valuation on property beyond the state line, and it must be presumed that it had valued only what it was authorized to value, and certainly the cases upon which that case is founded are not authority to the extent claimed for them in the opinion. In First Presbyterian Church v. City of New Orleans, 30 La. Ann. 259, 31 Am. Rep. 224, there had been a judgment rendered in a court of full jurisdiction in a case where the question could have been litigated and adjudicated and the judgment paid, and then an action brought to recover the money paid on the judgment upon the theory that the judgment was erroneous, because the property upon which the assessment was made, which was the subject of the judgment, was erroneous, and upon every principle of jurisprudence that action would not lie, both because the question could have been and must be presumed to have been adjudicated, and because it was a collateral attack upon the judgment. In County v. St. Paul, etc., R. R., 27 Minn. 109, 6 N. W. 454, and Birmingham v. Sham, 10 Adol. & E. (N. S.) 868, there was a right of appeal for the correction of the error, which was adopted.

The views we entertain are those entertained by the Circuit Court of Appeals in McLeod v. Receveur, 71 Fed. 455, 18 C. C. A. 188, where the question was brought in review, for the court there treat the case as one where the property in Indiana was excessively valued, because of an error of judgment as to how much of the bridge was in Indiana, and it will be seen at once that that court treated it as a case of over valuation or doubt as to the manner of arriving at it, which is everywhere conceded to be beyond review by the courts, and not a case of wrong principle of assessment. This view is in line with the decisions of the Supreme Court of the United States, as declared in Pittsburgh, etc., Co. v. Backus, 154 U. S. 421, 14 Sup. Ct. 1114, 38 L. Ed. 1031, and Cleveland, etc., Co. v. Backus, 154 U. S. 439, 14 Sup. Ct. 1122, 38 L. Ed. 1041, involving the same question as the last-named case in this court, where the rule is distinctly adopted that in the assessment and valuation of railways the property is considered as a whole, and, while the portion of the road located in another state may be considered in determining values, the valuation is made on property in Indiana in the proportion which the length in Indiana bears to the whole length of the road, and that such valuation is not upon property outside the state, and under that rule the result reached in the Bridge Company Cases may have been a proper valuation for aught that appears. But in the Backus Case it is conceded that a gross error in the system upon which the valuation is made may invoke the action of the courts. So in Stanley v Supervisors, 121 U. S. 535, 7 Sup. Ct. 1234, 30 L. Ed. 1000, whilst recognizing the plenary powers of taxing boards, and their conclusiveness as to the matters of valuation of property within their jurisdiction, and the manner of arriving at values, it is said: “When the overvaluation of property has arisen from the adoption of a rule of appraisement which conflicts with a constitutional or statutory direction, and operates unequally, not merely on a single individual, but on a large class of individuals, or corporations, a party aggrieved may resort to a court of equity to restrain the exaction of the excess, upon payment or tender of what is admitted to be due.”

The true rule, as we conceive it to be, is that where the question is one of valuation, or where there may be a question of the extent to which consideration of the property in relation to other property of which it may...

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