CHICAGO, M., ST. P. & PR CO. v. Hedges, 511E-514E

• Decision Date: 14 December 1933
• Docket Number: No. 511E-514E,517E.,511E-514E
• Citation: 5 F. Supp. 752
• Court: U.S. District Court — Western District of Washington
• Parties: CHICAGO, M., ST. P. & P. R. CO. v. HEDGES et al., and four other cases.

5 F. Supp. 752

CHICAGO, M., ST. P. & P. R. CO. v. HEDGES et al., and four other cases.

Nos. 511E-514E, 517E.

District Court, W. D. Washington, S. D.

December 14, 1933.

F. M. Dudley, O. G. Edwards, and A. J. Laughon, all of Seattle, Wash., for complainant Chicago, M., St. P. & P. R. Co.

Thomas Balmer and Edwin C. Matthias, both of Seattle, Wash., for complainant Great Northern Ry. Co.

A. C. Spencer, of Portland, Or., F. T. Merritt, of Seattle, Wash., and F. J. Betz, of Portland, Or., for complainant Oregon-Washington R. & Nav. Co.

L. B. da Ponte, of Seattle, Wash., J. W. Quick, of Tacoma, Wash., and Thos. H. Maguire, of Seattle, Wash., for complainant Northern Pac. Ry. Co.

Thomas Balmer and Edwin C. Matthias, both of Seattle, Wash., for complainant Spokane, Coeur d'Alene & P. Ry. Co.

G. W. Hamilton, Atty. Gen., of Washington, and R. G. Sharpe, Asst. Atty. Gen., of Washington, for defendants.

Before GARRECHT, Circuit Judge, and CUSHMAN and NETERER, District Judges.

NETERER, District Judge.

These cases have been consolidated for hearing upon the applications for interlocutory injunction and upon the motions to dismiss. The relief sought by each is to restrain the defendants from enforcing or collecting the excise tax of 1½ per cent. of complainants' gross receipts from intrastate business, as provided by chapter 191, p. 869, Laws of Washington, 1933, an act relating to taxation. The allegations in all of the bills of complaint are similar.

An understanding of the background of the various complainants with relation to the interstate commerce rate for carriage to meet all requirements and authorized by the Interstate Commerce Commission (a rate-governing body whose official duty the court must presume was properly discharged) is necessary. A rate was in force at and prior to the enactment of the challenged act and under the prior system of taxation, and the effect of the change thereof upon the complainants' intra and interstate revenues and the laws and Constitution of Washington with relation to the railroads should be noted.

For brevity, the Chicago, Milwaukee, St. Paul & Pacific Railroad Company will be referred to as the Milwaukee; the Great Northern Railroad Company, as the G. N.; the Oregon-Washington Railroad & Navigation Company, as the O-W; the Northern Pacific as the N. P.; and the Spokane, Coeur d'Alene & Palouse Railway Company as the S. C. P.

All of the complainants are engaged as common carriers in transportation of passengers and property, intra and inter state. The Milwaukee is a corporation of the state of Wisconsin; the G. N. is a Minnesota corporation; and the O-W is an Oregon corporation. The Milwaukee operates a steam railway system extending from Chicago into the states of Wisconsin, Minnesota, South Dakota, North Dakota, Montana, Idaho, and Washington, with main lines and branches in and extending into the states of Michigan, Indiana, Missouri, and Iowa. The N. P. operates a system of steam railways extending from a point on Lake Superior in Wisconsin, through the states of Minnesota, North Dakota, Montana, Idaho, and Washington, with lines into the state of Oregon and the Dominion of Canada. The G. N. operates a system of railway lines and branches having eastern termini at St. Paul and Duluth in the state of Minnesota, and Superior in the state of Wisconsin, and extending westerly from said termini through the states of Minnesota, North and South Dakota, Iowa, Montana, Idaho, Washington, Oregon, California, and the Dominion of Canada, with western termini at Seattle and Tacoma in the state of Washington, Portland in the state of Oregon, and Vancouver in the province of British Columbia, and is now engaged in the transportation of passengers and freight intra and inter state and the United States mail. The O-W operates a system of steam railways situated in the state of Oregon, Washington, and Idaho in intra and inter state commerce. The S. C. P., a local corporation, operates an electric interurban railway extending from Spokane, Washington, easterly to Coeur d'Alene and Hayden Lake in the state of Idaho, and from Spokane southerly to Colfax, Wash., and to Moscow, Idaho.

The corporate situs of the complainants upon tax issues bear different relations. Local corporations are differently related to the state than foreign corporations. Great Northern R. Co. v. State, 147 Wash. 630, 267 P. 506; Spokane International Ry. Co. v. State, 162 Wash. 395, 299 P. 362. And all have other statuses than the N. P., operating under a federal franchise (13 Stat. 365). Lasby et al. v. Burgess, 76 Mont. 452, 248 P. 190. By Act February 28, 1919 (40 Stat. 1204), Congress referred to the N. P. R. R. Co. as the predecessor in interest of the complainant N. P. Ry. Co. In Northern Pacific Ry. Co. v. Townsend, 190 U. S. 267, 23 S. Ct. 671, 47 L. Ed. 1044, it is said that the N. P. Ry. Co. succeeded to the property of the N. P. R. R. Co. See, also, Northern Pac. Ry. Co. v. Ely, 197 U. S. 1, 25 S. Ct. 302, 49 L. Ed. 639.

It is strongly contended in the reply brief that the tax could in no way attach to the N. P. complainant as it would be a tax on a federal franchise, and that it impairs obligation of a contract with the United States. Neither of these objections apply to the relation and status of the N. P., on the record and history in this case.

Due consideration has been given to the cases cited by complainants and the defendants, including those in the reply briefs. The conclusion which is inevitably forced upon the court is that they are not decisive upon the issue here. These instant cases are distinguished from the cases, as is later shown, but undue extension of this memo forbids an analysis of the cases, and urgency for speedy conclusion, for reasons which later appear, inhibit more extended discussion.

The defendants Hedges and Jenner are members of the state tax commission of Washington, a continuing board composed of three members, of which defendants have been appointed and qualified, are citizens of Thurston county within the Southern division of the Western district of Washington, and organized by virtue of chapter 18, p. 33, Laws of Washington 1925, and amendatory acts, two members of the board to constitute a quorum to transact business, and, as such board, are charged with the duty of enforcing the provisions of and collecting the tax imposed by virtue of the challenged act.

We think the court has jurisdiction, and the motion to dismiss on that ground is denied. The motion of the defendants to dismiss for want of equity admits as true all matter well pleaded, unless the contrary is judicially known. The Circuit Court of Appeals of this circuit, in Gleeson v. Imperial Irr. District, 59 F.(2d) 529, 530, said: "When a pleader states matter as fact which is out of harmony with facts which the court judicially knows, the averments in the pleading are disregarded. Jones v. United States, 137 U. S. 202, 11 S. Ct. 80, 34 L. Ed. 691; Pearcy v. Stranahan, 205 U. S. 257, 27 S. Ct. 545, 51 L. Ed. 793; Middlesex Transportation Co. v. Pennsylvania R. Co., 82 N. J. Eq. 550, 89 A. 45; Heiskell v. Knox County, 132 Tenn. 180, 177 S. W. 483, Ann. Cas. 1916E, 1281; McSween v. State Live Stock Sanitary Board, 97 Fla. 750, 122 So. 239, 65 A. L. R. 508. Judicial knowledge is taken of all matters generally known. * * * And the court is bound to take notice of public facts and geographical positions, and also populations of cities and counties, public documents, reports of Commissions made to Congress, and proceedings thereon, etc. The Apollon, 22 U. S. (9 Wheat.) 362, 6 L. Ed. 111, and of public activities within the common experience of men within the jurisdiction, and more especially of public conferences and meetings of members of a community of common interest and wide concern of which the court ought to have known. Brown v. Spilman, 155 U. S. 665, 670, 15 S. Ct. 245, 39 L. Ed. 304. And if the judge's memory is at fault he may resort to means he may deem safe to refresh his memory. Brown v. Piper, 91 U. S. 37, 23 L. Ed. 200." See, also, Arizona v. California, 283 U. S. 423, 51 S. Ct. 522, 75 L. Ed. 1154.

By the same token, the court may, and it is its duty to, advise itself of public records required by law to be made and kept unfolding the status and relation of tax assessments of the litigants, pertaining to the instant issue, in considering the motion to dismiss and the motion for interlocutory injunction. The court may, and in the instant case obviously must, to determine the equities of the litigants, in view of the charges made in the several bills of complaint, advise itself of the assessments made against the properties of the several complainants prior to the change of the taxation system, and the enactment of the challenged law, an "emergency measure" to meet a condition because of the economic stress in the change of the revenue system.

The act in issue is for a brief period (2 years), and imposes a tax of $167,604, and the new revenue laws of which this act is a part reduces the taxes of complainant from $1,676,512 to $938,637, or a gain to complainants of $737,825. Public stress, neutralization of threatened dangers, rioting, defiance of processes, closing of the public schools for want of funds to carry on, and shifting of public burdens in a changing revenue system, and placing additional burdens ($737,825) upon those less able to bear them, and to the credit of the complainants who have not complained, heretofore, that $1,676,512 was a burden to interstate commerce, or made application to the Interstate Commerce Commission for relief, at a time when conditions evidently produced by the collapse of the credit system present "a condition and not a theory," requires critical, very critical, consideration of the claims made before adjudicating impotency of the Legislature to relieve the pressure of public stress for a brief time by invalidating this "emergency measure" to supply...