City Ry. Co. v. Beard

• Decision Date: 05 June 1922
• Docket Number: 41.
• Citation: 283 F. 313
• Parties: CITY RY. CO. v. BEARD, County Treasurer.
• Court: U.S. District Court — Southern District of Ohio

283 F. 313

CITY RY. CO. v. BEARD, County Treasurer.

No. 41.

United States District Court, S.D. Ohio, Eastern Division.

June 5, 1922

McMahon Corwin & Landis, of Dayton, Ohio, for plaintiff.

H. E Mau and R. E. Hoskot, both of Dayton, Ohio, for defendant.

John G Price, Atty. Gen., and Ray Martin and Clarence D. Laylin both of Columbus, Ohio, for Ohio Tax Commission.

SATER District Judge.

The plaintiff, an Ohio corporation, seeks to enjoin the defendant, individually and as treasurer of Montgomery county, from the collection of a tax levied in the year 1920. Prior to the 1st of March in that year the plaintiff filed with the tax commission its annual report. The commission fixed a tentative value of $2,970,220 on its property. On a hearing based on plaintiff's written application the valuation was reduced to $2,938,850. A subsequent rehearing was had, and a further reduction in assessable value was refused. The county auditor in an appropriate manner charged against the plaintiff's personal property taxes to the amount of $74,521.56, and against its real estate not used in the daily operation of its business $388.12. In the following December plaintiff paid $37,454.84, being the first semiannual installment of the tax charged against it.

The charge is made that the tax commission, the county auditor and treasurer, and other taxing authorities, in assessing the plaintiff's property for taxation, apportioning the valuation among the several taxing districts of the county, certifying the assessment and apportionment to the county auditor, placing the same upon the tax duplicate, levying a tax thereon, and collecting and threatening to collect the same, although done for and in the name of the state and under color of their respective offices have acted illegally and made a void assessment, and, if the defendant is permitted to collect in full the tax so levied, its so doing will be in violation of plaintiff's constitutional rights. The reason assigned is that the tax commission, in making the assessment, did not proceed upon any proper principle of valuation, and adopted an improper mode of fixing the value of plaintiff's property, in that it did not apply the same rules and principles in estimating its valuation as were adopted and used with respect to other property in the state and county, but arbitrarily assessed its property at the sum above named, when its value did not exceed over $2,000,000.

It is further charged that for many years past there has been in the county a systematic general undervaluation of real estate for purposes of taxation, the average tax valuation thereof not exceeding 60 per cent. of its true value; that no reappraisement of real estate in the county has been made since 1910, although the aggregate value thereof has enormously increased; that the county commissioners and state tax commission have neglected and refused to increase and readjust assessments on such real estate on the tax duplicate, or to cause a reappraisement thereof to be made, although fully advised of the undervaluation and inequalities existing, but have knowingly and systematically permitted the condition complained of to continue and grow worse from year to year; that as a result of such failure to adopt and follow a uniform rule in assessing plaintiff's and other property in the state and county, and the systematic and general undervaluation of such other property, the tax rate in the county in the year 1920 is much higher than would have been required to produce the same revenue, had the real estate therein been assessed on the average at its true money value; and that this plaintiff is discriminated against, denied the equal protection of the law, and is about to be deprived of its property without due process of law, in violation of the Fourteenth Amendment to the federal Constitution and the Constitution and laws of Ohio.

Plaintiff asserts it has paid more taxes for the year 1920 than would have been charged against its property, had it been assessed by a uniform rule along with other taxable property in the county; that the tax is a lien and cloud upon the title to its real estate; and that, if the defendant is permitted to seize its property and enforce the collection of the tax, its operation as a public utility will be hampered, to its irreparable damage and injury and to the embarrassment of the public and without any adequate remedy at law. The prayer is for injunction against the collection of the residue of the tax charged against it for the year in question.

The defenses interposed by the defendants are these: The plaintiff did not, in the county court of common pleas, institute proceedings to reverse, vacate, or modify the action of the tax commission, but paid the first half of the tax charged against its property, and sought no remedy until the other half became due, at which time the proper municipal and school authorities of the city of Dayton and the county of Montgomery had contracted large obligations on the faith of the tax duplicate, as plaintiff, by its acquiescence and delay, had allowed it to stand. The plaintiff, it is claimed, had an adequate remedy in the due course of law, which it failed to pursue and exhaust prior to invoking the jurisdiction of the court, without legal or equitable defense therefor, and so it is averred there is no equity in the bill of complaint, and its dismissal is asked. It is admitted that the tax on plaintiff's real estate is a cloud upon the title. The defendants have asked for a determination of the law on the issues tendered. As I understand their contention, they ask judgment on the pleadings, or as if on motion to dismiss. The issues must be determined by the law of Ohio.

In Ohio the power to impose taxes is legislative, and is vested in the General Assembly by section 1, art. 2, of the Constitution. State v. Guilbert, 70 Ohio St. 229, 254, 71 N.E. 636, 1 Ann.Cas. 25; Board of Education v. McLandsborough, 36 Ohio St. 227, 232, 38 Am.Rep. 582; Toledo Bank v. Toledo, 1 Ohio St. 622, 701; Western Union Tel. Co. v. Poe (C.C.) 61 F. 449, 467; New York Life Ins. Co. v. Board of Commissioners (C.C.) 99 F. 846, 850. In 37 Cyc. 965, in speaking of the nature of a tax levy, it is said:

'It is not a judicial power, but is a legislative function, to be exercised only by the state or some inferior political division to which the state has delegated the power; and as a legislative function it cannot be delegated to administrative officers, although the further proceedings, such as extending, assessing, and collecting the taxes, are administrative.'

The Legislature, for the assessment of property of individuals for the purposes of taxation, has provided agencies through which it operates, such as assessors, county auditors, boards of equalization and of review, tax commissions, and the like. Taxing officers and boards are not courts. Their actions are not judgments. Hagerty v. Huddleston, 60 Ohio St. 149, 165, 53 N.E. 960. In Musser v. Adair, 55 Ohio St. 466, 45 N.E. 903, involving additions to the valuations of property returned for taxation, it was said (55 Ohio St. 472, 473, 45 N.E. 905):

'Judicial powers are those conferred on judges as courts in the hearing and determination of questions arising in litigation between parties in actions pending before them. State ex rel. Harmon, 31 Ohio St. 250; De Camp v. Archibald, Sheriff, 50 Ohio St. 618, 624; Elliott, Appellate Procedure, Sec. 8. * * * In short, judicial power is the power exercised by courts in hearing and determining cases before them or some matter incidental thereto, and of which they have jurisdiction. Such powers cannot be conferred on a ministerial officer.'

Then follows a discussion of the power exercised by a county auditor as a taxing officer, with the conclusion that he is but a ministerial officer, and none other. In State v. Fassig, 5 Ohio App.Rep. 479, 484, 26 O.C.C. (N.S.) 81, 85, attention is directed to the creation of administrative boards having quasi judicial duties, among which are commissioners of counties, trustees of townships in relation to ditch and road cases, and county auditors in matters of taxation; but as to quasi judicial officers it is said in Bergman v. Kearney (D.C.) 241 F. 884, 897:

'It is impossible to say that all acts judicial in their nature are within the exclusive province of the judicial department of the government. Numerous instances may be cited in which nonjudicial officers have been required to exercise functions which in a sense are judicial, and yet statutes imposing such duties have been held to be constitutional. For instance, we have a railroad commission, an industrial commission, a public service commission, a tax commission, boards of equalization, and boards of county commissioners. Not one of these boards is a court, and yet under certain circumstances each is authorized to require the presence of witnesses, to listen to evidence, to hear argument, to ascertain facts, to apply existing law thereto, and to enter decisions seriously affecting the rights of individuals. Such judicial power exercised by nonjudicial officers is termed quasi judicial, to distinguish it from the judicial power, which devolves upon, and may be exercised only by, the courts.'

The tax commission and other taxing authorities do not act in any constitutional sense as courts.

The plaintiff has exhausted its remedy before the taxing officers. Under section 5611-- 1, Ohio G.C., the determination of the taxing commission became final and conclusive for the year 1920, unless reversed, vacated, or modified by the courts. By the terms of section 5611-- 2, the proceeding to obtain such reversal, vacation, or modification is by petition in error, filed in the court of...