Cleveland Cliffs Iron Co. v. Village of Kinney

• Decision Date: 20 August 1919
• Citation: 262 F. 980
• Parties: CLEVELAND CLIFFS IRON CO. v. VILLAGE OF KINNEY et al.
• Court: U.S. District Court — District of Minnesota

262 F. 980

CLEVELAND CLIFFS IRON CO. v. VILLAGE OF KINNEY et al.

United States District Court, D. Minnesota, Fifth Division.

August 20, 1919

Washburn Bailey & Mitchell, of Duluth, Minn., for plaintiff.

Whipple & Randall, of Duluth, Minn., and Luke F. Burns, of Virginia Minn., for defendants Village of Kinney, John Schultz, and John Setala.

Charles E. Adams and Whipple & Randall, all of Duluth, Minn., for defendant county auditor.

BOOTH District Judge.

This is a suit in equity by the Cleveland Cliffs Iron Company against the village of Kinney and others, to enjoin the defendants from holding an election for the purpose of annexing to the village of Kinney the lands described in the complaint, and from calling an election at any time during the pendency of the action to vote upon said question of annexation, or from taking any action in reference to such election. The bill was filed June 12, 1918. A preliminary injunction was issued on the 15th day of June, 1918. Subsequently the county auditor was made a party defendant. The case has been brought on for final hearing upon the bill, amended and supplemental bill answers to said original and supplemental bills, and testimony taken. The following facts appear:

The village of Kinney is a village in St. Louis county, Minn including within its limits, at the commencement of this suit, approximately 1,200 acres of land, and with a population of approximately 1,000 persons. The assessed value of the land within the limits of the village of Kinney for the year 1917 was approximately $846,985. The taxes levied and assessed for said year by said village were approximately $15,500. The village is located within the town of Great Scott. The total valuation in said town at the commencement of the suit was approximately $2,105,000.

Plaintiff is the owner through leases of the following lands lying within the town of Great Scott, but outside the limits of the village of Kinney as existing at the commencement of this suit, to wit: The north one-half of the southwest quarter and the southeast quarter of the southwest quarter of section 12, and the north one-half of the northwest quarter and the southeast quarter of the northwest quarter of section 13, all in township 58 north, range 19 west. The assessed valuation of said property at the commencement of the suit was approximately $300,000; at the time of the trial approximately $400,000. At the commencement of the suit there was but one resident upon the lands owned by the plaintiff, but the plaintiff was at that time planning to open mines upon its property, and about to bring a considerable number of men upon said lands for the purpose of opening and operating the mine. At the time of the trial, the mine had been opened, and the population on the plaintiff's land was approximately 257.

On the 4th day of June, 1918, there was presented to the village council of the village of Kinney a petition, signed by 6 persons, praying that the village council call an annexation election for the purpose of determining whether certain territory described in the petition should be annexed to the village of Kinney, including plaintiff's lands, and comprising in all some 1,560 acres, having approximately 108 residents. Upon the presentation of said petition, the village council passed a resolution calling an election for the 17th of June, 1918, and appointed the defendants John Schultz and John Setala inspectors and judges of election, and as a third inspector and judge Alvin Goodspeed, Sr.

The statutory steps preliminary to the holding of the election were duly taken. On the 15th of June, 1918, a preliminary injunction was issued after hearing, and was served upon the village of Kinney and two of the personal defendants, to wit, John Schultz and Alvin Goodspeed, Jr. By inadvertence, one of the personal defendants was alleged in the complaint to be an inspector of the election, when in fact he was not, so that service of the writ of injunction was in fact made on one only of the three inspectors of the election. On the 17th of June, 1918, the election was held. Two of the appointed inspectors being absent, the third one who was present swore in two other inspectors in accordance with the provisions of the statute. On the 18th of June, the village recorder of the village made his certificate and attached thereto certain papers, required by the statute to be filed with the county auditor in case of such election, and forwarded same to the county auditor. Each and all of the inspectors of the election and the village recorder had full knowledge and notice of the preliminary injunction.

Thereafter, and on or about the 3d of September, 1918, the village council of Kinney passed a resolution making its annual levy of taxes in the sum of $40,000 for general purposes and returned the same to the county auditor. The taxes as finally spread upon the tax books by the county auditor for said village of Kinney for said year amounted to $31,614.22.

The supplemental bill sets out facts as to matters occurring subsequent to the issuance of the preliminary injunction, and prays for additional relief, viz. that the attempted annexation be declared invalid, that the election proceedings be set aside, and the land attempted to be included by said annexation be declared not a part of the village of Kinney, and that the county auditor be enjoined from spreading any taxes levied by the village of Kinney against the lands attempted to be annexed.

By timely motions, and also in their answers, the defendants have contested the jurisdiction of the court: First, that this court as a federal court has no jurisdiction of the case; second, that the subject-matter in suit is not one of which an equity court in general has jurisdiction.

The United States District Court, being a court of limited jurisdiction, it is the duty of the court to search the record in each case to ascertain whether the jurisdictional facts exist. N.Y. Life Ins. Co. v. Johnson, 255 F. 958, 167 C.C.A. 250. Although upon the face of the plaintiff's pleadings the claim is made that the statute under which the election was proposed to be held is unconstitutional and void, as being in contravention both as to the Constitution of the United States and of the state of Minnesota, such contention was expressly disclaimed upon the final hearing.

The jurisdiction of this court as a federal court is sought to be sustained on the ground of diversity of citizenship. This was not alleged in the original bill; but an amendment was allowed, and, although the sufficiency of this amendment is attacked, yet, as it appears from the record that the diversity of citizenship does in fact exist, an amendment which would be sufficient in form would be allowed as of course at any stage of the proceedings. Judicial Code, Sec. 274c (Comp. St. Sec. 1251c).

But the amount involved necessary to give the court jurisdiction is not alleged either in the original bill or in the supplemental bill. The assessed valuation of plaintiff's land is alleged and proven, but this amount, of course, is not the amount involved in the suit. The loss of the land is not involved nor is any damage to the land alleged or claimed. However, questions relating to the taxation of the land are involved, and the original bill contains this allegation:

'That the annexation of said lands of this plaintiff would be of absolutely no benefit to this plaintiff, or to said lands; on the contrary, it would simply divert funds raised by taxation upon certain property to the village treasurer, to be largely squandered in useless expenditures, the annual taxes at the present village rate on said property being upwards of $5,000 yearly.'

It is not alleged, however, what the current taxes paid by the plaintiff on its said lands in the town of Great Scott were under the conditions existing at the time of filing the bill, nor is it alleged what the taxes levied by the town of Great Scott on said lands would be if the proposed annexation was not carried out. It may be noted in this connection that, if the village of Kinney and the town of Great Scott each should levy taxes upon plaintiff's land up to the legal limit under the existing statutes of Minnesota, the difference between the two amounts thus levied would not be sufficient to meet the jurisdictional requirement of this court. Further than this, upon the trial, one of the plaintiff's witnesses, manager of said plaintiff company, testified that the company made no claim that the taxes would be higher on plaintiff's lands after annexation than before, and did not base opposition to the annexation on the ground of increased taxation, but did claim that the taxes levied should be expended by the township authorities of the town of Great Scott, rather than be expended by the village authorities of Kinney, for the benefit of that village.

Such being the state of the record, the jurisdictional amount, so far as increased taxes are concerned, is neither alleged, claimed, nor shown to exist. Two rights are, however, claimed by the plaintiff to be threatened or injured by the annexation:

1. The right to have the taxes paid by plaintiff company levied and administered by the authorities of the town of Great Scott rather than by the authorities of the village of Kinney.

2. The right to have plaintiff's lands remain subject to township government, instead of being subjected to village government.

But no value is alleged or proven as to either of these rights nor is the amount of threatened damage either alleged or proven. Perhaps, in the nature of the case, this was not possible but, if so, it simply shows the impossibility of establishing one of the necessary jurisdictional facts. My conclusion is,...