First Nat. Bank of Toledo v. Treasurer of Lucas County

• Decision Date: 01 January 1885
• Citation: 25 F. 749
• Parties: FIRST NAT. BANK OF TOLEDO and others v. TREASURER OF LUCAS CO.
• Court: U.S. District Court — Northern District of Ohio

25 F. 749

FIRST NAT. BANK OF TOLEDO and others v. TREASURER OF LUCAS CO.

United States Circuit Court, N.D. Ohio, Western Division.

December Term, 1885

Doyle &amp Scott, for plaintiffs.

E. S Dodd and G. Harmon, for defendants.

Before WELKER and HAMMOND, JJ.

HAMMOND J.

The question presented by these cases is one of fact rather than law. The complainants contend that they fall within the principle of Cummings v. National bank, 101 U.S 153, and Pelton v. National Bank, Id. 143, while the respondent seeks to bring them within the rulings of Exchange Nat. Bank v. Miller, 19 F. 372, and Wagoner v. Loomis, 37 Ohio St. 571. It is better however, before we consider the question of fact, to examine the precise bearings of these adjudications upon the rights of the parties here. They sufficiently set forth the various provisions of the constitution and laws of Ohio and the peculiar methods of taxation in that state, and make it wholly unnecessary to repeat them in this connection. I understand the supreme court of Ohio to decree that, inasmuch as the constitution and laws of the state provide for equality of taxation by requiring all property whatever to be assessed for taxation at its 'true value in money,' any citizen whose property is assessed below that value has no just cause of complaint because the property of other citizens is assessed at less than his own, and his only remedy is to apply to the assessing officers to increase all assessments to their 'true value in money.' This is the constitutional test of equality, and, even where there is a fraudulent conspiracy to discriminate against a citizen or a class of citizens, there is no relief, unless it can be shown that the burden imposed is greater than it would have been if all assessments had been made at 'their true value in money.'

While the supreme court of the United States has not undertaken to decide that this is not a correct interpretation of the constitution and laws of Ohio, it does decide that national banks can only be taxed by the states to the extent permitted by congress, and that existing legislation does not permit the state of Ohio, by direct statutory enactment, or through its taxing officials, to systematically discriminate against those banks, even within the limit of the true value of their shares in money. Whatever may be the legal test of equality under the constitution and laws of Ohio, the test prescribed by the act of congress is that national banks shall not be taxed in excess of other moneyed capital. Rev. St. 5219. In the Pelton Case it was not complained that the taxation of the bank was greater than its true value in money, but only that, 'while all the personal property in Cleveland, including moneyed capital not invested in banks, was in the assessment valued far below its real worth, say at one-half or less, the shares of the banks, after deducting the real estate of the banks separately taxed, were assessed at their full value, or very near it. ' So, in the Cummings Case the complaint was based on conduct of the taxing officials similar, if not identical, in all respects to that complained of in the case we are considering. There was no pretense that the shares were taxed beyond their true value in money, but only that other property being taxed at six-tenths of its value, the bank shares were assessed at a sum 'fully equal to the selling prices of said shares and to their true value in money. ' The disproportion was the thing complained of and relieved against in both cases. There is nothing in the case of National Bank v. Kimball, 103 U.S. 732, which modifies in the least the two others we have cited. On the contrary, the rule is repeated that 'where, though the law itself is unobjectionable, the officers who are appointed to make assessments combine together and establish a rule or principle of valuation, the necessary result of which is to tax one species of property higher than others, and higher than the average rate, the court will also give relief,' as it will when the statute itself makes the injurious discrimination.

And here it may be remarked that the principle is finding extension in its application, that federal prohibitions against the states cannot be evaded by making laws fair upon their face, and yet, in their administration, through common consent or neglect to enforce them, operating to annul the federal restriction. Virginia Coupon Cases, 114 U.S. 269, 307; S.C. 5 S.Ct. 903, 923. The supreme courts of the United States and of the state of Ohio agree that, if the constitution and laws of Ohio be obeyed, or obedience to them be enforced, no inequality of taxation can arise, except such as is incidental to the exercise of erroneous judgment in valuation; or, to use the apt and forcible language of Judge SAGE in Exchange Nat. Bank v. Miller, supra, only such that to relieve against it would be to substitute for 'the judgment of the assessors, in their official valuation,' the differing judgment of the parties themselves, or their witnesses, 'as expressed in their testimony.' But when the officials charged with the duty of assessing values deliberately determine, in deference to the popular will, not only to violate the statute itself, but the judicial admonition of those august tribunals, and adopt a different mode of valuation,-- as, for example, that they will place all property on the duplicate at a certain percentage of its true value in money,-- they cannot be permitted to apply one percentage to other property--especially, 'other moneyed capital'-- and a larger percentage to the shares of national banks, for the simple reason that, whatever the laws of Ohio may permit in this regard, a paramount act of congress forbids it. And there can be no question of intention or design in such discrimination. In the very nature of it, arithmetically considered, there is discrimination in the operation; and no reasonable man can be heard to say that he did not intend to discriminate when he applies a larger per centum of valuation in one case than another. If an assessor say, this piece of property is worth $1,000 and this $600, the first tax-payer cannot complain, though each piece be worth precisely the same by every possible rule of value. But when the assessor says, these articles of property are each worth $1,000, or it may be different sums, and I assess one at six-tenths, and the other at seven-tenths, he designedly discriminates injuriously-- the fact that he ignorantly does it is immaterial--against the one affected, and he does an entirely different thing than in the first operation mentioned. The supreme court of the United States says that the peculiar taxing system of Ohio, with its various assessors and diverse boards of equalization, does not, necessarily, result in such discrimination; but it has never said that when, in a given assessment, these boards, one and all, or any one of them, adopt a six-tenths rule as to one tax-payer, and a seven-tenths rule as to another tax-payer, there is not necessarily a discrimination in the transaction. It has said just to the contrary, and so has the supreme court of Ohio when it declared that 'taxing by a uniform rule requires uniformity, not only in the rate of taxation, but also in the mode of assessment upon the taxable valuation. ' Exchange Bank v. Hines, 3 Ohio St. 1, 15. A six-tenths mode as to one, and a seven-tenths mode as to another, is not uniformity.

And here it is to be observed, for the fallacy of the contrary rule lies in that direction, that it is wholly immaterial upon what principal sum of value you make these respective calculations of percentages. If it be determined to assess all property at six-tenths of its 'true value,' or of its 'market value,' or by whatever name you designate it, and that value be reached in one case by taking the par or face value of shares in a bank, let us say, and in another by taking a value higher than the par value, because the shares will sell for more, and on one you calculate six-tenths, and on the other seven- tenths, the want of uniformity takes place, and results in a discrimination just as much as if the principal sums had been selected in exactly the same way. And it is no argument against the illegality of the discrimination to say that either of these principal sums was improperly taken as the basis of calculation, or that one was too large and the other too small, or that neither is just what it should have been. The vice does not consist of discrimination at that point, but beyond it,-- at the point where the different modes of ascertaining the final taxable value are adopted. The 'systematic rule' that entitles the party to relief is taking a differing percentage for the final calculation. We do not say that unlawful discriminations may not be made in ascertaining the principal sums on which to calculate the percentage, but that unlawful discriminations are always made whenever the principal sums having been ascertained, no matter how, a different percentage is adopted in ascertaining the amounts to go upon the tax duplicate. Such a mode is just as 'systematic' if applied in a single instance as if applied in many, if adopted by one assessor as if adopted by all, and is as 'intentional' in its discrimination as if a preconceived purpose had been declared. One who touches a match to the powder might as well say that he did not intend that the powder should explode, as that an assessor should say that under such a rule he did not intend to discriminate. We do not wish to say that inequalities of valuation arrived at by erroneous mathematical calculations come within the rule of equitable relief more than inequalities otherwise reached by the imperfect processes of human judgment, but only that the process...