Gus Coulter v. Louisville Nashville Railroad Company
| Decision Date | 20 February 1905 |
| Docket Number | No. 244,244 |
| Citation | 196 U.S. 599,49 L.Ed. 615,25 S.Ct. 342 |
| Parties | GUS G. COULTER, S. W. Hager, and C. B. Hill, Appts. , v. LOUISVILLE & NASHVILLE RAILROAD COMPANY |
| Court | U.S. Supreme Court |
Messrs.
William O. Davis, Henry L. Stone, and Napoleon B. Hays for appellants.
[Argument of Counsel from pages 599-603 intentionally omitted] Messrs.James P. Helm and Helm Bruce for appellee.
This is a bill brought by the railroad company, appellee, a Kentucky corporation, against citizens of Kentucky, the members of the state board of valuation and assessment, and, respectively, auditor of public accounts, treasurer, and secretary of state. The only ground of jurisdiction alleged is that, under the tax laws of the state of Kentucky, as administered by its executive officers, the railroad company is deprived of the equal protection of the laws, contrary to the 14th Amendment. The Constitution of the state requires all property not exempted from taxation to be assessed at its fair cash value; but the bill alleges that the county assessors uniformly assess the property assessed by them, which is the great body of tangible property in the state, below its cash value. It alleges that, in like manner, the board of equalization equalizes the county assessments at a percentage not above 80 per cent of the fair cash value of the property taxed. On the other hand the defendants, who assess the franchise tax on the railroad company, are alleged to have assessed the company's property in Kentucky at its full value, viz., $33,788,724.50, for the year 1902, and then, deducting the tangible property locally taxed, $23,103,825, to have made the taxable franchise $10,774,899.50. Whereas, if 80 per cent of the value of the company's property had been taken, then, deducting as before, the taxable franchise would be only a little over $4,000,000.
The railroad company contends that when there is a uniform and general undervaluation of other property, then the only way in which the company can be put on an equality with other taxpayers is by a similar undervaluation in its case. The railroad company contends further that although this contravenes the letter of the statute, the requirement of equality so far outweighs the requirement of a tax on the full value of property, that if, by misconduct elsewhere, both cannot be observed, the rule of equality must prevail. It should be mentioned that the franchise tax is both state and local, and that after the same has been laid and apportioned between the state and county, etc., by the defendants, the state auditor, who is one of them, certifies to the county clerks their proportion of the tax. The bill prays for an injunction against such an apportionment and certification, and also against collection by the officers of the state. There was a general demurrer to the bill, and an answer and replication. The demurrer was overruled. Much evidence was taken, and at the final hearing a decree was entered by the circuit court enjoining the defendants as prayed, and requiring the defendant Hager, treasurer of the state, to execute a receipt in full of the state taxes on the franchise for 1902, the plaintiff having paid the sum which was due on its view of the case. 131 Fed. 282. The defendants appealed to this court. It may be assumed from an affidavit filed, if not from the pleadings that the amount in controversy is over $2,000. See United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 310, 41 L.Ed. 1007, 1017, 17 Sup. Ct. Rep. 540.
From a consideration of different kinds of evidence the circuit court reached the conclusion that the county assessors had systematically and intentionally undervalued the property assessed by them. In the first place it found a settled habit of undervaluing, recognized by the legislature and the state court, before the adoption of the Constitution of 1891, which required the fair cash value to be assessed. It found that while the value of land had increased or, at least, had not diminished since 1891, the assessments had varied very little, while those of 1891 were not more than 70 per cent of the value at any time. It considered testimony that from 1893 to 1896 the assessments were equalized at 70 per cent, following earlier statutes, notwithstanding the Constitution of 1891. It then compared tabulated statements of sales in the different counties, which were required by statute to be furnished to the board of equalization, with the local assessments and with the results reached by the last-named board. It thus found an additional and independent reason for believing that there was systematic undervaluation in the counties, and it inferred from comparisons and from testimony to that effect that the board paid little attention to the tabulated statements, even on a basis of 80 per cent, but really was governed by the assessment of the previous year. Finally, it confirmed its conclusions by direct testimony as to the practice in certain counties and the rules practically adopted by the board. The reasoning is careful and elaborate, and cannot be read without an impression that probably it is correct to the extent of establishing a general undervaluation of land.
On the other hand, there was testimony that the statements of sales did not afford satisfactory evidence of average values, or at least, for various reasons, were not regarded by the board of equalization as affording it. Most of the members of the board testified that they tried in good faith to reach fair cash values, and there were many affidavits to a like effect as to the past and present conduct of the county assessors. It was sworn that, so far as percentages of the reported sales were used, they were used on an estimate of what proportion actual values would bear to the sums named in the deeds. The circuit court, while regarding it as the condition of equitable relief that the property other than that of the plaintiff should have been undervalued systematically and intentionally, hardly dealt with this evidence in its...
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