Holt v. Indiana Mfg. Co.

• Decision Date: 03 May 1897
• Docket Number: 354.
• Citation: 80 F. 1
• Parties: HOLT et al. v. INDIANA MANUF'G CO.
• Court: U.S. Court of Appeals — Seventh Circuit

80 F. 1

HOLT et al. v. INDIANA MANUF'G CO.

No. 354.

United States Court of Appeals, Seventh Circuit.

May 3, 1897

A suit between citizens of the same state to enjoin the collection of a state tax on the value of patent rights, on the ground that the state statute authorizing the tax contravenes the federal constitution, is not a suit arising under the patent laws so as to give jurisdiction to the circuit court of appeals, but is one involving the validity of a state statute under the constitution of the United States, and must therefore, be taken direct from the circuit court to the supreme court, under section 5 of the act of March 3, 1891.

The Indiana Manufacturing Company, the appellee, a corporation organized and existing under the laws of the state of Indiana, brought suit in the court below against the appellants, who were, respectively, Sterling R. Holt, the treasurer, Joel A. Baker, the assessor, Thomas Taggart, the auditor, and George Wolf, the assessor, of Center township of Marion county, and who, with the other appellants constituted the board of review of Marion county, and who are, respectively, citizens of the state of Indiana, to enjoin the collection of certain personal taxes for the years 1892, 1893, 1894, and 1895, assessed upon the capital stock and certain tangible property of the Indiana Manufacturing Company. The gravamen of the charge in the bill is that the larger part of the assessment made by the taxing authorities was for the supposed value of certain rights under letters patent of the United States owned by the appellee, and which it is claimed are not subject to assessment or taxation by state authority; and that its capital stock, aside from its tangible property which was conceded to be assessable represented solely the supposed value of the letters patent. So far as the assessment included tangible property owned by the appellee, the taxes levied thereon had been paid. Jurisdiction is asserted, notwithstanding there existed no diversity of citizenship, upon the grounds that the suit is brought to redress the deprivation, under color of the laws of the state of Indiana, of a right secured by the constitution and laws of the United States, and that the statutes of the state of Indiana requiring the taxation of patent rights or letters patent of the United States are repugnant to the constitution of the United States, and are void; and upon the further ground that the suit is one arising under the patent laws of the United States. A general demurrer for want of equity was overruled, and the defendants thereupon pleaded to the merits. The court below decreed for the complainant (the appellee here), holding that the material allegations of the bill were established by the proofs; that the taxes assessed upon the valuation of the company's capital stock were an indirect assessment for taxation of the letters patent owned by the complainant; that the statutes of the state of Indiana relating to and requiring the taxation of patent rights or letters patent of the United States are unconstitutional, invalid, and void; that the cloud placed upon the title of the corporate property of the company by reason of such assessment and taxation should be removed; and that the defendants (appellants) and their successors in office should be and they were perpetually enjoined from the collection of such taxes, 'or any other amount (of taxes) which may be claimed to be due on account of the value of any patent rights or letters patent owned or held by complainants, directly or indirectly, or on account of the value of the stock of complainant by which such patent rights or letters patent may be represented. ' The appeal is from that decree.

William A. Ketcham and Alfred R. Hovey, for appellants.

Chester Bradford, for appellee.

Before WOODS, JENKINS, and SHOWALTER, Circuit Judges.

JENKINS Circuit Judge, after such statement of the case, delivered the opinion of the court.

At the threshold we are confronted with an objection to the jurisdiction of this tribunal to entertain the appeal which seems insuperable. There is no question involving the jurisdiction of the court below. That jurisdiction rested upon the ground that the suit was instituted to uphold a right secured by the constitution and laws of the United States, of which the complainant below was sought to be deprived under color of the laws of the state of Indiana, and the decision below held those laws to be unconstitutional and void. The fifth and sixth sections of the act of March 3 1891, whereby this court was established, and its jurisdiction defined (26 Stat. 826, c. 517), classify the cases which may be taken by appeal or writ of error from the circuit or district courts to the supreme court of the United States, and those which may be taken to this court. The fifth section provides that appeals or writs of error in the following cases may be taken directly to the supreme court of the United States: (1) In any case in which the jurisdiction of the court is in issue; in such cases the question of jurisdiction alone shall be certified to the supreme court from the court below for decision. (2) From the final sentences and decrees in prize causes. (3) In case of a conviction of a capital or otherwise infamous crime. (4) In any case that involves the construction or application of the constitution of the United States. (5) In any case in which the constitutionality of any law of the United States, or the validity or construction of any treaty made under its authority, is drawn in question. (6) In any case in which the constitution or law of a state is claimed to be in contravention of the constitution of the United States. ...