In re Mississippi River Power Co.

• Decision Date: 15 January 1917
• Citation: 241 F. 194
• Parties: In re MISSISSIPPI RIVER POWER CO.
• Court: U.S. District Court — Southern District of Iowa

241 F. 194

In re MISSISSIPPI RIVER POWER CO.

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

January 15, 1917

George Cosson, Atty. Gen., C. A. Robbins, Asst. Atty. Gen., and E W. McManus, Co. Atty., of Keokuk, Iowa, for Johnston.

A. W O'Harra, of Carthage, Ill., George B. Stewart, of Fort Madison, Iowa, and J. O. Boyd and Hazen I. Sawyer, both of Keokuk, Iowa, for Mississippi River Power Co.

WADE District Judge.

S. H Johnston, claiming to be the assessor of a certain taxing district within the city of Keokuk, Iowa, listed and assessed the property of the Mississippi River Power Company at the sum of $8,000,000, and, claiming to act pursuant to the law of Iowa, he assessed a penalty of 100 per cent. for alleged refusal of the company to sign or swear to the assessment roll, thus making a total valuation for assessment purposes of $16,000,000. This assessment being returned to the board of review of the city of Keokuk, the power company filed objections thereto, and a hearing was had, and the valuation reduced from $16,000,000 to $500,000. From this action of the board of review, Johnston prosecuted this appeal under the provisions of the Code of Iowa authorizing an appeal from the final action of the board of review to the district court of the state of Iowa. Thereupon the Power Company, a nonresident of Iowa, appeared in the district court of the state of Iowa and filed its petition for removal to this court, which was granted, and the case is now before the court upon a motion to remand.

The property assessed consists of the dam and power plant owned by the power company upon the Mississippi river at Keokuk, Iowa, and in petition for removal it is made to appear that many very important questions of law and fact are involved, including the question of the boundary line of the state, and the question as to whether the property is real property, or personal property, and whether the property is subject to assessment at all, complicated by the further fact that a portion of the dam comprises the locks and dry dock, which, by act of Congress permitting the erection of the dam, is the property of the United States. But I do not find it necessary to go into these numerous questions. The fact of diversity of citizenship is not in dispute, and the motion will be disposed of upon that ground.

I have heretofore written an opinion in the case of Chicago, Milwaukee & St. Paul Railway Co. v. Drainage District No. 8 of Shelby County, Iowa, et al., pending in the Western division of this district, remanding a case involving the levy of the tax imposed for drainage purposes, embracing some of the questions here presented. A petition for rehearing is pending in said case, and, while all the questions involved are not identical, some of them are, and in so far as this opinion may be in conflict with the opinion in the above-entitled case, such opinion is hereby overruled.

The main question in controversy is whether or not the action now in this court upon removal from the state court is a 'suit' within the meaning of the Removal Act. The statutes of Iowa provide for assessment of property for taxation purposes by an assessor, who lists the property and reports his findings to a board of review, composed in cities of the members of the city council. This board of review has power to increase or decrease the assessments, parties have a right to be heard, and appeals may be taken to the district court, as has been done in this case.

Of course, the assessment and levy of taxes is legislative in its character, or, as it is sometimes expressed, it is administrative; but it is an exercise of the legislative power.

'Taxes have not, as a general rule, in this country since its independence, nor in England before that time, been collected by regular judicial proceedings in a court of justice. The necessities of government, the nature of the duty to be performed, and the customary usages of the people, have established a different procedure, which, in regard to that matter, is and always has been due process of law. ' Kelly v. Pittsburgh, 104 U.S. 78, 26 L.Ed. 658.

The Legislature has the power to designate the tribunal which shall make assessments upon property. It may confer this power upon a judicial or a nonjudicial body, and the owner of property assessed cannot claim that he has been deprived of 'due process of law' because the Legislature does not permit him to have a hearing in court.

'The necessity of revenue for the support of the government does not admit of the delay attendant upon proceedings in a court of justice, and they are not required for the enforcement of taxes or assessments. ' Hagar v. Reclamation Dist., 111 U.S. 701, 4 Sup.Ct. 663, 28 L.Ed. 569.

See, also, St. Louis & Kansas City Land Co. v. Kansas City, 241 U.S. 419, 36 Sup.Ct. 647, 60 L.Ed. 1072; Spencer v. Merchant, 125 U.S. 345, 8 Sup.Ct. 921, 31 L.Ed. 763; Paulsen v. Portland, 149 U.S. 30, 13 Sup.Ct. 750, 37 L.Ed. 637; Bauman v. Ross, 167 U.S. 548, 17 Sup.Ct. 966, 42 L.Ed. 270.

So that the Legislature of Iowa had the power to prescribe a method of assessment, and levy and collection, of taxes, without providing for any hearing before any court.

It is the contention of appellant that by the appeal provided for the district court of the state is simply made part of the 'machinery' by which, and through which, the taxing power of the state is exercised. It is insisted that the action of the court in reviewing upon appeal the action of the board of review is administrative rather than judicial. If this be true, then this proceeding is not a 'suit' within the meaning of the Removal Act.

But at the outset we are confronted with the fact that the district court of Iowa is a constitutional court, possessed of no administrative powers or functions, and the Supreme Court of Iowa has specifically held that nonjudicial powers cannot be conferred upon the district court by the Legislature:

'But powers not in themselves judicial, and that are not to be exercised in the discharge of the functions of the judicial department, cannot be conferred on courts or judges designated by the Constitution as a part of the judicial department of the state. ' State v. Barker, 116 Iowa, 96, 89 N.W. 204, 57 L.R.A. 244, 99 Am.St.Rep. 222.

Thus is distinguished the case relied upon by counsel, In re City of Chicago (C.C.) 64 F. 897, in which it was held that a proceeding for assessment of taxes pending before a county court was not removable. The county court was not a constitutional court; it was a special tribunal created by the Legislature, possessing judicial powers, and also administrative powers. In the proceedings before it, this county court was exercising, not its judicial powers, but its powers specially conferred as an 'assessing tribunal'; the court saying:

'Although conducted under judicial forms, and in a court having judicial powers, I am of opinion that it is exclusively an administrative proceeding.'

The court points out the distinction in the following language:

'Because the Legislature saw fit to vest this power or duty in the county court, it does not follow that it would be thereby vested in any other court, and certainly not in a federal court, unless it is clearly a judicial power or duty.' The Legislature of Iowa, in providing for an appeal to the district court, conferred upon that court either an administrative power or duty or a 'judicial power or duty.' I cannot assume that the Legislature enacted a law in conflict with the Constitution, or in excess of its legislative powers. I must, if possible, under the language used, construe the act as valid and constitutional.

But, under the foregoing opinion of the Supreme Court of Iowa, it would not be valid if the Legislature undertook to confer upon the district court administrative powers or duties. It can only be held valid by assuming that the Legislature intended that the proceedings upon appeal would be judicial in their nature.

It cannot be denied that the Legislature had the power to provide for a 'suit' before a court, in which the proceedings before the board of review might be retried. While it had the power to complete the assessment and levy the taxes without the intervention of a court, and without a judicial proceeding, it could without doubt waive this right, and as a matter of grace give to the property owner, or to the municipality, the right to a trial in court upon the issues considered by the board of review.

The language of the statute clearly indicates that this was the purpose of the Legislature. It provides that:

'The court shall hear the appeal in equity, and determine anew all questions arising before the board which relate to the liability of the property to assessment, or the amount thereof. ' Code Supp. 1373.

In construing the language of this statute, the Supreme Court of Iowa has specifically held, in the Matter of the Appeal of the Sioux City Stockyards Co., 149 Iowa, 5, 127 N.W. 1102, that this trial upon appeal is an exercise of judicial, and not of legislative, power.

'On such appeal the court is to hear the matter in equity, and determine anew all questions arising before the taxing officer or tribunal which relate to the liability of the property to assessment or the amount thereof. ' Schoonover v. Petcina, 126 Iowa, 261, 100 N.W. 490.

'It is well settled in this state that the Legislature may provide for the exercise by a court of the power to judicially determine facts which are made the conditions on which authority may be exercised by officers to whom it delegated the exercise of legislative and executive power. ' Denny v. Des Moines County, 143 Iowa, 466, 121 N.W. 1066.

The case before the district court upon appeal is not only...