Indiana Manufacturing Company v. Armin Koehne

• Citation: 47 L.Ed. 651,23 S.Ct. 452,188 U.S. 681
• Decision Date: 23 February 1903
• Docket Number: No. 177,177
• Parties: INDIANA MANUFACTURING COMPANY, Appt. , v. ARMIN C. KOEHNE et. al
• Court: United States Supreme Court

188 U.S. 681

23 S.Ct. 452

47 L.Ed. 651

INDIANA MANUFACTURING COMPANY, Appt.,

v ARMIN C. KOEHNE et. al.

No. 177.

Argued October 24, 1902.

Decided February 23, 1903.

Messrs. Chester Bradford and F. Winter for appellant.

Messrs. William L. Taylor, Merrill Moores, and Cassius C Hadley for appellees.

Mr. Justice Peckham delivered the opinion of the court:

The complainant herein has appealed from the decree of the circuit court of the United States for the district of Indiana, which dismissed its bill. It was a suit in equity to enjoin the collection of taxes. It appears that certain taxes had been assessed against the complainant, a corporation of Indiana, and process had issued for the collection thereof which included all the years from 1893 to 1898 (both years inclusive), and also for the year 1900; that such taxes, or the greater part of them, were (as averred) illegal, because they were, among other things, assessed pursuant to a law of the state of Indiana, upon the value of certain letters patent of the United States, for inventions owned by the corporation; that such state law was in violation of the Federal Constitution, and was therefore void; that the part of the taxes which complainant admitted to be legal it had paid, and notwithstanding such payment the tax officials were threatening to levy upon its property to collect the residue.

By reference to the general tax laws of Indiana of 1891 it will be seen that it is therein provided that each district assessor shall, commencing in April in each year, inquire of each person concerning his property, while as to corporations their officers are to deliver to the assessor a sworn statement of the property of such corporation in detail, and among the items to be reported is the 'market value, or, if no market value, then the actual value, of the shares of stock' of the company. The statement made by the corporation to the assessor is by him delivered to the county auditor, who in turn delivers it to a board of review, which values and assesses the capital stock and all franchises and other property of the company. This board of review makes the original assessment. The corporation so assessed, or any taxpayer, may appeal from the assessment upon the corporation, to the state board of tax commissioners. (Tax law of 1891 § , as amended by the act of 1895, p. 79.) Upon such appeal the state board decides as to the assessment, and may, if it decides that the property is assessable, make such an assessment, increasing or reducing it, as it may decide proper, and the auditor then certifies such changes in valuation made by the state board to the several counties, and provision is made for the collection of the same by the proper officials. By the act of 1853 (Ind. Rev. Stat. ed. 1881, §§ 5813, 5814; Ind. Rev. Stat. ed. 1894, §§ 7915, 7916) provision is made that any person or corporation may appear before the board of commissioners of any county and establish by proper proof that such person or corporation has paid taxes which were wrongfully assessed against him or it, and it is thereby made the duty of the board to order the amount so proved to have been paid, to be refunded to the payer from the county treasury so far as the same was assessed and paid for county taxes. Where a portion of the amount so wrongfully assessed and paid shall have been paid for state purposes, and shall have been paid into the state treasury, it is made the duty of the board to certify to the auditor of the state the amount so proved to have been wrongfully paid, and the auditor is directed to audit the same as a claim against the treasury, and the treasurer of the state is directed to pay the same out of any moneys not otherwise appropriated.

The further steps to be taken in case the authorities refuse, upon such application, to pay over the taxes wrongfully assessed, are adverted to hereafter.

The bill states that defendant Koehne is the treasurer of Marion county, where these taxes were assessed, and he is by law also the treasurer of the city of Indianapolis, and as the treasurer of the county of Marion and the city of Indianapolis he collects for them all taxes, and makes distribution thereof, and also collects all taxes due the state from Marion county, and in fact he collected all taxes assessed for all purposes against appellant. There is no other treasurer of the city of Indianapolis, and the money for that city collected by tax remains in the hands of the county treasurer of the county of Marion until it is expended; the county treasurer thus retaining all taxes in his hands belonging both to the county of Marion and the city of Indianapolis until those taxes are properly expended.

Other averments were contained in the bill, but none material to the case as we view it, and upon all the facts complainant comes into a court of equity for the purpose of enjoining the collection of the alleged illegal portion of these taxes which had been imposed on the letters patent mentioned, and it was claimed by the complainants that, excluding the value of such patents, the shares had no value above the indebtedness of the corporation, and therefore it was wholly exempt, or exempt with the exception of a very small sum, from taxation, and that sum it had paid.

The foundation of this appeal to equity, as averred by complainant, was (1) on the ground that the assessment constitutes a cloud upon title; (2) that there is no adequate remedy at law; (3) that a multiplicity of suits is avoided; and (4) that it prevents irreparable injury to complainant.

It has long been the settled doctrine of the Federal courts that the mere illegality of a tax, or the mere fact that a law upon which the tax is founded is unconstitutional, does not entitle a party to relief by injunction against proceedings under the law, but it must appear that the party has no adequate remedy by the ordinary processes of the law, or that the case falls under some other recognized head of equity jurisdiction, such as multiplicity of suits, irreparable injury, etc. See Cruickshank v. Bidwell, 176 U. S. 73, 80, 44 L. ed. 377, 380, 20 Sup. Ct. Rep. 280, where many of the authorities upon this subject are collected in the opinion which was delivered by Mr. Chief Justice Fuller. See also Pittsburgh, C. C. & St. L. R. Co. v. West Virginia Bd. of Public Works, 172 U. S. 32, 43 L. ed. 354, 19 Sup. Ct. Rep. 90, where Mr. Justice Gray dealt with the subject quite fully. We must judge the case at bar under the rules laid down by the authorities cited.

We take the grounds in the order above stated.

(1) In regard to the averment that the assessment constitutes a cloud upon title.

It is the ordinary case of an assessment upon the value of the capital stock of a corporation and its franchises. Our attention has not been called to any statute which makes the assessment upon the shares a lien upon the real estate of a corporation, and if it were such lien, there is no averment that the company owned any real estate; hence, no cloud upon its title is made apparent, even if there could be a cloud cast upon the real estate merely by reason of an ordinary assessment, such as is made in this case. There is nothing in the objection.

(2.) There is the averment that the complainant is without any adequate remedy at law, and one of the grounds for such averment is stated in the bill as follows:

'And your orator further shows unto your honors that the defendant Armin C. Koehne is the treasurer of Marion county, Indiana, whose duty it is as such treasurer, under the laws of the state of Indiana, to receive and collect taxes for the said state of Indiana, and also for Marion county in said state, and also for the city of Indianapolis within said county, and also for the school board of the city of Indianapolis, Indiana. That a large proportion of the amounts received and collected by the said defendant as treasurer, as aforesaid, are for and on account of and for the benefit of the state of Indiana, a sovereign state, and one of the United States, and that under the Constitution and laws no suit can be maintained against the state of Indiana. That it is a part of the duty of the said defendant Armin C. Koehne, as aforesaid, to pay over into the treasury of the state of Indiana a large portion of the amounts so received and collected by him as taxes, and, therefore, that if said amounts are so collected and received and paid over, they will become mixed with the moneys of the said state, and thus be beyond reach of any process of this or any court, and irrecoverable, and that great and irreparable injury will result to your orator if such unlawful collection and paying over as aforesaid be not prevented.'

The averment that a portion of the tax is to be paid to the state of Indiana, and that the state cannot be sued, is answered by the remedy provided by the law of Indiana for such a case. Under that law the complainant was bound in the first place to appeal from the decision of the board of review, which included the letters patent, in the value of the shares of stock of the corporation. Such appeal would, by the provision of the statute, be taken to the state board of tax commissioners, and if that board affirmed the decision of the board of review the corporation could pay the tax and immediately file a petition with the board of county commissioners to recover it back under the act of 1853, above referred to. An appeal is given from the refusal of that board to repay the tax. 3 Ind. Rev. Stat. 1894, § 7917; Schultz v. Blackford County, 20 ind. 178; State ex rel. Godfroy v. Miami County, 63 Ind. 497, 501. This appeal would be taken to the circuit court, and by the general law an appeal lies from that court to either the appellate court or the supreme court of the state, according to the amount involved.

The fact that a portion of...