Mayor and Aldermen v. New York Bay R. Co.

• Decision Date: 23 June 1926
• Docket Number: No. 3441.,3441.
• Parties: MAYOR AND ALDERMEN OF JERSEY CITY et al. v. NEW YORK BAY R. CO. et al.
• Court: U.S. Court of Appeals — Third Circuit

13 F.2d 982 (1926)

MAYOR AND ALDERMEN OF JERSEY CITY et al. v. NEW YORK BAY R. CO. et al.

No. 3441.

Circuit Court of Appeals, Third Circuit.

June 23, 1926.

Edward P. Stout, of Jersey City, N. J., for appellants.

Albert C. Wall, of Jersey City, N. J., for appellees.

Before BUFFINGTON and WOOLLEY, Circuit Judges, and GIBSON, District Judge.

WOOLLEY, Circuit Judge.

This case, on the law, is ruled by Mayor and Aldermen of Jersey City et al. v. Central Railroad Co. of New Jersey, 212 F. 76, 128 C. C. A. 532; affirming (D. C.) 199 F. 237. The complainants, one a railroad corporation of the State of New Jersey, lessor, and the other a railroad corporation of the State of Pennsylvania, lessee, filed their bill against the respondents, a municipal corporation of the State of New Jersey and its city solicitor, to restrain the collection of taxes which, they alleged, the respondent municipality had assessed against their property so unfairly and inequitably as to violate the provisions of the Fourteenth Amendment to the Constitution of the United States. The gravamen of the complaint as set forth in the bill is that local assessors, for purposes of taxation, designedly, intentionally, habitually and systematically undervalued properties of others at rates from 45 per cent. to 70 per cent. of their true value, and with like design, intention and habit overvalued the property of the complainants at rates varying from 150 per cent. to 900 per cent. of its true value, and by this unjust discrimination imposed upon the complainants an undue share of the common burden of taxation.

The law for the redress of such a wrong is settled. It is that, when there is unjust discrimination against a person's property in that there is an intentional, systematic undervaluation of other taxable property of the same class, and the property of the taxable suffering from this discrimination is about to be taken for nonpayment of taxes, the remedy is by injunction in equity to prevent the taxation of his property at any higher rate than that imposed upon the property of those in whose favor the discrimination exists. Cummings v. National Bank, 101 U. S. 153, 160, 25 L. Ed. 903; Greene v. Louisville & Interurban R. Co., 244 U. S. 499, 516, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88; Taylor v. Louisville & Nashville R. Co., 88 F. 350, 31 C. C. A. 537; Sioux City Bridge Co. v. Dakota County, 260 U. S. 441, 445, 43 S. Ct. 190, 67 L. Ed. 340, 28 A. L. R. 979; Sunday Lake Iron Co. v. Wakefield, 247 U. S. 350, 352, 38 S. Ct. 495, 62 L. Ed. 1154. "It is not enough, in these cases, that the taxing officials have merely made a mistake. It is not enough that the court, if its judgment were properly invoked, would reach a different conclusion as to the taxes imposed. There must be clear and affirmative showing that the difference is an intentional discrimination and one adopted as a practice." Chicago G. W. Ry. Co. v. Kendall, 266 U. S. 94, 98, 45 S. Ct. 55, 57, 69 L. Ed. 183; Cummings v. Bank, 101 U. S. 153, 25 L. Ed. 903; Sioux City Bridge Co. v. Dakota County, Nebraska, 260 U. S. 441, 448, 43 S. Ct. 190, 67 L. Ed. 340, 28 A. L. R. 979; Southern Ry. Co. v. Watts, 260 U. S. 519, 526, 43 S. Ct. 192, 67 L. Ed. 375; A. T. & St. F. Ry. Co. v. Sullivan, 173 F. 456, 97 C. C. A. 1; Mayor and Aldermen of Jersey City et al. v. Central Railroad Co. of New Jersey, 212 F. 76, 128 C. C. A. 532.

As the respondents have not questioned this law and as the complainants have, by their pleadings, brought themselves within its terms, the case is resolved into one purely of fact. As raised by the bill, the issues of fact concern, first, the complainants' charge of the corporate respondent's intentional and systematic undervaluation of other peoples' property, about which there is no dispute — the respondents admit it; and next, their charge of a like intentional and systematic overvaluation of the complainants' property, about which there is sharp conflict. The only point of agreement between the parties is the genesis of the transaction. This was the purchase in 1889, by Young, of 515.51 acres of land — 66.51 acres upland and the rest under water — located in the Greenville section of Jersey City, New Jersey, on both sides of the Morris Canal, for $661,309.50. Of this sum $109,296.50 was money expended for riparian grants. Therefore the rate paid per acre, as the cost of these grants is excluded or included, was either $1,200 or $1,358. In the same year Young sold the property to the New Jersey Warehouse & Guaranty Company for about the same figure. From 1889 to 1905 that corporation sold various parcels of the tract for an average consideration of $1,007 per acre and in 1909 another parcel for $3,800 per acre, the highest price obtained. In 1905 it sold 471.5 acres lying east of the canal to the lessor complainant, subject to the taxes assessed thereon from the year 1892. Originally, of this acreage all but 22.5 acres was under water and extended out one mile to the bulkhead line in the New York Bay where the water was about 7 feet deep. To make the property useful for any purpose and particularly for railroad purposes, it had to be filled in and a channel dug to deep water. This the Warehouse Company began in 1900 and completed in 1904 at a cost of about $3,896,583, when yard tracks were laid to the bulkhead line. Disputes between the owners of the land and the respondent municipality in respect to taxes promptly arose and persisted through the tax years 1892 to 1908, both...