Nashville, C. & St. L. Ry. v. Browning

Decision Date16 December 1939
Citation140 S.W.2d 781
PartiesNASHVILLE, C. & ST. L. RY. v. BROWNING et al., Constituting State Board of Equalization.
CourtTennessee Supreme Court

W. H. Swiggart, Seth M. Walker, Edwin F. Hunt, and W. A. Miller, all of Nashville, for plaintiff in error.

Roy H. Beeler, Atty. Gen., and W. F. Barry and Dudley Porter, Jr., Asst. Attys. Gen. (William Gerber and Frank H. Gailor, both of Memphis, W. C. Cherry and Horace Osment, both of Nashville, J. W. Anderson and T. S. Myers, both of Chattanooga, and James J. Pleasants, Jr., of Memphis, of counsel), for defendants in error.

DeHAVEN, Justice.

The Nashville, Chattanooga & St. Louis Railway filed a petition for certiorari and supersedeas in the Circuit Court of Davidson County to review the action of the State Board of Equalization in fixing the value of petitioner's property for taxation. The trial judge dismissed the petition and an appeal has been taken to this court.

The Railroad and Public Utilities Commission is directed by statute (Code § 1508) to assess for taxation, for state, county and municipal purposes, all of the property of every description, tangible and intangible, within the state, belonging to railroad companies and other named public utilities. It is provided that the Commission shall assess all of such property biennially, in even years, at its actual cash value as of the same date the properties of other persons are by law assessed. The owners of property assessable under the statute are required by Code, § 1509, to file with the Commission sworn schedules and statements of certain information.

Section 1526 of the Code is as follows: "Upon examination of every such schedule and statement and all other evidence taken by them, the said commission shall proceed to ascertain and determine the value of said property within the state for taxation and assess the same accordingly, taking into consideration the capital stock, corporate property, franchises, and gross receipts, the market value of the shares of stock and bonded indebtedness, and such other evidence as is afforded by said statements and schedules or other evidence taken to enable them to fairly and equitably fix the actual cash value of the properties of such persons."

The railway filed its return with the Commission, and after considering the same, together with other evidence, the Board fixed the cash value of the railway's property in Tennessee, for taxation, at $16,223,199, for the biennium 1938-39. The railway filed numerous exceptions to the assessment, which were denied after a full hearing, and the railway prayed and was granted an appeal to the State Board of Equalization. The statute (Code, § 1533) provides that the Commission shall file with the Board the assessments made by them, together with such records as may be deemed necessary. Section 1534 provides that the Board shall proceed to examine the assessments so made, and are authorized to increase or diminish the valuation placed upon any property valued by the Commission, and are further authorized to request of the Commission additional evidence touching the property assessed; that if the Board so desire, they have the power, without referring any assessment to the Commission, themselves to employ experts, accountants, and to call witnesses to testify upon any assessment certified to them by the Commission, and to call upon the Interstate Commerce Commission for any valuation of property in the office of such Commission; that the assessments shall not be deemed complete until corrected and approved by the Board. Under Code, Section 1535, the Board is required to certify to the Commission the valuation fixed by them upon each property assessed, and the action of the Board "in fixing the valuation upon such property shall be conclusive and final and the valuation so fixed shall be assessed against said property and the taxes due thereunder be paid."

The Board reviewed the assessment of the railway's property and approved the same. Before the Board certified back to the Commission the amount of the assessment, as approved, the railway filed its petition for writs of certiorari and supersedeas in the Circuit Court of Davidson County. The circuit judge, upon motion of the Board, taking into consideration the entire record as certified to the circuit court by the Board, dismissed the petition and discharged the supersedeas. From this action of the circuit judge, the railway has appealed to this court and made numerous assignments of error. The railway in the presentation of its case has not followed seriatim the assignments of error. As a matter of convenience we will follow the same course.

The railway complains, in the argument contained in its brief, that "The assessment is not supported by any evidence; is grossly in excess of the value of the property as established by the evidence; was made by methods not calculated to produce a fair and just result and therefore arbitrary and illegal; and was made in violation of the provisions of the statutes controlling the assessment of railroad property."

The assessment made by the Board is made final and conclusive by statute (Code, § 1535) and is not open to review by the courts on certiorari, where the Board has not, with reference to the assessment, exceeded its jurisdiction or acted illegally or fraudulently. Tomlinson v. Board of Equalization, 88 Tenn. 1, 12 S.W. 414, 6 L.R.A. 207; Anderson v. Memphis, 167 Tenn. 648, 72 S.W.2d 1059; Treadwell Realty Co. v. City of Memphis, 173 Tenn. 168, 116 S.W.2d 997. In Savage Co. v. City of Knoxville, 167 Tenn. 642, 72 S.W. 2d 1057, it was held that value placed on property for taxation by duly constituted taxing authorities is not reviewable by the court, nothing else appearing, since value is a matter of opinion. In Mossy Creek Bank v. Jefferson County, 153 Tenn. 332, 284 S.W. 64, it was held that mere error in honest judgment of a county board of equalization as to value of property will not obviate binding effort of conclusion, in absence of fraud. The rule announced by the above cases is no longer open to doubt or discussion. Where, however, the Board acts illegally, fraudulently or in excess of its jurisdiction, certiorari is the proper remedy. State ex rel. v. Dixie Portland Cement Co., 151 Tenn. 53, 58, 267 S.W. 595; Louisville & N. Railroad Co. v. Bate, 12 Lea 573, 80 Tenn. 573.

The provision of the statute that the valuation made by the Board "shall be conclusive and final" presupposes a substantial compliance with the proceedings prescribed with reference to the method of making valuation of railroad property.

The Commission, as affirmatively appears from the itemized assessment made by them, considered all of the elements specified in the statutes (Code, § 1526). The Commission had before it the return of the railway and other evidence submitted and fixed the value of the railway's property in the sum above stated. No witness, or document in evidence, fixed the exact value as reported by the Commission; but from the facts developed, the Commission held itself able to fairly and equitably fix the actual cash value of the property. No intentional discrimination or fraud on the part of the Commission or Board is charged or proven. In Rowley v. Chicago & N. W. R. Co., 293 U.S. 102, 55 S.Ct. 55, 59, 79 L. Ed. 222, the court said: "There is nothing in this record to suggest any lack of good faith on the part of the board. Overvaluation resulting from error of judgment will not support a claim of discrimination. There must be something that amounts to an intention, or the equivalent of fraudulent purpose, to disregard the fundamental principle of uniformity."

In Chicago Great Western R. Co. v. Kendall, 266 U.S. 94, 45 S.Ct. 55, 57, 69 L.Ed. 183, 189, the court said: "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."

The rule announced in the above cases is generally recognized and needs no additional citation of authority in its support.

The good faith of the Commission and Board and the validity of their action are presumed; when assailed, the burden of proof is upon the complaining party. Sunday Lake Iron Co. v. Wakefield Township, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154.

It is contended for the railway that the Commission and Board should have made the assessment on the basis of capitalization of net income at a rate which would measure a fair return to the investor in the property, or, at least, that such method should have been made the predominant factor in arriving at the value of the property. Capitalization of net income is not specified in Section 1526 of the Code; but this factor could have been considered along with other elements in fixing the value of the property. Incorporated in the assessment made by the Commission under the caption "Earnings" is a tabulated statement of net operating income for the years 1933-1938. A statement filed by the railway showed net operating revenue for the years 1931-1937 averaged $947,530.60 per annum, and that the net revenue from non-operating property for the...

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