Ohio Fuel Supply Co. v. Paxton

• Decision Date: 25 September 1924
• Docket Number: No. 266.,266.
• Citation: 1 F.2d 662
• Parties: OHIO FUEL SUPPLY CO. et al. v. PAXTON et al.
• Court: U.S. District Court — Southern District of Ohio

1 F.2d 662 (1924)

OHIO FUEL SUPPLY CO. et al. v. PAXTON et al.

No. 266.

District Court, S. D. Ohio, E. D.

September 25, 1924.

Eagleson & Laylin, of Columbus, Ohio, for plaintiffs.

Joseph O. Fritz, Pros. Atty., of Wooster, Ohio, for defendant Russell.

SATER, District Judge.

The question for decision is raised by the answer of the treasurer of Wayne county. The correctness of the conclusion reached in City Railway Co. v. Beard (D. C.) 283 Fed. 313, 20 Ohio L. R. 213, is not questioned. The situation of the parties is the same as in that case, excepting as to the difference in the valuation fixed on plaintiffs' property with reference to its actual value and the amount of tax assessed against the same, and excepting that the Beard Case was disposed of on the pleadings, whereas in the instant case the facts material to a decision are established by certain admissions in the answer, a failure to deny some of the averments in the bill, and an agreed statement of facts. The similarity is such (the illegal and fraudulent character of the system of valuing property for taxation being manifest) that the issue now under consideration could properly have been decided in the Beard Case, had it been tendered. The facts and claims, in so far as they need be specifically stated, on which the issue arises, are these:

The tax commission fixed a tentative valuation on the plaintiffs' property, exclusive of real estate not used in their operations. On their application a hearing was had, in consequence of which such valuation was slightly reduced. A further reduction followed as the result of a request for a second hearing, following which the tax commission refused to modify its conclusion or the value as then fixed. The justiciable stage was then reached. The plaintiffs protested against the valuation as fixed (which was higher than that on some, at least, of other similar corporations), on the ground that it was excessive and discriminatory. The plaintiffs do not ask to be relieved from the payment of taxes justly chargeable against their property, but only those in excess thereof which were imposed in violation of constitutional provisions. After the commission's final refusal to make a further reduction in the valuation of plaintiffs' property, that body proceeded to apportion among the 38 counties in which such property is located the amount taxable in each. The sum apportioned to Wayne county for taxation was $1,750,600, but the actual value of such property in that county was but $1,506,763.

The plaintiffs made no claim to the taxing authorities of the county of the overvaluation of their property, and took no action to secure a reappraisement of property in that county, or in any of its taxing subdivisions, the real estate in all of which is valued for taxing purposes at only 60 per cent. of its actual worth, while the plaintiffs' property was valued by the tax commission at 116 per cent. of its real value. That the appraised value of real estate in the county was but 60 per cent. of its true value was known to the county auditor and county commissioners, or in the exercise of due diligence could have been ascertained by them, and was a fact of common knowledge in the county at the time the tax values of real estate were required by law to be determined. The plaintiffs' property, as valued by the commission and so apportioned to the county, was then by the proper local tax authorities further apportioned among the several appropriate taxing districts, and taxes were assessed against it by the budget commission at the same rate as imposed on other property within the respective subdivisions to meet their operating expenses for the ensuing year and to provide sinking funds to care for their bonded indebtedness. The taxes so levied were then placed upon the tax duplicate. The plaintiffs and the taxing authorities were charged with notice of the provisions of the statutes relating to the imposition of taxes. Bonds of some or all of such subdivisions, with interest, fell due within the year for which the taxes were levied, and contracts were made in the conduct of their business in reliance on the receipt of the taxes levied.

When the Ohio Fuel Supply Company paid the first half of the year's tax assessed against the plaintiffs' property, it protested to the county treasurer against its taxable valuation and gave him notice of the intention to enjoin the collection of the residue of the taxes charged; but no other complaint touching the valuation and taxation of such property was at any time made by the plaintiffs, or either of them. The defendant claims that, if the temporary injunction against the collection of so much of the taxes as are wrongfully charged be made permanent, such municipalities and boards will not be able to meet their financial obligations, in consequence of which inconvenience, hardship, and loss will result to themselves and their creditors equal to that which plaintiffs would suffer should they be required to pay the tax. Defendant avers a lack of diligence on the part of plaintiffs in asserting their rights and pursuing their remedy, and contends that, had they enjoined the tax levy, they would have incurred no greater expense than in the present suit, and would have enabled the taxing authorities to recast their levy and, by making it slightly higher, to have insured themselves respectively funds sufficient to meet their liabilities. The defendant further charges that the plaintiffs, instead of enjoining the collection of the excess taxes, should have enjoined the levy of the same, and that by reason of their silence and inaction they are guilty of laches and are estopped from obtaining equitable relief.

The claim that the taxing officers, had they been notified of plaintiffs' intention to test the correctness of the valuation of their property and its excessive character, would have increased the rate in order to insure adequate funds to meet all legitimate demands for the ensuing year, cannot, for want of proof, be accepted as an established fact. The opportunity would have been presented to pursue that course had the taxing boards elected so to do. That the defendant treasurer, at the close of nine months from the filing of the bill, interposed an answer disputing the soundness of plaintiffs' contention, suggests that the issue now under consideration might then have been tendered.

The first three sections of the Act of April 10, 1856 (53 O. L. 178), later became sections 5848-5851 of the Revised Statutes, and are now known as sections 12075-12078, Ohio G. C., and are shown in the margin.¹ This action is brought under section 12075. The question for decision is: Must a party, under circumstances such as are disclosed in the instant case, who knows or has reasonable cause to believe his property is excessively valued for taxation and is about to be illegally assessed, enjoin the levy, and, if he fails to do so, does he thereby lose his right to enjoin the collection of the taxes illegally charged against such property?

Section 12075 gives to taxpayers a choice of remedies. He may elect either to enjoin an illegal tax levy or he may enjoin the collection of such tax. He may not, however, do both. This appears from the use of the word "or," occurring in the statute, a definition of which is thus given in 29 Cyc. 1502: "The word `or' is a disjunctive particle that marks an alternative, generally corresponding to `either,' as `either this or that,' a connective that marks an alternative, as, `you may read or you may write — that is, you may do one of the things at your pleasure, but not both.'" For like definitions, see 21 Am. & Eng. Ency. Law (2d Ed.) 936; Caster v. McClellan, 132 Iowa, 502, 504, 109 N. W. 1020; 6 Adjudged Words and Phrases, First Series, 5009.

It is clear the plaintiffs can maintain their action unless by their conduct they have estopped themselves from so doing. It will be noted that the remedy afforded by the statute runs against both illegal taxes and illegal assessments. Cases assailing assessments are therefore as pertinent as those attacking taxes. In the well-considered opinion of Stephan v. Daniels, 27 Ohio St. 527, is found an intelligent analysis and extended discussion of the act of 1856. Under the remedial provisions of that law, enacted to obviate the difficulties of the taxpayer in obtaining relief from illegal taxes and assessments, it was said the complaining party, to obtain an injunction, need not aver and show, as under the ordinary rules of equity, that great and irreparable injury is about to be done for which he has no adequate remedy at law, but only that the tax is illegal which is about to be assessed or collected, citing Steese v. Oviatt, 24 Ohio St. 253, and that, in an action to recover back an illegal tax, two things must be shown: (1) That the tax is illegal; and (2) that it has been collected by those authorized by law to make collection of taxes. Daniels and others, to prevent their property from being sold for unpaid taxes, were compelled to pay involuntarily what they contended was, and what proved to be, an illegal street assessment. They had not endeavored to enjoin the improvement at its inception or as it progressed. It was contended that they were not entitled to recover back the money paid for the reason the assessment was fair and reasonable, that they had knowledge of the improvement as it progressed, that they stood by without objection until the improvement was completed, and that it had greatly enhanced the value of their property on which the assessment was levied. The answer to the argument thus made is found in the fifth paragraph of the syllabus, which is the law of the case and is as follows:

"An answer, which avers that D. had actual knowledge, or had the means of knowing, of all the steps taken by the city in making the improvement, and made no objection, that the lot is greatly benefited thereby, that the...