People's Gaslight & Coke Co. v. Stuckart

• Citation: 121 N.E. 629,286 Ill. 164
• Decision Date: 05 February 1919
• Docket Number: No. 11877.,11877.
• Court: Supreme Court of Illinois
• Parties: PEOPLE'S GASLIGHT & COKE CO. v. STUCKART, County Treasurer.

286 Ill. 164

121 N.E. 629

PEOPLE'S GASLIGHT & COKE CO.

v.STUCKART, County Treasurer.^*

No. 11877.

Supreme Court of Illinois.

Dec. 18, 1918.

Rehearing Denied Feb. 5, 1919.

Appeal from Circuit Court, Cook County; David F. Matchett, Judge.

Bill by the People's Gaslight & Coke Company against Henry Stuckart, County Treasurer. From a decree dismissing the bill, complainant appeals. Reversed and remanded, with directions.

Carter, J., dissenting in part.

Meagher, Whitney, Ricks & Sullivan, of Chicago (Boetius H. Sullivan and Edwin Hedrick, both of Chicago, of counsel), for appellant.

Edward J. Brundage, Atty. Gen., and Maclay Hoyne, State's Atty., of Chicago (Samuel A. Ettelson, Corp. Counsel, Louis J. Behan, John W. Beckwith, Leon Hornstein, Charles R. Francis, and Morton S. Cressy, all of Chicago, of counsel), for appellee.

DUNN, J.

The state board of equalization assessed the capital stock of the People's Gaslight & Coke Company in 1909 at $12,314,226, upon which valuation a tax of $550,445.90 was extended. On February 28, 1910, the company filed a bill against the treasurer of Cook county to enjoin the collection of all of this tax in excess of $300,000, upon the ground that the assessment was fraudulent, excessive, and not uniform with the assessment of other property throughout the state, which was at the same time so underassessed as to impose upon the complainant a greater share of the burden of taxation in proportion to the value of its property than that imposed upon other property. A temporary injunction was granted upon the payment of $300,000 to the treasurer. An answer was filed, and the cause was referredto a master, who made a report recommending a decree making the temporary injunction permanent. The court overruled most of the defendant's exceptions to the master's findings of fact and partially sustained others, but sustained exceptions to the legal conclusions and entered a decree dismissing the bill for want of equity. The complainant has appealed.

The state board of equalization adopted the following rules for assessing the capital stock of corporations, including the franchise over and above the tangible property:

‘First. The fair cash value of the shares of capital stock (consideration being given, among other things, to the value of the shares of stock and the quotations of such shares in the market over such a period of time as may be reasonable, also the books of said corporations and the returns made to the auditor of public accounts, or such other information as the board may have or may be able to obtain) and the amount of the indebtedness (except indebtedness for current expenses, excluding from such expenses the amount paid for the purchase or improvement of property) shall be combined or added together. Said state board of equalization shall then equalize said amount so obtained, so that said companies or associations shall be assessed as near as practicable upon a uniform basis with other property throughout the state.

‘Second. From the aggregate amount so determined and equalized, as aforesaid, there shall be deducted the aggregate equalized valuation of all tangible property of such corporation or association, respectively, and one-third of the remainder, if any, shall be taken and held to be the assessed value of the capital stock of such corporation or association, including the franchise, over and above the tangible property thereof.’

The appellant's statement made in 1909 in compliance with the statute requiring from corporations sworn statements in regard to their capital stock showed that the amount of its capital stock was $35,000,000, consisting of 350,000 shares, all of which had been issued and paid up; that the total amount of its indebtedness was $37,096,000; that the market quotations of its stock from April, 1908, to April 1, 1909, varied from 88 1/2, the lowest, in April, 1908, to 114 1/2, the highest, on April 1, 1909, and at the date of the statement, September 28, 1909, were about 115 5/8, and that the assessed valuation of all its tangible property was $8,311,373, representing the full value of $24,934,120. Assuming the value of the stock to be $115 a share, the total valuation was $40,250,000. With the indebtedness added, the total is $77,346,000. Equalizing this on the basis of an assessment of other property throughout the state at 80 per cent. of its value would produce the amount of $61,876,800, from which, according to the rule, should be deducted the equalized valuation of the tangible property, $24,934,120. The remainder is $36,942,680, one-third of which, $12,314,226, is the amount of the assessed value of the capital stock which is complained of. The assessment does not exceed the actual value of the appellant's capital stock and franchise ascertained according to the rules of the state board of equalization.

The appellant's case is not based upon an actual valuation of its property above its fair cash value, but upon an intentional, and therefore fraudulent, systematic undervaluation for assessment of all other property in the state, and particularly by the state board of equalization of the value of the capital stock and franchise above the value of the tangible property of all other corporations except the appellant. The case is substantially that appellant's property was assessed at practically its full value, while all other property was so grossly undervalued as to make the appellant pay a much larger proportion of the taxes than it should. The bill charges that personal property in the state was assessed by the local assessors at not exceeding 50 per cent. and real estate at not exceeding 60 per cent. of its fair cash value, and that these underassessments were intentionally and deliberately made. It further alleges that the state board of equalization assessed the capital stock and franchises of 1,168 companies and associations, including the appellant, incorporated under the laws of this state, other than railway companies, with an aggregate paid-up capital stock of $328,077,216, at a total full value of $261,362,997, or at an assessed value of $87,120,999, that the equalized value of the tangible property of said companies or associations was $51,394,441, and that the net assessment of their capital stock and franchises was $35,394,441. The appellant's assessment was more than one-third of this amount. It is also alleged that the board fixed the value of the capital stock and franchises of 1,336 other companies and associations at a full value of $177,692,718, or an assessed value of $59,230,906, which latter sum was precisely the same as the equalized value of the tangible property of the 1,336 companies or associations as assessed by the local assessors, whereby no capital stock and franchise tax was assessed against them. The bill further charges that the board deliberately and fraudulently undervalued at not to exceed 55 per cent. of its value the capital stock, including franchises, of steam railways, and at not to exceed 30 per cent. the capital stock, including franchises, of electric railways, in order to relieve such companies from the payment of their just proportion of the taxes for the year 1909, and facts are set out in the bill which are relied upon to show a deliberate and fraudulent intent. The bill also charges that other gas companies throughout the state were assessed at not to exceed 45 per cent. of the fair cash value of their property, but were underassessed as the result of a deliberate and fraudulent intent and purpose, which relieved them from the payment of their just proportion of the public burden, and that property throughout the state of every kind was undervalued and assessed at not to exceed 60 per cent. of its fair cash value, exceptin the case of appellant; that the assessment against the appellant, as compared with every other assessment of capital stock and franchise, is unfair, unjust, ununiform, discriminatory, and confiscatory, and was arbitrarily fixed or determined upon some other basis than that applied to all other companies; that it is a gross fraud upon the appellant, and imposes upon it a greater proportion of the public burden than is borne by other similar corporations and than is borne by any other property of the same value, and amounts to the taking of the appellant's property without due process of law, imposes an unequal burden of taxation, and is therefore in contravention of the provisions of the Constitution of the state requiring that taxes shall be equal and uniform throughout the state.

Rules fixed by the state board of equalization for ascertaining the value of the capital stock of corporations substantially the same as those now in force have been approved by this court. Porter v. Rockford, Rock Island & St. Louis Railroad Co., 76 Ill. 561;Chicago, Burlington & Quincy Railroad Co. v. Cole, 75 Ill. 591. In State Board of Equalization v. People, 191 Ill, 528, 61 N. E. 339,58 L. R. A. 513, an assessment which had been arbitrarily made too low was disregarded, and a writ of mandamus was awarded requiring the state board of equalization to make an assessment of the capital stock of the corporation involved according to its rules. In Calumet & Chicago Canal & Dock Co. v. Stuckart, 275 Ill. 253, 113 N. E. 894, the collection of the capital stock tax based upon an assessment of capital stock in violation of the rules of the board was enjoined. The evidence shows that the assessment of the capital stock of corporations was referred by the board to two committees of seven each, one having charge of the capital stock of all corporations except railways and the other of railway corporations. The committees acted independently, and each made a report to the board of the assessments recommended, and the report of each committee was adopted. The committee on capital stock of corporations other than railways dealt with the assessment of 2,504 corporations, but in no case were...