Samuel Raymond v. Chicago Union Traction Company

• Decision Date: 21 October 1907
• Docket Number: No. 115,115
• Parties: SAMUEL B. RAYMOND, County Treasurer of Cook County, Illinois, and ex officio County Collector of Cook County, Illinois; John J. Hanberg, His Successor as Such County Treasurer and County Collector, et al. Appts., v. CHICAGO UNION TRACTION COMPANY
• Court: U.S. Supreme Court

207 U.S. 20

28 S.Ct. 7

52 L.Ed. 78

SAMUEL B. RAYMOND, County Treasurer of Cook County, Illinois, and ex officio County Collector of Cook County, Illinois; John J. Hanberg, His Successor as Such County Treasurer and County Collector, et al. Appts.,

v CHICAGO UNION TRACTION COMPANY.

No. 115.

Argued April 8, 9, 1907.

Decided October 21, 1907.

The appellants, who were defendants below, have appealed from the judgment of the circuit court of the United States for the northern district of Illinois. The case is one of several argued together, the facts in regard to which are substantially the same. It was brought to enjoin the appellants from taking any further proceedings towards the collection of certain taxes assessed against the appellee upon an assessment alleged to be in violation of the 14th Amendment to the Constitution of the United States, and which, if enforced, would result in the taking of appellee's property without due process of law, and in denying to it the equal protection of the laws.

The case was brought in the circuit court of the United States at Chicago, and an opinion was delivered by that court at the time of the judgment for appellee. 114 Fed. 557. An earlier opinion upon a previous motion in certain traction company cases, relating to one phase of the matter in controversy, which was pending at the time in the southern district of Illinois, is to be found in 112 Fed. 607. The questions arise by reason of the provisions of the Constitution of the state of Illinois and certain sections of its tax statutes or revenue laws. The material part of article 9, § 1, of the Constitution of Illinois, 1870, is as follows:

'The general assembly shall provide such revenue as may be needful by levying a tax by valuation so that every person and corporation shall pay a tax in proportion to the value of his, her, or its property,—such value to be ascertained by some person or persons to be elected or appointed in such manner as the general assembly shall direct, and not otherwise; but the general assembly shall have power to tax . . . insurance, telegraph, and express interests or business, vendors of patents and persons or corporations owning or using franchises and privileges in such manner as it shall from time to time direct by general law, uniform as to the class upon which it operates.' Const. 1870, art. 9, § 1.

The following are the statutes in question:

'Real property shall be valued as follows: First, each tract or lot of real property shall be valued at its fair cash value, estimated at the price it would bring at a fair voluntary sale.' Hurd's Rev. Stat. 1899, chap. 120, ¶4.

'Personal property shall be valued as follows: First, all personal property, except as herein otherwise directed, shall be valued at its fair cash value. . . . Fourth, the capital stock of all companies or associations now or hereafter created under the laws of this state, except those required to be assessed by the local assessors and hereinafter provided, shall be so valued by the state board of equalization as to ascertain and determine respectively the fair cash value of such capital stock, including the franchise, over and above the assessed value of the tangible property of such company or association, 'arriving at such valuation from the best information obtainable, taking into consideration, among other things, the market value of their shares of stock, and the total amount of their indebtedness." Hurd's Rev. Stat. 1899, chap. 120, § 3.

The state board of equalization is the body that makes the original assessments upon the capital stock, etc., of corporations like the ones in question here, and there is no appeal from its valuation or decision.

The following are some of the averments of the bill of complaint filed by the appellee in this suit: The defendants were, respectively, the town collector of the town of North Chicago and the county treasurer of Cook county, the city of Chicago being within in the limits of that county. In November or December of the year 1900 a valid assessment was made by the state board of equalization, assessing the full value of the capital stock of the appellee, including franchises, at the sum of three millions of dollars over and above the value of the tangible property of the appellee, and, in accordance with the provisions of the revenue law then in force, it decided, ascertained, and set down the sum of $600,000, one fifth of the above-mentioned $3,000,000, as the assessed value of the appellee's property, designated as 'capital stock, including the franchise,' for all purposes of taxation. This assessment was never vacated, annulled, or set aside, but was duly certified to the proper officer, and the state, county, city, and all other kinds of taxes levied for the year 1900, for and against property situated in the said town of North Chicago, were duly extended against such assessed value of $600,000, and the taxes were also extended against said assessment made upon the tangible property of the appellee for the year 1900, and a warrant was duly issued to the town collector of the town of North Chicago, directing him to collect the taxes so extended. On or about the 28th day of January, 1901, appellee paid to the collector of the town of North Chicago the sum of $52,902, in full satisfaction of all the taxes assessed against the appellee, and no part of the money so paid by appellee in satisfaction of the taxes has ever been returned or tendered back to the company, but, on the contrary, the money has been paid over by the collector, less his commission, either directly or through the county treasurer of the county, to the various taxing and public bodies entitled to receive the same, and has been used or is still retained by said bodies, respectively.

On the 10th day of November, 1900, proceedings by taxpayers were instituted against the state board of equalization to compel that board to make an assessment for that same year against the appellee upon its capital stock and franchises. This application was made while the state board of equalization was in session, but before any final action had been taken by the board to determine and fix the proper assessment to be made on the capital stock of the appellee. It was alleged in the petition that the state board of equalization intended to adjourn its session without making any assessment upon the capital stock, including the franchises, of the appellee, and on twenty-two other corporations doing business in the city of Chicago, and that it intended illegally to neglect and refuse to discharge the statutory duty obligatory upon it in that regard. Neither the appellee nor the other corporations mentioned in the petition were made parties to the proceedings, nor did they ever become parties thereto. The defendants therein, members of the state board of equalization, denied that they had refused or intended to refuse to discharge their duties as members of the board. Thereafter the board assessed the capital stock of the respondent, including the franchise, as already stated, and on the 3d of December, 1900, adjourned sine die.

Before this adjournment, and on the 16th of November, 1900, the mandamus proceedings had been continued, and no action was thereafter taken therein until about the 12th day of March, 1901. About the 1st of May, 1901, the proceedings came on for trial and terminated in a judgment directing that a writ should issue against the members of the state board of equalization, requiring the board to convene and forthwith value and assess the capital stock of the appellee, 'so as to ascertain and determine respectively, as to each of said corporations, the fair cash value of its capital stock, including its franchises, over and above the assessed value of the tangible property of such company for the year 1900.'

An appeal was taken to the supreme court from that judgment, but no evidence was introduced on the trial of the case in support of the merits of the assessment theretofore made upon the capital stock, including franchises, of the appellee, and no argument was made either in the trial court or in the supreme court, upon appeal, in support of the merits of the assessment, the defense being rested almost wholly on objections to jurisdiction, and other legal grounds, touching the power of the court to grant the relief prayed for. (A method of assessing the capital stock had been adopted by the board, which omitted the indebtedness of the corporations as a factor in the valuation of such stock, and it was this error which led to the original assessments upon those corporations, and that caused the mandamus proceedings.)

The amount of the assessment against the appellee for the year 1900 appeared upon the trial of the mandamus proceedings, and it was found by the trial court that the assessment was so low as to show that it was in fact a fraudulent assessment, and therefore in law no assessment at all, and upon appeal the supreme court held that the finding of the court below was justified, and that, under such circumstances, where there was in law no assessment, the court might compel the board to fulfil its duty by assessing the property of the taxpayer thus fraudulently undervalued. See State Board v. People, 191 Ill. 528, 58 L.R.A. 513, 61 N. E. 339. The state court held that under the provisions of the statute of Illinois the state board of equalization, acting as the original assessor of the capital stock and franchises of corporations, might make an assessment of omitted capital stock and franchises of corporations under the section of the statute referred to. See §§ 276, 277 of the revenue act, Hurd's Stat. 1899, page 441.

The judgment of the circuit court granting the writ of mandamus was thereupon affirmed by the supreme court, and the writ was issued on the 22d of November, 1901, against the board. The writ, as issued under the direction of the supreme court, after reciting that the...