Spokane & I.E.R. Co. v. Spokane County

• Decision Date: 21 August 1913
• Citation: 75 Wash. 72,134 P. 688
• Court: Washington Supreme Court
• Parties: SPOKANE & I. E. R. CO. v. SPOKANE COUNTY et al.

134 P. 688

75 Wash. 72

SPOKANE & I. E. R. CO. v. SPOKANE COUNTY et al.

Supreme Court of Washington, En Banc.

August 21, 1913

Appeal from Superior Court, Spokane County; E. H. Sullivan, Judge.

Suit by the Spokane & Inland Empire Railroad Company against Spokane County and Z. Stewart, as Treasurer of Spokane County. From a judgment in favor of defendants, plaintiff appeals. Affirmed.

Graves Kizer & Graves, of Spokane, for appellant.

John L Wiley and O. J. Saville, both of Spokane, for respondents.

PARKER J.

The plaintiff seeks to have the valuation placed upon its operating property by the state board of tax commissioners and the state board of equalization in the year 1911 decreed to be unwarranted, arbitrary, and illegal in amount; to have the county treasurer of Spokane county enjoined from collecting taxes due Spokane county computed upon the value so placed upon its operating property; and to compel the county treasurer to accept payment of its taxes due Spokane county computed upon a less valuation, which it alleges to be the value of its operating property in Spokane county. The superior court having sustained a demurrer interposed by the county and its treasurer to the plaintiff's complaint, and the plaintiff having elected to not plead further, judgment of dismissal was entered against it accordingly, from which it has appealed.

The facts pleaded in appellant's complaint, upon which it rests its right to the relief prayed for, may be summarized as follows:

Appellant owns and operates an electric railway system, consisting of street and interurban railway lines in Spokane and Whitman counties. In the years 1908, 1909, and 1910 and state board of tax commissioners assessed the operating property of appellant in the manner provided by the act of 1907 relating to the assessment of operating property of railroads (Rem. & Bal. Code, § 9141 and following). In the year 1910 the valuation so placed upon appellant's operating property by the state board of tax commissioners was $6,500,398. At the time of making this and prior assessments by the state board of tax commissioners, the state Railroad Commission had not ascertained the value of appellant's property or made any findings with reference thereto, as it was authorized to do under section 8638, Rem. & Bal. Code, of the Railroad Commission Law then in force. In the year 1911 the state board of tax commissioners did not, independent of the part its members took as members of the state board of equalization, place any assessed valuation upon or make any investigation as to the value of appellant's operating property. At a hearing before the state board of equalization on September 8, 1911, appellant was advised of the intention of the members of that board to use and adopt, as the true value of appellant's operating property for the purpose of taxation, the value which the members of that board understood would be placed upon appellant's operating property by the Public Service Commission, successor to the state Railroad Commission, as authorized by the Laws of 1911, p. 601, § 92. Thereafter, on September 21, 1911, before the adjournment of the state board of equalization, the state Public Service Commission made a finding that the value of appellant's operating property within the state was $12,500,000, and thereupon the state board of equalization adopted such value as the actual value of such property within the state, and proceeded upon that basis to equalize the same with other property in the state.

No facts are pleaded in appellant's complaint attacking the procedure followed by the Public Service Commission in determining this valuation, so that we must presume that its finding was made after hearing upon due notice to appellant, as provided in the Public Service Commission Law of 1911, p. 601, § 92, and that such finding of valuation thereupon became of full force as an adjudication of that valuation as declared by the provisions of that law. Appellant sued out a writ of review in the superior court for Spokane county against the Public Service Commission seeking a review of the finding upon the question of the value of its property, claiming that the value so found was excessive and unwarranted, which proceeding for review was pending and undetermined in the superior court for Spokane county when this action was determined therein. The action of the state board of equalization in determining the value of appellant's operating property to be $12,500,000 was not the result of any consideration on the part of either of state board of tax commissioners or of the state board of equalization as to the actual value of such property, nor was it the result of an exercise of their judgment with respect thereto, but the fixing of such value by the state board of equalization was solely the result of their adoption of the value found by the Public Service Commission. We assume that the state board of equalization apportioned the value of the whole of appellant's operating property, so determined and equalized, to Spokane and Whitman counties, as provided by section 9151, Rem. & Bal. Code, to be used as a basis for computation of appellant's taxes payable to the treasurers of those counties, respectively. Appellant alleges in its complaint facts to show that the finding of value made by the Public Service Commission was unwarranted and erroneous, which allegations we may for the present concede would be sufficient to challenge the correctness of that finding were it here subject to review, as it is in the review proceedings prosecuted in the superior court for Spokane county. Appellant also alleges that the value of the whole of its operating property within the state in 1911 did not exceed $6,500,398, at which sum it was assessed in the year 1910, and that the portion of its property in Spokane county was then of the value of $4,250,900, and insists that it is entitled to satisfy its taxes payable to the treasurer of Spokane county by payment of a sum to be computed upon that basis.

The argument of counsel for appellant proceeds upon the theory that the action of the state board of tax commissioners and the state board of equalization, in fixing the value of its operating property for purposes of taxation, was such an arbitrary and capricious refusal of its members to exercise their own judgment, resulting in an excessive and unwarranted valuation being placed upon its property for purposes of taxation, as entitles it to the relief prayed for in this action, under our decisions in the following cases: Andrews v. King County, 1 Wash. 46, 23 P. 409, 22 Am. St. Rep. 136; Templeton v. Pierce County, 25 Wash. 377, 65 P. 553; Miller v. Pierce County, 28 Wash. 110, 68 P. 358; Dickson v. Mittitas County, 42 Wash. 429, 84 P. 855; Metropolitan Bldg. Co. v. King County, 62 Wash. 409, 113 P. 1114, Ann. Cas. 1912C, 943; Savage v. Pierce County, 68 Wash. 623, 123 P. 1088. Those decisions establish the rule that the courts will interfere in behalf of a property owner and prevent the imposition of an excessive tax upon his property, when it is shown to be the result of capricious and arbitrary action amounting to an actual or constructive fraud upon the rights of the property owner. The state board of equalization having adopted, without further inquiry or exercise of their own judgment as to its correctness, the findings of the Public Service Commission made as to the value of appellant's operating property on September 21, 1911, while the state board of equalization was in session, our principal inquiry is, Was that the lawful manner of determining the value of appellant's operating property by the state board of equalization? If it was, it cannot be decided in this case that such action on the part of the board of equalization was arbitrary or unlawful.

It is first contended by counsel for appellant that in the year 1911 the state board of tax commissioners were required by the law then controlling their duties to assess operating property of railroad companies, and exercise their own judgment as to the value of such property for purposes of taxation, and not be controlled by any finding made by the Public Service Commission as late as September 21st in that year. The argument advanced is that such finding came too late to control the value of appellant's operating property for taxation to be made in that year. By the terms of the act of 1907 (Rem. & Bal. Code, § 9141 and following) relating to the assessment of the operating property of railroad companies, it is the duty of the state board of tax commissioners to make an annual assessment of the 'operating property' of all railroad companies in the state for the purpose of taxation, which assessment is to be equalized by the state board of equalization and apportioned to the several counties through which the lines of each of such railroads run, for the computation of taxes to be paid to the respective treasurers of such counties. By the terms of the Railroad Commission Acts of 1907 and 1909 (Rem. & Bal. Code, § 8638), it was the duty of the Railroad Commission to ascertain and find, after notice and hearing, the market value of the property of each railroad company 'used for the public convenience within the state.' No time is specified in the law for so doing, the law requiring only that the value be ascertained 'as early as practicable,' and that when so ascertained and found by the Railroad Commission such finding 'shall be conclusive evidence of the facts stated in such finding or finding as of the date of filing, under conditions then existing. * * *' In the case of State ex rel. O. R. & N. Co. v. Clausen, 63 Wash. 535, 116 P. 7, we held, in substance, that the finding of the Railroad Commission upon the...