Union Pac. R. Co. v. Board of Com'rs of Weld County, Colo.

• Decision Date: 12 February 1915
• Docket Number: 4136.
• Citation: Union Pac. R. Co. v. Board of Com'rs of Weld County, Colo., 222 F. 651 (8th Cir. 1915)
• Parties: UNION PAC. R. CO. v. BOARD OF COM'RS OF WELD COUNTY, COLO., et al.
• Court: U.S. Court of Appeals — Eighth Circuit

222 F. 651

UNION PAC. R. CO. v. BOARD OF COM'RS OF WELD COUNTY, COLO., et al.

No. 4136.

United States Court of Appeals, Eighth Circuit.

February 12, 1915

C. C Dorsey, of Denver, Colo. (N. H. Loomis, of Omaha, Neb., and Gerald Hughes and E. I. Thayer, both of Denver, Colo., on the brief), for appellant.

Charles F. Tew, of Greeley, Colo. (Walter E. Bliss, of Greeley Colo., on the brief), for appellees.

Before HOOK and SMITH, Circuit Judges, and AMIDON, District Judge.

AMIDONDistrict Judge.

In a carefully prepared petition for rehearing the following passage from the opinion filed herein is quoted:

'Is the remedy given by section 5750 adequate?It is difficult to follow the reasoning which would hold that it is not adequate.The evil caused by suits in equity to restrain the collection of taxes is grave, and has often been set forth by courts.Dows v. Chicago,11 Wall. 108 112, 20 L.Ed. 65;State Railroad Tax Cases, 92 U.S. 575, 23 L.Ed. 663;Indiana Manufacturing Co. v. Koehne,188 U.S. 681, 23 Sup.Ct. 452, 47 L.Ed. 651;Boise Artesian Water Co. v. Boise City,213 U.S. 276, 29 Sup.Ct. 426, 53 L.Ed. 796.To correct this evil, statutes of similar import to section 5750 have been passed in many of the states of the Union.The highest court of Colorado has frequently declared the correction of this evil to have been the object of its statute.Board of Commissioners of Bent County v. Atchison, T. & S.F. Ry. Co.,52 Colo. 609, 125 P. 528.The statute is not attacked upon the ground that it is unconstitutional, nor could such an attack, if made, be sustained.The law is therefore valid legislation.It was not intended to be cumulative.Its object was to give an action at law for the recovery of sums paid on account of invalid taxes, in place of a suit in equity to restrain their collection.Under such circumstances, does it lie wit

This would be to make the law of no effect through theh the courts to say that the remedy which the Legislature has provided is inadequate, and that the remedy which it has condemned shall therefore be continued? traditions of equity.It would not only be judicial legislation, but would nullify a statute which is conceded to be constitutional.It is a mistake to view this statute as relating to procedure only.It creates a right in favor of the aggrieved taxpayer, and, from considerations of the highest public policy, abolishes the right to stay the collection of public revenues by injunction.The courts may not rightfully nullify it, upon the ground that the remedy which it gives is less adequate than the one which it takes away.The statute being constitutional, the judgment of the Legislature on that subject must control.Such statutes have been frequently before the Supreme Court, and have been uniformly held to afford a plain, speedy, and adequate remedy such as excludes the right to resort to equity.'

In regard to this passage the petition proceeds as follows:

'We respectfully assert that this is revolutionary doctrine.From the foundation of the federal judicial system until this court spoke in the present case, it had been held by an unruffled current of authority, including repeated decisions of the Supreme Court of the United States, that equity jurisdiction of the federal courts was to be determined in accordance with the general principles of equity as the same existed in 1789, at the time of the adoption of the first Judiciary Act,' etc.

This is a grave charge, especially grave when made by the eminent counsel who sign the petition.It has therefore received careful consideration.

The rule which the passage of our opinion is supposed to violate is stated as follows in Payne v. Hook, 7 Wall. 425, 430, 19 L.Ed. 260:

'We have repeatedly held 'that the jurisdiction of the courts of the United States over controversies between citizens of different states could not be impaired by the laws of states, which prescribe the modes of redress in their courts, or which regulate the distribution of their judicial power.'If legal remedies are sometimes modified to suit the changes in the laws of states, and the practice of their courts, it is not so with equitable.The equity jurisdiction conferred on the federal courts is the same that the High Court of Chancery in England possesses, is subject to neither limitation nor restraint by state legislation, and is uniform throughout the different states of the Union.'

The case in which this language was used was as follows: An administrator in the state of Missouri had wasted the estate and converted the same to his own use, and been guilty of other gross frauds.An heir of the estate residing in Virginia filed a bill against the administrator, asking that he be compelled to account, that certain fraudulent instruments be set aside, and plaintiff's distributive share be ascertained, and a decree entered for its payment.The statute of Missouri conferred exclusive jurisdiction in the administration of estates of deceased persons upon the probate courts of the state.The administrator objected to the suit in the federal court upon the ground that this remedy in the probate court was plain and adequate, and exclusive of all redress by plenary suit in equity.Under the laws of Missouri a citizen of that state, seeking redress similar to that sought by the plaintiff, would have been compelled to go into the probate court, and it was contended that a citizen of Virginia could have no other remedy.The Supreme Court rules that this remedy in the courts of the state could not be pursued in the federal courts, and could not be given effect so as to destroy the jurisdiction of those courts as created by the Constitution and laws of the national government.

Another case cited in the petition for rehearing is Smyth v. Ames,169 U.S. 466, 18 Sup.Ct. 418, 42 L.Ed. 819.That was a suit brought by railroad companies having lines in the state of Nebraska to restrain the enforcement of a schedule of rates fixed by the Railway Commission of that state.The local statute authorized any railroad company to show, in a proper action brought in the Supreme Court of the state, that the rates prescribed by the Commission were unreasonable and unjust, and, if that court found such to be the fact, to obtain an order upon the Railway Commission permitting the rates to be raised, etc.It was objected to the jurisdiction of the federal court that this remedy was plain and exclusive.The Supreme Court ruled that the remedy could not be pursued in the federal courts, and that, as the case made by the bill showed a controversy clearly within the jurisdiction of those courts, the granting of this statutory remedy, which was available in the state court alone, could not have the effect to destroy jurisdiction of the federal courts.

A great many cases of similar character are cited and quoted from in the petition for rehearing.Among them are the following: McConihay v. Wright,121 U.S. 201, 205, 7 Sup.Ct. 940, 30 L.Ed. 932;Mississippi Mills v. Cohn,150 U.S. 202, 14 Sup.Ct. 75, 37 L.Ed. 1052;Borer v. Chapman,119 U.S. 587, 600, 7 Sup.Ct. 342, 30 L.Ed. 532;Kirby v. Lake Shore & Michigan Southern R.R.,120 U.S. 130, 137, 7 Sup.Ct. 430, 30 L.Ed. 569;Butler Bros. Shoe Co. v. United States Rubber Co.,156 F. 1, 84 C.C.A. 167;Spencer v. Watkins,169 F. 379, 94 C.C.A. 659;McClellan v. Carland,187 F. 915, 110 C.C.A. 49;National Surety Co. v. State Bank,120 F. 593, 56 C.C.A. 657, 61 L.R.A. 394.In all of these cases the remedy given by the statestatute was confined to state courts or could not be asserted by a citizen of another state in the federal courts.

What bearing have these authorities on the present case?In the absence of a statute, the payment of a tax, with few exceptions, is held to be voluntary, and, though the tax may be invalid, the money paid cannot be recovered.This is especially true of taxes upon real property.The process by which such taxes are collected is so gradual, and affords so many opportunities of resistance, that the courts have almost uniformly held that there can be no such duress as to such taxes as to render their payment involuntary.The statute of Colorado here under consideration changes that law.It provides that, in all cases in which a person shall pay a tax which is for any reason erroneous or illegal, the board of county commissioners shall refund the same without abatement or discount.This is substantive law.It gives a new right.The statute has nothing to do directly with the law of procedure.The remedy for the enforcement of the right which it gives is not prescribed by the statute.That remedy is a suit at law.It is given by the common law.That is the remedy now, was the remedy in 1789, and for some centuries before that date.This remedy, as Mr. Justice Van Devanter points out in Singer Sewing Machine Co. v. Benedict,229 U.S. 481, 33 Sup.Ct. 942, 57 L.Ed. 1288, is available in the federal courts the same as in the state courts.

In the passage quoted from our opinion we thought we made it plain that this statute does not provide a remedy in the sense that that term is used in the law of procedure.

It deals only with the substantive rights of property owners.It is remedial only in the sense of a substantive law which corrects a known evil.It is too elementary for discussion that such laws of the several states are as binding upon federal courts, sitting in those states, as upon the local courts.We are therefore brought back to the conclusion reached in that part of our opinion which is criticized, namely, that the statute lies in a field of legislative, rather than judicial, discretion.

The inapplicability of the decisions cited in the petition for rehearing is made quite plain by the opinion of this court...