Western Union Telegraph Co. v. Tax Commission of Ohio, 465

• Citation: 21 F.2d 355
• Decision Date: 28 July 1927
• Docket Number: No. 465,468.,465
• Court: United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
• Parties: WESTERN UNION TELEGRAPH CO. v. TAX COMMISSION OF OHIO et al. AMERICAN TELEPHONE & TELEGRAPH CO. v. SAME.

21 F.2d 355 (1927)

WESTERN UNION TELEGRAPH CO. v. TAX COMMISSION OF OHIO et al.

AMERICAN TELEPHONE & TELEGRAPH CO. v. SAME.

Nos. 465, 468.

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

July 28, 1927.

Ireton & Schoenle, of Cincinnati, Ohio, and Francis R. Stark, Francis N. Whitney, and Samuel C. Bowman, all of New York City, for Western Union Tel. Co.

Maxwell & Ramsey, of Cincinnati, Ohio, A. E. Holcomb, of New York City, and Joseph S. Graydon, of Cincinnati, Ohio, for American Telephone & Telegraph Co.

Edward C. Turner, Atty. Gen., and Virgil H. Gibbs, Sp. Counsel, of Columbus, Ohio, for defendants.

Before MOORMAN, Circuit Judge, and HICKENLOOPER and HOUGH, District Judges.

HOUGH, District Judge.

The complainants are New York corporations, and the bills allege diversity of citizenship and unconstitutional action and threatened action on the part of the tax commission of Ohio, contra to the guaranties contained in the Fourteenth Amendment to the Constitution of the United States, and the uniformity clause of the state Constitution (article 12, § 2).

The cases have been submitted to this court, constituted under the provisions of section 266 of the Judicial Code (Comp. St. § 1243), upon the bills, the answers of the tax commission of Ohio, and the proof, and upon the application of the complainants for the issuance of preliminary injunctions to supersede temporary restraining orders heretofore granted, and the application of the defendant tax commission, raised both by motion and answer, to dismiss the bills.

The specific injective relief sought, is to enjoin and prevent the tax commission from certifying the values of complainant's property in Ohio, found by it upon hearing and rehearing to be subject to taxation, and of definite and specific values, to the auditors of the various counties in the state, in proportion to the amount of the properties in such counties.

The complainants attack the amount of valuation only, raising no question that the property so valued and subsequently to be assessed does not have its situs for taxation in Ohio and is not liable to taxation here. This attack upon the valuation is presented in a twofold aspect: (1) That such property has been overvalued; and (2) that other property throughout the entire state is systematically valued at less than its true value in money, and that the valuation of complainant's property is therefore discriminatory and results in imposing an unequal and illegal burden of taxation upon complainants, in violation of the federal and state Constitutions. No tax has yet been assessed and none could be assessed until the valuation is apportioned and certified to the county auditors; and manifestly no tender has been made of taxes admittedly to become due.

In the year 1910 and the years following, the Legislature of Ohio made some radical changes in the taxing machinery of the state and in the taxing personnel thereof. Under the executive branch of the state government, it created the Ohio tax commission, and clothed it with plenary powers, as appears by sections 1465 — 1 to 1465 — 36, inclusive, of the General Code of Ohio. In section 1465 — 33 it is provided that "all powers, duties and privileges imposed and conferred upon any state board, * * * or any power or duty theretofore conferred upon any state or county officer or board, which power and duty by such act was conferred upon such commission, is hereby imposed and conferred upon the commission created by such act. * * *"

The taxation machinery proper is dealt with in sections 5320 to 5773, inclusive, of the General Code. And in section 5579 it is provided that, "in addition to all other powers and duties vested in or imposed upon it by law, the tax commission of Ohio shall direct and supervise the assessment for taxation of all real and personal property in the state. County auditors shall, under the direction and supervision of the tax commission of Ohio, be the chief * * * assessing officers of their respective counties, and, * * * shall list and value real and personal property for taxation, within * * * their respective counties, except as may be otherwise provided by law. There shall * * * be in each county, a board to hear complaints and revise assessments of real and personal property for taxation, which shall be known as the county board of revision."

And in section 5610 it is provided that "an appeal from the decision of a county board of revision may be taken to the tax commission of Ohio. * * *"

The assessment of telegraph and telephone companies' property for taxation is made the duty of the tax commission itself under the authority of section 5446, General Code.

Its valuation on finding of liability of property for taxation, whether in case of an original valuation or other original proceedings of such board, or an appeal from the county board of revision, is final and conclusive for the current year (section 5611 — 1, General Code), unless reversed, vacated, or modified, as provided in the next section. Section 5611 — 2, General Code, confers jurisdiction upon the court of common pleas by petition in error, for the purpose of obtaining a reversal, vacation, or modification of the final determination of the tax commission, and further provides that "no determination of the tax commission as to the value of property for taxation shall be reversed, vacated, or modified unless it is shown by clear and convincing evidence that the value of the property, as determined by the tax commission, is not the true value in money of such property."

By section 5613, General Code, all the property in the state comes under the jurisdiction and consideration of the tax commission, to determine whether or not all or any class of that property has been listed at its true value in money, and it may increase or decrease the aggregate value of the real property or of the personal property, or any class of real or personal property, in any county, township, city, village, or taxing district, by such rate of per cent. or by such amount as will place such property on the tax list at its true value in money, to the end that each and every class of real and personal property shall be listed and valued for taxation by an equal and uniform rule at its true value in money.

It is made the duty of the respective county auditors, upon the final certifications by the tax commission to them, to place the values upon the county tax duplicate. Sections 5448 and 5615, General Code.

It was apparently the intent of the Legislature that no state judicial action be permitted to interfere with the activities of the tax commission, except as provided in section 5611 — 2, General Code, as it has provided in section 1465 — 31 that "no injunction shall issue sustaining or staying any order, determination, or direction of the commission * * * required by law to be taken in pursuance of any such order, determination or direction, but nothing herein shall affect any right or defense in an action to collect any tax or penalty."

This later legislation repealed in part, at least, section 12075, General Code, which had been upon the statute books for many years, and provided: "Common pleas * * * courts may enjoin the illegal levy or collection of taxes and assessments, and entertain actions to recover them back when collected, without regard to the amount thereof, but no recovery shall be had unless the action be brought within one year after the taxes or assessments are collected."

The legislative taxation structure confers upon the tax commission the power and duty to value originally public utilities property; to find the ultimate value of the property of specific individuals who have remonstrated and appealed the question of value to the commission; and, finally, upon an abstract of the real and personal property transmitted to it by the various county auditors, under section 5612, to pass upon the various classes of property in the respective taxing districts, and, under section 5614, to increase or decrease any of the classes of real or personal property, to the end, as provided in section 5613, that "each and every class of real and personal property shall be listed and valued for taxation by an equal and uniform rule at its true value in money." The commission, therefore, is the final arbiter and valuer of all the property in the state, of whatsoever nature, subject as we have seen to the review provided in section 5611 — 2, General Code.

The answers make issue on the questions of overvaluation of complainant's property and discrimination and in resistance of the application for injunction raise three questions; namely: (1) The jurisdiction of the court as such; (2) that the complainant's right of action has not reached a justiciable stage; (3) and that an adequate remedy at law exists.

1. The bills allege diversity of citizenship and the requisite jurisdictional amount involved, and, outside the bare statement of jurisdictional amount, the bills on their face show that subject to proof the requisite jurisdictional amounts are involved.

Upon the question of discrimination or systematic discriminatory valuations on the part of the taxing authorities, that action is assailed as contravening the federal Constitution which presents clearly a federal question within the equity jurisdiction of a federal court as such and one which that court may hear and determine. Connecting Gas Co. v. Imes (D. C.) 11 F.(2d) 191; Taylor v. L. & N. R. R. Co. (C. C. A. 6) 88 F. 350; Cummings v. National Bank, 101 U. S. 153, 25 L. Ed. 903; Greene v. Louisville & Interurban R. R. Co., 244 U. S. 499, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88; L. & N. R. R. Co. v. Greene, 244 U. S. 522, 37 S. Ct. 683, 61 L. Ed. 1291, Ann. Cas. 1917E, 97; Chicago G. W. Ry. v. Kendall, 266 U. S. 94, 45 S. Ct. 55, 69 L. Ed. 183; Risty v. C., R. I. & P. Ry. Co., 270 U. S. 378, 46 S. Ct. 236, 70 L. Ed. 641; Railroad & Warehouse Com. of Minnesota v. Duluth...