Source: https://supreme.justia.com/cases/federal/us/229/481/
Timestamp: 2019-04-18 15:00:38+00:00

Document:
Under § 723, Rev.Stat., a bill in equity does not lie in the courts of the United States where a plain, adequate and complete remedy can be had at law.
Where it is obvious that there is a remedy at law, it is the duty of the court to interpose that objection sua sponte to a suit in equity.
Where, as in this case, there has been no waiver on the part of the defendant, the objection is available in the appellate court.
The illegality or unconstitutionality of a state or municipal tax is not itself a ground for equitable relief in the federal courts. Boise Water Co. v. Boise City, 213 U. S. 276.
The state courts cannot define the equity jurisdiction of the federal courts, but where the state courts have held that a suit in equity could be maintained in the courts of the state, the same suit can be maintained in the federal court having jurisdiction in other respects.
In Colorado one paying an illegal tax has a remedy at law to recover it back, and the fact that the tax list is prima facie evidence of the amount due does not make it conclusive.
The fraud, accident or mistake necessary to justify an equitable action to enjoin the collection of a tax must be more than mere illegality.
The facts, which involve the construction of § 723 Rev.Stat., and the right to maintain a bill in equity to restrain the collection of taxes where the taxpayer has a plain and adequate remedy at law, are stated in the opinion.
objections to the increase and obtaining a hearing and ruling thereon by the assessor and by the proper reviewing authority, to which it was entitled by the local law. There were also allegations to the effect that the company had no property within the city and county other than that returned by it; that the additional assessment and the taxes levied thereon were illegal because of the assessor's failure to give the required notice, and that to enforce the collection of such taxes would be violative of designated provisions of the Constitution of the United States. The defendants demurred on the ground that the bill did not state a case for equitable relief, but the demurrer was overruled. The defendants then answered, repeating the objection made in the demurrer, and interposing other defenses which need not be noticed now. Upon the hearing, a decree was entered dismissing the bill, and the company appealed to the circuit court of appeals. That court held that there was an adequate remedy at law, and affirmed the decree. 179 F. 628. The company then took the present appeal.
In the courts of the United States, it is a guiding rule that a bill in equity does not lie in any case where a plain, adequate, and complete remedy may be had at law. The statute so declares, Rev.Stat. § 723, and the decisions enforcing it are without number. If it be quite obvious that there is such a remedy, it is the duty of the court to interpose the objection sua sponte, and in other cases it is treated as waived if not presented by the defendant in limine. Reynes v. Dumont, 130 U. S. 354, 130 U. S. 395; Allen v. Pullman's Palace Car Co., 139 U. S. 658. There was no waiver here. The objection was made by the demurrer and again by the answer, and so, if it was well grounded, it was as available to the defendants in the circuit court of appeals to prevent a decree against them there as it was in the circuit court. Boise Artesian Water Co. v. Boise City, 213 U. S. 276.
"A notable application of the rule in the courts of the United States has been to cases where a demand has been made to enjoin the collection of taxes or other impositions made by state authority upon the ground that they are illegal or unconstitutional. The decisions of the state courts in cases of this kind are in conflict, and we need not examine them. It is a mere matter of choice of convenient remedy for a state to permit its courts to enjoin the collection of a state tax because it is illegal or unconstitutional. Very different considerations arise where courts of a different, though paramount, sovereignty interpose in the same manner and for the same reasons. An examination of the decisions of this Court shows that a proper reluctance to interfere by prevention with the fiscal operations of the state governments has caused it to refrain from so doing in all cases where the federal rights of the persons could otherwise be preserved unimpaired. It has been held uniformly that the illegality or unconstitutionality of a state or municipal tax or imposition is not, of itself, a ground for equitable relief in the courts of the United States. In such case, the aggrieved party is left to his remedy at law when that remedy is as complete, practicable, and efficient as the remedy in equity."
"in all cases where any person shall pay any tax, interest, or costs, or any portion thereof that shall thereafter be found to be erroneous or illegal, whether the same be owing to erroneous or improper assessment, to improper or irregular levying of the tax, to clerical or other errors or irregularities, the board of county commissioners shall refund the same without abatement or discount to the taxpayer."
"Against an illegal tax, complainant has a full and adequate remedy at law, and we see no reason why in this case he should not be remitted to that remedy."
"By § 3777, 2 Mills' Anno.Stat., it is provided that taxes paid which shall thereafter be found to be erroneous or illegal shall be refunded, without abatement or discount, to the taxpayer. No statement appears in either of the complaints from which it can be deduced that the remedy afforded the plaintiff by this section is not adequate."
134 F. 769, 771. Thus, it will be perceived that, if the taxes in question were illegal and void, as asserted, the company had a remedy at law. It could pay them, and, if the commissioners refused to refund, have its action against the county to recover back the money. Such a remedy, as this Court often has held, is plain, adequate, and complete in the sense of the guiding rule before named, unless there be special circumstances showing the contrary. Dows v. Chicago, 11 Wall. 108, 78 U. S. 112; State Railroad Tax Cases, 92 U. S. 575, 92 U. S. 613-614; Shelton v. Platt, 139 U. S. 591, 139 U. S. 597; Allen v. Pullman's Palace Car Co., 139 U. S. 658, 139 U. S. 661; Indiana Manufacturing Co. v. Koehne, 188 U. S. 681, 188 U. S. 686.
But it is said that, in an action to recover back the money, the tax list would be treated as the judgment of a special tribunal, conclusively determining all questions in favor of the validity of the tax. It well may be that, if the list were regular on its face, it would be presumptive evidence that the tax was valid, but we find nothing in the statutes of Colorado or in the decisions of its supreme court which goes to the length suggested. The plain implication of the section providing for repayment is otherwise. Another section (Rev.Stat. § 5677) declares that the tax list "shall be prima facie evidence that the amount claimed is due and unpaid," and the only decision cited by the company speaks of the assessment as being presumptively right "in the absence of any evidence to the contrary." Singer Manufacturing Co. v. Denver, 46 Colo. 50.
the company had no property within the city and county other than that returned by it. We say this because the fraud, accident, or mistake which will justify equitable relief must be something more than what is fairly covered by the charge here made, for otherwise the well settled rule that mere illegality in a tax affords no ground for such relief would be a myth. There really would be no case in which the illegality could not be said with equal propriety to be the result of fraud, accident, or mistake, for it always arises out of some deviation from law or duty.

References: § 723
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