Source: https://supreme.justia.com/cases/federal/us/201/245/
Timestamp: 2019-04-21 14:55:57+00:00

Document:
to its validity, whether state or federal, may be presented in a single suit, and call for consideration and determination, and as a federal court has the jurisdiction, it may be its duty, when the question is properly presented, to pass upon an alleged conflict between a state statute and the state constitution even before the question has been considered by the state tribunals. It will, however, be reluctant to do so, especially when the statute is one affecting public revenues of the state.
There is no general supervision by the Nation over state taxation, in regard to which the state has, generally speaking, the freedom of a sovereign both as to objects and methods.
While there is always a possibility of misconduct on the part of officials, legislation may proceed on the assumption of their properly discharging their duties.
Where a legislature enacts a specific rule for fixing a rate of taxation, by which rule the rate is mathematically deduced from facts and events occurring within the year, and created without reference to the matter of that rate, there is no abdication of the legislative function, but, on the contrary, there is a direct legislative determination of that rate.
Unless there is some specific provision in the state constitution compelling other action, a state may treat its entire territory as composing but a single taxing district, and deal with all property as within the district and subject it to taxation accordingly.
This Court may, in a case of this nature, take judicial notice of the fact that the Michigan is traversed in almost every direction by railroads, and that the county in which there are no railroads, if any there be, is an exception.
Nothing in the federal Constitution prevents a state from separating a particular class of property and subjecting it to assessment and taxation in a mode and by a rate different from that imposed on other property and applying the proceeds to state, rather than local, purposes.
One hearing is sufficient to constitute due process, and a state statute giving a state assessing board power to correct valuations, naming time and place at which any person interested may be heard, does not deprive the persons assessed of their property without due process of law because those parties do not have further opportunities to be heard by a court or the legislature.
A legislature is not bound to impose the same rate of tax upon one class of property that it does upon another; it is sufficient if all of the same class are subjected to the same rate and the tax is administered impartially upon them.
This Court generally accepts the finding of a trial court upon a question of fact when the evidence is conflicting, and so held in this case as to a charge of systematic undervaluation which the trial court found against.
property the average rate of tax upon other property subject to ad valorem taxes, applying the proceeds to state purposes, and providing for ascertaining the rate by mathematical computations by the state board of assessors based upon reports from the local assessors, does not conflict with the constitution of the state or with that of the United States.
"SEC. 10. The state may continue to collect all specific taxes accruing to the treasury under existing laws. The legislature may provide for the collection of specific taxes from banking, railroad, plank road, and other corporations hereafter created."
"SEC. 11. The legislature shall provide a uniform rule of taxation, except on property paying specific taxes, and taxes shall be levied on such property as shall be prescribed by law."
"SEC. 12. All assessments hereafter authorized shall be on property at its cash value."
"SEC. 13. The legislature shall provide for an equalization by a state board in the year one thousand eight hundred and fifty-one, and every fifth year thereafter, of assessments on all taxable property except that paying specific taxes."
"SEC. 14. Every law which imposes, continues, or revives a tax shall distinctly state the tax, and the object to which it is to be applied, and it shall not be sufficient to refer to any other law to fix such tax or object. "
"SEC. 10. The state may continue to collect all specific taxes accruing to the treasury under existing laws. The legislature may provide for the collection of specific taxes from corporations. The legislature may provide for the assessment of the property of corporations at its true cash value, by a state board of assessors, and for the levying and collection of taxes thereon. All taxes hereafter levied on the property of such classes of corporations as are paying specific taxes under laws in force on November sixth, A.D. nineteen hundred, shall be applied as provided for specific state taxes in section 1 of this article."
"SEC. 11. The legislature shall provide an uniform rule of taxation, except on property paying specific taxes, and taxes shall be levied on such property as shall be prescribed by law: Provided, That the legislature shall provide an uniform rule of taxation for such property as shall be assessed by a state board of assessors, and the rate of taxation on such property shall be the rate which the state board of assessors shall ascertain and determine is the average rate levied upon other property upon which ad valorem taxes are assessed for state, county, township, school, and municipal purposes."
"SEC. 13. In the year one thousand nine hundred and one, and every fifth year thereafter, and at such other times as the legislature may direct, the legislature shall provide for an equalization of assessments by a state board, on all taxable property, except that taxed under laws passed pursuant to section 10 of this article."
act of 1881, and was evidently regarded as equally unconstitutional. Indeed, though not directly involved in that suit, it was referred to in the opinion of Mr. Justice Montgomery.
of the corporations enumerated in this act, owned, used, and occupied by them within the limits of this state, and also such proportion of the rolling stock, cars, and other property of such corporations as is used partly within and partly without this state, as herein provided to be determined."
township, village, and school district -- paid by property in Michigan which is taxed otherwise than under act 173, are divided by the total assessments of such property, whether made by one or another assessor, and the quotient resulting from this process of division is the rate of tax applied to corporate property under Act 173."
"be applied in paying the interest upon the primary school, university, and other educational funds, and the interest and principal of the state debt, in the order herein recited, until the extinguishment of the state debt other than the amounts due to educational funds, when such taxes shall be added to and constitute a part of the primary school interest fund."
After a full hearing upon pleadings and proofs, the circuit court entered a decree dismissing the bill, 138 F. 223, whereupon the plaintiff appealed directly to this Court, under section 5 of the Circuit Court of Appeals Act.
United States. If conflict with the state constitution is the sole ground of attack, the supreme court of the state is the final authority, Merchants' Bank v. Pennsylvania, 167 U. S. 461, and cases cited in the opinion, while in the other case the ultimate decision rests with this Court. The validity of this act has not been directly presented to or determined by the state court, but the first attack by the parties interested is made in the federal court and by this suit, and conflict with both constitutions is alleged. Undoubtedly a federal court has the jurisdiction, and, when the question is properly presented, it may often become its duty, to pass upon an alleged conflict between a statute and the state constitution even before the question has been considered by the state tribunals. All objections to the validity of the act, whether springing out of the state or of the federal Constitution, may be presented in a single suit, and call for consideration and determination. At the same time, the federal courts will be reluctant to adjudge a state statute to be in conflict with the state constitution before that question has been considered by the state tribunals. Especially is this true when the statute is one affecting the revenues of the state, and therefore of general public interest. Coulter v. Louisville & Nashville R. Co., 196 U. S. 599, 196 U. S. 609. And this reluctance becomes more imperative when the statute has been before the highest court of the state, and a decision rendered upon the assumption that it is valid, and this although the direct question of validity was not presented nor determined.
of taxation by dividing the total tax levy on all property other than railroad property by the value of such other property, as determined by the defendant board, by adding to the actual assessed value of such property as fixed by the local assessors and by the board of state tax commissioners, acting under the authority of the law relating to the assessment of taxes, the sum of $296,748,142, thus making the aggregate divisor in determining the rate of taxation that much in excess of the assessed valuation, thereby reducing the rate to be levied upon the railroad property of the state, and thus reducing the amount which the relator would receive as its portion of the tax assessed against railroad property by a very substantial sum."
"A fair reading of this language of the statute, we think, leads to the conclusion that the board of assessors has imposed upon it the duty, ministerial in character, of determining by a computation from data, which the law provides for placing in its hands, the rate of taxation which other property in the state is subjected to, as it appears by assessment rolls which are supposed to contain an accurate and true assessment of all property at its full cash value."
"There can at this time be no question, after the frequent and uniform expressions of the federal Supreme Court, that it was not designed by the Fourteenth Amendment to the Constitution to prevent a state from changing its system of taxation in all proper and reasonable ways, nor to compel the states to adopt an iron rule of equality, to prevent the classification of property for purposes of taxation, or the imposition of different rates upon different classes. It is enough that there is no discrimination in favor of one as against another of the same class, and the method for the assessment and collection of the tax is not inconsistent with natural justice. Bell's Gap Railroad Company v. Pennsylvania, 134 U. S. 232; Giozza v. Tiernan, 148 U. S. 657, 148 U. S. 662; Adams Express Company v. Ohio State Auditor, 165 U. S. 194, 165 U. S. 228; Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283; Billings v. Illinois, 188 U. S. 97; Merchants' Bank v. Pennsylvania, 167 U. S. 461; Kentucky Railroad Tax Cases, 115 U. S. 321; Home Insurance Company v. New York, 134 U. S. 594; Gulf, Colorado & Santa Fe Railroad Company v. Ellis, 165 U. S. 150; Clark v. Titusville, 184 U. S. 329; American Sugar Refining Company v. Louisiana, 179 U. S. 89; New York v. Barker, 179 U. S. 279; Charlotte, &c. Railway Company v. Gibbes, 142 U. S. 386; Travelers' Insurance Company v. Connecticut, 185 U. S. 364; Kidd v. Alabama, 188 U. S. 730; Turpin v. Lemon, 187 U. S. 51; Florida &c. Railroad Company v. Reynolds, 183 U. S. 471."
duty of inquiry as to the necessities of the state or the proper rate of taxation of railroad property, are in fact the only officials exercising any discretion and judgment.
the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation."
"This vital power may be abused, but the Constitution of the United States was not intended to furnish the corrective for every abuse of power which may be committed by the state governments. The interest, wisdom, and justice of the representative body, and its relations with its constituents, furnish the only security, where there is no express contract, against unjust and excessive taxation, as well as against unwise legislation generally."
Maine v. Grand Trunk Railway Company, 142 U. S. 217, is worthy of consideration on this question of legislative determination. The Legislature of Maine graded the rate of an excise tax imposed upon railroads by the amount of their gross transportation receipts, and provided that, when a railroad was partly within and partly without the state, the gross receipts chargeable to the road within the state should be ascertained on the mileage basis. The court below held that, as the Grand Trunk Railroad was partly within and partly without the State of Maine, the imposition of the tax was a regulation of commerce, and therefore in conflict with the exclusive power of Congress over interstate and foreign commerce, and rendered judgment for the company.
a reference to the results of any other year could affect its character."
See also Home Insurance Company v. New York, 134 U. S. 594, and cases cited in the opinion. Of course, a passenger on the Grand Trunk Railroad knew that the fare he was paying was increasing the gross receipts, and therefore indirectly affecting the amount of the tax collectible under the statute. But it was not to be assumed that he would travel and pay fare with that object in view. No more can it be assumed in the present case that the local taxing officers, although knowing that an increase in their local tax levy will increase the tax rate upon railroads, will be led by that knowledge to forget their single duty to the community for which they are acting. No one pays money for the mere sake of compelling others to pay. Some personal advantage must be intended. No more will local tax officers levy a tax upon their neighbors, those who have placed them in position, for the mere sake of increasing the tax burden upon railroads, especially when the local levy is not followed by an equal increase in the amount of the burden cast upon railroads, and but a trifling fraction of that increase inures, either directly or indirectly, to the benefit of the taxpayers of the locality. The total value of other property in Michigan subject to ad valorem taxes was, according to the record, in the neighborhood of $1,500,000,000. A tax levy in the City of Detroit for local purposes of $1,500,000 would therefore increase the rate of taxation on railroad property only one mill, and that increase would profit Detroit but little, as the railroad tax is appropriated for state purposes only.
be fixed by this mathematical computation from the other rates already established than for the legislature to prescribe in advance that which it may hope will be such rate. In the one case, the exact average is determined; in the other, an estimate is made which may turn out to be more or less than the average.
While the peculiar method of ascertaining the average rate prescribed by this statute may be new, yet the application of an average rate to the taxation of railroads in not new, nor confined to Michigan. See § 1, c. 64, Public Statutes and Session Laws of New Hampshire of January 1, 1901, section first enacted in 1878; 1 Mass.Rev.Laws (1902) c. 12, § 93, p. 227; c. 14, §§ 37, 40, pp. 266, 268, incl., taken from laws of 1864, 1865, and 1880; 2 Mo.Rev.Stat. (1899) §§ 9363, 9364, pp. 2175, 2176; Wis.Laws (1903) c. 315, §§ 7-14, incl. pp. 496-499; Railroad v. State, 60 N.H. 87; State ex Rel. Brown v. Missouri Pacific Ry. Co., 92 Mo. 137; Chicago & Alton R. Co. v. Lamkin, 97 Mo. 496; State ex Rel. Gottlieb v. Metropolitan Street Ry. Co., 161 Mo. 189, 199.
gas works, waterworks, street railways, parks, baths, libraries, etc., the Northwestern Railway's tax on its property (though wholly outside of Detroit -- in the 'Upper Peninsula') is proportionately larger on that account."
"It may well be that (as respects the immediate point) the unity of railroad property would justify a statute requiring a railroad to pay taxes to the state at a rate derived by averaging the taxes, state and local, paid by others in the same taxing jurisdiction; but the question before the court is whether it can be made to pay a tax directly dependent upon, and measured by, the local taxes of counties, cities, towns, villages, and school districts where it has no part of its property and no office. Such a plan operates to tax the railroad because of the expenses (public and private) of local communities whose benefits it does not enjoy."
property in the immediate localities in which the railroads are located, but by those upon all property wherever situated in the state. We do not mean to hold that cases may not arise in which enforcing this method of taxation works such injustice to a railroad as to call for judicial interference. But we do hold that the mere fact that all the property in the state is taken into account in determining the average rate does not carry with it such proof of injustice and inequality as to compel the courts in all cases to strike the latter down. From the cases that are before us involving this statute, it appears that there are many railroad companies in the state, and we may fairly take judicial notice of the fact that the state is traversed in almost every direction by railroads. And while it is possible that there may be a county or two without one, yet it is an exception, and to hold that for each railroad the average rate must be determined from the property in the localities immediately contiguous or through which its road passes might well introduce into the matter of taxation a confusion and inequality resulting in far greater injustice than the uniformity established by the present system.
"But there is nothing in the Constitution of Kentucky that requires taxes to be levied by a uniform method upon all descriptions of property. The whole matter is left to the discretion of the legislative power, and there is nothing to forbid the classification of property for purposes of taxation and the valuation of different classes by different methods. The rule of equality, in respect to the subject, only requires the same means and methods to be applied impartially to all the constituents of each class, so that the law shall operate equally and uniformly upon all persons in similar circumstances."
See also Pittsburgh &c. Railroad Company v. Backus, 154 U. S. 421; Florida Central &c. Railroad Company v. Reynolds, 183 U. S. 471; Coulter v. Louisville & Nashville Railroad, 196 U. S. 599.
"While it may be true that this system of submitting the different kinds of property subject to taxation to different boards of assessors and equalizers, with no common superior to secure uniformity of the whole, may give opportunity for maladministration of the law and violation of the principle of uniformity of taxation and equality of burden, that is not the necessary result of these laws, or of any one of them, and a law cannot be held unconstitutional because, while its just interpretation is consistent with the Constitution, it is unfaithfully administered by those who are charged with its execution. Their doings may be unlawful, while the statute is valid."
to be heard, and also authorizes the board to correct the valuation. So that it cannot be objected that the railroad companies are precluded from a full hearing on the matter of valuation, and, as has heretofore been said by this Court, one hearing is sufficient to constitute due process.
Other questions are discussed by counsel in their briefs, but in view of the exhaustive and well considered opinion of the trial judge, with the general trend of which we concur, it is unnecessary to further extend this discussion. It is sufficient to refer to that opinion for a consideration of those questions. We have noticed those which seem to us paramount and controlling.
462. Detroit & Mackinac Railway Co. v. Powers.
463. Chicago & Northwestern Railway Co. v. Same.
464. Toledo, Saginaw & Muskegon Railway Co. v. Same.
465. St. Clair Tunnel Co. v. Same.
466. Michigan Air Line Railway Co. v. Same.
467. Grand Trunk Western Railway Co. v. Same.
468. Ann Arbor Railroad Co. v. Same.
469. Cincinnati, Saginaw & Mackinaw Railroad Co. v. Same.
470. Chicago, Detroit & Canada Grand Trunk Junction Railroad Co. v. Same.
471. Munising Railway Co. v. Same.
472. Lake Superior & Ishpeming Railway Co. v. Same.
473. Marquette & Southeastern Railway Co. v. Same.
474. Chicago, Milwaukee & St. Paul Railway Co. v. Same.
475. Sault Ste. Marie Bridge Co. v. Same.
476. Mineral Range Railroad Co. v. Same.
477. Duluth, South Shore & Atlantic Railway Co. v. Same.
478. Detroit, Grand Haven & Milwaukee Railway Co. v. Same.
479. Pontiac, Oxford & Northern Railroad Co. v. Same.
480. Minneapolis, St. Paul & Sault Ste. Marie Railway Co. v. Same.
481. Copper Range Railroad Co. v. Same.
482. Gogebic & Montreal River Railroad Co. v.Same.
483. Manistee & Southeastern Railroad Co. v. Same.
484. Escanaba & Lake Superior Railroad Co. v. Same.
485. Grand Rapids &Y Indiana Railway Co. v. Same.
486. Wisconsin & Michigan Railway Co. v. Same.
487. Lake Shore & Michigan Southern Railway Co. v. Same.

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