Case Name: Baltimore & O. R. Co. v. Allen, Auditor, etc., and others
Court: United States Circuit Court for the Western District of Virginia
Jurisdiction: United States
Decision Date: 1883-05-15
Citations: 17 F. 171
Docket Number: 
Parties: Baltimore & O. R. Co. v. Allen, Auditor, etc., and others.
Judges: 
Reporter: Federal Reporter
Volume: 17
Pages: 171–197

Head Matter:
Baltimore & O. R. Co. v. Allen, Auditor, etc., and others.
Circuit Court, W. D. Virginia.
May 15, 1883.)
Enjoining Collection of Taxes—Foreign Corporation—Jurisdiction op Circuit Court—Tender ov Coupons of Bonds of State of Virginia—Acts of March 30, 1871; .January 14, 1882, and January 26,, 1882.
On the thirtieth of March, 1871, the slate of Virginia passed a funding act, authorizing coupons, cut from her consolidated bonds, to be receivable in payment of all dues to the state. On the fourteenth of -January, 1882, she passed an act reciting that many spurious coupons were in existence, and requiring 1he validity of all coupons offered in payment of public clues to be tested by a specified proceeding in court. This latter act was pronounced by the "United States supreme court at its last term in Antoni v. Greenhoio, 2 Sup. Ot. Hop. 91, to be constitutional and an ample remedy for the coupon-holder. On the twenty-sixth of January, 1882, Virginia passed another act, providing that in all compulsory collections of taxes the collecting officer should receive only gold, silver, or national currency for the taxes, but also providing a method by which the tax-payer might pay in coupons to the state treasurer, after the validity of the coupons had boon tested by a court proceeding defined, and thereupon receive back from the treasurer' the amount of money which had been collected from him, the tax-collector. This last act is identical, in principle and provisions, with the act of the state of Tennessee; which was reviewed by the United States supreme court in Tennessee v. Sneed, 96 TJ. S. 69, and pronounced constitutional, and to be an ample remedy for the coupon-holder. The Baltimore & Ohio Kailroad Company, a corporation of Maryland, operating certain roads in Virginia, disregarding the acts of January 14, 1882, and of January 26, 1882, tendered the amount of taxes duo to the state of Virginia in coupons of the bonds of the state, issued under the act of March 30, 1871, “receivable at and after maturity for all taxes and debts, dues and demands. due the slate,” which the authorities refused to receive; and having assessed 30 per cent, in addition after 60 days, and seized the property of the railroad company, threatened to sell the same for the amount of taxes and penalty, whereupon the company applied to the circuit court of ihe United Stales for an injunction. Held, that the coupons tendered must be received in payment of the taxes; that the penalty was improperly assessed; and that the railroad company were entitled to an injunction to restrain the state authorities from selling their property.
Hughes, J., dissents.
In Equity. On motion for a preliminary injunction.
The railroad which reaches from the border of Virginia beyond Winchester to Staunton is owned by four several companies, but it is operated by the Baltimore & Ohio Railroad Company, the complainant in this cause. The part between the state border and Winchester is owned by the Winchester & Potomac Company; that between Winchester and Strasburg is owned by the Winchester & Strasburg Company; and that between Strasburg and Harrisonburg, by the Yirginia Midland Company. These three roads are under lease to the complainant. The road between Harrisonburg and Staunton is owned by the Yalley Railroad Company, and is operated by the complainant. The four roads are operated practically as one line by the complainant; none but its own locomotives, cars, and trains being used upon them, and the complainant having the exclusive control of the running of the trains in all the business which is conducted. These roads are all leased by the complainant except the Yalley Railroad, which seems to have a contract by which it has reserved the privilege of employing its own depot agents to collect freights, and its own conductors on passenger trains to collect tickets and fares; but the conductors are employes of the complainant for performing the same duties over the entire line. All four of the roads have as a common treasurer, W. H. Ijams, who resides in Baltimore, and has his office in Baltimore.
These railroads were assessed for state taxes in December, 1882, by the board of public works of Yirginia, in pursuance' of section 20 of chapter 118 of the Acts of 1881-2, p. 506. That section, after requiring certain annual reports from railroad companies, provides as follows in regard to railroads:
“ Upon the receipt of every such report, it shall he the duty of the auditor of public accounts to lay the same before the board of public works, who shall * * * proceed to ascertain and assess the value of the property so reported, upon the best and most reliable information that can be procured, and to this end shall be empowered,” etc. “A certified copy of the assessment, when made, shall be immediately forwarded by- the secretary of the -board to the president or other proper officer of every railroad * * * company so assessed, whose duty it shall be to pay into the treasury of the st-atg, within sixty days after the receipt thereof, tire tax which may be imposed thereon by law. A company failing to * * * pay the tax assessed upon its property shall be immediately assessed, under the direction of the auditor of public accounts, by any person appointed by him for the purpose, rating the value of their real estate and rolling stock at $20,000 per mile, and a tax shall at once be levied on such value at the annual rate of forty cents on the hundred dollars.”
The amount of the assessment made under the first provision of this law was based on a valuation of $15,000 a mile, and was, for the three leased roads, $4,818.12, and for the Yalley road $1,593.04, making a total of $6,411.16. Notice was given, during the first week in December, to W. H. Ijams, treasurer, in Baltimore, of this assessment. This notice was repeated during the week which commenced on the fifteenth of January, 1883. The taxes so notified to be due wore not paid -within 60 days after the notices were sent. On this failure of payment the auditor of public accounts again assessed these roads, in accordance with the second provision of the law above cited, “rating their real estate and rolling stock at $20,000 per mile.” This second assessment, of course, added 33-¿- per cent, to the former one. In pursuance of the same provision of the law, John E. Hamilton, treasurer of the county of Augusta, “appointed by the auditor for the purpose,” proceeded to make a levy for the several amounts of tax thus assessed by the auditor on the following property of the complainant, viz.: On 22 freight cars at Winchester; on 1 engine and 15 freight cars at Harrisonburg; and on 24freight cars at Staunton. He also levied on an iron safe and some furniture of the Valley company at Staunton, which was all the personalty of that company which could be found. The levies at Staunton and Winchester were made on the twenty-third of March, and that at Harrison-burg on the twenty-fourth of March last.
On the sixteenth of March, 1883, agents of the complainant had appeared at Richmond and tendered tax-receivable coupons of interest, alleged to have been cut from bonds issued by the state of Virginia, in payment of the several amounts of taxes duo under the first assessment that has been described. The tender was made first to the cashier of a bank having deposits of the state under a warrant of the treasurer authorizing the bank to receive the amounts of money due for taxes, and was refused. It was then made to the treasurer aud the auditor of the state successively, who each refused the coupons. The agents did not tender the taxes in gold, silver, United States treasury notes, or national bank notes, which are required to be paid in the discharge of taxes by the act of January 26, 1882, (chapter 43, § 3, p. 37, Acts 1881-2,) nor did they deliver, or offer to deliver, the coupons for verification, as required by the act of January 34, 1882, (chapter 7, p. 10, of the same volume.)
Complainant now brings this bill into this court, in which S. Brown Allen, as auditor of public accounts of Virginia; David R. Eeveley, as treasurer of Virginia; and Jolm E. Hamilton, as treasurer, residing lit Staunton, who is treasurer of the county of Augusta, are made the parties defendant.
The bill recites certain acts of,the general assembly of Virginia declaring that coupons of interest, such as those tendered by complainant, shall be receivable in discharge of all taxes and dues to the state; avers the tender of coupons made on the sixteenth day of March, which coupons are now brought into this court; and complains among other things of the seizure of its cars and an engine by Hamilton, the defendant; of irreparable injury sustained; of cloud upon title resulting from illegal levy; of threatened multiplicity of suits; of obstruction in the performance of its duties to the public as a common carrier; and of the penalty inflicted upon it by the second assessment. The bill prays that the said Hamilton may be forever enjoined from further proceeding under the levies he has made; that the court will decree that the taxes first assessed were, by the tender of the coupons and by the bringing them now into this court, paid off and discharged ; and that the second assessment and the levies made under it were null and void. On the filing of the bill a. motion was made by complainant for a preliminary order enjoining further proceedings under the second assessment, and enjoining the sale of the property levied upon. It is that motion which the court has now to deal with.
Hugh W. Sheffey, A. R. Pendleton, and W. B. Compton, for complainant.
Franks. Blair, Atty. Gen., for defendants.

Opinion:
Bond, J.
The facts in this case, as shown by the affidavits and proofs filed, are few. The complainant is the Baltimore & Ohio Bailroad Company, a corporation of Maryland, which-operates certain roads in Virginia. These roads were duly assessed for taxes by the state officers to the amount of $6,411, for which sum the complainant tendered in payment coupons of the bonds of the state of Virginia issued under the act of March 30, 1871, "receivable at and after maturity for all taxes and debts, dues and demands, due the state." Not regarding the tender as a legal settlement of the debt, the defendants, as they were required to do by the state law providing for the taxation of railroads, after 60 days' default, assessed the companies 30 per cent, in addition to their real tax as a penalty for their,default. The defendant Hamilton, as tax collector, has seized the property of the complainant, and threatens to sell it for the amount of the taxes and the penalty. The bill asks that he may be enjoined from so doing; that the tender of the coupons may be regarded as payment or extinguishment of the debt; and that the company may not be subjected to a penalty for doing what the act of March 30, 1871, contracted with the holder of such coupons he might do.
That the coupons must be received for public taxes, when tendered, the supreme court of the United States has, at its last term, emphatie- . ally decided. Antoni v. Greenhow, 2 Sup. Ct. Rep. 91. The language of the court is: "The right of the coupon-holder is to have his coupon received for taxes when offered." The fact here is that the complainant tendered coupons, and that they were rejected and the tax increased because coupons, and not money, were so offered. It is clear, then, that a right of the coupon-holder has been denied, according to the interpretation of the act of March 30, 1871, by the supreme court. What remedy has he ?,i
In the case of Antoni v. Greenhow mandamus was sought as the remedy, but the forms of proceeding in that in Virginia were not complied with, for the reason that the complainant alleged: they were , unconstitutional because they impaired the obligation of the contract. But the supreme court decided that the writ of mandamus now existing in Virginia did not differ so much from the remedy existing when the coupons were issued as to impair the obligation of the contract. It expressly decided, as we have seen above, that the right of the coupon-holder was to have them received when offered; but it also decided that if he sought by mandamus to compel such receipt, he must follow Virginia practice in obtaining that remedy.
The allegation or claim of this complainant is that it owes no taxes; that the tender of the amount in coupons has paid or extinguished the debt. It does not ask the court to compel the tax-collector to do any act he refuses to do, but to stop him from doing an unlawful thing, namely, from taking property for taxes when none are due, and from imposing a penalty where there is no default; and, surely, although the writ of mandamus is altered so as to be useless for the purposes of his case, and the writ of replevin is wholly abolished in Virginia, the supreme court has not decided that the complainant has no remedy whatever. Had such been its decision it would have declared that the words "was receivable when offered" meant or should read, "was receivable after they had been reduced to judgment;" for that is the only form under which, by the writ of mandamus, the receipt of coupons can bo compelled in Virginia.
The complainant alleges that a large part of its rolling stock on the taxed roads in Virginia is in custody; that it cannot, while such is the ease, fulfill its transportation contracts, the non-performance of which will subject it to numberless suits for breach of such contracts, and to the liability of large damages.
In general the courts of equity are slow to restrain the collection of taxes. They will not do so because the tax is alleged to be void or illegal, (92 IT. S. 515;) but whore there will he irreparable damage, as is plain in this case, and where all taxes have been paid by the tender of coupons receivable for taxes and the complainant lias been subjected to a larger assessment by reason of its offer of taxpaying coupons rather than money,—which offer the supreme court lias decided it was its right to make,—I think an injunction ought to issue.
This is not alleged to be'a void and illegal tax; it is asserted to be a paid one, and paid in the way complainant had a right to pay it. The hill docs not seek a remedy under any of the methods of practico provided by Virginia. It appeals to the equitable jurisdiction of the United States courts. The complainant is a non-resident of this state, asserting a right which the supreme court, in Antoni v. Greenhow, as I understand it, decides that it has, and a failure to enforce which will cause it irreparable damage. The complainant has no adequate remedy at law. The writ of mandamus is of no avail to it; it has paid its debt once and would have to pay it again to get that remedy; it cannot got its goods hack from the purchaser by replevin, for there is no such -action in Virginia; it cannot sue the tax-collector for trespass, for since the institution of the suit of Antoni v. Greenhow this state has by law forbidden it to do so. Altogether, it seems to me the complainant would be remediless and its "right" a delusion, did hot a court of equity listen to' it.
The argument of the attorney general that this action is not within the jurisdiction of this court, because it is, in fact, a suit against the state, which does not permit itself to be sued, does not seem to me :to be sound. From the case of 9 Wheat., Bank v. Osborn, down to The Arlington Case, 1 Sup. Ct. Rep. 240, recently decided, this form of action has been sustained by the supreme court in proper cases.
You may not sue the state unless she consents; and if she be an indispensable party not consenting, you can maintain no action at all. But she is not a necessary party, and the complainant here can prevent his anticipated wrong and irreparable damage, by restraining the party who is about to commit it, without joining the state. Litchfield v. Co. Hamilton, 101 U. S. 781, note; Belknap v. Belknap, 2 Johns. Ch. 463. Nor does the fact that the state has provided a remedy for the complainant deprive him of any other that exists. The complainant is a non-resident of Virginia. His citizenship entitles him to apply to the United States courts for the exercise of their equitable jurisdiction in a proper case. That .equitable jurisdiction was not derived from the states, but from the constitution of the United States, and remains the same, no matter what laws are passed by the states respecting legal remedies or forms of procedure. This is the proper forum of the non-resident citizen, and he is not deprived of his rights in it by the passage of any act by the legislature of Virginia respecting suits at law against the tax-collectors of the state. We have here a non-resident citizen. He seeks equitable relief against a tax-collector who is about to do an act which, if this prima facie case made in the bill can be maintained, will do it irreparable damage, in violation of the constitution of the United States. This jurisdiction has been exercised many times by the United States courts in like cases, and, in my judgment, the prayer of the bill should be granted and the preliminary injunction issued as prayed, and it will be so ordered.
My brother, the district j udge, does not concur, and files a separate opinion.