Court Opinion

ID: 6738608
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:22.109967+00
Date Added: 2024-06-11T16:01:52.335297
License: Public Domain

Christianson, J.
This is an appeal from an order of the district court of Burleigh county commanding the appellants, Dutton, Aasness, and Hughes, to appear before the state tax commission and give testimony and produce books and records relating to the value of the property, the earnings, expenses, and general financial condition of the Hughes Electric Company.
The powers and duties of the state tax commission are defined by § 2Ó88, Comp. Laws 1913, as amended by chapter 232, Laws 1917. The statute, so far as now pertinent, is as follows:'
“It shall be the duty of the commission and it shall have the power and authority:
“1. To have and exercise general supervision over the administration of the assessment and tax laws of the state, over assessors, town, county and city boards of review and equalization and all other assessing officers in the performance of their duties, to the end that all assessments of property be made relatively just and equal in compliance with the laws of the state.
“2. To confer with, advise and give the necessary instructions and directions to local assessors as to their duties under the laws of the state and to that end call meetings of local assessors of each county to be held at the county seat of such county, for the purpose of receiving necessary instructions from the commission relative to the duties of their office and to the laws governing the assessment and taxation of all classes of property.
*422“5. To require township, village, city, county and other public officers to report information as to the assessment of property, collection of taxes, receipt from licenses and other sources, the expenditure of public funds for all purposes and such other information as may be needful in the work of the commission in such form and upon such Wanks as the commission may prescribe.
“6. To require individuals, copartnerships, companies, associations and corporations to furnish information concerning their actual funds or other debts, current assets and liabilities, value of property, earnings operating and other expenses, taxes and all other facts, which may ■be needful to enable the commission to ascertain the value and relative burdens borne by all kinds of property in the state.
“1. To summon witnesses to appear and give testimony and to produce records, books, papers and documents relating to any matter which the commission may have authority to investigate or determine. •
“8. To cause the deposition of witnesses residing within or Avithout the state or absent therefrom to be taken upon notice to the interested party, if any, in like manner that depositions of witnesses are taken in civil actions in the district court in any matter which the commission may have authority to investigate or determine.
“10. To appoint a special assessor and deputies under him and cause to be made in any year a reassessment of all or any real and personal property or either in any assessment district when in the judgment o£ said commission such reassessment is desirable or necessary to the end that any and all property in such district shall be assessed equally as compared with like property in the county wherein such district is situated. Upon the completion of such reassessment the said assessor shall certify to such assessment and file the same with the county auditor, and the county auditor shall forthwith notify the members of the board of county commissioners who shall meet the first Monday in the following month of the year and then and there hear all grievances and complaints thereon, and proceed to review and equalize such assessments. Thereupon the said assessment shall be filed with the county auditor and such lists shall supersede and be in place of the original assessment made for such year upon such property and the' county auditor shall extend and levy against said property so reassessed *423the tases thereon for such, year according to such reassessment in tbe same manner as though such list was the original assessment .list of such property.
“13. To examine carefully into all eases where evasion or violation of the laws for assessment and taxation of property is alleged, complained of, or discovered, and to ascertain wherein existing laws are ■defective, or are improperly or negligently administered.
“14. To consult and confer with the governor of the state upon the subject of taxation, the administration of the laws in relation thereto, and the progress of the work of the commission, and to furnish the governor from time to time such assistance and information as he may require.” '
(The omitted subdivisions of the section are not involved in this controversy.)
Section 2089, Comp. Laws 1913, provides: “Oaths to witnesses in any matter under the investigation or consideration of the commission may be administered by the secretary of the commission, or by any member thereof. In case any witness shall fail to obey any summons to appear before said commission, or shall refuse to testify or answer any material question, or to produce records, books, papers, or documents when required to do so, such failure or refusal shall be reported to the attorney general,’ who shall thereupon institute proceedings in the proper district court to compel obedience to any summons or order of the commission, or to punish witnesses for any such neglect or refusal. ...”
This is a proceeding instituted by the attorney general of the state ’.under § 2089, supra, to compel the appellants, Dutton, Aasness, and Hughes, to appear and testify before the state tax commission, and to produce certain books and records relating to the property, earnings, expenses, and financial condition of the Hughes Electric Company,— a public utility corporation, organized under the laws of the state of Minnesota, and engaged in the business of furnishing electricity and other commodities to the public in the city of Bismarck, and elsewhere.
The attorney general’s petition in this case avers that the petitioners are members of the state tax commission, and that in performance of their powers and duties as such commissioners, as prescribed by ^ *4242088, Comp. Laws 1913, and tbe amendments thereof, “the said tax commission for the purpose of ascertaining and securing the information concerning the value of the property of the Hughes Electric Company, and the capital fund, debts, current assets, and liabilities, and operating and other expenses of such company, and such facts as might be needful to enable the commission to ascertain the value of the property of such Hughes Electric Company as provided by law, and for the purpose of performing their duties as members of such tax commission as prescribed by law,” in April, 1917, prepared and mailed to the Hughes Electric Company a notice commanding said company to have its managing officers appear before said tax commission “at a stated time and place,” and then and there to testify as to the value of the property, the earnings and general financial conditions of said company, and to “bring with them such books, papers, and records as may be necessary to consult, or determine the above matters with reference to said company.”
It is further averred that the Hughes Electric Company, and its managers and officers, refused and neglected to appear before the tax commission, or produce the books, papers, and documents, as directed in said notice.
The petition further avers that the state tax commission, in May, 1917, issued a subpoena or subpoenas addressed to the above-named appellants, Dutton, Aasness, and Hughes, commanding them and each of them, to appear before the state tax commission, at a designated time and place, and “then and there to testify generally before the said commission as provided for in §§ 2088 and 2089 of the Compiled Laws of 1913 for the state of North Dakota as to such matters and things as you have knowledge of concerning the actual value of the property, the earnings and general financial condition of the Hughes Electric Company, a corporation, doing business in the city of Bismarck, county of Burleigh, and state of North Dakota.” And further commanding said Dutton, Aasness, and Hughes, to bring with them at the time and place stated in said subpoena “the minute book, ledger, stock book, blue prints or books of engineering department, showing the extent, location, and the cost of the physical property, and such other records of said Hughes Electric Company as may be necessary *425to determine the actual value of the property, earnings and general financial condition of said corporation.”
It is further averred that said respondents, Aasness, Dutton, and Hughes, failed to obey the commands of said subpoena or subpoenas, and that “it is necessary and proper, and that it is the duty of such tax commission as prescribed by law to inquire into the capital stock, debts, current assets, and liabilities, the value of the property, the earnings and the opei’ating expenses and other expenses, its taxes, and all facts concerning such company needful to enable the commission to ascertain the value of the property of such Hughes Electric Company, in order that it may fulfil its functions and duties as prescribed by law, in order that it may properly cause to be assessed and make recommendations of assessment, all concerning such Hughes Electric Company.”
The petition further avers that the said state tax commission has reported to the attorney general the failure of the respondents to obey tibe said notice and subpoenas.
In the return and answer it is admitted “that on the 19th day of May, 1917, there was served upon the above-named respondents Aasness and Dutton an alleged command to appear before said tax commission on the said day at 2 o’clock p. m., . . . that said service was made about 1:45 o’clock p. m. of said day.” And it is averred “that said respondents did not have access to any books, papers, or records of the Hughes Electric Company, except the customer’s register thereof; .. . that they have been in the employ of said company only a. short time and then were and now are without knowledge or information as to the value of the property, earnings, and general financial condition of said company, or the contents of the general records thereof.”
It is further averred that “said Hughes Electric Company is a foreign corporation with its principal office at Minneapolis, Minnesota; and that its books, papers, and records, except the blue prints of its equipment and pipe lines and its current customer’s register, are, and at all times since its organization have been, kept at its said principal place of business.”
It is further averred that “said tax commission, its inspectors, engineers, and agents, were given access to the property, machinery, and *426equipment of said Hughes Electric Company; and that they have been enabled thereby to secure all of the information and data necessary and requisite‘to determine the value of such property, machinery, and equipment.” And also “that the property of said corporation has been assessed for the year 1917 by the city assessor of the city of Bismarck; that the respondent company, its officers, and managers, showed to such assessor the blue prints and engineering records of said company, and furnished him with all the data, facts, and information demanded and required by him for the purpose of making such assessment.”
The answer denies that it is necessary and proper, or the duty of the tax commission, to make the proposed inquiry, and in that behalf alleges that the tax commission is without authority to malee assessment of the property of the Hughes Electric Company.
It is also averred that the orders of the tax commission are unreasonable, arbitrary, and void, and that such orders and subdivisions 7 and 8 of § 2088, Comp. Laws 1913, are violative of § 18 of the state Constitution and the 4th Amendment to the Federal Constitution, which guarantee to the people the right to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures.
The answer also avers that the attorney general’s petition does not state facts sufficient to justify the issuance of an order or writ to compel the respondents to testify or produce books, papers, and documents as demanded by said tax commission.
The trial court ordered that E. A. Hughes, Bobert W. Dutton, C. B. Aasness, and each of them, appear before the tax commission on the 27th day of November, 1917, at'2 p. m., of same day, then and there to testify as to such matters as they may have knowledge of, concerning the value of the property, earnings, expenses, and general financial condition of the Hughes Electric Company, and to bring with them at said time and place the minute book, ledger, stock book, inventory book, and blue prints or books of the engineering department, showing the location and the cost of the physical property of the Hughes Electric Company. And the ease comes to this court on appeal from such order.
The first question which naturally presents itself is whether a case is presented which falls within the above-quoted statutory pro*427■visions, and justified tbe trial court in entering tbe order appealed ■from.
It is a constitutional mandate in tbis state tbat “all taxable property” (except tbe property of railroads, express companies, freight line companies, car equipment companies, private ear line companies, telegraph or telephone companies .or corporations, which is assessed by tbe state board of equalization) “shall be assessed in the county, township, village, or district in which it is situated, in the manner prescribed by law.” Const. § 179, as amended. The uniform and unbroken policy has been to have all taxable property (except that assessed by the state board of equalization) assessed by local assessors, and to have the assessment reviewed and equalized in the first instance by the board of the township, village, or city wherein the property assessed is situated. And for more than twenty years a system has been in vogue in this state “whereby the local boards of review, where there arc such boards, shall equalize the assessments as between individual taxpayers, the county board of equalization as between the several assessment districts, and the state board of equalization between the several counties.” First Nat. Bank v. Lewis, 18 N. D. 890, 121 N. W. 836. This system was not abrogated by the creation of the state tax commission. In fact the very language of the act creating the commission and defining its duties and powers recognizes the existence and continuation thereof, and the continued performance of their respective duties by the former taxing and reviewing officers. It is still the duty of the assessors to assess, and of the different boards of review to review and equalize the assessments within their respective jurisdictions.
It is true (and the attorney genera! lays great stress on this fact) certain supervisory powers are conferred upon the tax commission by subdivision 1 of § 2088, Comp. Laws. 1913. But the attorney general’s petition herein does not present a case wherein the tax commission seeks to exercise supervision over assessing officers.
No assessing officer or reviewing board is a party to this proceeding, nor is there any allegation of failure or neglect of duty on the part of any such officer or board.
The reason assigned for the proposed inquiry is that it is “needful to enable the Commission to ascertain the value of the property of such Hughes Electric Company in order that the commission may ful-*428fil its functions and duties as prescribed by law, and in order that it may properly cause to be assessed and malm recommendations of assessment all concerning such Hughes Electric Company.”
The proceeding was instituted in July, 1917, and the order appealed from was made November 12, 1917. Hence, the property of the Hughes Electric Company must have been assessed by the assessor for the year 1917 before the proceeding was instituted, and all proceedings relating to such assessment, including the proceedings before the county and state boards of equalization, must have been fully completed before the order was entered. And yet there is not even a suggestion in the petition (or in the record at all), that the assessor or any board of review has failed to perform his or its duty, that the property has escaped taxation, or that there has been any complaint or discovery of evasion or violation of the laws relating to assessment.
It may also be noted that there is nothing in the attorney general’s petition to indicate that Hughes, Dutton, or Aasness have any connection whatever with the Hughes Electric Company, or that it is in any manner within their power to produce any of the books, papers, and documents sought So far as the showing made by the attorney general is concerned, these men may be total strangers to and have no connection whatever with the Hughes Electric Company. It is true there are certain statements in the answer which indicate that Dutton and Aasness are employed by the company, but there is nothing to indicate in what capacity they are employed, and it is positively averred that they “did not have access to any books, papers, or records of the Hughes Electric Company,” which the order appealed from commanded them to produce. And it is further averred that they were and are “without knowledge or information as to the value of the property, earnings, and general financial condition of said company or the contents of the general records thereof.”
While the legislature may confer authority upon a nonjudicial body to summon witnesses and require the production of books and records in a proceeding properly pending before, and within the jurisdiction of, such body, it is scarcely necessary to say that the lawmaking power is limited by the constitutional restrictions, and that the legislature may not itself exercise, still less confer upon any merely administrative body, “a general power of making inquiry into the private *429affairs of tbe citizen/’ or otherwise destroy or impair those fundamental personal rights guaranteed and “recognized by the Constitution as inhering in the freedom of the citizen.” Interstate Commerce Commission v. Brimson, 154 U. S. 447, 479, 38 L. ed. 1047, 1058, 4 Inters. Com. Rep. 545, 14 Sup. Ct. Rep. 1125. Our state Constitution contains counterparts of the guaranties of personal rights contained in the Federal Constitution.
The state tax commission was created by legislative enactment. It is elementary that a board so created possesses such powers only as the legislature has expressly conferred upon it. Railroad Comrs. v. Oregon R. & Nav. Co. 17 Or. 65, 2 L.R.A. 195, 19 Pac. 702; Miller v. Oakwood Twp. 9 N. D. 623, 84 N. W. 556.
■ It will be noted that the statute under consideration makes no provision either that the testimony given or books and records produced before the tax commission shall be guarded with secrecy, or that such testimony or evidence shall not be used in any criminal proceeding, against the person required to adduce it. Such guaranties are usually found in laws permitting inquiries into private business affairs. The very absence of such restrictions in the statute under consideration is indicative that the legislature must have intended that the power conferred should be exercised only in some matter or proceeding properly pending before the commission, and that the scope of inquiry should be reasonable, restricted to the particular matter under consideration, and in no case infringe upon any of the inherent personal rights recognized by the Constitution.
Manifestly the legislature did not intend to invest the tax commission with arbitrary power. It clearly contemplated that the power conferred should be exercised, not capriciously or arbitrarily, but with reason.
In other words the legislature intended that there should be some reasonable basis for an order of the tax commission summoning witnesses to appear and testify and produce books, records, and documents.
The petition (and record) in the case at bar fails to disclose any basis for the proposed inquiry. There is nothing asserted in the petition in this case which might not with equal force and at all times be asserted against any, or every, taxpayer in the state. If the tax com*430mission bad tbe power to require the attendance of witnesses and the-production of books and documents under the facts set forth in the petition in this case, it unquestionably has the power to issue similar orders, and conduct similar inquiries with respect, to every taxpayer in the state, regardless of whether there is any reason whatsoever for such action.
The order appealed from must be reversed. It is so ordered.
The foregoing opinion was prepared while former Chief Justice Bruce was still a member of the court, and he concurred in the opinion in its entirety. Mr. Justice BroNSON, who succeeded Judge Bruce as a member of this court, being disqualified, Judge Crawford of the Tenth judicial District was called in and sat as a member of the court upon the final disposition of the case. Judge Crawford also concurred in the opinion in its entirety.