Court Opinion

ID: 8775450
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:59:44.506535+00
Date Added: 2024-06-11T17:02:31.237198
License: Public Domain

SANBORN, Circuit Judge
(dissenting). Propositions of law and fact assumed by the majority and conceded to be sound which condition the decision of this case are these: The mere excess or illegality of a tax will not sustain a bill in equity to avoid it or to restrain its collection in the absence of any ground of equity jurisdiction such as fraud, accident, mistake, or threatened multiplicity of suits and of inadequacy of the remedy at law. One may not be deprived of his property without due process of law by the levy and collection of an illegal tax any more constitutionally than he may by any other proceeding without such process. The due process of law prescribed by the statutes of Colorado, by which the assessment or valuation of the complainant’s property that formed the foundation of the tax here in question was to' be fixed and adjudicated, was that the complainant should make and deliver to the assessor a schedule of its taxable property and of its value under oath (Rev. St. Colo. 1902, §§ 5573, 5582, 5615), that “the assessor shall, prior to the first Tuesday in August of each year, mail to each person, association or corporation, whose property has been assessed at a- valuation other than that given in the schedule filed by such person, association or corporation, a statement of any such *635change in valuation, and shall give notice by publication * * * that on the day to be therein named he will sit to hear any and all objections to the assessment roll,” that he should hear such objections on that and succeeding days until all grievances were heard (section 5639), that from any decision of the assessor overruling any of its objections to the increase of its assessment the complainant might appeal to the board of county commissioners which might hear all testimony produced and subpoena witnesses to testify, and that from an adverse decision of the board the complainant might appeal to the district court, where the issue should be tried de novo on its merits (section 5641). The complainant filed its verified schedule according to the law, in which it stated that the assessment or valuation of its taxable property was $3,800. The assessor arbitrarily and without good reason raised this assessment to $66,300, but gave the1 complainant no notice of, and it did not know, that fact so that it had no opportunity to contest this raise before the assessor, before the board of county commissioners, or before the district court. Upon this increased assessment, which was confirmed and sent forward by the assessor without notice, the tax in question has been levied, and it is a perpetual lien on all the personal property upon which it was laid. Section 5676.
The majority are of the opinion that the rational deduction from these assumed or conceded propositions of law and fact is that there is no equity in the bill, while it seems to me that they present good ground for the relief sought by the complainant.
Under the statutes of Colorado, which have been quoted, the assessment roll after the time for a hearing upon the increased assessment passed, and after the roll was confirmed and sent forward by the assessor for the levy, was an adjudication of the assessment of the complainant’s property by the quasi judicial tribunal, the assessor, the board of county commissioners, or the district court, empowered by the law to determine its amount.
Does this case present any ground of equitable cognizance? Due process of law is as essential to the taking of one’s property by taxation as by a judgment of the court, or by any other proceeding, and due process of law must give “notice to the defendant of the charge or claim against him and an opportunity to be heard respecting the justice of the order or judgment sought from the court if the claim is sustained.” In re Wood and Henderson, 210 U. S. 246, 254, 52 L. Ed. 1046; 1 In re Rosser, 41 C. C. A. 497, 501, 101 Fed. 562, 566. In the Colorad® scheme of taxation the notice of the increase of the assessment required by section 5639 was the process upon which the whole proceeding was founded. It was the summons to the complainant to appear before the assessor, before the board of county commissioners, and before the district court if it desired and to answer the claim of the county that its taxable property was $62,500 more than it had testified that it was. But this summons was never served, this notice was never given to the complainant, and a judgment by default was rendered against it that its assessment was $62,500 more than it actually was, and that it should pay an unconscionable tax upon this illegal increase. Why was this notice not given? If the asssessor *636intentionally withheld it* and knowingly confirmed and sent forward the assessment without giving the notice, he perpetrated a gross fraud upon the cpmplainant. If he did not knowingly or intentionally withhold the notice or fail to give it, he did so by mistake or accident. In either case he brought this suit well within the domain of a court of chancery; Fraud, accident, and mistake are three great heads of equity jurisprudence, and, whenever injustice or wrong irremediable at law is about to result from either, the power is vested in and the duty is imposed upon the courts of equity to prevent the threatened injury. Their jurisdiction rests upon the fact that, unless they act, wrong will be perpetrated which cannot be remedied. The facts of this case seems to me to bring it within these established principles.
Has the complainant a remedy at law in the national courts against the unjust tax as prompt, complete, and efficacious as the remedy by injunction which it seeks? For it is such a remedy in such a court and that alone that may repel it from a federal court of equity. It is conceded on all hands that the assessment roll and the warrant issued thereon are presumptive proof within and without every court of service of the jurisdictional notice, of the validity of the tax, and of the regularity of all prior proceedings. Are they not also conclusive evidence thereof against every attack not supported by averments and proof of fraud, mistake, or some other such equitable ground of relief? And such allegations and proof for the purpose of avoiding such adjudications and enjoining their execution may be heard in the federal courts in suits in equity alone.
It is true that judgments of courts and of quasi judicial tribunals, such as the assessor and the Board of Equalization, are alike open to collateral attack where the subject-matters or the persons thereof cannot be subject to the jurisdiction of such tribunals. Foltz v. St. Louis & S. F. Ry. Co., 60 Fed. 316, 320, 8 C. C. A. 635; In re Sawyer, 124 U. S. 200, 221, 222, 8 Sup. Ct. 482, 31 L. Ed. 402; Whitehead v. Railroad Company, 28 Ark. 460; Lessee of Hickey v. Stewart, 3 How. 751, 11 L. Ed. 814; Bigelow v. Forrest, 9 Wall. 339, 351, 19 L. Ed. 696; Ex parte Lange, 18 Wall. 163, 176, 21 L. Ed. 872. Bu,t where, as in the case at bar, the subject-matter and the party are within the potential jurisdiction of the tribunal, in this case the assessor, and its jurisdiction depends upon a fact which might or might not support that jurisdiction, in this case the fact of service of the jurisdictional notice, which the tribunal is empowered and required to ascertain and determine, its decision is conclusive against collateral attack; and it can be avoided only by a direct appeal or a plenary suit for fraud, mistake, or some other equitable ground of relief. Colton v. Beardsley, 38 Barb. (N. Y.) 29, 51, 52, and cases'there cited; In re Sawyer, 124 U. S. 200, 220, 221, 8 Sup. Ct. 482, 31 L. Ed. 402; Des Moines Nav. Co. v. Iowa Homestead Co., 123 U. S. 552, 556, 559, 8 Sup. Ct. 217, 31 L. Ed. 202; Rogers v. Penobscot Mining Co., 154 Fed. 606, 609, 83 C. C. A. 380; Foltz v. St. Louis & S. F. Ry. Co., 8 C. C. A. 635, 637, 60 Fed. 316, 318; National Surety Co. v. State Bank, 120 Fed. 593, 600, 56 C. C. A. 657.
The difference, between these two classes of cases is noted in Rog*637ers v. Penobscot Mining Company, where it is said that a challenge of the power of the court to take any action in the case under any circumstances is fundamental and subject to examination without a specification of error, while an objection that the jurisdictional notice was not served assails nothing but the method of the exercise of the power of the court, relates to procedure only, and cannot be successfully presented indirectly. Pennoyer v. Neff, 95 U. S. 714, 721, 722, 24 L. Ed. 565, cited by the majority, well illustrates the distinction. In that case an indirect attack was made upon a judgment against a person without the jurisdiction of the court which rendered the judgment which was based on the publication of the summons. The fact that the defendant had not been personally served within the territorial jurisdiction of the court was admitted and the judgment was assailed (1) because the affidavit for publication was insufficient to invoke the jurisdiction of the court, and (2) because the court was without any power to acquire jurisdiction of the person of the defendant beyond its territorial jurisdiction. The Supreme Court decided that advantage of the lack of jurisdiction on the former ground could be taken by a direct attack only, but that on the second ground the judgment was void against a collateral attack.
In Des Moines Nav. Co. v. Iowa Homestead Co., 123 U. S. 552, 556, 559, 8 Sup. Ct. 217, 31 L. Ed. 202, a lack of a diversity of citizenship requisite to give jurisdiction to the Circuit Court which rendered the judgment apparent on the face of the record, and in Re Sawyer, 124 U. S. 220, 221, 8 Sup. Ct. 482, 31 L. Ed. 402, a lack of the requisite amount in controversy to give jurisdiction apparent on the record, were declared to be unavailable to avoid the judgments on collateral attacks.
In Colton v. Beardsley, 38 Barb. (N. Y.) 29, 51, 52, the jurisdiction of a school district to elect a trustee was conditioned by the existence of a vacancy, and that fact was primarily determinable by the remaining trustees. They had decided that there was a vacancy and had called the election. The New York court said:
“It is of the essence and nature of such acts, whether the power to perform them is committed to a court or a body of men, or to an individual, that they are final and conclusive except in a direct proceeding for their reversal; and that they cannot he inquired into or questioned collaterally. When the jurisdiction of an inferior tribunal depends upon a fact which such tribunal is required to ascertain and determine by its decision, such decision is final until reversed in a direct proceeding for that purpose. * * * The test of jurisdiction in such cases is whether the tribunal has power to enter upon the inquiry, and not whether its conclusions in the course of it were right or wrong.”
In Foltz v. St. Louis & S. F. Ry. Co., 60 Fed., at page 319, 8 C. C. A., at page 637, this court declared:
“Wherever the right and the duty -of the court to exercise its jurisdiction depends upon the decision of a question it is invested with power to hear and determine, there its judgment, right or wrong, is impregnable to collateral attach, unless impeached for fraud.”
And in National Surety Co. v. State Bank, 120 Fed. 593, 56 C. C. A. 657, we sustained a bill in equity to enjoin the enforcement of a *638judgment of a state court on the ground that by mistake the jurisdictional notice had not been served upon the defendant.
The assessor had jurisdiction' upon proper notice to the complainant of the subject-matter and of the party to this tax proceeding. He was invested with the power, and it was his duty to ascertain and determine whether or not the jurisdictional notice had been served upon the complainant, and if it had been to confirm the assessment of its property and send it forward for the levy. The assessment roll and the warrant formed the record of his adjudication of this issue, and it seems to me that they and that judgment which they evidence are impervious to collateral attack under the authorities which have been cited, and that they can be avoided or ^ restrained in a federal court only by a plenary suit like that in hand upon the ground of fraud, mistake, or other like basis for relief in equity.
In my opinion the roll and the warrant, until avoided or restrained in equity, constitute a perfect justification of a distraint by the treasurer, a complete answer to an action of trespass in a federal court for such distraint, incontrovertible proof- of a cause of action to recover the tax in such a court where equitable defenses are not available in actions at law, and the complainant has no adequate remedy at law for the threatened collection of the unjust tax.
Moreover, the fact that the assessment upon which the defendant relies to support the tax shows property of the complainant of the value of $66,300- within the jurisdiction of the treasurer, together with the legal presumption that a state of things once shown to exist will continue for a reasonable -time, seems to me ample proof that the complainant has property liable to respond to the endeavors of the treasurer to collect this tax and a just estoppel of the defendant who did not deny this fact in his answer from, denying it now. For these reasons this bill appears to me to disclose an assessment made by fraud or mistake without due process of law upon which a tax has been illegally founded which the defendant is about to collect out of the property of the complainant, and that it will suffer irreparable injury, in that this unconscionable tax will be collected from it and there will be no way in which it may recover it back without this suit in equity, or another of similar character. Here are safe and ample grounds for an injunction against the illegal tax.
The facts and the law seem to me to place this case on all fours with that of National Surety Company v. State Bank, 56 C. C. A. 657, 664, 120 Fed. 593, 600. In that case the surety company, pursuant to a requirement of a statute of Nebraska, appointed the Auditor of the State its attorney on whom process against it might be served in any action. An action was brought against it, the "summons therein was served upon the auditor who, by accident or mistake, failed to forward it to the surety qqmpany, and a judgment was rendered against it by default in one of the courts of the state of Nebraska for $7,-842.40, on a cause of action to which it had a meritorious defense. A suit was brought in the United States Circuit Court in that district to enjoin the.execution of that judgment of the state court. This court quoted the declaration of Chief Justice Marshall in Marine Insurance Company v. Hodgson, 7 Cranch, 332, 336 (3 L. Ed. 362), that:
*639“Any fact which clearly proves it to be against conscience to execute a judgment, and of which the injured party could not have availed himself in a court of law, or of which he might have availed himself at law, but was prevented by fraud or accident, unmixed with any fault or negligence in himself or his agents, will justify an application to a court of chancery.”
—and granted the relief sought.
I am of the opinion that the unconscionable judgment of an assessor rendered through fraud, accident, or mistake without the due process of law and the opportunity to be heard required by the Constitution and the law is not less sacred and is as remediable in equity as the unconscionable judgment of a court.

 28 Sup. Ct. 621.