Bohler v. Callaway/Opinion of the Court
First. A primary and preliminary question is that of the validity of the arbitration and award. The proceeding was initiated and award made under the act of 1910 but it was not begun until July 28, 1919, a year after the act of 1918 claimed by appellants to have repealed the arbitration provision was enacted.
The executor contends that the refusal of the state Supreme Court to enjoin the arbitration board from proceeding was res adjudicata as to its validity. There were no defensive pleadings. It was a decision upon an interlocutory injunction and was presumably made in the exercise of judicial discretion upon a balance of convenience as to halting the proceeding of arbitration before its conclusion. Chicago Great Western Ry. v. Kendall, 266 U.S. 94, 100, 45 S.C.t. 55, 69 L. Ed. --. The court pointed out that the ruling it affirmed was only a pendente lite injunction. 150 Ga. 235, 103 S. E. 792. Neither the court nor counsel referred to or considered the act of 1918. Its effect upon the arbitration proceeding does not seem to have been called to the attention of either. To give finality to such a temporary ruling would be contrary to the principles governing estoppel by judgment. Santowsky v. McKey, 249 F. 51, 161 C. C. A. 111; Knox v. Alwood (D. C.) 228 F. 753; Webb v. Buckalew, 82 N. Y. 555. When the case came again to the Supreme Court on the second application for injunction by the tax authorities, it was dismissed for varying reasons of the four judges. Certainly in view of the holding by two of them that the act of 1918 repealed the provision for arbitration, it could not be said to be a judgment binding the parties to the validity of the award. We agree with the District Judge that no estoppel grew out of the injunction suits.
Second. Did the act of 1918 render the award a nullity? Two of the state Supreme Court judges held that it did. Four federal judges have agreed with them. The sections of the act of 1918 here applicable were the first, third fifth, seventh, and eighth. By the first section when the owner of property had omitted to return the same for taxation at the time and for the years the return should have been made, he, or, if he was dead, his personal representative, was required to return the property for taxation for each year it was delinquent. By the third section when such property was of the class which should have been returned to the tax receiver of the county, the latter was to notify in writing the delinquent, or, if dead, his personal representative, requiring a return within 20 days. By the fifth section if the delinquent or his personal representative refused to return the property after notice the tax receiver was to assess the property from the best information he could obtain as to its value for the years in default and to notify such delinquent of the valuation which should be final unless the person or persons so notified raised the question that it was excessive, in which event the further procedure should be by petition in equity in the superior court of the county where such property was assessed. By the seventh section if the delinquent or his personal representative disputed the taxability of such property, he might also raise that question by petition in equity. By the eighth section all laws and parts of laws in conflict with the act were repealed.
As already stated, by the laws in force before 1918, the remedy for the delinquent taxpayer was in case of excessive assessment to demand arbitration in 20 days. Obviously the act of 1918 gave to the taxpayer an opportunity to file a petition in equity to enjoin excessive assessment as a substitute for his previous remedy by arbitration. The repealing section though not specific, was quite broad enough to end a resort to arbitration under the old law.
Third. Had the federal court jurisdiction to entertain the bill and enjoin the enforcement of the executions issued upon the assessments? Appellants cite Keokuk & Hamilton Bridge Co. v. Salm et al., 258 U.S. 122, 42 S.C.t. 207, 66 L. Ed. 496, as indicating the contrary. That was a bill in equity by a bridge company to enjoin a tax assessment by county assessors on a railroad bridge because of discrimination. The assessment made by the county assessors was subject to revision by a board of review required to give a hearing and to correct the assessment as should appear just. The payment of taxes was not to be enforced by distraint or levy, but by legal proceedings in a civil suit for the collection of a debt in which the owner might appear and defend on any legal ground, including discrimination. The complainant there brought his bill without taking any of the steps offered by the statute as an administrative remedy and ignored the defense he might make in the suit to collect the tax. The question here is different. The remedy to be taken by the taxpayer against excessive assessment is by petition in equity. That is a judicial proceeding. Such a proceeding is not administrative as the appeal to the Supreme Court was in the case of Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 29 S.C.t. 67, 53 L. Ed. 150. Nithing in the Georgia decisions shows that the petition here provided was other than a regular application to a court of equity for relief by injunction. Nothing indicates that the court was to make administrative assessment. It was only to enjoin excessive assessment. No reason existed why a federal court sitting in the same jurisdiction might not grant equitable relief to the taxpayer against the executions on the assessments, provided there be stated in the bill ground for federal equity jurisdiction. This was a suit of a civil nature under section 247 of the Judicial Code (Comp. St. § 1224), and arose under the Constitution of the United States. It was properly in equity because there was no adequate remedy at law, the assessments being final except as subject to equitable intervention. The Georgia law gives no right of action to recover taxes voluntarily paid even under protest on the ground that they were illegally assessed and collected. Section 4317 of the Civil Code of Georgia of 1910 is as follows:
'Payment of taxes or other claims, made through ignorance of the law, or where the facts are all known, and there is no misplaced confidence and no artifice, deception, or fraudulent practice used by the other party are deemed voluntary, and can not be recovered back, unless made under an urgent and immediate necessity therefor, or to release person or property from detention, or to prevent an immediate seizure of person or property. Filing a protest at the time of payment does not change the rule.'
In Georgia the statutory methods for levy, assessment and collection of taxes are not merely cumulative they are exhaustive. Richmond County v. Steed, 150 Ga. 229, 103 S. E. 253; State v. Western & Atlantic R. R. Co., 136 Ga. 619, 71 S. E. 1055. It would seem to follow that the only remedy intended to be furnished in Georgia in such a case as this was by injunction in equity against excessive assessments. If the remedy by law is doubtful, equitable relief may be had. Wilson v. Ill. So. Ry., 263 U.S. 574, 577, 44 S.C.t. 203, 68 L. Ed. 456; Union Pacific R. R. Co. v. Weld County, 247 U.S. 282, 285, 286, 38 S.C.t. 510, 62 L. Ed. 1110; Davis v. Wakelee, 156 U.S. 680, 688, 15 S.C.t. 555, 39 L. Ed. 578. The case seems to be quite like that of Cummings v. National Bank, 101 U.S. 153, 25 L. Ed. 903, in which under a statute of Ohio authorizing a suit for injunction to prevent the collection of illegal taxes, it was held that a bill would lie in the federal court to enjoin the collection of a tax as illegal because it discriminated against the shares of a national bank.
Another objection to the bill is that the assessments made in July, 1919, have become final by the delay because this bill was not filed until March 11, 1922. It is argued that as the petition in equity takes the place of the arbitration proceeding and the arbitration proceeding had to be begun within 20 days after the notification to the taxpayer of the assessment, in some way or other the 20-day limitation is projected into the new act. No statutory time limitation which would bar the resort to a petition or a bill in equity as filed in this case has been pointed out to us by counsel and we cannot infer one.
We come now to the issue of discrimination. By the Constitution of Georgia (article 7, section 2) it is provided that:
'All taxation shall be uniform upon the same class of subjects, and ad valorem on all property subject to be taxed within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.'
By the laws of Georgia all real and personal property, including stocks and securities in corporations in other states owned by citizens of Georgia, is to be returned and taxed at its fair market value; i. e., what it would bring at cash sale when sold in such manner as it is usually sold. Park's Annotated Code of Georgia 1914, §§ 1002, 1002a, 1003, and 1004.
It is well settled that if the administration of the tax laws of a state is shown to result in an intentional and systematic discrimination against a complainant by a bill in a federal court, the court may grant relief by injunction under the state law without deciding the federal constitutional question upon which jurisdiction of the bill is based. Louis. & Nash. R. R. Co. v. Greene, 244 U.S. 522, 527, 37 S.C.t. 683, 61 L. Ed. 1291, Ann. Cas. 1917E, 97; Greene v. Louisville R. R. Co., 244 U.S. 499, 508, 514-519, 37 S.C.t. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88; Taylor v. L. & N. R. R. Co., 88 F. 350, 31 C. C. A. 537; Georgia Railroad v. Wright, 125 Ga. 589, 602, 603, 54 S. E. 52.
Complainant's evidence to show that the valuation of real and personal property by the county officials was far below the market value in Richmond county and throughout the state of Georgia is convincing. It consists of reports and admissions by the comptroller general and the state tax commissioner, the chief taxing officers of the state, and of the testimony of past and present taxing officials of a great number of counties, some having large cities, and others without such cities in different parts of the state. In his report of 1920, the state tax commissioner said he thought it wise not to require more than 35 per cent. of the true value of real estate as a minimum basis for equalizing purposes, and be finally approved a comparative statement of counties showing the highest per cent. of true value of lands returned to be 60 and the lowest 25. The evidence further showed that the assessment of intangible personalty was at a much less percentage of true value than that of real estate. The fact seemed to be that stocks and bonds were not generally returned at all, and when they were returned they were assessed at a mere nominal figure. The condition in respect to the low valuations was attributed by several of the taxing officials, who were witnesses for the complainant, in part to the arbitration method. They said that if they attempted to impose anything like the real value, an arbitration was demanded, and the invariable result was a reduction of the assessment, so that there had come to be a generally understood acquiescence by county officials in low percentages. It was quite apparent that the undervaluation of both realty and personalty by county taxing officials in Richmond county and elsewhere in Georgia had become systematic and intentional. It would seem from the evidence and the reports that not more than 10 per cent. of stocks and bonds was taxed at all. The comptroller general's report for 1912 said that the system of assessment of such property was but little better than voluntary contributions of taxpayers to state's revenue. The recognition of these conditions seems to have led equalizers and assessors in fairness to scale down the assessment of stocks and bonds when returned. Hence we find that the board of tax assessors of Richmond county, a body whose duty it was to receive the regular annual returns from the tax receiver and equalize them as between individuals (Park's Annotated Code 1914, § 1116k), in determining the value of the White estate for taxing purposes for 1918-a current assessment the next year after those here in suit-fixed the value of the same stocks and bonds and intangibles at $250,000, or about 18 per cent. of their market value. Two of the assessors by affidavit testified from their experience that such percentage was at a higher rate than that at which such property when returned was usually assessed. The tax receiver who returned the property in this case at its full market value for the seven years testified before the board of arbitration that neither he nor the board of appraisers had ever taxed real estate at more than two-thirds of its value, mortgages or stocks at more than 50 per cent., and county property at more than 33 1/3 per cent.
Objection is made to the testimony of tax officials in this case, especially to that of the tax receiver, who fixed the 100 per cent. assessment in the present case, and to that of the members of the board of tax assessors and equalizers who assessed the value of the White estate for the year 1918. It is based upon the language of this court in C., B. & Q. Ry. v. Babcock, 204 U.S. 585, 593, 27 S.C.t. 326, 51 L. Ed. 636. We do nto think that the citation has application here. That was a case where members of a state railway assessing board were called by the taxpayers and subjected to an elaborate cross-examination with reference to the operation of their minds in valuing and taxing the particular railroads whose assessment was there in question. It was held to be improper thus to impeach official awards. The witnesses in this case were not subjected to cross-examination as to the reasons for their official action in this case. They were called because they were men of long experience in assessing property in the county and state to testify to the existence of a systematic and intentional undervaluation of the property of others-of property generally.
The court in reaching a conclusion as to the percentage to which the valuation here should be reduced in order fairly to avoid discrimination fixed 25 per cent., the same as that in the award of the board of arbitration. It is insisted that the action of the board, because its power to make an award was abolished by the law of 1918, was not admissible evidence. It is quite true that the award might be of doubtful competency if offered as independent evidence, but the fact that the award was made an issue in the pleadings and evidence and was a part of the record, suggests a difference. But even if it ought not to have been considered, the other evidence sustaining the conclusion of the court was ample. The evidence which the defendants offered was of a stereotyped character from the state and county officials of many counties, in which it was said that they all struggled to obey the law; but nothing which was said by them was any real contradiction of the affidavits already referred to, or of the reports of the state officials already commented on.
There only remains to consider the question of interest made by the executor on his cross-appeal. The District Court exacted interest on the amount found to be due and which the executor admitted to be due, from the time of the first tender by him at the time of the award of the arbitrators until the final tender some three years later when the amendment to the bill was filed. We think this was right. The tenders of the complainant were with a condition attached, namely that the money to be received was to be received in full payment of the claim. The complainant had no right to impose such limitation. If he owed the money, as he admitted he did, he should have paid it without restriction, and his withholding it for three years requires that he pay interest on it during the time of detention.