Illinois Central R. Co. v. Greene
244 U.S. 555 (1917)

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U.S. Supreme Court

Illinois Central R. Co. v. Greene, 244 U.S. 555 (1917)

Illinois Central Railroad Company v. Greene

Nos. 642, 643, 644, 645

Argued January 16, 17, 18, 1917

Decided June 11, 1917

244 U.S. 555

Syllabus

Greene v. Louisville & Interurban R. Co., ante,244 U. S. 499, followed in holding (1) that these are not in effect suits against the state, (2) that plaintiff has not an adequate remedy at law under § 162, Ky.Stats., and (3) that judicial relief may be granted against unlawful discrimination resulting from general and systematic undervaluations by assessors.

Louisville & Nashville R. Co. v. Greene, ante244 U. S. 522, followed (1) as to the sufficiency of proof of general, systematic, and notorious undervaluation of property by assessors in Kentucky, (2) in holding that the jurisdiction of the courts extends to enjoining the collection of illegal taxes when assessed for state purposes as well as when assessed for local purposes, and (3) in holding that, as applied to an

Page 244 U. S. 556

interstate railroad, the Kentucky statutes require first an apportionment of a proper share of the railroad's total "capital stock" (tangible and intangible property) value to Kentucky, followed by a deduction from Kentucky's portion thereof of the value of the railroad's tangible property in that state.

The evidence here warrants the conclusion that plaintiff's "franchise" (intangible property) in Kentucky was valued by the Board of Valuation and Assessment upon the basis of 80 percent of its "capital stock " (tangible and intangible property) apportioned to that state.

In the absence of fraud, the valuations made by an assessing board are not judicially reexaminable unless resulting from some principle of assessment which is fundamentally wrong.

In this case, no fundamentally wrong principle was involved in adopting the "capitalization of income," rather than the "stock and bond" plan for valuing a railroad system, in determining what rate of interest should be selected, or how many years' earnings should be considered, in capitalizing; or in finding what was the net income for a given year.

Although the fact that property is part of a system and has its uses only in connection with other parts of the system may be considered by a state in taxing that portion of the system which is within her borders, yet the idea of organic unity must not be made the means of unlawfully taxing property without the state belonging to persons domiciled elsewhere.

It being contended that, in valuing upon a mileage basis that portion of plaintiff's railroad system which was taxable in Kentucky, the Board of Valuation and Assessment did not make due allowance for the excess value per mile due to costly terminals in other states, held that, in the absence of contrary proof, the Board must be presumed to have made such allowance.

Plaintiff insisted that certain investment securities held by it in its treasury in another state should not be considered as part of its assets in assessing its intangible property, apportionable to Kentucky, averring in its pleading that they had no connection with its business of transportation and did not represent railroads or other properties operated by it. This contention being rejected for want of evidence upon the character of the securities and their relations to plaintiff's system, plaintiff on rehearing contended that, as they represented a controlling interest in other railroads outside the state, the mileage of such railroads should be taken into account, under Ky.Stats., § 4081, in the apportionment, held that the district court did not abuse its discretion in ruling that this contention came too late.

209 F. 465 affirmed.

Page 244 U. S. 557

The case is stated in the opinion.

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