The provision in the statute of Minnesota for 1893, c. 151,
authorizing the governor of the state when it is made to appear
that there has been a gross undervaluation of taxable property by
the assessors for any county in the state, to appoint a board to
revalue and reassess it, which board shall, after due examination,
prepare a list of all such undervalued property, of the year or
years in which it was so underassessed, the amount of the
assessment, and the actual and true value thereof for which it
should have been so assessed, does no violation to the Fourteenth
Amendment to the Constitution of the United States, and does not
deprive the owner of lands, so reassessed at an advanced value, of
his lands without due process of law.
This writ of error brings up for review a judgment of the
Supreme Court of Minnesota affirming the judgment of the District
Court of Itasca County assessing certain taxes for the years 1888
to 1893, inclusive, on the lands of the plaintiff in error.
The law upon which the proceedings in taxation were based,
omitting parts not material to the pending controversy, is as
follows:
"Whenever it shall be made to appear to the governor of this
state by a complaint in writing and under oath, or by the finding
of any court, the legislature or any committee thereof, that for
any reason, any considerable amount of property in any county in
this state . . . , if assessed . . . has been grossly undervalued
by the assessor or other county officials, whether such valuation
and assessment has or has not been reviewed or acted upon by the
county board of equalization
Page 176 U. S. 551
of any such county, he shall forthwith appoint in writing some
competent citizen of this state, not a resident of such county, to
ascertain the character, location, value, and ownership of the real
and personal property of any such county so . . . underassessed or
undervalued, who shall forthwith proceed to examine and report upon
the subject, and prepare a list or lists thereof in duplicate,
showing therein the character, location, ownership, and valuation
of all such property, with the year or years for which the same or
any part thereof has been . . . undervalued; said list shall also
show therein opposite each tract, piece, or parcel of land or
personal property . . . underassessed for any year or years
thereupon, in which the same was undervalued or underassessed, with
the amount of such assessment, the actual and true value thereof at
the time and for which the same was subject to and should have been
assessed, together with the difference between the assessed and
actual value thereof as so found. One of which duplicate reports or
lists shall be by him filed with the county auditor of such county
on or before the first day of January in the year in which any such
assessment is to be made, and the other of said lists shall be by
him filed within the same time with the state auditor."
It is provided in other sections of the law that the county
auditor shall enter the lists on the assessment books, and that the
assessor shall assess the property at its true value corresponding
with the lists, and the auditor shall proceed as under the general
law.
The taxes which are in controversy were assessed under this law,
and proceedings were instituted for their recovery in accordance
with the usual practice in collecting taxes against lands in
Minnesota.
The plaintiffs in error claimed in their answer that the law of
the state and the proceedings under it were repugnant to the
Constitution of the United States in that they impaired the
obligation of the contracts made by plaintiffs in error with their
grantors, deprived them of their property without due process of
law, and denied them the equal protection of the laws.
Page 176 U. S. 552
The facts were stipulated as follows:
"It is hereby stipulated between the parties to the
above-entitled action that the following are, and may be considered
by the court as, facts in said matter:"
"That the defendants above named are the owners of the lands
described in their answer in this proceeding; that the defendants
became the owners of such lands on September 18, 1893; that in each
of the years 1888, 1889, 1890, 1891, 1892, 1893, and 1894, taxes
were assessed upon all said lands by the proper officials pursuant
to the provisions of chapter 11, General Statutes of 1878, and the
amendments thereto, and that such taxes for each of said years
were, before the same became delinquent, paid by the defendants and
their predecessors in estate; that the taxes sought to be recovered
against said lands in this proceeding are claimed to be due by
reason of an assessment made pursuant to the provisions of chapter
151, General Laws 1893, upon the ground that said lands in said
prior assessment proceedings had been grossly undervalued."
"That, prior to January 1, A.D. 1894, it was made to appear to
the governor of this state, by duly verified complaint, that a
considerable amount of property in said County of Itasca had been
grossly undervalued in the tax proceedings for the years from 1888
to 1893, inclusive; that thereupon and forthwith the said governor
did, in writing, appoint a competent citizen of this state, not a
resident of said county, to ascertain the character, location,
value, and ownership of the real and personal property in said
county so omitted, underassessed, or undervalued, to-wit, one J. S.
Dedon; that thereupon the said Dedon did forthwith proceed to
examine and report upon the subject, and did prepare a duplicate
list of such lands as he determined had been so underassessed or
undervalued, in the manner and form as prescribed in section 1 of
said chapter 151, General Laws 1893; that thereafter, and prior to
January 1, A.D. 1894, the said duplicate lists were filed with the
state auditor and with the county auditor of said Itasca County;
that thereafter the county auditor and county assessor of said
Itasca County took the proceedings in regard to said lands
described in said lists, which are prescribed in section 2 of said
chapter 151. "
Page 176 U. S. 553
"That the said lands so owned by these defendants were returned
as undervalued lands for each of said years from 1888 to 1893,
inclusive, and were entered by the county auditor upon the real
estate assessment books for the year 1894, and were assessed by the
assessor of said Itasca County at the respective values shown by
said lists, and were also entered by the county auditor upon the
assessment and tax books for each of said years from 1888 to 1893,
inclusive, and were assessed by him at the valuation and amounts as
shown by said lists to have been omitted or undervalued, and
arrearages of taxes by reason of said increased valuation were
extended upon said assessment books, and the taxes claimed in this
proceeding are the proper amount of taxes claimed in this
proceeding, which would be due against said lands on account of
said increased valuation if such tax were legal and valid and could
be collected in this proceeding."
"That no notice of any of said proceedings by any of said
persons in making said reassessment or revaluation of said lands,
or in extending said taxes against said lands, was ever given, by
publication or otherwise, to these defendants."
The trial court found in accordance with the stipulation, and
further found, as a conclusion of law, that the proceedings for
levying and assessing the taxes were in accordance with the
provisions of chapter 151, General Laws of 1893, but that the said
law and the proceedings therein provided were unconstitutional, and
the taxes therefore not a legal charge against the lands.
The judgment was reversed by the supreme court, and the taxes
sustained. 68 Minn. 353.
The court, in its opinion, confined its consideration to the
validity of the law under the constitution of the state, and did
not pass upon the claim that it was also in violation of the
Constitution of the United States. After the judgment was entered
in compliance with its mandate by the district court the case was
again certified to the supreme court in accordance with the
practice of the state.
The certificate recited the facts which have already been set
out, and
"that the points raised by the defendants [plaintiffs
Page 176 U. S. 554
in error] herein are as follows, to-wit: 1. Is chapter 151,
General Laws of 1893, of the State Minnesota, and the assessment of
taxes attempted to be made thereunder in this proceeding,
constitutional and legal? 2. In particular, is said chapter 151 and
the assessment of taxes attempted to be made in pursuance thereof
in this proceeding, in violation of article fourteen of the
Amendments to the Constitution of the United States, providing that
no state shall deprive any person of his property without due
process of law or deny to any person within its jurisdiction equal
protection of the laws?"
The supreme court affirmed the judgment. 72 Minn. 519.
MR. JUSTICE McKENNA delivered the opinion of the Court.
The procedure under the statute is as follows: a complaint to
the governor of the state that a considerable amount of property
has been grossly undervalued by the assessor or other county
officials.
The appointment by the governor of a competent person to examine
and report, and if he find undervalued property to prepare a list
in duplicate showing its character, location, ownership, and
valuation, one of which lists shall be filed with the county
auditor.
The entry of the list on the assessment books by the
auditor.
The assessment of the property at its value corresponding to the
list.
Proceedings by the county auditor as under the general law.
Page 176 U. S. 555
This procedure was exactly followed, and it is stipulated that
"the taxes claimed in this proceeding are the proper amount of
taxes due against said lands on account of said increased
valuation. . . ." In other words, the lands have not been made to
bear a greater burden than they would and should have borne if they
had been originally assessed at their true valuation. It is,
however, claimed that the increased taxation is illegal, because
the law authorizing it offends the Fourteenth Amendment of the
Constitution of the United States.
The grounds of the contention are that the former assessments
constituted judicial judgments, and hence to commit to the
executive the power of setting them aside, or to set them aside
without notice or opportunity to be heard, is not due process of
law. And further that the statute deprives the plaintiffs in error
of the equal protection of the laws in that it gives to owners of
similar real estate an opportunity to contest the absolute assessed
valuation of their property, and to plaintiffs in error only the
opportunity to contest the gross overvaluation, and that, if the
state knew of fraud in the assessments, it is estopped to assert it
against an innocent party, which plaintiffs in error are claimed to
be, and, as the statute ignores this doctrine of estoppel, it does
not provide due process.
Conceding
arguendo that the former assessments were
judicial judgments, the argument based on their immunity from
executive power or attack is not supported by the statute. It does
not commit to the governor control over them, and it does give
opportunity to be heard. The governor only starts the inquiry upon
which the reassessment may be based, and the statute directs the
proceedings in an orderly course of inquiry, report, entry upon the
assessment books, assessment by the assessor, and an action for the
collection of the taxes levied in the regular judicial
tribunals.
The complaint of plaintiffs in error seems to be that a hearing
before the governor was not provided. If the basis of this is that
the owner of property must have notice of every step in taxation
proceedings, we agree with the supreme court of the state that it
is untenable.
Pittsburgh &c. Railway v.
Board
Page 176 U. S. 556
of Public Works, 172 U. S. 32;
Davidson v. New Orleans, 96 U. S. 97;
Hagar v. Reclamation District, 111 U.
S. 701;
Winona & St. Peter Land Co. v.
Minnesota, 150 U. S. 526.
If the basis of the complaint is that the governor acts judicially,
and plaintiffs in error were entitled to have notice, and be heard
before he rendered judgment, it is also untenable. The governor
does not act judicially -- he determines nothing but that a
complaint has been made in writing and under oath, or that it has
been found by a court, or the legislature or any committee thereof,
that a considerable amount of property in a county of the state has
been grossly undervalued. If the perception of the fact of a
complaint or a finding of a court or legislature is a judgment in
the sense urged, every act of government is a judgment, and all of
its exercises could be stopped, upon the reasoning of plaintiffs in
error, by perpetual hearings. But supposing the governor's act is a
judgment, it ends with the appointment of an examiner. What is
substantial comes afterwards, and if against what may be
detrimental in that the landowner can be heard, he is afforded due
process within the rule announced by the authorities,
supra.
That the landowner is provided with an opportunity to be heard
is decided by the supreme court of the state. In the opinion in the
case at bar, the court said, quoting from 40 Minn. 512:
"Within 20 days after the last publication of the delinquent
list, any person may by answer interpose any defense or objection
he may have to the tax. He may set up as a defense that the tax is
void for want of authority to levy it, or that it was partially,
unfairly, or unequally assessed.
Commissioners of St. Louis
County v. Nettleton, 22 Minn. 356. He may set up as a defense
pro tanto that a part of a tax has not been remitted, as
required by some statute.
Commissioners of County v.
Jessup, 22 Minn. 552. That the land is exempt, or that the tax
has been paid.
County of Chisago v. St. Paul & Duluth R.
Co., 27 Minn. 109. That there was no authority to levy the
tax, or that the insertion of taxes for past years in the list did
not exist, or any omissions in the proceedings prior to filing the
list, resulting to his
Page 176 U. S. 557
prejudice.
County of Olmsted v. Barber, 31 Minn. 256.
The filing of the list is the institution of an action against each
tract of land described in it for the recovery of the taxes
appearing in the list against such tract, and tenders an issue on
every fact necessary to the validity of such taxes.
Chauncey v.
Wass, 35 Minn. 1. The only limitation or restriction upon the
defenses or objections which may be interposed is that contained in
section 79, to the effect that if a party interposes as a defense
an omission of any of the things provided by law in relation to the
assessment or levy of a tax, or of anything required by any officer
to be done prior to filing the list with the clerk, the burden is
on him to show that such omission has resulted in prejudice to him
and that the taxes have been partially, unfairly, or unequally
assessed. This relates not to want of authority to levy the tax,
but to some omission to do or irregularity in doing the things
required to be done in assessing or levying a tax otherwise valid.
Commissioners of St. Louis County v. Nettleton, supra. And
certainly, in justice or reason, a party cannot complain that when
he objects to a tax on the ground of some omission or irregularity
in matters of form, he is required to show that he was
prejudiced."
This Court, in
Winona & St. Peter Land Co. v.
Minnesota, 159 U. S. 526,
quoted the above extract as establishing that the property owner
was afforded a hearing by the laws of the state, and declared the
rule that the Constitution of the United States was satisfied if an
opportunity be given to question the validity or amount of the tax
"either before that amount is determined or in subsequent
proceedings for its collection." And, referring to the difference
in the manner of assessment and the successive opportunities for
review which were given to the property owner in one case and not
in the other, said:
"But there is nothing in this difference to affect the
constitutional rights of a party. The legislature may authorize
different modes of assessment for different properties, providing
the rule of assessment is the same.
Kentucky Railroad Tax
Cases, 115 U. S. 321,
115 U. S.
337;
Pittsburgh, Cincinnati &c. Railway v.
Backus, 154 U. S. 421."
The latter cases of
State v. Lakeside Land Co., 71
Minn. 283, and
State v. West
Page 176 U. S. 558
Duluth Land Co., 78 N.W. 115, cited by the plaintiff in
error, do not militate against the rule in any way substantial to
the pending controversy.
The special objections of plaintiffs in error therefore cannot
be sustained, nor the broader one that the first assessments are
final against any power of review or addition by the legislature.
We held in the
Winona case,
supra, that the
legislature had power to provide for the assessment of property
which had escaped taxation in prior years, and, as we have seen, a
special manner of assessment was sustained. We agree with the
supreme court of the state that a gross undervaluation of property
is within the principle applicable to an entire omission of
property. If it were otherwise, the power and duty of the
legislature to impose taxes and to equalize their burdens would be
defeated by the fraud of public officers, perhaps induced by the
very property owners who afterwards claim its illegal
advantage.
If an officer omits to assess property or grossly undervalues
it, he violates his duty and the property and its owners escape
their just share of the public burdens. In
Stanley v.
Supervisors of Albany, 121 U. S. 535, we
held that against an excessive valuation of property, its owner had
a remedy in equity to prevent the collection of the illegal excess.
It would be very strange if the state, against a gross
undervaluation of property, could not, in the exercise of its
sovereignty, give itself a remedy for the illegal deficiency. And
this is the effect of the statute. It "merely sets in motion new
proceedings to collect the balance of the state's claim, and there
is no constitutional objection in the way of doing this," as the
supreme court of the state said in its opinion.
The other objections to the statute do not demand an extended
consideration. That it deprives plaintiffs in error of the equal
protection of the laws is based on the absence of a provision for
notice in the progress of the proceedings, and is answered by the
Winona Case, supra.
The fourth contention -- that the state is estopped to assert
fraud in the former assessment if we should concede has any basis
in law, lacks an essential basis of fact.
Page 176 U. S. 559
The plaintiffs in error purchased after the enactment of the
statute, and the record affords no presumptions of ignorance or
innocence. If plaintiffs had been attentive to the assessment of
the land, its gross undervaluation could not have escaped their
notice. Besides, whether a party in a case has been given or
refused the benefit of the law of estoppel involves no federal
question.
Judgment affirmed.
