Railroad corporations attacked assessments made by a state
assessing board and sought to enjoin the collection of taxes based
thereon beyond a sum tendered, claiming that, induced by political
clamor and fear, the board had arbitrarily fixed excessive
valuations and had included property beyond the jurisdiction of the
state, thus depriving the corporations of their property without
due process. The bills charged political duress and a consequent
scheme of fraud. The board, after declaring that it had taken into
consideration the returns furnished by the corporations and their
respective stocks, bonds, properties and earnings, fixed the total
valuations and average mileage value of property in the state and
then fixed a lower value for assessment purposes, which the
corporations claimed was arbitrary and excessive. Members of the
assessing board were called as witnesses and cross-examined as to
the operation of their minds in reaching the valuation.
The charges of fraud and duress were not sustained.
In an independent proceeding attacking the judgment of an
assessing board, it is improper to cross-examine the members in an
attempt to exhibit confusion in their minds as to the method by
which the result was reached.
In a suit of this nature, this Court will not consider
complaints as to results reached by a state board of assessors,
except those based on fraud or the clear adoption of a
fundamentally wrong principle.
In this suit, it does not appear that the present Union Pacific
Railroad Company has any United States franchises which were taxed
by the State of Nebraska or improperly considered in estimating the
assessment for taxation of the company's property in that
The facts are stated in the opinion.
Page 204 U. S. 591
MR. JUSTICE HOLMES delivered the opinion of the Court.
These are bills to declare void assessments of taxes made by the
state board of equalization and assessment for the year 1904, and
to enjoin the collection of the same beyond certain sums tendered.
The bills allege that the board, coerced by political clamor and
its fears, arbitrarily determined in advance to add about nineteen
million dollars to the assessment of railroad property for the
previous year, and then pretended to fix the values of the several
roads by calculation. They allege that the assessments were
fraudulent and void for want of jurisdiction, and justify these
general allegations by more specific statements. One is that other
property in the state, especially land, was valued at a lower rate
than that of the railroads. Another, of more importance, is to the
Page 204 U. S. 592
the board adopted a valuation by stock and bonds, and then taxed
the appellants upon the proportion of the value so reached that
their mileage within the state bore to their total mileage, without
deducting a large amount of personal property owned outside the
state, or specially valuable terminals, etc., east of the Missouri
River. The principle of this last objection was sanctioned in
Fargo v. Hart, 193 U. S. 490
under the commerce clause of the Constitution, Art. I, section 8,
but later cases have decided that tangible property permanently
outside the jurisdiction is exempted from taxation by the
Fourteenth Amendment, Delaware, Lackawanna & Western R. Co.
v. Pennsylvania, 198 U. S. 341
Union Refrigerator Transit Co. v. Kentucky, 199 U.
, and the Fourteenth Amendment alone, somewhat
inadequately referred to, is the foundation of these appeals.
Demurrers to the bills were overruled, mainly, if not wholly, on
the ground of the charges of duress and fraud. Answers then were
filed denying the material allegations, and, after a hearing on
evidence, the bills were dismissed.
The dominant purport of the bills is to charge political duress,
so to speak, and a consequent scheme of fraud, illustrated by the
specific wrongs alleged, and in that way to make out that the taxes
were void. As the cases come from the circuit court, other
questions beside that under the Constitution are open, and
therefore it is proper to state at the outset that the foundation
for the bills has failed. The suggestion of political duress is
adhered to in one of the printed briefs, but is disposed of by the
finding of the trial judge, which there is no sufficient reason to
disturb. The charge of fraud, even if adequately alleged,
Missouri v. Dockery, 191 U. S. 165
191 U. S. 170
was very slightly pressed at the argument, and totally fails on the
facts. Such charges are easily made and, it is to be feared, often
are made without appreciation of the responsibility incurred in
making them. Before the decree could be reversed, it would be
necessary to consider seriously whether the constitutional question
on which the appeals are based
Page 204 U. S. 593
was not so pleaded as part of the alleged fraudulent scheme that
it ought not to be considered unless that scheme was made out.
Eyre v. Potter,
15 How. 42, 56 U. S. 56
14 Wall. 314, 81 U. S. 335
Hickson v. Lombard,
L.R. 1 H.L. 324.
When we turn to the evidence, there is equal ground for
criticism. The members of the board were called, including the
governor of the state, and submitted to an elaborate
cross-examination with regard to the operation of their minds in
valuing and taxing the roads. This was wholly improper. In this
respect, the case does not differ from that of a jury or an umpire,
if we assume that the members of the board were not entitled to the
possibly higher immunities of a judge. Buccleuch v.
Metropolitan Bd. of Works,
L.R. 5 H.L. 418, 433. Jurymen
cannot be called, even on a motion for a new trial in the same
case, to testify to the motives and influences that led to their
verdict. Mattox v. United States, 146 U.
. So as to arbitrators. Buccleuch v.
Metropolitan Bd. of Works,
L.R. 5 H.L. 418, 457, 462. Similar
reasoning was applied to a judge in Fayerweather v. Ritch,
195 U. S. 276
195 U. S.
-307. A multitude of cases will be found collected in
4 Wigmore on Evidence, §§ 2348, 2349. All the often-repeated
reasons for the rule as to jurymen apply with redoubled force to
the attempt, by exhibiting on cross-examination the confusion of
the members' minds, to attack in another proceeding the judgment of
a lay tribunal, which is intended, so far as may be, to be final,
notwithstanding mistakes of fact or law. See Coulter v.
Louisville & Nashville R. Co., 196 U.
, 196 U. S. 610
Central Pacific R. Co. v. California, 162 U. S.
, 162 U. S.
-108, 162 U. S. 117
State Railroad Tax Cases, 92 U. S.
; Cleveland, Cincinnati, Chicago & St. Louis
Ry. Co. v. Backus,
133 Ind. 513, 542. In Fargo v.
Hart, 193 U. S. 490
193 U. S.
-497, there was no serious dispute as to what was the
Again, this board necessarily kept, and evidently was expected
by the statutes to keep, a record. That was the best evidence, at
least, of its decisions and acts. If the roads had
Page 204 U. S. 594
wished an express ruling by the board upon the deductions which
they demanded, they could have asked for it, and could have asked
to have the action of the board or its refusal to act noted in the
record. It would be time enough to offer other evidence when such a
request had been made and refused. See Fargo v. Hart,
193 U. S. 490
193 U. S. 498
Cleveland, Cincinnati, Chicago & St. Louis Ry. Co. v.
133 Ind. 513, 542; Havemeyer v. Board of
202 Ill. 446. However, as the foregoing objections
were not urged, and as the cases were discussed upon all the
testimony, we shall proceed to consider them in the same way.
The facts that appear from any source are few. The board voted
first, as a preliminary step toward ascertaining the actual value
of all property to be assessed, to make an estimate of the tangible
property of the railroads, to be taken as one of the factors in
making up the total assessment of the roads. Schedules were
prepared, and it is objected that the board added twenty-five
percent to certain items as furnished by the companies. If this be
true, and it is not admitted that any figures were more than
tentative, the addition seems to have been made on personal
judgment and on a theory that the values given were the values the
property was insured for. If mistaken, a mistake does not affect
the case. The main point comes on the final assessment, to which we
turn at once.
The board expressed its result in another vote.
"Having given full and due consideration to the returns
furnished said board by the several railroad companies, and having
taken into consideration the main track, side track, spur tracks,
warehouse tracks, roadbed, right of way, and depot grounds, and all
water and fuel stations, buildings, and superstructures thereon,
and all machinery, rolling stock, telegraph lines, and instruments
connected therewith, all material on hand and supplies, moneys,
credits, franchises, and all other property of said railroad
companies, and having taken into consideration the gross and net
earnings of said roads, the total amount
Page 204 U. S. 595
expended in operation and maintenance, the dividends paid, the
capital stock of each system or road and the market value thereof
and the total amount of secured and unsecured indebtedness, [we] do
hereby ascertain and fix, for the purposes of taxation, the full
actual value, the average value per mile, and the assessable value
per mile of the several roads as follows . . ."
with a list.
The roads supplement the record by evidence that the state
treasurer, a member of the board, on the objection's being made to
a paper said to exhibit the stock, bonds, and floating debt of the
Union Pacific, that the stock and bonds of other companies owned by
the Union Pacific had not been deducted, answered, "the board has
decided that it cannot make deductions for property outside of the
state." This answer was in the presence of the other members of the
board. It is agreed that the paper referred to was prepared for the
use of the board. It shows a column of figures marked "Deductions
for locally assessed," and amounting, when added, to 1,152,230.
Then, under the head "Earnings," are the figures 398,474,068, from
which is subtracted 1,152,230, giving 397,321,838, which is divided
by 6,104, giving 65,092 as the quotient. This dividend is said to
be shown, by the coincidence of figures, to have been made up of
the market value of the stock of the Union Pacific, its mortgage
bonds and other indebtedness, less the property locally assessed in
the state, but without the deduction to which we have referred and
to which the road alleges that it was entitled. The divisor is the
total number of miles of the road. It is true that the valuation
ultimately reached was $55,000 a mile instead of $65,092, but this
is said to have been an arbitrary reduction, and did not reduce the
amount sufficiently, if we were to assume that this paper furnished
the basis of the tax.
But no such assumption can be made. The board considered the
paper, no doubt, but so they considered a capitalization of what
they understood to be the net earnings
Page 204 U. S. 596
in the state, and the value of the tangible property apart from
its outside connections. Exactly what weighed in each mind, and
even what elements they purported to consider in their debates, is
little more than a guess. There is testimony which cannot be
neglected that, in this very matter of valuing the road by stocks
and bonds, etc., the board, from another table furnished by the
company, valued it at over $540,000,000, and did deduct from that
sum the stocks and bonds owned by the road, and valued by the board
at over $140,000,000, prior to the subsequent reduction to $55,000
a mile. It is said that this valuation is absurd, and due to
misunderstanding of the table. But we have nothing to do with
complaints of that nature, or with anything less than fraud, or a
clear adoption of a fundamentally wrong principle. The board, in
its formal action properly before us, did vote to request of the
Union Pacific, among other things,
"an itemized statement of the several bonds and stocks owned by
said company, for which they are legally entitled to receive credit
on offset, in estimating the value of said Co. for assessment."
This recognizes the true principle, almost in terms. Beyond a
speculation from figures, and a few statements improperly elicited
from one or two members of the board, there is nothing to
contradict the inference from this vote except the above alleged
statement of the treasurer, met by his and others' testimony that a
proper deduction was made.
Evidently the board believed that the figures furnished by the
roads were too favorable and were intended to keep the taxes as low
as they could be kept. Evidently, also, the members or some of them
used their own judgment and their own knowledge, of which they
could give no very good account on cross-examination, but which
they had a right to use, if honest, however inarticulate the
premises. It would seem from the testimony, as might have been
expected, that the valuations fixed were a compromise and were
believed by some members to be too low, as they seemed to one too
high. It is argued to us, on expert testimony, that they are too
Page 204 U. S. 597
The result of the evidence manifests the fruitlessness of
inquiries, which, as we have said, should not have been gone into
at all. We have adverted more particularly to the case of the Union
Pacific, but that of the Chicago, Burlington & Quincy Railroad
stands on similar and no stronger ground, and what we have said
disposes of the main contention of both. If the court below had
found the other way, it would have been difficult to say that the
finding was sustained by competent evidence. There certainly is no
sufficient reason for disturbing the finding as it stands.
A point less pressed than the foregoing was that the other
property in the state was greatly undervalued, and that thus the
rule of uniformity prescribed by the Constitution of Nebraska had
been violated. Upon this matter it is enough to say that no scheme
or agreement on the part of the county assessors, who taxed the
other property, was shown, or on the part of the board of
equalization and assessment, and to refer to Coulter v.
Louisville & Nashville Railroad Co., 196 U.
Again, it was said that, inasmuch as the present Union Pacific
Company, a Utah corporation, acquired its road by foreclosure of a
mortgage from a preceding corporation chartered by the United
States, it appeared from admissions in testimony or followed from
the board's taxing the Nebraska portion of the road as a going
concern that it was taxing United States franchises, contrary to
the decision in California v. Central Pacific R. Co.,
127 U. S. 1
also, although stated, was not pressed. It does not appear that the
present Union Pacific has any United States franchises that were
taxed, and, if it has any that were considered in estimating the
value of the road, it does not appear that they were considered
improperly under the later decisions of this Court. Central
Pacific R. Co. v. California, 162 U. S.
. See Adams Express Co. v. Ohio State
Auditor, 166 U. S. 185
the same thing may be said as to the interstate business of the
Page 204 U. S. 598
roads. Adams Express Co. v. Ohio State Auditor,
165 U. S. 194
199 U. S. 166
U.S. 185. The board had a right to tax all the property in the
state, and to tax it at its value as an organic portion of a larger
whole. Western Union Telegraph Co. v. Missouri,
190 U. S. 412
Various arguments were addressed to us upon matters of detail
which would afford no ground for interference by the court, and
which we do not think it necessary to state at length. Among them
is the suggestion of arbitrariness at different points, such as the
distribution of the total value set upon the Chicago, Burlington
& Quincy system among the different roads making it up. But the
action does not appear to have been arbitrary except in the sense
in which many honest and sensible judgments are so. They express an
intuition of experience which outruns analysis and sums up many
unnamed and tangled impressions -- impressions which may lie
beneath consciousness without losing their worth. The board was
created for the purpose of using its judgment and its knowledge.
State Railroad Tax Cases, 92 U. S.
; State v. Savage,
65 Neb. 714, 768-769;
In re Cruger,
84 N.Y. 619, 621; San Jose Gas Co. v.
57 Cal. 614, 616. Within its jurisdiction, except, as
we have said, in the case of fraud or a clearly shown adoption of
wrong principles, it is the ultimate guardian of certain rights.
The state has confided those rights to its protection and has
trusted to its honor and capacity as it confides the protection of
other social relations to the courts of law. Somewhere there must
be an end. We are of opinion that, whatever grounds for uneasiness
may be perceived, nothing has been proved so clearly and palpably
as it should be proved, on the principle laid down in San Diego
Land & Town Co. v. National City, 174 U.
, 174 U. S. 754
in order to warrant these appeals to the extraordinary jurisdiction
of the circuit court.
MR. JUSTICE PECKHAM and MR. JUSTICE McKENNA dissent.