Bohler v. Callaway, 267 U.S. 479 (1925)
U.S. Supreme CourtBohler v. Callaway, 267 U.S. 479 (1925)
Bohler v. Callaway
Nos. 170, 171
Argued January 14, 1925
Decided April 13, 1925
267 U.S. 479
1. Refusals to grant interlocutory injunctions to stay proceedings before a board of arbitration held not res judicata in favor of the validity of those proceedings. P. 485.
2. The provision in Georgia for reviewing tax assessments by arbitration, Code 1910, § 1059; Acts 1910, pp. 22, 24, Parks Ann.Code, 1914, § 1116(d), was superseded by Acts of 1918, No. 270, p. 232, which substitutes a petition in equity to enjoin excessive assessments. P. 267 U. S. 485.
3. Where the only remedy afforded by the state law to a taxpayer against an invalid tax is by a proceeding in equity in the state court, purely judicial in character, to enjoin excessive assessment, the federal court has jurisdiction of a bill to enjoin collection in which it is set up that the tax violates the federal Constitution. P. 267 U. S. 486.
4. If the administration of the tax laws of a state is shown to result in a systematic and intentional discrimination against the plaintiff, the federal court may grant injunctive relief allowed by the state law without deciding the federal constitutional question upon which jurisdiction of the bill is based. P. 267 U. S. 489.
5. Evidence held sufficient to show such systematic underassessment of property in Georgia, particularly of stocks and bonds, as justified a decree holding invalid an assessment of plaintiff's securities at full market value, and reducing it to 25%. P. 267 U. S. 489.
6. In cases of this kind, it is proper to call as witnesses tax officials of the state and county, because of their experience in assessing property, to testify to the existence of systematic and intentional undervaluation. C. B. & Q. Ry. v. Babcock, 204 U. S. 55, distinguished. P. 267 U. S. 491.
7. To avoid addition of interest, a tender of money in discharge of a disputed tax should not be tied to the condition that it be received in full payment. P. 267 U. S. 492.
291 F. 243 affirmed.
These are an appeal and a cross-appeal direct from the District Court for the Southern District of Georgia, under § 238 of the Judicial Code, because involving the application of the federal Constitution.
The bill sought to enjoin the levy of executions on delinquent tax assessments of the tax receiver of Richmond County, Georgia, against the estate of J. B. White, for the seven years from 1911 to 1917. The assessments were as follows:
Assessment, 1911 $1,000,866.87 $13,552.20
" 1912 1,399,161.67 18,888.68
" 1913 1,558,300.83 22,751.19
" 1914 1,548,735.38 21,527.42
" 1915 1,439,160.83 21,011.75
" 1916 1,509,936.00 22,347.05
" 1917 1,623,567.52 25,490.01
The aggregate amount of the executions was $145,568.30, with interest thereon to the date when issued July 28, 1918, of $70,764.01, or a total of principal and interest of $216,332.01.
The bill of the complainant, who was White's executor, asked an injunction on two grounds. One was that in the sum assessed were national bank stocks, which, under § 5219, R.S., should have been assessed for taxation in New York City, where the banks were, and not in Georgia,
and also stock in a Georgia railway exempt from taxation by the state law.
The second ground was that the assessment of the stocks and other securities was at their full market value, whereas in Georgia and in Richmond County, property of this class in the hands of others was generally and intentionally assessed by the taxing officers at less than 25 percent of such value, and that such discrimination was unlawful under the statutes and constitution of Georgia, and would work a denial of the equal protection of the laws in violation of the Fourteenth Amendment of the federal Constitution.
J. B. White, a native of Ireland, came to Georgia in 1866, and resided there continuously until 1909. He never was naturalized. In 1909, he went abroad and died at Genoa, Italy, in March, 1917, leaving a will, in which he described himself as of Richmond County in that state and named the complainant, E. H. Callaway, as his executor. The executor probated the will and filed an inventory of the estate in the Court of the Ordinary. During the seven years -- 1911 to 1917 -- White had returned for taxation his real estate in Richmond County amounting to $600,000 and $300 of household and kitchen furniture, but no other personal property. After the probate of the will, the tax receiver of the county demanded of the executor returns of taxation for seven years on the securities shown in the inventory. The certificates of stock and the bonds were physically in possession of Henry Clews & Co. in New York. The executor insisted (though he subsequently abandoned the claim) that they are not subject to taxation in Georgia, for the reason that White was a nonresident. The tax receiver withdrew his demand. Thereafter, the board of county commissioners directed institution of proceedings in mandamus to compel the tax receiver to assess this property as delinquent. The suit for mandamus,
though it did not go to a rule absolute, brought out from a member of the firm of Clews & Co. evidence of the exact amount and value of the property which White had left with them. The tax receiver then made the assessments at full market value. The executor demanded arbitration, as provided by § 1059 of the Georgia Code of 1910 and the General Arbitration Act. Acts of Georgia of 1910, pp. 22, 24, as codified in Park's Annotated Code 1914, § 1116(d). The latter section directed the county tax receiver to assess property at the valuation fixed by the taxpayer in the return, if satisfactory, and, if not, within 30 days to make an assessment on the best information he could procure and notify the taxpayer. The latter might, by a demand within 20 days, have the question of true value referred to arbitrators, one selected by him, one by the tax receiver, and a third by the other two, and in default of their agreement, by the board of county commissioners. In this case, the executor selected his arbitrator, the tax receiver his, and the county commissioners selected the third. On the day of the meeting of the arbitrators, the state applied to the superior court of the county for an injunction to prevent their further proceeding, but the application was denied. The issue was then heard by the arbitrators, the state and county appearing and taking part therein by counsel. The arbitrators made an award fixing the valuation at 25 percent of the market value of the securities, and the same was "fastened in tax digest of the county for the year 1917." The tax collector calculated the taxes due and submitted the amount to the executor as $27,980.88. This sum the executor tendered as full payment of the taxes due. On advice of counsel representing the state, the collector declined it. The state and county then filed a second petition in the superior court to enjoin the tax receiver and the tax collector from making the assessments and collections according to the arbitration.
The superior court held the petition insufficient on demurrer, and dismissed the application. Meantime, the first application to enjoin the proceedings in arbitration reached the supreme court, and the superior court was sustained in refusing the injunction. Georgia v. Callaway, 150 Ga. 235. When the second application for injunction reached the Supreme Court, two of the judges out of six (only four being present) held that an Act of 1918 (Acts of Georgia of 1918, No. 270, p. 232) repealed the section of the Act of 1910 on which the arbitration had preceded and rendered it void, and that therefore the original assessments made by the tax receiver were valid, the executions could issue, and no injunction was necessary. Of the other two judges, one held that the Act of 1918 did not prevent the arbitration proceedings in which the state participated. The other held that the state had not put itself in a position to object to the assessment of the arbitrators, because its only complaint was that the award was fraudulent, and it had not made out its case, and that the effect of the Act of 1918 it was not necessary for the court to decide. So an injunction was a second time refused. Georgia v. Callaway, 152 Ga. 871.
The second decision was made March 4, 1922. On March 9th following, tax executions on the assessments made by the tax receiver July 28, 1919, including those on the stock of the national banks of New York City, were issued. The executor thereupon again tendered payment of taxes and interest under the award of the arbitrators to the tax collector which, was again declined.
On March 22, 1922, the bill in the present case was filed, and, after a hearing before three judges, a temporary injunction was issued by the district court. The state and the county and the tax officials were made defendants, and filed answers. Among other objections by them to the equitable relief sought was that, though the
complainant in his bill admitted that there was due from him $27,980.88 to the tax receiver, it had not been paid, and the bill should be dismissed. Thereafter on the 25th of September, 1922, the executor tendered the sum of $27,980.88, and it was accepted, without prejudice to the rights of any of the parties in the pending litigation. The executor then, upon leave of court, amended his bill and made the averment of the payment.
The district court, after a full hearing, sustained its jurisdiction, held that the award of the arbitrators was invalid and that the state and county were not estopped by the state court orders to attack it, enjoined execution of the assessments on the national bank and Georgia railway stocks as nontaxable, found unlawful discrimination in the assessments on the other securities, enjoined collection thereof to the extent of 75 percent, and decreed against the complainant interest on the 25 percent of the assessments already paid by him from the date of his first tender until their actual payment. The cross-appeal of the executor raised in his assignments of error the validity of the award of the arbitration and the question of interest.