1. In a suit in the district court to enjoin distraint of
property to satisfy taxes or for subrogation to a tax lien on other
property, the effect of payment of the taxes under protest and
alleged coercion, before dismissal of the bill for want of
jurisdiction, and the effect of a subsequent judgment in another
suit are questions relating to the merits, and cannot be considered
as grounds for dismissing a jurisdictional appeal. P.
271 U. S.
429.
2. In virtue of the Eleventh Amendment, a federal district court
has no jurisdiction over a suit by a private party against a state.
P.
271 U.S. 430.
3. A bill against state tax collecting agents to enjoin not the
collection, but a wrongful and abusive use of the process of
collecting, state taxes is not a suit against the state. P.
271 U.S. 430.
Reversed.
Appeal from a judgment of the district court dismissing the suit
for want of jurisdiction. The appellant, as trustee for bonds
secured on street railway property, sued the City of Seattle, The
County of King, W. W. Shields, as Treasurer of King County, and
Matt W. Starwich, as Sheriff of King County, to enjoin wrongful and
inequitable distraint of that property for collection of taxes.
Page 271 U. S. 427
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
In the beginning of the year 1919, the Puget Sound Power &
Light Company owned and was operating two public utilities in the
City of Seattle -- one a power and lighting system and the other a
street railway system. It still owns and operates the power and
lighting system, and the Old Colony Trust Company is the trustee in
a mortgage which was given thereon in 1921 to secure a large issue
of bonds still outstanding.
The City of Seattle now owns and operates the street railway
system. The transfer from the Puget Sound Company to the city was
effected March 31, 1919, under a contract between them entered into
six weeks before. Anticipating that the system would be taxed for
that year by reason of the company's ownership in the early months,
they stipulated in the contract, and again in the deed of transfer,
that "state, county, and municipal taxes" laid on the property for
1919 should be borne and paid by them in proportions conforming to
their respective periods of possession during the year. On that
basis, the company became obligated to pay one-fourth and the city
three-fourths.
Shortly after the transfer, state, county, and municipal taxes
aggregating over $400,000 were laid on the property for the year
1919. Of that amount, over $179,000 represented taxes imposed by
the city. The taxes became a lien on the property March 15, 1919,
and were listed against the company in the tax records by reason of
its ownership on that date. The county treasurer was to collect the
taxes and pay the money over to the state, county, and city in
definite proportions. If it became necessary to collect through
distraint and sale, that was to be done through the sheriff.
When the taxes became due, the city refused to pay any part of
them, and the county treasurer refused to receive
Page 271 U. S. 428
from the company the part allotted to it by the contract and
deed of transfer, and also refused to receive from it the whole of
the state and county taxes unless it also paid the city taxes.
Then, because the company would not accede to paying all, the
treasurer caused the sheriff to take steps to collect the whole out
of the power and lighting system by distraint and sale.
The present suit was brought in the federal district court by
the Old Colony Trust Company, the mortgagee of the power and
lighting system, to prevent the threatened distraint and sale of
that property to pay the taxes so laid on the street railway
property. The bill grounded the jurisdiction on diverse
citizenship; the plaintiff being a Massachusetts corporation and
the defendants being public corporations and individual citizens of
the State of Washington. The original bill was brought when the
sheriff was about to distrain the property. Besides setting forth
the matters we have stated, it charged that the defendants were
acting in concert and collusion to collect out of the mortgaged
power and lighting property the taxes which had been laid on the
street railway property and made a special lien thereon, and thus
to relieve the city from the performance of its obligation under
the contract and deed. The principal prayer was that the defendants
be enjoined from resorting to the mortgaged property until after
appropriate steps were taken to collect the taxes out of the
property on which they were laid and were a lien. There was also a
prayer for an interlocutory injunction. After the bill was filed,
the sheriff distrained the mortgaged property, as before
threatened, and gave public notice of intended sale. This was set
up by the court's leave in a supplemental bill, which repeated the
prayers of the original bill and prayed further that the plaintiff,
if coerced by the threatened sale into paying the taxes, be
accorded the benefit of the lien on the street railway
property.
Page 271 U. S. 429
The defendants appeared and moved that the two bills, original
and supplemental, be dismissed for want of jurisdiction of the
subject matter and want of equity, both said to be apparent on the
face of the bills. After a hearing on the prayer for an
interlocutory injunction and the motion to dismiss, the prayer for
the injunction was refused, and three weeks later a decree was
entered dismissing the bills for want of jurisdiction. The court
allowed a direct appeal to this Court, and also certified that the
sole ground of the dismissal was that the suit was, in effect, a
suit against the state, and therefore not cognizable in a federal
district court. The statute in force when the appeal was taken
limits the consideration here to the jurisdictional question shown
in the certificate.
The defendants ask that the appeal be dismissed on two grounds,
in support of which they make a showing by affidavits. One ground
is that the taxes have been paid, and that this has put an end to
the effort to collect them from the mortgaged property. The showing
is that the taxes were paid by the mortgagor almost three weeks
prior to the decree of dismissal. The plaintiff makes a counter
showing that the payment was made by it and the mortgagor acting
together; that they were coerced into this by an impending sale
which the court refused to restrain, and that they at the time not
only protested that the distraint and intended sale were arbitrary
and an abusive use of legal process, but reserved all their legal
and equitable rights. Obviously the fact of payment and its legal
effect pertain to the merits, and cannot be considered on this
jurisdictional appeal. The other ground is that, since the appeal
was taken, a decree has been rendered in another suit between the
mortgagor and some or all of the defendants which determined the
questions relating to these taxes. That decree may have a bearing
on the merits, but affords no ground for dismissing this appeal.
Illinois Central R. Co. v.
Adams,
Page 271 U. S. 430
180 U. S. 28,
180 U. S. 31;
Male v. Atchison, Topeka & Santa Fe Ry. Co.,
240 U. S. 97,
240 U. S.
99.
We come, then, to the question whether the suit was in effect a
suit against the state. If it was, the court below was forbidden by
the Eleventh Amendment to the Constitution to take jurisdiction of
it; otherwise, the jurisdiction was plain.
The bills did not name the state as a defendant; nor did they
complain of any act or omission by it, or seek any relief against
it. They did show that some of the taxes were state taxes, and,
when collected, were to be paid over to the state. But they were
not directed against the collection of the taxes. On the contrary,
they distinctly treated the taxes as valid and collectable. The
complaint was that those who were attempting the collection were
wrongfully pursuing a course which was so much in violation of the
rights of the plaintiff as to entitle it to an injunction -- not
against collection, but against that course of action. On this
point, the bills alleged that the street railway property, on which
the taxes were laid and were a special lien, was readily available
and amply sufficient to satisfy them; that the city, in acquiring
that property, had engaged to pay three-fourths of them, and that,
with knowledge of these matters, the defendants wrongfully and
collusively entered into an arrangement to refrain from collecting
any part of the taxes out of the street railway property or from
the city, and to collect them out of the power and lighting
property which was mortgaged to the plaintiffs, and that the
distraint and threatened sale were in pursuance of that
arrangement, and intended to relieve the city from its obligation
through a sacrifice of the plaintiff's mortgage security. In short,
the charge was that the defendants were wrongfully and abusively
using the process of collection for a purpose and in a mode at
variance with applicable legal and equitable principles and hurtful
to the plaintiff.
Page 271 U. S. 431
We think it apparent from this review of the bills that the suit
was not, in name or in effect, a suit against the state, but only a
suit against state agents to restrain them from wrongful acts
threatened and attempted under color of their agency.
The test to be applied is illustrated in
Hopkins v. Clemson
College, 221 U. S. 636.
There, a state agent, when sued on account of a wrongful act done
under color of the agency, advanced the contention that the state
was a necessary party, and that its immunity from suit extended to
the agent. But this Court, on a full review of prior decisions,
rejected the contention and said (p.
221 U. S.
642):
"But immunity from suit is a high attribute of sovereignty -- a
prerogative of the state itself -- which cannot be availed of by
public agents when sued for their own torts. The Eleventh Amendment
was not intended to afford them freedom from liability in any case
where, under color of their office, they have injured one of the
state's citizens. To grant them such immunity would be to create a
privileged class, free from liability from wrongs inflicted or
injuries threatened. Public agents must be liable to the law,
unless they are to be put above the law."
In
Poindexter v. Greenhow, 114 U.
S. 270,
114 U. S. 285
et seq., the question presented was whether a suit against
a tax collector to recover specific property which he had
distrained for a state tax and was proceeding to sell was in
substance a suit against the state. Prior to the distraint, the
plaintiff had tendered in payment of the tax certain coupons from
state bonds, and the collector had rejected them as not receivable
for the tax. The plaintiff stood on the tender, and, after the
distraint, brought the suit on the theory that the tender was valid
and the subsequent distraint wrongful. This Court held that the
suit was not against the state in form or in substance, but
Page 271 U. S. 432
against the collector for his personal wrong. In the opinion, it
was said (pp.
114 U. S. 293,
114 U. S.
299):
"Tried by every test which has been judicially suggested for the
determination of the question, this cannot be considered to be a
suit against the state. . . . His [the plaintiff's] tender, as we
have already seen, was equivalent to payment so far as concerns the
legality of all subsequent steps by the collector to enforce
payment by distraint of his property. He has the right to say he
will not pay the amount a second time, even for the privilege of
recovering it back. And if he chooses to stand upon a lawful
payment once made, he asks no remedy to recover back taxes
illegally collected, but may resist the exaction, and treat as a
wrongdoer the officer who seizes his property to enforce it."
Other cases well in point, although not relating to taxes, are
Philadelphia Co. v. Stimson, 223 U.
S. 605,
223 U. S. 619;
Johnson v. Lankford, 245 U. S. 541.
The dismissal below for want of jurisdiction was error.
Decree reversed.
MR. JUSTICE HOLMES did not participate in the consideration or
decision of this case.