In this record, there is no averment and no proof of any
violation of law by the assessors of New York. The mere fact that
the law gives the assessors in the case of corporations two chances
to arrive at a correct valuation of the real estate of corporations
when they have but one in the case of individuals cannot be held to
be a denial to the corporation of the equal protection of the laws
so long as the real estate of the corporation is, in fact,
generally assessed at its full value.
This Court cannot, with reference to the action of the public
and sworn officials of New York City, assume without evidence that
they have violated the laws of their state when the highest court
of the state refuses, in the absence of evidence, to assume such
violation.
The case is stated in the opinion of the Court.
MR. JUSTICE PECKHAM delivered the opinion of the Court.
The plaintiff in error comes here for the purpose of obtaining a
review of the judgment of the New York Court of Appeals, which
affirmed the judgments of the courts below dismissing a writ of
certiorari.
The relator is a corporation created under the laws of the State
of New York and a resident of, and doing business in, the City of
New York, and it procured the writ, as provided for in the statute,
to review an assessment of $165,999 made upon its capital in the
regular course of proceedings to levy and collect the annual tax
budget of the city for the year 1896. Plaintiff sought to review
the assessment on the ground,
Page 179 U. S. 280
among others, that it was illegal and that to levy it under the
facts stated would be to deny to the company the equal protection
of the laws.
The facts upon which the question arises are these: the capital
of the company was $900,000. The Tax Commissioners of the City of
New York, in the course of their proceeding to tax the actual value
of that capital, ascertained the actual value of what they termed
the total "gross assets" of the company, which they found to have
been $1,095,049. This value was arrived at from a statement of its
property made by the company to the commissioners. By the term
"gross assets" used by the commissioners is meant the actual value
of the capital and surplus of the company, but not its franchise.
People ex Rel. Union Trust Co. v. Coleman, 126 N.Y. 433.
From this total they deducted (a) the debts of the company,
$329,050, (b) the assessed value of the real estate of the company,
otherwise taxed, $600,000, leaving a balance of $165,999, which was
the amount upon which the company was assessed upon its capital,
aside from the assessment of $600,000 separately made upon its real
estate.
The company claims that these "gross assets" should have been
stated at $730,049, and the same deduction should be made as in the
above statement, which would result in no assessment on the
capital.
This difference of gross assets arises in this way: as made up
by the commissioners, they consist of the actual value of the
building and lot owned by the company in New York City, in which it
does business, taking it at its cost as admitted by the company in
its statement made to the commissioners and which the commissioners
found to be its actual value,
viz: $965,000, and to that
is added other property, $130,050, making a total of $1,095,049,
while the item as claimed by the company is made up of the
Page 179 U. S. 281
value of the same building and lot as it was assessed by one of
the deputy tax commissioners for the purpose of separate taxation
under the law, such assessed value being $600,000; added to that
was the same item of $130,050 for other property as stated by the
commissioners, the gross assets of the company by this valuation
amounting to $730,050, and the difference between the two items is
seen to be $365,000. The plaintiff in error insists that, in
arriving at the actual value of the capital for taxation under the
statute of 1857 (the third section of which is set out below), the
real estate which goes to make up a part of such value should be
put in at its value as assessed for taxation in a separate manner,
while the commissioners claim that, as the law provides that the
assessment upon the capital shall be at its actual value, it is
necessary to arrive at the actual value of the real estate before a
particular assessment can be reached in regard to the capital which
includes it, and that, in arriving at the actual value of the real
estate, they are not estopped from determining what that actual
value is by the fact that, for the purpose of a separate
assessment, the real estate had been mistakenly and improperly
assessed at another and a lower figure.
These conflicting claims arise out of the statute which provides
for the taxation of corporations, their capital stock and surplus,
and the general statute which provides for the taxation of real
estate belonging either to individuals or corporations. That
portion of the statute relating to the taxation of the capital of
corporations, which provides the method to be pursued, reads as
follows:
"The capital stock of every company liable to taxation, except
such part of it as shall have been excepted in the assessment roll,
or as shall have been exempted by law, together with its surplus
profits or reserved funds, exceeding ten percent of its capital,
after deducting the assessed value of its real estate, and all
shares of stock in other corporations, actually owned by such
company, which are taxable upon their capital stock under the laws
of this state, shall be assessed at its actual value and
Page 179 U. S. 282
taxed in the same manner as the other personal and real estate
of the county."
Laws 1857, c. 456, § 3.
As the New York Court of Appeals, in
People v. Commissioners
of Taxes, 95 N.Y. 554, has said, there is a most extraordinary
confusion of ideas in the above section. Its meaning has, however,
in some respects, been made tolerably clear by the above-cited
case, together with those of
People ex Rel. Union Trust Company
v. Coleman, 126 N.Y. 435, and
People ex Rel. Equitable Gas
Light Company v. Barker, 144 N.Y. 94.
In the first case, it was stated that the general purpose of the
statutes relating to assessments and taxation is to secure an
assessment of all property, real and personal, at its actual value,
and they are to be construed and enforced with this purpose in
view. A construction of the statute in relation to other questions
not material here was given in that case. In the case reported in
126 N.Y., it was held that the phrase "capital stock," contained in
the section above quoted, meant not the share stock owned by the
individual members, but the capital owned by the corporation, and
that this capital was to be taxed, together with the surplus, after
making the reductions provided for in the section, and that the law
did not include, for purposes of assessment and taxation, the
franchises of the company.
In the
Equitable Gaslight Company Case, 144 N.Y. 94, it
was held that, in arriving at the actual value of the capital for
purposes of assessment, the assessors were not concluded by the
assessed value of the real estate made for purposes of separate
taxation if that assessment were a mistaken one, but might legally
disregard such assessed valuation and estimate the real estate at
its actual value, although it exceeded its assessed value.
Looking at the manner of assessing the real property of both
individuals and corporations, we find the general statute is as
follows:
1 Revised Statutes 393, § 17, 9th ed. p. 1685:
"All real and personal estate liable to taxation shall be
estimated and assessed by the assessors at its full and true value,
as they would appraise the same in payment of a just debt due from
a solvent debtor. "
Page 179 U. S. 283
And also 1 Revised Statutes 389, § 6:
"The real estate of all incorporated companies shall be assessed
in the town or ward in which the same shall lie, in the same manner
as the real estate of individuals. . . ."
The special statute applying to New York City is substantially
the same so far as assessment at full or actual value is concerned.
Consolidation act, c. 410, Laws 1882, § 814.
Under these statutes, the tax upon real estate must be imposed
in all cases, both of individuals and of corporations, upon its
full and true value as found by the assessors. In the case of the
individual, however, no resort can be had to any other proceeding
by which that tax can be increased by any subsequent assessment
upon the difference between the assessed and the actual value of
the real estate, if any there should be. In the case of
corporations, on the contrary, under the construction given the
statute of 1857 by the Court of Appeals in the last above-cited
case, if the real estate should be mistakenly assessed under the
general statute at an undervaluation for purposes of separate
taxation, the difference between the assessed and the actual value
of the real estate may be reached in making an assessment upon the
actual value of the capital under the act above mentioned. By such
a result, it is claimed the company is denied the equal protection
of the laws. It must be remembered there is no claim made that, in
any event, the corporation is taxed upon any property not legally
taxable, or that it is taxed beyond the actual value of its
property as provided by law. The only claim is that is this
opportunity to correct a mistaken assessment upon its real estate
in the case of a corporation when assessed upon its capital, which
does not exist in the case of an individual, the corporation is
denied the equal protection of the laws. This is the sole federal
question in the case.
It is seen that the laws of the state provide for no
undervaluation of real estate owned by either individuals or
corporations. Those laws provide in terms for the assessment of all
real estate at its actual value, while the whole force of the
contention of the plaintiff in error is based upon the fact of
undervaluation, although it is in the very teeth of the statute and
is a plain violation of its provisions. If there were no
undervaluation of
Page 179 U. S. 284
real estate -- or, in other words, if the laws of the state were
complied with -- the question sought to be raised by the plaintiff
could not arise. The failure of the assessors in this one instance
to assess the real estate of the company for separate taxation at
its actual value, and its assessment at that value in assessing for
taxation the actual value of the capital of the company, could
obviously work no denial of the equal protection of the laws of the
company if individuals were in fact assessed for their ownership of
real estate at its full and true value as required by law. If the
law were faithfully carried out, no harm could, in any event, come
to the plaintiff in error by this subsequent assessment of its real
estate at its full value, for it would only pay the same as
individuals, they being assessed upon their real estate at its full
value. To raise the question which the plaintiff in error seeks, it
was therefore obviously necessary to allege and prove as a fact
that there was habitual violation of law by undervaluation; that,
in the language of Mr. Justice Miller in
Supervisors v.
Stanley, 105 U. S. 305,
105 U. S. 318,
the assessors "habitually and intentionally, or by some rule
prescribed by themselves or by someone whom they were bound to
obey," undervalued real estate for assessment in New York City, or,
as stated in
Cummings v. Merchants' Nat. Bank,
101 U. S. 153,
101 U. S. 155,
that a rule or system of valuation had been adopted by those whose
duty it was to make the assessment, which was designed to operate
unequally and to violate a fundamental principle of the
Constitution, and that such rule had been applied not solely to one
individual, but to a large class of individuals or corporations. It
was said in that case that this was precisely the case made by the
bill, and, if supported by the testimony, the Court thought relief
should be given. There was both allegation and proof.
Both these cases related to the taxation of national bank
shares, and the question was whether the tax levied violated the
provisions of the National Banking Act on that subject.
In this record, there is no averment and no proof of any
violation of law by the assessors of New York. There is no
allegation in the petition for the writ of certiorari that there
has been any undervaluation of real estate either with regard
to
Page 179 U. S. 285
individuals or corporations, but, on the contrary, it is therein
asserted that the assessed valuation of the real estate of the
company was its actual value, and that it had been overvalued in
the valuation of the capital of the company. The mere fact that the
law gives the assessors in the case of corporations two chances to
arrive at a correct valuation of their real estate when they have
but one in the case of individuals cannot be held to be a denial to
the corporations of the equal protection of the laws so long as the
real estate of the individual is in fact generally assessed at its
full value. But we are nevertheless asked by the argument at bar,
in the absence of allegations or proof of habitual, or indeed of
any, undervaluation, to assume or take judicial notice of its
existence notwithstanding such undervaluation would constitute a
clear violation of the law of the state. And this we are asked to
do in order to reverse a judgment of a state court. Such a
presumption of the violation of law and of their duty by the
assessors the Court of Appeals of New York expressly refused to
adopt.
People ex Rel. Manhattan Railway Company v. Barker,
146 N.Y. 304. In delivering the opinion of the court, Judge Haight
said at page 312:
"The value of property is determined by what it can be bought
and sold for, and there can be no doubt but that these various
expressions used in the statutes all are intended to mean the
actual value of the property. The commissioners are sworn
officers, and, as such, in the absence of evidence to the contrary,
are presumed to have done their duty. They have assessed the real
estate at $7,323,200, and yet, under the method presented by their
counsel for ascertaining the value of the relator's personal
property, they now estimate the actual value of the real estate to
be $45,591,352. We are aware that it is generally understood that,
in many localities throughout the state, assessors, in violation of
their duties, assess the real estate in their localities at a sum
less than its actual value, but, in the absence of evidence that
this has been done by the commissioners of taxes and assessments in
the City of New York, we cannot assume that they have so
transgressed for the purpose of approving of their work in this
case. "
Page 179 U. S. 286
Should this Court, with reference to the action of the public
and sworn officials of New York City, assume without evidence that
they have violated the laws of their state when the highest court
of the state itself refuses, in the absence of evidence, to assume
any such violation? We think not.
Nor did the Court of Appeals act upon any judicial notice of the
fact of undervaluation in the case of
The Equitable Gas Light
Company, 144 N.Y. 94, already cited. While the assessed value
was stated, the commissioners in their return to the writ of
certiorari distinctly showed that the actual was more than the
assessed value, and the only question in the case was whether, in
arriving at the actual value of the capital, they were bound by the
assessed, and could not be permitted to show the true, value of the
real estate. The court held they were not so bound.
What the court remarked about the practice of undervaluation was
not the basis of its judicial action, for the facts were distinctly
proved. The subsequent case in 146 N.Y. 304 is a direct authority
for the refusal to make any presumption of a violation of official
duty.
This Court did not presume a violation of duty in
Cummings
v. Merchants' National Bank, supra. On the contrary, the bill
alleged the facts, and the testimony supported the allegations. In
extenuation of the practice alleged and proved, the Court remarked
in passing (page
101 U. S. 162)
that it was not limited to the State of Ohio, and that it was
matter of common observation that, in the valuation of real estate,
the rule was habitually disregarded. Although the Justice who wrote
the opinion did speak of the fact as matter of common observation,
neither he nor the Court took judicial notice thereof, but only
those facts which had been pleaded and testimony to sustain which
had been duly given formed the basis of judicial action. We will
not and ought not to presume a violation in the absence of
allegations and proofs to that effect.
Whether, if the case were proved, as assumed by counsel, it
would in fact amount to any such discrimination against
corporations as to work a denial to the plaintiff of the equal
protection of the laws is a question not raised by this record, and
therefore not necessary to be decided.
Page 179 U. S. 287
We think the plaintiff in error has failed to show any error in
the record, and the judgment of the Court of Appeals of New York is
therefore
Affirmed.