A suit in equity will not lie to restrain the collection of a
tax on the sole ground that the tax is illegal. There must exist in
addition special circumstances bringing the case under some
recognized head of equity jurisdiction such as that the enforcement
of the tax would lead to a multiplicity of suits or produce
irreparable injury, or, where the property is real estate, throw a
cloud upon the title of the complainant.
Appeals from decrees of the Circuit Court of the United States
for the Northern District of Illinois in two suits, one original,
the other a cross-suit. The bill in the original suit was filed by
the complainant to restrain the collection of a tax levied by the
City of Chicago upon shares of the capital stock of the Union
national Bank of Chicago, owned by him. The bank was organized and
doing business in the City of Chicago under the general banking act
of Congress, and the complainant was a citizen and resident of the
State of New York.
The principal grounds alleged for the relief prayed were that
there was, in the tax of the shares of the bank, a want of
uniformity and equality with the tax of other personal property in
Illinois, as required by the Constitution of that state, and that
the shares of the bank followed the person of the owner and were
incapable of having any other situs than that of his domicile, and
were not, therefore, property within the jurisdiction of the
state.
Other objections, relating principally to the manner in which
the tax lists were prepared, the want of notice of the assessment
to the complainant, and the absence of any deductions for debts,
were also urged, tending more to show
Page 78 U. S. 109
irregularities in the proceedings than invalidity in the tax. No
special circumstances respecting the tax or its enforcement were
alleged in support of the equitable jurisdiction of the court.
The bill in the cross-suit was filed by the Union national Bank
of Chicago, and besides alleging the illegality of the tax assessed
on various grounds, averred that if the shares were permitted to be
sold, irreparable damage would not only be done to each of the
shareholders, but also to the bank, which would be thereby
subjected to great loss of standing and other injury for the
redress of which the law afforded no remedy, and that such also
would be the result if the bank paid the taxes, and was subjected
to suits by each of the shareholders by reason of doing so; and
that in either event a multiplicity of suits would be rendered
necessary to adjust the rights of the parties. A demurrer was
interposed to the bills, original and cross. The circuit court
sustained the demurrers to both and, the complainants in the two
cases electing to abide by their bills, the court entered decrees
dismissing the bills. From these decrees, appeals were taken.
MR. JUSTICE FIELD delivered the opinion of the Court.
According to the view we take of this case, it is unnecessary to
consider the force of any of the objections urged by the appellants
to the decrees rendered. Assuming the tax to be illegal and void,
we do not think any ground is presented by the bill justifying the
interposition of a court of equity to enjoin its collection. The
illegality of the tax and the threatened sale of the shares for its
payment constitute, of themselves alone, no ground for such
interposition. There must be some special circumstances attending a
threatened injury of this kind distinguishing it from a common
trespass and bringing the case under some recognized head of
Page 78 U. S. 110
equity jurisdiction before the preventive remedy of injunction
can be invoked. It is upon taxation that the several states chiefly
rely to obtain the means to carry on their respective governments,
and it is of the utmost importance to all of them that the modes
adopted to enforce the taxes levied should be interfered with as
little as possible. Any delay in the proceedings of the officers
upon whom the duty is devolved of collecting the taxes may derange
the operations of government, and thereby cause serious detriment
to the public.
No court of equity will therefore allow its injunction to issue
to restrain their action except where it may be necessary to
protect the rights of the citizen whose property is taxed and he
has no adequate remedy by the ordinary processes of the law. It
must appear that the enforcement of the tax would lead to a
multiplicity of suits or produce irreparable injury, or, where the
property is real estate, throw a cloud upon the title of the
complainant before the aid of a court of equity can be invoked. In
the cases where equity has interfered in the absence of these
circumstances, it will be found upon examination that the question
of jurisdiction was not raised or was waived. Such was the case of
Bank of Utica v. City of Utica, [
Footnote 1] where the tax was illegal, and the
chancellor stated that the complainant had a complete remedy at
law, but as the parties submitted themselves to the jurisdiction of
the court, he passed upon the case and enjoined the defendants from
collecting the tax. So in the case of
Utica Manufacturing
Company v. Supervisors of Oneida County, [
Footnote 2] a demurrer to a bill filed to restrain
an illegal tax having been overruled, the chancellor affirmed the
ruling, stating, however, that as no question was raised by counsel
respecting the jurisdiction of the court, he had not considered
whether it was a proper case for equitable cognizance.
Numerous cases are found in the reports where jurisdiction has
been taken under similar circumstances and the collection
Page 78 U. S. 111
of an illegal tax restrained, but our attention has not been
called to any well considered case where a court of equity has
interfered by injunction after its jurisdiction was questioned
except upon someone of the special circumstances mentioned.
The decision of the Court of Appeals of New York in
Heywood
v. City of Buffalo [
Footnote
3] is in conformity with the views here expressed. In that
case, the court held the general rule to be that a court of equity
will not entertain an action by the party aggrieved for relief
against an erroneous or illegal assessment, but said that this rule
was subject to three exceptions, substantially these: where the
enforcement of the assessment would lead to a multiplicity of suits
or where it would produce irreparable injury or where the
assessment on the face of the proceedings was valid, and extrinsic
evidence would be required to show its invalidity. Whenever a case
was made by the pleadings falling within either of these
exceptions, the court said that equity would interfere to arrest
the excessive litigation or prevent the irreparable injury or
remove the cloud upon the title, but would not interfere where none
of these circumstances existed. In
Susquehanna Bank v.
Supervisors of Broome County, [
Footnote 4] the same doctrine was substantially repeated,
the court declaring that a bill to restrain the collection of a tax
would not lie unless the case was brought within some acknowledged
head of equity jurisdiction.
The Supreme Court of Illinois is equally clear upon this
question. In the case of
Cook County v. Chicago, Burlington
& Quincy Railroad Company, [
Footnote 5] the subject was considered, and the court said
that it had been unable to find any decision in its previous
adjudications asserting a right to bring a bill to restrain the
collection of a tax illegally assessed, without regard to special
circumstances. It concludes an examination of its former decisions
by stating that while it was considered settled that a court of
equity would never entertain a bill to restrain the collection of a
tax except in
Page 78 U. S. 112
cases where the tax was unauthorized by law or where it was
assessed upon property not subject to taxation, it had never held
that jurisdiction would be taken in these excepted cases without
special circumstances, showing that the collection of the tax would
be likely to produce irreparable injury, or cause a multiplicity of
suits.
Upon principle, this must be the case. The equitable powers of
the court can only be invoked by the presentation of a case of
equitable cognizance. There can be no such case, at least in the
federal courts, where there is a plain and adequate remedy at law.
And except where the special circumstances which we have mentioned
exist, the party of whom an illegal tax is collected has ordinarily
ample remedy, either by action against the officer making the
collection or the body to whom the tax is paid. Here such remedy
existed. If the tax was illegal, the plaintiff protesting against
its enforcement might have had his action, after it was paid,
against the officer or the city to recover back the money, or he
might have prosecuted either for his damages. No irreparable injury
would have followed to him from its collection. Nor would he have
been compelled to resort to a multiplicity of suits to determine
his rights. His entire claim might have been embraced in a single
action.
We see no ground for the interposition of a court of equity
which would not equally justify such interference in any case of
threatened invasion of real or personal property.
The cross-bill filed by the bank presents different features.
That institution insists that if it paid the tax levied upon the
shares of all its numerous stockholders out of the dividends upon
their shares in its hands, which it is required to do by the law of
the state, or if the shares were sold, it would be subjected to a
multiplicity of suits by the shareholders, and were it an original
bill the jurisdiction of the court might be sustained on that
ground. But as a cross-bill it must follow the fate of the original
bill.
Decrees affirmed in both suits.
[
Footnote 1]
4 Paige 399.
[
Footnote 2]
1 Barbour's Chancery 432.
[
Footnote 3]
14 N.Y. 534.
[
Footnote 4]
25
id. 312.
[
Footnote 5]
35 Ill. 465.
