94
only of prlvate property for use wIthout just compensation, 'Oqt the deprivati{)n; thereof d-q.e. pl.'Qqessopaw, and deniesto ,the state thep(lwer to "den,y ,withthe equalpoote,e'tion ,of whatlooneeive to be the, ruling of the supreme court in ,the Village of! NorwobdCase, supra, the temporary injull.ction asked for is granted. '. ". BItINKEUHOFF v. .: "
AULTMAN &'l'AYLOU CO. v.SAME. "
..
';
'(Oi.rcui.t 1. ·. ' '.: " ,
D. Ohio, E .. D.. l\!ay 19, J899.) ' . : ' ',:, . '."llf I :-
CONSTITUTIONAL LAW-DuE PROCESS l:lII'LAW-VISQUALIFllCA'l'ION BY INTER-
Rev. St. Ohio, § 2781." p/-,ovidingfoi', an examination by the, Ii uditor as to withbeldfrom the tax list by the tiixpayer,J;llakes taxes found Withheld delinquentfrom the time 'certified to tlie and enforceaallows' the auditor a commission ble by distrliJnt.. Uev. St. Ohio, § .of cent.. on all taJi'ellSo to the tax duplicate. Held that, the the auditor being jmpcia!. In their nature, his pecuniary interest renders proceedings conducted by him not due process of law within art. 14.1. I ' 2. FEDF:nAL COURTS-EQUITABLE REMEDIES UNDER; STIi.TEL'AWS-RESTRAINING (;OLLEOTlONOF TAX. :. · .' ,
A remedy. by Injunction against the collection of ap. illegal tax, expressly of equity provided by a state statute, may be applied by a federal, in the stit1e; notwithstanding the statute also provides for'an action at law to recover 'back tbe tax when paid; Cummings Bank, 101 U. S. 153, followed. '.
Wm.. A.' Lynch, Harter. & Bell & Cumming-s & & Workman, for complainants. Brucker & Cummms, Douglas & Mengert, B. Jones, for , '.' . :RlCKS,i DiStrict Judge.. ,These two bills are filed against Charles Brumfield, treasurer of Richland county, Ohio, and, as they involve .both cases, we them together whenever it is acts necessary to refer to them in connection with the bills., rhese bills seek to enjoin the respondent, who is treasurer of Richland county, ::>hio, from enforcing the .collection of $228,89!.l.79 of taxes and penalties from the Aultman & Taylor Company, and $162,918 of taxes and penalties from George Brinkerhoff, administrator of the estate of MichaelD" Harter, deceased; and the aggregate, with interest claimed, aniounts t'o nearly $500,000, which sums, the bills aver, stand illegally charged against the complainants on account of the taxes alleged to have be,enunlawfuIly and fraudulently withheld from the' tax duplicate ,'d(the said county by Aultman & Taylor Compan.v and by GeOrge Brinkerhoff, administrator of the estate of Michael D. Harter, decellsed,for the years 189S, 11:894, 1895, 1896, 18!.l7, and'1898. The Aultman & Taylor Compan.y, lin Its bill, alleges that for said years 1 As, to due process of ,law in revenue, proceedings, see note to Read v. Dingess, 8 p.e. A. 398.
BRINKEIUIOFF V. BRUMFJELD.
423
it made full and complete returns of all its taxable property required to be listed, and that it had so far progressed in liquidating its affairs that, in 1897 and 1898, after deducting the sum of its legal bona fide debts from its taxable assets, there remained no credits, as defined by section 2730 of the Revised Statutes of Ohio, or other personal property, for it to return that was subject to taxation; that it made in said years, respectively, full and complete reports to the auditor of Richland county, Ohio, of such facts, with full written explanation of its property matters as affected by the taxing laws; that it never, at any time from 1893 to 1898, made any false return of its property for taxation; that it never evaded making a proper return, and that its return was never, at any time, fraudulent or evasive, but full and eomplete, as required by law. The complainant George Brinkerhoff, administrator, allega; that his decedent, D. Harter, in 1893 made a correct return of his property for taxation; that he then lived in Richland county, Ohio; that in the years 1894, 1895, and 1896 the said Michael D. Harter, decedent, was nM a citizen or resident of the, state of Ohio, but was in said years, and up to the time of his death, on February 22, 1896, a resident of the state of Pennsylvania; that he owned no personal property subject to taxation in Riehland county during said years which the laws of Ohio required him to return for taxation ; that for the years 1897 and 1898 the complainant, as administrator, held and controlled no property subject to taxation under the laws of Ohio for which returns should have been made. '.rhe bills of complaint further allege that for each of said years 1893 to 1898, inclusive, the auditor of Richland county, wrongfully claiming that said complainants had made false returns of their persona] property for taxation, and claiming to act under the authority of sections 2781 and 2782 of the Revised Statutes of Ohio, placed upon the tax duplicate, and certified for collection against said complain· ants to the said Charles Brumfield, treasurer, taxes and penalties as follows: ]'01'
Against the Aultman & Taylor Company: Um3, principal, $1,204,500 00, tax, $3.5.785 "]894, " 1,2(;4,500 00, " 35,532 .. 1,264,500 00, .. 35,785 "189G, .. 1,2G4,500 00, .. 3H.544 " 18m, 1,264,500 00, 37,049 " 1898, 1,264,500 00, " 37,302
35 45 35 05 85 75
Agnillst George Brinl,erhoff, administrator: For ISn:1, principal, $ 900,000 00, tax, $25,470 00 .. " 18H4, 1895, 11'11)(;, 1897, 1898, .. HOO,OOO llOO,OOO !JOO,OOO !JOO,OOO 000,000 00, (lO, 00, 00, 00, " 25,290 00 25,470 00 26,110 00 :W,370 00 26,550 00
,. ..
"
The said SUIllS included a penalty of 50 per cent. of the original amount claimed, whieh penalty was an infliction imposed by the auditor, and the said sums for each year, multiplied by the rate of taxation for each year, provided the basis and means by which said auditor arrived at the taxes claimed. The bills further aver that the said taxes and penalties now stand charged for collection on the
94 FEDERAL REPORTER.
face of the tax duplif.::ates, and appear as debts, against tb,e Aultman & Taylor Go:rppany and tb,e estate of D. Harter, deceased, to be collect,edby action or distraint; and that the said reliIPRndent, on the' of February, 1899, began all action against of saidcoIJ;lplaipantSo in the cQUrt of commQn pleas of said county. The said ,bills ,of complaint aver that a federal question is presented, inasmuch as that the proceedings above narrated, if per· In,itted to be carried out tq their logical result, would deprive the COlUplainants of their property without due process of law, and would be incolltravention of the constitution of the United States. 'The first contention presented by the issues is whether the notice, to the complainants, was such as was cQlltemplated by the ws of Ohio. The facts show the complainants were notified by tpe, auditor to appear in his officeto explain why certain property was not reported for taxation, and why certain, personal property "'liS withheld from the tax duplicate:, Said hearing had been carried on, several witnesses had been examined, and it was then understood by the parties that further proceedings would be resumed after due notice was given. The allegations of the bills are (and the facts stated in the affidavits confirm these allegations) that immediately rlft,er the last adjournment the complainants were told that they wo'uld be notified if any further proceeding;; took place, and an opportunitywould be given tbem to presellt any matters they inight choose to'place before the authorities before they of this important question. Immediately after this assurance had been given, without waitill.g to give them additional notice, the respondent proceeded a( ,Gliceby suit against ,the compla,inants in the court of common pleas' of Richland county. This suit was to tecover the large amounts heretofore stated. It is contended on behalf of the complainants that such notices. as they ,had were not sufficient to givp thiml an opportunity to be fully heard, and that the proceedings had under such imperfect notices were not such as contemplated by the eonstitution of the United States, and were npt due process 'of law. This court had occasion to examine these statutes very fully in the case of Me.rers v. Shields, reported in 61 Fed. 713, In view of the opinion of the court on the second contention to be considered, it will not be neces8ary to consider any further the sufficiency of this notice. The facts, as they appear from the affidavits, tend to show that the officers charged with the collection of these taxes did not deal fairly with the complainants in. their nbticesand proceedings before the auditor, and evidently intended to take advantage of them in prematurely instituting suits against them. It is but fair to state that the claim on the, part of the county officers is that tht.·y were advised that the complainants were about, to apply for an injunction, and that therefore these suits were instituted. \Vhether notices were sufficient or we can proceed to the consideration of the second contention presented by the bills. 'rhe statutes of qbio contemplate after an examinatioll such as the auditor held in these ,cases that officer ,was tom.akea report of the nature of personal property he, found to be withheld b.y,the taxpayer from the tax lis,t and from re,?ort to the assessor. and from :;Iuch facts
V. BRmHfIELD.
and :examination to name the amount which he claimed was due to the state and county. Such report from the auditor was to be transcribed in a book prepared for that purpose in the auditor's office, and the auditor wa" to certif,y the same to the treasurer; and from that moment they became delinquent taxes and penalties, for which the treasurer might bring suit, coupled with the power of distraint to enforce the collection of the alleged delinquent ta,xes. '.rl1e tribunal thus created by the laws of Ohio for the purpose of sitting in judgment upon delinquent taxpuyers is, by reason of its composition and the, powers vested in it, one of the Illmt rf'lllarkablp semi-judicial bodies known to the jurisprudenee of any eountr,r. For instunee: In the Aultman & Ta,rlor Company ease the tax aIllI penalty demanded amounts, in round numbers, to $228,000; tIll' auditor's eommission for collE>cting this sum, 4 per eent.. would be $!J,120; the treasurer's commission, 5 per cent., would be $10.:WO: the inquisitor's portion, 20 per eent., would be $45,HOO; the total fpes to tpe auditor, treasurer, and inquisitor, if they sueeeeded in enfordng their judieial decree or judgment against the Aultman & Taylor Company, would amount to $G4,!J80. In the Brinkerhoff. administrator, case, the tax and penalty asked from the estate of )lichael D. Harter is $162,000; the auditor's commission would be $f),480; the treasurer's eommission, $8,100; the inquisitor's shure, 20 per eent., $32,400; total for auditor, treasurer, and inquisitor in this easp. $46,!J80. Summarizing the above figures, the fees of the auditor. treasurer, and tax inquisitor, if they sueeeeded in enforeing the colle('tion of the amount of taxes stated from these two eomplainants. would be as follows: Auditor, $15,600; treasurer, $18,3HO; inquisitor, $78,000,-total, $111,!J60. In other words, we have here a eonrt, constituted by the laws of Ohio, who are to sit in judgment upon the eases of these two complainants; and, in case they deeide in favor of the state and against the complainants, their aggregate commission wonld be $111,!Jf)0, and, if they deeide the case in favor of tlw taxpayer and against the county and state, they would be without any eompensation for their services. In the ease of lleyers v. Shields, heretofore eited, this (;ourt had oeeasion to consider the question as to whether the uuditor, vested with these powers, was acting in a judicial capacity, and in that opinion the decisions of the supreme eourt of Ohio were eited in the eases of Gager v. Prout, 48 Ohio St. 110. 2'f) N. E. 1013, and Htate v. Critps, 48 Ohio St. 4HO, 26 K. E. 105. In such ease the in referring to the auditor's proeeedings, said: "The respondent was acting in a quasi judidal eapacity. He had assulllPd jurisdiction. and entered upon the invpstigatioll. The law imposed upon him the duty of hearing and weighing evidpnce and rendering a decision ulJon it. This necessarily involved the exercise of judicial discretion."
In the same opinion this court said: "Having thus shm<-n the judicial character of the dutips whic'h the t\l\mtor performs in the proepedings whieh haTe just heen reviewf'd. how does the la\v ;',l!y his direet peeuniary interf'st in the judgment he renders affeets the valiclity of his proeeedings'! In Pearce v. Atwood. 13 :\lass. X:24, Chief .Jllstiee Parker said: 'It is very certain that hy the principles of natural jllstiee ,md of tb", common law no lllan can laWfully sit as a judge in a case in which he
426
94 F!!lDERAL REl'ORT&R.
may have. apecu,niary interest. Any interest, however small, has been held to render a judge Incompetent.' Lord 'Campbell' 'said, In 'Dimes v. Grand Junction Canal;' 3: H. L. Cas. 759: 'It is of the last' importance that the maxim that no man Is to be a judge in his own case should be held sacred, and that it is not to Oeconfipedto a cause in which he, is a p:,u;ty, 1.;Jut applies to any cause in which. he has aninterest. We have again and again set aside proceedings because an individual who had an intere.st took part in the decision.' If one of the judges of a court is disqualified on 'this ground, the jUdgment will be void,e'Ven though the proper number may haveconcUl'red without the disqualified judge.' The legislative voice has spoken in equally positive inhibitions agai,nst interested persons acting as jUdges, appraisers, road viewers, or commissioners. In Ohio statutory provisionS are In force allowing 'a change of venue of the suit upon the mere affidavit of the parties of prejudice, bias, or interest."
In the Meyers Case the court continued its examination of the decisions of other courts, and found abundant authority for holding that a tribunal. authorized to render arbitrary and summary judgments againl'!t citizens having so large a moneyed interest in the decrees and judgments to be rendered by not such a judicial tribunal ascOIltl=mplated. by the constitution of the United States, and that the auditor, who was directly interested in the proceeds collected under the assessment, could not be said to be depriving the litigants ,him of their property by due process of law. In view of the very lengthy opinion filed in the case of Meyers v. Shields, in which ne:irfy. all. the law questiOnS n<;lw. presented were fully conI do J:I,<;lt feel called upon, in the brief time I have to prepare an opinion in this case, to l'eview tlle authorities, and g,tate my opinion as to the law. It is su:fl1cient so far ll:sthe claim that the bills in equity in these cases ought not to be entertained because have a, cOp1plete and iadequate remedy at law is concerned, every doubt on that point by its opinion)n the case of Cummings v. Bank, lOt u; S. 153, and Taft, .inJhe, United court also by the opinion of in qreth&rv. Wrigllt,15 ;Fed,. 742,23 q., Q. A. 498.,., .U,the Of d'idnotspecial1y provide that a taxpayer against whom l!een assessed' might secure the s/ilwe 1;>y a in equity and an relief again.st tb.e jurisdictioJlofthis c,ourt might be in qqubt. In view of the urgen.GY which this' o:pi:iiionis prepared, I 'can only say tha,tthe CQnr1:!'l;q.opts l::o:Q,clusions and opinions ane nm,lllced iJ;l, the, case, oLMe:yers v. Shields. ,This ,has stood on docketfoli 1i:ve years, aiJ.dtp.e in it have been affirmed in several of the circuit, a:ud district courts of the United reversed it is to which 'the. can propl;ltates, aI).d erly refer. A ,preliminary injunction will be allow:ed, ill lieu of the restraining-order heretofore the parties may prepare the for final hearing on' 3JTI applitation for a permanent injunction. An order, will be entered dividingt;he 90 days as prescribed by the sixty-ninth rule in equity, so thattl.1e parties may have the case ready for hearing on its merits, at the fall term.
or