105 F. 809 | 6th Cir. | 1900
after stating tlie foregoing facts, delivered the opinion of the court.
The learned circuit judge, in disposing of the matter of the increase of the valuation of the stock in complainant bank made by the state board of equalization for incorporated banks, expressed the opinion that the tax actually assessed being no greater than ought to have been assessed, considering the market value of said stock, the complainant was not in a position to ask a court of equity to intervene; and he therefore declined to consider the irregularity in the action of the state board. The statute of Ohio (section 2808) fixes the time for the meeting of the state board. This board is required to meet on the third Tuesday of June, annually, at the office <jf the auditor of state, and examine the returns of said banks to the county auditors, and the value of said shares as fixed by the county auditors, as the same shall have been reported by the county auditors to the state auditor. At this meeting it was provided (section 2809) that, said board shall hear complaints and equalize the value of said shares according to the rules prescribed in title 13 for valuing and equalizing the values of real and personal property. Looking to the other sections of the statute contained in this title, we find that it is provided in section 2804 that the annual county board shall not increase or reduce the valuation of any real estate except in cases of gross inequality, and then only upon reasonable notice to fill persons directly interested, and ah opportunity for a full hearing upon the question involved. Section 2807 provides, speaking of the powers of city boards to hear complaints, that:
“No such addition shall be made to such list returned under oath without the board having first given reasonable notice to the person or persons whose personal property is sought to be added, to, or the valuation thereof increased, to appear before said board at a time and place to be fixed by said board,. and show cause why such addition should not be made, or why such valuation should not be increased.”
These statutes, construed together, we think, require that the state board of equalization, before it can increase the value of shares of incorporated banks, shall give notice to persons affected by its action. Undoubtedly the noticé prescribed by the statute for the meeting of the board on the third Wednesday in June is sufficient notice to the parties that the board will meet on that day, and taxpayers are bound to take notice of the time and place fixed by law. This was
“It is a fundamental principle that before a person can be deprived of a right, even by a judicial suit, he must have notice and reasonable opportunity to be heard In defense of Ms rights. A tribunal invested by law with power to affect the property of a subject is bound to give such subject an opportunity of being heard before it proceeds. The rule is of universal application, and Is founded on the plainest principles of justice.”
In Hovey v. Elliott, 167 U. S. 409, 17 Sup. Ct. 841, 42 L. Ed. 215, Mr. Justice White said:
““Wherever one is assailed in his person or Ms property, there may he defend, for the liability and the right are inseparable. This is a principle of natural justice, recognized as such by the common intelligence and conscience of all nations. A sentence of a court pronounced against a party without hearing him. or giving him an opportunity to be heard, is not a judicial determination of his rights, and is not entitled to respect in any other tribunal.”
. Numerous other authorities might be cited to sustain this proposition, but we deem it unnecessary to amplify the opinion upon this branch of the case. It is an elementary principle of law that tribunals vested with power to affect the property of citizens must act with notice. He must have opportunity to be heard, and a statute which undertakes to give the right to such tribunals to interfere with property of citizens without hearing deprives him of a privilege long secured by the common law, and does not afford him due process of law. Nor do we think it an answer to this proposition to say that the assessed value was no higher than the true value of the shares in money. No increase in the value of shares already as-, sessed can be made without jurisdiction of the party affected. Sec
As a further ground for reversal it is claimed that the matter in controversy between, the parties as to the right of stockholders in the complainant bank to set off indebtedness against their holdings of stock is res adjudicata between the parties, and to establish this proposition the record in the ease of Mercantile Nat. Bank of Cleveland, Ohio, v. Whitbeck is introduced, in which a final decree was entered in the circuit court of the United States for the Northern district of-Ohio on the 8th day of April, 1887. It is alleged that in that case the question was made as to the right of the stockholders to set off their indebtedness against their stock holdings, and was conclusively determined, it having been therein held that the tax laws of Ohio, permitting holders of other moneyed capital to set off their indebtedness, was a discrimination against the holders of national bank stock, within the meaning of section 5219, Rev. St. U. S. Since the decision of the supreme court in the case of Chapman v. Bank, 56 Ohio St. 310, 47 N. E. 54, and the decision of the supreme court of the United States in the same case, affirming the decision of the supreme court of Ohio (Bank v. Chapman, 173 U. S. 205, 19 Sup. Ct. 407, 43 L. Ed. 669), it is settled that the holder of national bank shares, in the absence of proof of discrimination in favor of capital coming into competition with that invested in shares in national banks, has no right to deduct the amount of his bona fide debts from such shares, but is legally bound to pay the tax upon the assessed value thereof without deduction on account of such debts. No attack upon this position is made in the argument of this suit in behalf of the appellants, but it is insisted that the matter is res adjudicata, because of the decision in the suit of appellant against Whitbeck, treasurer. That case is reported in 127 U. S. 193, 8 Sup. Ct. 1121, 32 L. Ed. 118. The bill in the case was based on two grounds, — to restrain the treasurer from collecting taxes because bank shares had, in the county of Cuyahoga, by certain means set forth in the bill, been assessed at 65 per centum of their value, whereas other capital of citizens in that county was assessed at 60 per centum of its value. This the supreme court held to be unlawful ' discrimination against the holders of such shares. Upon the question raised here, it is necessary to examine the manner in which it was made, and the nature of the decree granting a perpetual injunction. From the record in evidence in the Whitbeck Case we find that the bill avers, among other things-:
*815 “Your orator further avers that by section 2780 of the Revised Statutes of Ohio it is enacted that ‘the term “credits” shall he held to mean the excess of the sum of all legal claims and demands, whether for money or other valuable thing, or for labor or service due to, or to become due to the person liable to pay taxes thereon, including deposits in hanks or with persons in or out of this slate, other than such as are held to be money as hereinbefore defined, when added together (estimating every such claim or demand at its true value in money) over and above the sum of legal bona fide debts owing by such person’; and by section 2786 of the Revised Statutes of Ohio it is provided that every person required to list property for taxation shall deliver to the assessor annually a statement of all personal property, money, and ‘credits’ and other property in his possession or under his control on the day preceding the second Monday of April of that year, which he is required to list for taxation; and by section 2787 it is provided that such statement, among oilier things, shall truly set forth the amount of ‘credits’ possessed by such person, as that term is by the above recited statute defined. Your orator says that a large amount of moneyed capital in the hands of individuals, invested in promissory notes and other obligations and credits, is by t lie aforesaid provision, allowing deduction of legal, bona fide debts to be made therefrom, expressly exempted from taxation, thereby making an unjust and unlawful discrimination against moneyed capital invested in national bank shares, as io which no exemption or deduction is provided for by the laws of the state, which discrimination is in direct violation of the restrictions of said section 5219 of the Revised Statutes of the United States.”
Then follow allegations as to the indebtedness of certain shareholders. The right is claimed to deduct the same from the value of their sitares of bank stock. Again, in summing up the grounds of relief, complainant says:
“Your orator avers and insists that the taxes so levied and assessed against it on account of its said shares of stock are unjust, illegal, and void, for the following among other reasons: (1) That said tax is levied and assessed against your orator directly, and is in violation of the act of congress under which your orator is incorporated. (2) That the laws of Ohio authorize and permit the owner of credits to deduct therefrom all debts owing by him, and require him to list, for taxation only the excess of credits over his Indebtedness, and that such is the uniform practice throughout the state, and that under the laws of the same state the owner of capital stock of your orator is denied the right to deduct therefrom his indebtedness, but is required to list for taxation the whole number of shares owned by him, and not simply the excess over his indebtedness; and your orator insists that such discrimination results in the taxation of your orator's stock at much greater rate than is assessed upon oilier ■moneyed capital in the hands of individual citizens of Ohio.”
In this statement we find the averment that the owners of credits are permitted to deduct their indebtedness, while the owners of bank slock are not thus favored. But the term “credits,” as used in this part of the bill, must be taken in connection with the allegations of (lie bill which state the definition given by the stalutes of Ohio of the term “credits,” which shows such term to include the excess of sums of a limited class of moneyed capital over and above the indebtedness of individuals, and not to include moneyed capital in general. Upon this branch of the bill the question presented was whether the deduction permitted for the purpose of taxation of indebtedness from the limited class of capital named in the statute was an unlawful discrimination against the shareholders in national banks, within the meaning of the federal statute. The record shows that the decree making a general finding in favor of complainant in the Whitbeck Case was based on the
, “These principles require the affirmance of the ’decree of the circuit court, and, while there- wifi be found in them a sufficient answer to the questions*817 certified by tlie judges of that court, we do not think it necessary to make a more specific answer to each of them. The decree is affirmed.”
The decree could stand, under the finding, in favor of the hank upon the other proposition. We think the supreme court has decided a proposition not made in the bill, and not set forth in the certificate of division of opinion. While it is said in that certificate that the laws of Ohio make no provision for deduction of debts by shareholders of national banks, there is no statement that such holders are the only owners of moneyed capital not entitled to such deduction. In the case of Bank v. Chapman, 173 U. S. 219, 19 Sup. Ct. 413, 43 L. Ed. 675, the supreme court say of the Whitbeck Case;
“It is staled, however,- that this specific question, has been otherwise decided in Whitbeck v. Bank, 127 U. S. 193, 8 Sup. Ct. 1121, 32 L. Ed. 118. If this were true, we should be guided by and follow that decision. Upon an examination of the case it is seen that the court gave chief attention to the question whether an increase1 in the value of the shares in national banks made by the state board of equalization, from 60 per cent, of their true value in money, as fixed by the auditor of Cuyahoga county, to 65 per cent., as fixed by the board (other property being valued at only 60 per cent), amounted to such a discrimination in the taxation of the shareholders of such banks as is forbidden by the federal statute. It was held it did. Coming to the question of the deduction of bona fide indebtedness of shareholders, the court assumed that, under the statute o-f Ohio, owners of all moneyed capital, other than shares in a national bank, were permitted to deduct their bona fide indebtedness from the value of their moneyed capital, but that no provision for a similar deduction was made in regard to the owner of shares in a national bank; and it was held that the owners of such shares were entitled to a deduction of llieir indebtedness from the assessed value of the shares, as in the ease of other moneyed capital. The point, to which the court chiefly directed its attention related to the question whether n timely demand had been made for such deduction of indebtedness. It was held that it was made in time, for the reason that the court below expressly found that ‘the laws of Ohio make no provision for the deduction of the bona fide indebtedness of any shareholder from the shares of his stock, and provide no means by which such deduction could be secured.’ As a demand at an earlier period would have been useless, the court held it unnecessary. An examination of the statute of Ohio in regard to taxation shows that debts can only be deducted from credits, and how much of credits is moneyed capital is unknown. The case is not autlioiily adverse to the principle we now hold. Eor the reasons already stated, we think the judgment in this case should be affirmed.”
In view of- the foregoing comments on the decision in the Whit-beck Case, and the erroneous assumption the.rein of the character of the Ohio statute, we are not prepared to say that the judgment in that case was res adjudicata as to the rights of complainant’s stockholders to deduct their debts from their shares of national bank stock.
A different question is presented by the allegatións of former adjudication in the bills filed in 1893 and 1894. In those bills it was sought to enjoin the treasurer from collecting taxes upon the shares of complainant bank without permitting deduction for bona fide debts; it being averred that by section 2730 of the Eevised Statutes of Ohio it is enacted that the term “credits” “shall be held to mean the excess of the sum of all legal claims and demands, whether for money or other valuable things or for labor or service due or to become due to the person liable to pay taxes thereon, including deposits in banks or with persons in or out of this state other than
“The complainant further says that a large amount of moneyed, capital in the hands of individual citizens of the state, and of said county of Cuyahoga and state of Ohio, city of Cleveland, invested in promissory notes and other legal obligations, securities, claims, and demands, is by the aforesaid provision, allowing a deduction of legal, bona fide debts to be made therefrom, expressly exempted from taxation, .thereby making an unjust and unlawful discrimination against moneyed capital invested in national bank shares, as to which no exemption or deduction is provided for by the laws of the state, which discrimination is in direct violation of the restrictions of' section 5219 of the Revised Statutes of the United States, which provides that ‘the taxation shall not be at a greater rate than is assessed on other moneyed capital in the hands of individual citizens of such state.’ ”
This is a distinct allegation that this statute works an unlawful discrimination in favor of the holders of credits under the laws of Ohio, in permitting the holders of a class of capital to have a deduction denied to holders of shares in national bank stock. It was further alleged in those bills as follows:
“The complainant further avers that heretofore, to wit, at a date prior to the April term of this court, in the year 1887, the complainant brought suit against Horatio N. Whitbeck, as treasurer of said Cuyahoga county, who then held such office, to enjoin the collection of the excessive taxation of shares of said complainant growing out of the refusal of the taxing officers of said county to allow the deductions of bona fide debts of stockholders from the assessed value of said shares, said Whitbeck then representing the same interest, sustaining the same relations, and charged with the same duties to the public as does the present defendant; and in said suit this complainant alleged by its bill the refusal by the then auditor of said county to allow a deduction of bona fide debts of the shareholders from the value of shares of stock of said complainant owned in large part by the same stockholders as those above named, and in which action said treasurer of said county, admitting said refusal to allow said deduction, so' joined issue as to present the question of the rights of said owners of said shares to said deduction, in view of the laws of Ohio; and the sai'd laws being the same as the present laws of the state, and those under which the taxing officers of said county acted in 1892 and 1893, in making assessments and in refusing deductions to be made of bona fide debts of stockholders from the valuation of said shares; and the complainant says that, upon the issue so joined, the said court, at its April term, A. D. 1887, held and determined that said shareholders were by law entitled to said deduction of bona fide debts from the value of their said, shares to an equal amount fixed for taxation; and in said action the court gave judgment perpetually enjoining said treasurer from collecting or attempting to collect any tax or assessment on the valuation of said shares to an amount equal to said debts from which said deduction was sought to be made and disallowed by said auditor, on the ground that said disallowance was a discrimination against money invested in national bank shares, prohibited by the act of congress; and the complainant alleges that said issue, so determined and adjudged, was between the same parties, involved the same subject-matter and legislation, and the judgment therein given remains wholly unreversed, and is still in full force and operation.”
The treasurer demurred to this bill, and the demurrer was overruled. The defendant electing t'o stand by his demurrer, a final decree was given, enjoining the tax levied on the amount assessed equaling the shareholders’ indebtedness; the allegations of the bill having. been found to be true. The bill above quoted from was
“In the year 1897 a large amount of moneyed capital In tlie hands of individual citizens of the state, invested in promissory notes and other obligations and credits, was by section 2780 of the Revised Statutes of Ohio authorized to be exempted from taxation through the deductions therefrom of legal bona llde debts.”
We may take judicial notice of the fact that the statute, at the time of the filing of the present bill, and the report of the master upon which the decree was entered, is the same as it was when
“The proposition that, because a suit for a tax of one year is a different demand from the suit for a tax for another, therefore res adjudicata cannot apply, while admitting in form the principle of the things adjudged, in reality substantially denies and destroys it. The estoppel resulting from the thing adjudged does not depend upon whether there is the same demand in both cases, but exists, even although there be different demands, when the question upon which the recovery of the second demand depends has, under identical circumstances and conditions, been previously concluded by a judgment between the parties and their privies.”
The opinion of Mr. Justice White in that case is a thorough and elaborate discussion of the doctrine under circumstances closely akin to those of the present case.
One ground of relief in the bills of 1893 and 1894 was predicated upon the former adjudication set forth in that respect in the parts above quoted. The demurrer confessed the allegations of the bills. Judgment rendered upon demurrer has been held by the supreme court of the United States as decisive as a verdict upon the same facts would' be. Pacts established by such an adjudication
“Matters once determined in a court of competent jurisdiction may never again be called in question by parties or privies against objection, though the judgment may have been erroneous, and liable to and certain of reversal in a higher court.”
We, therefore, cannot escape the conclusion that the former adjudications in the cases of 1893 and 1894 are conclusive between the parties, notwithstanding the subsequent decision of the supreme court in the Chapman Case. In reaching a contrary conclusion, we think the master, as well as the circuit court, erred. The judgment will be reversed, and the cause remanded, with instructions to enter a decree in favor of complainant in accordance with the views herein expressed.