270 F. 369 | 9th Cir. | 1921
(after stating the facts as above). The District Judge expressed the opinion that the evidence was not sufficient to sustain the contention that the property of the company was overvalued, while all other prope'rty was undervalued, and he held that the board of equalization had adopted the findings of the Public Utilities Commission of tire state which had determined that the vahie of appellant’s property was $3,587,500, to which sum the court added the valuation of the St. Maries lighting system, estimated at $33,000, making a total of $3,620,500. It was also the opinion of the learned judge that the state board of equalization intended to make the assessment on the basis of 75 per cent, of the actual cash value of the property, although the evidence demonstrated that most of the other property in the state was assessed at not to exceed 50 per cent, of the actual cash value, and that generally that standard was recognized in making the assessments of property. But tire court held, however, that it had not been established that the board of equalization valued any of the public utilities at 50 per cent, and that the presumption was that it put all public utilities upon an equal footing and on the 75 per cent, basis. The way of consideration by the court was as follows:
The total assessed valuation of Kootenai county for 1918 was taken at $18,396,436, of which sum $11,595,837 was assessed by the local assessor, and tire balance, $6,800,599, was found as the valuation put upon public utilities by the state board of equalization. From the assessment of $11,595,837 the court substracted the assessments improperly made under the 50 per cent, value upon bank stock, $129,500, and, after adding this sum to the assessment on public utilities, found that, including appellant’s property, the total valuation of $6,930,099 was on a 75 per cent, basis for all public utilities, and $11,466,337 was upon a 50 per cent, basis upon property other than public utilities. In conclusion the court said:
“As against the other property in the first class, plainly the plaintiff’s property is entitled to no relief. But, as against the second class, equality of treament requires a 33% per cent, reduction.”
The ratio of the two classes was found to be approximately 7 to 12, and the plaintiff was held to be entitled to a reduction of 33% per cent, upon twelve nineteenths of its assessment, or a total reduction of $8,835. In objection to the decree appellant’s contention is that the court erred in holding that the value of the property of the appellant subject to taxation was greater than $2,438,978, and in holding that the state board of equalization found that the total actual value of the operating property was $3,620,500.
It is true that the finding of the Public Utilities Commission was primarily to arrive at a valuation for the purpose of rate-making and not taxation, and that when that body determined that as of December 31, 1917, the value of the used and usable property of the Power Company used in delivering electrical energy in Idaho, the Commission had in mind the fixing of a reasonable rate for service. But, as we have indicated, it is also true that in arriving at the valuation for such purpose the Commission considered many other elements bearing directly upon the question of actual value and really considered actual value. The evidence shows that they referred to the books and records of the company, which were audited by the accountant force of the Commission, considered depreciation, capital and stores account, development cost, going concern value, values of property which had not been used and which probably never would be used in the operation of the light and power property, earnings, land values, and what would be fair apportionments of value of tangible and intangible property. After consideration of these and other elements, including inventories and revenue statements and “all the evidence, facts, and circumstances surrounding the case,” a value of $3,800,000 was unanimously determined upon by the commissioners.
The findings of the District'Court was that'the Public Utilities Commission determined that the ultimate conclusion of the present worth of the property of appellant was based not exclusively upon any one of several methods more or less commonly employed for reaching the value of properties such as public utilities, and that the theory of reproduction cost, in so far as it was used, was not applied without making allowance for depreciation and that other compensating considerations were recognized by the Commission and that on the whole the decision of the Commission was so clear that the board of equalization must have understood and did understand that the value of the property subject to taxation was .$3,587,500. In this connection it
“We shall not attempt to fix any separate and distinct value for each of the elements herein discussed, but the same have all been taken into consideration in our final value. Neither has the Commission adopted any one particular theory of value, but has endeavored to give due consideration and weight to all theories and elements of value.”
Following this statement the Commission put the total value of all the property of the company, tangible and intangible, used and useful, in Idaho as $3,800,000. The court adopted the $3,587,500 value and added the value of the St. Maries lighting system, $33,000.
“Uniformity in taxing implies equality in the burden of taxation, and this equality of burden cannot exist without uniformity in the mode of assessment, as well as in the rate of taxation.”
The court said:
“It is equally plain that it malees no difference what basis of valuation— that is, what percentage of full value — may be adopted, provided it be applied to all alike. The adoption of full value has no different effect in distributing the burden than would be gained by adopting 75 per cent., or 50 per cent., or eren 10 per cent., as the basis — so long as either was applied uniformly. The only difference would be that, supposing the requirements of the treasury remained constant, the rate of taxation would have to bo increased as the percentage of valuation was reduced. * * * Therefore the principal, if not the sole, reason for adopting ‘fair cash value’ as the standard for valuations, is as a convenient means to an end — the end being equal taxation. But if the standard be systematically departed from with respect to certain classes of property, while applied as to other property, it does not serve, but frustrates, the very object it was designed to accomplish. It follows that the duty to assess at full value cannot bo supreme in all cases, but must yield where necessary to avoid defeating its own purpose.’’
The court fortified this view by quoting extensively from the very learned opinion of Judge Taft, writing for the Circuit Court of Appeals for the Sixth Circuit in Taylor v. Louisville & Nashville R. Co., 88 Fed. 350, 31 C. C. A. 537. In that case the Constitution of Tennesee required that all property should be taxed according to its value so that taxes should be equal and uniform throughout the state. Certain kinds of property were valued by one body of officials, while property in general was valued by another. It is true there was no provision for equalization as between the two classes, but in the light of the facts, that in the instant case there was the deliberate discrimination, we do not believe that that point is of vital importance, because the case turned upon the broad principle that the sole and manifest purpose of the Constitution of the state was to secure uniformity and equality of burden upon the property in the state, and that as a means of securing such a result there was a provision that the assessment should be according to true value. Judge Taft, for the court, treated the case as one in which the complaining taxpayers and other taxpayers owning the same species of property were taxed at a higher rate than the owners of other species of property, and referred to the discrimination as brought about by the intentional and systematic disregard of the law by those charged with the duty of assessing all other species of property than that owned by complainant and its fellows of the same class. The court found itself placed in a dilemma, and said that an intentional undervaluation of a large class, where assessments at true value should be had, is necessarily designed to operate unequally upon other classes of property to be assessed by different taxing tribunals who presumably would conform to the law.
“The various boards whose united action is by law intended to effect a uniform assessment on all classes of property are to be regarded as one*376 tribunal,, and the whole assessment on all classes of property is to ,be regarded as one judgment. If any board, which is an essential part of the-taxing system, intentionally, and therefore fraudulently, violates the law by uniformly undervaluing certain classes of property, the assessment by other-boards of other classes of property at full value, though a literal compliance with the law, makes the whole assessment, considered as one judgment, a fraud upon the fully assessed property. And this is true, although the-partieular board assessing the complainant’s property may have been wholly free from fault or fraud or intentional discrimination.”
It is the justice of the principle stated that also prevailed in the recent case of Greene v. Louisville & I. R. Co., supra, and that appeals most forcibly to us. Cases which take a contrary view are regarded by the Supreme Court as talcing “little or no account of the rights of aggrieved) taxpayers.”
The decree of the District Court is reversed, and the cause is remanded to the District Court, with directions to enter decree in accordance with the views herein expressed; and, should it be necessary for the court to hear additional testimony as to the exact amount which may be due, the court may proceed accordingly.
Reversed and remanded.
