Messrs. Charles J. Greene, James E. Kelby, and Charles F. Manderson for appellant in No. 215.
[204 U.S. 585, 587] Messrs. John N. Baldwin, Maxwell Evarts, and R. S. Lovett for appellant in No. 341.
[204 U.S. 585, 589] Messrs. William T. Thompson, Norris Brown, and M. F. Stanley for appellees.
Mr. Justice Holmes delivered the opinion of the court:
These are bills to declare void assessments of taxes made by the state board of equalization and assessment for the year 1904, and to enjoin the collection of the same beyond certain sums tendered. The bills allege that the board, coerced by political clamor and its fears, arbitrarily determined in advance to add about nineteen million dollars to the assessment of railroad property for the previous year, and then pretended to fix the values of the several roads by calculation. They allege that the assessments were fraudulent, and void for want of jurisdiction, and justify these general allegations by more specific statements. One is that other property in the state, especially land, was valued at a lower rate than that of the railroads. Another, of more importance, is to the effect that [204 U.S. 585, 592] the board adopted a valuation by stock and bonds, and then taxed the appellants upon the proportion of the value so reached that their mileage within the state bore to their total mileage, without deducting a large amount of personal property owned outside the state, or specially valuable terminals, etc., east of the Missouri river. The principle of this last objection was sanctioned in Fargo v. Hart, 193 U.S. 490 , 48 L. ed. 761, 24 Sup. Ct. Rep. 498, under the commerce clause of the Constitution, art. 1, 8, but later cases have decided that tangible property permanently outside the jurisdiction is exempted from taxation by the 14th Amendment ( Delaware, L. & W. R. Co. v. Pennsylvania, 198 U.S. 341 , 49 L. ed. 1077, 25 Sup. Ct. Rep. 669; Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194 , 50 L. ed. 150, 26 Sup. Ct. Rep. 36), and the 14th Amendment alone, somewhat inadequately referred to, is the foundation of these appeals. Demurrers to the bills were overruled, mainly, if not wholly, on the ground of the charges of duress and fraud. Answers then were filed denying the material allegations, and, after a hearing on evidence, the bills were dismissed.
The dominant purport of the bills is to charge political duress, so to speak, and a consequent scheme of fraud, illustrated by the specific wrongs alleged, and in that way to make out that the taxes were void. As the cases come from the circuit court, other questions beside that under the Constitution are open, and, therefore, it is proper to state at the outset that the foundation for the bills has failed. The suggestion of political duress is adhered to in one of the printed briefs, but is disposed of by the finding of the trial judge, which there is no sufficient reason to disturb. The charge of fraud, even if adequately alleged (Missouri v. Dockery, 191 U.S. 165, 170 , 48 S. L. ed. 133, 134, 24 Sup. Ct. Rep. 53), was very slightly pressed at the argument, and totally fails on the facts. Such charges are easily made and, it is to be feared, often are made without appreciation of the responsibility incurred in making them. Before the decree could be reversed it would be necessary to consider seriously whether the constitutional question on which the appeals are based [204 U.S. 585, 593] was not so pleaded as part of the alleged fraudulent scheme that it ought not to be considered unless that scheme was made out. Eyre v. Potter, 15 How. 42, 56, 14 L. ed. 592, 598; French v. Shoemaker, 14 Wall. 314, 335, 20 L. ed. 852, 857; Hickson v. Lombard L. R. 1 H. L. 324.
When we turn to the evidence there is equal ground for criticism. The members of the board were called, including the governor of the state, and submitted to an elaborate cross-examination with regard to the operation of their minds in valuing and taxing the roads. This was wholly improper. In this respect the case does not differ from that of a jury or an umpire, if we assume that the members of the board were not entitled to the possibly higher immunities of a judge. Buccleuch v. Metropolitan Bd. of Works, L. R. 5 H. L. 418, 433. Jurymen cannot be called, even on a motion for a new trial in the same case, to testify to the motives and influences that led to their verdict. Mattox v. United States, 146 U.S. 140 , 36 L. ed. 917, 13 Sup. Ct. Rep. 50. So, as to arbitrators. Buccleuch v. Metropolitan Bd. of Works, L. R. 5 H. L. 418, 457, 462. Similar reasoning was applied to a judge in Fayerweather v. Ritch, 195 U.S. 276, 306 , 307 S., 49 L. ed. 193, 213, 214, 25 Sup. Ct. Rep. 58. A multitude of cases will be found collected in 4 Wigmore on Evidence, 2348, 2349. All the often- repeated reasons for the rule as to jurymen apply with redoubled force to the attempt, by exhibiting on cross-examination the confusion of the members' minds, to attack in another proceeding the judgment of a lay tribunal, which is intended, so far as may be, to be final, notwithstanding mistakes of fact or law. See Coulter v. Louisville & N. R. Co. 196 U.S. 599, 610 , 49 S. L. ed. 615, 618, 25 Sup. Ct. Rep. 342; Central P. R. Co. v. California, 162 U.S. 91, 107 , 108 S., 117, 40 L. ed. 903, 908, 909, 16 Sup. Ct. Rep. 766, 105 Cal. 576, 594, 38 Pac. 905; State Railroad Tax Cases, 92 U.S. 575 , 23 L. ed. 663; Cleveland, C. C. & St. L. R. Co. v. Backus, 133 Ind. 513, 542, 18 L.R.A. 729, 33 N. E. 421. In Fargo v. Hart, 193 U.S. 490, 496 , 497 S., 48 L. ed. 761, 764, 24 Sup. Ct. Rep. 498, there was no serious dispute as to what was the principle adopted.
Again, this board necessarily kept, and evidently was expected by the statutes to keep, a record. That was the best evidence, at least, of its decisions and acts. If the roads had [204 U.S. 585, 594] wished an express ruling by the board upon the deductions which they demanded, they could have asked for it, and could have asked to have the action of the board or its refusal to act noted in the record. It would be time enough to offer other evidence, when such a request had been made and refused. See Fargo v. Hart, 193 U.S. 490, 498 , 48 S. L. ed. 761, 764, 24 Sup. Ct. Rep. 498; Cleveland, C. C. & St. L. R. Co. v. Backus, supra; Havemeyer v. Cook County, 202 Ill. 446, 66 N. E. 1044. However, as the foregoing objections were not urged, and as the cases were discussed upon all the testimony, we shall proceed to consider them in the same way.
The facts that appear from any source are few. The board voted first, as a preliminary step toward ascertaining the actual value of all property to be assessed, to make an estimate of the tangible property of the railroads, to be taken as one of the factors in making up the total assessment of the roads. Sehedules were prepared, and it is objected that the board added 25 per cent to certain items as furnished by the companies. If this be true, and it is not admitted that any figures were more than tentative, the addition seems to have been made on personal judgment and on a theory that the values given were the values the property was insured for. If mistaken, a mistake does not affect the case. The main point comes on the final assessment, to which we turn at once.
The board expressed its result in another vote. 'Having given full and due consideration to the returns furnished said board by the several railroad companies, and having taken into consideration the main track, side track, spur tracks, warehouse tracks, roadbed, right of way, and depot grounds, and all water and fuel stations, buildings, and superstructures thereon, and all machinery, rolling stock, telegraph lines, and instruments connected therewith, all material on hand and supplies, moneys, credits, franchises, and all other property of said railroad companies, and having taken into consideration the gross and net earnings of said roads, the total amount [204 U.S. 585, 595] expended in operation and maintenance, the dividends paid, the capital stock of each system or road and the market value thereof and the total amount of secured and unsecured indebtedness [we] do hereby ascertain and fix, for the purposes of taxation, the full actual value, the average value per mile, and the assessable value per mile of the several roads as follows:' with a list.
The roads supplement the record by evidence that the state treasurer, a member of the board, on the objection being made to a paper said to exhibit the stock, bonds, and floating debt of the Union Pacific, that the stock and bonds of other companies owned by the Union Pacific had not been deducted, answered, 'the board has decided that it cannot make deductions for property outside of the state.' This answer was in the presence of the other members of the board. It is agreed that the paper referred to was prepared for the use of the board. It shows a column of figures marked 'Deductions for locally assessed,' and amounting, when added, to 1,152,230. Then, under the head 'Earnings,' are the figures 398,474,068, from which is subtracted 1,152,230, giving 397,321,838, which is divided by 6,104, giving 65,092 as the quotient. This dividend is said to be shown, by the coincidence of figures, to have been made up of the market value of the stock of the Union Pacific, its mortgage bonds and other indebtedness, less the property locally assessed in the state, but without the deduction to which we have referred and to which the road alleges that it was entitled. The divisor is the total number of miles of the road. It is true that the valuation ultimately reached was $55,000 a mile instead of $65, 092, but this is said to have been an arbitrary reduction, and did not reduce the amount sufficiently, if we were to assume that this paper furnished the basis of the tax.
But no such assumption can be made. The board considered the paper, no doubt, but so they considered a capitalization of what they understood to be the net earnings [204 U.S. 585, 596] in the state, and the value of the tangible property apart from its outside connections. Exactly what weighed in each mind, and even what elements they purported to consider in their debates, is little more than a guess. There is testimony which cannot be neglected that, in this very matter of valuing the road by stocks and bonds, etc., the board, from another table furnished by the company, valued it at over $540,000,000, and did deduct from that sum the stocks and bonds owned by the road, and valued by the board at over $140,000,000, prior to the subsequent reduction to $55,000 a mile. It is said that this valuation is absurd and due to misunderstanding of the table. But we have nothing to do with complaints of that nature, or with anything less than fraud, or a clear adoption of a fundamentally wrong principle. The board, in its formal action properly before us, did vote to request of the Union Pacific, among other things, 'an itemized statement of the several bonds and stocks owned by said company, for which they are legally entitled to receive credit on offset, in estimating the value of said Co. for assessment.' This recognizes the ture principle, almost in terms. Beyond a speculation from figures, and a few statements improperly elicited from one or two members of the board, there is nothing to contradict the inference from this vote except the above alleged statement of the treasurer, met by his and others' testimony that a proper deduction was made.
Evidently the board believed that the figures furnished by the roads were too favorable and were intended to keep the taxes as low as they could be kept. Evidently, also, the members or some of them used their own judgment and their own knowledge, of which they could give no very good account on cross-examination, but which they had a right to use, if honest, however inarticulate the premises. It would seem from the testimony, as might have been expected, that the valuations fixed were a compromise and were velieved by some members to be too low, as they seemed to one too high. It is argued to us, on expert testimony, that they are too low. [204 U.S. 585, 597] The result of the evidence manifests the fruitlessness of inquiries, which, as we have said, should not have been gone into at all. We have adverted more particularly to the case of the Union Pacific, but that of the Chicago, Burlington, & Quincy Railroad stands on similar and no stronger ground, and what we have said disposes of the main contention of both. If the court below had found the other way it would have been difficult to say that the finding was sustained by competent evidence. There certainly is no sufficient reason for disturbing the finding as it stands.
A point less pressed than the foregoing was that the other property in the state was greatly undervalued and that thus the rule of uniformity prescribed by the Constitution of Nebraska had been violated. Upon this matter it is enough to say that no scheme or agreement on the part of the county assessors, who taxed the other property, was shown, or on the part of the board of equalization and assessment, and to refer to Coulter v. Louisville & N. R. Co. 196 U.S. 599 , 49 L. ed. 615, 25 Sup. Ct. Rep. 342.
Again, it was said that, inasmuch as the present Union Pacific Company, a Utah corporation, acquired its road by foreclosure of a mortgage from a preceding corporation chartered by the United States, it appeared from admissions in testimony or followed from the board's taxing the Nebraska portion of the road as a going concern that it was taxing United States franchises, contrary to the decision in California v. Central P. R. Co. 127 U.S. 1 , 32 L. ed. 150, 2 Inters. Com. Rep. 153, 8 Sup. Ct. Rep. 1073. This, also, although stated, was not pressed. It does not appear that the present Union Pacific has any United States franchies that were taxed, and, if it has any that were considered in estimating the value of the road, it does not appear that they were considered improperly under the later decisions of this court. Central P. R. Co. v. California, 162 U.S. 91 , 40 L. ed. 903, 16 Sup. Ct. Rep. 766, 105 Cal. 576, 590, 38 Pac. 905. See Adams Exp. Co. v. Ohio State Auditor, 166 U.S. 185 , 41 L. ed. 965, 17 Sup. Ct. Rep. 604. And the same thing may be said as to the interstate business of the [204 U.S. 585, 598] roads. Adams Exp. Co. v. Ohio State Auditor, 165 U.S. 194 , 41 L. ed. 683, 17 Sup. Ct. Rep. 305, 166 U.S. 185 , 41 L. ed. 965, 17 Sup. Ct. Rep. 604. The board had a right to tax all the property in the state, and to tax it at its value as an organic portion of a larger whole. Western U. Teleg. Co. v. Missouri, 190 U.S. 412 , 47 L. ed. 1116, 23 Sup. Ct. Rep. 730.
Various arguments were addressed to us upon matters of detail which would afford no ground for interference by the court, and which we do not think it necessary to state at length. Among them is the suggestion of arbitrariness at different points, such as the distribution of the total value set upon the Chicago, Burlington, & Qunicy system, among the different roads making it up. But the action does not appear to have been arbitrary except in the sense in which many honest and sensible judgments are so. They express an intuition of experience which outruns analysis and sums up many unnamed and tangled impressions,-impressions which may lie beneath consciousness without losing their worth. The board was created for the purpose of using its judgment and its knowledge. State Railroad Tax Cases, 92 U.S. 575 , 23 L. ed. 663; State ex rel. Bee Bldg. Co. v. Savage, 65 Neb. 714, 768, 769, 91 N. W. 716; Re Cruger, 84 N. Y. 619, 621; San Jos e Gas Co. v. January, 57 Cal. 614, 616. Within its jurisdiction, except, as we have said, in the case of fraud or a clearly shown adoption of wrong principles, it is the ultimate guardian of certain rights. The state has confided those rights to its protection and has trusted to its honor and capacity as it confides the protection of other social relations to the courts of law. Somewhere there must be an end. We are of opinion that, whatever grounds for uneasiness may be perceived, nothing has been proved so clearly and palpably as it should be proved, on the principle laid down in San Diego Land & Town Co. v. National City, 174 U.S. 739, 754 , 43 S. L. ed. 1154, 1160, 19 Sup. Ct. Rep. 804, in order to warrant these appeals to the extraordinary jurisdiction of the circuit court.
Mr. Justice Peckham and Mr. Justice McKenna dissent.