[326 U.S. 620, 621] Mr. Harry E. Walburg, of Newark, N.J., for petitioners.
Messrs. Charles E. Hughes, Jr., of New York City, and Shelton Pitney, of Newark, N.J., for respondent.
Mr. Justice DOUGLAS delivered the opinion of the Court.
This action was brought by respondent under the Declaratory Judgment Act, Judicial Code, 274d, 28 U.S.C. 400, 28 U.S.C.A. 400, to have declared null and void certain assessments on intangible personal property entered for the years 1940 and 1941 by the Collector of Hillsborough Township, Somerset County, New Jersey. 1 The jurisdiction of the federal court in New Jersey was invoked by [326 U.S. 620, 622] reason of diversity of citizenship and the allegation that the taxing authorities had consistently, systematically and intentionally singled out respondent for discriminatory treatment in the assessment of taxes for which she was without remedy under the laws and decisions of New Jersey. It was prayed that the assessments be declared invalid as in contravention of the due process and equal protection clauses of the Fourteenth Amendment and of the provisions of applicable New Jersey statutes to which we will later refer. The District Court denied a motion to dismiss the gave judgment for respondent. 56 F.Supp. 41. The Circuit Court of Appeals, 3 Cir., affirmed. 149 F.2d 617. The case is here on a petition for a writ of certiorari which we granted because the asserted conflict of that decision with Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293 , 63 S. Ct. 1070, raised an important problem concerning the relationship between the federal courts and state taxing authorities.
Sec. 267 of the Judicial Code, 28 U.S.C. 384, 28 U.S.C.A. 384, provides that suits in equity shall not be sustained in the federal courts 'in any case where a plain, adequate, and complete remedy may be had at law.' That principle has long been recognized as having 'peculiar force' in cases where the federal courts were asked to enjoin the collection of a state tax. Matthews v. Rodgers, 284 U.S. 521, 525 , 52 S.Ct. 217, 219, and cases cited. 'The scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts, and a proper reluctance to interfere by injunction with their fiscal operations, require that such relief should be denied in every case where the asserted federal right may be preserved without it.' Id., 284 U.S. page 525, 52 S.Ct. page 219. Where the remedy at law is 'plain, adequate, and complete', it is the one which must be pursued even for the protection of any federal right. That practice of the federal equity courts was given further recognition and sanc- [326 U.S. 620, 623] tion by Congress in the Johnson Act, 48 Stat. 775, as amended, 50 Stat. 738, 24(1) of the Judicial Code, 28 U.S.C. 41(1), 28 U.S.C.A. 41(1), which provides that 'no district court shall have jurisdiction of any suit to enjoin, suspend, or restrain the assessment, levy, or collection of any tax imposed by or pursuant to the laws of any State where a plain, speedy, and efficient remedy may be had at law or in equity in the courts of such State.' It was against that background that we held in Great Lakes Dredge & Dock Co. v. Huffman, supra, that the policy which led federal courts of equity to refrain from enjoining the collection of allegedly unlawful state taxes should likewise govern the exercise of their discretion in withholding relief under the Declaratory Judgments Act.
The Circuit Court of Appeals fully recognized the principle of the Huffman case, but concluded that the state procedure was not 'speedy, efficient or adequate' (149 F.2d 620) to protect the federal right against discriminatory state taxation. It is around that conclusion that the first phase of this controversy turns.
The equal protection clause of the Fourteenth Amendment protects the individual from state action which sel cts him out for discriminatory treatment by subjecting him to taxes not imposed on others of the same class. The right is the right to equal treatment. He may not complain if equality is achieved by increasing the same taxes of other members of the class to the level of his own. The constitutional requirement, however, is not satisfied if a State does not itself remove the discrimination, but imposes on him against whom the discrimination has been directed the burden of seeking an upward revision of the taxes of other members of the class. Sioux City Bridge Co. v. Dakota County, 260 U.S. 441 , 445-447, 43 S. Ct. 190, 191, 192, 28 A.L.R. 979; Iowa-Des Moines Nat'l Bank v. Bennett, 284 U.S. 239, 247 , 52 S.Ct. 133, 136; Cumberland Local Co. v. Board of Revision, 284 U.S. 23 , [326 U.S. 620, 624] 28, 29, 52 S.Ct. 48, 50. The courts of New Jersey in a long line of decisions2 have held that a taxpayer who has been singled out for discriminatory taxation may not obtain equalization by reduction of his own assessment. His remedy is restricted to proceedings against other members of his class for the purpose of having their taxes increased. The rule was stated in Royal Mfg. Co. v. Board of Equalization, 76 N.J.L. 402, 70 A. 978, affirmed 78 N.J.L. 337, 74 A. 525, as follows: '... the county boards are required to secure taxation of all property at its true value; so that the fact that the property of A. is assessed at its true value, and the property of other taxpayers within the same district is assessed below its true value, affords A. no ground for demanding a reduction of his valuation, though it does entitle him to apply for an increase in the valuation of the others.' 76 N.J.L. pages 404, 405, 70 A. page 979. On the basis of that rule it is plain that the state remedy is not adequate to protect respondent's rights under the federal Constitution.
It is argued, however, that in 1933 the New Jersey courts adopted a different rule when Central R. Co. v. Thayer-Martin (State Tax Department), 112 N.J.L. 5, 169 A. 489, was decided by the Court of Errors and Appeals. In that case the court did entertain an objection that the particular tax assessment violated the rule of Sioux City Bridge Co. v. Dakota County, supra. It found that the complaining taxpayer had not shown that a discrimination within the meaning of our cases existed. So it is argued that as the highest court in New Jersey recognized the federal rule, the federal District Court should have remitted respondent to her remedy in the New Jersey [326 U.S. 620, 625] courts. There is, however, a two-fold difficulty with that position.
In the first place, the same judge who wrote the opinion for the Court of Errors and Appeals in the Thayer-Martin case wrote the opinion for the Supreme Court of New Jersey a year later in Lehigh Valley R. Co. v. State Board, 174 A. 359, 12 N.J.Misc. 673. The taxpayer contended that the state board of tax appeals erred in refusing to admit evidence of discrimination. The argument was that the rule of Sioux City Bridge Co. v. Dakota County, supra, should be followed and the holding of Royal Mfg. Co. v. Board of Equalization, supra, should be disapproved. The Supreme Court of New Jersey declined to allow a writ of certiorari to review the judgments of the state board of tax appeals. It did not mention the Thayer- Martin case, but followed Royal Mfg. Co. v. Board of Equalization, supra, saying that the New Jersey law on the point was 'settled and controlling.' 174 A. page 360, 12 N.J.Misc. p. 675. It, therefore, may well be true, as respondent ays, that the court in the Thayer-Martin case simply decided that the point raised by the taxpayer was not supported by facts and found it unnecessary to consider whether, if systematic discrimination had been shown, New Jersey would have afforded an adequate remedy. In any event, there is such uncertainty concerning the New Jersey remedy as to make it speculative (Wallace v. Hines, 253 U.S. 66, 68 , 40 S.Ct. 435, 436) whether the State affords full protection to the federal rights. In the second place, the state board of tax appeals to which respondent might have appealed concededly has no right to pass on constitutional questions. 3 Its judgments may be reviewed by the New Jersey Supreme Court by certiorari. The allowance of that writ, however, is not a matter [326 U.S. 620, 626] of right, but purely discretionary. 4 And the refusal of a writ of certiorari by the Supreme Court may not be judicially reviewed by the Court of Errors and Appeals. 5 Accordingly we conclude that there was such uncertainty surrounding the adequacy of the state remedy as to justify the District Court in retaining jurisdiction of the cause. While the charges of discrimination in the complaint were denied, the jurisdiction of the District Court is determined by the allegations of the bill (Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271 , 43 S.Ct. 540) which here were substantial.
This brings us to the second phase of the controversy. Neither the District Court nor the Circuit Court of Appeals decided the case on federal grounds. They held in reliance on Duke Power Co. v. State Board, 129 N.J.L. 449, 30 A.2d 416, 420; Id., 131 N.J.L. 275, 36 A.2d 201, that the assessments were invalid under the New Jersey statutes. In that case, as in the present one, property 'omitted in the assessment' was attempted to be assessed by the County Board against the taxpayer after April 1st of each of the tax years involved without notice and hearing. 6 [326 U.S. 620, 627] The assessment was set aside as not being in conformity with the statute. And it was held that the remedial statutes,7 designed to cure irregularities in assessing or levying taxes, 'do not apply where the statute for the addition of property omitted from the assessment is not complied with.' 129 N.J.L. page 457, 30 A.2d page 420.
Petitioner argues that it is clear from Duke Power Co. v. State Board, supra, that respondent had a remedy in the state tribunals for failure of petitioner to follow the procedure required by the New Jersey statutes and that the federal court should have required her to pursue it. [326 U.S. 620, 628] We have held that where a federal constitutional question turns on the interpretation of local law and the local law is in doubt, the proper procedure is for the federal court to hold the case until a definite determination of the local law can be made by the state courts. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 , 61 S.Ct. 643; Chicago v. Fieldcrest Dairies, 316 U.S. 168 , 62 S.Ct. 986; Spector Motor Service, Inc., v. McLaughlin, 323 U.S. 101 , 65 S.Ct. 152. The latter case involved a suit in which the constitutionality of a Connecticut tax was challenged. There was uncertainty concerning the meaning of the local law. Under one construction the constitutional issues would fall; and in any event a decision by the state courts would cause the constitutional issues to be formulated in an authoritative rather than a speculative way. But it was clear that there was available a state remedy to which the complainant could resort on the remand of the cause. In the present case it appears that respondent's opportunity to appeal to the State Board of Tax Appeals8 had expired even before the District Court ruled on the motion to dismiss. 9 And it is not clear that today respondent has open any adequate remedy in the New Jersey courts for challenging the assessments on local law grounds. 10 Moreover, Duke Power Co. v. State Board, supra, decided shortly [326 U.S. 620, 629] before the District Court rendered judgment,11 gave an authoritative interpretation of the local law. Hence, the reason for holding the case in Spector Motor Service, Inc. v. McLaughlin, supra, and remitting the complainant to the state courts for determination of the local law question no longer was existent here.
It follows a fortiori that the bill should not have been dismissed. As stated in Greene v. Louisville & I.R. Co., 244 U.S. 499, 520 , 37 S.Ct. 673, 682, Ann.Cas.1917E, 88, 'A remedy at law cannot be considered adequate so as to prevent equitable relief, unless it covers the entire case made by the bill in equity.' Though the availability of a state remedy on the local law question be assumed to exist, so much uncertainty surrounds the New Jersey remedy to protect the taxpayer's federal right that a refusal to dismiss the bill was a proper exercise of discretion. Thus however the case may be viewed, the exceptional circumstances which we have noted take it out of the general rule of Great Lakes Dredge & Dock Co. v. Huffman, supra. The District Court, therefore, properly proceeded to decide the case on the merits. That it placed its decision on local law grounds is not objectionable. For it is well-settled that where the federal court has jurisdiction, it may pass on the whole case and agreeably with the desired practice decide it on local law questions, without reaching the constitutional issues. Siler v. Louisville & N.R. Co., 213 U.S. 175, 191 , 193 S., 29 S.Ct. 451, 454, 455; Greene v. Louisville & I.R. Co., supra, 244 U.S. page 508, 37 S.Ct. page 677, Ann.Cas.1917E, 88; Chicago Great W.R. Co. v. Kendall, 266 U.S. 94, 97 , 98 S., 45 S.Ct. 55, 56; Risty v. Chicago, R.I . & P. Ry. Co., 270 U.S. 378, 387 , 46 S.Ct. 236, 240; Waggoner Estate v. Wichita County, 273 U.S. 113, 116 , 47 S.Ct. 271, 272; Hurn v. Oursler, 289 U.S. 238 , 243-248, 53 S.Ct. 586, 588- 590
Petitioner makes an extended argument to the effect that Duke Power Co. v. State Board, supra, is not a con- [326 U.S. 620, 630] trolling precedent on the local law question on which the decision below turned. On such questions we pay great deference to the views of the judges of those courts 'who are familiar with the intricacies and trends of local law and practice.' Huddleston v. Dwyer, 322 U.S. 232, 237 , 64 S. Ct. 1015, 1018. We are unable to say that the District Court and the Circuit Court of Appeals erred in applying to this case the rule of Duke Power Co. v. State Board, which involved closely analogous facts.
Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of this case.
[ Footnote 1 ] The assessments call for tax payments of nearly $7,000,000 for each year as compared with the Township's budget of something like $97,000 annually. Prior to these assessments the net assessed valuation for taxation of all property assessed, both real and personal, in the township amounted to $3,117,863 for 1940 and $3,139,020 for 1941. The resulting tax rate was 3.12 per cent for 1940 and 3.10 per cent for 1941. The additional assessments against respondent apparently would have increased the valuation of the township tax ratables by $221,940,438 for each of the two tax years, though it would not have affected the tax rates for those years.
[ Footnote 2 ] State v. Collector of Randolph Tp., 25 N.J.L. 427, 431; State v. Taylor, 35 N.J.L. 184, 189; State v. Koster, 38 N.J.L. 308; State v. Segoine, 53 N.J.L. 339, 340, 21 A. 852; Affirmed 54 N.J.L. 212, 25 A. 963; Central R. Co. v. State Board, 74 N.J.L. 1, 65 A. 244; Royal Mfg. Co. v. Board of Equalization, 76 N.J.L. 402, 70 A. 978; 78 N.J.L. 337, 74 A. 525; Pennsylvania Coal Co. v. Saddle River, 96 N.J.L. 40, 43, 114 A. 157.
[ Footnote 3 ] Duke Power Co. v. Hillsborough Township, 26 A.2d 713, 717, 20 N.J. Misc. 240, 243, reversed on another point Duke Power Co. v. State Board of Tax Appeals, 129 N.J.L. 449, 30 A.2d 416; Schwartz v. Essex County Board, 129 N.J.L. 129, 132, 28 A.2d 482, 484, affirmed 130 N.J.L. 177, 32 A.2d 354.
[ Footnote 4 ] Staubach v. Cities Service Oil Co., 130 N.J.L. 157, 31 A.2d 804.
[ Footnote 5 ] Post v. Anderson, 111 N.J.L. 303, 168 A. 622; Staubach v. Cities Service Oil Co., supra, note 4.
[ Footnote 6 ] N.J.Rev.Stat. 54:3-20 N.J.S.A. provides in part, 'On the written complaint of the collector, or any taxpayer of the taxing district or of the governing body thereof, that property specified has been omitted in the assessment, the county board, on five days' notice in writing to the owner by the party complaining, and after due examination and hearing, may enter the omitted property on the duplicate by judgment rendered within ten days after the hearing, a transcript whereof shall be furnished by the board to the collector, who shall amend his duplicate accordingly.'
A different procedure is provided by 54:3-20 for inclusion of property 'omitted by the assessor.' For a discussion of the difference between the two types of assessments see Duke Power Co. v. State Board, supra, 129 N.J.L. pages 452-455, 30 A.2d pages 418, 419. At page 455 of 129 N.J.L., at page 419 of 30 A.2d, the court said:
[ Footnote 7 ] Sec. 54:4-58 provides:
Sec. 54:4-59 provides:
The court in Duke Power Co. v. State Board, supra, 129 N.J.L. page 457, 30 A.2d page 420, stated that 'the remedial statutes we do not find to have been a substitute for proper assessment. Their application has been only in instances where properly has been omitted by the assessor or has been assessed in the name of one other than the true owner.'
[ Footnote 8 ] Ninety days are allowed. State Board of Tax Appeals, Rule V(c), CCH. Corp. Tax Serv. par. 89-505. The resolutions of the County Board attempting to make the assessments were entered June 26, 1941.
[ Footnote 9 ] The present bill was filed in July, 1941, the answer in September, 1941, and the motion to dismiss in November, 1941. The order denying the motion to dismiss was made in August, 1942.
[ Footnote 10 ] It seems that under certain circumstances certiorari to the Supreme Court may be had in lieu of an appeal to the State Board of Tax Appeals. It was held in Schwartz v. Essex County Board, supra, note 3, that lack of jurisdiction of the county board or irregularity in its proceedings may be tested by certiorari. 130 N.J.L. page 178, 32 A.2d 354. And see State v. Clothier, 30 N.J.L. 351. But as we have seen, note 4, supra, it is a discretionary writ.
[ Footnote 11 ] That case was decided by the Court of Errors and Appeals on March 9, 1944. The present case was decided by the District Court on July 14, 1944.