196 U.S.

Argument for Appellants.

the steamer sailing to that port, and subject to the stipulations, exceptions and conditions in those bills. We see no occasion to consider the questions which might be raised if the same stipulations were contained in the bills of lading to New York. See Liverpool Steam Co. v. Phenix Insurance Co., 129 U. S. 397, 463; Inman v. South Carolina Ry., 129 U. S. 128; Phenix Insurance Co. v. Erie & Western Transportation Co., 117 U. S. 312.

Decree affirmed.

COULTER v. LOUISVILLE AND NASHVILLE RAIL

ROAD COMPANY.

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR

THE EASTERN DISTRICT OF KENTUCKY.

No. 244. Argued November 29, 30, 1904.- Decided February 20, 1905.

A railroad company in Kentucky claimed as its only ground of Federal

jurisdiction in an action in the Circuit Court of the United States against members of the state board of valuation and assessment that under the tax laws of the State it was deprived of equal protection of the laws contrary to the Fourteenth Amendment, because while the law of the State required all property to be taxed at its fair cash value there was a uniform and general undervaluation of other property but the company's property was taxed at its full value. There was conflicting testimony as to the valuations, most of the members of the board testifying

that they tried in good faith to reach fair cash values. Held, that: The court will not intervene merely on the ground of a mistake in judgment

on the part of the officer to whom the duty of assessment was entrusted

by the law. It is not beyond the power of a State, so far as the Federal Constitution is

concerned, to tax the franchise of a corporation at a different rate from

the tangible property in the State.
Where the only constitutional ground on which the complainant can come

into the Circuit Court obviously fails the court should be very cautious
in interfering with the State's administration of its taxes upon other
considerations which would not have given it jurisdiction.
The facts are stated in the opinion.

Mr. Wm. 0. Davis and Mr. Henry L. Stone, with whom
Mr. Napoleon B. Hays, Attorney General of the State of
Kentucky, was on the brief, for appellants:

Argument for Appellants.

196 U.S.

.

1

The Circuit Court had no jurisdiction of this action.

The state board had made the final assessment of appellee's franchise, and the auditor had given appellee the statutory notice thereof, and it is not shown that appellants, being the auditor, treasurer, and secretary of state, constituting said board, had any further statutory power or authority to enforce the collection of the unpaid part of the state taxes on said assessment. Hence, appellee's suit was against the State without its consent, and in violation of the Eleventh Amendment. Louisiana v. Jumel, 107 U. S. 711; Ex parte Ayres, 123 U. S. 443; Hans v. Louisiana, 134 U. S. 1; Coulter v. Weir, 127 Fed. Rep. 897; Fitts v. McGhee, 172 U. S. 516; Arbuckle v. Blackburn, 113 Fed. Rep. 616.

The bill alleges that the amount in controversy in this action, without considering the local taxes, exceeds $2,000, but there is no allegation stating the amount or value of the local taxes due the counties, cities, towns, and taxing districts exceed the sum of $2,000. Walter v. Northwestern Railroad Co., 147 U. S. 370; Fishback v. Western Union Telegraph Co., 161 U. S. 96; Coulter v. Fargo, 127 Fed. Rep. 912.

There being no diverse citizenship between the parties, the bill does not show jurisdiction in the Circuit Court, on account of the alleged denial of the equal protection of the laws within the meaning of the Fourteenth Amendment. Nash., Chatt. & St. L. Ry. v. Taylor, 86 Fed. Rep. 168; R. R. & Telephone Co. v. Board of Equalization, 85 Fed. Rep. 302; Taylor v. Louisville & Nashville R. R. Co., 88 Fed. Rep. 350; Louisville Trust Co. v. Stone, 107 Fed. Rep. 305; Cummings v. Merchants National Bank, 101 U. S. 153; Albuquerque Bank v. Perea, 147 U. S. 87.

The proof shows the assessment of appellee's franchise had become final before this action was instituted.

The bill as amended does not state facts sufficient to entitle complainant to any relief in equity.

The allegation in the amended bill that said assessors "uniformly" assessed such property below its value for the year 1902 is not sufficient to bring this case within the rule

196 U. S.

Argument for Appellants.

announced in this class of cases by the Federal courts. Cases supra and German National Bank v. Kimball, 103 U. S. 732; Pelton v. Commercial National Bank, 101 U. S. 143; New York ex rel. v. Barker, 179 U. S. 279; State ex rel. v. Western Union Telegraph Co., 165 Missouri, 504; West. Un. Tel. Co. v. Missouri, 187 U. S. 412; Exchange National Bank v. Miller, 19 Fed. Rep. 372.

The county assessors did not habitually and intentionally nor fraudulently assess the property of individuals and corporations, not required to report to the board of valuation and assessment, at less than its fair cash value; nor did the board of equalization intentionally or fraudulently equalize the assessments of such property subject to equalization on the basis of eighty per cent of its cash value for the year 1902.

If the allegations are sufficient to give jurisdiction to the Circuit Court, and to constitute a cause of action, then the proof falls short of what is required by the decisions of the Federal courts in this class of cases before an injunction will be granted interfering with the collection of the public revenues of a State. Cin. So. Railway v. Guenther, 19 Fed. Rep. 398; Taylor v. Louisville & Nashville R. R. Co., 88 Fed. Rep. 373; New York ex rel. v. Barker, 179 U. S. 279.

If there was any actual discrimination between the assessments of property by the local assessing authorities as equalized and those of appellee's franchise, it was sporadic, and not designed or intentional.

The presumption is that the sworn assessing officers discharged their duties faithfully and as required by law, until the contrary is clearly shown by a preponderance of the competent and relevant evidence.

The franchise or intangible property of the complainant was not in fact assessed by the board of valuation and assessment at its full cash value, or at a sum in excess of eighty per cent of such value for 1902. To ascertain the value of the franchise or intangible property of a public service corporation two methods have been followed by the board of valuaArgument for Appellants.

196 U. S.

tion and assessment, and approved by the courts, to wit: the capitalization plan, whereby the total value of all the property of the corporation is fixed at a sum which at six per cent will produce the amount of the net income or earnings; the stock and bond plan, whereby the total value of all the property of the corporation is fixed at the market value of the shares of stock and bonds. Henderson Bridge Co. v. Commonwealth, 99 Kentucky, 641; S. C., 166 U. S. 152; Louisville Railway Co. v. Commonwealth, 105 Kentucky, 722; Adams Express Co. v. Kentucky, 166 U. S. 180; State Railroad Tax Cases, 92 U. S. 575; Commonwealth v. Covington & Cin. Bridge Co., 70 S. W. Rep. 849; West. Un. Tel. Co. v. Taggart, 163 U. S. 1.

Under either of these plans the value of the franchise or intangible property of the corporation may be ascertained by deducting from such total value the assessed value of its tangible property, the remainder being considered the value of its franchise or intangible property.

The share of Kentucky in the assessment of appellee's property was more than twenty-six per cent, the percentage adopted by the board of valuation and assessment, which erroneously included as a part of the lines of the road that appellee “operated, owned, leased or controlled” in that State and elsewhere 1,044.21 miles of road belonging to other companies, in which appellee merely owned.one-half or a majority of the shares of stock. The road of another company in which appellee owns a majority of the stock is not “controlled " by the appellee within the meaning of the statute.

United States v. Northern Securities Co., 120 Fed. Rep. 721; Pullman Palace Car Co. v. Mo. Pac. Railway Co., 115 U. S. 587; Porter v. Pittsburg &c. Co., 120 U. S. 670; Am. Preservers Co. v. Norris, 43 Fed. Rep. 714; Exchange Bank v. Macon &c. Co., 97 Georgia, 7; Atchison &c. Ry. v. Cochran, 43 Kansas, 234; Louisville Gas Co. v. Kaufman, 105 Kentucky, 131.

The complainant, by reason of the action of the county assessors and board of equalization or the board of valuation

and assessment, has not been discriminated against or denied the equal protection of the laws within the meaning of the Fourteenth Amendment to the Constitution of the United States. King v. Mullins, 171 U. S. 436; Judson on Taxation, $$ 437, 562; Head Money Cases, 112 U. S. 595; National Bank v. Baltimore, 100 Fed. Rep. 27; Bell's Gap R. Co. v. Pennsylvania, 134 U. S. 233; Merchants' &c. Bank v. Pennsylvania, 167 U. S. 464; Col. & So. R. Co. v. Wright, 151 U. S. 478; Florida Central &c. R. Co. v. Reynolds, 183 U. S. 476; Kentucky Railroad Cases, 115 U. S. 321; Charlotte C. & A. R. Co. v. Gibbes, 142 U. S. 386; Wagoner v. Loomis, 37 Ohio St. 571; Lowell v. County Commissioners, 152 Massachusetts, 375; Cent. Railroad Co. v. State Board, 48 N. J. L. 7; Louisville Railway Co. v. Commonwealth, 105 Kentucky, 710.

Mr. James P. Helm, with whom Mr. Helm Bruce was on the brief, for appellee:

A State cannot through its administrative officers, intentionally, uniformly and systematically make some of its citizens bear, proportionately to their wealth, one-fifth more of the burdens of state government than it requires of all the rest of its citizens. Or, putting the proposition a little differently, it is not competent to the State to make a certain class of its citizens pay on the value of their property one dollar on the hundred, for the support of the State, and require of all the rest of the citizens that they should pay only eighty cents on the hundred dollars, for the same purpose. It cannot do this directly, and it ought to require no argument to prove that it cannot do it indirectly. In other words, great principles do

, not depend upon mere form, but on substance.

The lower court after a prolonged and most careful consideration of the evidence finds no room to doubt that the condition was the result of design. The language of the court is that all the property in the State subject to equalization, had been “systematically, habitually and intentionally undervalued to at least twenty per cent for the year 1902, first by