Appendix — Chicago Great Western R. Co. v. Kendall

Supreme Court brief1924

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APPESDLIS

Boer. Warr Ahetrnet. Back auditor shall, om or fare

Fore the thir Monday ine Sime, rvaleer ont, and transit

fr ther cemeckit@or of state wre absstenct of the real ane per-

merneil prrenperty ine bie comnty, ite whiek he shall set forth:

fe The wemler of veves of land and the Aaagregate

ceetial and taxable valies of the came, exelusive of town

lots, Fetiened ly (he aeeeescte, as Gorreeed hy the county

heed of reuhew s

d The agarewate actual and taxable valuee of real

wstate in each township, Gly and town in the COUNT, £6

Heed ds Comeoetod ly the cotnty: baad af ceew:

S. Phe dgerogate aotial and taxable valios of! personal

PHOPEREN §

4. Am abstieet cs te the rremior and wate at! alt ani

beetle aes the Saenme cee Het eee edd Ie the assessor, showing

the wate acteal and taxable valkes and mamber af

eek Rited or class, ard stteh other faets as meee he re

quited by the state hoard of rerio

“See BEX State board of review. The executive

council shall constitute the state beard of review. and

shall meet at the seat of government on the second Mon

day of July im cach wear, The awdliter of siate shall be

the clerk of the board, amd shall lay before it the abstracts

transmitted to him be the anditor. ax repaired bye the pre-

coding section ~”

“See, 1509. Ch. 139, 37th GN. Adjusting valuation

is conmstios, Wt sbiall cljmat the valuation of property of

the several counties, adding to or deducting from the

valuation of each kind or dass of property such per.

comtage in wach case as 0) Wing the «ame to ix taxallo

value ax fixed in this Aiapher, Int Welore sich executive

Connell ail ahd to the valuation of any kind or clase of

property any seh ywreeihage, 1 sill serve ton Anys!

motive Vy mail, on the anlitor of the eounty whoae vilin

fiend ie propo to te vaieod and hall bold an ed jonrned

meeting aOR wie den Maye? Hote, wh whieh tine enel

boy Hhiy App by ite bowed of eipervisore, eonnty

—O—

attorney, or otherwise, and make written or oral pro-

test against such proposed raise, which protest shall eon-

sist simply of a statement of the error, or errors, com-

plained of with such facts as may lead to their correction,

and at such adjourned meeting final action may be taken

in reference thereto.’’

Ae Office Supreme Court, U.

FILmMD

OCT 6 1924

NO. 23 WM. A, STANSSURYT

OLERK

Supreme Court of the

United States

OCTOBER TER\M, A. D. 1924

THE CHICAGO, ROCK ISLAND AND PACIFIC

RAILWAY COMPANY,

Appellant,

NATHAN E. KENDALL, GOVERNOR OF THE

STATE OF IOWA, ET AL,

Appellees.

AppgaL From THe District Court or tHE Untrep States

FOR THE SouTHERN District or Iowa.

BRIEF FOR APPELLEES.

Ben J. Gisson, Attorney General,

Nem Garrett, Assistant Attorney General,

Counsel for Appellees.

INDEX

Page

oops bes aets Mee Mi Be SRE RRS Sanne IRD ENERO, 4

BOE artnet ena caty sce eee eto 10

Brief of the Argument............................ 19

I eerie sce tee eet eee. Oo

Division CEE PCRS OT OP IAB OE EE ES

ct ee ng a « GEE PEE PE Pere trae Prem aiee a en oe 37

PN Ue 2 so snes tee oe et 47

AUTHORITIES

Adams Express Company v. Ohio, 166 USS. ISD... ... 3

Adams Express Company v. Ohio State Auditor, 165

UL S. 194; 166 UL S. 185 (Tax Case).......... 2: 0-32

Ames v. Union Pacifie Ry. Co., 64 Fed. 165, 176... ... 29

Atlantic & S. L. RR. Co. v. State, 16. No TL 1B3. 0... ou)

Auto and Supply Co. v. Jeffrey and Company, 139

ES s Wil ako he Seas Ge eee 26

meeesy ©. Ua Om OO, Mi

Baker v. Druesdow, 68 L. Ed. Ady. sles caee RCO OOEE 28

Bituminized Brick & Tile Co. y. Simons Brick Co.

re 6 See EME oieceee os a 20

Bluefield Water Works Co. ¥. Publie Service Com.

Bee «| Rem en the MIE ral ee 5 TN wa aI 2s

Boston R. R. Co. v. State, 62 N. HW. 649.000.0000... 2S

Brackett v. Commonwealth, 111 N. E. 1026 (Mass.) 25, 26

Branson v. Bush, 251 UL S. IST, IS2,1S7.......... 28, oH)

Castner v. C. BB. & QQ. RL RL Co. 126 lowa 581: 102

Pau

Cedar Rapids Gas Light Co. vo Cedar Rapids, 144

lowa 426; 223 0. ea me

(.B& (). Ry. Vv. Babcock, 204 U.S. 585 le kéceeae. 24

c. . Hh. oe Ca «3 Kendall, Opinion of the

Three Judge Court on file NN ieee 74

(.M.& St. PL Ry. vv. Kendall, 278 Fed. 248. .....0... yt

Coa NW. Ry. Cony. Eveland, 285 Ped, 42 2s, ot

Cleveland, Cineinnati, Chieage and St. Louis Ry. Co,

Vv. Backus, 14 US. 459, 445 (Tax Casey. . 000... M

Columbus & S. RL Ceo ve. Wright. 15D U.S. 470, 479,

sc TEE CT EE TERT TT TST Te Or re Pee 20, 30

Constitution of Lowa, Art. VIEL See. 2............. ae

Constitution of lowa, Art. [, See. G................. 3

Cooley on Taxation, Third Ed. Vol, 1, 201, 25...... 1

Cotthng v. Kansas City Steck Yards Co, IS3 0. 8.

7 91

Pte Di ee eee ee oS 2S ee a ee oe ee eee

Ve lbcint R ce. TEE OE Cpe ea OORG ae om, 2M, 3

Dubuque ve ROR. Co. 47 lowa 196...0............ |

Dunleith v. Dubuque, 32 lowad27................... a

Purge v. art, W065 U, 8, 400, $09.................3 ia

Franklin County vo Nol TL 1. Ry. (o. 12 Lea 521

(RM EOE oo oven cra teehee 2

Foster v. White Cloud Ove On, RE Me SO. oc co cs <6

(ien. Blectrie Co. v. Clarke & Sons Co, LOS Fed. 170.. 27

Gray's ** Limitations of Taxing Power’, p. GAT tp, 21

Groesheck v. Ry., 256 U.S. 607, 615................. mM

Hanish ve US. 227 Red. Ss $388 My Cont'd Sait

Wy Os cine ceseesseness cabin es ot

Harvard Law Review for May, 1920, p. 902.....0.... a

Hawkeye Ins. Co. ve Freneh, 109 lowa 583: 80 X \\

PN edeecrersaeratainn eae: Pee wi

Pave

Hunter v. Colfax Cons. Coal Co., 175 lowa 245, 254,

284, 280; 14 N. W. 107; (Amended) 157 NW.

ig BE CTL EEE TOAD Mg SES ene mm 21

Hutton v. Doxsee, 16 lowa I3...000.........000 2 Fi

Hingis Central ete, RL R. Co. vy. literstate Commerce

Commission, 206 UL S. pe Phe PEs miles obes

om Be Ciigam, Ds OM. es... =

In Re Railroad Tay Cases, 02 US. OTH, HOG, COs. TT

CREAR DR D6 See bes boa ea ak a, 21, 2, 2M. | eS

In Re Railroad Tax Cases. 115 it . , See ty

lows Mutual Tornado Ins. Ass'n V. Gilbertson, P20

la. GOS; OG NL W, cee PERT TET OPT PO ene 21

Jones Gk OL VER, R. Co, 16 lowa6...00000000 2: 20

Jones v. Hopkins, 32 lowa WB..........0000000 0 a

“Jurisdiction te Tax ’* by Professor Beale, Harvard

Law Review for April, 1019, ase isthe» SREP ou

Kansas City So. RR. Co. v. United States, 231 Us,

sg tae Poche, CO ee ee 285

Kenneheck Water Company ve Waterville, 97 Maine

bees GDL. HAL Mths SO AOL G. 23... 5.8.8: che

Knoxville vy. Knoxville Water Co 4 1h Th Pern |

ha Abra Silver Mitung (ou, ¥, Uo inites| States, 179 U.S.

TOO os on cased ara we cel pdkae Koco k a, 2s

Louisiana Railway Commission Cumberland Tele

cvagge gli let LAE Se | APURR RARE ag ie the

i. de N. HW, Ces. ¥. Greene coun U.S ee Se A

L& NL BR. Co, y. Bosworth, 200 Ped. 380.0000 ot

VieDormott v. Mahoney, 19 lowa 470.08 NOW. $000,

Metropolitan Trust Co. vo Honsten At ey ee

elrdnery Ceaoige RTT ET RPP EET aa i i 2

Miehigan Central BR. OR. Co, vy. Powers, DO] :. mh Be.

wehict Sstry MLE TEL EPEC PT OE re en ee 1

Minnesota Rate Cases, 200 US. 342, 454, 455, 454,

poser SERN T PUTT PE TR PO ER Ee dd

Service Commission, 67 L. Kad. 381; 262 U.S. 276 Os

Monongahela Navigation Co, y. United States, 14s

t,. &, 292 (Condemnation Case). ..........0.0 ot

Montes 2 Wet Quinton, My fowa, fier] 5 Sees

aa a

Page

Morrison vy. Manchester, 58 N. HL 551.............. 28

M. W.& 8. R. Co. v. Morley, 198 Fed. 991............ 333

National Water Works v. Kansas City, 62 Fed. 853,

ey gh EEE ELT LET 5 Oe ne eae a

N. J. Jet. RL R. Co. v. Assessors, 84 NJ. L. 413...... 30)

Nichols Shepard Co. v. Ringler, 135 lowa 18] ; 212

oy Sh, REY PE tr Onno La ta aR 20

North American Bldg. Ass'n vy, Sutton, 35 Pa. St. 463 26

Ohio Tax Cases, 232 ULS. 590... ee eT er ee

Omaha ve Omaha Water Co. 218 ULS ISO, 202, 208

OEE EE EE EEE a ee ae ee 20, 31-32

Pac. Express Co. v. Seibert, 142 USS, A en 2]

People v. Coleman, 126 N.Y. 448; 27 NX. BK, SIS; 12

OPE EGE eee de iiss... 38

peome ¥, Comma 2a N.Y. 102...................... 33

People v. Feitner, 77 N. Y.8.745.................. oo

Per Curiam Opinion on Temporary Hearing herein 28, 31

Pierce v. Exeeutive Council, 165 lowa 465,471... 93. 58

Pittsburgh, ete. RL Ro Co. y. jackus, 154 U.S. 421,

han, Boe dat Reyes 81g Eee 30-32-33

Pope v. Allis, 115 ULS. at ME eee a fe Kv ohio cs 4 |

Postal Tel. Co. v. Adams, 155 U.S. G88............. ou)

Pullman Palace Car Co. vy. Pa. 141 U.S. 18, 26... aod

Railroad Co. v. Dubuque, 17 Lowa 120.0..0...0.0... ed

Railroad Co. v, Pennsylvania, 4UL 8S. 2320000 2]

Raymond v. Traction Co. 207 US. 20.......00002 24

Re Passenger Rates, M. St. P. v. SS. M. R. ('o.,

I Mis, R. C. R. 540 (1907)..................... hh

R&S. Ass’n vy. Railway Co, IS 1.0. ¢. F400, 485.00... Ou

San Diego Land & Town Company v. Jasper, 89 US,

ig Baten, a eR er er a

San Diego Land & Town Company v. National City,

Wet US. 739, 757, 758; 74 Fed 79, 83, 84.0.0... 00. 2

Scottish U and N Insuranee Company v. Herriott, 109

powre, Ma BON W.O08.............5....... 1, 20

Sections Code, 1897

BEDE rea UNS eck ooo ee din doe ek cececcn., oe

ETS ers vie serge s Phe oc sc hieecccs ce, y

2 ee

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Page

COT eho ccgscecieric,, 22

ti SRCEMR SNe OANA AW heb nv vb é9 66.0 es «eos 22, 23-433

ESR erie. Perv ereeverces eddy Day OO-45

SEES CSE ee aS ila nag

BN a Sa eel a 0 Ts eh ck asec ve cc: ¢ ee

MT ce weie se WUE Sor edb vedaekkccesn. 2

aes ue Sains evs coe cce sss o. . e

ry ee iy red or os osc’, ee

EN tee Dy bei ako h0k sass cecssce Sn

EEA ha lye ne as aS 22-39

I css wucals Oa s05 06 6 vv oo és cues 5 26

EE Se cle aie vey hin eve ee ones, . |

Sections Supplement to the Code, 1912

a A EE

Ne is eee de eek reel vdcces, 2

SE a as A el na 2

NOES Rei Caer aaa

ee Pcie vay bey ie oles ccs cc

Se ai eae Re ae ae Se aes

(dl EER IS Rc ge a a 22

ety da ee eel ods cs 3 ae

OE ar coe Sa FS ae ie ee

re en wae oad de oro kkie: 22, 23-40

EE GREG FR TOS eae en 22, 25-40

CE Oe ei sv lek sebie,. ao

MRO t ge ce bddes ks cckiieic.

Vcr oer sini cuys ¢o¢eci cis. 23

ere in eek og6so6 ee leeckcceny 233

OS a

AREER Te ra area ane 23-43

PLE s soap el oe ca eriys cess cdcss,

EC oes ey sav cirsles heey &cdecs «Res

oe io oka ooo hiv boi cco, 23

eal ak bye ke wes dic crcs cee cc, 23-4

ins cei oy yo eee dasa vcd eo 23-40

Pax

ties g MEER ROE PIE I POP GANG) aoe cs she

PONE Sic xg S esac eoteatae dilee ae aed 22

Knsee-15: AEE REO PE POG ooh Rag me Ne in 2

COU va uiees tuned ee oer Coe aes a

Section 16, Interstate Commerce Net as amended... .. 4

Seevers Vv. Cleveland Coal Co. 158 lowa 574: 138 N, WW.

AU San ray eee arene Odd eee eae 25

('t. Rep. (ULS.) 190:67 L. Ee. SO PAG. veces ca Oh

smith v. Martin, 106 Ath 666 (Vt)..00000.0 2H

Smyth ve Ames, 1600S. 466, 460000000000... «oda

Payer v. Meme, S6 lawa, BOW... oo sos oo vce c usc ot

Southern Ry. Co. v. Watts (UL S.) 67) ed. S75; 260

in OU MON ss oy oe San be rs ates ee 24-25, DS

Stanislaus v. San Joaquin, W2ULS. 201000000000... =

State Vv. Fairmont Creamery Co. of Nebraska. 132

DOO Tet 0 We, MO oct ee ee a

Sunday Lake Tron Company v. Wakefield, 247 U.S.

MP i ii CUR EENOE CECE meee AC a, o

Turrentine v. Grigsby, 11S Mla. 380: 23 So. 666... .... 7

Union Pae. RR. Co. v. Christensen, 275 Fed. 6..... 30

Union Tank Line Co. v. Wright, 249 US, 275....00.. a2

United Express Co. v. Mllvson, 28 Towa, 370.0000. .20, 27

United States Compiled Statutes, Par. 12, See, S584... 26

Veiths v. Hagge, 8 lowa 168, 189..0000.........0.... --£

Vicksburg, ete, RL RL Co. ve Putnam, 11S US. 545

se ET EEE Ee AE rig ate a ea a

Walkley v. Clark, 17 Lowa 451....0................ |

Warren v. Henly, 31 Iowa 31....................... ")

Waterloo Rapid Transit Co. v. Bd. of Supervisors, 131

ne: Set WOE Be We, MO onc ccs ce ee 19, 21

Welsh vei. B.& Q. ROR. Co. 53 Towa 632:6N, W123. 20

Westshore Ry. Co. v. State Bd. of Asse ~sors, 82 N_.D.

BOW 20 OF BU ME ecko sack we ee” a

Western Union Telegraph Co. v. Tageert, 18 ULS. 1

TEE, wai v vere eruvEs erased eine le eke Eee

Page

Western Union Telegraph Co. vy, Gottlieb, 199 U.S.

Oe sc ikoriebwesShaae evesierki beri) ounce fae, .

Western Union Telegraph Co. vy. Massachusetts, 125

SPO eveSe env eeavivs

Pee Bevia ALE EERO REE EG 30

Willeox ve Consolidated (Gias Co., 212 U.S. 19, 41.

ic REE OEE oT re es eae 29, 31, 32

Wiiliaimns v. Donaldson, & PINGS Ss vateac ua tucat. 27

Nenia First National Bank v. Stewart, 114 UL S. 224.

No. 23

IN THE

Supreme Court of the

United States

OCTOBER TERM, A. D. 1924.

THE CHICAGO, ROCK ISLAND AND PACIFIC

RAILWAY COMPANY,

Appellant,

NATHAN EE. KENDALL, GOVERNOR OF THE

STATE OF OWA, BET AL,

lL ppellees.

STATEMENT OF FACTS

This is an appeal from an order and decree of the

District Court of the United States, for the Southern

istrict of Lowa, constituted under the provisions of

Section 266 of the Judicial Code, denying the application

of the Appellant for a temporary injunction.

The Appellant filed in the Distriet Court, its bill,

challenging the validity of the assessment of its proper-

lies for the year 1922 by the Executive Council of Iowa.

Upou the filing of the bill, the Distriet Court issued a

temporary restraining order, restraining the Executive

Council of Lowa from certifying, as provided by law, the

wssessment in question, Thereafter there was organ-

—10 —

ized a three-judge court, composed of Kimbrough Stone,

Cireuit Judge, Thomas E. Munger and Martin J. W ade,

District Judges. To this court the ease was submitted.

After evidence had been introduced and arguments

heard, the eourt entered its written opinion, order and

decree, denying a temporary injunction and dissolving

the restraining order,

Thereafter and on the tenth day of November, 1922.

this appeal was allowed and pending the appeal a super

sedeas Was granted staying eight per econt of the assess

ment, all eonditioned upon the filing by the appellant of

a bond conditioned upon the payment of the taxes finally

determined to be legal, together with penalties and in

terest.

The bill of the appellant as filed in the Distriet Court

charges that farm lands have been assessed under the

laws of Lowa systematieally and continuously and in

conformity to a general scheme upon a basis of thirty

eight per cent of actual value, whereas the Exe cutive

Couneil of Towa intentionally and therefore fraudulently

assessed the appellant's property in the year 1922 upon

the basis of seventy-five per cent of actual value. There

is no elaim that the Executive Couneil of Towa misintey

preted the law or applied a wrong method in finding the

value of the appellant's property. The only elaim= is

that it intentionally diseriminated in applying a higher

percentage of actual value to appellant's properties than

to farm lands. The issues, the proofs and the facts are

very earefully and simply stated by the three-judge eourt

in its opinion rendered herein. We quote this opinion:

“These are hearings upon applications for tem

porary injunctions on separate bills a by the Chi

cago, Roek Island & Paeifie Railw: ay Company, and

co ]] —

the Chicago Great Western Railroad Company, re-

spectively. The applications were heard together

and both will be covered in this opinion.

‘These complainants challenge the validity of as-

sessments for taxation of the railway property of

complainants by the Exeeutive Council of the State

of Lowa. The Rock Island claims that farm lands

are assessed at slightly over 38 per cent of actual

value; that, with knowledge of this undervaluation

of farm lands, the Exeeutive Couneil intentionally

assessed its property at 75 per eent of actual value.

The Great Western claims the same as to farm lands

and that its property was intentionally assessed at

11) per cent of actual value, A reduction in the

valuation by the council, after the Great Western

filed its bill, would reduee this elaimed percentage

slightly over i115 per cent of actual value.

‘There is no claim that the eouncil misinterpreted

the law governing their aetion. The claim is that it

intentionally discriminated in applying the law.

There is no material difference between counsel

on the point that if such intentional discrimination

exists, under the Iowa laws, it may be examined and

prevented by the courts. Allegations of violation of

provisions of the Federal Constitution amply sus-

tain the jurisdiction of this court. Sueh jurisdiction

has been upheld in many eases, among which are:

Wallace v. Mines, 253 U. S., 66; Greene v. Ry, 244

ULS., 499; Raymond cv. Traction C'o., 207 UL S., 20,

and Slate Railroad Tax Cases, 92 U.S. 575. There

fore, this court has, under the allegations ef the com

plainants, jurisdiction of these cases and must ex

amine and determine them,

“At the threshold of this examination it is of Vital

importanee to state the limits within whieh this in

quiry must be confined. Assessment of taxes is

essentially a legislative funetion, State Railroad

Var Cases, 92. U.S. 575, 615. Courts ezmnot aet as

hoards of review to correct errors in legislative judg

ment. They act only to restrain legislative action to

its legal boundaries. The Executive Council ix

clothed by the Statutes of lowa with full power to

determine the valne of these railway properties for

—12—

neral taxation purposes. This power, however,

sesteleted and defined by those statutes and by the

state constitution. Of those restrictions, the ones

liere vital relate to quality of valuation. Because of

differences in character, the Statutory methods of de

termining value are different in the case of railroaa

property and of ordinary land and personal prop

erty. However, the statutes are clear that the ult:

mate aim and requirement is that property in ea -

of the above classes shall be assessed at full ac’ aa!

value (Sees. 1305, 1334-A and 1336 lowa Code.) The

rate of taxation applicable to all of the above /:asses

of property is the same, so that inequality of assess

ment results in inequality of taxation. I’ is not,

however, every inequality of assessment + /hich ea),

be corrected by the courts. As said by ¥.r. Justice

Miller (State Railroad Tax Cases, 92 U S., 575, at

612), ‘perfect equality and perfect uw’ .iformity of

taxation as regards individuals or coy porations, or

the different classes of property subje st to taxation,

is a dream unrealized.". And when t’.e most perfect

system is sought to be honestly ay plied to all the

different classes and items of preperty in a great

state like Lowa the result must be aturated with the

inequalities and inaceuracies ivevitably attending

the fallibility of human judgmert applied to such a

complex situation. ‘l'o correct / neh inequalities and

inaccuracies is not the funetio of courts. First,

for the legal reason that the {etermination of such

matters is a legislative fun cion; and, second, for

the practical reason (as said oy Justice Miller in the

above case, p. 610), ‘as a). valuation of property

is more or less matter of « pinion, we see no reason

why the opinion of this cov -t, or of the Cireuit Court,

should be better, or shovil be sulstituted for that

of the board, whose opin on the law has declared to

be the one to govern in che matter.’. But when the

assessing body does not exercise its judgment fairly

and honestly, an entirely different situation, both

legally and practically, exists. The law gives every

taxpayer the legal rig it to the honost, fair judgment

of the assessors ast) the value oj his property for

taxation purposes. The method of enforcing this

right is by invalidating the assessment wrongfully

made and enjoining its enforeement. This limit of

judicial action, in tax assessment matters, to in-

stances where the allegations and the proof show

willful, intentional wrong valuation, has been estab-

lished by many eases in the Supreme Court. Appli-

cation of the doctrine is well illustrated in Albu.

querque Bank v. Perea, 147 U.S. 87; Sunday Lake

frou Co, «. Wakefield, 247 U. S., 300; Raymond v.

Traction Co., 207 U.S. 20, and Greene r. Ry., 244

PS. 49% In the Albuquerque Bank and Sunday

Lake tron Co, eases, the court refused to interfere.

In the Raymond and Greene exses, injunetions issued

and were upheld,

Therefore, the inquiry here is not whether the

property of these complainants was overassessed as

compared with farm lands but whether the Executive

Council intentionally so overassessed such property,

The complainants allege that sueh was the ease.

“We start into the proof with the presumption

that the eouneil did its duty and made no intentiona!

overas-oessment. Nor is overassessment neeessarily

sufficient, standing alone, te prove intentional over

dsse-siient, Complainants have the burden of

proving both overassessment and an intention te

overassess, Sunday Lake lron Co. +. Wakefield, 247

US. 300,553. In the absenee of direet evidenee, in

tention may be inferred from surrounding and. at

tendant cirevmstanees, We may examine the action

of the couneil in the light of the faets before it and

upon which it must have based its action,

"A< io farm land values, we are aided by a stipn-

lation which places the average value in ‘the state

at $125.00. The average assessment, by the loeal

bowrds, was $76.00. This was a fraction over 6] per

cent of xetnal value. It seems to be conceded by

counsel for the respondents that respondents knew

of this unuderassessment. Lf not eoneeded, the proof

is ample that they did know it. Therefore, in assess

ing coiuplainants’ property, they were obligated to

apply a relatively similar pereentage of valuation.

Doos the evidenee econvinee that they failed to do so

and that such failure was intentional?

ee ee

‘*In endeavoring to answer this question, it is im

portant to recognize and give weight to the characte:

of the problem before the council. That problem

Was to ascertain the value of the property in Towa

of two large interstate railway systems. The stat

utes of lowa contemplate that the council shall, in

such cases, assess the ‘entire railway within the

state” (See. 1536, Code). [It ineludes all real estate

(See. 1554-A and 1856 Code), personalty (See. 1336

Code) and intangibles (See. 1336 and 1334 and

S404 Code). [tis contended by complainants that

intangible property is not included but we think the

above sections are intended to cover sueh property

and the valuation is to be upon the entire property as

a going concern, The diflieulties of ascertaining the

value of a single, simple thing as a house, a building

ora tract of land are evident and have been expe

rienced by every court. llow infinitely much more

complicated and difficult must always be the valua

tion of a large railway property! For a half een

tury the courts have struggled with this problem and

have not yet settled even the bases to be used in de

termining such value. There have been innumerable

cases before the Supreme Court involving the valua

tion of large publie utilities for taxation and rate

purposes. In no one of them has it heen laid down

that any particular basis or method of aseertaining

such value was exclusive or controlling. The most

that has been decided is that certain bases or meth

ods bore directly upon value and were useful in

determining it. Sueh reeognized bases are eost price,

reconstruetion cost price, market value of stoek-

and bonds and capitalization of net income. The

uncertainties coneerning selection of any one basis, or

combination of bases, as a standard of value is al<o

made evident by the sharp conflict between econo-

mists, accountants and students of this subject,

They never have agreed and they do not now agree.

This uncertainty is further emphasized in these eases

where counsel for the Rock Island present six base

(par value of stocks and bonds, market value of

stocks and bonds, capitalization of net income at 6

per cent, capitalization of net income at 7 per cent,

capitalization of government rental at 6 per cent and

property investment as shown in Ex Parte No. 74, a

valuation proceeding by the Interstate Commerce

Commission), the Great Western presents five

(physical value, capitalization of net earnings in

lowa at 5 per cont, market value of stocks and bonds,

‘apitalization of net earnings allocated to Towa at

o per cent, government rental capitalized at 5 per

cent) and respondents present three (investment

cost, reproduetion cost and valuation under Ex Parte

No. 74).

The diffienlty does not stop with the bases of

value, It continues into the bases of allocation. te

lowa of a proper proportion of the non-fixed prop

erty and intangibles, There are, at least, twelve dif

ferent bases suggested in these eases, As to the

(ireat Western, the six bases suggested by it do not

widely vary, the extreme percentages to Lowa being

4.0% per cent and 54.55 per cent. As te the Rock

Island, the variation is from 7.25 per cent to 29.63

per cent. As to the Roek Island the respondents

contend for a ratio to Lowa of 27.4 per eent,

“MI of these theories as to bases of values and

bases of allocation were before the couneil, Woe are

Hot informed as to whieh of these theories or com:

binations of theories the eouneil adopted or what

Weight it gave to any one or more. All of these bases

lave some logical hearing upon the matter, As ne

one hits been settled upon, in the decisions, as eon

trolling, the propriety of seleetion remains a matter

of fact (Groesheck +, Ry, 20 US, HO7, O15) to be

determined by the eouneil, whieh is) the Td

quired by law to make the assessment, In the

absence of evidence as to the bases employed, we

‘annot impugn the good faith of the council if the

result reached by it is substantially justified by the

application of any one, or combination, of these

bases to the facts before it. Nor, direct evidence of

intent being present ean we impute bad intention if

(aside from all theories of valuation and alloentioi

the couneil had before it direet. evidence of value

Which rational men would use and whieh could jus

tify the result reached,

—16—

‘There remains the test of the intent of the coun

cil in the light of the above considerations and of

the facts before it. We were told at argument that

the council had before it all of the facts here pre

sented. In considering the facts, the evidence is dif-

ferent as between the two complainants and each

must, therefore, be considered separately.

THE ROCK ISLAND

The aflidavit of L.A, Hermany (Complainant's

Nx. 11) purports to show the value of the entire sys

tem on the six bases of par value of stoeks and bonds,

market value of stocks and bonds, ‘apitalization of

net income at 6 per cent, capitalization of net income

at 7 per cent, capitalization of government rental at

6 per cent, and value under Ex Parte No. 74. These

bases are averaged over a period of five years ending

June 30, 1922. Alloeation to lowa is suggested on

six different bases. Using all of these factors and

giving equal weight to each, the result is a valuation

to Towa of $56,953,316.00 as against an assessed

Value of $06,950,984.00, The inaccuracy of this re-

sult, and, therefore, either of the method or of the

figures used is shown by the Rock [sland bill whieh

sets out a claimed valuation not in exeess of $40),

200.00 per mile in luwa on a mileage of 2.202.335

miles, or an aggregate Iowa value of $89, 194,567.00.

For the moment considering the figures in the exhibit

to be true, the couneil nay have taken any single base

or any combination thereof whieh it might deem help

ful. It may, also, have used any of the suggested

methods of allocation, so long as it ineluded therein

the requirements of the Lowa statute that it consider

gross earnings and the relative proportion of state

and interstate ‘business.’ However, this affidavit

contains no information as to gross earnings, It is,

also, for the fiseal instead of the ealendar vear,

whieh latter is the taxation period. The couneil

might, also, properly have rejected the five vear

period and taken the single year 1921 or a shorter

period than five vears. The result possible for Lowa

Value by employment of the exhibit figures and some

—17—.

one or more of these bases of valuation and alloca-

tion might range from more than $109,000,000.00 to a

little less than $10,000,000.00. If the higher results

were accepted by the council, the ratio of assessed

value would be slightly over 60 per cent as against

61 plus per cent for farm lands.

‘‘There was, however, before the eouneil addi-

tional direet evidence of value which might rationally

have been considered by it. In fact, the motives of

the council could not be successfully attacked had

they, in good faith, used that evidenee as the basis of

the valuation instead of going into the field of sug-

gested theoretical bases of value and methods of allo-

cation. This evidence ineluded the report of the

company to the Interstate Commeree Commission of

the investment value of its property in lowa for pur-

poses of physical valuation by the commission; the

protest filed by the company to the tentative valu.

tion findings of the Interstate Commerce Commis-

sion; and the report of the directors of that rail-

road to its stockholders. The above report to the

commission shows a total valuation of over $137,-

900,000, It seems doubtful whether the item therein

of “General Expenditures,’ totalling over $14,300,-

00.09 should he eensidered at all for taxation pur-

poses. Kxeluding this item, however, leaves a bal

ance of over $123,000,000,00, — If this balance be

taken as the aetual value then the assessment for

taxation sinks to slightly over 50 per eent as com

pared with 61 plus per cent for farm lands.

The above protest filed by the company with the

Interstate Commeree Commission claimed a system

value of not less than $525,000,000.00. From this

amount a most liberal deduction for included items

not preperly to be considered in tax values within

the state of Towa would leave a figure which, allo

cated by any reasonable method suggested, would

apportion to Iowa at least $100,000,000,00. The as-

sessed value would be 66 per cent thereon as com-

pared with 61 per cent for farm lands. Such narrow

difference of percentage might well honestly oceur

and is slight evidence of fraud.

‘In the above annual report to the stoekholders

for 1921, the statement is made, and supported by

figures, that the physical property of the company,

as a going concern, exceeds the par value of the out.

standing stocks and bonds. This par value is given,

in that report, as slightly over $362,000,000.00. If

that be allocated on the mileage basis for 1921 of

29.81 per cent (being one of the methods suggested

by this complainant) the Iowa value is something

over $107,000,000.00. To this the assessed value is

61 per cent plus as against 61 per eent plus for farm

lands.

‘*In view of the above possible findings, based on

evidence before it, we cannot say that the eouneil in-

tentionally overassessed this property.

THE GREAT WESTERN

‘*We apply the same reasoning ani examination, ss

above, to the evidence concerning this carrier. On the

basis of physical values, as tentatively determined

by the Interstate Commerce Commission, the as-

sessed value is 66 per cent plus if the figures of the

carrier be correct or 54 per cent plus if the figures of

the respondents are right. Using the reports of the

Towa Railroad Commission and the Executive Coun

cil for 1921, the system value is at least $120,000,-

000.00. The parties agree that approximately 50 per

cent is a fair basis for allocation. Sueh would give

$60,000,000.00 for Iowa value. The assessed value is

less than 40 per cent thereof. Using this same

method as to the value found in Ex Parte No. 74, the

result is slightly above 40 per cent.

‘*We conclude, therefore, that the council cannot,

on evidence which includes the above, be found to

have intentionally overvalued the property of this

complainant.

‘In the above valuation of the two roads, no ac-

count has been taken of intangible values. We have

thought it unnecessary to investigate the amount of

such values because the showing as to physical val-

ues is, in our judgment, sufficient to defeat these ap-

— 19 —.

plications for temporary injunctions. We do not

say the above methods are, in our opinion, the best

to use in ascertaining the values sought but we do

think that men honestly seeking such values might

rationally use the above methods and figures as a

basis.

‘Some of these figures have been attacked by the

carriers as to some items included therein. It was

within the provinee of the council to reject these con

tentions and we are not here to review such action

as to facts before them. In most instances, an ap

proval of such contentions would not vary the above

percentages sufficiently to cast a shadow upon the

good faith of the council.

“Our conclusion is, therefore, that the applica

tions should be and they will be denied,’

BRIEF

DIVISION |

Section 2 of Article VIIL of the Constitution of lowa

does not prohibit the legislature from enacting laws for

the taxation of the property of corporations or individ.

uals by classes. The rule is that all corporations and

natural persons engaged in the same business must be

taxed alike but that different classes of property need not

he so taxed,

Michigan Central Railroad Co. tr. Powers, 201 ULS,

245, 293, 302;

Hunter v. Colfax Cons. Coal Company, 175 Towa,

204, 287, 289; 154 N. W. 1037: (Amended) 157

N. W. 145;

Waterloo Rapid Transit Co. ¢. Bd. of Supervisors,

131 Lowa, 237; 108 N. W. 307:

The Scottish U. & N. Insurance Cor. Herriott, 109

lowa, 606; 80 N. W. 665;

Cooley on Taxation, Third Kdlition, Volume 1, pave

291, 365;

—0—

In Re Railroad Tax Cases, 92 U. §. 575;

In Re Railroad Taz Cases, 115 U. S. 321;

Columbus € S. R. Co. v. Wright, 151 U.S. 470;

Gray’s ** Limitations of Taxing Power,’’ Page 647,

Section 6 of Article | of the Constitution of lowa does

not prohibit the legislature from enacting laws which

operate uniformly upon the individuals of a class to which

such laws apply. If, in operation, such laws apply to all

persons or citizens in like situation, and within the same

class, then there is no offense against the provisions of

this section.

Jones vo Go CU. Railroad Co., 1G lowa, 6;

Welch v. C. B. & Q. Railroad Co., 53 lowa, 632: 6

N. W. 13;

Hawkeye Insurance Co. v. French, 109 Towa, 38):

SON. W. 660;

The Scottish Uo &N. Ins. Co. v-. Herriott, 109 Lowa,

606; 80 N. W. 665.

( t

Section 6 of Article L of the Constitution of lowa does

not prohibit the enactment of statutes providing for the

uniform assessment and taxation of property by classes.

United Express Co. ¢. Ellyson, 28 lowa, 370;

Warren v. Henly, 31 lowa, 31;

Dubuque v. Railroad C'u., 47 Iowa, 196;

Dunleith v. Dubuque, 32 Iowa, 427;

Hawkeye Insurance Co. v. F’rench, 109 Towa, 585:

80 N. W. 660:

The Scottish U.N. lus. Co. vr. Herriott, 109 Lowa,

606; S80 N. W. 665;

Des Moines v. Bolton, 128 Iowa, 108; 102 N. W.

1045;

State v. Fairmout Creamery Co. of Neb., 158 Lowa,

702; 133 N. W. 895:

a yan

Waterloo Rapid Transit Co. v. Board of Supervis-

ors, 131 Towa, 237; 108 N, W. 307.

The legislature is not bound by the provisions of See.

tion 2, Article VII] of the Constitution of Iowa to assess

or tax the properties of corporations in one elass upon the

samme basis as the Property of individuals or Corporations

In other Classes,

Deccuport vr, Railroad C0., 38 Lowa, 633:

Dubuque v. Railroad Co., 47 Lowa, 196:

Contial lowa BR. R. Co, Lhe Board, 67 Towa, 199;

2 N. W. 128:

Dave Mporl v. Railroad Co., 16 lowa, 348:

Railroad Co, ¢. Dihuque, 17 lowa, 120;

United apr as Uo, v. Ellyson, 28 lowa, 370;

Hunter v. Collar Cons. Coal Co., 175 lowa, 245;

lot N. W. 1037; (Amended) 157 N. W. 145:

lowa Mutual Vornado Insurances Ass'n v. Githert

sou, 129 Lowa, HOS; 106 N. W. 153.

A like construction has heen plaeed upon the equal pro.

tection clause of the l4th Amendment to the Constitution

of the United States.

Pac ific Eerpress Co.r, Seibert, 142 US. 339; 349:

Railroad Co, ¢. Pennsylvania, 1I34ULS, 239;

(rayv’s ** Limitations of Taxing Power,"* Page O47.

DIVISION IT

The assessment of taxes is essentially a legislative

funetion.

State ROR. Tar Cas; a, Se UU. &., S75, GIS.

—22—

Farm lands and railway properties under the statutes

of Iowa are placed in separate and distinct classes for

taxation purposes.

Section 1305, Code Supplement 1913;

Sections 1334, 1334-a, 1334-b, Supplement to the

Code 1913;

Seetions 1335 and 1336, Code 1897 and succeeding

sections,

The provisions of Section 1305 of the Code Supplement

1913 apply only in the absence of a specific statute pro-

viding another and different method of valuation.

The legislature has provided many different methods

of fixing the assessment value or base of property.

Section 1310, Code Supplement 1913;

Section 1314, Code 1897;

Section 1315, Code 1897;

Section 1318, Code 1897;

Section 1319, Code 1897;

Section 1321, Code Supplement 1913;

Seetion 1322, Code Supplement 1913:

Section 1323, Code 1897;

Sections 1330, 1330-a, Code Supplement 1913;

Section 1333, Code Supplement 1913;

Section 1333-a, Code Supplement 1913;

Section 1336, Code 1897;

Section 1340, Code 1897;

Section 1342-a, Code Supplement 1913;

Section 1343, Code 1897;

Sections 1346-d, 1346-e, Code Supplement 1913:

Section 1347-a, Code Supplement 1913;

Section 1350, Code 1897,

— 23 -.

Railway properties are valued for taxation purposes

under special provisions of the statutes.

Sections 1334, 1334-a, 1334-b, 1334-c, 1337, 1337-a,

1340, 1340-a, 1340-b, 1340-¢, 1340-4, 1340-6,

1340-1, Code Supplement 1913 and

Sections 1335, 1336, 1338, 1339, 1341 and 1342 of

the Code 1897,

The executive council is elothed with full power and

authority to find and to determine the assessment base

or value of railway properties.

Section 1334, Code Supplement 1913, ef Seq.

Farm lands are assessed only in odd-numbered years,

therefore, the executive couneil had nothing to do with

the assessment of farm lands in the Year 1922.

Seetion 1350, Code 1897.

The Executive Council of Lowa, sitting asa State Board

of Equalization, has no power to generally increase the

assesstients of land in all of the counties. Tts sole duty

is to equalize among the several counties.

Pierce ve. Exccoutive Council, 165 Lowa, 465, 471:

Montis v. McQuiston, 107 Towa, 651.

DIVISION II]

Courts will not assume jurisdiction nor interfere with

an assessment made by an assessing board, unless it ap-

—%%4—

pears that said board diseriminated against a certain

class of property by intentionally, knowingly and Sys-

tematically assessing it at a higher percentage of actual

value than it intentionally assessed other classes of prop-

erty. Even then the courts merely reduce the assessed

Value of such overassessed property to the same relative

basis at which other property was assessed,

Sioux City Bridge Co. v. Dakota ('v., 67 LL. Ed. 340,

345 ;

Greene ve Lod NR. R. C'o., 244 US. 499;

Taylor v. Lod N. RR. Co. 88 Fed. DOO ;

Albuquerque Bank v. Perea, 147 UL S. 87:

Sunday Lake Tron Co. v. Wakefield, 247 U.S. 350:

Raymond v. Traction Co., 207 U.S, 20.

In a suit to restrain and to enjoin an assessment, it is

not sufficient to prove the undervaluation of other classes

of property or of other property within the same class.

Such undervaluation must be intentions], continuous and

habitual.

C.G.W. Railway Co. vo N. EB. Kendall, Opinion of

the Three-Judge Court on file herein:

Sunday Lake Tron Co. x. Wakefield, 247 U.S. 350-

Southern R.R. Co. v. Watts, 67 L. Kad. 379; 260

U.S. 519;

C.BL& Q. Ry. Co. r. Babeock, 204 US, DSO:

Coulter v. Lod N. R.R. Co., 196 U.S. 599 ;

Stoux City Bridge Co. v. Dakota Couuly, 43 Sup.

Ct. Rep. (U.S.) 190; 67 L. Fd. 340, 343.

The burden of proving both overassessment and. an

Intention to overassess is on the appellant.

Sunday Lake lron Co. v. Wakefield, 247 U.S. 350:

398 ;

a ee

McDermott v. Mahoney, 119 Iowa, 470; 93 N. W.

499 ;

Brackett v. Commonwealth, 111 N. E. 1036

(Mass.).

Bituminized Brick & Tile Co. v. Simons Brick Co.,

192 Pae. 528 (Cal.).

Mere errors of judgment do not support a claim of dis-

crimination, but that there must be something more—

something which, in effect, amounts to an intentional vio-

lation of the essential principle of practical uniformity.

Stour City Bridge Co. v. Dakota County, 67 L. Ed.

340, 343:

Southern Ry. Co. vr. Watts, 260 U.S. 519:

Sunday Lake lron Co, v. Wakefield Tup., 247 ULS.

390, 3893, 62 L. Ed. 1154, 1156, 38 Sup. Ct. Rep.

495;

Stote ROR. Vax Cases, 92 U.S. 575, 612.

It is fundamental that the construction placed upon the

constitution of a state by the court of last resort of the

state is binding upon the federal courts.

Iu Re Gilligan, 206 U.S. 563;

Corington v. First Natl. Bank, 198 UV. S. 100: 40

i. B. A. (N.S.) 447 (Note),

Letters may constitute written admissions and in order

to render them admissible in evidence it is not necessary

that they shall have been sent to the party offering them.

Castner ve CB. Y. RB. Co., 126 Lowa, 581: 102

N. W. 499;

Nichols Shepard Co. v. Ringler, 135 Lowa, 181; 112

N. W. 543;

—26—

Stecle Smith Groce Co, v. Potthast, 109 Towa, 413:

SON. W. 517;

Auto & Supply Co. Jeffrey & Co., 139 Iowa, 7, 10;

La Abra Silver Mi ing Co. v. United States, 175

U.S. 425, 498;

Xenia First Nationa’ Bank v. Stewart, W408

224, 228

Reports made by a railroad ‘orporation under the pro-

Visions of a statute to the Boars of Railroad Commission

ers of Lowa, are admissible in evidence as publie records

and as admissions in any case where their contents are

material The statute does net ») ecify or limit the uses

tou whieh they may be put.

Section 2143, Code 1897;

Brackett vo Commonwealth, W1 XN. Eo. 1086

( Mass. ).

Reports to the Interstate Commeree C% mmission by a

railroad corporation are publie reeords avd are admis.

sible in evidence in all judicial proceedings,

Section 16, Interstate Commeree Act, as amended:

Paragraph 12, See. Sd84, United States Compiled

Statutes 1916;

Manish v. United States, 227 Fed. O84, 58." CIIL),

Sanborn, I.

The annual reports and books of a corporation are aa

missible in evidence against it as admissions.

Smith v. Martin, 106 Atl. 666 (Vt);

Bailey v. Railroad C'o., SOULS. 604;

Vicksburg, ete., Ro Co, v. Putnam, 8 US, 545:

Ne Am. Bldg. Ass'n r, Suttouw, 35 Pa. St. 463:

—

Foster v. White Cloud City Co., 32 Mo. 505:

La Abra Silver Mining Co. v. U. 8.175 U.S. 423,

498.

Pleadings filed in another ease containing admissions,

are competent evidence against the party making them in

another suit as admissions of the facts stated.

Pope v. Allis, WSUS. at p. 370;

Grou l Electric Co, rv. Clark & Sous ('o., 108 Fed. 170,

A written statement is none the less competent as an

admission because it is contained in a document which is

not itself effective for the purpose for whieh it was made.

Snyder vy Reno, 38 lowa, 329:

Turrcutine ¢. Grigshy, 8 Ala, 380: 23 So, 666.

Where two writings are clearly connected the admis

sion of one renders the other competent,

Section 4615, Code 1897;

Seevers v. Cleveland Coal Co., 158 Iowa, 574: 138

N. W. 793;

Jones vr. Hopleins, 32 lowa, 508:

Williams v. Donaldson, & lowa, 108;

Veiths vr. Haqgge 8 lowa, 163, 189;

Walkley v. Clarke, 107 Iowa, 451;

Hutton vr. Dossee, WG Lowa, 123.

DIVISION VI

In the absence of specifie direction in the statutes, the

selection of the method of dete ‘rmining the assessed value

isa matter of fact to be determined by the assessing body.

Crroesheck v. Ry., 200 U.S. OT, O15.

For taxation purposes the minimum value is the value

of the physieal property.

Baker v. Druesdow, 68 L. Ed. Advance Op. 55;

Railroad Tax Cases, 92 U. 8. 575;

Ohio Tax Cases, = U. S. 590;

Westshore Ry. Co. State Bd. of Assessors, 82

N. J. L. 41; 81 Ath Bor;

Morrison v. Manche ster, O8 N. 1 551:

ene R.R.Co. vr. State, 62 N. HL. 649;

WL Ry. Conv. Eveland, 285 Fed. 425;

alae Bush, 251 ULS. 182:

Per Curiam Opinion on T emporary Hearing

Herein.

The method most frequently used by courts and eom

missions to determine the present physieal or struetural

value of a railroad or public utility property is the eost

of reproduction method,

Mo. ~ ha Rel. S.W. Bell Tel. Co. v. Pub. Serv. Com.,

7 L. Ed. 981; 262 U.S. 276;

Blucfie ld Water W orks Co. vr. Pub, Service Com.,

261 UL S. 679;

Southern Ry. Co. vr. pay 260 US S. 519;

Des Moines Gas € vo. v. Des iggy 8, 238 U.S. 155:

Kansas C ny Southern RL R. Conv U nited States,

231 U. S. 423, 445;

om $9 ao

Minnesota Rate Cases, 230 U.S. 352, 434, 453, 454,

458;

Willcox v. Consolidated Gas Co., 212 U.S. 19, 41,

a2;

Stanislaus Co, +. San Joaquin, 192 U.S, 201:

San Diego Land & Town Co. ¢. Jasper, 189 US.

439, 442;

Collling v. Nansas City Stock Yards C'o., 183 1, s.

79, 91;

San Diego Land & Town Co, ¢. National City, \74

8 739;

Sniath vr. Ames, 169 US. 466;

Ames ve. Union Pac. R. R. Co., 64 Fed. 165;

Des Moines Gas Co. +r. Des Moines, 199 Fed. 204,

The distinction between value for rate-making pur-

poses and value for taxation purposes is that in taxation

matters other elements of value are to be added, whieh

cannot be ineluded in rate-making values. The elements

of value conimon to both, have the same Value regardless

of the purpose of the valnation,

Harvard Law Review for May, 1920, p. gor;

Omahav.e Omaha Waterd ‘o., 218 USS. TSO, 202, 203 ;

Nall Wat, riorks ov. Kansas City, 62 Fed. Soy,

SOD;

Ames vr. Union Pacific Railway Co, 64 Fed. 165,

176;

San Diego Land & Town Co. v, National City, 74

ed. 79, 83, 84: 174 U.S. 739, 791, TOS:

Say Diego Ca, x. Jusper, ISO LS, 459;

Stanislaus County vr. San Joaquin, 192 U8, voy.

It is proper to allocate value to the state of Iowa on

the milezge prorate basis in the absence of a clear show

ing that such method works an injustiee or is grossly un-

fair, either to the state or the complainant.

—30—

L.@ N.R.R. Co. v. Green, 244 U. S. 522, 548;

State R. R. Tax Cases, 92 U.S. 575, 608, 611;

Pullman Palace Car Co. v. Penn., 141 U.S. 18, 26:

Pittsburgh, ete., R. R. Co. v. Backus, 154 U.S. 421,

430, 431, 444;

Western Union Telegraph Co. v. Taggert, 163 U.S.

1, 26, 27;

Fargo v. Hart, 193 U.S. 490, 499;

Columbus So. R. RB. Co. ¢. Wright, 151 U.S. 470.

479, 480;

Western Union Telegraph Co. v. Gottlieb, 190 U.

S. 412;

Western Union Veleqgraph Co. v. Mass., 125 U.S.

230;

Postal Telegraph Co. v. Adams, 155 V. S. 688;

Adams Express Co. v. Ohio State Auditor, 165

U.S. 194;

Branson v. Bush, 21 U.S. 182;

Westshore R. R. Co. v. State Bd. of Assessors, 8?

N. J. L. 38; 81 Ath 352,

The branch or feeder lines of a railroad must be con-

sidered as a part of the system, and the net earnings al-

located to sueh lines on the mileage prorate basis js

unfair.

R.& S. Ass'n rv. Ry. Co, WLC. €. 440, 485;

N.d. dct. RR. Co. v. Assessors, 84.N. J. L. 413:

Union Pac. R. Co, r. Christensen, 275 Fed. 6:

AML & S.L.R.R. Co. v. State, 60 N. H. 133;

Louisville & N. R. Co. v. Bosworth, 209 Fed, 380:

Branson v. Bush, 251 U.S. 181, 187.

DIVISION VII

The co-ordinating of the **bare-bones"’ of a railroad

property into an efficient working organism, and the de

velopment of such a plant into an established going busi-

—

¥<-

ee 3

—31—

ness, adds to the value of the bare physical property an

additional value due to the existence of these elements

known as *‘going coneern value.”’

Omaha v. Omaha Water Company, 218 U.S. 180;

Cedar Rapids Gas Light Co. v. Cedar Rapids, 144

lowa 426; 223 US. 665, 670;

Des Moines Gas Co. t. Des Moines, 238 U.S 182.

165;

Denver v. Denver Union Water Company, 246 US,

178, 192;

A norrvills t. Kvorville Wate r C'o., 212 of Ss. 1;

Willeor ?, Consolidated (las C'o., 212 Z Ss. 19.

Franchise Value" is that element of value inherent in

a railroad property represented by franchises and priv-

ileges, and is ineluded in a value for tax

Purposes,

ation or exchange

NV. WR. R. Co. v. KEveland, 285 Fed. 425, 435:

Opinion filed herein derying application for tem

porary injunetion ;

State Railroad Tax Cases, 92 VU. S. 575, 606;

Ohio Tax Cases, 232.U.8. a90;

Willeor v. Consuiidated fias Company, 212 UL S.

19;

Mononqahela Navigation Cov U8. 148 U. S. 312.

Earning eapacity is an element of Value inherent in a

railroad property, and is due to its favorable location

With reference to command of traffie-produecing industries

along its line, its advantage of connections, potential

trafic in its tributary territory and location

present and prospective.

features,

Monongahela Navigation Company v. UU. S.. 148

U.S. 312 (Condemnation Case) :

— 32 —

Cleveland, Cinn., Chicago & St. Louis Railway Co.

v. Backus, 154 U.S. 439, 445 (Tax Case) ;

Franklin County v. M.C. & T. 1. Ry. Co., 12 Lea

O21 (Tax Case) ;

Adams Kepress Co. v. Ohio State A uditor, 105

US. 194, 166 U.S. 185 (Tax Case) ;

Smyth vo Ames, 169 U.S. 466, 546.

‘Good Will’’ is recognized as an element of value in

herent in a railroad property and is to be ineluded in ar.

riving at the total value of a railroad property for taxa

tion purposes,

Metropolitan rust Co. vr. Houston ©s.0. 8. Co.

90 Fed. 683;

Cedar Rapids Gas Light Co. v. Cedar Rapids, 223

ULS. 655;

Consolidated Gas Case, 212 U.S. 19, dD:

Omaha v. Omaha Water Co,, 218 U.S. 1S0;

Jurisdiction to Tax,” by Prof. Beale, Harvard

Law Review for April, 1919, page O14,

Railroad property situated partly within and partly

Without the state but organically related, may be taken

into consideration as a means of reaching the full value

of the property in the state.

L.& N.R.R. Co. vr. Gre en, 244 U.S. 522, 54s:

State R.R. Tax Cases, 92 U.S, O79, GOS, G11;

Pullman Palace Car Co. v. Penn, 141 U.S. 18, 26:

Pittsburgh, etc., R. R. Co. v. Backus, 154 UL S. 421,

430, 431, 444;

Western Union Telegraph Co. v. Taggert, 163 U.S.

1, 26, 27;

Fargo v. Hart, 193 U.S. 490, 499;

Adams Express Co, vr. Ohio State Auditor, 165

U.S. 194;

Union Tank Line Company +. Wright, 249 U.S.

275.

DIVISION VIII

The market value of the stoeks and bonds of a railroad

company should be given little or no weight in the de

termination of total value for taxation purposes.

People v. Commissioners of Tares and Assess

ments, 23 N.Y. 192:

People rv. Coleman, 16 N.Y. 448; 27 N. BK. S18, 12

L.. R.A. 762;

People rv, Feitner, 77 N.Y. S. 745;

MW. &S. R. Coor. Morley, 198 Fed, 99],

The capitalization of net earnings should not be given

coutvolling weight in arriving at a total value for taxation

purposes in lowa,

lowa Statutes:

Pil! shurah Railway Co, ¢, Backus, 14. 8, 459;

lds Erpress Co, v. Ohio, 166. IS}:

Nennehee Water Company rv. Wats rrille, 97 Maine

185; 601. ROA. S06; 54 Atl 6:

Minnesota Rate Cases, 230 . & jo2 :

Smyth v, Limes, 169 US. 406;

Re Passe wager Rates, M. mr. *, &, &. MR. Co.,

1 Wis, RoC. R. 540 (1907);

Whincis Central, ele, RR. BR. Co, tr. Tuterstate Cum

meree Commis sion, 206.0, S. 441, 462:

Nansas City Southern Ry. 2 ULS., BI. 8. 423,

446, 447;

Lewisiava Railway Commission " Cumberland

Li lephone Company, 212 US. 414.

ARGUMENT

There is but one issue in this ease, namely, did the

Exeeutive Couneil of lowa, in fixing the assessment of

—%4—

the appellant's property in the year 1922, knowingly,

intentionally and as a part of a general scheme, assess

the appellant's property upon a basis of 75 per eent of

actual value, at the same time knowing that farm lands

had been knowingly, intentionally and as a part of a

general scheme assessed upon a basis of only 388 per eent

of aetual value. No claim to the adoption of a wrong

method of fixing value or to a misinterpretation of the

law is advaneed.

As the base upon which to found its ease the appellant

in its bill first contends that the Constitution of the State

of Towa prohibits the classifieation of property for taxa-

tion purposes. The constitutional provisions referred to

are as follows:

“The property of all corporations for peeuniary

profit shall be subject to taxation the same as that of

individuals. *’—Neetion 2, Artiele VIEL, Constitution

of Towa.

* All laws of a general nature shall have a uniform

operation; the General Assembly shali not grant to

any citizen or class of citizens, privileges or immuni

ties, which upon the same terms shall not equally

apply to all citizens. "’—Seetion 6, Article I, Constitu

tion of Towa.

It is fundamental that the construction placed upon the

coustitution of a state by the court of last resort of the

state is binding upon the federal courts. In Re Gilligan,

206 U.S. 563; Covington v. First National Bank, 198 U.

S. 100; 40 L. R. A. (N.S.) 447 (Note).

It is likewise fundamental that unless there is some-

thing in the state constitution which requires the assess

ment of all property upon the same basis, the legislature

may provide for the assessment of property by classes.

Mr. James M. Gray in his work ‘Limitations of Taxing

ottios

Power,"’ at page 647, after discussing this question at

length, says:

‘The effect is that the only real effective protec.

tion against unequality of taxation which is available

to the taxpayer is such protection as is afforded by

the constitutions of the states.”’

The Supreme Court of Iowa has construed both these

provisions of the Iowa Constitution. Section 2 of Arti-

cle VITLE has been construed as permitting the legislature

to classify property, both of corporations and natural

persons for assessment and taxation. It has been held

that thix provision was designed to prevent the exemption

of corporate property from taxation. Insurance Com-

pan v. Herriott, 109 Towa 606: Association v. Gilbert-

von, 129 Lowa G58: Railroad Company ve The Board, 67

lowa 199; Dare “port ve. Railroad Co., 38 Towa 635: Du-

buque v. Railroad Co., 3 Towa 56: Hunter re Coal Co.,

1vo Towa 245; Waterloo Rapid Transit Co. v. The Board,

131 Iowa 237,

The interpretation placed upon Seetion 6 of Artiele |

of the Constitution of Lowa is to the same effect, the

court holding that the only requirement is that all prop

erty within the same class, whether the property of an

individual or a corporation shall be assessed alike, but

that property in different classes may be assessed upon

a different basis. United Express Co. v. Ellyson, 28

lowa 370; Warren r. Henly, 31 lowa 31: Scottish Ins. Co.

v. Herriott, 109 lowa 606: Dex Moines v. Bolton, 128

lowa TOS: Mabbell ¢. Hiagens, VAS Towa 26: Waterloo

Rapid Travesit Ua... ¢. Supervisors, 131) lowa 237: Du-

huque re CORLL EP. RR. Co. 40 Lowa 196: Dinleith +

Dubuque, 32 lowa 427: Hawkeye Ins. Conv. French. 109

lowa 585,

The eourt of last resort of lowa has also held that the

— 36 —

Statutes of Lowa providing for the taxation of railway

propertics do not violate the provisions of either Section

6 of Article [ or Seetion 2 of Article VIII, or Seetion 30

of Article ILL of the Iowa Constitution, Dubuque ¢.

Railway Co., 47 Lowa 196; Central La. Railway v. The

Board, 67 Lowa 199: United Bapress Co, vr, Ellyson, 28

lowa 370; Warren vr. Henly, 31 lowa 31.

The marked distinction between the ease at bar and

other cases in which the federal court has assumed juris

diction will be apparent from a study of such eases, [ny

the several cases relied upon by the appellant the state

constitution contains a provision requiring uniformity of

taxation, not only within the class but as between classes,

For example, in the ease most stressed, Greene v. Louis

ville, Ete, Ry. Co,, 244 U.S. 499, jurisdietion was ey

pressly entertained upon the ground that the rule of

equality and uniformity guaranteed by the Kentucky

Constitution econfessedly violated by the state taxing

board of that state brought the ease within the equal pro-

tection clause of the Fourteenth Amendment of the Fed

eral Constitution, thereby creating a federal question,

opening the door for the exercise of federal jurisdiction.

Section 174 of the Kentucky Constitution provides as

follows:

Seetion 174. °° All property, whether owned by

natural persons or corporations, shall be taxed in

proportion to its value, unless exempted by this eon

stitution, and all corporate property shali be the

same rate of taxation paid by individnal property.”’

Such also was the precise situation in Raymond v.

Traction Co., 207 ULS. 20, in which the Hlinois Constity

tion provided;

The general assembly shall provide sueh revenne

as may be needful by levying a tax by valuation, so

= oe

that every person and corporation shall pay a tax in

preportion to the value of his, her or its property—

such value to be ascertained hy some person or per-

sous to be cleeted or appointed in such manner as the

veneral assembly shall direct and not otherwise.’

Having determined then that there is nothing in the

state constitution whieh will confer jurisdiction upon the

court, Nay Wwe now turn to a consideration of the statu

tory law of the state.

THE IOWA STATUTES

It was contended by the appellant that both classes of

property, namely, farm lands and railway properties, are

to be valued for assessment purposes under the provi-

sions of section 1305 of the supplement to the eode 1913.

It is true that there is a general provision relating to the

fixing of the assessment bare or value of property. This

section 1305 of the eode supplement LOTS. is in words as

follows:

“Ail property subject to taxation shall be Valued

at its vetnal value, and shall be assessed at twenty

five per cent of sue actual value. Such assessed

valne shall be taken and considered as the taxable

value of such property, upon whieh the levy shall he

made. ANetnal value of property as used in this

chapter shall mean its value in the market in the

ordinary course of trade. This section shall mot

apply to special charter cities.”

This general law, however, applies in the absenee of a

specific statute, only. A consideration of the laws of the

state relating to the assessment of property will elearly

show that the legislature has, as to many classes of prop.

erty, provided specific assessment bases or values to he

arrived at in a different manner than is provided in the

= =

general statute. In this connection, attention is invite]

to a consideration of the assessment laws relating to the

property of merchants, the property of manufacturers,

the property of banks, moneys and credits, the property

of express companies, the property of general corpora

tions, the property of freight line companies, the properts

of transmission line companies, the property of telephone

companies, the property of gas and water works, the

property of building and loan associations, the property

of insurance companies, and particularly the property of

railway companies. These statutes have been unifornily

upheld by the court of last resort of the state.

Railway properties under the law are valued for asse=s.

ment purposes under the provisions of section 1336 of the

code 1897. This section is in words as follows:

“The said property shall be valued at its actual

value, and the assessments shall be made upon tlie

taxable value of the entire railway within the state,

except as otherwise provided, and shall inelude the

right of way, roadbed, bridges, culverts, rolling

stock, depots, station grounds, shops, buildings,

gravel beds and all other property, real and personal,

exclusively used in the operation of such ‘ailway. In

assessing said railway and its equipments, said eonn-

cil shall take into consideration the gross earnings

per mile for the year ending January first, preeeding,

and any and all other matters necessary to enable

said council to make a just and equitable assessment

of said railway property. If a part of any railway

is without this state, then, in estimating the value

of its rolling stock, and movable property, they shall

take into consideration the proportion whieh the

business of that part of the railway lving within the

state bears to the business of the ‘ailway without

this state."’

We call attention to the fact that under the law farm

lands are originally assessed by local assessors in the sev.

— 39 —

eral taxing districts of the state. The assessor fixes the

value of such properties as directed by the terms and

provisions of section 1305 of the code supplement 1913.

He then submits his findings to the Joeal board of review

of the taxing district and such local board of review pro-

ceeds to hear complaints, either on the part of the prop-

erty owner or on the part of the public, all to the end that

the acts of the assessor may be carefully reviewed and as

nearly as possible, a correct result attained. After the

action of the loeal board of review, the results are sub-

mitted to the county board of supervisors, whieh sits asa

board of equalization for the purpose of adjusting and

equalizing as between the several taxing districts of the

county. After the hoard of equalization of the County

has acted, the results are transmitted to the state auditor

and by him laid before the exeentive eouneil, sitting as a

hoard of equalization. The exceutive couneil proceeds to

equalize as between the counties, all to the end that thers

may be, as nearly as possible, Uniformity as between the

counties.

At this point, may we call attention to the fact that the

desessment of farm lands is made only in odd-numbered

years. Section 1350 of the eode 1897 provides as follows:

Property shall be taxed each Year, and personal

property shall be listed and assessed each year in the

name of the owner thereof on the first day of Jan-

vary. Real estate shall be listed and Valued in each

odd-numbered year, and in each year in whieh real

estate is not regularly assessed the assessor shall list

and assess any real property not ineluded in the

previous assessment. and also any building ereeted

since the previous assessment, with a minute of the

tract or lot of land whereon the same are situated,

and the auditor shall thereupon enter the taxable

value of such buildings on the tax list as a part of the

real estate to be taxed: but if such buildings are

—_—

erected by another than the owner of the real estate,

they shall be listed and assessed to the owner as per.

sonal property."*

Therefore, in even-numbered years no change can be

made by any assessorial body of the state as to the asses.

ment of farm lands. It is true that provision is made for

the addition of the improvements which have been elder

to the lands during the vear, but the original land itself

is assessed in odd-numbered years only, We are con

strained to request the court to keep this facet in mind a.

it will be referred to later in this brief and argument.

On the other hianel, railway properties are assessed ene)

year by the Exeeutive Couneil of the state. Snueh prop

erties are assessed as a whole and not by parts. The

value so arrived at is divided among the several taxing

districts of the state in proportion as the mileage within

such taxing district is to the mileage within the state.

Many elements of value are to be considered by the Exee.

tive Council in fixing the value of railway properties,

whereas, as to farm lands, only the value in the market in

the ordinary course of trade is to be considered,

Having observed that railway properties are to. be

valued for assessment purposes under the provisions of

the special statutes relating thereto, may we now give

consideration to the requirements of sveh statutes,

For convenience we quote these statutes at length.

They are in words and figures as follows:

See. 1354, Code Supplement 1915. ** Railway Com-

panies—wlhen made—verified statement—when fur-

Nished. On the second Monday in July in each year,

the exeentive couneil shall assess all the property

of each railway corporation in the state, excepting

the lands, lots and other real estate belonging thereto

not used in the operation of any railway, and except.

ing railway bridges across the Mississippi and Mis

—41 —

souri Rivers, and excepting grain elevators; and for

ile purpose of making such asseesment its president,

Viee president, general manager, general superin-

tendent, reeeiver or such other officer as the council

may designate, shall on or before the first day of

April in each year, furnish it a verified statement,

showing in detail, for the year ended December 31st

next preeeding:

“Th. The whole mumber of miles of railway owned,

operated or leased by suel corporation or company

Within and without the state:

"2. The whole number of miles of railway owned,

operated or leased within the state, including double

tracks and side tracks, the mileage of the main line

and branch lines to be stated separately, and show

ing the number of miles of track in each county;

3. A fall and complete statement of the cost and

eetual present value of all buildings of every deserip-

tion owned by said railway company within the state

not otherwise assessed;

“4. The total number of ties per mile used on all

iis tracks within the state;

“Oo. The weight of rails per vard in main line,

Jdonble tracks and side traeks;

6. The number of miles of telegraph lines owned

trl need within the state;

“4. The total number of engines, and passenger,

chair, dining, offieial, express, mail, bageage, freight

end other cars, including hand ears and boarding

ears Reed in construeting and repairing such railway,

in-use on its whole line, and the sleeping cars owned

hy it, and the number of each class on its line within

the state, each eliss to he valued separately ;

“S. Any and all other movable property owned by

said railway within the state, classified ‘and sehed-

uled in sueh manner as may be required by said

counell:

“o. "The gross carnings of the entire read. and the

vross earnings in this state;

“10. The operating expenses of the entire read,

and the operating expenses within this state:

“11. The net earnings of the entire read. and the

het earnings, within this state."’

—_

See. 1334-a, Code Supplement 1913. ** Detailed

Statements—what to include. Each railway or other

corporation required by law to report to the exeeu.

tive council under the provisions of the law as it ap

pears in section thirteen hundred thirty-four of the

suppiement to the code shall, on or before the first

day of April, nineteen hundred and five, make to the

executive council a detailed statement showing the

amount of real estate owned or used by it on Decen,

ber thirty-first, nineteen hundred and four, for rai!

Way purposes, in each county in the state in which

said real estate is situated, including the right) of

way, roadbed, bridges, culverts, depot grounds, sta-

tion buildings, yards, section and tool houses, round

houses, machine and repair shops, water tanks, turn

tables, gravel beds and stone quarries, and for all

other purposes, with the estimated actual value there-

of in such manner as may be required by the exeen-

tive council. Only one such detailed statement by

any corporation shall be necessary, and when re-

ceived by the council it shall become the record of

railway lands of such corporation, and redeemed as

annually thereafter reported for valaation and assess

ment by the executive council. On or before the first

day of April of cach subsequent year such eorpora-

tion shall in like manner report all the real estate

acquired for any of the railway purposes above

named during the preeeding calendar year; and also

a list of any real estate, previously reported, dis.

posed of during the same period, which disposition

shall be noted by the eouneil in an appropriate co!

umn Opposite to the deseription of said traet in the

original report of the same in the record of railway

land?’

See. 1334-b, Code Supplement 1913. **Reeord of

railway lands. The executive council, shall, by some

convenient method of binding, arrange the’ state-

ments required to be made under the provision of

the preceding seetion so as to form a consolidated

list of all real estate reported to it as being owned

or used for railway purposes within the state of

lowa, which list shall he known as the reeord of rail

way lands."

— 43 —

See. 1855, Code of Lowa, 1897. ‘Operating ex-

penses—amended statement. There shall not be in-

cluded in said operating expenses any payments for

interest or discount, or construction of new tracks

except needed sidings, for raising or lowering tracks

above or below crossings at grade in cities or towns,

for hew equipment, except replacements, for redue-

ing any bonded or permanent debt, nor for any other

item of operating expenses not fairly and reasonably

chargeable as sueh in railway accounts. The couneil

may demand, in writing, detailed, explanatory and

amended statements of any of the items mentioned

in the preceding section, or any other items deemed

by it important, to be furnished it by sueh railway

corporation within thirty days from such demand, in

such form as it may designate, which shall he veri-

lied as required for the original statement. The re-

turns, both original and amended, shall show sueh

obner frets as the eounell, in vw riting. shell require,"

See. 1540, Supplement Code 1913. “Number of

sleeping and dining ears. In addition to th: matters

required to be contained in the statement made by

the company for the purposes of taxation, sueh state-

Inert shall show the number of sleeping and dining

ears not owned by sueh corporation, but used by it in

operating its railway in the state daring each month

of the vear for whieh the return is made, the value

of excel ear so used, and also the Hii ber of miles ened)

month said ears have been run or operated on sueh

railway, within the state, and the total number of

miles said ears have been run or operated cach

month within and without the state. Sneh statement

shall show the average daily sleeping ear and dining

car service or wheelage operated on each part or divi-

sion of the line or system within the state, designat-

ing the points on the line where variations oceur,

with the mileage of that part having the same daily

~ervice or wheelage.”"

See TYO-a, Supplement Code 1913. <* Gross earn.

ings—-proportion. That for the purpose of making

reports to the exeeutive council. the L£voss earnings

of railway companies, owning or operating a line, or

lines of railway partly within this state, and partly

—44—

Within another state, or other states, or territory, or

territories, upon their line or lines within this state,

shall be ascertained and reported by said railway

companies as follows, to-wit: The aggregate of thie

earnings upon business originating and terminating

Within this state, upon business originating in this

state and terminating elsewhere, upon business orig

inating elsewhere and terminating in this state, and

upon business neither originating or terminating in

this state but carried on or done over the line or

lines in this state or over some part thereof, shall

be reported; and with respect to all such interstate

business the earnings in this state for the purpose of

report shall be actually computed upon the basis of

the length of haul or carriage in this state as com-

pared with the length of haul or carriage elsewhere,

It being hereby declared that for the purpose of mak-

ing reports looking to the dssessment of railway

property for taxation, the gross earnings or business

done or carried partly within this state and partly

in another state, or other states, or territories, shal]

be that proportion of the entire earnings of sueh

business that the haul or carriage in this state bears

to the entire haul or earriage,”*

See. 1340-¢. Supplement to the Code INS. Net

earnings, The exeeutive council shall have the power

to prescribe a method for all railway companies do-

ing business in this state, together with the rules and

regulations for the ascertainment of the net earnings

of the railway lines in this state, to the end that all

such railway companies, in aseertaining and making

report of net earnings, shall proceed upon the same

basis and in a uniform manner.”

See. 1340-¢. Supplement to the Code. TS. Addi-

tional rules and regulations, The rules, regulations,

method and requirements herein provided to be made

by the exeeutive couneil shall be made and eom-

municated in writing or print to the said several rail-

way companies within thirty days from and after

the passage and taking effect of this aet, and shall

he and become binding Upon se”! railway companies

from the time they are so com, ‘vated: provided,

however, that the said executive veil shall have

——E

45...

the power to preseribe supplemental or additional

ries, regulations, and requirements at any time, and

communicate them to the several railway companies

in the manner aforesaid, and with respect to such

additional or supplemental rules, regulations, and re

quirements, they shall be and become binding upor:

the said railway companies within thirty davs after

they are so communicated.”

Sec. LH0-f, Supplement to the Code, 1913. Re

fusal to conform to rules— penalty. Tf any railway

company shall fail or refuse to obey or conform to

the rules, regulations, method, and requirements so

made or preseribed by the exeeutive council, under

the provisions of this act. or to make the reports as

herein provided for, the executive coune|l shall pro

eood and assess the property of sueh railway com

pany so failing or refusing, according to the best

information obtainable, and shall then add te the

taxable valuation of such railway company Dd per

contum thereof, whieh valuation and penalty shall be

separately shown, and together shall constitute the

Heses nent for that vear.’

See. 1556, Code of Lowa, S97. **Valuation. The

“ud property shall be valued at its actual value, and

the assessments shall he made upon the taxable value

of the cntire railway within the state, exeept as other

Wise provided, and shall inelude the right of way,

road fF, brichres, e:iys rt=, rolling ~toek, depots, sti

tion grounds, shops, buildings, gravel beds and all

other property, real and personal, exclusively used in

the operation of sueh railway. In assessing said rail

way end its equipments, said council shall take into

considevation the gross earnines per mile for the

year ending January 1, preceding, and any and all

other ratters Necessary to enable said eouneil te

make a just and equitable assessment of said railway

property. Tf a part of any railway is without this

state, then, in estimating the valine of its rolling stoe!:

and movable property, they shall take into eonsid

eration the proportion whieh the business of that

part of the railway Iving within the state heres to

the business of the railway without this state.”

See. DMI. Code 1897, “ Assessinent by executive

— sm

council. The council shall, at the time of the assess.

ment of other railway property for taxation, assess

for taxation the average number of ears so used by

such corporation each month, and the assessed value

of said cars shall bear the same proportion to the

entire value thereof that the monthly average num.

ber of miles such cars have been run or operated

Within the state shall bear to the monthly average

number of miles sueh cars have been used or Oper

ated within and without tie state. Such Valuation

shall be in the same ratio as that of the property of

individuals, and shall be added to the assessed valua-

tion of the corporation, fixed under the preceding

sections.’’

See. 1542, Code 1897. ** Real property of railways

Lands, lots, and other real estate belonging to any

‘ailway company, not used exclusively in the opera-

tion of the several roads, and all railway bridges

across the Mississippi and Missouri rivers, and grain

elevators, shall be subject to assessment and taxation

on the same basis as property of individuals in the

several counties where situated.’

See. 13539, Code 1897. ‘Rate. ATI such railway

property shall be taxable upon said assessment at the

same rates, by the same officers, and for the same

purpose as the property of individuals within sueh

counties, cities, towns. townships and lesser taxing

districts.’

It is fundamental that all statutes relating to the same

subject are to be construed together in determining the

true intent and purpose of the legislature. Therefore, in

determining what was the true intent and purpose of

the legislature of Iowa in fixing the assessment base or

value of railway properties, all of these statutes must he

considered. These statutes provide for the Executive

Council to secure a complete and itemized accounting of

the physical units of property, both real and persons,

used in the operation of the properties of the earricr

Within the state. This itemized schedule separates the

fixed property and the movable property so that the data

will be complete as to both classes of property. This

data is secured by the Executive Council for some definite

purpose. If the value of the carrier is to be fixed without

regard to the separate units of physical property, then

there would have been ne necessity for the enactment of

these several statutes providing for the reporting of the

physical units and related facts. Does it not necessarily

follow that the true intent and purpose of the legislature

was to secure a complete accounting of the physical prop

erties for valuation purposes? This purpose is not only

disclosed in the several] sections of the statutes quoted

but it is particularly emphasized in the Valuation seetion,

See, 1335, Code 1897, wherein it is provided that the valu.

ation shall inelude the right of Way, roadbed, bridges,

culverts, rolling stock, depots, station frounds, shops,

bnildings, gravel beds and all other property, real and

personal, exclusively used in the operation of sueh rail.

way.’’ Therefore, we feel justified in saving that no

other possible construction can be placed upon these

statutes than that:

Ist. There must be a valnation of the physical units:

and

2d. To the valuation of the physieal units must he

added the valuation of the intangible clements.

II]

IN GENERAL.

It is fundamental that the assessment of property for

taxation purposes is a legislative funetion, Under the

Constitution of Lowa the legislature has an absolute right

to vest the Exeentive Couneil of lowa with full and eom

plete authority to assess the appellant's property as well

as to equalize the value of rea] estate. The eourts will

inl a

not interfere to curreet mere errors in legislative judg.

ment.

State Railroad Tas Cases, 92. U.S. 575;

Sunday Lake lron Co. v. Wakefield, 247 U.S. 350:

C. B&Q. Ry. Co. v. Babcock, 204 U. S. B85.

In order for the court to assume jurisdiction in this

case it must be shown clearly and satisfactorily that there

has been a departure from the rule of practical uniform.

ity and that such departure has been in‘entional, system.

atie and continuous. Chief Justice Taft in Siowr City

Bridge Co. v. Dakota County (U.S.) 67 L. Ed. 843, well

states the rule when he says:

Mere errors of judgment do not support a claim

of discrimination, but there must be something more,

something whieh, in effect, amounts to an intentions!

violation of the essential principle of practieal uni

formity. Sunday Lake dron Co. +. Wakefield, 247

U.S. 350, 353: 62 L. Nd. 1154, 1156: 38 Sup. Ct. Rep,

495,”’

Mr. Justice Miller in Railroad Tar Cases, 92 U.S. 575,

says:

Perfect equality and perfect uniformity of taxa

tion as regards individuals or corporations or the

different classes of property subject to taxation, is a

dream unrealized, * * "as al] valuation of prop

erty is more or less a matter of opinion we see ne

reason why the opinion of this eourt or of the cirenit

court should be better or should he substituted for

that of the board, whose opinion the law had declare:

to be the one to govern in the matter. "*

The Court in Pittsburgh Ry. Co. v. Backus, 154 US.

421, 434, 435, 456, says:

‘*Upon this testimony (testimony as to the valu:

of complainant ’s property) the deeision of the eourt

Was that there was nothing tou impeach the assess.

ment made by the state board, and in this conclusion

we concur, The true cash value of the plaintiff's

property in the state of Indiana in the year 1891 was

a question of fact, the determination of which for

the purposes of taxation was given to this special

tribunal, the state board, Whenever a question of

fact is thus submitted to the determination of a spe-

cial tribunal, its decision creates something more

than a mere presumption of fact, and if such deter-

mination comes into inquiry before the courts, it can-

not be overthrown by evidence going only to show

that the faet was otherwise than as so found and

determined. Here the question determined by the

state board was the value of certain property. That

determination cannot be overthrown by the testi-

mony of two or three witnesses that the valuation

was other than that fixed by the board. It is true

such testimony may be competent, and was received

in this case because, taken in eonjunetion with other

testimony, it might establish fraudulent conduct on

the part of the board suflicient to vitiate its deter

Inihaiion. It is not, however, contended by counsel

that there was any actual fraud on the part of that

board; that the individnal members thereof deliber-.

ately violated the obligations of their oaths of of.

fice, and intentionally placed upon the property of

the plaintiff a valuation which they knew to be gross.

ly in exeess of that which it in facet bore, and did so

with the purpose of making the plaintiff bear a

larger share of the burden of the support of the state

government than it rightfully should. The conten-

tion is made that the board made a grievous mistake

in placing so high a value, and that it took into eon

sideration property outside of the state, and gave to

the property within a value partly dedueed trom that

Without the state. The testimony, however, does not

sustain this contention. * * @

“The findings of an official hody sueh as the Board

of Valuation and Assessment made—as was the ease

here—after a hearing and upon notice to the tax-

payer, are quasi judicial in their character, and are

not to be set aside or disregarded by the courts un.

less it is made to appear that the body proceeded

snttan

Upon an erroneous principle or adopted an improper

mode of estimating the value of the franchise. op

unless fraud appears.’

The Court in Louisville & Nashville Railroad Con

pany v. Greene, 244 US. 523, 536, 542: 61 L. Ed. 1201,

Says:

‘In our opinion, it is a sufficient answer to this

contention to say that the board merely earried out

the capitalization-of-income plan of Valuation, per

haps to its logical extreme, but certainly not in a

manner that enables this court to say that they pur

sued a fundamentally wrong method. * *) * it

criticism merely of the conclusion of the board Upon

a question of facets which is not properly subject to

review by the eourts ’’

The evidence in this ease discloses clearly that the

Executive Council of Iowa in the Year 1922) proeeeded

honestly and fairly in an earnest attempt to equalize upon

the same relative and uniform percentage the assessed

Value of farm lands and railroad property, including the

property of the earrier.

A similar proceeding had been brought in the District

Court of the United States for the Southern District of

Towa in an attack upon the 1921 assessment as made hy

the Exeeutive Couneil of Iowa, Subsequently these eases

were disposed of upon an agreed settlement which has

nothing to do with this case. The fact, however, as to

What the law was and as to what was required by the

Kxecutive Couneil is clearly shown in the opinion of the

Court rendered at that time and to be found in Se Ae

St. P. Ry. Cor. Neudall, ef al, 278 Fed 29s,

In the exercise of an honest purpose the Executive

Couneil at once, after such proceeding had been deter

mined, proceeded to inform itself very fully relative to

railroad values. This fact is disclosed by the reeord in

roy | ewe

this ease. For years the annual reports of the carriers to

the Executive Council of Iowa for assessment and taxa-

tion have been meager (See Exhibit KE, Transeript 206),

Realizing this faet, that body in conformity to law, ealled

upon the carriers for a complete statement of facts rela

tive to the value of their several properties from every

conceivable standpoint and ineluding operating statisties,

vross and net income, physical value, values of stocks and

honds, ete. (See Exhibit Fy Transeript 214). The Coun.

eil did not stop with the information thus disclosed, but

proceeded to invite the carriers to appear personally and

present evidence or faets which might in any way be

considered as refleeting the true value of the properties to

he assessed. The carriers, ineluding the appellant, ap-

peared and did present exhibits and arguments. The

argument of the carriers as presented to the Exeentive

Connell orally are set out in the Transeript, (Transeript

Ho lon, Exhibit 12.)

Not only did the earriers orally present the matter to

the council, but it also presented exhibits as to the value

of its properties, which exhibits are almost identical with

the proofs offered before the three-judge eourt. (Com

pare Exhibit 12, Tr. 142-154.) The earrier alse presented

evidence relative to land Values so that the Executive

Conneil at the time of the assessment had before it the

same ease as Was presented to the three-judge court.

The Executive Council was not even eontent with this

information thus obtained. It went further and secured

still further information. The aflidavit. of KE. Mav

Sweeney, Seeretary of the Exeeutive Couneil in charge of

taxation matters, states (Transcript 301);

“eS * the couneil had before it in connection

With the assessment of said railroad properties they

had complete statistieal reviews and data relative

on SB on

to the market values of stocks and bonds; the par

value of stocks and bonds; gross and net income of

the several railroads; the annual reports and adii-

tional annual reports of each of the several carriers,

including the two carriers in question; also the re.

port for all preceding years of each of said carriers,

including said two particular carriers; also the com.

plete assessed value of all classes of property for

preceding years; also the reports of said railroad

companies, ineluding the two comp.nies in question,

the Railroad Commission of the State of Iowa, for

the year 1921 and preceding years; also exhibit No, 1,

pages 7 to 12, in Ex Parte 74 before the Interstate

Commerce Commission of the United States; also

the reports of the Railroad Commission of the State

of Iowa; the reports of the Executive Couneil of the

State of Iowa; the reports of the Auditor of State

of the State of lowa; also the tentative finding of

Value by the Interstate Commerce Commission. on

file with the Governor of lowa; also copy of letter

of L. C. Fritch, Vice President of the Chieago, Rock

Island & Pacific Railway Company, to the Board of

Railroad Commissioners of Iowa, with reference to

the value of Chicago, Roek Island & Pacifie Railway

property in Iowa; also other matters and things

Which I do not at this time reeall.”’

It thus will appear that the Executive Council at the

time of adjusting the valuation of the properties of the

appellant had before it full and complete information and

was in a position to determine honestly and fairly a rela-

tive value as compared with farm lands.

It is to be observed that the Executive Council eould

not in the year 1922 change the assessed value of farm

lands. It could only seek to reduce the assessed value of

railway properties to the same relative percentage. This

is exactly what the courts hold it had a right to do and

what it ought to do. This is exactly what it did. [1 may

be interesting to note that the Executive Couneil of lowa

has no authority to raise the assessed value of farm lans

a ae

to a basis of 100 per cent. It only has authority to equal-

ize the value as between counties upon the same relative

and uniform percentage. In Pierce v. Erecutive Council,

I60 Lowa 455, 471, the Supreme Court of Iowa outlines

the power of the Executive Council, sitting as a board of

equalization, as follows:

Phe fourth division of the deeree seems tu us to

be much broader than ean be justified under any rule

of daw with whieh we are femiliar. Save as to an

ocigiticl assessment of railways, ete., the State Board

of Review had no other duty than to equalize the as

sessiicnts among the several counties of the state.

It hed no pewer, as we understand, to make original

assessments in any of the counties, or to generally

merease the assessments in each and all of the eoun-

lcs. Its sole duty, as we understand it, in this re-

spect, was to equalize among the several eounties.

Soils rv. MeQuiston, 107 lowa 651."

The courts have assumed Jurisdiction in cases of {his

character only wpon the theory that one class of property

iis been assessed intentionally, systematically and con-

Unnousls upon a higher percentage of wssessed to setus|

Value than that percentage of assessed to actual value

Which has been, as a part of the scheme, applied to an

other class of property. This, because of the fact that the

result of the application of a different pereentage to the

two classes of property has resulted in a denial of the

equal protection ef the laws to the property owner whose

property has been assessed upon the higher basis, TM.

has been so repeatedly announced by this court as te |

fundamental. In the ease at bar a different situation |

presented. The Exeeutive Couneil of lowa did NOt sews

fo assess the property of the appellant upon a higher

percentage than that at whieh farm lands has been

vssessed and equalized, but upon the same percentage.

ay Yee

In doing so it did that which would result to each prop

erty owner an equal and uniform assessment.

This duty on the part of the assessing board has bee,

repeatedly referred to by the courts. The latest pro

nouncement thereon is that of Chief Justice Taft in Sious

City Bridge Co. v. Dakota County, Supra, wherein jy.

says:

“This court holds that the right of the tax paver

Whose property alone is taxed at 100 per cent of it.

true value is to have his assessment reduced to the

percentage of that value at which others are taxed,

even though this is a departure from the require.

ment of the statute. The conclusion is based on the

principle that where it is impossible to seeure bot)

the standards of true value, and the uniformity and

equality required by law, the latter requirement is

to be preferred as the just and ultimate purpose of

the law."’

The appellant before the three-judge court did not at

tack the good faith of the Executive Couneil in seeking

to equalize upon the same relative and uniform basis hy

the production of any evidence, unless it be assumed that

the proofs of value submitted by it are such as to raise

a presumption that the Executive Council did not equal-

ize upon the same relative percentage. The three-judge

court has very carefully analyzed the evidence submitte:!

by the appellant as to its values. Without repetition,

may we again quote:

The aflidavit of I. A. Hermany (Complaint ’s

Ex. 11) purports to show the value of the entire sys-

tem on the six bases of par value of stocks and bonds,

market value of stocks and bonds. capitalization of

net income at 6 per cent, capitalization of net income

at 7 per cent, capitalization of government rental st

6 per cent, and value under Ex Parte No. 74. Those

bases are averaged over a period of five years ending

June 30, 1922. Allocation to Towa is suggested on

-=- JJ —

six different bases. Using all of these factors and

giving equal weight to each, the result is a valuation

to lowa of $56,953,316.00 as against an assessed

value of $66,950,984.00. The inaceuracy of this re-

sult, and, therefore, either of the method or of the

figures used is shown by the Rock Island bill whieh

sets out a claimed valuation not in excess of $40,-

200.00 per mile in Iowa on a mileage of 2.202.335

miles, or an aggregate lowa value of $89,194,567.00,

For the moment considering the figures in the exhibit

to be true, the council may have taken any single

base or any combination thereof which it might deem

helpful. It may, also, have used any of the sug-

gested methods of allocation, so long as it inelnded

therein the requirements of the Lowa statute that it

consider gross earnings and the relative proportion

of state and interstate ‘business.’ However, this af-

fidavit contains no information as to gross earnings.

It is, also, for tie fiseal instead of the calendar vear,

which latter is the taxation period. The couneil

might, also, properly have rejected the five year

period and taken the single year 1921 or a shorter

period than five years. The result possible for Iowa

value by employment of the exhibit figures and some

ene or more of these bases of valuation and alloca

tion might range from more than $109,000,000.00 to a

little less than $10,000,060,00, If the higher results

were aceepted by the council, the ratio of assesse|

value would be slightly over 60 per cent as against

G1 plas per cent for farm lands."

As will have been observed these facts were all before

the Exeentive Council, and it is to be presumed that they

Were given that consideration to whieh they were es

titled.

Again, it may be said in addition te What has been said

by the eourt, that each of the compilations submitted by

the appellant are subject to the very grave objection that

they are not based upon the actual facts as diselosed by

the reeord,

As Opposed to the evideners of Value as thus presented,

_ wo

the state submitted the findings of the Lxeeutive Counc]

on the same relative and uniform basis, together with;

complete data and information relative to the Values of

the appellant's properties upon which the three-judge.

court reached the following eonelusions :

There was, however, before the couneil acd:

tional direct evidence of value which migit rationally

have been considered by it. In fact, the motives of

the council could not be snecessfully attaelked bod

they, in good faith, used that evidence as the basis of

the valuation instead of going into the field of sug.

gested theoretical bases of value and methods of allo

vation. This evidence ineluded the report of the eom-

pany to the Interstate Commeree Commission of the

investment value of its property in lowa for pur-

poses of physies! valuation by the COMMMISStoOns the

protest filed by the company to the tentative valna

tion findings of the Interstate Commeree Cominis

sion; and the report of the directors of that rail

road to its stoekholders. The above report to the

commission shows a total valuation of over SENT,

S00,000, Tt seins doubtful whether the item therein

ef “General Expenditures,’ totalling over $14.200,

000.00 should be considered at all for taxation pur-

poses. Exeluding this item, however, leaves a bal

ance of over $122,000,006.00, Tf this balance be

taken as the actnal value then the assessment for

taxation sinks to slightly over 50 per cent as com

pared with G1 plus per cent for farm lands.

The above protest filed by the company with the

Interstate Commerce Commission elaimed a system

value of not less than $525,C00,.000,00, From this

amount a most liberal deduction for ineluded items

het properly to be considercd in tax values within

the state of Town wonll leave a fieure whieh. allo.

cated by any reasonable method sugested, would ap-

portion to Towa at least $106,000,000,00, | The

assessed vale would be 66 per cont thereon as com

pared with 61 per eent for farm lands. Such narrow

difference of percentage might well honesthy oeeur

and is sight evidence of fraud,

— pa

‘‘In the above annual report to the stockholders

for 1921, the statement is made, and supported by

figures, that the physical property of the company,

as a going coneern, exceeds the par value of the out.

standing stoeks and bonds. This par value is given,

in that report, as slightly over $362,000,000.00, If

that be allocated on the mileage basis for 1921 of

29.81 per cent (being one of the methods suggested

by this complainant) the Towa value is something

over $107,000,000.00, To this the assessed value

is G1 per eent plus as against 61 per cent plus for

farm lands.

‘In view of the above possible findings, based on

evidence before it, we cannot say that the eouneil in.

tentionally overassessed this property."

(Defendant's Exhibit Al Tr. Ive: Defendant ‘s

Exhibit C, Tr. 187-192: Defendant's Exhibit D. Tr.

12-200; Defendant's Exhibit F. Tr. Y14 ane side

folio pages 557 to 587: Defendant's Exhibit G, Vr.

“14, 215 to 222; Defendant's Exhibit. Kk 1, Tr. 224

225; Defendant's Exhibit K-2. Tr. 22, specifically

pages 289, 290, 291, 202; Defendant's exhibit KOS,

Tr, 292, 296, 297, 208, 200. Defendant's Exhibit L. 2,

Tr. 300; Defendant's Exhibit S. Tr. 30D: Defend

ant’s Exhibit T. Tr. 302: Defendant's exhibit N. Tr.

ot.)

In addition to the proofs of value thus referred to hy

the court, reference is made to the affidavits and cor

clusions of value based upon the reeord whieh show

clearly that the actual value of the properties of the ap-

pellant in Iowa, subject to taxation by the Executive

Conncil, exceeds $4 1O,000,000.00, which is more than suf

ficient to sustain the assessment as made by the Exeeu

tive Couneil.

In addition to the foregoing evidences of value based

upon the value of the physical structures, proofs were jn

troduced as to the intangible values of such properties,

These intangible values have to do with such elements of

Value as good will, connected use and operation, ete. Such

intangible values coupled with the physical values raise

the total value of the appellant's property beyond any

tmount conceivably necessary to sustain the action of the

Executive Council,

It follows that the appellant must fail because it has

failed to make out a case of intentional diserimination.

It must fail further because of the fact that the proofs

clearly show that the actual value of the appellant's

property is more than suflicient to sustain the Assess.

ment in question upon a basis of 61.34 per cent.

It is respectfully contended that this court must and

should affirm the order and decree of the three-judge

court.

Respectfully submitted,

Bex J. Ciinsox, Attorney General,

Neti Garret, Assistant Attorney General,

Counsellors fur the Appellee

OCT 24 1924

&, ee

IN THE WH. R, STANSS

Supreme Court of the

United States

OCTOBER TERM, A. D. 1924

No, 23

————

THE CHICAGO, ROCK ISI“AND & PACIFIC RAIL.

WAY COMPANY, Appellant,

NATHAN E. KENDALL, GOVERNOR OF THE

STATE, ET AL., Appellees.

APPEAL FROM THE DISTRICT COURT OF THE

UNITED STATES FOR THE SOUTHERN

DISTRICT OF IOWA

ADDITIONAL BRIEF FOR APPELLEES

Ben J. Gisson, Attorney Generol of Iowa,

Nem. Garrett, Assistant Attorney General,

Solicitors for Appellees.

INDEN

ox tes ites ETN OSE Ne EEL Per

DETROIT eo SON har 6 oC dee bb oak,

Division = |

Division U1

Division TH

A ee

pfs SS eo ae ee ee

ee ee a Ee Pe are Soe aa

1, 196 Fe Wien iin sb s

WEN. RR. Co. v, Cirecne, 24408, 28.0.8

MW. &S. RCo. v. Morley, TS Read GOL.

Moutis v. MeQuiston, 107 lows iy

Poopte ie (OMmmnissioners, i a .

Poople Vv. Coleman, 126. N.Y, 43000000...

Preree Vv. MNxeentive Couneil, 15 Lows ee

Union Pae. Re. Co, uv. Connell Blutt< (loway 75 XN.

Wot ikidecues Sens

Siowy City Bridge Co. v. Dakeotsy Connty, 2600S. 441

Taylor ve Loa NORD RL Con 88 BY di. a0

IN THE

Supreme Court of the

United States

OCTOBER TERM, A. D. 1924

No, 23

THE CHICAGO, ROCK ISLAND & PACIFIC RAIL

WAY Ot IMPANY, App lant,

Vv.

NATHAN E kK ENDALL, GOVERN RmoOF TIE

STATE, KT A Dace App Lee x,

APPEAL FROM THE DISTRICT COURT OF THE

UNITED STATES FOR TIE SOUTHERN

DISTRICT OF OWA

ADDITIONAL BRIEF FoR APPELLEES

STATEMENT

This statement is supplementary to the statement con-

tained in the original bries and argument filed herein

by the appellees. The oceasion for the filing of this Brief

and Argument is unusual and for that reason some refer.

lice to the exact situation is heeessary,

The appellant failed te file its Brief and Argument

pier to the ~ubimission of the case. The appellees there

ame DD ame

upon filed a motion to dismiss and affirm which was sub-

mitted on the Gth day of October, 1924, and is for deter

mination by the court. The appellees also filed their Brief

and Argument. On the 7th day of October, 1924, the

ease Was argued orally. At that time the eourt granted

ten days to the appellant to file a Brief and Argument

and gave additional time to the appellees to reply.

For the convenience of the court and for the purpose

of particularly emphasizing certain outstanding facts, we

eall attention to the following:

This is an appeal from the findings of a three-judge

court constituted under the provisions of Section 266 of

the judicial code denying the application of the appellant

for a temporary injunetion.

. The assessment complained of was made by the

Bicsative Council of Towa, which exeeutive eouncil also

finally equalizes the values of farm lands. In other

words, we are dealing with one board whieh otto

the final assessed value of both classes of property ji

volved, namely, farm lands and railroad properties.

There is no evidence of bad faith on the part of the

re de Council of Lowa in equalizing upon the same

relative percentage of assessed to actual value. The sole

evidence subinitted by the appellant being as to the under

valuation of farm lands and the value of its own prop

erty.

The ratio of assessed to actual value of farm lands

is agreed upon at 61.3 per eent. The appellant offers no

evidence to show that the Executive Couneil of Towa did

not in good faith equalize as between the two classes of

property upon such basis.

4. There is no evidence in the record to show that the

—

Exeentive Council of lowa intentionally overassessed the

property of the appellant. On the other hand, there is

ample evidence upon whieh the executive council might

properly find the value of the appellant’s property on a

lasix of G13 per cent to be equal to or in exeess of the

assessed value fixed by it.

6H. The evidence clearly shows that prior to the making

of the assessment in question the executive council made

an exhaustive investigation and research into railway

values and particularly of the elements of value of the

appellant's properties; that after a hearing in whieh

council for appellant took part, the executive council in

dssessing appellant's property in Towa reduced the

desessment below what it had been for a number of years,

(‘There was evidence before the three-judge court up

aw hieh it properiv denied the application fora tempor:

wey injpunetion,

In connection therewith we submit the following:

at. Exhibit At ¢TrTT) offered by the appellecs, is a

statement of the value of the property in Lowa of the ap-

pellant made by L. CL Briteh. View President of the Rail

Way Company in elarge of econstruetion, maintenance and

capitel expenditures. Mr. Priteh stated in said letter

that the letel value in fowa as of June SO, 1915, was KOT,

MES, The total additions and hetterments in lowa

from Anne Sa, it, to December Ot, 1921, is shown in Ex-

hit 2of Exhibit Kt eT r, 227) tobe SIL207987. These

Wo stints added together produce a value as of date De

eonrher Sh, P21, af FLAS TH5.055. To this, the assessed

Valine of S66 950084 jf. 45 per eent, as compared te aig

pereent the ratio gereed upon,

bh, Mshibit C etfered by the appellees is the 42nd An

— 4—

nual Report of the Board of Directors to the stockholders.

Lhe whole document was offered in evidence, but only the

portion applicable is included in the transcript. (Tr.

187-192.) This exhibit is analyzed by the witness Thorne

in his affidavit, Exhibit 4 of Exhibit K-2 (Tr. 239.) The

value of that portion of the system which may properly

be considered in conneetion with the taxation of the prop

erty of the appellant in lowa as stated in this analysis

amounts to F562049,271. The figures contained in this

statement it will be noted are adopted by the board of

directors as the minimum value of the property of the

appellant. Tt will be noted therein that the board of di.

rectors state (Tr. i89) that ‘this valuation, officially

determined by the United States Government, refutes for

all time and for all purposes the suggestion sometimes

made by the uninformed that this cOmpuny is OVver-eap

italized. We regard the valuation established by the

Commission as being much less than the actual value of

the property, and having filed the protest contemplated

by law in the hope that, upon a hearing, the Commission

Will substantially increase its valuation: but, even on the

Commission's minimum basis, this valuation must. be

taken as establishing a property valne behind our stocks

and bonds, mueh in exeess of their par value.”

lt will be noted that the values enumerated therein are

wdmitted to be on a minimum basis. Reference is made

in the quotation from the report to the stocks and bonds

and capital obligations outstanding against the property,

These will be referred to later. Attention is also ealled

to the statement in the quotation that the board of diree-

tors regards the figures shown by them to be ‘mueh less

than the actual value of the property’ and that thev have

filed the protest contemplated hy law. Reference will be

—

made to this protest and the values therein claimed later

in this statement.

AMlocating the figure of $362,349,271 to the State of

lowa on the mileage proportion basis there is produced in

howaa value of $1OS016, 318, Te this, the assessed value

8 OLY per cent, as compared to 61.8 per cent, the ratio

aureed upon,

e. baxhibit Fir. 254 Fol, ot -o00) Which isa part of

the additional soanunt report to the Executive Couneli,

contains a statement of the par value of the stocks and

bonds of the appellant company. It is there shown that

the par value of the stoeks and bonds of the system on

December 3b, 21 was at least $355,752,926 after making

ail possible deductions fer seeurities lot properly to be

included, as claimed by appellants. This amount allo-

cated to Lowa on the mileage proportion basis produees a

value for fowa of SL0G.008.1 10, However, appellees in-

sist that the correel total amount of stocks and bonds te

he considered is of the mar Value of FOS S14926. This

smonnt allocated te Lowa on the imileage proportion basis

produces a value of $114,130,292, Tt will be noted in this

connection thet the hoard of directors in its wunual report

to toe stoekholders, referred to in the paragraph above,

is udinitted te de the aefnal Value of the property. To

this, the assesseel Vale of SOO OSS is 3s per cent. as

compared to GL3 ner eent. the ratio agreed upon.

! ! |

i: this connection it is interesting to note that the ap-

pellant im its Exhibit | of BExtibit Th. Fol, 410, Opposite

Transcript 136, vives the par Value of its stoeks and bonds

eof Pipe NAL PO) 3 SOTO SOO C50,

d. Exhibit D Pr. 192) offered by appellees is the pro

et toe the ; poellont against the valnati moot its property

by the Interstate Commerce Commission. This protest

and the values therein claimed by the appellant as adidi-

tional to the valuation made by the Interstate Commerce

Commission is analyzed by Mr. Thorne in Exhibit 7 of

Exhibit K-2 (Tr. 243-247.) It will be observed that the

appellant claims an inerease in the physical values of its

total properties over that allowed by the Interstate Com.

meree Commission of approximately $194,740,092 (Tr.

244.) Of this amount there is in Lowa, specifically desig.

nated in the protest, an amount equal to $34,842,444 (Tr.

246.) Adding this amount to the total value found hy

the Interstate Commerce Commission as of June 30, 1915,

brought down to December 31, 1921, as computed by the

appellant in its showing before the Executive Couneil,

Exhibit G in this reeord (Tr. 214, 215-222) a total claimed

value by the appellant is produced amounting to $129,.

223,696 in lowa (Tr. 247.) To this, the assessed value

of $66,950,984 is 51S per cent, as compared to 61.3 per

cent, the ratio agreed upon.

e. Exhibit T offered by the appellant (Tr. 307) is an

extract from the Wettling Exhibits submitted in behalf

of the railroads in the western distriet in May, 1920, in a

proceeding known as Ex Parte 74, the purpose of which

was to determine the value of the properties of the rail

rows as a basis for the determination of rates. The

portion of that exhibit applicable herein is set out in the

transeript page 302. The appellant stated its total value

therein to be $392,426,762. This exhibit was analyzed

by the appellee ’s witness Thorne in Exhibit 3 to Exhibit

K-2 (Tr. 238.) In this exhibit, after making the neces

sary deductions for these properties not properly to be

considered in connection with the assessment of appel

lant’s property in Towa, the resultant value for the SVs

_— i

tem ts $374,308,331. On the hearing the Interstate Com-

merce Commission adopted a value which should be used

hy it by reducing the value presented by the appellant by

%04 per cent. This produced a final value of $338,-

225,008. This value allocated to Iowa o jleage

proportion basis produces a value of . To

this, the assessed value is 6 per cent, as compared to 61.3

per cent, the ratio agreed upon.

f. Appellee’s Exhibit K-1 (Tr. 224-228) shows a total

physical value in lowa based upon the tentative valua-

lion report and the reports to the Exeeutive Couneil and

the Railroad Commission of Lowa by the carrier brought

down to date December 31, 921, of $114478401. The

assessed value bears to such value a ratio of 57.7 per

cent as compared to 61.3 per cent.

¥. To all the physical values of the property of the ap-

pellant there should be added an intangible value repre-

senting the going concern value, franchise value, the value

of good will, earning power and the value of unity of use

and connected operation.

Mr. Thorne in Exhibit K-2 extensively analyzes the in

tangible values of the appellant's property. Exhibit 4

of Exhibit K-2 (Tr. 280) is a computation by Mr. Thorne

computing the intangible value of the property of the

appellant as of date December “1, 1921, as being $11,

LIS. This intangible value is hased upen the carn

ines amd physical valuation of appellant's property.

Exhibit 10 of Exhibit K-2 (Tr. 282) is another comp

tation of the intangible value of the appellant's property

ena different basis. There are other computations of

intangible values but the ene relied upon by the state ix

the one just deseribed. While any of the physical values

hereinbefore deserihed are suflieient te sustain the assess

ment by the Executive Council on the basis of 61.3 per

cent of actual value the addition of the intangible value

necessarily inherent in the property removes any ques-

tton as to the adequacy of the assessment. This intang

ible value added to any of the physical values suggested

(the basis of which were before the Executive Counci!

and the District Court) produces a value so great that

there is no question about the correctness of the assess-

ment made,

There are a number of other coniputations of the value

of the appellant's property in the record but we do not

desire to go into detail further on this point as we he.

lieve what we have outlined is sufficient to show that the

Executive Council, as well as the court below, had before

them suflicient facts and evidence upen which to make

the assessment in question and that they were justified

in fixing the assessed value of the appellant's property pt

the amount fixed.

BRIEF

Under the laws of lowa the Exeeutive Council sits as

one board vested with power and charged with the duty

as a beard of assessment, equalization and review to

equalize the assessed values of property, in¢luding beth

lands and railroad property.

Sees. 1377, 1378 and 1379, Code 1897, as amended ;

Sees. 1554, et seq. Supplement to Code, 1013.

(These seetions are set out in fallin the Ap

pond.)

The Executive Council of Iowa, sitting as a State

Board of Equalization, has no power to generally inerease

the assessments in all of the counties. Its sole duty is

to equalize upon a uniform ratio.

Pierce c. Executive Counc, 165 Towa 465, 471;

Montis cv. McQuiston, 107 Towa 651.

ARGUMENT

It is first contended that there is evidence sufficient to

disclose the facet that farm lands have been assessed at

less than 100 per cent for a number of years. There is

ho coutroversy on this proposition. In other Words, all

of the evidence as to the underassessment of farm lands

submitted by the appellant is immaterial because it is

agreed by the parties that the assessed value of farm

lands bears, to the actual value, a ratio of approximately

O13 percent. The trial court so found.

The failaey of the #ppellant’s argument lies in the fact

that the issue here is not whether farm lands were as-

sesserd on the basis of G13 per cent, but whether the evi-

dence discloses clezrly that the property of the appellant

Wits assessed as a part of « systematic scheme ata higher

percentage of actual velue. There is not the slightest

evidence in the record to show that railroad property was

assessed at a higher perecntage of actual value than farm

deat sis. Ih iruth, tise “v ilenee discloses exactly the «yp

posite, natuely, that the Executive ¢ ‘ouneil of lowa sought

to equalize upon the same relative and uniform percent.

eve us hetwoen the two elnsses of property, This is

exactly what they should have done ane this is exaetis

Coiuly, 2H0UL S. 44d.

The appellant eltes o tinnber of cases, ineliding the

Following : S; : Cal ‘ ii “he Cam: dnd ; Dakota

a en

County, 200 US. 41; L.& NOR R. Co. ¢. Greene, 244

U.S. 622; Taylor eo LON. RR. Co, 88 Fed. 350, Ip

each of the eases cited the court assumed jurisdiction

pen the theory that one elass of property had been as

sessed intentionally, sYstematieally and Continuous |

upon a higher percentage of assessed to actual value than

that percentage of assessed to actual value whieh has been

asa part of the scheme applied to another elass of prop

erty. This, beeause of the fact that the result of the

systematic application of a different percentage to the

two classes of property resulted in a denial of the equal

protection of the laws to the property owner whose prop

erty has been assessed upon the higher basis. This rule

has heen se repeatedly announced by this Court as to be

fundamental As we have heretofore stated, a different

situation is presented in the ease at bar. The Executive

Council of Lowa did not seek to assess the property of the

appellant upon a higher pereentage than that at whieh

farm lands had been by it equalized, Wut Uy

percentage,

Cider the laws of lows the Beecntive Conneil sit< as 9

beard of dssesmment, equalization aml review, Wt i.

Vested with power, not only to aexess rnilyoud prepwenty,

bit ale to eqnalize the nasemsed value of fav bats

flown Cumlo Supplement, (OU, Sections at | mip, Dew

Cole, 107, Seetions 177, DATs, aed VT,

N clear distinetion exist» between enses neh im thin,

Where one bond fixed the fil assessed) value of both

Chisses of property anda ense where Hiferent hours ado

sO, Tn seh cases the presumption is that the hoard

doos that whieh tought te lo, maely, eqmalizes Wyprne the

sie rehitive and uniform percentage. thus hollowing the

law and the constitution,

A different: situation ix presented where two boards

—ll—

act. In such eases as a primary base, it is assumed that

each follows the law and assesses upon a basis of 100 per

cout, Proof of the undervaluation as a part of a system.

atic scheme of diserimination of a large class of property

hy one hoard would, in sneh cases, be sufficient, unless it

he shown that the other board ds-essed upon the same

perecntage., In the ease at har, therefore, We begin with

the conclusion that the Executive Couneil of lowa did

that whieh it oughi to de under the law, namely, equalized

os between the two Classes of property,

Aside from the presumption to which we have referred,

are alse the proofs whiel: show clearly that the EN xeeutive

Couneil of lowa ‘lidl assess the eppeilant ‘s Property Upren

the same relative and uniform basis of dssessed toe actual

value, {See original Brief of Appellees, See alse ap

prellees Motion toy Disimins anid Aflit in.)

lis this counection attention is specifically called to the

fet that after the most exhaustive study of the nes

then (see Brief for Nppelives, pages 0, 54 and 52). the

; “4881 braved fitsaatls Ve ited thine iissiis eeu Vili ot the

aye lant’s property from #31000 per mile to Ry

per mile, The showing of wonnld faith Hed thier beent pray

jmrse on the prt of the assessing bowed jn eoniplete, satud

Necilives the claim Mut there wire an Te eT

tie slisevinination,

Contec! for appellants refer repeateddy to the adoption

Hy The dimsesodiwe homed of a wreny Wether, Suel is not

Nisease, There is ne question nVelved at the aloption

OP Wrote tether lath iter the valine of the eoiplarinant 's

Peaperty, Ne atlesation thereat ps contained in the

rlelinews cay! he praoks were offered hefore the eourt,

The sole que then dh Valved is did the Exoentive Couneil

~aties

of Iowa intentionally, systematically and continuously

und as a part of a scheme assess the appellant’s property

upon 4 higher relative ratio of assessed to actual value

than that applied to farm lands?

MARKET VALUE OF STOCKS AND BONDS

Counsel for appellant further contends that net in

come and the market value of its stocks and bonds are

to be considered in determining the value of its property.

With this contention we quite agree. There is no doubt

but that both net income and the market value of its

stocks and bonds are to be given weight in determining

the value of a railroad property. The weight to be given,

however, is within the sound diseretion of the board

specially vested, under the law, with power to fix the

valne, The value of a railroad property is not to be

determined by the consideration of any one element, Wut

by the giving of consideration tu every element of value.

The weight to be given each factor is one to be determined

by the trilmnal authorized miler the law to And the value,

The evidence elearly discloses that the market value

OF mtoeks atid boned of the appedtinit's property tis well

He the net icone for yours wis before (he ipsossing hour,

Wi Was given proper weight, CANhibis, Te, sony Tr

is Tent tet the court will notosubetitute dps Jide

ment for that of the Ceibunal, espoeially vestock under the

law with power to fix the value for assessment PULposes,

Tn this connection it may be interesting to note that in

allot the cases determined by this court (save those eases

involving the adoption of a wrong method), the court had

uniformly adopted the value fived by the ussessing board

—_

and, where relief has heen granted, has simply applied to

such value the proper percentage, (See cases cited,

Brief tor Appellees Division 3-A.)

Counsel for appellants, however, would have the eourt

disregard every clement of value and find the value, sub.

stituting it for the value fixer hy the assessing board upon

the sole basis of the market value of its stocks ane bonds

and certain sims averred to be the net income fora period

oF five years, capitalized, This contention is) elearty

erroneots and, it would seem. needs ne answer,

To ts the value of a railroad property upon the sole

hasis of the market value of its stocks ane bormds is funda

nentiliy ineorvect. Especially is this true in the cause

at her The poriod of time used is the five vears im

bnecdiatedy preceding 1h combor ol, ES? F. This Was an

dbaorwial period and therefore an Witty period to use

i determining the true value of a eurities.

‘

Ascsins all of the seenriines of a mutroud system are

Het Wertcht sid wold on ihe tarket in bulk. Onby small

ihe fractions, vinecing Crow one thiee-humdredihis of one

er CON to possiily one per eont are bought and sold. No

ive mda will iy for a, eitiele share of stock or a single

1, deqerdert as it ie on the poliev of the company,

Whit would be paid for the controlling interest in the

POWMINS, Whenever the fontrolling interest is sold

aponly, the Hineket vile of Ife shares of stoek Meredses

Ny Tonys gael bounds, cad in MANY iMstanees exceeds by

Nar the valine of the proportios op the company,

Phe eile pe bape ap LOOK Maes not carry with it any

eiiohinee al eomtpal, tbs Not the property of the rail

rr whieh the pureliaser Miys. bat an indinitesinas! im

wae ag fhe eormarmition Th hin ‘is bavi P COT

A iis Prardion, eopureneser ts leo ine ear.

from the properiv af the

a,” oe

‘Again, the market value of stocks and bonds is de-

pendent upon the rate of interest and dividends and jn

terest paid. Tf the property of the corporation is worth

ene hundred cents on the dollar, the bond seeured by the

property is tet necessarily worth one hundred cents on

the dollar. There may be no connection between the mar.

ket value of the securities and the value of the property

back of the securities, An underlying bond, backed hy

property equal or exceeding in value its face, paying 7

per cent, might sell above par, Whereas the sane boned,

secured by precisely the same property, paving an in

terest rate of 3 per cont would not sell at over SIXTY Cents

on the dollar. The value back of the property may he

ample and suflieient to pay it, yet the rate of interest, the

wisth of time it rans. and other factors have eireat Weight

in determining the velue of the obligation in the market,

Again, asin the ease at bara company may husband its

resources, putting its ineome, gross and net. Det

the property instead of paying it out by way of dividends,

and it may have an established reputation of this kind,

Inevitably, such a policy depresses the value of its stocks

as compared toa company which pays larger dividends.

The market value of stocks and bonds Nuetnate enor

nously, especially in abnormal times. This may be du.

fo stock manipulations. Ttoamay be due te the Hooding of

the market with other securities. Whatever he the eause,

the fact remains that stoeks amd bonds during the five

years in question (Mietuated very greatly. Neain. if the

eempany has a reckless history or absorbs, consolidates

and reorganizes constantly, as in this ease, we eare not

how valuable the property is, the market value of its se

enrities is low,

The distinetion always to be kept in mind is that the

‘hare of stock as property is entirely different from the

—

property of the corporation. The minority stockholder,

wud it is always the niinorty of stock that is suld, is help

less anid wholly dependent pon the corporation in which

he hotds stock. Therefore, the wise investor is always

cautious in purchasing stock te investigate not so mnel

the Vale of the prop ity of the corporation, as the poliey

of the COMME,

We have given consideration te a great many eases in

Which, as stated, the market Value of stocks and bonds is

2IVEN seme Weight. The following summary, we believe,

“Lhe found accurate:

1. Sueli decisions are relative very few in nuriber.

2. In those rare CXCeptions where the market Value of

SCCUrITIOS ix given consideration, it ix only Consider: line

edentally, aud is net controlling,

& [tis only in old eases that it is vive

nN any serious eon-

sideration,

4. It ix hever vivery controlling consideration Where

other factors are available,

See Lis Moines Worle re

ed Cify ot Des Moine —

92 Fed. p93, hos 2

ple eS Comiustisxione reat Laas s and

resessmecnuls, BAN, Y.~ 2: Pe ople vr. Coleman, 126 ; im

frees ME. Ws SOR. Co. rv. Marl 4 TOS Fed, NO],

EARNINGS

bey cieceditionn te its contentions

Securities refer to its

ifs shewlne the vedie af its properties arrived at

it ix pleased to term its met

there is neo donb Iunt threat

i to he given Cousideration jn determining

paY ee

the final value of the appellant’s property. The weight

to be given it is to be determined by the assessment board.

The evidence of net income is subject to many grave ob-

jections, among which are the following:

The period of time used was five years preceding July

1, 1921. No consideration is given to the net income for

the entire year 121, whereas the Value for assessment

purposes is to be fixed as of date December ol, Wet,

Again, the period of time used was abnormal in charae

ter, In the vear 1OIS the Government took over and

operated the railroads of the Hation, The period of

Government operation continued until Mareh 10, Phe

Wages paid railroad workers amd the east of materials

used increased during that period out of all proportion

to the inerease in freight rates. This was due partly te

the fact that the Government operated the railroads pri

marily for the purpose of winning the war ane not for the

purpose of making profit. Ina larger sense, berhaps, we

may say that conditions changed so rapidly that changes

in the freight rates in the very nature of things could net

keep pace. This condition was recognized hy Congress in

the enactment of the Transportation Aet in T20 and by

the Interstate Commerce Commission in its order inereas

ing passenger fares, charges and freight rates, Sueh in

creased fares, charges and rates were by speeifie act of

Congress to be fixed so that there would be woreturn te

the carriers of G per cent Npon the vetual value of the

properties used and useful for Transportation purposes,

The value used as to this exrrier is shown by Exhibit?

(Tr. 302) as #362,426,762.) This value was finally by the

Interstate Commerce Commission redneed O04 per eens,

Such value was the earning value. We have alresedls

herein used steely valine ond as s! OW aD is mee than sah

cient to sustain the assessment of the Executive Couneil

on the basis of 61.3 per cent, the ratio agreed upon.

Again, the figures used for net income are taken arbi

travily from the books of the carrier and do not give unuy

cousideration to the normal or reasonable operating ex.

pense,

Without extending this argument on this point further,

We make the final observation that the net income of this

carrier Was given cousideration by the Exeeutive Council

of Lowa in fixing the assessed Value in question, and its

Cveriiination of the Weight to be given is final.

Counsel cites two lowa eases in whieh it is contended

that net income is to be given consideration. As will

We boon observe we edo not yuestion this fact. How

ever, either of the eases eltead, amely, ily Of Marion v.

CLR MR. RCo. 120 Lowa Loand WMiarshallten nw i...

B.C. o. Wilkie ISS lows He, are net in point. Both

of these cases are appeals from the aetion ofa loeal board

of review, Urider the laws of lowa the District Court,

os Well as the Supreme Court, is Vested with authority

to inerease or rednee assessments. Tn other words, the

Court sits as an appellate assessment tribunal. A clear

os inet ion lies between Snel egses hed eases iN Whieh

there isa collateral attack upon the action of an assessing

bod Nevin, both of these eases hold thot while net

income is to he given consideration, it is not controlling,

With this contention we qtite agree, Again, both of these

eoves pre under the wenoere! ‘tatute amd are assessed nm

the market value of the Preperty, As will have heen

hate] hy reading the original brief for appellees filed

herein, it is not the market valne of a railroad property

that is te he considered os the assessment base, hat rather

the cetual value of the yroperty whieh is orrived at by

—

taking ime consideration, first, the value of the strue-

fares, and then adding thereto the intangible values.

In direet contradietion of the contentions of the appel-

lant, attention is called to the recent ease of Union Pac Hite

Riy. Co. ve. Counce’ Lilnijs, Vewa) 175 N. W. 6, in whiel;

the Court sitting as an appellate tribunal in assessments

refused to take net income as the basis for fixing value.

but used rather the original eost less depreciation, A

capitalization of net ineome in sneh ease would have re

sulted in a grossly inereased figure over that finally «le

termined upon by the Court and, as the Court properly

said, it would far exceed the actus! valne of the property,

The point wemake is that wet income is dlwayvs to be given

consideration as is gross income, the weight to he given

each depending upon all of the facts and circumstances,

tel the deterniination of the matter honestly arrived at

by the hoard will net be interfered with by the eourts,

tmay be interesting to note that HW net ineome be taken

and if the figures of the conmplainant carrier be used for

certain of the years, particularly the vear 1920, there

would be no value to this properts. Such a eontention

is absurd ane foolish,

CONCLUSION

We have already extended this argument to an extreme

lenath, but fecling as we do that when an assessment board

in wood faith seeks te cynalize the assessed value of

property, gives consideration to every contention made by

the carriers, makes an exhaustive study of the problem

inorder to provide equality, that its action should not be

overturned. In the ease at bar we submit that the trial

court Was correct in its determination that the evidence

Was insoflicient to show an inteutional, systematie dis-

— a

erinmrettion ane that its determination and interlocutory

deeree should be and must be iflirmed,

Respectfully submitted,

Bix J. Girses, Attorney General,

Nev Larne ry Assists t Attorney CGroneral,

Saul cllaors f

(ry thie Lppelles x.

APPENDIX

“See, 1377. Abstraet. Each anditor shall, on or be

fore the third Monday in June, make out, and transmit

to the auditor of state an abstract of the real and per

sonal property in his county, in which he shall set forth:

1, The number of acres of land and the aggregate

vetual and taxable values of the sane, exelusive of town

lots, returned lw the SSE SSsOrs, is corrected ly the County

board of review:

2. The aggregate actual and taxable values of rea!

estate in-each township, city and town in the county, re

turned ils corrected Hy the county hoard of review:

3. The aggregate actual and taxable values of persons!

property;

4. An abstract as te the number and value of all ani

mals as the same are returned by the assesser, showing

the aggregate actual and taxable values and number of

each Kind or class, amd sueh other facts as may be re

quired by the state board of review."

“See, 1578S. State board of review. The exceutive

couneil shall constitute the state board of review. ane

shall meet at the scat of government on the second Mon

day of July in each vear. The ouditer of state shall he

the clerk of the board, and shall lay before it the abstract -

transmitted te him by the auditor, as required by the prs

eeling section.”*

"See DT Cho mo, oTth GAL Nedijusting valuation

in counties, Tt shall seliust the valuation of property af

the several counties, adding to or deducting from. the

Valuation of each kind or elass of property such per

centage in-each ease as will bring the same to its taxall:

Value as fixed in this chapter, but before such exeeutive

counell shall add te the valuation of env kind or elass of

preperty any such percentage, it shall serve ten days’

notice by mail, on the anditer of the county whose valna

tion is proposed to he raised and shall held an adjourne |

meeting alter such ten days’ neties, at whieh time sueh

county may appear by its beard of <upervisors, eounty

osGh ww

attorney, or otherwise, ond make written or oral pro-

test against such proposed raise, whieh protest shall con.

sist simply of a statement of the error, er errors, e¢om-

pli inet of with sneh faets as mov lead te their correction,

and at such adjourned meeting final action may be taken

in reference thereto."’

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.