Opposition Brief — DeBardeleben Coal Corp. v. Ott

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CITATIONS.

Cases:

Betron, etc., v. New Orleans, 131 La. 73, 59 So. 19 14

California v. Pacific Railroad Co., 127 U.S. 129... 10

Clearwater Timber Co. v. Shoshone County, Idaho,

Se SEE nabbvcecuncasdavacdbessuckaanues 10

Connecticut General Life Insurance Co. v. Johnson,

5 ee & 8h Se re ae 13

Fargo v. Hart, 193 U. S. 490, 242 S. Ct. 498....... 12

Fidelity Mutual Life Insurance Co. v. Fitzpatrick,

es OR BOD ccna kacsaenesadvny ss 8

Griggsby Construction Co. v. Freeman, 108 La. 435,

ON PPT ere TUTE TT EP er ree 13

Nashville Co. & St. Louis Railroad v. Browning,

fee SF ee errr er 12

Santa Clara County v. Southern Pacific Railroad

RR Be RAPE T OTE LETTER TeT 10

Texas & Pacific Railroad v. Abilene Cotton Co.,

DME in ki nean sce henesabek keames CRanx 11

Union Tank Line Co. v. Wright, Comptroller Gen-

eral of Georgia, 249 U. S. 275, 39 S. Ct. 276... .11,12

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CITATIONS—(Continued)

Federal Rules of Civil Procedure—Rule 54 (c)’

Statutes of Louisiana:

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SUPREME COURT OF THE UNITED STATES

October Term, 1947.

Nos. 802 and 803.

DEBARDELEBEN COAL CORPORATION,

Petitioner,

versus .

LIONEL G. OTT, COMMISSIONER OF PUBLIC

FINANCE AND EX-OFFICIO CITY TREASURER,

Respondent.

On Petition for Writ of Certiorari to the United States

Circuit Court of Appeals for the Fifth Circuit.

BRIEF FOR LIONEL G. OTT, COMMISSIONER OF

PUBLIC FINANCE, ETC., IN OPPOSITION.

OPINION BELOW.

The opinion of the Circuit Court of Appeals (R. 152) is

reported at 166 F. 2d 509.

2

JURISDICTION.

The judgment of the Circuit Court of Appeals was en-

tered March 5, 1948, (R. 160, 161) and a petition for re-

hearing was denied April 13, 1948 (R. 167). The petition

for writ of certiorari was filed May 13, 1948. The juris-

diction of this Court is invoked under Section 240 of the

Judicial Code, as amended by the Act of February 13,

1925 (28 U. S.C. A. § 347).

QUESTIONS PRESENTED.

1. Whether petitioner, after arbitrarily refusing to give

the Louisiana assessing authorities any information what-

soever, as to their watercraft, can now be heard to com-

plain of the method of assessment used in taxing such

watercraft.

2. Whether, even though the Louisiana laws give a

taxpayer ample opportunity to correct a method or amount

of assessment, by invoking the Louisiana Statutes, and a

taxpayer refuses to follow such procedure, such taxpayer

can ask a Federal Court to review the method of assess-

ment.

3. Whether, when the Circuit Court of Appeals, in a

broad interpretation of the Federal Rules of Civil Pro-

cedure, remands the case, to determine whether excess

taxes were paid, the taxpayer, in the interim, can secure

a review by this Court of the so-called method of assess-

ment.

THE STATUTE INVOLVED.

The statute involved is Act 152 of 1932 as amended by

Act 59 of 1944 of the Legislature of Louisiana.

Act 152 of 1932 provides, in part:

“* * * the rolling stock or movable property of any

railroad company, telegraph company, canal company

or other transportation company, whose line lies

partly within this State and partly within another

State or States, or whose sleeping cars run over any

line lying partly within this State or partly within

another State or States, shall be assessed in this State

in the ratio which the number of miles of the line

within the State has to the total number of miles of

the entire lines.”

Act 59 of 1944, provides, in part:

“Movable Personal Property——All movable and

regularly moved locomotives, cars, vehicles, craft,

barges, boats and similar things, which have not the

character of immovables by their nature or by the

disposition of law, either owned or leased for a defin-

ite and specific term stated and operated (such, illus:

tratively but not exclusvely, as the engines, cars and

all rolling stock of railroads; the boats, barges and

other watercraft and floating equipment of water

transportation lines); * * *

“(f) The movable personal property of such per-

sons, firms, or corporations, whose line, route, or sys-

tem is partly within this State and partly within an;

other state or states, shall be by the Commission

valued for the purposes of taxation and by it as-

sessed; * * *

—ccaV[T

4

“I. The portion of all of such property of such

person, firm or corporation shall be assessed in the

State of Louisiana, wheresoever, in the ratio which

the number of miles of the line, within the State

bears to the total number of miles of the entire line,

route or system, here and elsewhere, over which such

movable personal property is so operated or so used

by such person, firm or corporation.”

STATEMENT.

DeBardeleben filed these two suits against the City of

New Orleans to secure the return of taxes collected on

their watercraft in Louisiana for the years 1944 and 1945,

which taxes were levied under Act 152 of 1932 as amended

by Act 59 of 1944 of the Legislature of Louisiana. Peti-

tioner alleged that the tax was unconstitutional because

it was a burden upon interstate commerce, because it

violated the due-process clause of the State and Federal

Constitutions, and in the alternative, if the taxing situs

was in Louisiana the method used by the Louisiana Tax

Commission was incorrect and resulted in an excessive

assessment (R. 8, 9).

Petitioner never alleged that any watercraft wholly out-

side of Louisiana was ever assessed.

The Unitea States District Court found no merit in peti-

tioner’s complaint as to the method of assessment and

held that Louisiana was the taxing situs of the water-

craft of “Coyle Lines” (trade name of DeBardeleben’s

—

Marine Division) for the watercraft used in and through

New Orleans and Louisiana. The District Court held,

however, that Louisiana had the right to the whole of

these taxes, and to partly tax under these Louisiana

Statutes was illegal, null and void (R. 66).

Nor could the United States Circuit Court of Appeals

for the Fifth Circuit find any merit in petitioner’s allega-

tion as to the method of assessment, the Court holding that

the method of assessment was causd by DeBardeleben’s

own willful acts on their “refusal to furnish requested in-

formation” (R. 159). The Court of Appeals, however,

reversed the District Court, holding that the City of New

Orleans had the right to these taxes under the Statutes

involved, and remanded the case to determine whether

DeBardeleben paid excess taxes (R. 160).

Petitioner does not complain of the finding of the situs

of this watercraft in Louisiana, but restricts its applica-

tion for writ of certiorari to the question of the method

of assessment.

ARGUMENT.

Petitioner’s application discloses a very unique situation.

It seeks to have this Court review a method of assess-

ment on certain facts—which method of assessment was

caused solely by its own capricious and arbitrary acts.

—

Briefly, the Louisiana Tax Commission (the assessing

authority) sought by every means at its command to se-

cure the value of petitioner’s watercraft and its mileage

within and without Louisiana. The Commission sent

letters and even sent its field-men to petitioner’s place

of business, but DeBardeleben refused to give any of this

information whatsoever. This is shown by the agreed

stipulation in the record (R. 19). What was the Tax

Commission then to do? It did the only thing left to do

and filled in the return “from the best information it

could obtain.” This is in accordance with Louisiana law,

when a taxpayer refuses the information (Act 170 of 1898

of the Legislature of Louisiana, Sec. 19). The Commis-

sion, in its desire to be absolutely fair, used the valua-

tion of similar tow-boats and barges from other com-

panies who had actually made returns to the Tax Com-

mission, (R. 111) and did not use a “crystal ball” or “pull

figures out of the air” as counsel would have this Court

believe.

Thus, DeBardeleben itself caused the situation of which

it now seeks here to complain! Now, at this late date,

because the assessment does not meet petitioner’s con-

ception of correctness, it seeks the intervention of a

Federal Court. It was never contemplated, under our

law, that a litigant could benefit from its own willful

and arbitrary acts. In other words, this is not a “game”

of “hide and go seek” whereby the DeBardeleben Coal

Corporation thwarts the Louisiana Tax Commission in its

every effort to secure exact information and then seeks

to have this Court protect it from the consequences of its

own act.

_—

7

If DeBardeleben believed the method or the amount of

the assessment was wrong, it had ample opportunity for

a hearing before the assessing authorities within a reason-

able time, and could then appeal to the Louisiana Courts.

(Act 39 of 1922 of the Legislature of Louisiana). It did

none of these things. It chose to file a suit in Federal

Court to test the constitutionality of the tax itself. This

it had a right to do, but had no right, in that forum, to

contest the method of assessment or the amount of the

tax.

Petitioner does not seek a review here of the constitu-

tionality vel non, of the tax itself, but seeks to inject the

issue of the unconstitutionality of the method of assess-

ment. Clearly, there is no Federal question presented in

this application.

Both the United States District Court and the United

States Circuit Court of Appeals for the Fifth Circuit, both

found, on a question of fact, that there was no merit

whatsoever in petitioner’s contention as to the method of

assessment. Neither of these Courts, at any time, found

that the method of assessment employed by the Louisiana _

Tax Commission violated the due process of law clause of

the Constitution.

The Circuit Court of Appeals, in its opinion (R. 153)

shows:

“The trial below resulted in judgment for each of

the appellees, ordering the return of the taxes paid,

the court holding * * * in the case of DeBardeleben,

that, while Louisiana had the right to tax such of its

property as had a tax situs in Louisiana, the assess-

ee

ment on the proportionate rule basis as made was

illegal, null, and void.”

The Court of Appeals, of course, corrected the errone-

ous conclusion of the District Court, holding, in effect,

that if Louisiana had the right to the whole of this tax,

it could take but a portion thereof if it desired.

- The Circuit Court of Appeals has remanded these two

cases to the District Court to “ascertain from the present

record, or that record supplemented by additional evi-

dence, whether DeBardeleben has paid excess taxes for

the tax years, and, if it has, under Act 330 of 1938, order

-a refund of the excess paid, with interest.” (R. 160.)

Thus, even though petitioner maintains that it never has

at any time, complained of the amount of the assessment,

the Court of Appeals has given them even more than

that to which they are entitled, because their suits are

not for a reduction of the assessment, but for a cancella-

tion of the entire assessment, and under Louisiana prac-

tice, reduction, in the absence of an alternative plea there-

for, may not be decreed in a suit for cancellation. Fidel-

ity Mutual Life Insurance Co. v. Fitzpatrick, 125 La. 976,

52 So. 118, 120. The Court of Appeals, however, in a

broad interpretation of Rule 54 (c), Federal Rules of

Civil Procedure, is giving petitioner relief even though

not demanded. These suits, therefore, now stand re-

manded to the District Court to obtain more facts as to

the correct assessment. Thus, petitioner is getting all the

relief to which it could possibly be entitled.

Petitioner seeks to inject here the issue of including

“eight barges in Alabama” in the assessment. This ques-

—

tion was never raised by the pleadings. It was only raised

in argument.

Louisiana never, at any time, included in its assessment,

any barges wholly within the State of Alabama. This is

clearly demonstrated by an examination of the actual

assessment sheet of the Louisiana Tax Commission on

DeBardeleben Coal Corporation (R. 69). This is the basis

of the assessment and shows the levy against DeBardele-

ben Coal Corporation, doing business as “Coyle Lines”

(dba Coyle Lines). The trade-name “Coyle Lines” is the

Marine Division of DeBardeleben Coal Corporation. The

record shows that the eight barges in Alabama belonged

to the Mining Division of DeBardeleben—a wholly dif-

ferent subsidiary. The Louisiana Tax Commission never,

at any time, made an assessment of property of the

“Mining Division” but solely of the “Marine Division”

(Coyle Lines). The assessment was restricted to prop-

erty used within the State of Louisiana and is further

demonstrated from the quotation in petitioner’s brief (p.

24) when the Chairman of the Louisiana Tax Commis+

sion testified “that would be a fair assessment for the

property in Louisiana”. (Emphasis ours.)

Possibly, because petitioner has sought to cloud the

issue with this reference to the inclusion of certain barges

in Alabama, the Circuit Court of Appeals deemed it ad-

visable to remand the matter to ascertain the exact situa-

tion. For even if true (which respondent vigorously de-

nies) the Court of Appeals decreed:

“The erroneous inclusion of property in an assess-

ment is ground for reduction, not cancellation.

10

Griggsby Construction Co. v. Freeman, 108 La. 435,

32 So. 399.” (R. 159.)

There is no jurisdiction, therefore, in this Court, to

grant a writ of certiorari, because there is no Federal

question involved; further, these two cases now stand

remanded to the District Court for further evidence as to

the amount of the assessment, and to ascertain what is

actually included.

The cases cited and quoted from by counsel for peti-

tioner find no application here. They are not at all

analogous to the issue presented here, and we shall at-

tempt to briefly show this.

California v. Pacific Railroad Company, 127 U. S. 129,

and Santa Clara County v. Southern Pacific Railroad Com-

pany, 118 U. S. 394, involved state taxation of franchises

received from the United States Government and which

it was prohibited from taxing by the constitutions of the

state or the United States. The Court in California v.

Pacific Railroad Company (supra) stated in conclusion:

“This renders it unnecessary to express any opin-

ion on the application of the Fourteenth Amendment,

as the result would not be different whatever view

we might take on that subject.”

The next case quoted from by counsel for petitioner,

Clearwater Timber Company v. Shoshone County, Idaho,

155 Fed. 612, 632, involved the taxation of land owned by

the United States Government, before the transfer was

completed to plaintiff, and consequently complainant was

ere,

—

11

not the owner of this land at the time taxes were levied,

title being in the United States. It is interesting to note

that immediately after the quotation on page 19 of peti-

tioner’s brief, the Court had occasion to observe:

“However, I do not decide what, if any, application

of this principle would have to the record in this case

if it appeared that a part of the lands in evidence

were subject to taxation. I am of the impression

that I would seek hopefully for some method under

the law by which the plaintiff would be required to

pay a just proportion of the taxes before it received

protection against that which was unjust. But, it

being my view of the law that none of these lands

were subject to taxation in 1903 and 1904, complain-

ant’s prayer is not beset with any equitable objec-

tions. It had and has no duty either at law or in

equity to pay these taxes in whole or in part. * * *

“T have no disposition to assist parties in escaping

a just proportion of the burden of taxation on ac-

count of technical defects in the proceedings of rev-

enue officers in levying and enforcing the payment

cw? .

Texas and Pacific Railroad v. Abilene Cotton Company,

204 U. S. 426, indicates that petitioner should have pur-

sued its remedy, if any, through the Louisiana Tax Com-

mission, which respondent has always contended.

Much reliance is placed by petitioner on Union Tank

Line Company v. Wright, Comptroller General of Georgia,

249 U. S. 275, 39 S. Ct. 276. That case differs widely

from the issue here. While approving, in effect, the tax

apportionment principle on a mileage basis, the Court held

+S AOD EER RENT, PU TY ITE EN Co

12

that even though Georgia knew the exact number of cars

in the State at a given time (as admitted in the agreed

stipulation) they adopted a plan so arbitrary as to unduly

burden interstate commerce. In that case, a correct re-

turn was filed by the Union Tank Line Company—in the

instant cases no return was filed, even though requested,

effectively keeping from the Louisiana Tax Commission

the data needed. The Union Tank Line Company case

(supra) was decided on a question of fact. The facts in

the present cases are wholly in favor of respondent’s posi-

tion.

The information needed lies wholly within the breast of

the taxpayer. For, if the state authorities were required to

keep a check, either upon the average use or aggregate

mileage covered by the movements of interstate common

carriers within the State, and to supplement this with

observations in other states in order to arrive at the due

proportion, the cost of administration easily might con-

sume the tax.

Fargo v. Hart, 193 U. S. 490, 242 S. Ct. 498, is not at all

applicable because Louisiana is not seeking to tax prop-

erty wholly beyond its jurisdiction.

Counsel cites Nashville Company & St. Louis Railroad

v. Browning, 310 U. S. 362, 60 S. Ct. 968, 973, which really

substantiates respondent’s position. In that case, Tennes-

see taxed this interstate carrier by taking the ratio which

petitioner’s mileage in Tennessee bore to its total mileage.

After approving this principle of taxation, the Court went

on to say:

—

13

“We conclude, therefore, that the Commission’s

over-assessment of petitioner’s property, if over-

assessment there was, constitutes no deprivation of

any right under the Federal Constitution.”

The last case quoted from by petitioner, Connecticut

General Life Insurance Company v. Johnson, 58 S. Ct.

436, 303 U. S. 77, involved the right of California to tax

premiums of a Connecticut company on premiums received

in Connecticut on reinsurance contracts—obviously in-

applicable to the issue here.

Thus, counsel for petitioner has cited no case where a

Court has found for petitioner on this issue—that is, the

method of assessment, when the taxpayer has arbitrarily

withheld the pertinent facts, nor can such a case be cited.

And it needs no citation of law by respondent to show

that the issue here is purely a state function, when the

state itself gives every opportunity for the correction of

the method or amount of assessment, which method the

present petitioner arbitrarily refused to invoke.

The Louisiana courts have had occasion to pass on this

question of assessment.

In Griggsby Construction Co. v. Freeman, 108 La. 435,

32 So. 399, the Supreme Court of Louisiana stated:

“We shall consider only the ground insisted on in

the brief, and shall take them up in the order in

which they are presented in the brief:

14

“I. That the assessment includes property not be-

longing to plaintiff, and for the taxes on which

plaintiff is not responsible: Suffice to say that plain-

tiff, having been called upon by the assessor to fur-

nish a list of its property, and having failed to do so,

is, by the express terms of the revenue act (section

14), ‘estopped from contesting the correctness of the

assessment list filed by the assessor’.”

In Betron, etc., v. New Orleans, 131 La. 73, 59 So. 19,

the Supreme Court of Louisiana went on to say:

“Plaintiff made no return of property for assess-

ment, and is therefore estopped by the statute from

contesting the correctness of the assessment list filed

by the assessor. Section 25 of Act 170 of 1898. * * *”

It should need no citation of the law, however; simple

common-sense, equity, logic and justice must decree that

petitioner’s position here is untenable.

CONCLUSION.

Petitioner is not seeking here a review of the law of

situs in taxation, the issue being restricted solely to a

question of the method of assessment.

The due process of law clause of the Fourteenth Amend-

ment is fully satisfied by the Louisiana Statutes, which

give a taxpayer the right of appeal to the assessing au-

thorities to correct any discrepancy in the method or

we

15

amount of the assessment, eh tae 8 AO Ee

the Courts of Louisiana.

The DeBardeleben Coal Corporation refused to follow

this procedure, refusing to apply for the relief granted

them by the Louisiana law as to the method of this assess-

ment. Petitioner, therefore, cannot now complain that

there has been a taking of its property without due pro-

cess of law, when ample opportunity has been afforded

it to correct any alleged errors in the method of assess-

ment.

The Circuit Court of Appeals correctly found that the

taxing authorities could only do what they actually did

in these two cases, and that is, make an assessment from

the best information they could obtain in view of the

arbitrary position taken by petitioner.

Thus, it is self-evident that petitioner has no right, and

should have no right, to invoke the supervisory powers

of this Court to review a method of assessment for which

they were solely to blame, and for which the Louisiana

law itself gives ample remedy.

In addition thereto, the Circuit Court of Appeals has

remanded these cases, giving petitioner even more relief

than that to which it is entitled, under these circum-

stances.

ek YOR MERI ERs 6 Mor ul Ca

16

Patently, there is no Federal question presented here,

and the application for writs of certiorari should therefore

be denied.

Respectfully submitted,

HENRY G. McCALL,

City Attorney,

HENRY B. CURTIS,

First Assistant City Attorney,

ALDEN W. MULLER,

Assistant City Attorney,

HOWARD W. LENFANT,

Special Counsel,

Attorneys for Respondent.

This is to certify that copies of this brief have been

served on opposing counsel on this the 8 day of June, 1948.

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