U.S. Supreme Court
Wallace v. Hines, 253 U.S. 66 (1920)
Wallace v. Hines
Argued April 21, 1920
Decided May 3, 1920
253 U.S. 66
In the absence of an adequate remedy at law plainly allowed against the state, equity has jurisdiction to restrain state officials from enforcing an illegal tax, the effect of which, if not paid, would be to cloud plaintiff's title and subject him to pecuniary penalties. P. 253 U. S. 67.
Held that the law of North Dakota permitting actions respecting title to property or arising upon contract to be brought against the state as against a private person does not clearly allow such an adequate remedy, since an action to recover money wrongfully extorted is a case in contract only in an artificial sense. Id.
The method of taxing an interstate railroad company by assessing the value of its property within the state at that proportion of the total value of its stocks and bonds that the main track mileage within the state bears to the main track mileage of the entire line is indefensible when it is shown that the cost of construction per mile was much less within than without the taxing state, and that the large and valuable terminals are elsewhere. P. 253 U. S. 68.
No property of such an interstate railroad situate beyond the state can be taken into account in taxation unless it can be seen in some plain, intelligible way that it adds to the value of the road and of the rights exercised within the taxing state. P. 253 U. S. 69.
Hence, the possession of bonds secured by mortgage of lands in other states, or of a land grant or other property elsewhere, adding to the riches of the corporation but not affecting the road in the taxing state, can afford no ground for increasing the tax there, whatever the tax may be, on property or an excise on doing business. P. 253 U. S. 70.
North Dakota law of March 7, 1919, c. 222, as administered, held an unwarrantable interference with interstate commerce and a taking of property without due process of law. Id.
The case is stated in the opinion. chanroblesvirtualawlibrary