U.S. Supreme Court
Great Northern Ry. Co. v. Weeks, 297 U.S. 135 (1936)
Great Northern Railway Co. v. Weeks
Argued January 6, 7, 1936
Decided February 3, 1936
297 U.S. 135
1. The full and fair value of property for the purpose of a tax assessment is the equivalent of the property in money paid at the time of assessment. P. 297 U. S. 139.
2. In assessing railway property for taxation, the assessor is not bound by any rule or formula, but is free to consider all pertinent facts, estimates and forecasts and to give them their reasonable weight. P. 297 U. S. 139.
3. Courts will not disturb tax assessments unless clearly unreasonable. To warrant an injunction, overvaluation due to mere error of judgment is not enough; there must have been that which in chanroblesvirtualawlibrary
legal effect is the equivalent of intention or fraudulent purpose to overvalue, and so to set at naught fundamental principles that safeguard the taxpayer's rights and property. P. 297 U. S. 139.
4. An assessment of property for taxation is presumed to have been rightly made on the basis of actual value. P. 297 U. S. 139.
5. In apportioning value of an interstate railway system to a State for taxation, there were used as factors the percentages in the State (a) of total track mileage; (b) of physical property, measured by cost of reproduction less depreciation; (c) of car and locomotive miles, average of five years, and (d) of gross earnings, average for five years, the amount of such earnings assigned to the State being found by adding to the intrastate revenue earned in the State the mileage proportion of revenue from traffic moving partly within and partly outside of her boundaries. Though percentages thus used were not higher than those submitted to the taxing board by the Railway Company, the Company contended in this suit that the apportionment operated to tax property outside of the State. Held that, having regard to the size of the entire railway system and the variety of things that affect values to be attributed to its railroad in different States, and the numerous matters as to which there may be wide difference of opinion, the use of the percentages was not shown to be confiscatory or arbitrary. P. 297 U. S. 143.
6. In determining whether a tax assessment was arbitrarily made and grossly excessive, the assessors may not be compelled to submit to examination as to the operation of their minds in making it. P. 297 U. S. 145.
7. Judicial notice must be taken of the fact that, late in 1929, there occurred a great collapse of values of all classes of property -- railroads, other utilities, commodities and securities -- and that the depression then commenced progressively became greater. P. 297 U. S. 149.
8. In assessing railroad property during the depression, a taxing board was bound to take into account and give due weight to the sudden, progressive, and enormous declines of value. P. 297 U. S. 149.
9. In a suit by an interstate railway company to enjoin in part the collection of taxes levied on its property in North Dakota for the year 1933, the allegations and evidence on behalf of the state authorities showed that, for a series of years, including the depression years 1929-1932, the basis adopted by them and approved by them as the best available for computing the value of the entire railway system was the five-year average value of the stocks and bonds and capitalized income; that, if this basis had been used in 1933, the system valuation for that year and the part of it assignable to and assessed in North Dakota would have been vastly less chanroblesvirtualawlibrary
than in 1932, owing to the effects of the economic depression upon property values, prices, and earnings; but that, in assessing for 1933, they had arbitrarily repeated the assessment for 1932, without making a fresh computation of value or paying heed to economic changes. Resolving all doubts in favor of validity, the evidence conclusively showed that the challenged (1933) assessment exceeded the true full value of the railway's property in North Dakota in 1933 by $10,000,000.
(1) That the taxing board's failure to consider the enormous diminution in value of the railway's property caused by the 1929 collapse and the progress of the depression was equivalent in law to intention to make the grossly excessive assessment and deprived the railway of rights under the due process clause of the Fourteenth Amendment. Pp. 297 U. S. 145, 297 U. S. 151.
(2) The railway's right to relief was not prejudiced by overassessment and submission to overtaxation in any prior year. P. 297 U. S. 152.
77 F.2d 405 reversed.
Certiorari, 296 U.S. 558, to review the affirmance of a decree dismissing the bill in a suit to enjoin collection of taxes.