The opinion of the court was delivered by: FORMAN
These cases are here on final hearing for a permanent injunction to enjoin the State Taxing Commissioner, the Comptroller, the Treasurer, and the Attorney General of the state of New Jersey, from collecting or enforcing certain taxes levied under the Railroad Tax Act of New Jersey (P.L.1888, c. 208, p. 269 [4 Comp. St.N.J.1910, p. 5260, § 445 et seq.]) as amended and supplemented, for the year 1932 (Comp.St.Supps.N.J. § 208 -- 445 et seq.) on the property of the Lehigh Valley Railroad Company and the Central Railroad Company of New Jersey.
The plaintiff railroads own or lease and operate interstate systems of transportation that lie partly in New Jersey.
These suits are the first of a series of actions similar in nature brought by these and other plaintiffs against the same defendants concerning taxes alleged to be due in each succeeding year following 1932, up to and including 1935. We will deal here with the suits involving the year 1932 only.
The parties have stipulated that the 1932 cases shall be determined on the record which was made at the hearing before the State Board of Tax Appeals of New Jersey and reviewed by the Supreme Court of New Jersey in the cases concerning taxes for the year 1933. The parties stipulated further that this court should determine all questions of the admissibility and competency of the evidence offered in the record before the State Board of Tax Appeals. (See stipulation on file dated February 1, 1935.)
The Constitution of New Jersey (art. 4, § 7, par. 12) requires that "property shall be assessed for taxes under general laws, and by uniform rules, according to its true value."
"That it shall be the duty of the board of assessors to * * * proceed to ascertain the true value of all property used for railroad or canal purposes of each railroad and of each canal company in this state, including its franchises, and they shall, in such ascertainment, ascertain:
"I. The length and value of the main stem of each railroad, and of the waterway of each canal and the length of such main stem and water-way in each taxing district;
"II. The value of the other real estate used for railroad or canal purposes in each taxing district in this state, including the roadbed (other than main stem), water-ways, reservoirs, tracks, buildings, water tanks, water works, riparian rights, docks, wharves and piers, and all other real estate, except lands not used for railroad or canal purposes;
"III. The value of all the tangible personal property of each railroad and of each canal company;
"IV. The value of the remaining property, including the franchise." 4 Comp. St.1910, p. 5264, § 447.
The principal contentions of the railroads are that their properties have been excessively valued by the use of improper principles which result in the denial of due process and subject interstate commerce to an undue burden, and that they have been discriminated against in that their properties have been assessed on the basis of full valuation while other property in the state is assessed at less than full valuation and results in the denial of equal protection of the law.
On the other hand, the defendants deny these contentions and further contend that these suits should have been presented to a court consisting of three judges, constituted under section 266 of the Judicial Code (28 U.S.C.A., § 380), and that an injunction granted in these suits would violate section 265 of the Judicial Code (28 U.S.C.A. § 379), for the reason that it would, in effect, restrain judicial proceedings of a state court.
The problems of taxation here are of vital consequence to the state and the several railroads involved. The railroads have naturally been an important source of revenue for the state, since they represent such considerable investments.
For the purpose of taxation the properties of the railroads are classified in the Railroad Tax Act of New Jersey as main stem, other real property, personal property and ...