Before PARKER and GOODRICH, Circuit Judges, and KIRKPATRICK, District Judge.
The plaintiff in this case brought an action for declaratory judgment under the statute (28 U.S.C.A. § 400) seeking a declaration that four personal property tax assessments levied by the Somerset County Board of Taxation against the plaintiff individually and as trustee for the Duke Endowment are null and void. The litigation terminated in the District Court with the entry of a summary judgment in the plaintiff's favor and the defendants appeal.
The first ground for complaint on the part of the defendants is that the District Court was without jurisdiction to entertain the suit under the Declaratory Judgment Act. We do not doubt that federal courts are not to entertain suits under this statute for the sole purpose of obtaining a determination of the validity of a state tax assessment where federal rights are fully protected by proceedings in the state courts. Great Lakes Dredge & Dock Co. et al. v. Huffman, 1943, 319 U.S. 293, 63 S. Ct. 1070, 87 L. Ed. 1407, is not only authority for the general proposition but gives appropriate caution to federal courts on the question of even indirect interference with the regular tax procedure of the states. But that decision did not hold that declaratory judgment procedure was unavailable where a federal right was threatened and where there was not an adequate remedy available within the state machinery.
The federal right involved is set out in Sioux City Bridge Co. v. Dakota County, 1923, 260 U.S. 441, 43 S. Ct. 190, 67 L. Ed. 340, 28 A.L.R. 979. It was there held that intentional and arbitrary assessment of one owner for taxation at its true value, in accordance with the State Constitution and laws, while other like property is systematically assessed much lower, is a violation of the equal protection of the laws. This proposition has been reiterated in Cumberland Coal Co. v. Board of Revision of Tax Assessments in Greene County. Pennsylvania, 1931, 284 U.S. 23, 52 S. Ct. 48, 76 L. Ed. 146, and in Iowa-Des Moines National Bank v. Bennett, Chairman et al., 1931, 284 U.S. 239, 52 S. Ct. 133, 76 L. Ed. 265.
New Jersey makes provision for taxpayers who consider their legal rights to have been infringed by acts of taxing authorities. There is an appeal provided to the State Board of Tax Appeals. Borough of Oradell v. State Board of Tax Appeals, 1940, 125 N.J.L. 37, 13 A.2d 479. Procedure on certiorari may be invoked to review the Board's decision. Town of Kearny v. State Board of Taxes and Assessment et al., 1926, 103 N.J.L. 26, 135 A. 61. There is appeal to the Court of Errors and Appeals. General Motors Corporation v. State Board of Tax Appeals et al., 1932, 125 N.J.L. 574, 16 A.2d 632.
But when one turns to the New Jersey decisions upon the point covered in the Supreme Court cases above cited to compare the local rule of law, there is found this authoritative statement by Gummere, C.J., in Royal Mfg. Co. v. Board of Equalization of Taxes of New Jersey, 1909, 78 N.J.L. 337, 74 A. 525, 526: "The action of the taxing authorities in assessing other property in the same taxing district at less than its true value afforded no reason for reducing the assessment upon the prosecutor's property to less than its true value; for the Constitution requires that property shall be assessed for taxation according to its true value, and a reduction below true value would be a violation of that constitutional provision." This rule is reiterated in other decisions.See State (Maxson et al., Prosecutors) v. Segoine, Collector, 1891, 53 N.J.L. 339, 21 A. 852, aff'd 1891, 54 N.J.L. 212, 25 A. 963; State, Wharton, Prosecutor v. A. E. Koster, Collector of Washington Township, Burlington County, 1876, 38 N.J.L. 308. In the latest case on the subject the court said: "It is the established law of this state that the fact that other property in a taxing district is assessed for valuation at less than its true value affords no ground for reducing the assessment placed upon the property of a complaining taxpayer below the true value thereof. * * * The petitioners concede this to be true but contend that the rule to the contrary, as announced in the cases of which Sioux City Bridge Co. v. Dakota County * * * is typical, should be followed * * *. A substantially like contention was made and denied by this court * * *. The law, on this point, is also settled and controlling." Lehigh Valley R. Co. of New Jersey v. State Board of Taxes and Appeals et al., 1934, 174 A. 359, 12 N.J. Misc. 673.
The appellants contend that Central R. Co. of New Jersey v. State Tax Department et al., 1933, 112 N.J.L. 5, 169 A. 489, certiorari denied 1934, 293 U.S. 568, 55 S. Ct. 79, 79 L. Ed. 667, has established the state law to the contrary and that the subsequent decision just quoted from must be disregarded as evidence of state law. We disagree. It is true that the court in the Central Railroad decision referred to the Sioux City Bridge case in that opinion citing it for the proposition that undervaluation must be established as an adopted practice. What the court decided, however, was that the testimony offered in the particular litigation could not justify a finding of organized effort on the part of local assessors to assess local property at less than true value. The same judge who wrote the opinion in this case also wrote the opinion in the Lehigh Valley case cited above. It is quite evident from the language used by him and his failure even to cite his earlier opinion that he did not think that the decision in the Central R. Co. case had overruled earlier decisions and changed the state law. We conclude that the view of the New Jersey courts upon the point is still that set out in the quotation from Mr. Chief Justice Gummere and the conflict between state law and federal right is still that which appears in the discussion of this court in Central R. Co. of New Jersey v. Martin, State Tax Com'r. et al., 3 Cir., 1933, 65 F.2d 613.
The plaintiff's complaint alleged facts which showed a violation of the right set out by the Supreme Court in the Sioux City Bridge case. Appeal to the state courts, as shown in the state decisions cited, shows that such appeal would be unavailing to protect a constitutional right.Under those circumstances, the state procedure is not speedy, efficient or adequate.Union Pacific Railroad Co. v. Board of County Commissioners of the County of Weld, State of Colorado, et al., 1918, 247 U.S. 282, 38 S. Ct. 510, 62 L. Ed. 1110; Dawson, Attorney General of the State of Kentucky et al., v. Kentucky Distilleries & Warehouse Co., 1921, 255 U.S. 288, 41 S. Ct. 272, 65 L. Ed. 638. We conclude that the jurisdiction of the federal court in a declaratory judgment suit was properly invoked. See Spector Motor Service v. McLaughlin, Tax Commissioner, 1944, 323 U.S. 101, 65 S. Ct. 152.
The point upon which the plaintiff won, in the District Court, was not the constitutional question, but that of the invalidity of the assessment under New Jersey law. This is shown in the plaintiff's motion for judgment and the opinion of the court in granting it.Since the foundation for federal jurisdiction existed, however, that jurisdiction continued for the settlement of the controversy "even though [the court] decided the Federal questions adversely to the party raising them, or even if it omitted to decide them at all, but decided the case on local or state questions only." Siler et al. v. Louisville & Nashville R. Co., 1909, 213 U.S. 175, 191, 29 S. Ct. 451, 455, 53 L. Ed. 753; Greene, Auditor, et al., Constituting The Board of Valuation and Assessment for the State of Kentucky et al., v. Louisville & Interurban R. Co., 1917, 244 U.S. 499, 37 S. Ct. 673, 61 L. Ed. 1280, Ann.Cas.1917E, 88; Chicago Great Western R. Co. v. Kendall, Governor of the State of Iowa, et al., 1924, 266 U.S. 94, 45 S. Ct. 55, 69 L. Ed. 183; Hurn et al. v. Oursler et al., 1933, 289 U.S. 238, 53 S. Ct. 586, 77 L. Ed. 1148.
As already said, the decision in favor of the plaintiff was given, not on the constitutional ground of discrimination, but on the invalidity of the assessment under the law of New Jersey. A short statement of the formal setting of this portion of the case is relevant.
The complaint alleges that prior to October 1, 1940, plaintiff "deliberately and intentionally * * * established her residence and domicile in * * * [the] Territory of Hawaii * * *"; that on November 7, 1940, while residing there, defendant tax assessor of the Township of Hillsborough, in the County of Somerset, State of New Jersey, wrote her a letter directed to her at Duke Farms, Hillsborough Township, asking her to give a true account of her personalty as of October, 1940, for the purpose of fixing a proper assessment. On December 4, 1940, her attorney acknowledged receipt of the letter on her behalf stating she was not taxable in the Township with respect to personalty as she was not a resident of New Jersey.
On June 26, 1941, as a result of the application of one Horner, a resident and taxpayer and the collector of taxes of Hillsborough Township, the Somerset County Board of Taxation adopted a resolution that plaintiff was a resident of Hillsborough Township on October 1, 1939, and that taxable intangible personalty owned by her on that date and omitted from assessment for the year 1940 be assessed against her in the sum of $60,054,424. A like resolution was adopted for intangible personalty owned by her on October 1, 1940, which had been omitted for 1941.
Resolutions were also adopted against plaintiff as trustee of the Duke Endowment for $161,886,014 omitted from assessment for 1940 and 1941. Certified copies of the resolutions and schedules annexed thereto were mailed to plaintiff at her home in Hillsborough Township, June 27, 1941, when she was advised that the next regular ...