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for the amount agreed upon between the Central Pacific Railroad Company and the Board of Supervisors, which amount was about sixty per cent of the tax levied. A motion was thereupon made by me on behalf of the State for an order setting aside the judgment thus entered, as having been entered in pursuance of the illegal compromise; and as will be remembered, the Superior Judge held that the Attorney-General had no authority to interfere in such matters, but upon appeal to the Supreme Court, the judgment of the Superior Court was overruled, and the opinion of this office fully
Several other counties have undertaken to make compromises of the same nature, and in each instance motions have been prepared with a view of obtaining an order vacating the judgments rendered in pursuance thereof. To the ordinary mind it would seem that the decisions to which reference has been made ought to be sufficient to prevent other Boards and officers of the counties from undertaking a thing which has thus been decided to be illegal, but I have been informed that since the decision of the case of Sacramento County against the Central Pacific Railroad Company, other Boards of Supervisors have signified to the District Attorney their willingness to have judgments of the same character entered in behalf of their several counties. Whether this is true or not is not officially known to me, but if it is true it is an effort at a flagrant violation of official duty that deserves more than censure. Men in official positions ought to understand that their powers are measured by the law, and that they have no right to undertake that which the law denounces as illegal; and I would respectfully suggest to the Legislature that such violations of official duty should be inade a felony by law. In this manner, and in this only, can men, whose natural bent of mind is to violate legal principles, who are unfortunately elected to small but important local offices, be prevented from bartering away the people's rights. There is more in the objection to such compromises than in the mere illegality of the thing.
The question as to whether a sovereign should ever compromise with its subjects is a matter of State policy, upon which but one decision can be rendered. The State is never so nearly bankrupt as that it may be compelled to allow its subjects to dictate to it, nor is it ever so unjust as that it will resort to the levying of illegal charges for the purpose of forcing compromises from its subjects. The levying of an illegal charge as the instrument with which to wring an illegal payment from its subjects, would bear a close resemblance to blackmail, a thing which no sovereign can ever afford to resort to. And besides this the effect of such a compromise is to confess a doubt as to the validity of our own fundamental law in a respect which is of the most vital importance to the people, and to permit the parties assessed in such cases practically to assess themselves.
If there be any doubt as to the validity of those provisions of our Constitution which authorize such assessments to be made, it is better that we should suffer the temporary inconvenience resulting from a litigation of that subject, than that the State should surrender to the taxpayer. It is better that we should know whether our Constitution is valid or invalid; and to that end should test the question, even at the risk of losing the whole of the taxes for a few If our Constitution is in conflict with the Constitution of the United States, it is of the greatest importance that we should learn
that such is true at the earliest practical moment, in order that we may make one that will stand the test of judicial scrutiny, Compromises at this time would necessitate compromises in the coming years, and would create a precedent upon which Boards and officers might base the same kind of conduct in the future. When it is conceded that these Companies, or that these Boards, may compromise the taxes due the State, the entire system of taxation, as created by the Constitution, is uprooted. The theory upon which the Government raises its taxes is such that an interference with a part to some extent destroys the whole. The Legislature fixes the amount of the taxes necessary to run the State Government; the State Board of Equalization, after the assessment has been levied by the several assessing officers, determines the rate of taxation necessary to raise the amount of money for the use of the State during the coming year. Any reduction of any assessment after the rate of taxation has been fixed by competent authority, or any reduction of any individual tax after that rate has been fixed, necessarily reduces the amount of money raised during that fiscal year, and therefore leaves the State with a deficiency in the amount of money necessary to carry on the affairs of the Government. Aside from this, when it is conceded that these Boards have power to reduce assessments, what a vast field is opened up to bribery and corruption. The power to compromise the taxes levied by the State Board would necessarily carry with it the power to compromise the taxes levied by the County Assessors. Under such circumstances each man of wealth might appeal to local Boards, and ask them to reduce the amount of his taxes, and each corporation might do the same thing; and if that were true, a corrupt man in a populous county, acting as a member of the Board of Supervisors, could make himself independently wealthy by selling himself to those who desired a reduction of their taxes.
It is for this reason that these powers were finally vested in some tribunals to make the assessments in such manner as that they are not the subject of interference by any power or authority. This rule has been carried so far as that even judicial tribunals are not permitted to inquire into the justice of assessments levied by competent authority, except in cases of fraud, because, as said before, the amount of revenue being first fixed by the Act of the Legislature, the assessment of the taxable property being next made by the assessing officers, and the rate of taxation then being calculated with reference to the amount of taxes necessary to be raised, and the amount of taxable property as fixed by the assessing officers, any interference with the valuation, or the amount of tax levied upon any particular piece of property, would necessarily result in a failure to collect the amount which the Legislature determined was necessary for the support of the Government. These considerations, as before suggested, render it manifestly necessary that stringent legislative provisions should be made for the prevention of such compromises.
There are now two cases involving these taxes in the Supreme Court of the United States. They are not test cases in the sense that their determination will necessarily determine the other tax cases now pending in the Circuit and other Courts, but they are cases which, in my judgment, involve the whole question as to the validity of the State Constitution. It is alleged by the railroad company that our Constitution is invalid for two reasons:
First-Because it fails to provide due process of law in cases of assessment of railroads operated in more than one county in the State.
Second-Because it denies to railroad and other quasi-public corporations an equal protection of the law. The determination of either of these questions against the State, in the cases now pending in the United States Supreme Court, would possibly render necessary an amendment to the Constitution of California.
A long and very thorough consideration of the questions involved in those cases has brought me to the conclusion that if the Constitution of California is properly construed, the first point does not arise under it at all, and the second point is clearly not well founded. These provisions of the Constitution of California have been determined to be self-executing, and hence the State Board may act and exercise all its powers without legislation, and may, itself, in the absence of legislation, provide the machinery for the exercise of those powers. Section 9 of Article 13 of the Constitution provides that such State and County Boards of Equalization are hereby authorized and empowered, under such rules of notice as the County Boards may prescribe as to the county assessments, and under such rules of notice as the State Board may prescribe as to the action of the State Board, to increase or lower the entire assessment roll, or any assessment contained therein, so as to equalize the assessment of the property contained in said assessment roll, and make the assessment conform to the true value, in money, of the property contained in said roll." From a reading of that section it is apparent that it was the object of the framers of the Constitution to provide a means by which all parties should have an opportunity to be heard. The language of the section is general, and gives the Board power to raise or lower the entire assessment roll, or any assessment contained therein. This language necessarily includes all kinds of possible assessments that may be made by any authority under that chapter of the Constitution. It will be observed that no exception to the general rule thus provided by the Constitution is made by express language, and it would be a strange construction of an instrument of that kind which would, first, by implication, construe into it an exception which is not made by its language, and then hold the instrument invalid on account of that. exception.
The Constitution, therefore, should be so construed as to give all parties a right to be heard, and a right to a reduction of their assess ments, in case such a reduction would be just, and by that means, to relieve the cases of the first constitutional question raised by the railroad company. This construction of the Constitution is sustained by the general rules of law. It is a rule founded in the first principles of natural justice, that the State will not arbitrarily impose burdens upon the property of a citizen, or of any person within its limits, but that it will give every person an opportunity to be heard in some form; and this provision of the Constitution, recognizing this general principle, has provided for the said Boards of Equalization, before which taxpayers may be heard as to the justice of assess ments levied upon their property, and has thereby, in general language, recognized the right of every person and corporation, without exception or discrimination, to appear before those Boards, or some of them, and have the assessment upon his or its property equitably and properly equalized. The power to equalize, as con
ferred by Section 9 of Article 13 of the Constitution, is full and ample, and covers all kinds and classes of property and persons. After providing for the organization of the several Boards of Equalization, it will be seen that that section proceeds to give to those several Boards the power to raise or lower the entire assessment roll, or any assessment contained therein. How could language be made more comprehensive? And by what means can the intent of the framers of the Constitution claimed by the railroad companies, be drawn from that language? Under this general power thus conferred, the idea of the existence of an assessment in any form, without the power in some form, and by one of the tribunals mentioned by the Constitution to equalize it, is, to my mind, utterly inconceivable.
The provisions of the State Constitution above referred to were intended to secure a forum before which all persons and all corporations should have an absolute right to be heard; and any rule, whether it found its origin in legislative enactment or judicial construction, which would deny to any person or corporation this right to be heard, would be in conflict with the spirit and declared intent of that instrument. The notice necessary to constitute due process of law is found in the provisions of our Code, which fix a time. for a sitting of the State Board of Equalization, at which time all persons feeling aggrieved may appeal to that Board for proper relief. If my construction of this provision of the Constitution be correct, it follows, therefore, that there is a forum before which the railroad companies have an absolute right to be heard, and an opportunity to be heard; these constitute due process of law within the meaning of the Fourteenth Amendment to the Constitution of the United States, as those terms have been construed and interpreted by the highest tribunals in the land.
But if my construction of this provision of the Constitution be incorrect, may we not meet the question by legislation rather than by constitutional amendment?
Section 10 of Article 13 of the Constitution of California confers upon the State Board of Equalization the power to assess the franchise, roadway, roadbed, rails, and rolling stock of all railroads operated in more than one county in this State, at their actual value, and to apportion the said assessment to the counties, cities and counties, towns, townships, and districts in which such railroads are located, in proportion to the number of miles of railway laid in such counties, cities and counties, cities, towns, townships, and districts. It will be observed that the Constitution thus confers upon the Board the jurisdiction and power to make the assessment, and is in itself a law which will enable the Board, in the absence of legislation to levy the assessment and, in the manner which it may determine, finally fix the valuation of that kind of property; but the Constitution does not determine when the final valuation shall be fixed; what notice, if any, shall be given to the railroad companies; what evidence shall be heard as to the valuation of property; nor the time when the Board shall sit for the purpose of finally determining question of valuation. This provision, like many other provisions of the Constitution in relation to tribunals exercising judicial or quasi-judicial functions, simply confers the jurisdiction and power
without undertaking to determine the details to be pursued by the Board in the exercise of the power.
It will be observed also that the Constitution does not provide. whether the assessment shall be final as first fixed by the Board, or whether in the determination of the value the Board may first fix it and then grant a rehearing and hear evidence from the parties as to the justice of the assessment as first made; nor does it determine any of the processes or methods that shall be resorted to by the Board, in order to the exercise of the powers and jurisdiction conferred by this provision of the Constitution. Such matters are the subject of legislative regulation. As the Legislature may determine what kind of summons, the method of service, the time within which answers may be filed, the method of moving for new trials, and rehearings before Courts of record exercising constitutional jurisdiction, so the Legislature, in regulating the method of the exercise of the powers conferred upon the State Board of Equalization, may provide for notice, the form of notice to be served upon railroad companies, and the time within which they may answer, the method in which hearings and rehearings may be had, and all the other machinery usually exercised by Courts and Boards in the exercise of their judicial powers under similar provisions of the Constitution. In other words, the Legislature may provide, if it sees fit, that before these assessments are finally made the State Board of Equalization, sitting as such, shall notify the owners of the several railroads to appear and be heard as to the amount of the assessment to be levied against their property. If this question, in the present unsettled condition of the legislation and laws of this State, should be determined against the State and in favor of the Railroad Company, by the Supreme Court of the United States, I would respectfully suggest to the Legislature the passage of laws which would entitle the owners of railroads, like the owners of other property, to a notice and an opportunity to be heard, in order that the defects in the system, if possible, may be cured by legislation, without a resort to the expense necessary to the adoption of an amendment to the Constitution.
The other question is one of less difficulty. Section 4 of Article 13 of the Constitution of California, provides that "a mortgage, deed of trust, contract, or other obligation, by which a debt is secured, shall, for the purposes of assessment and taxation, be deemed and treated as an interest in the property affected thereby. Except as to railroad and other quasi-public corporations, in case of debts so secured, the value of the property affected by such mortgage, deed of trust, contract, or obligation, less the value of such security, shall be assessed and taxed to the owner of the property, and the value of such security shall be assessed and taxed to the owner thereof, in the county, city, or district in which the property affected thereby is situate." It is claimed by the railroad people, that the effect of this provision of the State Constitution, is to deny to railroad and other quasi-public corporations an equal protection of the law, and in the discussion of this question it has been assumed, to some extent, that this provision authorizes deductions of mortgaged debts from the valuation of the property upon which the mortgages were given. A reading of the section, however, will demonstrate that no such construction can properly be given to that provision of the Constitution; it simply purports to fix a new rule as to the ownership of property