B.UNTINGTON V. PALMER.
PALMER and another.
(Circuit Court, D. California. 1881.)
1. EQUlTULJIl llfunt:.
He who comes into equity must do .0 with clean hands.
2. SAME-ApPLICATION of-RAILROAD8-8'rOCKllOLDER8-STATE TAX IN PART
Where a stockholder, on hehalf of himself and all others who should come in and contribute to the expense of the suit, brought a bill in equity against the corporation, and the tax collector of a particular county, to enjoin the collection of a state ll,nd county tax as being illegal and unconstitutional, and, as 'such, utterly void, it was held, that, as the bill did not allege payment of 80 much of the taxes I'S must be conceded ought be assessoo and paid, it was demurrable. An averment in the bill of a readiness to make such payment is not enough.
SAWYER, C. J..rThis is a bill in equity brought by a stockholder of the Central Pacific Railroad Company, on behalf of himself and all other stockholders who shall come in and contribute to tbe expense of the suit against the corporation and the taJ collector of Alameda county, to enjoin the collection of a state and county tax, as being illegal and unconstitutional on various grounds, and as such utterly and in toto void. The defendant Palmer demurs to the hill for want of equity. The bill contains. the usual allegations of sucr bills brought by stockholders, but it fails to allege the payment· bi even the tender of any part of the tax, and for the want of this allegation alone, without reference to any other point involved, the said defendant insists that the bill is without equity and must be dismissed. He relies upon the State Railroad Tax Gases, 92 U. S. 575, and subsequent decisions, to sustain the position. There were three of the state railroad tax cases, neither of them brought by the corporation itself. In the first, the trustees and mortgagees holding the road for the security of the bondholders were complainants; in the last two, the complainants were stockholders, precisely as in this case. So far, then, as the parties are concerned, the last two cases, at least, were like this, and governed by the same principles. There was a willingness to pay so much of the taxes as might have been legally assessed alleged in the bills. It was also alleged that the assessments were wholly void. Page 589. It is true, the court in cases held that the objections made to the tax were not well founded; but another point, as to want of an allegation of payment, was fairly presented by the bill, and as distinctly'decided. It having been fairly presented by the record, argued; considered, and decided, it cannot, as is claimed by complainant, be considered a mere dictum, v.8/no.7-29
.. ilEDERAL REPOR'11ER.·:
because another point was also presented and decided, requiring the same decree. Statif'V:'Si<lif'k, 9Saw'Y.639; affirmed, 94 U. S. 488. The latter might we-ll be called a. il,ictum as the former. Indeed, since it was necessary to dismiss the bill on the poiBt of equity jurisdiction alone, withoutf ''tegard to the 'other pointa presented, the opitiions orl.' the 'Other points, if any, were dicta. The court. says: . . . ,
principle of equitable jurisprudence forbids in of a court of chancery in favor of complainants. Itiscthat.univlel:sal 1"ule, which requires that he,who seeks equity at the' hands of the 'courtmu8tfiTst do equity. ' , ". '''The defendants in aHthese cases are the clerks and 'treasurers of' the couriti8S-'-the clerk who makes out the tax list and the treasurer who collects tM taxes.. Thes8 taxes are both the state arid county taxes. It is clear, from st:atenwnts', 9ill.ts, ,and. from ,what we: haye already said, that. there lI)l;lst.1;le in ,mentioned. a ,coI).sidera,qle amount of estate and coming within the character of local tangiiJle property,and stibjedted'to tb.Xation on precisely the game principles, and rio other, that all o1lher persdnahuid real estate within the county is taxed. It is equally clear within each county is liable to be taxed at the sam" rate that othl:lrproperty Iii\<. taxed. Wily hav6 not complainants paid this tax? In referen(fe .to it is said that they rl\sist the ru1e by the value of t):J.eirrQad-bed in eachcQunty is ascertained, and therefOre resist the tax? But, surely, it should pay tdq; ,by some, rule. If the rule gives t()o large a valuation in some must be too small in others. What right have they to resist the tax hi. the latter case? And in the former, is the whole,tax void because the assessment is too large? Should they pay noth· ing.a.\ld eElcQ,pe wholly, because they have been assessed too high? These themselves. Before complainants seek the aid of the court to be relieved of the excessive tax, tpeyshouldpay what is due. Before they ask equitable relief, they should do that justice w,hich is necessary to enable the court to hear them. ' . l' · .. It is a profitable thing for corporations 01' individuals, whose taxesara very large, to obtain a preliminary injunction as to all their taxes, contest the l<ase through several litigation,.and when in the end it is'found that but a small part of the tax should be permanently submit to pay the ance. This not equity. It is in..direct violatien of the first principles of equity jurisdiction. It is not sufficient to say in the bill that they are ready and WIlling to pay whatever may be found due. They must first pay What-is conceded to be due, or what can be seen to be due on the face oithe bill, or be $hown by affidavits, whether concededior not,before the preliminary injunction should be granted. The estate is, not t,o be thus tied up as to that about which there is no contest, by lumping it with that which is really contested. If the proper officer refuses to receive a part of the tax, it. must be tendered, and tendered without the condition annexed of' a receipt in full for all the taxes assessed. " We are satisfied that an observance of this principle would prevent the
latgerpart of the suits fur restraining collection of taxes. which now come inw,the courts. We lay it down with unanimity as a rule to govern the «Qurts of the United in their action in lIuch cases."
. .As,we it, the court distinctly holds that some tax, according to some., rule of ta.xation; ought to be paid on all taxable property, and that a bill wWoh does not .allege a. payment; of so D,luch of,the taxa-a the party if not conceded, may be seen from the bill or shown by affidavit! Qught to be assessed.and paid,: does not present any equity to jQ.Mifyu.u injunction. And the court' takes .particular pains to say to the· circuit COurt8 that they' are wpected tq conform to this view. Its langu!l.ge is: "We lay it dowRwith unanimity a8a rule to govern the courtu>f the United State8 in their action in such ca8e8." ld. 617. The defendant endeavors to distinguish·the. present case from those cited, on the ground that in the latter the assessments were,merely unequal, and therefore only void BS to,the the tax is unconstitutional and void itdtsl excess; while in this entirety. always supposed that, the assessment. of ,a 'taix in solido, which is void as to part, is wholly void. And the bills in the cases cited alieged the tax to be wholly void. rd. 589., But, however this may be, tbe supreme court at the last term determined this precise point, also, adversely to defendant, in the German National Bank of Chicago v. Kimball, Collector, etc. The hill was dismissed by the circuit court on demurrer. It alleged the tax to be in violation of both the acts of congress and the constitution of the state of Illinois, and wholly void, as in this case. The decree dismissing the bill WfltS affirmed by the supreme court. The supreme court,! in affirming the decree, says: ·
"We think there aro two fatal objections to the bill. The first of these is that there is no offer to pay any sum as a tax which the shares of the bank ought to pay. We have announced more than once that it is the established rule of this court that no one can be permitted to go into a court of equity to enjoin the collection of a tax until he has shown himself entitled to the aid of the court by paying so much of the tax assessed against him as it can'be plainly seen he ought to pay."
The court further says:
"The bill attempts to evade this rule by alle.qin.q that the tax is wholly 'Void, and therefore none of it ought to be paid; and that, by reason of the absence of all uniformity of values, it is impossible for any person to compute or ascertain what the stockholders of the complainant lJallk ought to pay on the shares of the bank."
This is precisely the distinction sought to be drawn here between this case and the State Railroad Tax Cases. But the sup'reme "court,
in consiJul'ing this distinction, when sought to be set up in the German Bcmk Case, quoted several passages from its decision in the Railroad Tax Cases, which need not berepeated hete, and then said: "These principles a.re sufficient to decide the and were declared by this court in a case arising in the same state and under the same constitution and revenue laws with the one now before 11S." The decree dismissing the bill was affirm'ed on the ground thllit i;J:lere was no allegation of a payment of a part of the tax. Thus the supreme court has itself denied sought to be established in this case ; and its -decisions are controlling in this c011rt. The able decisions of the supreme court of Wisconsin, relied on by defendant, concedhig them to adopt a diifereJ1t view, must yield in the national court to the superior authority of the supreme court of the United States. We are unable to distinguish the present case from those already cited from the supreme court. Under the decisions in those cases, the-bill presents no sufficient equity to justify an injunction, because there is rio allegation of payment of so much of the tl),X as must· be conceded ought to have been assessed and paid. On the authority of the cases 'cited, the demurrer must be sustained on the grounds indicated, and the ground being jurisdictional it becomes unnecessary, if riot improper, to consider any of the other points raised by the bill and demurrer. As it is understood that the bill cannot be truthfully amended, so as toaV'oid the objection coosidered, it must be dismissed'; and it is so ordered· . H-qFFMAN, D. J..,
and another v.
(Circuit (Jourt, W. D.
July 16, 1881.)
Partial assignments of one's rights under a contract are not good as against the other contracting party.
SAME-SAME-REsCISSION BY ASSIGNEE.
The assignee will not be allowed to work a rescission of the contract.
SA.c"\l:E-SAME-AcTION BY ASSIGNEE.
Nor can he maintain an action against such other party without joining the assignor, unless with such party's
Albert Bell entered into an agreement with the defendant, Bidwell, by the terms of which the defendant, among other things, was to manufacture a certain plow'under two, patents, which belonged to the defendant, and to pay the