This Court will follow the ruling of the highest court of a
state when it has held that a state statute does not violate the
constitution of that state.
While a state may only tax shares of a national bank in
accordance with the federal statute, a state law which does not
give the shareholders the benefit of all deductions to which they
are entitled is not necessarily void altogether, but may be
sustained as to the amount properly taxable.
The mere lack of a provision in a tax law for notice does not
take away the jurisdiction of the taxing officer to make an
assessment under any circumstances. If the tax could be imposed for
a certain amount, it is not void, but, at most, voidable for the
illegal amount, if any.
Where the amount of the tax which shareholders should pay if all
the deductions they claimed were allowed is ascertainable, neither
they nor the bank itself on their behalf can maintain an action in
equity to restrain the collection of the entire tax. They should,
under the rule that he who seeks the interposition of a court in
equity must himself do equity, first offer to pay that part of the
tax which under their contention is not illegal.
This is an appeal by the bank as complainant below from a decree
of the United States Circuit Court for the Eastern District of
Virginia dismissing its bill with costs. 107 F. 570.
The complainant and three other national banks in Lynchburg,
Virginia, each commenced a suit in the above-named court against
the auditor of public accounts of the state to restrain the
collection of certain taxes assessed upon the share owners of stock
in the several banks on the ground that such taxes were illegally
laid. This particular complainant has brought the case here by
appeal as a test case, the same questions arising in all the
others.
It is insisted upon the part of complainant that the laws under
which these taxes were levied are unconstitutional and
Page 191 U. S. 273
void, and the prayer of the bill is that the stockholders may be
relieved and discharged from all liability on account of such
unpaid taxes.
The original bill, which was filed July 22, 1896, seeks to
enjoin the collection of taxes upon the stock of the shareholders
in the complainant bank for the years 189§ to 1895, both
inclusive, and a preliminary injunction order to that effect was
granted. After the filing of the original bill, and on February 10,
1900, a supplemental bill was filed by leave of the court, and it
was therein sought to enjoin the collection of all taxes for the
years 1891 to 1897, both inclusive.
Both bills were demurred to, and the circuit court sustained the
demurrers and dismissed the bills.
It was averred in the bills that the acts of the Legislature of
Virginia providing for the taxation of bank shares, both in
national and state banks, were in violation of the federal
Constitution, as well as that of Virginia, and were also in
violation of the act of Congress, Rev.Stat. § 5219, providing
for the taxation of shares of national bank stock under state
authority.
The taxes referred to in the original bill were levied under the
Act of Virginia passed March 6, 1890. Acts of Virginia Assembly
1890, p. 205. That act prohibited any assessment upon the capital
stock of banks, either state or national, and provided for
assessing the stockholders on their shares in those banks upon the
market value thereof at the same rate as is assessed upon other
moneyed capital in the hands of individuals residing in the state.
It will be observed that this rate of assessment is the condition
upon which Congress, in the section of the Revised Statutes above
mentioned, permits the taxation of national banks by or under state
authority.
Under this Virginia act, it was further made the duty of the
banks to pay the amount of the tax, and if a bank failed to pay the
same, its cashier and his sureties were made liable for the tax and
twenty percentum in addition, to be recovered by the auditor of
public accounts upon notice.
Page 191 U. S. 274
An assessment upon the real estate of the bank was also to be
made against the bank itself for the same taxes as other real
estate was assessed for. The ground of the alleged illegality of
the taxes is stated to be the want of any provision for notice of
time and place of valuation of the shares in arriving at market
value, and the failure to provide for deducting the value of real
estate from such market value, and also the failure to permit
deductions for the debts of the shareholders.
The taxes spoken of in the original bill (1891-1895) were not
paid, and no proceedings seem to have ever been taken to enforce
their collection, under that act, against the cashier or his
sureties. It might be surmised that they were not taken because of
a doubt as to the constitutionality of that part of the act which
provided for the liability of the cashier and his sureties, if the
bank failed to pay the tax assessed upon its shareholders. However
that may be, the authorities did not in fact take any proceedings
to enforce the payment of the taxes until the passage of the Act of
March 3, 1896. Acts of Assembly of Virginia 1898, p. 700. That act
provided a procedure for the collection of the taxes theretofore
assessed against the stockholders of banks and then remaining
unpaid. By its provisions, the taxes were made a first lien upon
the stock, no matter in whose hands found, and it was made the duty
of the auditor of public accounts immediately to furnish the
cashiers of banks with a list of their stockholders theretofore
assessed with taxes upon their bank stock and who had not paid the
same, and each bank so desiring and electing was authorized to pay
to the auditor the taxes assessed upon the stock held by its
stockholders, provided payment was made before the first day of
July, 1896. If the bank did not choose to make such payment, it was
made the duty of the auditor to give a copy of the lists to the
attorney general, and it was made his duty to proceed by motion to
collect the taxes from the individual stockholders. The motion was
to be cognizable in the Circuit Court of Richmond city, after ten
days' notice to the stockholder, and might be served upon
nonresident
Page 191 U. S. 275
defendants in the mode provided by § 3208 of the Virginia
Code.
By the supplemental bill the taxes for the years 1896-1897 were
brought under review, and a perpetual injunction was asked to
restrain the collection of all taxes from 1891 to and including
1897. The assessments for the years 1896-1897 were assessed under
another act of the legislature of Virginia, which was also passed
March 3, 1896. Acts General Assembly of Virginia 1895-1896, p. 726.
The seventeenth section of that act provided for assessments upon
the shares of state and national banks at the market value of the
shares of stock held in the banks at the same rate that is assessed
upon other moneyed capital in the hands of individuals residing in
the state. The act provided also that the banks should make a
report on the first day of February in each year in which should be
given the names of the shareholders, the number of shares owned or
held or controlled by each, the market value of the stock, and the
shareholders' residences, and it was then made the duty of the
commissioner of revenue, on or after the first day of February in
each year, to assess each stockholder upon the shares of stock held
or owned by him at the market value, on the first day of February
in each year, as therein stated. The section then provided for the
retention of all the dividends by the bank, and for the application
of the same to the payment of the tax assessed upon such
stockholders, and that each bank might, if it so elected, pay the
tax so assessed against the stockholders directly to the auditor of
public accounts before the first day of June in each year.
Provision was then made that, if the bank failed to make such
payment, the auditor of public accounts was to transmit a copy of
the assessment list furnished him by the commissioner of revenue,
and it was made the duty of the treasurer to collect the tax
therein levied, and to that end to levy upon the stock of the
taxpayer.
Other provisions were made in regard to the transferring of the
stock to the purchaser at the sale upon the levy made
Page 191 U. S. 276
by the treasurer, and penalties were denounced upon the bank for
a refusal to comply with its provisions.
Soon after the passage of the Acts of March 3, 1896, the public
authorities were about to take proceedings for the purpose of
enforcing the collection and payment of the taxes for the years
mentioned, and thereupon this suit was brought, and a preliminary
injunction obtained restraining the collection of all taxes for
those years upon the bank shares until the further order of the
court.
The shareholders in these four banks in the City of Lynchburg
have paid no taxes on their shares of stock in those banks since
1890.
MR. JUSTICE PECKHAM, after making the foregoing statement of
facts, delivered the opinion of the Court.
The complainant objects to the legality of the taxes upon the
ground, among others, that the acts of the Virginia legislature
under which they were levied violated the provisions of the
Constitution of that state, and were therefore entirely invalid.
These objections are, as we think, untenable. They are technical,
and relate to alleged defects in the titles of the acts, in not
being sufficiently specific in stating the tax and the object to
which it was to be applied, and also that the taxes were not equal
and uniform. We think the objections are without merit, and we
concur with what is stated upon this subject in the opinion of the
circuit court herein. The state court has held the statutes do not
violate any provision of the state constitution, and we follow that
court upon such a question.
Merchants' Bank v.
Pennsylvania, 167 U. S. 461;
Schaefer v. Werling, 188 U. S. 516.
Page 191 U. S. 277
The chief objections which are made to the taxes are three:
1. No notice is provided for in any of the acts as to when or
where the valuation of the shares of the bank for purposes of
taxation will be made, and hence the shareholder has no opportunity
to be heard upon that question, and the whole tax is void for that
reason.
2. That the acts provide for a valuation of the bank's shares at
the market value, without providing for a proportionate reduction
on account of the value of the real estate owned by the bank, which
is also by the law of Virginia to be assessed for its value against
the bank itself; that, by reason of this omission, the shareholder
is taxed once on the full market value of the stock, a part of
which consists of the value of the real estate, and he is taxed
again indirectly for his proportion of the amount of the tax paid
by the bank on this same real estate, and the result is that he is
taxed upon his bank shares, as he insists, at a greater rate than
upon other moneyed capital, etc.
3. That no provision is made under these acts for permitting
shareholders to deduct their indebtedness from the assessments upon
their shares of stock, while it is alleged the holders of large
amounts of other moneyed capital are by the laws of Virginia
permitted to deduct their indebtedness from that capital, and are
called upon to pay taxes only upon the balance.
On these grounds, the complainant insists that the taxes were
illegal and void, and upon such grounds it has based its prayer
that the stockholders should be wholly freed from any liability to
pay such taxes or any part thereof.
The defendant under his demurrer argues that, properly
construed, although notice is not in terms provided for, yet the
acts do provide an opportunity for a hearing before the tax can be
enforced, and also that there is no illegal discrimination in the
scheme enacted by the legislature of Virginia against the holders
of national bank shares and in favor of other moneyed capital in
the hands of individual citizens of the state. He denies that, so
far as relates to the alleged failure
Page 191 U. S. 278
to deduct the value of the real estate of the bank from the
market price of the stock, or the indebtedness of the shareholder
from the amount upon which such shareholder is assessed (when the
provisions of the general law of Virginia upon the subject of
taxation of other property are compared), there was any violation
of law or any illegality in the several taxes assessed on such
shares. He also insists that the complainant could not legally
represent the shareholders herein, or maintain this action. He
further urges that, as neither the original nor the supplemental
bill showed any payment or tender of an amount which would be
justly due, even under the objections of complainant, the suit
could not be maintained.
The circuit court held that, as to the taxes for 1891-1895,
under the two acts already mentioned (acts of 1890 and 1896), the
suit could not be maintained for the reason that the bank was under
no obligation to pay the taxes for its shareholders, and there was
no penalty or other inconvenience to the bank attending its refusal
to pay, but that the case was different under the second act of
1896 as to the assessments made after 1895, and that, as to those,
the bank was placed in such a position under that act as permitted
it to maintain the suit. The court then examined the act with
reference to the averments of the bill and supplemental bill, and
with regard to the general laws of Virginia relating to the
taxation of other property, and concluded that the act of 1896 was
valid as construed by it, and that the assessments of 1896 and
1897, under it, were legal, and therefore dismissed the bill.
In the view we take of this case, it is unnecessary to decide
any other question than that which arises from the omission in
either bill to aver payment, or at least a tender, of the amount of
taxes equitably and justly due as a condition of obtaining the
interference of a court of equity by enjoining the collection of
the balance.
The prayer of the bill is
"that the said defendant and all others may be perpetually
enjoined from collecting taxes assessed on the stockholders by the
State of Virginia for the
Page 191 U. S. 279
years 1891, 1892, 1893, 1894, 1895, 1896, and 1897; that the
said acts of the Legislature of Virginia assessing the stockholders
of your complainant with taxes may be declared unconstitutional and
void, and that its stockholders, as well as your complainant, may
be discharged and relieved from all liability growing out of the
assessments."
From this it appears there has in fact never been any payment or
tender of any part of the taxes assessed against the shareholders
during the years above mentioned, and the omission of an averment
of payment, or tender of payment, was therefore not a mere
oversight.
In our view of the facts set forth in this case in the original
and supplemental bills, the complainant was not entitled to any
injunction unless it paid the amount equitably due, and if it made
such payment, then the injunction would issue, restraining the
collection of the balance. This is, of course, upon the assumption
that the objections taken to the acts as above set forth are well
founded. Whether they are or not it is not necessary for this
purpose to decide.
Taxation of shares of stocks in national banks is the universal
rule, and probably there is no state in the Union in which such
taxation is not provided for as a part of the property subject to
taxation for the general support of the state government. The State
of Virginia has by this legislation sought to provide for and
enforce taxation of this kind of property. It is clearly shown that
it intended to provide for a legal assessment -- one that complied
with the conditions of the federal statute, for the language of the
various acts above mentioned in providing for such taxation is
substantially the same as that used in the federal statute, as they
provide that the assessments shall not be on the capital of any
bank, but shall be upon the shares at the same rate as is assessed
upon other moneyed capital in the hands of individuals residing in
the state. This is the purpose of the laws, and if in attempting to
effect that purpose some slip is made or some details are provided
for therein which may render assessments under them irregular or
even illegal,
Page 191 U. S. 280
that fact does not detract from the equitable duty of the
shareholders in national banks to fulfill the plain demands of the
laws, and pay a tax on their shares in like proportion as is
assessed upon other moneyed capital, before they can establish any
claim for interference in their behalf by a court of equity. To the
extent (if any) that the assessment exceeds that amount, it may be
assumed proper to ask a court of equity to enjoin its collection;
but surely it offers no equitable foundation for an injunction
restraining the collection of the whole tax, nine tenths of which
may be justly due on every equitable principle.
The original and supplemental bills, taken together, show at
least the amount that would be justly and equitably due on the
theory of the complainant, for they show that, if the two
deductions (being all that are insisted upon by the complainant)
had been made by the taxing officer, the complainant would not have
had any ground of complaint as to the amount of the taxes. There
are data in the original and supplemental bills from which it can
be at once and definitely determined what the amount of the
deductions claimed by complainant would be. The market value of the
stock is stated for each year, as assessed by the taxing officer,
and also the value of the real estate is stated for each year, and
this last amount, complainant insists, should be deducted in
arriving at the market value of the stock. The bills also show the
different shareholders who had debts at the time the various
assessments were made, and the amounts of the deductions they would
therefore be entitled to for each of the years in controversy.
These two classes of deductions being made, the complainant offers
no equitable objection to taxes which might be assessed upon the
balance. With these data thus appearing, from which the equitable
amount of the taxes due by the shareholders is readily determined,
we think this conceded amount should be paid before a court of
equity ought to grant its aid by way of injunction. The universal
rule of a court of equity is that he who seeks its equitable
interposition must himself do equity. Is there any higher equity
than that a citizen
Page 191 U. S. 281
should pay the amount of a tax which he concedes to be just and
equitable before asking the aid of a court of equity to grant an
injunction to enjoin the collection of any greater sum?
The complainant, however, insists that the rule does not exist
where the assessments are void, and not merely irregular, and it
asserts that these assessments are void because the acts under
which they were laid do not provide for notice to the shareholder
before determining the value of the share upon which the tax is to
be laid, and also because the assessment violated the act of
Congress in being at a greater rate than is assessed upon other
moneyed capital.
We are of opinion, however, that these assessments were not void
within the meaning of the rule which absolves the taxpayer from the
necessity of paying or tendering the amount equitably due from him.
If there were no right to assess the particular thing at all,
either because it is exempt from taxation or because there is no
law providing for the same, an assessment under such circumstances
would be void, and, of course, no payment or tender of any amount
would be necessary before seeking an injunction, because there
could be no amount equitably due where there never had been a right
to assess at all. Where, however, there is a statute which provides
for an assessment, and gives jurisdiction to the taxing officer,
under some circumstances, to make one, but the particular
assessment is invalid for want of a notice to the taxpayer, or some
other kindred objection, the equitable duty still rests upon him to
pay what would be his fair proportion of the tax as compared with
that laid upon other property, before he can ask the aid of the
chancellor to enjoin the collection of the balance. This is the
equitable rule, and it is good morals as well. To say that the act
under which the tax is levied is unconstitutional, and therefore is
the same as no law, and hence there is no duty to pay anything,
because no tax can be levied without some law therefor, is to state
the proposition too broadly. We concede that, if the law were
unconstitutional because, for instance, there was no
constitutionally
Page 191 U. S. 282
power to tax the particular property, there is no necessity to
pay anything. But where some part of the law may be
unconstitutional because of a failure to comply with some matter of
detail, but the amount which the owner of the property ought to pay
is perfectly clear under the provisions of law, then if the
taxpayer desire to be exempted from paying more than his share, he
must pay or offer to pay his proportion before equity will aid him
in his effort to escape paying a disproportionate share.
The statute herein provides for a tax and creates the equitable
obligation to pay some amount by reason of the shares, and even
though there may be some obstacle which prevents its entire
legality, yet the person assessed should recognize his equitable
obligation to pay the tax to the extent stated before he can base
any claim for the assistance of equity to get rid of the balance of
the tax. The mere lack of a provision in the statute for notice did
not take away the jurisdiction of the taxing officer to make an
assessment under any circumstances.
What is the purpose of notice? Clearly that the person assessed
may have an opportunity to show some reason, if any, why he should
not be assessed at all, or else not so much as he has been in fact.
But suppose that, although there was no notice provided for in the
act, the taxpayer had nevertheless heard of the assessment, and in
fact had appeared before the assessing officer and made his case,
showing he should not be assessed more than a certain stated
amount, and the officer had allowed his claim to its full extent.
Should he be thereafter permitted to resist by means of an
injunction the collection of the tax so imposed upon the ground
that the statute provided for no notice to him, and none was
officially given? Certainly not. So, when he comes into a court of
equity to ask its aid, should it appear, on his own statement or
otherwise, that, if all the claims he makes were allowed he would
still equitably owe the government a certain sum by reason of the
statute providing for the assessment and his ownership of the
property assessed, will he be heard to insist that the court
Page 191 U. S. 283
grant him an injunction preventing the collection of any tax,
because he had no notice of the assessment? He owes something to
the government as a tax upon his shares, and ought any court of
equity to aid him in escaping all obligation because, while
insisting that the whole assessment is illegal, it yet clearly
appears that a portion thereof, even if uncollectible, is
nevertheless equitably and justly due. Is the equitable obligation
arising by reason of these statutes and under these circumstances
to pay some tax completely obliterated because the particular tax
cannot legally be collected, and may be called void? We think
clearly not. This same reason applies not only to a lack of notice,
but also to the case of a claim that the tax is illegal because it
did not allow the deductions which by the federal statute should
have been allowed. The tax under such circumstances is not void,
but, at most, voidable for the illegal amount.
Albany County v.
Stanley, 105 U. S. 305,
105 U. S.
315.
We refer to a few of the many authorities upon the subject.
In
State Railroad Tax Cases, 92 U. S.
575,
92 U. S. 616,
it was said by Mr. Justice Miller, in delivering the opinion of the
Court, as follows:
"Before complainants seek the aid of the court to be relieved of
the excessive tax, they should pay what is due. Before they ask
equitable relief, they should do that justice which is necessary to
enable the court to hear them. . . . 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 of the bill, or be shown by
affidavits, whether conceded or not, before the preliminary
injunction should be granted. The state is not to be thus tied up
as to that of 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."
This language is used in relation to taxes which were
claimed
Page 191 U. S. 284
to be too high with reference to other property in the state,
but the principle of the rule exists even where the tax is averred
to be too great, because certain deductions provided by law were
not made, or because there was no notice given of the assessment,
and hence the taxpayer never had an opportunity to be heard. If,
after hearing, there would appear something to be equitably due
from the taxpayer, he should pay it before seeking relief from the
court.
In
Cummings v. Merchants' National Bank, 101 U.
S. 153, where the question was whether the rule adopted
by the local boards of assessment was in conflict with the state
constitution, the court held that it was, and that an assessment
made under those circumstances was illegal, but that nevertheless
the taxpayer was bound to pay the amount equitably due, and the
opinion closes with the statement that,
"the complainant having paid to defendant, or into the circuit
court for his use, the tax which was its true share of the public
burden, the decree of the circuit court enjoining the collection of
the remainder is affirmed."
In
National Bank v. Kimball, 103 U.
S. 732, the general rule was held to be that the owner
of taxable property seeking to enjoin the collection of a tax
thereon, which he alleges to be in excess of what is lawful, must
first pay or tender so much thereof as is justly due. Mr. Justice
Miller, speaking for the Court, said:
"The bill attempts to evade this rule by alleging 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 bank ought to pay on the shares of
the bank."
The
State Railroad Cases, supra, were then referred to
by the Court, and quotations therefrom made, and the principles
therein announced were held to be sufficient to decide the case at
bar, thus holding that the mere fact that a tax was void for some
particular reason was not ground for the interposition
Page 191 U. S. 285
of a court of equity by injunction where it could be seen there
was an equitable obligation due from the taxpayer to pay a certain
conceded amount, or an amount which could easily be ascertained,
and which had not been paid.
These cases in this Court are sufficient to show the propriety
of the rule, and that it has been followed by us whenever the
opportunity arose.
The same principle has been, however, decided by many of the
state courts.
In Smith v. Humphrey, 20 Mich. 398, 409, Mr.
Justice Cooley, delivering the opinion of the court, said:
"He who comes into equity for relief must be willing to do
equity, and there can be no ground upon which, in enjoining an
excessive claim, the complainant can be discharged from that which
is justly due. [Citing Story and Spence.] This is the rule even as
between individuals, and there is at least equal reason for
applying it in behalf of the state when it is seeking to collect
its revenues. We have had occasion to apply it heretofore in suits
to enjoin taxes.
Conway v. Waverly, 15 Mich. 257;
Palmer v. Napoleon, 16 Mich. 176.
See also Hersey v.
Supervisors of Milwaukee, 16 Wis. 185;
Bond v.
Kenosha, 17 Wis. 288."
This Michigan case was one on appeal from an absolute decree
perpetually enjoining a sale for unpaid taxes because of a demand
of interest by the proper authorities at a rate not allowed by law.
The court held that it could not be sustained, and that the payment
of the amount due, with interest at the lawful rate, must be made,
and then the sale would be perpetually enjoined.
In
Merrill v. Humphrey, 24 Mich. 170, it was held that
a property owner seeking to enjoin the collection of a tax on the
ground that the amount is excessive should show by his bill, as
near as may be practicable, what amount is just and what is
excessive, and he should pay to the proper officer the amount which
he concedes to be properly
Page 191 U. S. 286
chargeable against himself. Mr. Justice Cooley, delivering the
opinion of the court in that case, said (p. 175):
"We have already said that the complainant should be required to
do equity as a condition of relief. What is just to the public
cannot be done unless he pays within due time such proportion of
the tax assessed upon him as he concedes to be fair, and we think
this payment should be required by the injunction master to be made
to the proper officer as a condition to the allowance of
injunction. To this extent, the case is within the principle of
Conway v. Waverly, 15 Mich. 257, and
Palmer v.
Napoleon, 16 Mich. 176, heretofore decided by us, and of
several Wisconsin cases,"
etc.
In
Steuart v. Meyer, 54 Md. 454, where it appeared that
the sale of certain property in the City of Baltimore for the
nonpayment of taxes was illegal in not complying with the statute,
it was held (p. 468) that the complainant, as a condition of
obtaining a decree setting aside the sale, must pay to the party
entitled to receive it the full amount of the taxes in arrears at
the time of the sale by the collector, together with the interest
accrued thereon to the time of the payment, and also all taxes that
had subsequently accrued due on the property, with interest.
In
Alexander v. Merrick, 121 Ill. 606, it was held
that, in accordance with the principle that a party seeking equity
must do equity, a court of equity, in setting aside a void tax sale
as a cloud upon title, would still require the complainant to
refund the taxes paid by the holders of the certificates of
purchase on their purchase, and also succeeding taxes to protect
their purchase. In this case, it was conceded that the tax sales
were illegal and void, and that any deed issued by the county
clerk, based upon such sales, would also be unlawful and void, but
nevertheless would, on their face, appear to be valid official acts
of the clerk, and would cause a cloud upon the title to the lands.
At page 614, the court said:
"The complainant claims that the certificates of sale were
clouds upon his title, and obstacles in the way of its
beneficial
Page 191 U. S. 287
enjoyment. He asks a court of equity to dissipate these clouds
and remove these obstacles. He who asks equity must do equity. The
court below, by its decree, should have required the complainant to
refund the taxes paid by Reed and Forsythe as a condition to
granting the relief prayed for. That such a requirement is proper
in cases of this kind has been repeatedly held by this Court."
In
Morrison v. Hershire, 32 Ia. 271, 277, an assessment
for local improvements, the court refused to interfere even if the
assessments were, as to one of the fronts on the street,
unauthorized unless the party complainant paid or tendered the
portion legally due. The court said:
"An elementary principle of equity is applicable to the
objections here presented. It is not denied that, under the rule of
assessment as fixed by the council, if applied as contended for by
plaintiffs, certain sums are due from the lot owners which are
charges upon their lots. These sums the respective plaintiffs are
bound by law and in equity to pay. Before plaintiffs can claim
relief as to the sums which they insist are over-assessed upon
their property, they must pay or offer to pay the sums lawfully and
justly due according to their own theory of the assessment; for he
who seeks equity must do equity; but this plaintiffs have not
done."
And on page 278:
"We understand that it is a settled rule in equity that, where a
party is in conscience bound to pay a certain sum of money which,
together with an amount that he is not legally bound to pay, is
brought as a legal claim against him, equity will not restrain the
collection of the whole unless he pay or offer to pay by tender the
sum which he justly and legally owes."
The rule requiring payment of the sum equitably due cannot be
too rigorously enforced in cases regarding payment of taxes. This
rule does not assume the validity of the assessment for that sum,
but it simply says that, under the circumstances, the taxpayer
shall have no right to come into court and enjoin the payment of
any tax when the amount which,
Page 191 U. S. 288
equitably, he ought to pay is easily and certainly determinable
from the conceded facts in the case.
In the case at bar, because certain deductions were not made,
although there was a large sum assessable even if the deductions
were allowed, the injunction granted has prevented the collection
of any part of the assessments, and for twelve years, the
stockholders in these Lynchburg banks have paid not one dollar of
taxes by reason of their ownership of such shares. This is
inequitable and unjust, and a court of equity should not be made
the instrument by which such injustice is continued.
Although we reach the conclusion above stated on the ground we
have discussed, it is not to be inferred that we regard the other
grounds untenable. We intimate no opinion in regard to them. To the
end that complainant may, if it so elect, pay as provided in this
opinion, and then commence further proceedings, the dismissal of
the bill will be without prejudice, and as thus modified the decree
of the Circuit Court is
Affirmed.
