Caseflicks

Supreme Court of the United States • 1915

Bi-Metallic Investment Co. v. State Board of Equalization

239 U.S. 441 | 36 S. Ct. 141 | 60 L. Ed. 372 | 1915 U.S. LEXIS 1435

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Takeaway

In short, this case distinguishes individualized adjudication, which ordinarily requires a hearing, from generally applicable governmental policymaking, which ordinarily does not.

Background

Colorado’s State Board of Equalization and Tax Commission ordered a forty-percent increase in the valuation of all taxable property in Denver. Bi-Metallic Investment Company, a Denver real-estate owner, alleged that neither it nor the city, county, or local assessor had an opportunity to be heard before the statewide bodies issued the order.

Bi-Metallic sued to enjoin the order’s enforcement, arguing that the increase would take its property without due process of law under the Fourteenth Amendment. The Colorado Supreme Court sustained the order and directed dismissal of the suit. The United States Supreme Court affirmed.

Issues

Issue #1

Whether the Fourteenth Amendment’s Due Process Clause requires an individual hearing before a state board imposes a general forty-percent increase in the assessed valuation of all taxable property in a county.

Holding

No. Due process does not require each affected property owner to receive an individual opportunity to be heard before the government makes a general, broadly applicable tax-valuation determination.

Reasoning

The Court assumed the due-process claim in its strongest form: that Bi-Metallic, the Denver assessor, and no representative of the city and county received a hearing beyond whatever notice followed from the boards’ statutorily fixed meeting date. Even so, the relevant action was a countywide increase applied to all taxable property in Denver, not an individualized valuation decision directed at a particular owner.

Property owners were assumed to stand alike because an owner whose particular property had been assessed differently from the generally prevailing rate had the ordinary opportunity to protest and appeal that individual assessment. The challenged state action instead addressed the general premise that Denver property had been systematically undervalued.

When a rule of conduct applies to more than a small number of people, requiring every affected person to have a direct voice in its adoption would be impracticable. General statutes routinely affect property and personal interests, sometimes severely, without individualized pre-enactment hearings. In a complex society, political accountability—people’s immediate or remote power over those who make general rules—supplies the relevant protection.

The Court treated the valuation order as constitutionally equivalent to a statewide decision to increase the tax rate or to decree that Denver valuations would be forty percent higher for the current year. No one would contend that every taxpayer must be heard before such a generally applicable legislative decision. Government must have a limit to individual argument in matters of broad public policy.

Issue #2

Whether Londoner v. Denver required a hearing before the general increase in Denver property valuations could take effect.

Holding

No. Londoner applies when a relatively small number of persons are exceptionally affected on individualized grounds, not when the government makes a general determination governing all assessments in a county.

Reasoning

In Londoner, a local board determined whether a special paving tax should be imposed, in what amount, and upon which properties. The decision concerned a relatively small group of owners and required individualized determinations about the special benefits each property received; due process therefore required an opportunity to be heard.

The Denver-wide valuation increase did not require comparable individualized factfinding about particular owners or parcels. It was a general decision about the assessment principle used throughout the county, so Londoner did not control.