Rogers v. Hennepin County

Background

A group of people who owned memberships in the Minneapolis Chamber of Commerce sued to cancel 1912 tax assessments on those memberships and to stop collection. The plaintiffs claimed three kinds of owners: city residents, state residents outside Minneapolis, and citizens of other states. They said memberships were not taxable, were being unfairly singled out, and that taxing them violated their rights under the Fourteenth Amendment (which protects fair treatment and legal process). Minnesota courts sustained a demurrer and, relying on a related case about a Duluth board of trade membership, upheld the tax. The case reached the U.S. Supreme Court by a writ of error.

Reasoning

The central question was whether the membership interests were protected by the federal Constitution from state taxation. The Court agreed with the state court that memberships are property that can be valued and taxed. It held that placing the assessments under the label "Moneys and Credits" or the method of official valuation did not, by itself, violate the Fourteenth Amendment. The Court rejected claims of double taxation and improper discrimination and said the State could fix the taxable situs of memberships at the location of the exchange, even for nonresidents. The State’s valuation and hearing procedures were available to challenge the assessments.

Real world impact

The ruling means states may tax exchange or chamber memberships and can treat their situs as the place where the exchange operates. Owners who think their memberships are overvalued must use state boards and procedures to seek relief. The decision affirms that these kinds of taxes do not automatically raise federal constitutional problems.

Dissents or concurrances

One Justice, McReynolds, said the writ of error should be dismissed, a procedural point he thought appropriate.