Case ID: ohio-st_49/html/0189-01.html
Source: Caselaw Access Project
Author: {"author": "Bradbury, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Railway Co. v. State.
    
      Railroads — “ One dollar per mile” fee — Act creating, construed— Constitutional law.
    
    The act of April 15, 1889 (Section 251a Revised Statutes), requiring “ every corporation or company operating a railroad or any part of a railroad within this state" to pay to the Commissioner of Railroads and Telegraphs a “ fee ” of one dollar per mile for each mile of track operated hy it within this state, contravenes sections two and five of article twelve of the constitution of this state.
    (Decided March 2, 1892.)
    Error to the Circuit Court of Franklin county.
    On May 1, 1890, the state of Ohio, by its attorney general, in an action theretofore begun and then pending in the court of common pleas of Franklin county, filed the following amended petition:
    "The plaintiff says: That the defendant is a corporation duly incorporated under the laws of the state of Ohio, having its principal office in the city of Columbus, in said state, and that on the first day of September, 1889, it operated two hundred and seventy-four and sixty-three hundreths (274.63) miles of railroad within the- state of Ohio.
    “ That on the 16th day of October, 1889, said defendant filed its annual report, duly verified, for the year ending on the 30th day of June, 1889, in the office of the Commissioner of Railroads for this state.
    
      “ That it was the duty of the defendant to have filed said report oh the first day of September, 1889, and to have paid on that day to the Commissioner of Railroads, a fee of one dollar ($1.00) per mile for each mile of track operated by it within the state of Ohio; but that the defendant failed and refused, and still fails and refuses, to make said payment, or any part thereof, to the commissioner, or any one for him.
    “Plaintiff says that by reason of the failure of the defendant to make said payment, or any part thereof, there is due it from the defendant, the sum of $274.63, for which it asks judgment, with interest from the 1st day of September, 1889.
    “David K. WatsoN,
    
      Attorney General."
    
    To this amended petition a demurrer was interposed by the railway company, which was overruled by the court, and the railway company not desiring to plead further, a judg ment was rendered against it for the amount claimed with interest, which judgment was affirmed by the circuit court in a proceeding brought in that court by the railway company to obtain its reversal: whereupon the present proceedings were begun in this court to reverse the judgment of said courts.
    Brief of Watson, Burr & Livesay, for plaintiff in error.
    I. The first problem is to determine the nature of this law, and we respectfully ask the attention of the court to the following question, viz: What was the object and purpose of the legislature in laying this exaction ? Was it for the purpose of revenue, or was it an incident to the exercise in some of its forms of the police power? The answer to this question will, as it seems to us, go far towards settling the case. If it is the former, we hope to show the law to be clearly unconstitutional. If it is the latter, and the exaction ¿-oes no further than the police purpose to be attained, then it is not a revenue or tax law, but the fee is a mere incident to regulation.
    From the original creation of the office of Commissioner of Railroads 'and Telegraphs, to the year 1889, a period of twenty-two years, the office has existed as a part of the executive branch of the state government, and has been supported from its general revenues.
    The amendment in question (Ohio Raws, 86, 351) deals solely with the payment of a fee. No other change whatsoever was made in the law. No additional burden was put upon the state, no new duty upon the officer, nor was any corresponding benefit conferred upon the companies, by the passage of this supplementary section. Its whole and only object was to put money into the hands of the commissioner to be paid forthwith into the treasury to the credit of the general revenue fund.
    There was no attempt, on the part of the general assembly, to disguise the true object of the law, or bring the exaction within the scope of any exercise of the police power. Home Ins. Co. v. State of New York, 134 U. S... 594; Henderson v. New York City, 92 U. S., 259; Brown v. Maryland. 12 Wheat. 419; State v. Hipp, 38 Ohio St., 199; Exchange Bank v. Hines, 3 Ohio St., 1.
    The reasonable and natural effect of the law in question, and we may add its only effect, is to add the sum of one dollar per mile to the taxation of railroad property as prescribed in section 2774, and the other sections of the statutes relating thereto, and to increase by so much the general revenue of the state. Peyton v. Bliss, 1 Woolw., 170, 173; The Nashville, 4 Biss., 188.
    That it'is not an assessment for benefits as understood in Ohio, is clear on several grounds.
    It is a matter of common history that the office of Commissioner of Railroads and Telegraph s was not established for the benefit of railways, but for the benefit of the public as against the railroads. Field v. The Commissioners of. Highland Co., 36 Ohio St., 476.
    
      The attorney general also seeks to maintain the charge in question as a license fee, and cites several cases in which license fees have been sustained. But it is not a license fee. Adler v. Whitbeck, 44 Ohio St., 539; Anderson v. Brewster, lb. 576; Senior v. Ratterman, lb. 661; Marmet'v. The State, 45 Ohio St., 64.
    Again the attorney general likens the tax in question to an inspection fee, and cites the case of Gas Co. v. The State, 18 Ohio St., 238.
    The supreme court in the case cited held this act constitutional, and the assessment valid, basing its decision however, purely upon the ground that the act was an inspection law, and that the fees to be paid were purely inspection fees.
    All inspection laws, probably without exception, are both for the general benefit of the public and«the particular benefit of the individual whose goods are inspected. Gibbons r. Ogden, 9 Wheaton, 1.
    Again, the attorney general cites the case of The State, ex rel. v. The Judges, 21 Ohio St., 1, in support of this law.
    That case related to the fees paid the probate judge, clerk of courts, sheriff, auditor and treasurer.
    The judgment of the court was based expressly, so far as concerns the question now at issue, upon the fees being compensation for official services rendered and facilities afforded to persons requiring, and who are- especially bene-fitted by, the performance of such services.
    Finally, the attorney general seems to contend that the tax in question is valid, for the reason that the legislature alone has power to determine in what mode and how much corporations may be taxed. In the absence of constitutional restraints, no doubt this is true. But the doctrine is not peculiar to corporations. The extent of the taxation, and what property or kinds of business shall be taxed, whether of natural or artificial persons, are matters solely within the legislative discretion. Hill v. Higdon, 5 Ohio St., 243, 245; Cooley, Constitutional Limitations, 632, 633; Cooley on Taxation, 43 et seq.
    
    
      II. We claim the law to be unconstitutional on two1 grounds. 1. The act in question violates article XII, sec. 5 of the constitution.
    As the chapter relating to the Commissioner of Railroads and Telegraphs stood before the amendment of 1889 was interpolated, the payments of money therein provided for were limited to fines, forfeitures and penalties. These were not taxes or fees, and therefore the above constitutional provisions did not require the object to which the money was to be applied to be designated. They were simply to be paid into the state treasury (sec. 265). But the levy of one dollar per mile annually upon the mileage of each railroad is, by whatever name it may be called, a tax’, and before the legislature could lawfully levy such tax, it was necessary that the law imposing the tax should state distinctly the object to which the same should be applied. People ex rel. Hopkins v. Board of Supervisors of Kings Co., 52 N. Y., 556, 567; Dean v. Lufkin, 54 Tex., 264.
    2. The chief objection which we urge against the law is its violation, as we believe, of art. XII, sec. 2, of the constitution. People ex rel. v. Albertson, 55 N. Y., 55; State v. Frame, 39 Ohio St., 899,414; Hipp v. State, 38 Ohio St., 199,
    Brief of J. H. Collins, also, for plaintiff in' error.
    The law is in violation of section 2, article XII, of the constitution.
    It is also in violation of section 5, article XII, of the constitution.
    The claim of the attorney general is that this fee partakes more of the nature of an assessment than a tax, and for that reason was clearly within the power of the legislature. The distinction between an assessment and a tax proper is that the former is a local taxation for the purpose of paying for some improvement whereby a peculiar benefit arises to the parties, and is in this manner distinguished from general taxation; and the claim is made that this is an assessment for a benefit peculiar to the railroads of the state, and that that benefit consists in the fact that the office of railroad, commissioner has been established, and that he from year to year publishes his reports, and that the publication of these reports and other services which he renders by virtue of his office are peculiarly beneficial to the railroad.
    The court is not authorized to infer from the provisions of the law creating the office of railroad commissioner and prescribing his duties that they are beneficial to the railroads; but on the contrary, the office of railroad commissioner and the passage of laws conferring powers upon him which he possesses, partake rather of the visitorial powers of the state, coupled with what in common parlance is known as the police powers; police powers being alwaj^s exercised for the benefit of the people at large, and the same may be said with regard to the visitorial powers.
    If it is a tax, then it is not assessed according to the true value in money of the property, but rather according to the length in miles of the railroad track; and if a tax, it is not levied in pursuance of law, nor does the- law state to what purpose the money arising therefrom shall be applied. If the theory of the attorney general is correct, that the fee should be paid for the number of miles operated on the first day of September of each year, it would seem to follow that the railroad commissioner was authorized to determine arbitrarily what number of miles each railroad company operated on that day, because no papers in his office would furnish the information; and there was no opportunity whatever for a hearing in any form, but the money was taken under the compulsory and arbitrary power of the railroad commissioner, and would amount to depriving them of property without due process of law, and, in fact, without-any process of law.
    
      David K. Watson, Attorney General, for defendant in error.
    Concerning the constitutional objections, to the effect that the action can not be maintained, it will be observed' that the sections of the constitution cited by counsel refer to taxes, and establish rules by which taxes shall be levied, and I assume it will be admitted by counsel that unless they can bring the act of April 15, 1889, within these provisions •of the constitution, that act will stand.
    The position' I take is, that money paid by a corporation in compliance with an act of the general assembly, in consideration of a benefit received, is not, within the meaning of the constitution, such a tax as is ordinarily levied upon property, but that the money the railroad companies (in this •case) are required to pay by virtue of this supplementary section, partakes more of the nature of an assessment than of a tax, and it was therefore clearly within the power of the legislature to pass the act. Bouvier Raw Die.
    It is in this sense, in which I claim the legislature transcends no constitutional provision when it requires railroads to pay a fee. The legislature did not assume any special control or government over, or require any special report or work from, the railroads in the state, until the passage of the act of 1867, other than such as was required of them generally by the Ohio statutes.
    Unquestionably, the purpose of the legislature in requiring the railroads to furnish such reports was to establish a bureau of information for the benefit of the public, and the benefit of the railroads by the state and its expense. These corporations had' grown to enormous proportions. They had invested millions of money,' and controlled thousands of employes, and constituted the great channels of commerce. It was proper, therefore, for the general assembly to take hold of, and legislate upon, this subject. The annual report which the railroad commissioner was required to make by the act creating his office, was intended to be, and was, and still is, of almost incalculable benefit to the roads. Information dispersed through this department of the state government, is eagerly sought and taken advantage of by the various railroad companies.
    No one will question that a special favor and benefit was conferred upon the railroads of the state by the establishment of the office of railroad commissioner. Such department of our state government was necessarily attended with large expense. The commissioner was paid a salarj’-. The act creating the office allowed him to employ one or more clerks, and the report which he is required to publish is a voluminous and expensive document. All this expense was borne by the state. The purpose of the general assembly in passing the supplementary section, the constitutionality of which is involved in this case, certainly was to require the railroads to bear a portion of the expense of the office of railroad commissioner, inasmuch as they received large benefits from the establishment of such an office. The word “tax” is not used in the act complained of. The language is, “ at the time of the filing of the report required by section 251, every corporation or company operating a railroad or any part of a railroad in this state, shall pay to the commissioner a fee,” etc. The word “fee”.as used in this sense, is synonymous with the word “assessment,” as defined by Bouvier. Questions of a similar character have frequently come before the courts of our state, and the levying of an assessment or a fee, has uniformly been sustained. State v. Gasley, 5 Ohio, 15; Marmet v. State, 45 Ohio St., 71; Cincinnati v. Buckingham, 10 Ohio, 257.
    A subsequent case arose in the same city which involved! the right of the mayor to fine a party for neglecting or refusing to take out a license for a trade in that city according to the ordinance, which required draymen and those following similar occupations, to pay a given amount each. 15 Ohio; 644: Cincinnati v. Bryson, 15 Ohio, 625; Baker v. City of Cincinnati, 11 Ohio St., 540; Zanesville v. Richards, 5 Ohio St., 589-593; Hill v. Higdon, 5 Ohio St., 243-247; Reeves v. Treas. Wood County, 8 Ohio St., 333; Cincinnati Gas Light and Coke Company v. State, 18 Ohio St., 238; Western Union Telegraph Company v. Mayer, 28 Ohio-St., 521.
    But the broad ground upon which the validity of this act rests, is that it is a matter of legislative discretion. Therefore, unless the act is plainly in violation of the constitution, the court will not interfere. What laws are wise or unwise, good or bad, necessary or unnecessary, is not for the determination 'of the court, but the legislature. In construing; constitutions, courts interpret the organic law of the state. They do not legislate by assuming to usurp legislative authority. “ legislative power in this state shall be vested in a general assembly,” .is the provision of article II, section 1, of our constitution. Here, then, is the source of legislative power. Here is found the authority for the general assembly to pass laws. The organic law of the state, the constitution, says the legislative power of the state — that is, the law-making power of the state — is vested in the general assembly. Such being the case, what are the limitations to this power? How far may it go? When does the legislature transcend its limits? The question is judicially answered. Baker v. City of Cincinnati, 11 Ohio St., 542; Marmet v. State, 45 Ohio St., 64; Milwaukee v. Helfen-stein et al. 16 Wis., 136; Leavenworth v. Booth, 15 Kansas, 627; New York v. The Home Insurance Co., 92 N. Y., 328; Delaware Railroad Tax Case, 18 Wall., 206-231; Californian. Pacific Railroad Company, 127 U. S., 1,41.
   Bradbury, J.

The constitutionality of the act of the general assembly of the state of Ohio, passed April 15, 1889, 86 Ohio Raws 851, is involved in the determination of the case. That act reads as follows:

“SECTION 1. Be it enacted by the General Assembly of the state of Ohio, That section 251, of the Revised Statutes, be supplemented as follows ;■
“Sac. 251 a. At the time of filing the report required by section two hundred and fifty-one, every corporation or •company operating a railroad, or any part of a railroad within this stare, shall pay to the commissioner a fee of one dollar per mile for each mile of track, whether main, branch, double or side track, operated by them within this state. Any corporation or company failing to pay such fee, at the time precribed, shall forfeit and pay a sum of not less than •one thousand nor more than five thousand dollars. All fees received by the commissioner under this section shall be paid by him into the state ^ treasury, upon an order from the .auditor of state.

Section 251, Revised Statutes, to which the section above •quoted is supplementary, requires the president, etc., of any railroad situate in whole or in part within this state, to file' in the office of the commissioner of railroads and telegraphs, a report containing a minute and elaborate account of its business and transactions for the preceding year.

The constitutionality of the section imposing a fee of one dollar per mile of track, is assailed on two distinct grounds: (1.) That it contravenes section,2, article XII, of .the constitution of this state, which provides that “Raws shall be passed, taxing by a uniform rule, all moneys, credits, investments * * * * and also all real and personal property', according to its true value in money.” * * (2.) That it violates section 5 of the same article (XII) which pr ovides that “No tax shall be levied, except in pursuance of law; and every law imposing a tax, shall state, distinctly, the object of the same, to which only, it shall be applied.”

If this exaction from railroad companies, imposed according to trackage, is a tax, within the meaning of the constitution, then it falls within the inhibition of both of those sections of our coustitution. Within the inhibition of section II, because the railway property, including tracks, within the state, is taxed by the general taxing laws of the state, at its true value in money, and the tracks of a railroád, being part of its property, is subjected to a burden not imposed upon any other property within the state, and not imposed “according to its true value in money;” and within the inhibition of section 5, because it fails to state the object for which the tax is levied. The question of the constitutionality of the section, therefore, must depend upon whether it shall be held to levy a tax or'not, within the meaning of the constitution, and counsel direct their argument, in great measure, to the discussion of this point.

Counsel for the state contends, at one stage of his argument, that the exaction is not a tax, but, instead, partakes-more of the nature of, and should be treated as, an assessment levied according to benefits, which, it is claimed, accrue to the railroads operated within the state, by the provisions of the act creating the office and prescribing {lie duties of the commissioner of railroads and telegraphs.

We are so accustomed to associate the doctrine of assessments, levied upon property 'according .to tbe benefits that may, accrue to it, with its usual subjects -of application, some improvement of a local character, such as sidewalks, grading and paving highways, and constructing and maintaining ditches and the like, that the two are with difficulty separated in our mental operations;- but, nevertheless, there may be no such necessary connection between them as .to forbid a far wider extension of the principle, and its application to many other and perhaps widely varient subjects. But, however this may be, it is not necessary to pursue the speculation further, for the sum exacted is an arbitrary one, having no apparent connection with any benefits conferred by the act itself, or that to which it is supplementary, and the law fails to attempt in any manner, whatever, to provide a method by which any relation between the benefits and burdens that it confers or imposes, can be ascertained; but simply provides for the payment of a fixed sum which is to be applied solely to swell the general revenues of the state. None of the features heretofore present, in all acts of the legislature which provide for assessments upon property, according to the benefits it receives from the operation of law, are discernable in the act under review, and it cannot be assigned a place in that class of legislation.

The power of the legislature to levy special exactions to be applied in payment of the expense of governmental supervision over certain .lines of business, which the state in the exercise of its police powers may supervise, was maintained by fhis court-in case of The Cincinnati Gas Light & Coke Company v. The State of Ohio, 18 Ohio St. 237. That case involved the constitutionality of an act of the general assembly'of this state passed April 6,1868, 63 Ohio Raws, 164, (S. & S. 158), providing for the inspection of gas-meters. The act provided for the appointment of' an inspector, and prescribed his salary, provided also for the purchase of such apparatus as might be required in the performance of the duties of his office, and for the purpose of paying the salary of the inspector and the cost of the necessary apparatus to enable him to perform his duties, provided that_ a sufficient sum therefor should be assessed against the several gas companies of the state according to their respective appraised valuation. In the 18 Ohio St., 287, the power of the legislature to levy the exaction imposed upon gas companies, by the act above mentioned, was assailed, upon the ground that it contravened the constitutional rule of equality in levying taxes, prescribed by sec. 2 of article XII of the constitution. This court, however, sustained the act. The opinion of the court was delivered by Judge Brinicerhoff; and while it may be contended that some illustrations are found in the opinion of that learned judge, not strictly apposite to the case, yet the opinion, taken as a whole, clearly shows that the dceision was put upon the ground that the exactions levied upon the several gas companies, were not a tax within the constitutional meaning of that term. This view is supported by the following quotation from that opinion: “It is settled by the repeated decisions of this court, in Hill v. Higdon, 5 Ohio St. 243; Reeves v. Treasurer of Wood County, 8 Ohio St. 333: and Baker v. The City of Cincinnati, 11 Ohio St, 534, that the section of the constitution just referred to is only applicable to, and furnishes the governing principle for, all laws levying taxes for general revenue, whether for state, county, township, or municipal corporation purposes. Now, although the assessment or charge upon the gas companies of the state imposed by the statute in question may be a tax, in the widest import of the word, it certainly is not a tax for purposes of general revenue. It is the assessment of a charge for a special purpose growing out of the exercise of the supervisory power of the government over the business in which these companies are engaged.”

It is true that an examination of the act above mentioned, providing for the inspection of the gas-meters, will disclose provisions highly beneficial to the gas companies, and it is contended that therein it differs from the act providing fofa'commissioner of railroads and telegraphs; the latter act, it is said, imposes burdens on the railroads of the state instead of conferring benefits. An inspection of this latter act will disclose provisions, some of which are burdensome while others are beneficial; but, whether the one or tbe other predominate, we do not think it material to inquire in this connection, for we apprehend that the question whether the act before mentioned, relating to the inspection of gas-meters, etc., was upon the whole beneficial, rather than burdensome, to the gas companies of the state, did not bear materially upon the depision of the court in 18 Ohio St. 237. The ground upon which that decision was put, we think, was that the business of manufacturing and selling gas was one that fell within the police or supervisory power of the state, and that the expense necessarily attending upon its supervision could lawfully be charged against the gas companies, because .the exaction made for that purpose was not a tax within the constitutional meaning of that word.

It cannot, we think, be denied that the business of transporting passengers and freight by the railroads within this state, is as clearly within the supervisory, or police powers, of the state as is that of making and vending gas; but while this is so, it does not aid in upholding the statute now under consideration, for that statute does not attempt, as the gas inspecting statute did, to provide a fund to be directly applied to liquidate the expenses attending the supervision.

What is this, statute? Its constitutionality must be determined by its operation. It provides in terms that there be placed upon each mile of railroad track within this state an exaction of one dollar per annum; the statute calls it a “fee,” but its nature is not affected by the name that may be assigned to it. It is an exaction levied upon railroad tracks, and railroad tracks are property. It does not differ in principle from a fixed sum, levied upon all farmers of the state, for each acre of land of which they may be seized, or each head of horses or other live stock that they may own. In both instances the tax is levied upon property, but it is neither leived “according to its true value in money” nor uniformly upon all property; both of which are constitutional requirements (sec. 2, art. XII), if it is a tax within the constitutional meaning of that word. That it is such a tax, we think, there can be little, if any, doubt. A tax is “a pecuniary burden imposed for the support of the government.” * * * “Burdens or charges imposed by the legislative power of a state upon persons or property to raise money for public purposes.” 2 Bouvier, 705. The money raised by this section under consideration is directed to be paid into the state treasury; it becomes a part of the funds of the state applicable to any conceivable public purpose. There is not a word in the section under consideration, or in the act to which it is supplementary, to indicate a purpose that the fund raised shall be limited, or even in any way specially applied, to the expenses incurred in super, vising the railroads of the state. A law like this — the direct and only purpose it can accomplish, being to create a a fund by an exaction on property to be paid into the state treasury to be used indiscriminately for any and all public purposes — must be regarded as creating a tax. It bears no resemblance to, and should not be confounded with, that class of laws enacted by the legislature, the immediate object of which is to call into active operation the police powers of the state, but which, incidentally or indirectly, may cause the production of public revenue.

Judgments of the ciraái and court of common pleas reversed, and petition dismissed.