Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1882-08-03
TAXATION.
IMPORTANT DEcIsIoN BY THE u 8
CIRCUIT COURT FOR CALIFORNIA.
Does the State Constitution Discriminate
Unjustly Against railroads 7-Is the
Power Exercised by the State
Board of Equalization in Con-
fsct With the Constitution
of the United States?

~NJHHsAy H6o23oe ol4iCdub Us tuc
Power Exercised by the State
Board of Equalization In Con-
f.ct With the Constitution
of the United states7
The following is the full text OF the recent
decision of the United States Circuit Court
In the railroad tax cases. 1t viii be found to
address itself to an exceedingly important
issue: y
Circuit Court Of the United States in and
Tor the District of California. County of
San Matso va. The Southern Pacific Rail
road Company.
This Is an action to recover Of the South.
eTn racihc Railroad Company. a corporation
created under the laws of California. certain
State and county taxes levied upon it's prom
erty tor the fiscal year of 1880 and 1881, and
alleged to be Cue to the plaintiff, with an
additional i've per cent. for their pon-pav.
ment and interest. 1t was commenced ia the
Sure Court CT tie county of San Mateo.
Inc railroad company. among other things,
sets up IN its answer as defense substantially
this: ThaE by the Thirteenth Article of the
constitution CT the State a mortgage, or
other obligation by which debt is secured
Is treated, for the purposes Of assessment and
taxation, is an interest 10 the property af
iected that except as TO railroad and other
quasi public corpoyations,"
THE VALUE OF THE PROPERTY,
Less the value of the security, is TO be as
sessed and taxed TO the owner, and the value
OF the security TO be assessed and taxed to its
holder (Sec. Al; that by the same article the
frauchise, roadway, roed-bed, rails and rolling
stock OF railroads operated in mora than one
county, are to be assessed by the State Board
OF Equalization at their actual value, and ap-
p1rtioned to tho couSties, cities or towns in
which the roads are located in proportion to
the number Ct miles of railway laid therein
tSec. 81 that st the time Of and previously to
the assessment of the. property of the railroad
company. upon which the taxes claimed in
this action were levied, there existed mort.
gage rpoI the property, executed for ad-
Vances made for The construction and eauip.
ment or the road exceeding three Thousand
dollars for each nile Of the same, no part of
which has been paid except the accruing in.
terest, and the whole of which was and still is
q lien thereon; that the STATE Board of
Equalization, acting under the authority OF
the provisions of
THE STATE CONSTITUTION,
Assessed. as the property of the railroad
company, its franchise, roadway, road bed.
rails and rolling stock at what wss deemed to
be their actual value, without allowing any
deduction fer the mortgage subsisting there.
on, and thus made. as between the property
OF individuals and that of the railroad com,
pany, an unjust and unlawful discrimination
against tie company; and that the State
'onstitutlon. 10 its discriminating provisions,
conflicts with she Inhibition of the Four
teenth Amendment of the Constitution of
the United States, (which declares that no
State shall deny to any person within its
Jurisdiction the equal protection of the laws.
Upon that inhibition the company relies to
defeat the assessment, OK at least to reduce it
by such deductions az are made In the esti-
mate for taxation of tie value of property
held by individuals.
THE RAILROAD COMPANY
Also sets up among other things, as q further
defense to the action. substantially this:
Chat the section of the Thirteenth Article Of
the State Constitution, which confers all the
suthority possessed by the State Board to
make tie ssSessment complained of, is itself
invalid iu this that while it is self. executing,
recurring no legielstion for its enforcement, it
makes no provision for aff0rdiug to the own
ers OF the property assessed an opportunity to
be heard respecting its valuation, but author
izss the Beard to act withoIs notics to them.
without receiving any information from
them, aud without liability to have its action
reviewed, and il erroneous, corrected by any
other tribunal, making its Judgment how
ever arbitrary and capricious final and con-
elusive. And the company contends that in
thus not aifording to it an opportunity to be
heard respecting the valuation of its p.op-
erty, whilst su opportunity is afforded to in
dividuals for the correction of errors in the
assessed value of their property, a discrirni.
nation is made against railroad companies
within the Inhibition of the Fourteenth
Amendment.
CLAIMING IN ITS ANSWER PROTECTION
Under the amendment to the Federal Con-
stitution. against the enforcement of what it
alleges to be partial and discriminating pro-
visions of The State Constitution, under
which the State Board acted and by which
alone it justi6es It's action, the railroad COM
pany applied BIZ pstition to tho State Court
to transfer the action to the Circuit Court of
the United States. The required bond iu
such cases being fled the transfer was made.
The petition among other things alleges that
the Supreme Court Of the State has decided
that the railroad company is not entitled to
tie protection of the Fourteenth Amendment,
or to any reductions for its Indebtedness Sc
cured by mortgage ia the estimate of its
taxable property.
The plaintiff now moves that the action be
remanded to the State Court for trial as not
being removable TO the Federal Court under
the Act of Congress of March 5. 1875, to de-
termine the jurisdiction Of the Circuit Courts,
and to regulate the removal of causes to
them from the State Courts.
BY THE FEDERAL CONSTITUTION,
The Judicial power of the United States ex.
tends &c eli CASES in law and equity arising
under it, and under the laws of the United
States, snd tresties made under their authority.
The Act of 1875, in its flst section, invests
Iha (itvc11E q 10 Cc Ila Tel
original cognizance, concurrent with the
Courts of The several States, "of all suits of
civil nature ST common lay or in equity "
thus arising, where the matter in dispute ex-
cseds, exclusive of COSTS the sum or value OF FIVE
hundred dollsrs. It's second section declares
that any suit OF that character thus arising,
brought into State Court, may be removed
by either party into the Circuit Court Of the
United States. The terms used in the Act
suits Ct civil nature are less compre-
hensive than the term case in the Constitu-
ton. The latter may embrace proceedings
not usually or strictly termed suits. ard pros
ecutions of criminal nature. There can,
therefore, be no serious question as to the
validity of the legislation of Congress.
THE INQUIRY
Is as to It's meaning; and upon this there
might lie room fer much difference of opin-
ion, il lis construction had not already been
determined. Ii we were az liberty to give
our view of its meaning. We should not hes;-
tats 20 limit the authority to remove suits Of
civil nature from State Court to Federal
Cour5 under the Act il question to these in
which the cause of action arises upon the
Constitution, laws or treaties of the United
States, and not extend it to cases where the
defense, az here, rssts merely upon some
right or privilege claimed under them. Here
the cause of action arises upon the Ccnstitu.
ton and laws of tbs State prescribing the
manner and conditions on which its sovereign
right of taxation shall be exercised There
are eminent fitness and propriety in having
all such causes disposed of by the local
Courts, and in rot having them carried into
tie Federal Courts with their attendant de-
lays and expense. But the construction we
might give, if the question were one sAf first
impression, we are not permitted to give
The Supreme Court has already passed upon
the meaning of the Act, and held
IN EXPRESS TERMS
Against the view suggested. In Railroad
Company va. Mississippi az Otto, 1851 that
Court resfiitmed what had previously been
declared, that cases arising under the laws of
the United States are such as grow GU. of
the legislation of Congress, whenever any
right, or privilege, or claim, or protection, or
defense OF the party in whole or in part is
asserted under them. Equally, therefore,
cases must be held to arise under the Consti.
tuition, when Upon any of its provisions some
right, OF privilege, or claim. or protection, or
defense IN whole or in part is asserted in
Judicial proceeding. In the Mississippi case,
which was brought in State Court, the de-
PENDANT, setting up certain rights claimed un.
der an Act of Cox gress, prayed for removal
TO Federal Court under the Act OF 1875, and
the Supreme Court held that the party was
entitled to it, Blr. Justice Miller dissenting