Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1884-02-14
THE TAX CASES.
Corr espond ence Between the Governor,
Attoruey-aenerala and others upon the
I subject.

Attoruey-aeneral and others upon the
subjsct.
A printed copy OF the official corresps nd
ence concerning the proposed compromise of
the railroad tax cases was issued yesterday
from ths Office of the State Printer. The
letters are as follows
OFFICE OF ATTORNEY GENERAL OF CALTesNIA,
san FRANCISCO, January %, 1854.
To his EXceteucy George S .oneman The Central
Pacific Railroad Company and the Southern Pacific
Railroad Company are delinquent on the taxes for
the years l6S0-S1-S2. Offers were made by the de-
linqueut companies to your Excelle1cy to pay the
taxes o the three years above writ zen on the basis
of the assessment Of 1882 which YVES much less than
the assessment for lsSo-S1. These offers we're re,
jected, on the ground that no authority to scale
tax existed Anoth offer has been made by those
COR panles to pay the taxes foc 1SS0-Sl-S2 IN fus
except to those cases in which appeals have been
taken to the United States Supreme Court, and to
pay 10 full in those cases, whether the Judgment OF
that Court is for or against the roads, when the
Judgment Is rendered Yhe object being &C test
certain principles in dispute between the companies
and the State This ofe, however, does net include
five per cent. penalty for delinquency nor two per
cent per mouth interest, ten per cent att orney
fee, which are demanded III the sul's- Ghis oHer,
TO my mind, presents different question from the
other and is not within the principle upol which
the other sscted. The power to tax is a SOW
ereign, imperial power. The issue with the compa-
Mes raised Ia the first proposition, Is an lssue OF
supremacy. The companies refused 10 pay because
the tax excessive and offered to pay only II the
tax reduced. To have accepted their proposition
would have been to surrender the principle OF sov-
ereignty in the Stateto admit the hight OF the cit
iZen 10 res!s. the payment Of taxes, not on the
ground OF their illegally, but of their amount.
This officer and no Court has power to do.
Court having jurisdiction may declare tax illegsl,
but cannot declare it excessive or reduce the
amount.
The offer now made does not seem to me liable to
this objection. 1t comedies the right Of the State to
levy and collect tax which the companies aver is
excessive thus yielding the supremacy, and submit
ting to the sovereignty of the State. The sums de-
manded in the suits against the company as penalty,
interest and attorney fee, do not appear to me to
involve the vital doctrine OF your Elk ellencys
fusal OF their first Offer nor any vital doctrine 1t
is question Of c)sts-of precedure-nOt Of revenue
or principle. 1t is a matter Of administrative deter
imitation. Without implying any doubt as to
whether those sums should be collected the ques
ton whether the suit for them should be pressed to
judgment Or not, after the principal sum, the real
tax is paid tendere l, after the reuenue enacted
to be paid is paid in full, is think, Legitimate
matter for executive consideration, and in this
in the power of this office to settle as question of
law. II judgment for the face of the assessment
for the years ls50-Sl-S2 is entered on my motion,
or with my consent, 1t is, in my opinion. final
Under this view of the situation, taking to this
office the responsibility so far as a question Of law
is involved, and assuming distinctly the power law
fully to accept the payment offered, there remains
manifestly question of policy, where the response
biity rests with the administration This question
shall state clearly and as briefly as | can. And
that the question may be fully understood 1t is
essarY to bear in mind the following facts:
The general fund has been for many months
hausted and has borrowed from all avail lbe sources
whatever could be safely transferred. The taxes
which have been paid in will rot replace the bor-
rowed money and meet the demands on the general
fund by many hundred thousand dollars. In sholt
81
remains unimpaired, could hardly be in a worse
condition 7 he large majority Of the counties
with the same reservation of honor and credit,
as unfortunate as the State. Now, without embar
RAISING the statement with multitude of figures,
it is safe to say that the payment of the companies
taxes, offered will relieve both State and coun
ties almost entirely from the present pressure. Suits
have been issued against the companies for taxes of
the years given above, and hopes were entertained
that collections coEd be made to meet the eXigen-
cies OF the State and counties If any such hope
remained this communication would not be written,
nor the present question even considered by this
office.
very few words will demonstrate that such col
lection in such time is not possible. The county of
San Mateo instituted suit against the companies for
State and county taxes This suit tried in the
Circuit Court IN the summer of 1882, and judgment
given against the plaintiff. Appeal was taken TO
the United States Supreme Court. The case was
advanced on the calendar, argued aud submitted
in the fall Of 1882 II not decided but the Su-
stipulation were to abide the decision in the San
Mateo case should be tried in the Circuit Court In
July, 1883, six cases selected and tried, and
decided as before ia the San Mateo case-agln
the State. An appeal was perfected in one of the
six cases, and it was taken up to the Supreme
Court, and motion made to advance it on the cal
endar This motion overruled, on the ground
that the single case of Santa Clara did not present
all the questions involved and that the other csses
must be sent up before the Court would consider
any case. In the meantime the San Mateo case was
restored to its place the calendar practically out
of reach forever. All possible diligence has been
used, but the appeal in the remaining has Just
been perfected, and they cannot be placed on the
Supreme Court calendar before October 1881. That
means that they will not be decided this year In
justice to this office will state that directed ap-
peals 10 be taken in all Of the six cases l under
stood the Circuit Court to require that course, and
| particularly directed it to be done. Counsel in the
cases, to whom the duty of perfecng The appea was
assigned, without consultation with or authority
from this Office, determined otherwise. II is now,
therefore, clearly impossible to obtain decision in
the Supreme Court 10 the present year.
This being the status OF the litigation with the
companies and the finances being in the condition
narrowed TO a question, not of revenue and SOW
ereignty, but of costs and procedures, by the offer
their part to pay the tax in full what should be
done! There but two lines Oper-tO accept
the payment OF the tax or to convene the Legisla
ture. l have above indicated that in my opinion
the st line Of action is legal, and not in conflict
with the principles enunciated by your EXcellency
in ectng the first offer Of the companies to scale
the tax and now say that my mind is fully made
up to adopt it, usless the responsibility is removed
from this office by referring the whole subject to
the Legislature.
Article v, Section 9, Constitution, provides that
the Governor shall have power TO convene the Legis
lature on extraordinary occasions" That this is
an " extraordinary occasion " is made think sufi-
GENTLY evident by the unquestiOnabe statements
given in the narrative above There is no restric-
ton as to the number Of subjects which a called
session may consider, except the specifications OF
the proclamation. Whether or not extraordinary
occasions beyond matter Of revenue exist, | am
not now called upon to express an opinion. | need
not perhaps, 20 any further in the consideration Of
this question, after it is settled proposition of
law First, that the authority to convene the Legis
lature is given; and second, that an extraordinary
occasion has arisen. But it has been asked, and
often doubted, if the Legislature has power under
the Constitution TO anticipate the delay Of the
Courts, compel the prompt payment of taxes, and
supply the necessary revenue? call your attention
to Article Kill Section l, Constitution Corpora
tons may be formed under general laws but shall
not be created by special Act All laws now in
force IN this State concerning corporations, and all
laws that may be hereafter passed pursuant to this
section may be altered from time to time or re-
petled-"
lii noticeable that the provisions Of this section
were In the old Constitution in nearly the same
words. Some discussion has arisen as to the effect
Of this section but think it is universally admitted
that il gives the power to forfeit the charter and
terminals the existence of any corporation Ihaye
no doubt it authorizes law to forfeit the charter
Of any corporate which may become, or remain
for any specified time delinquent on the assessment
roll II, however, any construction should be given
TO this section modifying the tremendous agency it
seems to be- there remains TO be considered Article
MIL Section II, which provides Income taxes may
be assessed to and cd from persons, corpora
tons, Joint stock ions, or companies resident
or doing business in 49,. State or anyone or more of
them, in such cases aud amounts and in such man
ner as shall be prescribed by law" This sect on so
far as | know. has not been emRsculated by anJ
construction but is the law Of the State in the sense
in which any intelligent layman would understand
it. | do not suggest any schsme Of legislation IN
der it, but it is perfectly obvious that there is no
possibility Of escape from, nor much delay in the
payment Of taxes authorized by this section and
levied under well-consdered, earnest and practi-
cal statute.
To the end that | may act promptly as c'rcum.
sta ces absolutely require, aud that the harI ony
and efficiency Of the administration msy be main
tAined submit the question TO your Excellency
leaving the general fund wholly unprovded for an
Indefinite period, will the Governor convene the
legislature? AS my off cial action depends
entirely upon the answer to this question: shall
ject the offer OF payment II that rejection results
in call OF the Legislature or accept 1t il the refer.
eucc is not made to the people through their repre-
sentatives-your Excelency will percs i've that this
communication Is not impertinent intrusion into
the business Of your department. but a necessary
and most respectful inquiry, the answer to which
will adjust the responsibility for a most important
decision. Praying as early reply as possible, am
very respectfully +. c. MARSHALL,
Attorney General.
STATE or CALIFORNIA, EXECUTIVE DEPARTMENT,