The record-union., 1893-01-28

clhc Company, came to him and asked
that he make an offer to State Controller
Dunn to pay taxes due the State from the
company. They went to Dunn's office
together. They had a memorandum of
what was claimed by the State, and the
witness offered Mr.. Dunn 60 per cent. of
the amount. Mr.. Dunn declined the
offer, saying he could not accept under
the law as he undestood it. Afterward,
| however, he did accept payment on some
Of the smaller branch roads-something
1 like $4,000. In the proposition made to
the Controller was embraced all the
properties operated by the Southern Pa
ciiic people.
''State whether or not that offer was
made in good taith," said Mr.. Cross.
1T was" was the reply. "If it had
been accepted, the money would have
been paid over promptly" Continuing,
the Judge said that, as he recollected it, a
| similar offer was made in 1856 and in 1887.
E&-Controller Dunn wanted TO know if
| the Judge was sure about his latter state
| ment. Mr. benson replied that he felt
sure about it, but could not recall the de-
tails. lie remembered one Of the occa-
| sIons perfectly when Mr.. Ryan dropped
into his Office, and said: "Well, we are
going to tender them payment again
Viii you go up with me?" The witness
could not remember whether that was in
1886 or 1887.
Dunn asked permission to ask another
question, but instead of doing 50 began
TO make statement in his own behalf
Mr.. Cross objected TO this as Dunn was
not under oath. and the Chairman ordered
Dunn to keep quiet until his turn to
testify. He could ask questions, but not
put in any testimony.
Deputy Controller Douglas was called,
N EsH 81 \
duced the tabulated statements asked for
by the committee on Thursday, showing
the amounts paid into the State Treasury
by the Southern Pacific Company for
taxes during the years 1855, lSS9, 1890,
1871 and 1892. The statement was pub
hshed in yesterdays RECORD UNION.
/ The document was offered in evidence.
Charles Coglan, Secretary Of the State
Board OF Equalization, was the next wit
ness. At Mr.. Cross request he produced
the minute book of the board for 1883
lie turned to the meeting held on August
nth of that year, when the railroad as
sessment was made. The record showed
thaJ Mr.. Markley moved that the rail
road be assessed as a whole or unit. 1t
was said at that meeting that if the opin-
ions OF A. l.. Rhodes, Judge Terry, ID. NJ.
Delmas and others would so advise, such
would be done.
Mr.. Cross here turned to L. C. More
house, present Chairman Of the State
Board of Equalization, and asked for a
document which he had in his posses
sion, bearing upon the discussions had in
the board in 1888.
Mr.. Morehouse handed it over and then
Mr.. Cross read it. 1t was the opinion of
Messrs. Delmas, Terry, Waymire, Mesick,
Hhodes, baggett, and Attorney-Gener
Marshall-signed by all of them-to the
effect that the railroad property should
De assessed Nrhnlp ipalndfnC,
franchise. With this opinion were tele-
grams and copies of kilograms which
passed between Attorney Delmas and
John 2. Dunn, and in which the former
told the Controller that the board must
assess the franchise as well as the other
proDerty-aada as unit. Attached to these
documents was statement, signed by f.
w. Maslin, who was the Secretary OF the
board at that time. He set forth that Mr.
Dunn was authorized by the board twice
10 go 10 San Francisco and consult the
attorneys, and each time he returned
with the same advice as had been given
before
MIR. Cross then referred Secretary
Coglan to later meeting the same wear.
AT this meeting the Attorney General
advised the board to assess the franchise
ROAD bed, rails, ETC., as a whole. lie fur
nished the board with written opinion
ana referred to the consultation held in
san francisco by the attorneys referred
TO above. On motion of Controller Dunn
the board made up a lump assessment
ana adopted it, although Messrs. More
mouse, Markley, Wilcoxson and Gildea
explained in the record that while they
voted Tor the lump assessment it was
against their own Judgment. They were
SIMPLY governed by the array OF legal
talent that decided against them.
Senator Seaweu interrupted the evil
dence at this juncture and asked Mr.
Cross what light the proceedings of the
Board of Equalization were going to
throw on the merits OF the bill under
consideration.
Mr.. Cross replied that he desired to
show that trOm 1888 up to 1883, the Board
Of Equalization discussed, year after
year, the question Of assessing the COM
pany's Federal franchise, and that during
these years the board did assess the fran
chise, although all of them, except Con-
troIler Dunn, knew that they were not
doing what was right. In 1888. however.
the board took the bull by the horns" SO
to speak, and eliminated the assessment
OF the Federal franchise. This reduced
the total assessment on the cOmpany's
property to 9I8,000000, and the company
promptly paid the tax, and has continued
to do so ever since-and would have done
so during the years 1855, 1856 and 1857,
had 1t not come to the conclusion that the
tax upon its Federal franchise was ille-
gal.
Mr.. Cross then read the records of the
years succeeding 1888 and uD 10 and in
cluding 1887, showing the assessments for
those years, and also showing that dis
cussions were had among the equalizers
about the Federal franchise, and that it
was included each time.
Then the records Of 1888 were produced.
This was the year in which the board
changed its method of assessment by
eliminating the Federal franchise. The
Attorney-GenerRl was present at that
meeting, and being governed by recent
decisions of the courts, advised the board
that it could not assess the Federal fran
chise-that it could only assess such fran
chises as were derived from the State.
In answer to question, Secretary Cog
Ian testified that since 1888 the State
Board OF Equalization had not assessed
the Federal franchise, and that an entry
had been made in the records showing
that only the State franchise had been
levied upon since that year.
Mr.. Markley, an eX-member of the
State Board of Equalization, was the
next witness called. He was a member
from January l, 1888, to January /, 1887.
He remembers that Mr.. Ryan. the
Southern Pacific's tax agent. appeared
before the board every year with refer
ence to the assessments of the company.
He did not remem Der whether or not
Mr.. Ryan argued with the board that it
should not assess the Federal franchise
as there was so much talk on that sub
iect. He did not know that any distinc-
ton was drawn by the members of the
board between a State or Federal fran
chise, but they simply referred to it as
the franchise" The witness always
understood that this meant all the fran
chise that the company possessed. He
had always supposed that the company
was a California corporation and did not
raotIv- vrbaf