The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1893-01-31
The Railroad and Back
Taxes.
WILL PAY WHAT 1T CHOOSES.
The Weakness of the Southern Pa
Cific's Case Set Forth by the
Ex-COntrOiler.
Special to THE MORNING CALL.

ton for some time past, has concluded the
taking OF evidence and the arguments were
heard in the Senate chamber this evening.
At the session OF the committee held this
afternoon L. c. MOrehOuse. member of the
State Board of Equalization, and Z. Il.
MaSlin, ex-seeTetary Of the board. both tes-
tilted that the Federal franchises of the rail-
road company were assessed, and they knew
il at the time.
AT The evening session ex-State Controller
Dunn spoke at length for the people. His
argument was as follows:
In January, 1888. the railroads were de-
linquent for the taxes of 1850. 1881 and 1882
Suits had been brought 10 recover the taxes
of 1880 and 1881, and one case, that Of San
Mate0 County VS.. The Southern Pacific
Railroad, had been tried in the United
States Circuit Court and decided against
the State. This case was then pending
before the United States Supreme Court on
appeal from the Circuit Court. In this case
San MateO County was represented by
Rhoades and BarstOw and the State by its
Acknowledgement, Hon. A. L. Hart.
That case had been argued and submitted
for decision. when, as it appears from the
statements Of that time, 1t was declared
that the case was not representative one
in this, that it did not embrace all the Fed
eral questions. Subsequently the submits
sion was set aside, and during the year 1888
and decided against the State. One case.
that of Santa Clara County, was taken up
TO the United States Supreme Court.
In the meantime suits were brought for
the taxes of 1882, 1888 and 1884 This
l., II -
date set for the further hearing of the San
Mateo and Santa Clara County cases. The
attorneys for the railroad strenuOusly re-
sisted further proceedings In the San Mateo
case. aud submitted to the court certificate
signed by the Auditor and Treasurer OF the
county, alleging that the full amount of
taxes, including attorneys fees, Delinquent
cies and all interest and costs involved in
the case, bad been paid into the county
treasury.
The court refused to hear the case on the
ground that it appeared from the certificate
of the Auditor and Treasurer that all claims
had been paid and, therefore, that being
the situation, there was nothing to litigate.
1t should be stated here that an agreement
was entered into between the county, repre-
scented by tile Board of Supervisors, and the
railroad company on December II, 1885,
four days before the time set for the hear
ing, by which 1t was agreed to dismiss the
case, and that in pursuance of this agree
ment Rhodes and Barstow were dismissed
as attorneys for San Mateo County and an
attorney of Washington, ID. c., substituted
for the purpose OF securing the dismissal of
the action against the protest of the State.
The Santa Clara case was proceeded with
and finally decided against the State, on the
ground that fences were improperly in
cluded in the assessment, the court declining
to pass on the constitutional questions as TO
the method of assessment.
Early in 1884 Attorney General Marshall
had consented TO certain consent judg-
ments" being entered in all the cases then
pending in the United States Circuit Court
for taxes for the years 1880, 1884, 1882 and
1888. This was supposed TO have been
based upon the payment of the face of the
tax for the years 1880, 1881 and 1882.
But Ii must be remembered that the
proposition Of the railroad To pay the face
of the tax for those years applied only to
the taxes involved in the cases for which
suits were then pending in the Circuit
Court. TIE railroad company never offered
TO pay all the taxes for those years, as the
same were levied but at all times consid-
cred as fully settled aud finally disposed
of all the cases in which compromises had
been made with the District Attorneys of
quite number Of counties upon the basis of
about sc per cent of the amount levied
These compromises are referred to in the re-
port of The Controller for the year 1882,
made by the Hon. d. NJ. Keufield. but the
list Of counties there given is incom lete, as
other compromises were made subsequently
to the time embraced in that report.
II the railroad company had intended or
desired TO pay all the taxes levied 10 1880,
1881 and 1882, why were the payments not
made to MIR. Marshall at the same time the
consent judgments" were taken? One Of
the strongest reasons for not entertaining
the Offers to compromise made by the railroad
company was that their proposition did not
embrace this class OF cases, and equality Of
treatment 10 all the counties was insisted
upon by making up to the counties and also
to the State for all sums lost by the com
promises agreed 10 BY the several District
Attorneys.
The San Bernardino case for the taxes Of
1881, and the cases for the taxes of 1885,
went off on the question of Federal fran
cbises and the Including Of fences in the
assessments. Thus it will be seen that no
decision has yet been reached by the United
States Supreme Court upon the merits of
this controversy. The Federal questions
involved have never been even touched
upon in California case.
Mr.. Cross has asserted that the Supreme
Court OF this State has declared the provi-
sions of the Political Code relating TO the
taxation OF railroad property to be uncon-
stitutional. 1t is the method of collection
and not tile method Of assessment which
has so been declared uncon stilutional. The
court however, in other cases, notably In
the case Of the Bells Gap Railroad CON-
pany. has practically upheld the methods of
assessment set up by our constitution.
The San Pablo and Tulare case for the
taxes of 1856 presents the issue for which the
railroad has coDtended since the adoption
OF the constitution, viz: that the pro-
vision Of our constitution which allows
deduction to be made on account OF
mortgage upon all classes OF property ex-
cept railroads operated in more than one
county Is in violation Of the fourte entli
amendment of the constitution Of the United
States. This is the only question yet to
be determined relative to the constitution
ality Of our method of assessing railroads.
That the companies do not desire this ques-
ton TO be passed upon is evident from the
efforts now making to secure the dismis-
sal Of the San Pablo and Tulare case.
am convinced that they are of the opinion
that the decision in the Bells Gap Railroad
Company vs.. Penn, 1874 u. S. Rep, page
233. foreshadows a judgment favorable to
the State whenever the San Pablo and Tu-
lare case is determined by the United States
Supreme Court.
The facts in the Bells Gap case are as
follows: BY the law Of Pennsylvania all
moneyed securities are subject to an an
nnal tax Of mills on the dollar of their
actual value, except bonds and other securi-
ties issued by corporations. which are taxed
at mills on the dollar OF the nomin al or
par value. The company urged, among