The Saint Paul globe., 1899-03-23
BUSY DAY In SENATE
JUDICIARY COMMITTEE REPORTS
AGAINST THE JACOBSON GROSS
EARNINGS TAX
HOSPITAL FIGHT CONTINUES
Senator SchaIIer. in Behalf of the
Staples Plan. Had the Floor When
an Adjournment Was Taken to
Continue the Debate Again This
AfternOOn-ROuti of the Sem
ate.

Continue the Debate Again This
ate.
The bill introduced by Representative
jacobson (Rep), of Lac qui Parle, to in
crease the gross earnings tax on railroad
companies from to 4 per cent was
struck a body blow in the senate yester-
day, the judiciary committee recommend
ing it for indefinite postponement in the
following report:
The committee on judiciary. to whom
was referred II. f 25 respectfully report
as follows:
The bill, by its, terms, is alternative. 1t
provides that all railroads in this state
shall hereafter pay 4 per cent on their
gross earnings, instead of 3 per cent. as
now provided by law. or in the case Of
the refusal of the companies to pay per
cent that their property shall be assessed
and taxed, and it assumes to repeal all
existing gross earnings laws.
This double aspect OF the bill neces-
sarily presents two controlling ques-
tions:
First-Has the legislature the right to
repeal all the existing gross earnings
laws?
Second-If 1t has the right, would it be
for the best interests OF the state to do
so, when We must leave to the railway
companies the choice or accepting either
the increased gross earnings rate pro-
posed or submit their property to ordi-
nary modes of taxation like other prop
erty?
On the first question, as to the power
nj 10 ln.sicl lat find hot ar0l
OF the most extensive railroads in this
state exist and are doing business under
charters granted by the territory of
Minnesota, in which charters it was
provided that the rate of taxation TO be
paid by the companies to the territory
and future state should be per cent
or their gross earnings in lieu of all
other taxes. These roads are known as
the territorial land grant companies
Most of these charters were acquired
by the companies now operating under
them by the foreclosure of mortgages
given by the original companies; this is
notably the case with the st. Paul, Min
neapolis & Manitoba company which
succeeds the original Minnesota & Pa
cific.
At the time of the granting of these
charters there was no state constitu-
ton, or other fixed rule in reference to
equality of taxation. By what seems
an unbroken line of decisions IN the
United States and state courts, ever
since the Dartmouth college case, 1T has
been held that such charters are con-
tracts. And when we adopted our con-
st!tution. there was inserted a provision
assuming and agreeing to uphold all
contracts of the territory.
Our own supreme court has several
times passed upon this question and we
desire to call attention to some of these
cases:
In Railway Company VS.. Parcher. IA
Mimi, 224. Justice Berry, delivering the
opinion Of the court, said, in reference
to the Minnesota & Pacific charter:
THE charter granted in May. 1857, con-
stftuted a contract between the territory
and the Minnesota & Pacific Railway
company, one of the terms of which was
that the lands granted in aid of the
road should be exempt from taxation
until sold and conveyed by the COM
pany. That the exemption thus con-
ferred is a contract right Ga right which
legislature, in the absence of consti-
tutional inhibition, is competent to
grant, and inviolable) has been settled
in series of decisions by the supreme
court of the United States, so that the
matter IS not open for discussion.
In Stevens County vs. Railway Com
pany, SO Mimi, 467, the same doctrine
was enunciated, and in the recent case
Oeclue0 last year OF traverse county
VS.. Manitoba Company, 76 n. W., 217
Justice Mitchell speaking for the court,
said: THE chief contention of the state
is that this immunity of it's roads, lands,
etc, from ordinary form of taxation is
not a franchise or attached to the prop
erty, but mere personal privilege to
the first division company, which could
not be transferred by a mortgage or 9TH
erwise.
1T is a part Of the legislative history
of Minnesota, both a territory and
a state, that its policy in regard to
taxing land grant roads was adopted
with reference alike to facilitating the
early construction of these lines of road
and to securing to the state what was
supposed an ultimate and adequate re-
turn for the value of the franchises con-
ferred, and which would. in the long
run, be the equivalent of the company s
fair share of taxation. The policy adopt
ed was to provide for these companies
paying to the state a certain percentage
of their gross earnings in lieu of all 9TH
er taxation on their railroads and also
on their granted lands until sold by the