Omaha daily bee., 1902-07-17
RAILROAD TAXATION in COURT
s of Counsel on the Issues Raised in the Mandatn
Case Before Nebraska Supreme Court--Par VII"

NOW, let us 60 into this question OF fran
chise a little further, for the purpose of
seeing whether or not there is any fraud
with reference to the valuation Of fran
chises. That involves the consideration Of
what a franchise is, whether or not 1t
possesses this great value-this incalculable
value which these gentlemen have attached
to it. What is a franchise? First, there is
a franchise to exist. Second, there is a
franchise to do business as a corporation.
Third, there may be a franchise which car
ries with II peculiar privileges which can
not be enjoyed by any other person or by
any other corporation. Those are the three
classes Of franchises we will say.
The first, the right to exist as a corpora
ton, is Of no value separate and apart by
itself. 1t could not be sold upon the mar
ket. 1t could not be sold upon adverse
process, nor can the right to do business
as a corporation be sold upon the market.
It cannot transfer It. Separate and apart
from the tangible property it is not worth
a dollar. and 1t is so held in the Detroit
street railway case, 125 Mich, page $40,
which goes over similar facts.
With reference to the third franchise, IL
is said that these railroad companies have
a great franchise, In that they are per-
mitted to charge rates and fares for hauling
passengers and freight. They say 1t is
also a great franchise to be permitted to
condemn real estate-to exercise the right
Of eminent domain. How valuable? We
must remember that the people have their
compensation for these franchises and for
these rights. We cannot take a foot Of land
but we have to respond in damages for the
taking Of 1t and often times to pay more
than the land would bring for any other
purpose, and not only that, but are COM
PEELED to respond In damages for every
dollar of damages that accrues to abutting
property. Railroad companies must respond
in damages for that even though the advent
Of the railroad in that community may in
crease the value OF such property. So l
say that the public has its compensation
with reference to this privilege. The right
Of eminent domain In and Of itself has no
great value. II has no tangible value in
and OF itself. It must be considered with
the exercise Of the right and with the build
ing OF the road. And you might say this.
too, that this right exists simply by virtue
Of the will Of the legislature. It might be
enjoyed by an individual who is engaged in
a public enterprise and for the public bene-
Mt II the legislature felt inclined to grant It
to him The only reason that it may not
be granted to a private person is because in
the organization and operation Of these
eASob SOipOIhIlOub IL mas Deen found that
no single individual has ever undertaken to
control or own one. There has been no
necessity to appear before the legislature
to get such a right in favor OF an individual
for carrying on a public enterprise.
with reference to the right to charge
rates and fares, the public has it's compen-
sation. Legislative invasion may hold
rates and fares down to a point where the
Ireturn upon the investment will be reason
able and the line may be paralleled at any
time, so that no exclusive right is given.
1t cannot go beyond what is reasonable.
So We do not get any great right
there But the man who operates
a private business-who runs a great
newspaper, IL you please-or any pri-
vate corporation, has the liberty Of making
as much money as he or it may, limited only
by the nberality OF their more aggressive
competitors. So that this franchise is not so
very valuable in and of itself except as II
Is considered with reference to the tangi-
Die property. What gives to the tangible
property Its value as railroad property
Would there be any value to the Union Pa
cihc Railway company, to the Burlington
Railway company, to the Elkhorn Railway
company If they allowed the rails to ac-
cumulate rust, and II they allowed the ties
to rot in the ground. II they operated no
rams WOulu there De anything OF value
In railroad stock II trains did not move ?
Then what is it that gives life and vitality
to this property? What makes 1t Of value?
Why is 1t that this board did not assess 1t
as mere dead material? Why, because they
have the right to operate the railroad, be-
cause they have the right to exercise the
rights and privileges given to them under
the constitution and laws Of the state Of
Nebraska. That is what imparts value to
railroad property, and 1t is not this intangi-
BILE thing that has such great value sepa-
rate and apart by itself. But It is the live
and operated plant. II you do not have a
live and operated plant your franchises have
no value. ,
This is illustrated very forcibly to ones
mind by the case on which these gentlemen
seem to depend with so much vigor. Tho
case In the 154 United States. Of Backus
against Railroad Companies. That was a
case based upon a law which was passed
by the legislature OF Indiana in 1891, a
general revenue law. That general revenue
law repealed all former laws, and IL pro-
vided for an assessment of property gen.
orally, minutely and specifically; It pro-
vided for the assessment OF stocks and
bonds; 1t provided for the assessment Of
railroad property; it provided specifically
for reports which were to be made by
Taiirodu companies 10 the auditor, and II
provided among other things that there
should be listed with the auditor a list Of
stocks and bonds. differing from our statute.
1t provided directly that those stocks and
bonds should be listed with the auditor for
the purpose Of being considered by the
board in the assessment Of railroad prop
erty. Section 1877 OF the Indiana law pro-
vided that the board should assess railroad
property as railroad track and rolling
stock. 1t was assessed as such in this
particular case. An action was brought
by the railroad companies to have the law
declared unconstitutional. and also for the
purpose OF wiping out the assessment made
because 1t was inequitable. Among other
things, 1t was claimed that 1t allowed the
State Board Of Equalization to go over into
Ohio and Illinois and take the values there
and eommingle them with the value OF
property in Indiana and make an assess
ment upon such valuation. They also
claimed 1t was a tax or burden upon inter-
state commerce. These contentious were
found not correct, and were not considered
by the court as valid. In passing upon the
Indiana law Justice Brewer uses this Lam
guage:
Counsel sought IN argument TO narrow
the meaning or the words railroad track
and rolling stock" as though the two did
not include the entire railroad property;
= | hmN GN1AanNlN the anrnRaWnA nnnNRf -