The Saint Paul globe., 1904-12-28
DENIES TAX CLAIM
AGAINST THE n. P.
Judge Kelly Files Order Decid-
ing Company Is Entitled to
Credits on indebtedness

An order preliminary to a decision
WHICH, If sustained, will prevent any
Minnesota county from collecting taxes
ON the personal property of railway COM
panies, was filed in the district court yes
terday by Judge Kelly.
1t was an order in the case of the state
against the Northern Pacific Railway COM
pany, denying the motion for judgment,
Notwithstanding the amended answer of
the defendant
The basis of the order is that the rail-
way company is entitled, as it maintains,
to credits on It's debts in sum much
more than sufficient to offset the taxes
demanded
Specifically the state wished to collect
from the company $2S,392.S7. and a pen
atty for delayed payment of $3.50, as
taxes from 1903 upon certain land con-
tracts held in Ramsey county. The face
value of the contract was $S87, ,000
Judge Kelly says: THE defendant, in
its answer. seeks to apply the legal
MAXIM mobilia sequntur personam-per-
sonal property follows the domicile of the
owner. This is a legal fiction that rem
ders the personal property tax as Elusive
as will O. the wisp'
The court points out that it is we'll
known that the headquarters Of the
Northern Pacific have long been estab-
lished in st. Paul, even if the company
as maintained, was organized under the
laws of Wisconsin, and adds:
IF the mere fact that a corporation
exists by virtue of the laws of sister
state makes the domicile of such corpora
ton foreign in the sense that it changes
the situs of its personal property for tax
alton, then New Jersey, the prolific moth
er of corporations, would by such legal
fiction hold for taxation a large proper.
ton OF the personal property actually
owned or held in the United States
which is carrying legal fiction to absurd
results
The contracts in question, according to
Judge Kelly's memorandum, are contracts,
one under which the D. S. B. Johnston
Land company owes the Northern Pacific
nonlinally $4,000; and the other under
which the Hackney -Boynton company
owes the company the sum of 500, 900.
But, deducting payments already made,
the total value of these contracts to the
defendant is only 1882, III, instead of $751;
900.
Location of Lands immateriaI
1t is immaterial the memorandum ex-
plains. that the lands in question are sit
uated in North Dakota, or that the de-
fendant company may have to pay taxes
on them in another jurisdiction. 1t has
been decided that the tax laws of each
and that duplicate taxation must neces-
sarily result. Estate VS.. Deering, Sc MINI.
24).
5 There are three different reasons as
Judge Kelly sums up, why the land con-
tracts were taxable:
Because the Northern Pacific had a de-
faeto residence in Minnesota, business
situs for the purposes of taxation.
Because these contracts, like bank
bills and municipal bonds, are tangible
personal property, and should be taxed
wherever found.
Because these contracts, presumably
the fruit of business done by the de-
fendant under the laws of Minnesota,
should not escape just share of the
public burden by means of mere fiction
of the law Blackstone states, as an in
variable maxim, that no fiction shall ex-
tend to work an injury.
"On the other hand, can the defendants
set off its Indebtedness as against the
credits ON these contracts? If it can, it's
indebtedness of over $169, ,000, ,000 when de-
deducted, will leave nothing to tax
The question is. in effect, whether the
company'S S claims for deductions was made
with sufficient promptneSS
Railroad Can Plead Offsets
On this point the court decides that the
defendant has the right to plead and
have its offsets for bona fide indebtedness,
and that the right was not waived; be-
cause,
1.-The defendant company had no actual
notice of this assessment.
1T had no constructice notice inasmuch
as the-list or return provided for does NOT
seen. to. be required of railway companies.
Because for thirty years last past,
no such attempt has been made to assess
the personal property of any commercial
railway company in Minnesota, the man
ner of whose tax is regulated by per
centage upon gross earnings.
1.-The company had no actual notice OF
this intended taxation. and no constructive
notice. can be imputed; and it may, there
fore. lawfully set off its bona fide indebt-
edness.'
County Attorney Kane said yesterday
that when the case was formally decided
by Judge Kelly in accordance with his
order. an appeal would be taken to the
state supreme court.