New-York tribune., 1905-04-19
FRANCHISE ETAXARGUMENT
Guthrie Says Lac Is in COntraUen-
ton of the Constitution.

Washington, April lS.-The argument in the
New-York franchise tax case. before the Su-
prenae Court OF the United States, was resumed
when the court convened at noon to-day. Will
Sam D. Guthrie, who had begun his presentation
OF the corporation side Of the question few
minutes before the court adjourned yesterday
continued at length. He contended that the Ia"
is in eontravention of the constitution OF tae
United States in that it impairs the obligation
Of the contracts under which they acquired ana
own their franchises and operates. 10 deny them
one. process OF law as guaranteed by the federal
constitution.
Outlining the law under discussion, he said
that Il is a new experiment in legislation. and
subjects to general law OF ad valOrem taxation
the local or special franchises or rights which
ere exercised in public highways, streets. etc.
by corporations furnishing what are now COM
prehensively termed public utilities. such as
transportation, gas, electric lights, telephones
etc" He then called attention TO the fact that
these franchises had not been previously taxed
by general law, and. quoting from his brief in the
cases. added
oTybe subject is one Of general interest in all
the states, and the far reaching consequences
which must result from the principles upon
which the present cases are determined invite
the most careful consideration 1t is Of great
concern and interest TO many State governments
and 10 numerous corporations similarly stu
ated that this court shall indicate whether ex-
listing contracts granting such franchises are
protected against impairment by this new form
of subsequent legislation and whether such leg
islation must tax all owners Of franchises en-
gagged in substantially the same business and
under substantially the same conditions with
equality Ear practicable II the present
statute is upheld it undoubtedly VIII be followed
IN tate
impairs existing contracts and embodies unjust
and discriminating provisions 1t ought not TO be
permitted 10 become a precedent when an
amendment OF the statute can easily Obviate the
objections"
Giving figures TO show the effect OF the law,
Mr. Guthrie said that the public records show
that the amounts payable in 1900 by the Metro
politan company and its leased and subsidiary
lines in respect TO percentages on gross receipts
and other franchise payments amounted 10
$40 .753. and that the present Special Franchise
Tax law increased these payments 10 S1lO629.
He also charged that the law IS discriminatory
as among corporations and unconstitutional on
that account, as well as on account Of its viola
tions OF contract.
AIr. Guthrie dwelt upon the fact that the New
York streetcar companies have been paying
agular taxes on their property. real and per-
sonal and contended for this method of taxa
Ion as opposed 10 a tax franchises. He
quoted the message Of Governor Roosevelt. de-
dvered at the time the bill providing for a fran
chise tax before the legislature. 10 show
hat the measure was. in some particulars, un-
satisfactory TO the then Chief Executive of the
State.
Mr.. Guthrie was followed by Attorney General
Mayer. who spoke in support of the franchise
AK law, contending for its validity and fairness
Addressing himself TO the contention that the
charters OF the various corporations are in the
,ature Of a contract relieving them from taxa
lion. he recited many details bearing upon the
enactment Of the legislation. and. from it. de-
ducing the conclusion that the payments which
had been required We're compensatory by way
Of consideration for the grant Of fee and not
by way of communication for taxes. There is not
q syllable in these acts which declares entire
or special immunity from taxes" he said. re-
'erring 10 the legislation bearing corpo-
Tauons in the State
Quoting from his brief. he said:
II is difficult to understand why, If there was
my implied contract, IL was thus limited and
why, If the subject OF taxation within the
intention OF the legislature, the general subject
was not involved, rather than taxation on the
special franchises. The former involved practi-
cal CofsloeratlRls OF great moment The pay
Inent Of generaIotaXes On real and personal prop
erty, taxation on capital stock on earnings
and dividends, was provided for by existing
statutes. Taxation on special franchises, how
ever was unknown in the law of New York
nor was il contemplated by the legislature The
Court Of Appeals had decided that such fran
Chises did not within the purview Of any
act OF the legislature. and that franchise was
neither real nor personal property. and could
rot be taxed.
II was not until 1899. long after the various
franchises of the relator had been acquired that
the subject OF special franchise tax was moot
ed or considered, and It had its origin IN the
messages communicated by Governor Roosevelt
the legislature.
To say under the circumstances that the State
intended 10 exempt the relator from the pay
Tnent Of a special franchise tax, savors Of the
grotesque.