New-York tribune., 1905-04-20
FRANCHISE CASES CLOSED.
Ehhw Root argues against the Lac
Mr.. Mayer Defends II.

III. AHNYCI ICI CHtto -
Washington, April 19.-The arguments in the
special franchise tax cases from New-York were
closed to-day in the Supreme Court of the
United States. Eihu Root made the closing
address in the case of the Metropolitan com
pany, opposing the enforcement Of the law.
Our proposition: is" he said that the require
ment binding the company to pay a percentage
of its receipts is a contract, and that under II
the State cannot increase the taxation. Rights
OF this character were like licenses to sell liquor
ana in no sense like real property. He con-
tended that they are too intangible for taxation.
Mr.. Root then took up the questions involved
in the cases of the Consolidated and New-Am-
sterdam gas companies and explained how they
differed from the streetcar cases. He said that
in the New-Amsterdam case the point regard
ing contract under the charter is the same as
that involved in the sueetca- cases, but that
this factor is eliminated in the case Of the Con-
solidated company lie argued that the price
OF gas is always subject 10 legislation. and it
may be cut down as to eliminate all profit;
therefore the profit is transtOry, and should not
be burdened by taxation as proposed by the
law.
There had been no lawful valuation of the
franchises. Mr.. Root said and he found in this
circumstance reason for reversing the finding
OF the court below by which the law was held
to be valid. He admitted that there had been
arbitrary effort to fix a value, but said it
was purely fanciful-that. indeed, equitable
valuation is impossible in the case of property
Of so intangible nature franchise. we
concede the right of the legislature to tax cor
porations," he said, but demand that they
apply TO no more onerous rule than is ap-
piled to others IN the same class. and we say
that there has been gross and conspicuous dis
elimination in this matter" He did not dispute
the power Of the legislature TO classify for pur-
poses of classification, but he contended that
with the classification once made. all in class
must be treated alike which, he said, is not
done under this law
M Root was followed in the gas company
cases by Attorney General Mayer and Louis
Marshall in support of the tax Mr.. Mayer de-
voted himself a detailed reply 10 Mr.. Root
Mr.. Marshall took up the various decisions bear
ing the question of impairment of contract
and argued that on inspection of the several
franchises il apparent that no exemption
from future taxation was expressed or implied
in any OF them. He called the attention Of the
court to many decisions not only of the State
courts, but OF the Supreme Court, to the effect
that where an exemption from tax is claimed it
must appear IN the charter in clear and unms-
taxable terms: that il could not be spelled into
il by inference; that all the grantees took their
charters in view Of The constitutional provision
OF the State Of New York which gave the legiSla-
ture the right to amend modify any franchise
granted TO a corporation, and. even though it
should be alleged that payments agreed 10 he
made by the severa- corporations to the munici-
pality were in the nature of 4 tax the legisla-
ture had the right to change modify and
bring the special franchises within the taxing
power, Mr.. Marshall said franchises We're in
creasing In value in New-N OrS every year.
while il might well be said that the value of
more tangible property would depreciate. He
he raj
method o. taxation must include franchises
M. Mayer said that IN placing valuation on
the special franchises the assessors had taken
into consideration ali elements of value. and
therefore Mr.. Roots declaration that the valua-
tion only fanciful was not justified. He
added that ample opportunities 10 he heard had
been given TO the companies.
M. Root. replying 10 NJ. Mayors statement
called attention to tie fact tha. the franchises
of the companies had been fixed AZ different
figures which. he cOntended constituted an
inequality. He said that the tax il such cases is
the franchise alone, and tina. the property
itself must be dealt with for tax purposes under
another head
Mr. Roots statements called out several ques-
tions from the court, but Mr. Root held that the
variation in figures shows a mere arbitrary act
the part Of the assessors.
The last of the cases. that of the Brooklyn
CITY Railroad Company. was then taken up.
Charles A. Collin presented this case for the
company.
lie based his argument almost entirely on the
facts connected with the terms on which in" oIisi-
nal franchise was granted to tho Brooklyn city
that city which the right to construct car line
was granted 6y the city Council on tho most
favorable bids and these bids. he said. fixed the
rates Of from $40 to $50 n annual fees TO be paid
70 the city and the fares at from TO cents.
The contracts. secured. turned over go
the City company on its giving bond of S2J0eo,
which is still in effect. This contract he said.
'hxed the rates of fare and the annual tax To be
paid on account OF the right created by the CON
tract specifically as a lease expressing the
amount Of rent to b. paid determines The rental
during the period OF the lease and any attempt 10
increase the annual tax on account Of the right
created by the contract imp2irs tho obligation of
the contract as seriously attempt 10 increase
the rental payable under lease would impair the
obligation Of the lease
Messrs. Mayer and Marshall replied denying the
existence OF Il contract right and thus closed the
,ag,f In he last Of % Of On