The Minneapolis journal., 1905-09-22
COURT SUSTAINS
FRANCHISE TAX
Western Union Must Pay on Mil
ion-Dollar Valuation Fixed
by State.
DECISION WILL HAVE
FAR-REACHING EFFECT
Establishes States Right to Tax
Intangible Property Of Non
Resident Corporations.

The state wins in the long-contested
Western Union tax case.
The supreme court filed its decision
today, reversing Judge Bum of Ram
sey county, and upholding the action
Of the state. board of equalization in
the Western Union Telegraph company
from $865,5O0 to $1,0O0,000.
The effect Of the decision will be
far-reaching. It determines the right
Of the state to assess the franchises of
telegraph companies and similar corpo-
power and not on the basis of their
tangible property alone. The immedi-
ate effect of the decision will be to put
the sum of $50, 1913 in the state
treasury, but if followed up by the
taxing authorities it will add greatly
to the future revenues of the state.
The contest has been in issue since
the fall of 1899, when the state board
Of equalization, prompted by Governor
John Lind, fixed the Western Union g
valuation at $1,000,000 The company
only admitted a value Of 100000;
property in the state. The suit was
brought, and while it was pending the
company was allowed by stipulation to
pay taxes on the basis of 100000. in
has paid on that basis, while each yearS
the state board has fixed the $l,000000S
assessment. The company. will now
have to pay taxes on the full amount
for every year since 1899. 1t is un-
derstood that an attempt will be made
at the present session of the state
board to raise the assessment for 1908
| considerably above the $l,OOO,OOO fig
ure The decision filed today was writ
ten by Justice Jaggard, and the syl-
labus is as follows:
Synopsis of Decision.
State of Minnesota, appellant, vs.. Western
Union Telegraph company, respondent.
| The prima facie validity of an assessment OF
personal property for general taxation Is not
overcome by well-grounded claim Of over
valuation. Courts do not interfere except when
/ tax officials have acted fraudulently or mali
ciously to the substantial prejudice of the tax
4 payer, or have made a mistake gross as to
be inconsistent with fair and honest Judgment
or when they have proceeded erroneous
rule of law; and then only upon sufficient proof
addressed to proper legal standard Of valuation.
telegraph company, together with reasonable de:
duction for natural deterioration, is not q
proper basis for valuation of such property for
taxation on general lists.
The language of q law providing for a constt-
tutional method OF taxation is to be construed
fairly and reasonably so as to effectuate Iegis-
aha 20 eGhp pr protect s
Of public revenue and to avoid discrimination
j In taxation between property owners.
II Laws 1891, chapter g. amended by chapter 80,
laws of 1901 provides for the taxation of the
tangible and intangible property of telegraph
companies situated within this state as sys-
tenn and not merely for the taxation of items OF
tangible property only, and is constitutional.
Adams Express company vs.. Ohio, 165 q. 8.
1914, followed.
u Judgment reversed. Jaggard, J.
Lind Feels Endorsed.
The decision was good news to For
mer Governor John Lind, who led the
movement in 1899 for the increased
assessment. He said today:
"This decision confirms my views of
the law and the rights of the state
fully. There is absolutely no excuse
for the legislative and administrative
} branches Of the government not en-
forcing our taxing laws against non
resident corporations. When governor,
l urged the legislature to provide for
taxation of the sugar trust, the steel
trust, and other great monopolies do
ing business in the state, on franchise
basis. There was absolutely no ques-
tion as to the state S right to do so, or
, OF the Justice of such taXation, and the
state might as well have secured $780,
OOO. additional revenue each year from
such taxation. A deaf ear was turned
to my recommendation, however,
Principle Is Fixed.
: G.. W. Somerby was employed by for
| mer Attorney General W. j. Dona-
hover to try the case in the lower
/ court, where the state lost Attorney
General Young continued Mr.. Somerby
, in charge of the litigation, and he per-
fected and argued the appeal to the
, supreme court.
Mr.. Somerby, when asked today by
r E he j ourn ! as to the effect of the
( decision, said that he had not seen the
) text Of the opinion, but judging from
the syllabus, it will simplify future
} questions Of franchise taxation in Min
nesota, thing which will be welcomed
> by the taxing officers and by the state
: lawyers. 'sOur main contention has
been sustained - he said, Gin that the
Z item value Of corporation property can
s not be used as a basis for taxation.
Z Organized or unity value is the test. -