Omaha daily bee., 1907-01-22
TAXCASE IN SUPREME COURT
Railroads Object to Paying Taxes on Stock
Owned in Other Companies
STATE DEFENDS ASSESSMENT AS JUST
Attorney General Thompson and
Standardized Brown Appear for
state, c. J. Greene for
Railroads.
(From a Stan Correspondentl !


sram.)-Upon motion of senator-elect Nor
ris Brown, william T. Thompson. attorney
general for Nebraska. was this morning
admitted to practice before the supreme
court, this being the initial step prior to
nearing arguments I'm the Nebraska rail-
road tax cases. Charles ]. Greene. repre-
senting the Burlington: John NJ. Baldwin
representing the Union Pacific. and Max
well Evarts of New York, assistant gem
eral counsel of the Hartman linoA were
present as counsel for the railroads
Through mutual agreement betwean ooun-
sci, Mr. Greene opened and had an hours
time allotted to him, half of which he con-
sumed prior to the luncheon recess Of court.
Upon his conclusion Attorney General
Thompson presented an argument and was
followed by Senator-elect Brown, who did
not conclude at the usual hour at which
court adjourns. After finishing his argu-
ment tomorrow Mr. Brown will be followed
by Messrs John NJ. Baldwin and Maxwell
Bvarts for the railroads. NJ. ]. Stanley
of Aurora, Neb.. will also be given about
twenty minutes to close for the state.
Mr.. Greene devoted his time to reviewing
the brief prepared by the railroad COM
panies, starting with the statement that
in 1904 the state of Nebraska passed rev.
enue law. through the operations of which
lile ldA dSSeSSHlellS TdllFOdu properties
were increased so per cent and on all
other property throughout the state 80 per
| cent.
Objects to Taxing Securities.
The case the railroads have made out,
as Mr.. Greene said, rests wholly upon state
ments made by the Board of Equalization
and Assessments. He quoted at length
from the records Of the proceedings in
the lower court in which 1t gives testimony
Of the board describing their methods OF
| reaching a basis upon which to make an
assessment 1t is contended that the board
applied the stocks and bonds system, but
failed to deduct from the values of the
stock and bonds of the Union Pacific the
securities owned by It in other companies,
failing to appreciate that the value of the
stocks and bonds of the Union Pacific was
largely enhanced by hundreds of millions
of dollars Of stocks and bonds Il owned
/ in the Northern Securities company. South
ern Pacific and other corporations and that
fair estimate OF the tangible and intangi-
bic property in the state of Nebraska could
not be obtained by including property. the
ownership OF which had nothing to do with
the lines OF railroad owned by the Union
Pacific or the business conducted thereon
and was entirely incapable of division upon
I a mileage basis, but was taxable IL at all.
in the domicile of the company, which is
Utah. In other words. the board in using
the stocks and bonds method omitted to
deduct the value of the securities owned by
the Union Pacific from the values Of it's
own stocks and bonds before dividing by
the entire mileage Of the system. That is
TO say by proper application of the stock
and bond method the valuation of the road
would have been $4577S per mile, but in
stead Of this the board by failing to make
a deduction for the securities Of other
companies held by the Union Pacific made
the valuation s65.O92 per mile which II
arbitrarily reduced to 1000, OF about S1O.-
more per mile than the correct valuation.
Basis of states Contention.
Attorney General Thompson followed and
in a conversational tone explained the pur-
poses and intent of the Nebraska state
law, which clothed the state board with
authority to assess railroad and other prop
erty. The railroads were compelled to fur
nish a statement of the number of miles
of trackage in the state, the number of
buildings utilized as depots. warehouses.
etc, a statement OF the value of stocks
and bonds, net and gross earnings. all this
to be taken a basis upon which the
board was. to arrive at the value of the
railroad property in Nebraska. The con-
tention OF the state, Mr. Thompson said.
is that the board had authority to act
and took evidence to the tangible prop
erty of the railroads, whether they took
the stock and bond method of arriving at
a basis upon which to make an assessment,
or fixing a rate per mile, no wrong was
done to the railroad companies. II the
action of the board is impeached. 1t must
not be on grounds of fraud. but because
of errors in the methods in arriving at the
value Of property.
Brown Denies Charge.
Senator-elect Brown spoke without notes,
and as he was attorney general when these
suits were instituted devoted the major
portion of his address in giving a history
of the action. Mr.. Brown denied very
emphatic a charge which has been made
that the governor and other members OF
the board had entered into a conspiracy
to increase the taxation upon railroad
properties in order to pay on certain po-
ltical obligations. Mr. Brown severely
criticized the railroad companies for their
action in hauling the board into court. for
six weeks having them under cross-ex-
animation and then attempting TO use their
testimony thus secured to bolster up their
contentious as to overtaXation and doubtful
methods IN arriving at assessments II
had been the intent Of the board, he said.
to arrive at the actual value OF the phys
lcal or visible property owned by railroads.
He called the attention of the court par
tlcularly 10 the attempt to browbeat the
governor OF Nebraska into an admission
Of precise methods adopted by the board
/ TO reach the r, Il attained He scored
the Burlington in It's return TO the
board It neglecttD to give the value OF It's
stock. leaving the space blank. claiming
it did not know the value OF its stock
with a strong array of figures Mr.. Brown
was attempting TO show the court that
as a matter of fact the railroads OF Ne
braska were assessed at too low a figure
instead OF being unjustly dealt with. when
the hour for adjournment arrived.
During Mr. Greene's argument Justices
White. Day ard Holmes asked many per-
tinent questions of the railroad attorney
who was evidently embarrassed by their
apparent leaning against his position.
Mr. Baldwin will follow Mr.. Brown on
conclusion OF the latters argument to-
morrow. and Mr.. Stanley will conclude for
the state.
Personal Mention.
In honor OF Senator-elect Norris Brown
. i Mill p-frr W