The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1908-06-18
START BIG CONTEST
State Starts Suit To Recover From
Railways for Taxes Alleged
To Be Due on Earnings
RAILWAYS IN COUNTER SUIT

One of the first legal steps in the
suits Of the state against the North
western and St. Paul roads to recover
taxes on unreported gross earnings for
the years 1899-1905 will be taken prob
ably today in Milwaukee, when argu
ments on certain legal phases Of the
eases will be made before Judge Tar
rant at Milwaukee.
The state began suit in 1905, as
the result of an extensive investigation,
to compel the railroads to give an ac-
counting Of their earnings, it being
alleged they did not apportion proper
amounts upon which taxes should be
based. It is believed by the state that
there is an amount due the state from
the Northwestern road on these unre-
ported earnings Of about 100000 and
from the st. Paul. road about the same
sum.
The railroad companies in their
answer to the suits filed few months
ago, claim that they overpaid in the
taxes in the years mentioned and that
instead of owing the state about
100000, the state owes the companies
nearly $3,10O,0OO. A refund of the
amount overpaid is demanded.
The counterclaim of the Northwest
ern road is about $1,500,OOO and of the
st. Paul road, $1,60O,OOO. To this
counterclaim, Attorney General Gilbert
has filed an answer upon which there
will be arguments next Wednesday, in
which he claims that the railroads have
not set forth cause of action and that
the facts stated in the coun terclaim are
not sufficient to constitute a cause of
action. This point gives the suits a
new turn and under these circumstances
it may be over year before the real
merits of the case can be reached.
The railroad companies claim that
during the years 1899-19O5, during
which the state claims the railroads
did not pay a sufficient amount of
taxes, they paid taxes to the state on
interstate as well as interstate bust
ness They claim that the license fee
law, under which the taxes were col
lected, only contemplated that taxes
should be paid on business done with
in the state. They say they have
made a mistake and under the law
ask that the state refund because of
tax payment on interstate business,
The law enacted by the legislature
empowering the state to begin these
suits contained a peculiar clause that
was not discovered until recently. It
says that if any amounts are due the
railroads from the state by the reason
of overpayments, then the railroad can
begin an action to collect these
amounts. This innocent" feature Of
the statute was not discovered until
recently, but it is now the basis of the
action started by the railroads.
The arguments by the railroads on
the legal points involved will probably
be made by E. M. Hyzer and Lloyd
Bowers for the Northwestern and G.
I'll. Alstine and Burton Hanson for the
st. Paul. The state will be represented
by Attorney General Frank L. Gilbert
and Deputy General Russell Jackson.
Which ever way the case turns, it is
probable there will be an appeal to the
Supreme Court and the case may be put
on the August calendar for further
argument and decision. This will prob
ably delay reaching the real merits in
the suits before this time next year.
There are several other railroads in the
litigation.