Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1910-10-28
RAILROAD LIABLE
FOR VAST BACK TAX
SUPREME COURT DECISION HOLDS
ILLINOIS CENTRAL FOR
SUM OF sis 100000.
CASE MUST GO TO TRIAL
NOW ON ITS MERITS
Court Finds Enough Merit in States
Claim to Warrant Suit For Collection
State Claims Company Has Jug
qIed it's Books to Defeat Payment Of
7 Per Cent Tax Promised.

Springfield, H.. Oct. 2S.-The Illinois
Central. sued by the state for back
taxes tentatively placed at sl5.ooO.0O0.
was defeated in the preliminary hear
ing of the case by a decision OF the
supreme court today. The effect of the
decision is to send the case back 10
the circuit cours of La Sale county for
hearing on its merits The lower court
had sustained the companys demurrers
and dismissed the complaint.
State Shows Fraud.
1t is the contention of Governor De-
neen that for thirtythree years the
railroad has been milking the state
thru it's system of accounting for gross
earnings on which 1t is required under
the charter to pay ! per cent to the
state in lieu Of other taxes. Suit was
lied early in 1907, following message
of the governor to the legislature. In
which it was asserted the railroad so
manipulated its account as TO credit
millions of its earnings (said to be
S214,000, ,000) TO lines not chartered In
Illinois, and hence not subject to the
Il per cent tax. An appropriation was
made by the legislature to defray the
expenses OF the accounting This ac-
counting swelled the amount estimated
by the state from So.000,000 to $4,000
600
Dates Back to 1851.
The history of the suit really dates
back to 1851, when the state granted
special charter to the road. whlch
provided that in consideration OF u land
grant of 100000 acres. the company
should pay annually 5 per cent OF its
gross receipts, plus property tax or
three -fourths of 1 per cent which
should at least be equal TO per cent
gross earnings on the mileage In Illi-
nois. 1t is alleged that the railroad
has not only construed the z per cent
provision as the maximum instead of
the minimum,bnt has failed to give the
state a proper accounting since 1877.
and has so arranged its rates as to
place an undue proportion OF Its earn
ings on the books of lines outside of
Illinois The total amount said to have
been hidden in this fashion Is placed at
S214O0O, 900, Z per cent of which Is Sl5,-
600 900
When the state filed its bill in the
La Sale county circuit court three
years ago the railroad entered q de-
murrer, and also demurred to the
amended bill filed later by the state.
The circuit court sustained the de-
mur1e ct, issuing a decree dismissing the
complaint. From this decree the state
appealed. and today's decision indicates
the supreme court finds the complaint
sufficiently tenable on its face to war
rant a trial on its merits. The re-
manding of the case means trial on
the evidence. The date for this will be
determined by the La Sale county cir
cult court
According to Attorney Horton, OF the
Illinois Central the decision of the su :
preme court includes the important
point that under the statute OF limita- :
tions the state case as bearing on the
years prior to 1905 is null The state.
Horton. said. may now secure only
such taxes as il claims accrued be-
tween 1905 and 1907