Source: https://supreme.justia.com/cases/federal/us/141/40/
Timestamp: 2019-04-23 01:57:37+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 141 › Massachusetts v. Western Union Tel. Co.
The tax imposed by the statutes of Massachusetts, (Pub.Stat. c. 13, §§ 40, 42), requiring every telegraph company owning a line of telegraph within the state to pay to the state treasurer "a tax upon its corporate franchise at a valuation thereof equal to the aggregate value of the shares in its capital stock," deducting such portion of that valuation as is proportional to the length of its lines without the state, and deducting also an amount equal to the value of its real estate and machinery subject to local taxation within the state, is in effect a tax upon the corporation on account of property owned and used by it within the state, and is constitutional and valid as applied to a telegraph company incorporated by another state, and which has accepted the rights conferred by Congress by § 5263 of the Revised Statutes.
Western Union Telegraph Co. v. Attorney General of Massachusetts, 125 U. S. 530, followed.
Upon rendering a decree for the plaintiff in a suit in equity brought in behalf of a state, pursuant to statute, to recover the amount of a tax with interest thereon at the rate of twelve percent until paid, a sum tendered and paid into court by the defendant for part of that amount and interest thereon at that rate is to be applied to the payment of both principal and interest of the sum so admitted to be due; interest at the rate of twelve percent is to be computed on the rest of the principal until the date of the decree, and from that date interest on the lawful amount of the decree is to be competed at the ordinary rate of six percent only, notwithstanding the final disposition of the case is delayed by appeal.
Three informations in equity were filed in the Supreme Judicial Court of Massachusetts by the Attorney General at the relation of the Treasurer of the commonwealth against the Western union Telegraph Company, a corporation of New York, under § 54 of chapter 13 of the Public Statutes of Massachusetts, for the recovery of taxes assessed to the defendant for the years, 1886, 1887, and 1888 under other sections of that chapter, and interest thereon at the rate of twelve percent a year until paid, and for an injunction against the defendant's prosecution of its business until payment of such taxes and interest.
Upon petition of the defendant alleging that the matter in dispute arose under the Constitution and laws of the United States, the three suits were removed into the circuit court of the United States, and were there heard upon pleadings and proofs, and decrees entered for the amounts of the taxes and interest, deducting certain sums paid into court by the defendant and granting no injunction. Both parties appealed to this Court.
These cases cannot be distinguished from that of Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530, in which the validity of similar taxes was upheld in a judgment delivered by Mr. Justice Miller with no dissent.
and commodities whatsoever, brought into, produced, manufactured, or being within the same."
1 Charters and Constitutions 961.
"Every corporation chartered by the commonwealth or organized under the general laws for purposes of business or profit, having a capital stock divided into shares"
valuation of their capital stock, ascertained as aforesaid, as is proportional to the length of that part of their line lying without the commonwealth, and also an amount equal to the value, as determined by the tax commissioner, of their real estate and machinery located and subject to local taxation within the commonwealth; second, in case of other corporations, included in section thirty-eight of this chapter, an amount equal to the value, as determined by the tax commissioner, of their real estate and machinery subject to local taxation, wherever situated."
"Every corporation or association chartered or organized elsewhere which owns, or controls and uses, under lease or otherwise, a line of telegraph within this commonwealth"
shall make all the returns prescribed by § 38 excepting the list of shareholders, "and shall annually pay a tax at the same rate, and to be ascertained and determined in the same manner," as is provided in § 40.
By § 54, taxes assessed under §§ 40 and 42 may be recovered, "with interest at the rate of twelve percent per annum until the same are paid," by action in the name of the treasurer of the commonwealth, or by information at his relation in the Supreme Judicial Court.
"all machinery employed in any branch of manufacture shall be assessed where such machinery is situated or employed; and, in assessing the stockholders for their shares in any manufacturing corporation there shall first be deducted from the value thereof the value of the machinery and real estate belonging to such corporation."
Mass.Pub.Stat. c. 11, §§ 13, 20. Although it is hard to see how telegraph companies can have "machinery employed in any branch of manufactures" unless they make their own machines, yet railroad corporations, which are coupled with telegraph companies in the statutes in question, as well as other corporations embraced in those statutes, might have such machinery.
company, whether incorporated in Massachusetts or elsewhere, owning a line of telegraph in Massachusetts is to be there taxed on such proportion only of the whole value of its capital stock as the length of its line in Massachusetts bears to the whole length of its lines everywhere, and to prevent its whole tax in Massachusetts from amounting, in any event, to more than that, it is provided that from the taxable portion of the value of its capital so ascertained shall be deducted the value of any property owned by it in Massachusetts which is subject to local taxation in the cities and towns. Such being the real state of the case, all the objections to the validity of the tax are met and disposed of by the decision of this Court in the former case between these parties.
"the right to construct, maintain, and operate lines of telegraph through and over any portion of the public domain of the United States, over and along any of the railways or post roads of the United States, and over, under, or across the navigable streams or waters of the United States,"
it had a franchise from the United States which could not be taxed by any state through which its lines ran; that the statutes of Massachusetts in terms and effect undertook to tax the franchises of the corporation, and that the tax was unconstitutional and void both as interfering with interstate commerce and as being unequal and excessive.
the Territory of any other state and to erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the state into which it thus entered, and was under no obligation to pay its fair proportion of the taxes necessary to the support of the government of that state. 125 U.S. 125 U. S. 547.
By whatever name the tax may be called, as described in the laws of Massachusetts it is essentially an excise upon the capital of the corporation, and those laws attempt to ascertain the just amount which any corporation engaged in business within its limits shall pay as a contribution to the support of its government upon the amount and value of the capital so employed by it therein. 125 U.S. 125 U. S. 547.
The tax, though nominally upon the shares of the capital stock of the company, is in effect a tax upon that organization on account of property owned and used by it in the State of Massachusetts, and the proportion of the length of its lines in that state to their entire length throughout the whole country is made the basis for ascertaining the value of that property. Such a tax is not forbidden by the acceptance on the part of the telegraph company of the rights conferred by § 5263 of the Revised Statutes or by the commerce clause of the Constitution. 125 U.S. 125 U. S. 552.
The statute of Massachusetts is intended to govern the taxation of all corporations doing business within its territory, whether organized under its own laws or under those of some other state, and the rule adopted to ascertain the amount of the value of the capital engaged in that business within its boundaries on which the tax should be assessed is not an unfair or unjust one, and the details of the method by which this was determined have not exceeded the fair range of legislative discretion. 125 U.S. 125 U. S. 553.
That decision was cited by the court in Ratterman v. Western Union Telegraph Co., 127 U. S. 411, 127 U. S. 426-427, and in Leloup v. Mobile, 127 U. S. 640, 127 U. S. 649.
answer, of its real and personal property within the state, and tendered and paid into court the sum so admitted to be due, with interest thereon at the rate of twelve percent and costs. The sum so paid in was greater than like interest then accrued on the whole amount of the tax assessed and sued for. The court added to the whole amount of the tax sued for interest thereon at the rate of twelve percent to the date of the payment into court, deducted from the sum so ascertained the sum paid in, and entered a decree for the balance, with interest thereon at the rate of twelve percent from the date of such payment to the date of the decree, and thereafter until payment of interest on the amount of the decree at the rate of six percent, that being the usual rate of interest in Massachusetts.
It is contended in behalf of the state that the tender and payment into court could have no effect in a suit of this kind to recover a tax, with interest thereon at the rate of twelve percent in the nature of a penalty, and that such interest must be computed at that rate not merely to the time of the decree below, but to the time of payment, or at least to the time of the final decree in this Court. On the other hand it is contended that the sum paid into court should have been applied, according to the evident intention of the defendant in paying it, to both principal and interest of the sum admitted to be due, instead of applying it to interest on the whole claim sued for, and thereby increasing the sum on which to compute subsequent interest.
We are of opinion that in this matter, the defendant is right. In equity, at least, the defendant was entitled to the benefit of the sum paid into court. That sum should have been applied to that part of the principal sum and interest which was admitted to be due. After the payment into court, as before, interest at the rate of twelve percent was to be computed on the rest of the principal. The penal rate of twelve percent interest ran only until the amount to be recovered was judicially ascertained. Since the date of the decree below, interest is to be computed on the lawful amount of the decree at the rate of six percent only.
Decree reversed and case remanded with directions to enter a decree for the amount of the tax found due by the circuit court, but applying the sum paid into court and computing interest on the balance, in accordance with the opinion of this Court, the costs in this Court to be equally divided between the parties.

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 § 5263
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 § 54
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 § 38
 § 40
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