Source: https://caselaw.findlaw.com/us-supreme-court/199/1.html
Timestamp: 2019-04-22 21:07:02+00:00

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METROPOLITAN STREET RY. CO. v. NEW YORK.
Other sections provide the machinery for assessment. This assessment was to be made by the state board of tax commissioners, and one section authorized certiorari to review their proceedings.
'I. Error in declining to hold that the act of the legislature of the state of New York, approved May 26th, 1899 (chap. 712, Laws 1899), entitled 'An Act to Amend the Tax Law in Relation to the Taxation of Public Franchises as Real Property,' in so far as it authorizes the assessment imposed by the state board of tax commissioners on March 20, 1900, upon the franchises of the [plaintiff in error] relator above named, deprives said relator of its property without due process of law, in contravention of the 14th Amendment of the Constitution of the United States.
'II. Error in declining to hold that said legislative enactment, in so far as it authorizes the said assessment denies to said relator the equal protection of the laws, in contravention of the 14th Amendment to the Constitution of the United States.
'The legislature shall not pass a private or local bill in any of the following cases: . . .
'Granting to any corporation, association, or individual the right to lay down railroad tracks. . . .
'Sec. 7. The local authorities of any incorporated city or village to whom application, under the provisions of this act, may be made for consent to the construction, maintenance, use, operation, or extension of a street surface railroad upon any street, road, avenue, or highway, may, at their option, provide for the sale of and sell at public auction the franchise, subject to all the provisions of this act, to so construct, maintain, use, operate, or extend such street surface railway. . . .
'Sec. 1. The local authorities of any incorporated city or village, to whom application may be made for consent to the construction, maintenance, use, operation, or extension of a street railroad, or a railroad or railway for the transportation of passengers, mails, or freight, over, upon, under, or through any of the streets, roads, avenues, parks, or public places in such city or village, must provide, as a condition of the said consent to the use of said street, road, avenue, park, or public place, that the right, franchise, and privilege of using the said street, road, avenue, park, or public place shall be sold at public auction to the bidder who will agree to give the largest percentage per annum of the gross receipts of said company or corporation, with adequate security, as hereinafter provided, for the fulfilment of said agreement, and for the commencement and completion of such road according to the [199 U.S. 1, 8] plan or plans, and on the route or routes, fixed for its construction, within the time or times hereinafter designated and prescribed therefor; but this agreement shall not release any such road from the percentages required to be paid by chapter 252 of the Laws of 1884. The legislature expressly reserves the right to regulate and reduce the rate of fare on such railroad or railway. . . .
Subsequent to the law of 1884, above referred to, fifteen other franchises now belonging to the relator were granted by the common council of the city of New York. Most of them provided for annual payment to the city of New York of either a fixed amount or a fixed percentage, varying from 2 to 8 per cent of the gross earnings.
Messrs. William D. Guthrie and Elihu Root for plaintiff in error.
[199 U.S. 1, 24] Messrs. Julius M. Mayer and Louis Marshall for defendant in error.
The decision of the court of appeals settles that there is nothing in the law or the proceedings in this case in conflict with the Constitution of that state. It is not contended by the plaintiff in error that there is any constitutional objection to the taxation of franchises. The right to subject them to a share in the burden of supporting the government is conceded.
See also Erie R. Co. v. Pennsylvania, 21 Wall. 492, 22 L. ed. 595; Wilmington & W. R. Co. v. Alsbrook, 146 U.S. 279 , 36 L. ed. 972, 13 Sup. Ct. Rep. 72; Ford v. Delta & P. Land Co. 164 U.S. 662 , 41 L. ed. 590, 17 Sup. Ct. Rep. 230.
Applying these well-established rules to the several contracts, it will be perceived that there was no express relinquishment of the right of taxation. The plaintiff in error must rely upon some implication, and not upon any direct stipulation. In each contract there was a grant of privileges, but the grant was specifically of privileges in respect to the construction, operation, and maintenance of a street railroad. These were all that, in terms, were granted. As consideration for this grant the grantees were to pay something, and such payment is nowhere said to be in lieu of or as an equivalent or substitute for taxes. All that can be extracted from the language used was a grant [199 U.S. 1, 38] of privileges and a payment therefor. Other words must be written into the contract before there can be found any relinquishment of the power of taxation.
'The franchises are grants which usually contain contracts, executed by the municipality, but executory as to the owner. They contain various conditions and stipulations to be observed by the holders of the privilege, such as payment of a license fee, of a gross sum down, of a specific sum each year, or a certain percentage of receipts, as a consideration, or 'in full satisfaction for the use of the streets.' There is no provision that the special franchise, or the property created by the grant, shall be exempt from taxation. . . .
"And be it enacted, that, upon any of the aforesaid banks accepting and complying with the terms and conditions of [199 U.S. 1, 41] this act, the faith of the state is hereby pledged not to impose any further tax or burden upon them during the continuance of their charters under this act."
Chicago v. Sheldon, 9 Wall. 50, 19 L. ed. 594, is also not in point. An ordinance was passed by the city council of Chicago prescribing the amount of work which a street railway company must do in the grading, paving, etc., of the streets on which its railway was authorized to be constructed. The company, having accepted, and complied with the terms of this ordinance, the city attempted by assessments for special improvements to compel the railway company to pay for further work of the nature required by the original ordinance, and it was held that the obligations assumed by the railway company in respect to street improvements, as provided by the ordinance, could not be increased by special assessments for further improvements. But this involved no question of liability to general taxation, and only held void the effort of the city, under the guise of special assessments, to increase the obligations specifically assumed by the railway company under the original ordinance.
In New Jersey v. Yard, 95 U.S. 104 , 24 L. ed. 352, there was a contract that a certain tax should 'be in lieu and satisfaction of all other taxation or imposition whatsoever, by or under the authority of this state, or any law thereof,' and the decision simply upheld that exemption specifically contracted for.
We are of opinion that no contract right of the relator was impaired by the legislation in question.
The first specification is answered by the conclusion that we have reached in respect to the claim of an impairment of contract obligations; for if there was no such impairment, the fact that the companies have escaped the burden for these many years is their good fortune, and in no manner discharges them from the ordinary burdens of taxation which the present law imposes.
With respect to the second, it may be observed that the lump sum is so obviously a payment for the franchise that it cannot be considered in any just sense as possessing the nature of a tax. It is not even rental. It is like money paid for a tract of land,-part of the purchase price. It does not, like a percentage of the gross receipts, vary with the changes of business, has no resemblance to a continuing discharge of the obligation which property is under for contribution to the support of the government. Further, this whole matter of allowing a reduction on account of that which is spoken of as 'in the nature of [199 U.S. 1, 47] a tax,' is a matter of grace on the part of the legislature. The franchises granted were, as we have held, subject to taxation, and the fact that, upon equitable considerations, the state has consented that a certain reduction shall, in some cases, be made, does not entitle every holder of a franchise to a like reduction. It is akin to an exemption, and there is nothing in the Federal Constitution to prevent a state from granting exemptions from taxation. Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232 , 33 L. ed. 892, 10 Sup. Ct. Rep. 533.
With regard to the third contention, it may be said that there is a difference between surface and subsurface street railroads sufficient to justify a diversity in the mode and extent of taxation. In Savannah, T. & I. of H. R. Co. v. Savannah, 198 U. S. ante, 690, 25 Sup. Ct. Rep. 690, just decided, taxation of a street railroad was challenged on the ground that a steam railroad which ran into the city and along its streets, and there did some of the same kind of work as the ordinary street railroad, was not subject to the same tax, and, referring to this contention, is this declaration by Mr. Justice Holmes: 'The difference between the two railroads is obvious, and warrants the diversity in the mode of taxation.' Further, the condition of the title to the only subsurface road in the city of New York clearly puts it in a class by itself.
These are all the questions we deem it important to consider. We find no error in the decision of the Supreme Court of New York, and it is affirmed.

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