Legal Document

390 U.S. 317 88 Supreme Court Reporter 995 19 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 1201 NORFOLK AND WESTERN RAILWAY COMPANY et al., Appellants,v.MISSOURI STATE TAX COMMISSION al. Number 324. Argued Jan. 25, 1968. Decided March 11, Leave to File Petition for Rehearing Denied April 29, See 1046, 1633. [Syllabus from pages 317-318 intentionally omitted] William or Haw. Hawai‘i KFH45 A2 Allen, Washington, D.C., appellants. Atlantic Peterson, Asst. Atty. Gen. of Missiouri, appellees. Mr. Justice FORTAS delivered the opinion Court. 1 This case brings before us, once again, troublesome problems arising state taxation an interstate commercial enterprise. At issue is a tax assessment pursuant Missouri statute specifying manner in which railroad rolling stock be assessed State's ad valorem on that property.1 2 In 1964 Norfolk & Western Railway company (N W), Virginia corporation with rail operations, leased all property appellant Wabash Railroad Company. The owned substantial fixed and stock, did business as well other States. Prior lease, N W no only minimal amount Missouri. primarily coal-carrying railroad. Much its equipment specialized coalcarrying are generally located coal regions Virginia, West Kentucky, along coalferrying routes those eastern seaboard Great Lakes. Scarcely any ever enters According appellants, was by order diversify business, not provide opportunity integrated through movement traffic. 3 By terms became obligated pay 1965 taxes elsewhere.2 Upon receiving notice appellee Tax Commission, filed request adjustment hearing Commission. held, Commission sustained against taxpayer's challenge. On judicial review, Commission's decision affirmed without Circuit Cole County, then Appellants appeal this Court, contending effect reached thus violated Due Process Clause Commerce Constitution. We noted probable jurisdiction. 389 810, 84, 63 (1967). I. 4 taxable State at $31,298,939. Of sum, $12,177,597 relates within State, challenged Their attack aimed portion relating $19,981,757.3 5 With respect used familiar mileage formula authorized statute. relevant part, provides (§ 151.060, subd. 3): 6 '* * when shall extend beyond limits into another levied paid such road, said commission assess, equalize adjust proportion total value number miles road bears length controlled company.' 7 arrived first determining regardless where located, day, January 1, 1965. Value ascertained totaling original cost, less accrued depreciation 5% year up 75% each locomotive, car, piece mobile equipment. To value, $513,309,877, applied 'equalizing factor' 47%, employed assessing attempt bring assessments down level next found 8.2824% main branch line (excluding secondary side tracks) owned, leased, situated percentage equalized resulting figure $19,981,757. 8 There suggestion failed follow literal command problem arises because appellants' contention that, mechanically applying statutory formula, here unconscionable unconstitutional result. It their submission so far out actual facts record exercise taxing power out-of-state property. 9 submitted evidence based upon inventory actually day. calculated same cost-less-depreciation basis approximately $7,600,000, compared $19,981,000. also show tax-day unusual. showed both months immediately after never ranged above $7,600,000 figure. preceding year, 1964, $9,177,683, appellants demonstrated neither nor operations had materially increased intervening period.4 properties (for applied) hardly between prior were $12,092,594; 1965, $12,177,597. 10 concluded result justifiable. pointed method proceeds assumption 'rolling substantially evenly divided throughout railroad's entire system, units given time, period will Missouri.' held valuation could justified theory 'enhancement,' although referred principle. court described follows: 11 'The underlying regularly one has enhanced augmented it connected to, connection with, operational whole may, therefore, taxed according 'as part parts outside State;—in words, may made cover comes organic relation system.' Pullman versus Richardson, 261 330, 338, 43 366, 67 L.Ed. 682.' 12 correctly noted, however, 'even if validity methods conceded, results, valid must free excessiveness discrimination.' present case, disagree. our opinion, violates Clauses II. 13 Established principles lacking much discussed area law. course settled impose fair share transportation Marye Baltimore Ohio R. Co., 127 117, 123 124, 1037, 1039—1040, 32 94 (1888); Pullman's Palace-Car Commonwealth Pennsylvania, 141 18, 876, 35 613 (1891); Ott Mississippi Valley Barge Line 336 169, 69 432, 93 585 (1949); Braniff Airways, Incorporated Nebraska Board Equalization Assessment, 347 590, 74 757, 98 967 (1954). That regarded appropriately ascertained, tangible assets permanently habitually including intangible, 'going-concern,' Express Agency 359, 364, 558, 561, 757 (1954); Cudahy Packing Minnesota, 246 450, 455, 38 373, 375, 62 827 (1918); Adams Auditor, 166 185, 218—225, 17 604, 605, 607, 41 965 (1897). reference system intrastate part. As stated rule, 'the (tangible) (interstate) 368, 682 (1923). Going-concern course, elusive concept susceptible exact measurement. Rowley Chicago N.W.R. 293 102, 109, 55 55, 58, 79 222 (1934); Nashville, C. St. L.R. Browning, 310 362, 365—366, 60 968, 970, 84 1254 (1940). consequence, have been permitted considerable latitude devising formulas measure borders. Union Tank Wright, 249 275, 282, 39 276, 278, 602 (1919). Such usually involve determination application representing going-concern See, e.g., Pittsburgh, C., Backus, 154 421, 14 1114, 1031 (1894). A even though results they yielded precise evaluations State. hand, insisted many years entitled intangible unconnected Delaware Tax, 18 Wall. 206, 229, 21 888 (1874); Fargo Hart, 193 490, 499, 24 498, 500, 48 761 (1904). some cases have, fact, cast burden 499—503, 501, (1904); 283—286, 279, (1919); Wallace Hines, 253 66, 69—70, 40 435, 436, 64 782 (1920); Southern 274 76, 81—84, 47 542, 544—545, 71 934 (1927). constitutionally invalid, imposes illegitimate restraint commerce denies taxpayer process his due.5 permitted, under shelter imprecise allocation ignoring peculiarities enterprise, 'project plainly borders.' 365, Any bear rational relationship, face application, values 499—500, (1904).6 III. 15 Applying these now we conclude Missouri's W's cannot sustained. has, various contexts, taxation. challenging heavy burden. Butler Brothers McColgan, 315 507, 701, 704, 86 991 (1942); North Carolina ex rel. Maxwell, 297 682, 688, 56 625, 628, 80 977 (1936). confronted vastness encounters constitutional restraints. Its task resulted gross overreaching, represented purported taxed, violate Cf. Capitol Greyhound Lines Brice, 339 547, 70 806, 809, 1053 (1950). But borne burden, effort offset convincing made. 16 Here, shows rigid led grossly distorted practically $9,177,683 Wabash. introduced count count, would than half commission's postulating constituted stock. comprised about 2.71% (and 3.16% value) fleet. Our decisions recognize practical difficulties involved do require close correspondence computations using but certainly forbid unexplained discrepancy case.7 means impact confined broad tolerance permitted. life neatly lend themselves niceties constitutionalism; does Constitution tolerate result, however distorted, just product convenient mathematical which, most situations, produce tolerable product. basic difficulty totally barren enhancement factor might devastating discrepancy. attempted justify 'enhanced' extent attributed chiefly railroad, 70% whose revenue derived great deal equipment, scarcely traffic density tracks 54% whole. Finally, proved overwhelming majority long ago (1894), indicated otherwise validly ascertain exceptional example, 'where, certain localities, engaged particular kind requiring sole use localities extra stock.' Id., 431, 1119. challenge factual data W. place realm 'exceptional situations' recognized apparently conclusion lease transaction formerly belonging two separate lines. true, permits assumed, bridge chasm record. difference shown too explained mere assertion, more, due assumed nonparticularized increase value. 69, (1920). 20 499 (1904), care exercised lest 'be unlawfully privilege, state, name good will, closely true meaning. So fairly different equal division instance terminals rest another, latter make unity every mile. pretense.' 22 repeat necessary demonstrate forward strong tending prove yield obliged counter accommodations assure limits. If fails proof excessive commerce, prevail. IV. 23 Accordingly, record, exceeded her tax, defined Clauses. open action today concerned, remand appropriate tribunal reopen additional support assessment. vacate judgment cause further proceedings inconsistent decision. Vacated remanded. 25 BLACK, dissenting. 26 established law, recognizes apportionment company's proving 'clear cogent evidence' flagrantly excessive. 358 434, 444, 411, 417, cited. Dec. Immigration Nationality Decisions agree meet therefore affirm judgment. Mo., 426 South Reporter, 2nd 362. 27 cars transfer this, higher much. For, out, 'a last wrong. Something more can adjudged illegal *.' 1119, 1031. below agrees, pricing consider values, goodwill added brought being merged system. consideration new (see, 682), and, points allowed wide discretion Thus, formulas, here, upheld. 1254, 'In basing mileage, Tennessee adopted frequently sanctioned (cases cited).' 970. contended completely accurate, intangibles except show, puts it, 'that Constitution.' believe showing here. fatal flaw possible merger considered. Court's admits says Where differ considerations rather sufficient tax. 28 ¢This before, indeed pays lip service fact today, impossible develop statutes perfection. Indeed, International Harvester Evatt, 329 416, 91 390: 'Unless palpably disproportionate apportionment, makes patent willing nullify honest efforts apportionments.' U.S., 422—423, S.Ct., 447. And 'burden oppression manifest clear evidence.' 977. Since value* assessment, imposing N. exorbitant full property, cf. 1053, question applies 'all real (and) personal hired state.' Intangible explicitly exempted Mo.Rev.Stat. § 151.010 (1959). 1966, purchased previously while continuing change relationship issues presented us. analysis apply purchase deducted sum figures $860,415, 'economic railroads varying amounts. Exactly deduction three years. argue arbitrariness W, little ($10,103,340). said: determine 'what organism states functions.' 1254. concerned whether operation opportunities, benefits, protection conferred afforded Wisconsin Judge Penney 311 61 246, 249, 85 267, 130 American Law 1229. Those requirements satisfied apportioned carried State.' 174, (1949). Neither appellees contend analyses implications insofar concerned. 782: reason allowing look borders foreign corporations get things extent, gives them what possess. purpose Therefore elsewhere taken account unless seen plain intelligible way adds rights '(I)f ratio (the State) imposed necessarily fall 230—231, (1874). principle cases. 761; Galveston, S.A.R. Texas, 210 217, 225, 638, 639, 52 1031; 223 335, 347, 211, 215, 459; 602.

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