Court Opinion

ID: 6583476
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:40:25.160231+00
Date Added: 2024-06-11T15:57:22.236775
License: Public Domain

Dissenting opinion by
ROSS, J.
I concur in the views of the majority of the Court on the question of interest, but disagree, with reference to the construction to be placed upon ss. 1,11,12, 13andl4ofNo. 1 of the Acts of 1882. These contain the entire provisions of the act relative to taxing railroads. In determining- upon the proper construction to be given to these sections, all their provision must be considered. If Sec. II, stood alone, I should say, that the tax is imposed upon the entire gross earnings received by a corporation or person, from the operation of a railroad within this State. Its language seems to demand such construction. The first part of the opinion of the majority of the court assumes that this is the construction to be placed upon the Act, and therefore holds, the tax, so far as derived from interstate commerce, void. On this construction, they justly hold that that part of the tax assessed upon the earnings derived from interstate commerce, is unconstitutional, and void in accordance with the decision of the United States Supreme Court in Steamship Co. v. Pennsylvania, 122 U. S. 326. If a tax upon the entire gross earnings, it must rest upon the party to whom such earnings belong. In that case, under the lease by the orator to the defendant, I think, the tax would clearly fall upon the defendant; and the payment of the tax by defendant,would only pay its debt to the State, and wordd pay no part of the rent due from it to the orator. Under the lease, I think, the defendant alone is entitled to, and owns the entire gross earnings derived by it from operating the railroad of the orator. I do not think the reference in *30the lease to the gross earnings for the purpose of fixing the amount of the rent, makes any part of the gross earnings, as such, the property of the orator. Such earnings were not made the property of the orator, nor was the defendant under obligation to turn such earnings over to the orator in payment of the rent due it. The rent was to be paid in part by the order on the Cheshire Railroad Co. What was not thus paid the defendant could pay out of any funds which it could control. The orator, I think, had no gross earnings. Its income derived from the rent fixed by the lease, was not gross earnings within the contemplation of the statute. While it owned the road, road-bed and rolling stpck, it did not operate them. Hence, if this section were the whole of the law applicable to the taxation of this class of property, I should hold that the tax, whether valid or invalid rested upon the defendant’s property, and such payment gave the defendant no relief from paying the full amount of the rent stipulated in the lease. But this section does not contain the whole law relating to this subject. Sections 12 and 13 of the act need not be considered. They relate to the mode of ascertaining the amount of the tax per mile of the road operated in this State, and to the times when the tax is required to be paid.
In ascertaining the intention of the legislature, section 14 of the act must be considered. That section provides that, when a railroad is operated under a lease or contract, by some party other than its owner, the tax shall be paid by such other party, but for the owner of the railroad. It proceeds upon the basis that the tax, in all cases, is upon the property of the railroad, and to be paid by its owner. When, therefore, the railroad and rolling stock of a company are operated by a lessee, or contractee, for his own benefit, and when the gross earnings derived from operating the property belong, by the terms of the lease, or contract, to the operator, the tax rests, not upon the gross earnings, in specie, but upon the railroad, rolling stock and right to operate them, valued upon the basis of the gross earnings per mile *31derived therefrom. By both sections 11 and 14 the tax is made to rest upon property. I do not think that the act should be so construed as to make the tax rest upon the property of the lessor or contractor, the railroad, rolling stock and right to operate them, when operated under a lease or contract, and upon the gross earnings derived therefrom when operated by the owner. The act should be so construed that the tax will rest uniformly upon all such property by whomsoever operated. This result can be reached only by construing the act as I have done.
Turning now to section one of the act, we find the same idea expressed. The tax there is denominated a tax upon the corporate franchise or business in this State of a railroad. The most valuable franchise, and pretty much the only ones of pecuniary value, are the rights conferred by the State on such corporations, to locate, build, maintain, own and operate a railroad with its rolling stock in this State-. Every railroad in the State holds these franchises from the State. Here it is declared that the tax is upon the franchise. When “ or business in this State ” is added, it suggests that the franchise is to be valued upon the basis of the earnings received from the operation of the property. On this construction section 11 of the act declares that the value of the railroad, rolling stock, and right to operate them, in this State, is, for the purpose of taxation, to be determined by the gross earnings derived from such operation thereof per mile, within this State. Section 12 rates the tax upon the property or franchise so valued, and section 13 declares when the tax shall be paid. This construction makes all the provisions of the act on this subject harmonious, renders the tax a tax uj>on the property, or franchise to be paid by the owner of the property or franchise, and avoids all constitutional objections. I do not find anything in Steamship Co. v. Pennsylvania, supra, nor in any of the decisions there referred to and commented upon, which militates against this construction of this act. In the State Freight Tax case, 15 Wall. 232 to 282 (L. C. 21,160) Justice *32Strong says : “ Before proceeding, however, to a consideration of the direct question whether the statute is in direct conflict with any provision of the Constitution of the United States, it is necessary to have a clear apprehension of the subject and nature of the tax imposed by it. It has repeatedly been held that the constitutionality or unconstitutionality of a State tax is to be determined, not by the form or agency through which it is to be collected, but by the subject upon which the burden is laid. This was decided in the cases of Bank of Commerce v. New York, 2 Black 620 ; in the Bank Tax case, 2 Wall. 200 ; Society for Savings v. Coite, 6 Wall. 594; and Providence I. Institution v. Mass., 6 Wall. 611. In all these cases it appeared that the bank was required by the statute to pay the tax, but the decision turned upon the questions : what was the subject of the tax; upon what did the burden really rest, not upon the question from whom the State exacted payment into its treasury. Hence, where it appeared that the ultimate burden rested upon the property of the bank invested in United States securities, it was held unconstitutional, but where it rested upon the franchise of the bank, it was sustained.” I understand the principle thus announced is unquestioned. Sly associates make this a tax upon the gross earnings, in the first part of the opinion, and then by some process of reasoning, of which I fail to see the force or conclusiveness, hold that it is a tax upon the orator, analogous to the tax imposed upon the orator’s road-bed, per mile, under the acts of 1874 and 1876, and decided by this court in Rutland County but unreported, and which method of taxtation this took the place of. They also hold, as I understand the opinion, that the gross earnings derived from the operation of the orator’s railroad and property by the defendant, belong to the defendant, and yet that the tax rests upon the orator. I am unable to understand in what way that result can come about, unless the tax rests uj)on the orator’s road-bed, rolling stock and right to operate them valued *33upon the basis of the gross earnings derived per mile from its operation in this State by the defendants. When the tax is made to rest upon the orator, -who has no gross earnings, within the meaning of the act, it falls within the principle announced and quoted from the opinion of Justice Strong, in the State Freight Tax case, and is not unconstitutional.' The burden of the tax, on the views of my associates, rests upon the orator. As the orator derives no gross earnings from its railroad, the • tax, it seems to me, must either rest upon the railroad property or franchises of the orator. It must rest upon what the orator has and enjoys, and not upon what it does not own and is not entitled to. While I agree in the result reached by the majority of the court, I dissent from the method of reaching it and from holding the act unconstitutional.