Court Opinion

ID: 9841825
Source: CourtListenerOpinion
Date Created: 2023-09-22 20:07:54.775683+00
Date Added: 2024-06-11T09:04:35.454337
License: Public Domain

Me. Justice HaelaN
dissenting.
On the trial of this case in the state court of original jurisdiction, the secretary of the state Board of Equalization, from April, 1880, to March, 1891, was called as a witness by the defendant. His examination showed that he was present at the meetings of that board and kept the record of its proceedings. He said that from his knowledge of what passed at such meetings he could state what elements of value were considered by the board in making their estimate for the total values for 1887. He was asked the following questions separately : “ From the various sources of knowledge which you *158have enumerated, please state to the court what elements were taken into consideration by the state Board of Equalization in making the assessment of this company for the year 1887? ” “ Did you hear any conversation between the members of the state Board of Equalization during the meeting when the assessment of this company was made for the year 1887, with reference to the elements that they proposed to and did include in the assessment?” “At the time that the assessment of 1887 was made by the state Board of Equalization upon the property of the Central Pacific Railroad Company, what was said and done at the meeting of the state Board of Equalization on that day in your presence ? ”
The State objected to each question, as it was propounded, and its objection was sustained, the defendant excepting.-
The company then made the following ■ offer: “ Now, in view of the ruling of the court on this subject, we now offer to prove by this witness that from the time of the organization of the state Board of Equalization in 1880 down to and' including the year 1887, that board had every year considered the value of the Federal franchise — that is, the franchise derived from the United States by the acts of Congress of the government of the United States, belonging to and owned by the Central Pacific Railroad Company, as an element of value in assessing the total value of the property of that railroad company; and that in 1888, in consequence of the decision of the Supreme Court of the United States upon the subject, the state Board of Equalization for. the first time ceased to consider this Federal franchise as an element of value, and hence reduced their valuation by the sum of three million dollars on the Central Pacific Railroad Company’s property.” This offer was disallowed, and the company duly excepted.
Notwithstanding this action of the court, the State was permitted to prove by two members of the board, who participated in the assessment of 1887, that the Federal franchise was not included in that assessment.
One of the findings of fact was in these words: “ That in making its assessment and valuation therefor of defendant’s franchise said state Board of Equalization did not include, *159assess or value any franchise or corporate power held or exercised by defendant under the acts of Congress hereinbefore mentioned, or under any act of Congress whatever. And said board, in making said assessment and valuation therefor, upon defendant’s franchise, roadbed, roadway, rails and roll- ' ing stock, for- purposes of taxation for the fiscal year 1887, did not include in its said assessment and valuation therefor any Federal franchise, then possessed by defendant, nor any franchise or thing whatsoever, which said board could not legally include in such assessment or valuation. That the franchise, roadway, roadbed, rails and rolling stock of defendant’s railroad were valued and assessed by said state Board of Equalization, for purposes of taxation for the fiscal year 1887, at their actual value, and in proportion to their values respectively.”
A statement, on motion, was filed for a new trial and approved by the court. In that statement will be found the following : “ In its written opinion, upon which the findings were based, the court after determining as a fact, from a preponderance of the evidence before it, that the Federal franchise of defendant was not assessed or included in the assessment of the property of defendant by the state Board of Equalization, for the year 1887, uses the following language: ‘ But if the parol evidence offered did not weigh in plaintiff’s favor, and if by a preponderance of such evidence defendants could have shown that the State intended to and did include a Federal franchise in the assessment, I think the court would have to disregard it as incompetent. The effect of such parol evidence would be to contradict the record, which cannot be done. The best and only evidence of the acts and intentions of deliberative bodies must be drawn from the record of its intentions. . . .' From both standpoints of fact and of law, the findings must be that a Federal franchise was not included in these assessments.’ ”
• It thus appears that the trial court permitted the State to prove by oral testimony that the state board did not include the Federal franchises in its assessment, but denied to the defendant the privilege of showing, by the same kind of evidence, that' such franchises were, in fact,. included- in the *160assessment. This, in my judgment, was error, and directly affected the proper determination of the Federal question. The recital in the records of the board were not conclusive of the question. If, in fact, the board did include the Federal franchise in its assessment, the defendant should have been allowed to prove it by the best evidence capable of being produced; otherwise, it would be without remedy against a false statement on the records of the board.
Independently of this error, the judgment of the court below should be reversed upon the ground that the franchises of the Central Pacific Eailroad Company are not subject to be taxed.at all by the State, although some of its visible property may, according to the principles announced in former decisions of this court,, be taxable for state purposes.
In the Sinking Fund cases, 99 U. S. 700, 710, 727, this court, speaking by Chief Justice Waite, and referring to the Central Pacific Eailroad Company, said: “By the act of 1862, Congress granted this corporation a right to build a road from San Francisco, or the navigable waters of the Sacramento Eiver, to the eastern boundary of the State, and thence through the territories of the United States until it met the road of the Union Pacific Company. For this purpose all the rights, privileges and franchises were given this company that were granted to the Union Pacific Company, except the franchise of being a corporation, and such others as were merely incident to the organization of the company. The land grants and the subsidy bonds to this company were, the same in character and quantity as those to the Union Pacific, and the same right of amendment was reserved. Each of the companies was required to file in the Department of the Interior its acceptance of the conditions imposed before it could become entitled to the benefits conferred by the act. This was promptly done by the Central Pacific company, and in this way that corporation voluntarily submitted itself to such legislative control by Congress as was reserved under the power of amendment. . . . But for the corporate powers and financial aid granted by Congress it is not probable that the road would have been built.”
*161In California v. Pacific Railroad Compamy, 127 U. S. 1, 38, this court, referring to the Pacific Railroad acts, so far as they related to the Central Pacific Railroad, said: “Thus, without referring to the other franchises and privileges conferred upon this company, the fundamental franchise was given by the act of 1862 and the subsequent acts to construct a railroad from the Pacific Ocean across the State of California and the Federal Territories until it should meet the Union Pacific, which it did meet at Ogden in the Territory of Utah.”
In the case of United States v. Stanford, 161 U. S. 412, recently decided, we said : “ In United States v. Union Pacific Railroad Company, 91 U. S. 92, this court, speaking by Mr. Justice Davis, held that the construction of a railroad connecting the Missouri River with the Pacific Ocean was'a national work, because such a road would be a great national highway, under national control; that the scheme for establishing that highway originated in national necessities, the country being involved at the time in a civil war which threatened the disruption of the Union, and endangered the safety of our possessions on the' Pacific; and that the enterprise required national assistance, because private capital was inadequate for an undertaking of such magnitude. It appears upon the face of the act of 1862, as amended by the act of 1864, that Congress had in view the promotion of the public interest and welfare by the construction of a railroad and telegraph line that could be used by the government at all. times, but particularly in time.of war,-for postal, military and other purposes, and that, so far as the government and the public were concerned, such road and telegraph were to be operated as • one continuous line. These ends were to be. attained through the agency of a corporation created by Congress, and of certain corporations organized under state laws which Congress selected as instruments to be employed in accomplishing the public objects specified in its legislation.” Again, in the same case: “ Although the Central Pacific Railroad Company of California became an artificial being, under the laws of that State, its road. owes its existence to the national government; for, all that was accomplished in the *162exercise of privileges granted by, and because of the aid derived from, the United States. . . . The relations between the California corporation and the State were of no concern to the national government at the time the purpose was formed to establish a great highway across the continent for governmental and public use. Congress chose this existing artificial being [the Central Pacific Eailroad Company] as an instrumentality to accomplish national ends, and the relations between the United States and that corporation ought to be determined by the enactments .which establish those relations.”
The relations between this railroad company as well to the United States and the State is shown by the act of the legislature of California, approved April 4,1864, c. 417, entitled “ An act to aid in carrying out the provisions of the Pacific Eailroad and Telegraph act of Congress and other matters relating thereto,” Stat. Cal. 1863, 1864, 471. That statute referred to the act of Congress of July 1, 1862, c. 120, 12 Stat. 489, and to enable the Central Pacific Eailroad Company, therein named, more fully and completely to comply with and perform its provisions and conditions, provided that that company “ are hereby authorized and empowered, and the right, power and privilege is hereby granted to, conferred upon and vested in them, to construct, maintain and operate the said railroad and telegraph line, not only in. the State of California, but also in the said territories lying east of and between said State and the Missouri Eiver, with such branches and extensions of said railroad and telegraph line, or either of them, as said company may deem necessary or proper; and also the right of way for said railroad and telegraph line over any lands belonging to this State, and on, over and along any streets, roads, highways, rivers, streams, water and water courses, but the same to be so constructed as not to obstruct or destroy the passage or navigation of the same; and also the right to condemn and appropriate to the use of said company such private property, rights, privileges and franchises as may be proper, necessary or convenient for the purposes of said railroad and telegraph, the compensation therefor to be *163^ascertained and paid under and by special proceedings, as prescribed in the act providing for the incorporation of railroad companies, approved May twentieth, eighteen hundred and sixty-one, and the acts supplementary and amendatory thereof; said company to be subject to all the laws of this ■State concerning railroad and telegraph lines, except tnat ■messages and property of the United States, of this State, and ■of the said company shall have priority of transportation and transmission over said line of railroad and telegraph; hereby •confirming to and vesting in said company all the rights, privileges, franchises, power and authority conferred upon, granted to or vested in said company by said act of Congress; hereby .repealing all laws and parts of laws inconsistent or in conflict with the provisions of this act, or the rights and privileges herein granted.”
Looking at the question in the light most favorable to the State, it may be said that the franchises which the railroad ■company possesses, with reference to the construction ■ and .maintenance of its road within California, came jointly from the United States and the State. If the rights., privileges and franchises granted by the United States to this company were •not all that was needed for the accomplishment of the objects had in view by the construction of a national highway between the Missouri River and the Pacific Ocean, the state enactment of 1864, carried into the charter of the company, looking at the company simply as a state corporation, all the powers and franchises granted by the United States.
If the assessment in question had been separately upon the visible property of the company, as distinguished from its franchises, the case would have presented a different aspect; .and we should then have been compelléd to reexamine the question as to the extent to which the property of the company, used in accomplishing the objects designed by Congress, could be taxed by the State. But, as the opinion of the court shows, the present assessment was upon the franchise, roadway, roadbed, rails and rolling stock of the company without stating separately their respective values. That which was invalid cannot be separated from that which was valid.- So *164that the question is presented whether it is competent for the State to sell'for its taxes the franchise of the company. If.it cannot, the whole assessment is void. Santa Clara County v. South. Pacific Railroad, 118 U. S. 394, 415.
The court says that the railroad company obtained from the State the right and privilege of corporate capacity; to' construct, maintain, and operate its road; to charge and collect fares and freights; to exercise the power of eminent domain; to acquire and maintain right of way; to enter upon lands or waters of any person to survey route; to construct, road across, along or upon any stream, watercourse, road-stead, bay, navigable stream, street, avenue, highway, or across any railway, canal, ditch or flume; to cross, intersect,, join or unite its railroad with any other railroad at any point, on its route; to acquire right of way, roadbed and material for construction; to take material from the lands of the.State, etc., etc.
But did it not acquire those rights and privileges-also from the United States ? Did not the United States grant “ the fundamental franchise ” to construct and maintain a railroad from San Francisco across the State and through the territories, until it met the Union Pacific Railroad ? If that franchise be sold by the State for its taxes, how are the national objects contemplated by Congress to be accomplished ? What becomes of the mortgage of the United States upon the entire property of the company, roadbed, right of way, rolling stock, station houses, etc., which mortgage was taken in order to secure the payment of the bonds issued by the United States, under the acts of Congress ? What becomes of the power of the United States reserved in the acts of Congress for the General Government, in certain contingencies, to take possession of this railroad % In Northern Pacific Railroad v. Traill County, 115 U. S. 600, 610, where the question was as, to the power of a State -or Territory to tax certain lands that had been granted by Congress to aid in- the construction of' the Northern Pacific Railroad Company, Mr. Justice Miller, speaking for the court, said : “No sale of land for taxes, no taxes can be assessed on any property, but by virtue of the-*165sovereign authority in whose jurisdiction, it is done. If not assessed by direct act of the legislature itself, it must, to be valid, be done under authority of a law enacted by such legislature. A valid sale, therefore, for taxes, being the highest exercise of sovereign power of the State, must carry the title to the property sold, and if it does not do this, it is because the assessment is void. It follows that if the assessment of these taxes is valid and the proceedings well conducted, the sale confers a title paramount to all others, and -thereby destroys the lien of the United States for the cost of surveying these lands. If, on the other hand, the sale would not confer such a title, it is because there exists no authority to make it.”
It may be said that the franchise which the State may sell is that which was granted by it. But is the state franchise so distinct and separate from the franchise granted by the United States that it can be sold separately from the franchise granted by the United States? It seems to me that the franchise to build, operate and maintain a railroad from San Francisco to a point .of junction with the Union Pacific Railroad is a unit, and that it is utterly impracticable to separate and sell so much of that • franchise as originally came from the State, and leave intact that which was derived from the United States. The State cannot lawfully do anything to impair or cripple the franchise, rights and privileges derived from the United States. 'What was said in Pacific Railroad Removal cases, 115 U. S. 1, 16, in reference to the relations between the Union Pacific Railroad- Company and certain State corporations which consolidated with that company, is applicable here: “ The whole being, capacities, authority and obligations of the company thus consolidated are so based upon, permeated by and enveloped in the acts of Congress referred to, that it is impracticable, so far as the operations and transactions of the company are concerned, to disentangle those qualities and capacities, which have their source and foundation in these acts, from those which are derived from state or territorial authority.”.
This court has often declared that the Central Pacific Railroad Company was one of the instrumentalities that had been *166selected and was being employed by the United States in accomplishing important national objects, to which the United States is competent under the Constitution. Upon the franchises, and upon all the property of that corporation, rests a mortgage to secure the government against liability for the bonds it issued to that corporation. "With the consent of the State, if such consent was necessary, that corporation has received large grants of land upon the condition that it would meet and perform all the obligations imposed upon it by the acts of Congress. I cannot agree that the franchise which the corporation has received from the United States and the State can be assessed by the State for taxation, along with its roadbed, right of way, etc., and then sold. That is taxation of one of the instrumentalities of the National .Government, which no State may do without the consent of the Congress of the United States. Of course, this corporation ought to contribute its due share to the support of the government of each State within whose limits its property is situated and its privileges exercised. But it is for Congress to prescribe the rule of taxation to be applied at least .to the franchises of the corporation which, although created by the State, is as much a Federal agency as if it had been created a corporation by national enactment. It has never heretofore been recognized that a State could, without the assent of Congress, sell, for its taxes, the franchises, rights and privileges, employed, under the- authority of the National Government, to accomplish national objects, particularly where such franchises, rights and privileges, are under mortgage to secure the government against specified liabilities.
For the reasons stated, I dissent from the opinion and judgment of the court.