Court Opinion

ID: 4934095
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:12:12.900784+00
Date Added: 2024-06-11T08:14:35.191569
License: Public Domain

WaltoN, J.'
The question is whether the tax authorized by the' act of 1880, c. 249, entitled " An act relating to the taxation of railroads,” is one which it was competent for the legislature to impose. Jf it is a tax upon real or personal estate, then it is one which it was not competent for the legislature to impose; ' for the constitution (Art. 9, §8) requires all taxes upon real •.and personal estate to be apportioned and assessed equally, according to its just value ■; and we think it must be conceded that this tax is not so apportioned and assessed. But if it is a franchise tax that is, a tax imposed upon railroad corporations on account of their powers and privileges — then it is one -which it was competent for the legislature to impose; for the power of the legislature to impose such a tax is well settled, and is not denied by the defendants. The question,, therefore, is, whether it must be regarded as a property tax or a franchise tax. • We think it is clearly a franchise tax, and was so intended by • the legislature. True, the amount of the tax is to be determined 'by an appraisal of the railroads, with their franchises, rolling 'stock and .fixtures. The first section of the act so states. But .this mention of the rolling stock and fixtures is not for the 'purpose of imposing a tax upon them ; it is for the purpose of excluding from the valuation the remainder of the corporate ■property, namely, the land and buildings. This is made plain *383by the second section, which declares that the appraisal shall embrace only the road-ways, rolling stock and franchises, and that the land, buildings and fixtures outside of the road-ways, shall be taxable in the towns where situated.
Now it is perfectly well settled that the amount of a franchise tax upon a corporation may be graduated or measured by an appraisal of the whole, or any portion, of the corporate property,¡ without thereby making it a property tax. Most franchise taxes are so measured. Possessing the power to impose a franchise tax to any amount it deems proper, the legislature may measure the amount by any standard it pleases. It may fix the amount at a specified sum, as a poll tax is imposed upon 'an individual, and without regard to the amount of business the corporation does, or the amount of property it possesses, or it may graduate and measure the amount by an appraisal of the whole or any portion of its property, or by the amount of its business. .
A careful examination of the act under consideration will show that what the legislature intended to do, and what, in the' judgment of the court, it in fact did do, was to impose a frau-ehise tax upon railroad corporations, and to measure .the amount by the value of their franchises and their property exclusive of their real estate. Their reasons for this are obvious.’, The legislature believed that railroad property ivas not paying, its fair share of the public taxes. True, the real estate was being taxed in the towns and cities whore it was situated. lyut • neither the shares in the hands of stockholders, nor the rolling stock, could be thus successfully reached. The legislature must be presumed to know, and most of its members, if not all, undoubtedly did know, that a specific tax could not bo constitutionally imposed upon this class of property. It must also be presumed ü> have known that it did possess the power to impose a franchise tax upon railrord corporations to any extent it might deem proper, unless their charters expressly exempted them from such a tax. It therefore resolved to levy a franchise tax, which it- clearly possessed the power to do, and to make it the exact equivalent of a just tax upon the value of their franchises and that portion of their property which would otherwise escape taxation, and',' *384then enact that this franchise tax, thus justly and equitably graduated, should be in lieu of all taxes upon the shares of these companies : and this is precisely what the act under consideration accomplishes. It imposes a franchise tax, equitably and justly measured by an appraisal of that portion of the corporate property and the corporate franchises, which would otherwise be likely to escape taxation, and declares that this tax shall be in lieu of all taxes upon the shares. We fail to see anything oppressive or unconstitutional in this mode of taxing these corporations. In principle it does not differ from the mode sanctioned in Commonwealth v. Hamilton Manufacturing Co. 12 Allen, 298. Same case, 6 Wallace, 632.
In that case, the corporation was-required to pay a tax of one and one-sixth per cent on the entire value of its shares, less the value of its real estate and machinery. The court held that the reason for the deduction was obvious ; that it was because the real estate and machinery were taxable in the towns where they were situated; and if their value was not deducted from the franchise tax, inequality or double taxation would be the result. So, in this case, railroad corporations are required to pay a tax of one per cent on the entire value of the corporate property and franchises, less the value of the real estate which is taxable in the towns where it is situated. A careful examination of the two statuses will show that the one under consideration in that case, and the one under consideration in this case, are identical in principle, although differing in form. It was conceded in that case that the tax could not be sustained as a tax upon property, because not " proportional',” as required by their constitution.
But the court held that it could be sustained as a franchise tax; and it was so sustained by the Supreme. Court of the United States as well as by the Supreme Court of the state. The same reasoning which sustained the tax in that case will sustain it in this. The reasoning seems to us sound; and our. conclusion is, that the tax authorized by the act of 1880, c. 249, is a tax upon railroad corporations on account of their franchises, and not upon their real or personal estate; that while it is true that the amount of the tax is measured by the value of a portion *385of the corporate property as well as the corporate franchises, still, it is not a tax upon real or personal estate, within the meaning of the constitution, but a tax upon the powers and privileges of these corporations; and that the tax is one which it was constitutionally competent for the legislature to impose.
Judgment for the State for the sum of eleven thousand dollars, and interest from July 1, 1880.
Appleton, C. J., Barrows, Danforth, Virgin and SymoNds, JJ., concurred.