Court Opinion

ID: 3892040
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:22:22.579692+00
Date Added: 2024-06-11T13:47:56.922460
License: Public Domain

I find myself in accord with the views expressed by Mr. Justice McKINNEY in his dissenting opinion. Whether because of "inadequate time . . . to give the necessary investigation," as expressed in the opinion handed down by the Board of Equalization, or because of an under estimate by the members of that Board of the extent and nature of the duties which I understand the law imposes upon them in the making of railroad assessments, as distinguished from assessments of real estate generally, I am satisfied that errors appear.
I fully appreciate that the Circuit Court and this court are restricted to the correction of errors involving excess *Page 270 
of jurisdiction, illegality or fraud, without power to substitute our opinion as to value for that of the assessing tribunal, but no such restriction applies to the Board of Equalization. The Board sits as a quasi-court with de novo jurisdiction, with the obligation to render judgments of appraisal of value for taxation upon an independent investigation and examination into all the evidence. It is this judgment, so arrived at and exercised independently, which is made "conclusive and final."
It seems to me quite obvious from the recitals of the brief opinion filed, that the judgment fixing the assessment in this case was not so arrived at, but was rested largely upon two matters referred to in the opinion, (1) statements, or conclusions, in the report of the Railroad Commission, which, says the opinion, "we assume . . . are true" (that is, have adopted without independent examination and verification); and (2) the record of assessments of this Railroad for previous years, set out in the opinion.
I realize the difficulty of the task which I understand the law imposes on the Board of Equalization, composed, as it is, of gentlemen whose duties incident to their several highly important offices are so exacting as to leave them little time for the discharge of their extra "ex officio" duties as members of this Board. To meet this situation, however, the legislature has expressly provided that the Board may employ their own experts and accountants and bring in evidence from various sources of different kinds, including such as may be in possession of the Interstate Commerce Commission, all in order that the Board of Equalization may fit itself to make its own finding and appraisal of values on which to base its assessments. Now it does not appear that any such course was followed, but, as already suggested, the Board *Page 271 
assumed the correctness of the conclusions reported by the Railroad Commission and adopted them in toto. However competent and capable the distinguished gentlemen composing the Railroad Commission are, the duty and responsibility is imposed, not upon them, but upon the Board of Equalization, of rendering a judgment, which shall be "final and conclusive," after making for itself the investigation necessary to enable it to fix for itself these values.
It was exceedingly important to the petitioner in this case that the broad de novo jurisdictional powers of the Board of Equalization should be fully and carefully exercised, — that "adequate time" should be taken for "the necessary investigation" that the Board might "reach an equitable conclusion."
In addition to, and in line with the general criticism which I have felt constrained to make of the inadequacy of the examination apparently made by the Board of Equalization, in the exercise of its independent and final jurisdiction, an examination of the pertinent records convinces me that several specific errors appear going to the legality of the judgment of the Board of Equalization before us for review:
1. Reference has been made to the consideration given assessments of this Railway's properties for former years. One-third of the brief opinion of the Board is devoted to a comparative analysis of these former assessments which are quite apparently given predominant consideration. I find no authority for thus using assessments made in former years as a basis of value. The petition shows, and common knowledge of affairs supports, that radical and fundamental changes have taken place in the last few years in the conditions which basically affect the value of railroads, so that assessments *Page 272 
of former years furnish today no fair controlling criteria for appraisal of this particular, and peculiar class of property. For example, what is known as the "franchise" of a railroad, formerly a highly important element of value, has today greatly less value. A franchise is a special privilege, originally granted to a subject by the Crown, now in this country by the Government. It implies profitable advantages, not enjoyed generally, or competitively. A common incident of a franchise is a degree of monopoly. The grant to railroads carries the right of eminent domain, for instance. Inherent, therefore, in the franchise of a railroad, were former advantages which yielded automatically more or less large profits, not to be generally enjoyed. Now, this is changed, and it must be conceded — all men know it — that practically all of this element of value, formerly the dominant incident of the franchise, has been wiped out, in large measure by the policies and contributions to competition of the Government itself. This competition in transportation of passengers and freight, graphically set forth in the proof in the record, has apparently not only wiped out the major elements of value of the franchise, but has diminished greatly the "use" value of the railroads as a whole, and calls for at present a thorough going investigation of basic elements of value applicable to present day conditions, which it is apparent the Board of Equalization, for reasons indicated, did not undertake, or have opportunity, to make.
2. It is complained for petitioner that the Board of Equalization refused to regard the net earnings as an important element in fixing value. Attention is called to the argument before the Board of Equalization of Mr. Hendley (expert and spokesman for the Railroad Commission) that "not once in the law do we find the word *Page 273 
`net;'" that "the elements principally are the `gross' receipts, the value of the stocks and bonds and the value of the corporate property;" and in commenting on the assessment made by the Railroad Commission, the opinion of the Board of Equalization says that it was the "gross receipts" which were considered. While it is true that in Code, Section 1526, the expression "gross receipts" is used, we think it clear that the law as a whole contemplates that the operating expenses shall be considered in the same connection, thus arriving at the "net." The language of this section as a whole so requires, calling, as it does, for statements and schedules and other evidence as a basis for fixing the values. Also, Section 1509, setting out more specifically the information to be laid before and considered in making the assessment, expressly couples together the gross receipts and the expenses.
3. I think the record as a whole indicates that, contrary to the law applicable, certain intangibles of considerable amount, non-taxable under what is known as the Hall income tax law, have been taken into account in fixing the valuation arrived at as a whole. If this is so, then the assessment has to this extent, certainly, been illegally arrived at. The brief opinion is silent on this question, much stressed by petitioner, but it does appear that Mr. Hendley, the official spokesman for the Railroad Commission, in presenting the case to the Board of Equalization, did specifically call attention to the fact that the Railway held these valuables assets and this item was thus plainly brought to the attention of the Board in support of the assessment figures as reported by the Railroad Commission. It seems to me that it may be fairly assumed that these items were taken into account in fixing the assessment. In arguing before the Board *Page 274 
of Equalization for its adoption of the assessment figures reported by the Railroad Commission, Mr. Hendley, above mentioned, said, "The N.C.  St. L. Railway unlike other railroads have a nice cash surplus on hand. Its financial set up is good. On January 1 of this year they had on hand cash and non-taxable Federal bonds and notes in the amount of $3,569,801.00 to which should be added the $140,000.00 earned since January, 1938." The inference seems plain that these elements showing the Railway's "financial set up is good" were considered in appraising the corporations properties as a whole — otherwise why mention them? Commenting on this matter, the majority opinion says, "The securities were considered by the Commission merely as reflecting on the present financial condition of the Railway." Obviously, such consideration reflected an increased value and thus served to bolster up the assessment as a whole.
4. Reference has been made to apparent reliance on assessments of former years. It is shown that 38.96 miles of main track of petitioner's railroad, formerly assessed at $590,292.95, had been abandoned, with the approval of the Interstate Commerce Commission. This reduced the total track mileage in Tennessee from 838.98 to 800.02 miles, yet the value fixed for assessment here is identical with that made in the greater mileage for 1936, being, in both instances, $12,926,944. This seems to demonstrate that the assessment for this previous year was not only considered, but adopted.
5. The evidence appears to show that 3.65 miles of track, described as West Nashville Branch, is an industrial or side track and that this trackage has been included in the assessment as returned as main track mileage. *Page 275 
Without further elaboration, I concur with Mr. Justice McKINNEY that justice demands that the case should be remanded to the Board of Equalization for a re-determination of the assessment.