Court Opinion

ID: 8042184
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:41:30.834623+00
Date Added: 2024-06-11T16:37:21.775860
License: Public Domain

By the Court,
Norcross, C. J.
(after stating the facts):
Section 52 of the general revenue act (Rev. Laws, sec. 3664) provides what defenses may be set up in an action for delinquent taxes. The section reads:
"The defendant may answer, which answer shall be verified: * * * Fifth — Fraud in the assessment; or in failing to comply with the provisions of this act; or that the assessment is out of proportion to and above the actual *526cash value of the property assessed; provided, however, that in such last-mentioned case, where the defense is based upon the ground that the assessment is above the value of the property, the defense shall- only be effectual as to the proportion of the tax based upon such excess of valuation, but in no such case shall an entire assessment be declared void.”
We will assume that the defense interposed (that the tax sought to be recovered in this case is in effect an attempt to impose a tax on interstate commerce and for that reason void) is a legitimate defense to the action.
Three main questions are presented for determination:
First — Is the tax sought to be recovered in whole or in part a tax on interstate commerce?
Second — If not a tax on interstate commerce, but upon property of the appellant corporation within the state, was the assessment made in accordance with law?
Third — If property subject to taxation has been regularly assessed, is the assessment out of proportion to and above the actual cash value of the property?
[1-2] The law relative to taxation of express companies doing both intrastate and interstate business is stated in 7 Cyc. 479, as follows:
" The state may tax the intrastate business of express companies, but a state may not tax the interstate business, either by a levy on the gross receipts of an express company from its interstate business, or by a tax worded to cover companies doing interstate business only, but may tax the property of an express company engaged in interstate business, and may fix the value of such property, either by reference to the whole capital or the gross earnings of the company, or by taxing its intangible property in proportion to mileage in the state compared with total mileage. ”
The case does not present a question of a license or excise tax, and we shall not consider at length authorities dealing with laws, where such taxes have been opposed or have been attempted to be imposed upon, express companies. Suffice it to say that, where such a *527tax has been held to be a tax on interstate commerce or the right to engage in interstate commerce, it has been held violative of the constitution of the United States and void. See Ohio Tax Cases, 232 U. S. 576, 34 Sup. Ct. 372, 58 L. Ed. 737; State v. Northern Express Co., 80 Wash. 309, 141 Pac. 757.
It was held by the Supreme Court of the United States in Adams Express Co. v. Ohio State Auditor, 165 U. S. 194, 17 Sup. Ct. 305, 41 L. Ed. 683, and same case on rehearing, 166 U. S. 185, 16 Sup. Ct. 604, 41 L. Ed. 965 (quoting from the syllabus, 166 U. S.), that:
"It is well settled that no state can interfere with interstate commerce through the imposition of a tax which is, in effect, a tax for the privilege of transacting such commerce; and also that such restriction upon the power of a state does not in the lealst degree abridge its right to tax at their full value all the instrumentalities used for such commerce. The state statutes imposing taxes upon express companies which form the subject of these suits grant no privilege of doing an express business, and contemplate only the assessment and levy of taxes upon the properties of the respective companies situated within the respective states. In the complex civilization of today a large portion of the wealth of a community consists of intangible property, and there is nothing in the nature of things or in the limitations of the federal constitution which restrains a state from taxing such intangible property at its real value. Whenever separate articles of tangible property are joined together, not simply by a unity of ownership, but in a unity of use, there is not unfrequently developed a property, intangible though it may be, which in value exceeds the aggregate of the value of the separate pieces of tangible property. Whatever property is worth for the purposes of income and sale, it is worth for the purposes of taxation; and, if the state comprehends all property in its scheme of taxation, then the good will of an organized and established industry must be recognized as a thing of value, and taxable. The capital stock of a corporation *528and the shares in a joint-stock company represent not only its tangible property, but also its intangible property, including therein, all corporate franchises, and all contracts, privileges, and good will of the concern; and when, as in. the case of the express company,- the tangible property of the corporation is scattered through different states, by means of which its business is transacted in each, the situs of this intangible property is not simply where its home office is, bút is distributed wherever its tangible property is located and its work is done. No finespun theories about situs should interfere to enable these large corporations, whose business is of necessity carried on through many states, from bearing in each state such burden of taxation as a fair distribution of the actual value of their property among those states requires. ”
See, also, Adams Express Co. v. Kentucky, 166 U. S. 171; Wells, Fargo & Co. v. Johnson, 205 Fed. 60.
Since the decisions of the Supreme Court of the United States reported in the 165th and 166th U. S. Reports, cited supra, it has been the settled law in this country that the property of an express company doing both an interstate and intrastate business is in character both tangible and intangible; that such property may be subject to assessment and taxes and that the situs of this intangible property is distributed wherever its tangible, property is located and the work is done.
[3] Counsel for appellant do not, as we understand, contend that a state may not under appropriate laws levy a tax upon the intangible property of an express company, but that the tax sued upon was not a property tax, and, further, that the- State of Nevada had enacted no laws by virtue of which such a tax could be imposed.
Article 10 of the state constitution provides:
"The legislature shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation, for taxation of all property, real, personal and possessory, except mines.and mining claims, * * - * and, also, *529excepting such property as may be exempted by law for municipal, educational, literary, scientific, or other charitable purposes.” (Rev. Laws, sec. 352, as amended, Stats. 1913, p. 106).
Section 5 of the general revenue act (Rev. Laws, sec. 3621) provides:
"All property of every kind and nature whatever, within this state, shall be subject to taxation except:” (Here follows exceptions authorized by the provisions of the constitution, supra.)
Section 6 of the same act (Rev. Laws, sec. 3622) provides:
"The term 'real estate,’when used in this act shall be deemed and taken to mean and include, and it is hereby declared to mean and include * * *; and the same shall be listed under the head 'real estate.’
" The term ' personal property, ’ whenever used in this act, shall be deemed and taken to mean, and it is hereby declared to mean and include * * * all capital loaned, invested, or employed in trade, commerce or business whatsoever; the capital stock of all corporations, * * * companies, associations, ferries, or individuals doing business or having an office within this state; * * * and all property of whatever kind or nature not included in the term 'real estate,’ as said term is defined in this act. * * *”
It is clear from the foregoing excerpts, we think, that the constitution authorizes and the statute directs that all property of every kind, character, and nature not specifically exempted, is subject to taxation. The fact that the legislature, at the time of the adoption of the statute, supra, may not have indulged in the hope even that property of the appellant company, other than that visible to the naked eye, might be subject to taxation, nevertheless, it used language clearly evincing an intent to cover every possible contingency and to exclude from the burden of taxation only such property as was specifically exempted.
[4] Itis further contended, however, that the legislature *530has failed to adopt any rule or regulation governing the manner of determining the value of the intangible property of the appellant corporation, and without such rule or regulation having been prescribed by the legislature the revenue officers of the state are unauthorized to make an assessment. We think this objection sufficiently answered by the decision of this court in State v. Central Pacific R. R. Co., 10 Nev. 47, 63. This court, speaking through Beatty, J., said:
"No principle of valuation of property for purposes of taxation. is prescribed by the laws of this state. The statutes define the different species of property, and provide that every species shall be assessed at its 'actual cash value.’ But as to the mode of ascertaining the cash value our law is silent. No subsidiary principles of valuation are laid down to guide the owner in making his statement in those cases where he is required to specify values; and the assessor is left equally unrestricted in making his estimates. It follows that owners and assessors must be guided by those general principles which everywhere determine the valuation of property, independently of statutory rules. ”
See, also, Commercial E. C. & P. Co. v. Judson, 21 Wash. 49, 57 L. R. A. 78.
The property, tangible and intangible, of the appellant corporation being subject to taxation, was it duly assessed and taxed?
[5-6] By section 8 of the general revenue law (Rev. Laws, sec. 3624) it is provided:
" Between the date of the levy of taxes and the first Monday of September in each year, the county assessor * * * shall ascertain, by diligent inquiry and examination, all property in his county, real or personal, subject to taxation, and also the names of all persons, corporations, associations, companies, or firms, owning the same; and he shall then determine the true cash value of all such property, and he-shall then list and assess the same to the person, firm, corporation, association, or company, *531owing [owning] it. For the purpose of enabling the assessor to make such assessments, he shall demand from each person and firm, and from the president, cashier, treasurer, or managing agent of each corporation, association, or company, including all banking institutions, associations, or firms within his county, a statement under oath or affirmation of all the real estate or personal property within the county, owned or- claimed by such persons, firm, corporation, association, or company.” * * *
Section 1 of an act entitled "An act to provide for a more uniform valuation and assessment of property in this state,” approved March 16, 1901 (Rev. Laws, sec. 3797), provides:
"The county assessors of the several counties of this state shall meet for a period not exceeding ten days in the office of the governor at Carson City, Nevada, on the second Monday in January of each year, and shall at such meetings establish a valuation through the state of all railroads and rolling stock of such railroads, of all telegraph and telephone lines, of all electric-light and power lines, of all cattle and sheep, and upon all other kinds of property which in the judgment of said assessors can be valued and assessed more uniformly by said assessors, acting collectively, than by the several county assessors acting separately; provided, that in fixing such valuation the location and situation óf such property shall be considered; and, provided further, that nothing herein shall be so construed as to impair the right of the board of equalization of any county to equalize taxes on all property, the valuation of which has not been fixed at the annual meeting of the county assessors as provided in this section; but the said county board of equalization shall not have the power to equalize any property upon which a valuation has been placed by the said board of county assessors; provided, any taxpayer under the provisions of this act shall not be deprived of any remedy or redress in a court of law relating to the payment of taxes.”
*532Section 4 of said last-mentioned act (Rev. Laws, sec. 3800) provides:
" The valuation fixed at such annual meetings shall be the actual cash value of all such property as may be designated, as now provided by law, taking into consideration the locality of such property, and the assessors of the several counties shall assess and enter upon the assessment rolls of their respective counties all such property at the valuation designated by such meeting of county assessors, and shall -fix the value and assess all property not so valued at said meeting in the manner now provided by law.”
It is contended that the provisions of the statute (Rev. Laws, sec. 3797, supra), empowering the state board of assessors to " establish a valuation * * * upon all other kinds of property which in the judgment of said assessors can be valued and assessed more uniformly by the said assessors, acting collectively, than by the several county assessors acting separately, ” is a void attempt to delegate legislative power.
Counsel for appellant in their brief say:
"The legislature cannot leave the question to the state board of assessors whether or not express companies shall be taxed or shall escape taxation, yet this is what the legislature has done, if the contention of plaintiff is correct. ”
We do not understand plaintiff to make any such contention, but it is clear that the statute in question does not leave to thé discretion of the state board of assessors whether the property of express companies, or any other property subject to taxation, shall or shall not be taxed. If this were the statute, it would be void; but the revenue statutes require all property, except that specifically exempted, to be assessed either by the state board of assessors or by the county assessors.
Cooley, in his work on Taxation, says:
"We conceive that the legislature must, in every instance, prescribe the rule under which taxation may be laid; it must originate the authority under which, after due proceedings, the tax gatherer demands the *533contribution; but it need hot prescribe all the details of action, or even fix with precision the sum to be raised or all the particulars of its expenditure. If the rule is prescribed which, in its administration, works out the result, that is sufficient; but to refer the making of the rule to another authority would be in excess of legislative power. An illustration or two may possibly sufficiently explain the principle. The legislature, with the utmost propriety, may provide for a court of claims or a state board of audit, whose adjudications against the state shall be final upon it, and may direct that the amounts awarded shall go into the general levy for the year. Here is a rule to be properly worked out by a proper agency. A like provision for the adjustment of claims against counties, cities, and townships may also be made. A fund for contingent expenses may be put at the disposal of the executive or of other state officers, to be used for public purposes not previously enumerated in detail by the legislature. But to leave to a court of claims or any state officer or board the power to determine whether a tax should be laid for the current year, or at what rate, or upon what property, or how it should be collected, and whether lands should be sold or forfeited for its satisfaction-all this prescribes no rule and originates no authority; it merely attempts to empower some other tribunal to prescribe a rule and set in motion the tax machinery. And this is clearly incompetent. The legislature must make the law, but it may prescribe its own regulations regarding the ministerial agents that are to execute it. ”
The valuation of certain property must be determined by the state board, and the valuation of all property not so determined by it must be fixed by the several county assessors acting separately. The only discretion reposed in the state board is to determine whether other kinds of property than those enumerated can be valued and assessed more uniformly by the board than by the county assessors acting separately. The purpose of the assessment, whether made by the board or the individual assessors, is to determine the cash value of the property, *534and this purpose is declared by the legislature and cannot be delegated.
As said by this court, in Sawyer v. Dooley, 21 Nev. 397, 32 Pac. 437:
"All property, whether assessed by the board or by the county assessors, must be assessed at its actual cash value, and there is no reason why this value may not be as accurately determined by several different men and boards as by one. In fact, it might sometimes be done much better, as one man, although an expert upon the value of horses and farms, might know but little of railroads or other property. If not, this would be an equally good argument against the system of separate county assessors and boards, and require all the property in the state to be assessed and equalized by one man or one board. All that is required is a uniformity of taxes, and not a uniformity in the manner of assessing or collecting them.”
Ruling Case Law says:
"The difficulty in determining what powers may or may not be delegated seems in part to be due to a confusion between strictly legislative powers coming within the constitutional limitation, and other powers, which, although at times exercised by the legislature, are not strictly legislative and may be used in proper cases by persons belonging to the other departments of government, hence it is said that the rule that legislative powers cannot be delegated must be understood as being applicable only to cases where the discretion is essentially legislative. * * * ” (6 R. C. L. 165.)
Power is delegated to the state board of assessors to determine whether certain property, other than the classes specifically mentioned, may be assessed more uniformly by the board than by the several assessors acting independently. The purpose of this delegated power, as expressed by the statute, is to carry out the mandate of the constitution and statutes for uniformity and equality in assessment and taxation of all property. The board is given no power to discriminate in favor or against any class of *535property. It may in certain cases take from the county assessor the power to determine the valuation to be placed on a certain class of property, in which case the assessor is required to enter the property on the tax roll at the valuation fixed by the state board, but, as before stated, the statutory requirement as to cash valuation applies, whether the valuation is made by the board or the individual assessor. While the question is not entirely free from doubt, it is not clear that there is in this statute a delegation of strictly legislative power, and under the well-settled rule doubts must be resolved in favor of the statute.
[7] Assuming that no notice was given appellant that the state board of assessors would assess its property, we are of the opinion that the assessment would not for that reason be invalid. The statute makes no provision for such notice, and where notice is not required by statute none need be given. (37 Cyc. 1019, 1045.)
[8-9] Are the taxes involved in the action within the prohibition of a tax on interstate commerce? If it is a tax on the property of the appellant within the state that is sought to be recovered, then the tax is not invalid.
The language used by the assessor in the description appearing upon the assessment roll, it must be conceded, furnishes room for controversy as to whether property subject to taxation has in fact been assessed to appellant.
Counsel for appellant, in their claim that the language used in the description by the assessor rendered the assessment void, suggest that if the description had been: "The property of Wells, Fargo & Company, situated in Humboldt County, as united in ownership and use for express business, ” it would have been in accordance with what the Supreme Court of the United States in 166 U. S., supra, held was property subject to taxation. It must be admitted that the suggested description would have been better and, doubtless, would have obviated the serious question here presented. It does not follow, however, that, because the most apt language was not used, *536the description is so faulty as to render the assessment void.
Under the provisions of section 8 of the general revenue law (Rev. Laws, sec. 3624, supra) it was the duty of the assessor to demand of appellant and of appellant to furnish a statement of its property subject to assessment in Humboldt County. In the absence of showing to the contrary, it will be presumed that the officer performed his duty. It does not appear that the appellant furnished any other or different description of its property. It had property subject to taxation in Humboldt County as defined in 166 U. S., supra. It should have furnished a statement of this property. It is denied, in the reply to defendant’s answer, that the assessor intended to or did levy a tax on appellant’s right to engage in interstate commerce.
From the testimony of the assessor of Humboldt County given at the trial we quote the following:
"Q. You said you are familiar with the property; all you know about it is what those words convey to you, is it not, Mr. Leonard? A. Yes, sir.
"Q. You never saw the property? A. As much as anybody can see it.
"Q. Well, did you ever see it? A. I have seen part of the business.
"Q. Yes, but that is about all any one can know about the property — the description that is contained therein? A. Yes, sir.
" Q. You did not see that property in the county? A. It is intangible.”
The court refused to make a finding or to amend the findings upon the request of counsel for defendant "to the effect that the assessment and taxes described in the complaint were made, levied, and imposed upon the right of defendant to conduct and transact its interstate business over and along the railroad track and railway lines and systems named in said complaint.”
If we look to the action of the state board of assessors, we find that it had under consideration the assessment *537and valuation of appellant’s property as held subject to taxation by the decision of the Supreme Court of the United States in 166 U. S., supra. The motion made and carried by the state board fixing a mileage valuation on the property of appellant was not very specific, so far as description of the property to be assessed was concerned, but the' purpose of the board to assess property subject to assessment is quite manifest from its whole proceedings. It is, however, alleged in defendant’s answer, quoted supra, "that * * * said board assessed this defendant and valued the property used by this defendant at the rate * * * . ”
Cyc., under the heading,"Necessity and Sufficiency of Description,” says:
"It is essential to the validity of the assessment list and of all proceedings founded on it that it should contain a description of all the property intended to be assessed; but minute particularity is not required, any description being sufficient which identifies the particular property so clearly that the owner cannot be misled. And a detailed description will be more easily dispensed with where the assessor is unable to ascertain the exact nature of the property. It is not necessary to enumerate every item of personal property, but it has been held that the different classes mentioned in the statute should be separately listed, although by the force of some statutes, it is now held sufficient to list all such property under the general description of 'personal property’; and an assessment even under such a heading as 'miscellany’ may be considered sufficient if the owner himself knows exactly what is meant.” (37 Cyc. p. 1051.)
A case presenting a question analogous to the one under consideration came before the Supreme Court of California in 1911. (Western Union Telegraph Co. v. Los Angeles County, 160 Cal. 124, 116 Pac. 564.) The description of the property assessed in the case last mentioned, as stated in the opinion, read:
" ' Right to occupy the streets of the city of Los Angeles, ’ without other words of description or identification, the *538valuation thereof for purposes of assessment being placed at $50,000. ”
From the opinion of the court in that case by Angellotti, J., we further quote the following:
"By Western Union Tel. Co. v. Hopkins (L. A. No. 2445), 160 Cal. 106, 116 Pac. 557, it is decided that plaintiff had at the time of this assessment a right in the nature of a franchise in the streets of the city of Los Angeles, viz, the right to the exclusive occupation without compensation of portions thereof used for its poles and wires and underground conduit, derived from and held under section 536 of the civil code, which constituted no part of its federal franchise, and which was taxable for state and county purposes in the county of Los Angeles. If the assessment in the case at bar was exclusively of that right, it follows from the views announced in that case that the tax was valid. The only difficulty in this case arises from the wording of the description in the assessment. It is admitted that plaintiff has certain rights in regard to the streets of the city of Los Angeles by virtue of its federal franchise acquired under act of July 24, 1866, c. 230, 14 Stat. 221 (U. S. Comp. St. 1913, secs. 10072-10077), and, of course, that franchise cannot be assessed by state, county, or municipality. It is claimed by plaintiff that its federal franchise is included in this assessment, and, if so included, that the entire assessment must fall as illegal, because the values of the two rights, federal and state, are so blended together that the unlawful part cannot be separated from the lawful part. If the first of these claims is well founded, the second necessarily follows. (California v. C. P. R. R. Co., 127 U. S. 1, 29, 45, 8 Sup. Ct. 1073, 32 L. Ed. 150.) Plaintiff alleged in its complaint that the assessment was upon its federal franchise. By its answer defendant fully denied the allegations in this behalf, denying that the assessment was intended to or did impose any burden or tax on any federal franchise, and alleging that the only franchise or right assessed was that derived by plaintiff *539from the State of California, under section 536 of the civil code. No evidence was introduced by either side on this issue, the case being submitted for decision upon the pleadings and upon a stipulation as to the facts, which stipulation is silent upon this proposition. There were no findings of fact. We are satisfied that it must here be held that the assessment was limited to rights in the streets of Los Angeles derived by plaintiff from the State of California, and not covered by the federal franchise, and that the description was not so imperfect as to invalidate the assessment. ”
It is our conclusion that the description, in the light of the record, is not so imperfect as to invalidate the assessment.
[10-11] Is an assessment of appellant’s personal property, tangible and intangible inclusive, upon a mileage basis of $300 per mile of the lines of railroad over which appellant .conducts its business in this state, excessive? The burden of establishing excessive valuation was upon the defendant. (Rev. Laws, sec. 3664, supra.) Assuming that the net operative earnings of appellant were substantially the same in 1910 as in 1908, which appears to have been conceded, we have the sum of $3,115,026.46 as the net operative revenue derived from the tangible and intangible property combined in its business. This is a 10 per cent net earning on property of the value of over $31,000,000. Taking the entire operative mileage of the company, 65,474 miles, including nearly 15,000 miles of steamship lines, and we have a net earning of approximately $48 per mile. Even if we exclude, from a capitalization of the net earnings of the company upon a 10 per cent basis, the value of all the property of the company situated outside the State of Nevada and used in its operative business, to wit, $4,251,939.16, the figures would still show a net earning of over $40 per mile for the entire system, or a valuation of $400 per mile for the system as a whole.
In taking 10 per cent as the basis of capitalization of *540the net earnings of the company, we do not wish to be understood that so high a rate would be entirely just to the state, but such rate is used for the purpose of showing that the valuation placed upon appellant’s property was well within a capitalization determined from an assumed high rate of income.
[12] Whether the system of determining the valuation of appellant’s property, applied by the state board of assessors, was correct or not, it does not appear that it operated to impose an excessive valuation. The fact that erroneous methods may in good faith have been used to determine valuations is immaterial, we think, if an excessive valuation did not result therefrom.
In taking the total operative mileage of the company in making the above estimate of value, we do not wish to be understood as holding that the ocean steamship mileage should be included. For the present we express no opinion as to whether that mileage .should be considered. Assuming that it ought not to be included, and assuming 8 per cent to be a fair rate of interest upon which to estimate the value of appellant’s property subject to assessment upon a mileage basis, we would have resulting a valuation in excess of $750 per operative mile.
Appellant contends that the net income of the company from its- intrastate business in Nevada for the year 1910 was only $6,225.61, and, if any basis of capitalization is taken to determine the value of property within the state, it should be on this sum. This calculation leaves out entirely, as a means of determining the value of the tangible and intangible property of the company within the state, net receipts from interstate business, and does not take into consideration at all the net operative receipts of the entire system, and is not a fair means of determining valuation as pointed out by the Supreme Court of the United States in the 165th and 166th U. S. Reports, supra.
Judgment affirmed.