Court Opinion

ID: 3544000
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:55:28.759026+00
Date Added: 2024-06-11T15:06:17.617393
License: Public Domain

The defendant, a foreign corporation and absent from this state nevertheless owns a large number of freight cars which are *Page 203 
habitually used in the transportation of commodities over the various railroads in the state of Montana. The personal property so used is subject to taxation by the state and the state's power to so tax is an essential attribute of sovereignty. The Constitution of Montana provides: "The power to tax corporations or corporate property shall never be relinquished or suspended, and all corporations in this state, or doing business therein, shall be subject to taxation for state, county, school, municipal and other purposes, on real and personal property owned or used by them and not by this constitution exempted from taxation." Const. Article XII, section 7. By no provision of the Constitution is the property of the defendant corporation "exempted from taxation," hence it must be and is subject to taxation.
In 51 Am. Jur., title "Taxation," the author says: "It is everywhere agreed that neither the Fourteenth Amendment to the Federal Constitution nor the equality and uniformity requirements of the state constitutions prohibit the making of classifications in state legislation relating to taxation. The power of a state to make reasonable and natural classifications for purposes of taxation, it has been said, is clear and not questioned. Such classifications may be made with respect to the subjects of taxation generally, the kinds of property to be taxed, the rates to be levied or the amounts to be raised, or the methods of assessment, valuation, and collection." Section 173, p. 230.
"Legislative classifications in tax matters are presumptively valid, the burden being on the challenger to prove that such a classification does not rest upon a reasonable basis, and will not be disturbed by the judiciary in the absence of unreasonable discriminatory, or arbitrary action." Section 174, p. 234.
"The rule requiring equality of taxation within the same class does not prevent subclassifications in taxing statutes, it having been asserted in this connection that the legislature is not bound to tax every member of a class or none, but may make distinctions of degree having a rational basis." Section 179, p. 240.
"It has been frequently recognized that for many purposes *Page 204 
and under most circumstances, railroad companies may be treated as a separate class in tax legislation. Such separate classification has been justified variously upon the grounds of the inherent nature and uses of railroad property, the dissimilarity in use and value of railroad property from the mass of other property and its continuous extent through different localities, the distinctive characteristics and functions of such concerns, and the many respects in which railroads differ from other properties. * * *
"The property of separate classification for tax purposes of other particular kinds of public utilities, such as express companies, gas companies, street railroads, and telephone, telegraph, palace car, sleeping car, dining car, and fast freight companies, is generally recognized." Section 201, pp. 260-262.
"The fact that property is used or employed in interstate or foreign commerce does not of itself render it immune or exempt from nondiscriminatory local taxation. * * * It is not the character of the property that makes it subject to such a tax, but the fact that the property has its situs within the state and that the owner should give appropriate support to the government which protects it." Section 206, pp. 267, 268.
"The power of a state to tax property used for the purposes of interstate commerce and having a situs within its limits is not confined to taxation of specific articles of property, but may be exercised in any fair and reasonable manner. * * * in taxing property employed in interstate or foreign commerce, where the amount or particular items are variable or shifting, the tax may be laid on the average amount used in the state." Section 212, pp. 273, 274.
The absentee corporation property owner who has thus far escaped the tax collector, and who, so far as this record shows, has never paid a cent of taxes to the state of Montana, has no cause to complain of any discrimination against it. The resident taxpayers of this state, however, from whom the state collects year after year and who thus give support to their government, are the ones who, in my judgment, have just cause to complain *Page 205 
of discrimination, for they as resident property owners pay while the non-resident absentee owner is rendered immune from taxation on the property which, habitually, it uses in the state and which therefore has a situs here for taxation purposes.
Whether the statute under consideration unconstitutionally discriminates is to be determined, not by the ostensible reach of its language but by its practical operation, and in the latter I find no such discrimination. I concur in the foregoing dissent. I think the statute, the tax, and the decision of the trial court should each and all be upheld.