People ex rel. New York Cent. & H.R.R. Co. v. Woodbury

• Decision Date: 17 October 1911
• Citation: 203 N.Y. 167,96 N.E. 431
• Court: New York Court of Appeals Court of Appeals
• Parties: PEOPLE ex rel. NEW YORK CENT. & H. R. R. CO. v. WOODBURY et al.

203 N.Y. 167

96 N.E. 431

PEOPLE ex rel. NEW YORK CENT. & H. R. R. CO.

v.WOODBURY et al.

Court of Appeals of New York.

Oct. 17, 1911.

Appeal from Supreme Court, Appellate Division, Third Department.

Certiorari by the People, on the relation of the New York Central & Hudson River Railroad Company, against Egburt E. Woodbury and others, constituting the State Board of Tax Commissioners, and the City of Buffalo. From an order of the Appellate Division (129 N. Y. Supp. 1141), affirming an order of the Special Term, relator appeals. Modified and affirmed.

Alfred L. Becker, Alexander S. Lyman, and Lester F. Stearns, for appellant.

Thomas Carmody, Philip A. Laing, and George E. Pierce, for respondent tax commissioners.

Clark H. Hammond, for respondent City of Buffalo.

Alfred A. Gardner, for interveners Long Island R. Co. and others.

VANN, J.

By this proceeding the appellant, as relator, sought to review by certiorari certain special franchise taxes assessed upon its occupation of streets and crossings in the city of Buffalo for the year 1908. One hundred and thirty-nine separate assessments were involved, but 17 of them have dropped out of sight, so far as this review is concerned, owing to the stipulations of the parties, by which they were canceled and annulled.

A return was filed by the board of tax commissioners and, under an order of the court at Special Term, an amended return. The city of Buffalo, having been allowed to intervene, also filed a return, and upon the argument of this appeal certain interveners, who had not been made parties of record, were permitted to file briefs. The issues were referred to a referee to report the facts with his opinion, a trial was had, much documentary and some oral evidence received, findings made, an elaborate opinion written, and the conclusions reached that the assessments should be annulled, because the tax law (Laws 1896, c. 908) does not authorize the taxation of steam railroad crossings. A multitude of findings of fact were regarded as necessary, because each assessment stood by itself, but most of the findings are typical, involving the ordinary street crossing at grade, the overhead crossing, made pursuant to the action of grade crossing commissioners, and the occupation of a street lengthwise for a certain distance.

Upon the motion to confirm the report, a different view was taken, both of the law and the facts, by the Supreme Court at Special Term. Mr. Justice Chester did not adopt the facts as found by the referee, but, making findings for himself, overruled all the contentions of the relator, except that he adjusted the tax on the basis of 76 per cent, according to the actual valuation of other property in the city of Buffalo; the valuation made by the tax commissioners having been based on the actual value. His able opinion leaves comparatively little to be said upon the main questions involved .

Upon appeal to the Appellate Division, the order of the Special Term was affirmed, all the Justices concurring, except two, who dissented only in part, as the record states, ‘being of the opinion that the relator is not assessable for street occupation where the street was opened and extended across the right of way, the fee of which had been purchased and conveyed to the relator before the street was opened.’

The main contention of the appellant is that the statute authorizing the taxation of special franchises does not apply to steam surface railroads, because their crossings are not land according to the provisions of the tax law. The history of legislation relating to land as the subject of taxation shows many changes, made to conform to the progress of invention, resulting is new structures, on, over, and under land, which were not regarded as land until made such by statute. The original definition of land, as made in 1827, included the land itself, buildings erected and trees growing thereon, and all mines, minerals, etc., except mines belonging to the state. 1 R. S. 387, § 2. Under this statute, it was held that iron mains laid beneath the surface of streets to conduct illuminating gas to consumers, not being erected upon or affixed to land owned by the gas company, could not be regarded as real estate for the purpose of taxation. People ex rel. Citizens' Gaslight Company of Brooklyn v. Board of Assessors of the City of Brooklyn, 39 N. Y. 81, 87.

This decision doubtless led to the change made in 1881, whereby the definition of land was expanded in several particulars, and, among others, so as to include ‘all surface, underground or elevated railroads; all railroad structures, substructures, and superstructures, tracks and the iron thereon; branches, switches and other fixtures permitted or authorized to be made, laid or placed in, upon, above or under any public or private road, street or grounds; all mains, pipes and tanks laid or placed in, upon, above or under any public or private street or place,’ etc. L. 1881, c. 293, § 2. In 1896 the definition was further extended so as to include all supports and inclosures for electrical conductors and other appurtenances, and to agencies for conducting steam, heat, water, oil, electricity, etc. L. 1896, c. 908, § 3.

In 1899 the tax law was so amended as to include special franchises in the definition of land. The essential change was made by adding to the words ‘all surface, underground or elevated railroads,’ the following: ‘Including the value of all franchises, rights or permission to construct, maintain or operate the same in, under, above, on or through, streets, highways or public places.’ L. 1899, c. 712, § 1.

It is claimed by the appellant, and the referee so held, that the word ‘surface,’ as used in the statute of 1899, refers exclusively to street railroads operated by horses or electricity, and running from point to point within a city or village, and that it does not include railroads operated by steam, and running across the state from one terminal point to another. It must be conceded that the statute in this form was open to such construction, which, under the rule of ejusdem generis, would not be unreasonable; still steam railroads are operated upon the surface the same as street railroads, and the definition includes all surface roads. If the object of the Legislature was to describe railroads with reference to their location, no more appropriate word could have been used than the word ‘surface’ to describe all railroads located on the surface of the ground. Every railroad with reference to its location must fall within one of three classes: Those constructed on the surface, those underground, and those elevated above the ground. A road with its tracks depressed somewhat in an excavation, or elevated on an embankment, so as to make a good grade, is a surface road, because it is on the surface as changed for gradient purposes. If the intention was to confine the statute to street surface roads, why was the word ‘street,’ not used, as it had been in the Constitution, as amended in 1874, and in several acts of the Legislature, including the act of 1884, relating to ‘street surface railroads,’ and the general railroad act of 1890? Const. art. 3, § 18; L. 1884, c. 252; L. 1890, c. 565, art. 4; L. 1897, c. 415, § 5. It may be observed that, in addition to the description thus adopted in the statutes cited, the phrases ‘surface railroads not operated by steam’ and ‘steam surface railroads' were also in general use. L. 1896, c. 908, §§ 184, 185 and 194; L. 1897, c. 754, § 1; L. 1898, c. 80, § 1; L. 1898, c. 520, § 1.

Under the statute as amended in 1899, the state board of tax commissioners at once assumed jurisdiction and assessed steam railroad crossings by the thousand. In 1900 a case arose where a steam railroad had been assessed for the privilege of crossing six public highways at grade, and it was contended that such highway crossings did not constitute special franchises within the meaning of the statute, and were not taxable as such. The question was argued by distinguished counsel before Justice Kenefick, who wrote an elaborate and well-considered opinion, which was promptly published, sustaining the tax, and holding that the language of the franchise tax law included the crossings made by steam railroads over public streets. New York, Lackawanna & Western Ry. Co. v. Roll, 32 Misc. Rep. 321,66 N. Y. Supp. 748. That decision was not appealed from, but stood unchallenged for six or seven years. Similar assessments were made year after year in a vast number of cases affecting all the steam railroads in the state, and as a rule they acquiesced and paid the taxes, although some attacked the statute on other grounds. In 1900 the state board of tax commissioners, when reporting to the Legislature, recommended that special franchises should not include the crossing of a street, unless it was of a certain length, ‘because the taxes resulting from purely highway crossing valuations are not adequate to the cost to the state of making the same.’ and because the ‘identification of many highway crossings is impracticable.’ The Governor called the attention of the Legislature to this recommendation in his annual message. The Legislature responded promptly by adding a new subdivision, which provided that ‘the term ‘special franchise’ shall not be deemed to include the crossing of a street, highway or public place where such crossing is not at the intersection of another street or highway, unless such crossing shall be at other than right angles for a distance of not less than two hundred and fifty feet, in which case the whole of such crossing shall be deemed a special franchise.' L. 1901, c. 490, § 1. This amendment, especially when read in connection with the recommendation, indicates that the crossings referred to were in the country, and hence belonged mainly to steam railroads. The tax commissioners thereupon assessed on this basis by including all crossings not thus...