Illinois Central Railroad Company of the State of Illinois v. Commonwealth of Kentucky

• Citation: 54 L.Ed. 1147,218 U.S. 551,31 S.Ct. 95
• Decision Date: 05 December 1910
• Docket Number: No. 16,16
• Parties: ILLINOIS CENTRAL RAILROAD COMPANY OF THE STATE OF ILLINOIS, Plff. in Err., v. COMMONWEALTH OF KENTUCKY
• Court: United States Supreme Court

218 U.S. 551

31 S.Ct. 95

54 L.Ed. 1147

ILLINOIS CENTRAL RAILROAD COMPANY OF THE STATE OF ILLINOIS, Plff. in Err.,

v COMMONWEALTH OF KENTUCKY.

No. 16.

Argued October 26 and 27, 1910.

Decided December 5, 1910.

Messrs. Edmund F. Trabue Blewett Lee, John C. Doolan, and Attilla Cox, Jr., for plaintiff in error.

[Argument of Counsel from pages 552-555 intentionally omitted] Messrs. T. L. Edelen, James Breathitt, Robert B. Franklin, and Clem J. Whittemore for defendant in error.

Mr. Justice Hughes delivered the opinion of the court:

The commonwealth of Kentucky recovered judgment in this suit against the Illinois Central Railroad Company for the amount of the tax, for the year 1897, upon the franchise formerly belonging to the Chesapeake, Ohio, & Southwestern Railroad Company. The recovery was based upon the fact that the Illinois Central Railroad Company was at the time to which the tax related, in possession of the railroad, and was operating it under a power of attorney from the purchaser at a judicial sale, and had made the report which was required by the statute relating to the taxation of franchises. The judgment was affirmed by the court of appeals of Kentucky. 128 Ky. 268, 108 S. W. 245. The Illinois Central Company petitioned for a rehearing, and presented the Federal questions now urged under the 14th Amendment of the Constitution of the United States. The court entertained the petition and extended its opinion, holding that no right of the appellant under the 14th Amendment had been violated by the decision. Thereupon this writ of error was brought, and, as the state court passed upon the Federal questions, this court has jurisdiction. Mallett v. North Carolina, 181 U. S. 589, 45 L. ed. 1015, 21 Sup. Ct. Rep. 730, 15 Am. Crim. Rep. 241; Leigh v. Green, 193 U. S. 85, 48 L. ed. 626, 24 Sup. Ct. Rep. 390.

The validity of the statutes of Kentucky providing for the taxation of franchises is not assailed, and nothing is shown which would open to dispute the taxable character of the particular franchise here involved. The plaintiff in error, the Illinois Central Railroad Company, contends that, by virtue of the judgment, it has been deprived of property without due process of law, first, in that there was no assessment upon which to base the recovery of the tax; and second, in that it has been held personally liable to pay a tax upon a franchise of which it was not the owner. The plaintiff in error also contends that it has been denied the equal protection of the laws, as it insists that all other railroad corporations were assessed for the purpose of franchise taxation upon a different basis and by a different method, and that, as to other railroad corporations, the assessments similar to the one in question were abandoned.

The gist of the first contention—that there was no assessment—is that an assessment implies a record, and that there was no record, but only a memorandum; that an assessment must be a definite act, and that here it was only tentative.

It appears that the railroad of the Chesapeake, Ohio, & Southwestern Railroad Company was sold at a judicial sale in the summer of 1896, to Edward H. Harriman, who thereupon, under date of August 19, 1896, executed a power of attorney to the Illinois Central Railroad Company, authorizing it 'to take charge of the business, maintenance, and operation of the railroad, . . . together with all the land, real estate, leaseholds, easements, . . . and all other corporate property, real and personal, lately belonging to the said Chesapeake, Ohio, & Southwestern Railroad Company, included in the said sale and conveyance, and all the rights, privileges, immunities, and franchises whatsoever' which he had acquired. It was expressly authorized to receive 'all the earnings of the said railroad,' to apply the same to the expenses incurred in its 'management, maintenance, and operation,' and to take all proceedings necessary or expedient for these purposes.

On September 15, 1896, the Illinois Central Company made a report to the auditor of public accounts of Kentucky with respect to the railroad formerly the property of the Chesapeake, Ohio, & Southwestern Railroad Company, in accordance with the statute governing the assessment of franchises. This report came before the board of valuation and assessment, which was charged under the statute with the duty of making the assessment. It was placed in an envelop, or jacket, on the outside of which a proper form was provided for the entry of the amount of capital, surplus, undivided profits, all other assets, total capital, the amount to be deducted for tangible property, the value of the franchise, and the amount of the tax. Below this there were blank spaces for the insertion of the dates of the first and final notices to the corporation, of the notice to the county clerk, and of the payment of the tax. The form upon the jacket was filled out by the insertion of the name of the 'Chesapeake, Ohio, & Southwestern R. R. Co., Louisville, Ky.,' and the date of the report. In the columns provided for the purpose, entries were made, setting forth the 'Total Capital, $6,700,000,' 'Less Tangible Property, etc. $4,753,339,' 'Franchise, $1,946,661,' and 'Tax, $10,219.97.' This is the amount of the tax sued for and recovered in this action.

These entries were made early in the year 1898. The fact that the making of the assessment for the year 1897 was delayed did not detract from the authority and duty to make it. Southern R. Co. v. Coulter, 113 Ky. 657, 68 S. W. 873. That the board of valuation and assessment was authorized to fix the value of the franchise, and to make the entries setting forth their determination, and that the entries upon the jacket were in fact made by the board in the discharge of its duty, do not admit of question. The commonwealth of Kentucky filed as a part of its petition in the suit a copy of the indorsement on the jacket as a correct copy of the assessment. This was introduced in evidence on the commonwealth's behalf. The testimony presented in defense did not in any way challenge the authenticity or official character of the jacket entries. On the contrary, the testimony of the former state auditor, who, as such, was chairman of the board of valuation and assessment, leaves no room for doubt on this point. It also sufficiently appears upon this record, and it is not open to dispute here, that due notice of the assessment was given.

The point urged, in substance, is that the constitutional right of the plaintiff in error has been violated, because the state court has treated the entry on the jacket as a sufficient record of the assessment. It is said that this cannot be regarded as a record, because it lacks permanency. But this, of course, depends upon the means of preservation and the nature of the filing system adopted. There is no inherent reason why such a record should not be suitably preserved. It is unnecessary to...