American Ry. Express Co. v. Commonwealth
| Decision Date | 12 March 1920 |
| Citation | 187 Ky. 241,219 S.W. 427 |
| Parties | AMERICAN RY. EXPRESS CO. v. COMMONWEALTH (FIVE CASES). |
| Court | Kentucky Court of Appeals |
Dissenting opinion. For majority opinion, see 218 S.W. 453.
Chas C. Fox, of Danville, and Trabue, Doolan, Helm & Helm, of Louisville, for appellant.
F. R Feland, of Lawrenceburg, for the Commonwealth.
The opinion of the court is rested on the opinion in L. & N R. R. Co. v. Hopkins, 121 Ky. 850, 90 S.W. 594, 28 Ky Law Rep. 846. In that case the court had before it two cases, one involving the right of the city to require the Cumberland Telephone & Telegraph Company to pay a license tax, and the other involving the right to exact a license tax from the Louisville & Nashville Railroad Company.
I agree with so much of that opinion as exempted the Telephone & Telegraph Company from payment of a license tax, because it had paid the city a consideration for the privilege of doing business there, when it bought from the city a franchise under section 164 of the Constitution. But so much of the opinion as holds that both it and the railroad company were exempt from the license tax on the ground that the tax paid on the value of their intangible property under the assessment of the state board of valuation and assessment was in effect the payment of a privilege tax for the right to do business in the city should, I think, be overruled.
The state, under sections 4077-4091, requires this express company and other like companies to pay a property tax on the value of their property employed in business in this state; and the value of the property so employed in the state is assessed by the state tax commission, and the tax distributed by the commission to each county, city, and taxing district in the state, in proportion to the extent of the lines in each county, city, and taxing district.
This method of assessment was adopted because it was not thought practicable or just to permit the taxing authorities in the various taxing districts through which they run to assess the property employed in business in each of them. And all of the opinions of this court, except the Hopkins Case, supra, hold that the assessment of these companies is based solely on the value of their property employed in business in the state, and that on the value of this property alone they are taxed.
The Hopkins Case, however, goes beyond this, and is in conflict with many cases that have been written by this court before and since that opinion was handed down, declares that corporations like this express company are paying a franchise or privilege tax under and by virtue of the state tax commission's assessment to every taxing district in which they are doing business for the right to do business in this state. In so holding the Hopkins Case stands by itself, and a diligent search assisted by counsel in the case has failed to discover any authority in or out of the state sustaining it.
It is, of course, true that the value of the intangible property of a carrier corporation, like this express company, depends largely, if not entirely, on the volume of business that it does, and likewise true that, if it did no business, its intangible property would have little, if any, value; but this circumstance can have no bearing on the question we have in this case. We are not here concerned with the factors that go to make up the value of the intangible property of these corporations or the volume of business they do; these are matters for the state tax commission to deal with when it comes to fix the value of the intangible property for assessment purposes.
The only question in this case is: Does the payment by this corporation of a tax on its intangible property, although the value of this property is created by the business it does, amount to the payment of a license tax to Lawrenceburg and the other cities in which it does business? That it does not is, I think, conclusively demonstrated, when it is, as it must be, admitted that the tax on its intangible property is a property tax.
No provision had ever been made in our tax laws for a property tax that includes a license tax. The two classes of taxes are as separate and distinct as a municipal street improvement tax and a state school tax. They are separately treated in all text-books and in all court opinions. One is a tax upon the property that the taxpayer owns; the other is a tax he pays for the privilege of doing business. He may own property worth a million, but he will pay no license tax unless he engages in a business subject to such tax. He may not own any property of any kind, but yet, if he goes into a business, such, for example, as auctioneering, he must pay a license tax. One tax is authorized by section 171 of the Constitution; the other by section 181 of the Constitution. They are kept separate and apart in the whole scheme of taxation.
If the license tax due by this corporation is included in, and was a part of, the property tax paid by it to the city of Lawrenceburg when it collected its property tax, why should it not be said with as much force and truth that the merchant when he pays his property tax also pays his license tax?
I submit that the mere fact that the corporation pays on its intangible property, while the merchant pays on his tangible property, cannot be made the basis of any distinction such as was made in the Hopkins Case. Intangibles, such as bonds, notes, and capital stock, are as much property as lands and cattle.
It may be asked why the correctness of the principle laid down in the Hopkins Case has been permitted to stand unchallenged for a dozen years. A sufficient answer to this is that in the case we have the rule announced in the Hopkins Case is directly drawn in question for the first time since that opinion was handed down.
The result of its affirmance in this case will be that this company and others doing a common carrier business, as well as all the corporations mentioned in section 4077, will be exempt from the payment of the license tax to the cities and towns of the state that all other persons and corporations doing business therein are being and will be required to pay.
I can think of no just or sound reason why this express company should occupy any different position from that of any other person or...
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...Cumberland T. & T. Co. v. City of Calhoun, 151 Ky. 241, 151 S.W. 659; American Railway Express Co. v. Com., 187 Ky. 241, 218 S.W. 453, 219 S.W. 427. It is contended by appellants, however, that in the instant case a clear legislative intent is shown to vest the city with the power of double......
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...Cumberland T. & T. Co. v. City of Calhoun, 151 Ky. 241, 151 S.W. 659; American Railway Express Co. v. Com., 187 Ky. 241, 218 S.W. 453, 219 S.W. 427. It contended by appellants, however, that in the instant case a clear legislative intent is shown to vest the city with the power of double ta......
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