Arkansas Tax Commission v. Crittenden County

• Decision Date: 27 April 1931
• Docket Number: 263
• Citation: 38 S.W.2d 318,183 Ark. 738
• Parties: ARKANSAS TAX COMMISSION v. CRITTENDEN COUNTY
• Court: Arkansas Supreme Court

38 S.W.2d 318

183 Ark. 738

ARKANSAS TAX COMMISSION v. CRITTENDEN COUNTY

No. 263

Supreme Court of Arkansas

April 27, 1931

Appeal from Pulaski Circuit Court, Second Division; Richard M. Mann Judge; reversed.

STATEMENT OF FACTS.

This suit was begun in the Second Division of the Pulaski Circuit Court by Crittenden County and the Hulbert Special School District against the members of the Arkansas Tax Commission by a petition for a writ of mandamus. The petition reads as follows:

"Come your petitioners and as ground for the issuance of a peremptory writ of mandamus against the respondents as constituting the Arkansas Tax Commission as hereinafter prayed say:

"1st. That on July 10, 1928, the St. Louis-San Francisco Railway Company procured from the Interstate Commerce Commission an order permitting the purchase by it of the property of the Kansas City & Memphis Railway & Bridge Company, at a valuation of $ 3,368,405.51; that on September 1, 1928, a conveyance of said bridge property to said railway was made for the consideration aforesaid; that the property of said bridge company consists of a railway bridge across the Mississippi River at Memphis, Tennessee, connecting said city with Crittenden County, Arkansas, along the line of said railway; that said bridge cost to construct approximately $ 2,998,000 and about 70 per cent. of the physical structure is in Arkansas; that that part of the bridge proper, together with the approach thereto, both lying in Arkansas, is occupied by 2.20 miles of main track railway; that all of said bridge and approach thereto lying in Arkansas lies wholly within Crittenden County and Hulbert Special School District in said county, your petitioners herein.

"2d. That prior to said conveyance that part of said bridge proper lying in Arkansas was duly assessed by respondents or their predecessors in office acting as the Arkansas Tax Commission for purposes of taxation as lying in Crittenden County and Hulbert Special School District under its corporate name of Kansas City & Memphis Railway & Bridge Company, at a valuation of $ 550,000, and county school district taxes were regularly levied, assessed and collected against the same by petitioner county and school district; that the said Hulbert Special School District, relying upon said property continuing to be assessed as a part of the taxable value of said district, issued $ 175,000 bonds of said district, a large part of which is still outstanding and unmatured.

"3d. That, subsequent to said conveyance of said bridge property to said railway, the respondents herein, acting as the Arkansas Tax Commission, as aforesaid, in assumed compliance with the taxing laws of the State of Arkansas relative to the assessment of railroads and particularly in assumed compliance with act 129 of the Acts of 1927 and § 22 thereof, treated the said bridge property as a part of the main line of said railway, computed the average value of the main line of said railway and allocated to said school district and county only that proportion of the total valuation of said main line which the mileage therein bore to the total mileage of such main line trackage in Arkansas, and ceased altogether to localize the assessed value of said bridge property in said county and school district; that this method of computation, assessment and allocation resulted in a loss to said county and school district of assessed railway value therein of the former assessed value of said bridge property of $ 550,000 and a total gain in main line trackage value of less than $ 9,000 for each of the years 1928 and 1929, and will result in a like loss of assessed value and consequent revenue for the year 1930 payable in the year 1931 and for subsequent years.

"4th. Your petitioners maintain and aver that a true construction of the taxing laws of the State of Arkansas and particularly of § 22 of act No. 129 of the Acts of 1927 require respondents, the Arkansas Tax Commission, to ascertain the total utility operating value of said railway in Arkansas and, in connection therewith, the value of its localized component parts for the purpose of assessing such localized property in the taxing district where located; that as expensive a structure as a bridge across the Mississippi River, necessarily localized, must be separately valued under the terms of said section of said act and such physical value assessed for taxation in the district where located.

"5th. Your petitioners, for the purpose of showing that said bridge property should be separately valued and its physical value assessed be localized in said county and school district maintain and so aver that the physical value of said bridge equals approximately the value of one hundred miles of main line track; that said railway, by reason of its ownership of said bridge and the cost thereof, is allowed by the Interstate Commerce Commission to charge and collect excess rates and fares thereover for the transportation of freight and passengers equivalent to a charge made for an extended haul of about nineteen miles over its main line; that that part of said bridge property lying in the State of Tennessee is separately assessed at $ 667,000 in the name of said bridge company and not as a part of said railway; that said bridge possesses, for purposes of transportation thereover and apart from its use as a part of said railway system, a value only slightly less, if any, than the value at which it was purchased by said railway; that said bridge was taken over as an operating property by said railway at a fixed valuation; was already localized and valued by respondents and no change should have been made other than in its 'intangible value,' if any.

"6th. That the action of said respondents, acting as the Arkansas Tax Commission, in refusing to separately value said bridge property and localize the physical value thereof together with a proper portion of the intangible value of said railway in Crittenden County and Hulbert Special School District, as required by law, has resulted in a loss of taxable revenue to Crittenden County of about $ 4,000 per annum, and to Hulbert Special School District of about $ 9,000 per annum for each of the years 1928 and 1929, and will result in a like loss for the year 1930, payable in 1931, and subsequent years unless such erroneous action be corrected by proper order of this court.

"Premises considered, petitioners move this honorable court that an alternative writ of mandamus, or other process, issue directed to said respondents acting as the Arkansas Tax Commission, commanding them to appear and show cause, if any they can, why an order should not be made ordering and directing them as said commission to separately value the bridge property above described lying in the State of Arkansas and allocated to Crittenden County & Hulbert Special School District the physical value thereof, together with such part of the intangible value of said railway system as may be properly prorated thereto under the provisions of § 22 of said act No. 129 of the Acts of 1927, and to certify such assessment as required by law."

An amendment was filed to the petition which reads as follows: "Petitioner, as an amendment to motion for writ of mandamus, further alleges that the St. Louis-San Francisco Railway Company is a foreign corporation maintaining interstate lines of railroad, one of which enters the State of Arkansas at Memphis, Tennessee, crossing the bridge in question in this suit and running thence in a northwesterly direction for a distance of miles through the counties of Crittenden, Poinsett, Craighead, Lawrence, Randolph, Sharp, and Fulton."

The defendants filed a demurrer to the petition of plaintiffs which was overruled by the court. The defendants elected to stand upon their demurrer, and it was ordered that the petition for mandamus be sustained. The defendants have appealed.

Judgment reversed, and cause remanded.

Hal L. Norwood, Attorney General, and Walter L. Pope, Assistant, for appellant.

A. B. Shafer, for appellee.

OPINION

HART, C. J., (after stating the facts).

This appeal involves the correctness of the assessment made by the Arkansas Tax Commission of the railroad of the St. Louis-San Francisco Railway Company, which is an interstate railroad having a part of its line in the State of Arkansas. Prior to the year 1929, said railway company used a bridge crossing the Mississippi River from the Arkansas side to Memphis, belonging to the Kansas City & Memphis Railway & Bridge Company. While belonging to said bridge company, the Arkansas Tax Commission assessed the taxes to said bridge company. On September 1, 1929, said bridge company having sold the bridge to said St. Louis-San Francisco Railway Company, the Arkansas Tax Commission assessed it as a part of the line of railroad of said railway company, and there has been no separate assessment of the bridge to said bridge company or to said railway company. The question in the case is whether said bridge across the Mississippi River can be separated from the balance of the line of railway of the St. Louis-San Francisco Railway Company and separately assessed for the purpose of taxation and subjected to a different tax rate. In making the assessment of the property of said railway company, the Arkansas Tax Commission followed what it conceived to be the requirements of act 129 of the Acts of 1927, and adopted the general rule of...