Chi. & N. W. Ry. Co. v. State

• Decision Date: 17 July 1906
• Citation: 108 N.W. 557,128 Wis. 553
• Court: Wisconsin Supreme Court
• Parties: CHICAGO & N. W. RY. CO. v. STATE ET AL.

128 Wis. 553

108 N.W. 557

CHICAGO & N. W. RY. CO.

v.STATE ET AL.

Supreme Court of Wisconsin.

June 21, 1906.

Concurring Opinion, July 17, 1906.

Syllabus by the Judge.

Chapter 315, p. 491, Laws of Wisconsin for 1903, among other things provides:

(A) For a preliminary assessment of all railway property in the state on the unit system, by a state board of assessors, they to consider certain specified evidentiary matters and others in their discretion and accord owners of such property a hearing and complete their determination of the cash value of the property by the first day of November of the year of commencing the work;

(B) For a determination by such board, by the day aforesaid, of the cash value of all general property in the state assessed to be taxed in the then year, certain specified data to be considered and all other evidentiary matters obtainable from all sources;

(C) For a determination by said board, on and between the first Monday of December in the year aforesaid and the following 15th day of January, with reference to certain specified data, of the aggregate tax in the whole state, for all purposes, state and local, except special assessments for local improvements, levied on the valuation aforesaid;

(D) For a session of such board, substantially continuing from the second Tuesday of November aforesaid till the 15th day of the following January, for the purpose of reviewing the assessment of railway property and the valuation of the general property made as aforesaid, any owner of railway property to have an opportunity during such period to be heard, (a) as to the valuation and assessment thereof, (b) as to the valuation of general property, and (c) as to the taxes to be levied on its property;

(E) For a determination by such board of the average rate of taxation on general property;

(F) For the making of a tax roll showing the names of all owners of railway property and the taxes thereon;

(G) For collecting, in due course, of such taxes by the state treasurer.

The first clause of section 1, art. 8, of the Constitution, declaring that the rule of taxation shall be uniform, relates to all property taxed directly, and that only.

Section 1, art. 8, aforesaid does not limit the exercise of the power of taxation to that on property.

Section 1 of article 8 of the Constitution limits taxation of property to such as the Legislature shall prescribe, makes all such property one class, and ordains that the rule of taxation shall be uniform in respect thereto.

The second clause of such section leaves the Legislature unlimited authority as to what property shall be taxed and what shall not be taxed, subject to other equality clauses of the organic law, particularly section 1, art. 1. In prescribing property for taxation all of any particular class must be so prescribed or be exempted.

In prescribing property for direct taxation, or instrumentalities to effect such taxation, but not otherwise, under section 1, art. 8, of the Constitution, the Legislature may classify and subclassify property, to the extent of distinguishing differences as to a particular class or subclass, reasonably requiring special treatment to promote the constitutional requirement that as to all property taxed the rule of taxation shall be uniform.

The rule of uniformity has reference to uniformity of burden, not necessarily, uniformity of methods of imposing burdens and realizing thereon.

The rule of uniformity for direct taxation on property is the rule ordained by the Constitution itself, vitalized by legislative essentials necessary to its execution and aided by legislative details promoting its purpose to burden every dollar in value of all property prescribed for direct taxation, having regard to special conditions in the respective taxing districts, the same, as near as practicable, as every other dollar in value of such property, is burdened.

The property of a public service corporation is to be valued for taxation as a unit, the franchise element and tangible elements, whether in land or movables, being regarded as inseparable parts of one thing in which the former so far predominates as to stamp all with the impress of personal property.

In assessing property of ordinary corporations or of firms or individuals, the same is to be valued with reference to its use, situation, and all that concerns the same, no value being placed on such intangibles as good will or mere ordinary corporate rights or other mere circumstances other than as the same is included in the actual value of the tangible things, in the places and under the conditions in which they are found.

Property owned by mere private corporations is to be valued the same as if owned by a private person.

In assessing real property for taxation, the assessing agency is not concerned with physical value, except as evidence of physical conditions; nor specially concerned with franchise value. All it to be valued as a unit, inseparable for the purpose of valuing any one element or determining the value of the whole, by adding together the separate values of elements.

If the assessing agency, in valuing the general property taxed, commits jurisdictional or other error by including property not assessed by local assessors, such error affords owners of special property no ground for invoking equity jurisdiction.

Unintentional omissions in assessing property for taxation, referable to mere error of judgment or inadvertence; or differences between different assessors as to the treatment of the same kind of property under the same or similar circumstances, or other mere errors of judgment or mistakes without fraud, do not affect the validity of the tax.

A tax, state or local, must be levied, in the sense of voting the tax, by the legislative power to which the same is referable. That cannot be delegated to administrative officers. The act of laying the tax, and of determining the basis thereof as regards the valuation of property, on the legislative plan, is administrative. The former is an act of making law, the latter of executing it.

When the Legislature determines to raise a stated sum of money by taxation, or the sum which a specific form of taxation may produce, and delegates to administrative officers the duty of ascertaining facts and making computations from given data or facts to be ascertained by such officers and to thereby fix the rate and eventually the amount of the tax, it levies the same in a constitutional sense.

Section 5, art. 8, providing that the Legislature shall provide tax sufficient, etc., and whenever the expenses of any year shall exceed the income, the Legislature shall provide for levying a tax for the ensuing year sufficient, with other sources of income, etc., is satisfied if the Legislature determines, as shown by what it does, to raise by taxation a specific sum for public purposes, or such sum as the form of taxation adopted will produce. No express legislative estimate of the public needs is necessary, nor is annual or semi-annual legislation necessary. A law in that regard may provide generally for the future or till changed by the Legislature.

Section 2, art. 8, of the Constitution, and section 5 are to be read together. The latter limits the exercise of the taxing power to public purposes, and the former, likewise, limits the use of the avails of such exercise. They do not limit the method of determining the needs therefor.

The purpose of the ad valorem railway taxing law being to tax railway property upon the same basis and at the same rate as other property prescribed for direct taxation throughout the state is taxed, exclusive of special assessments, the avails in money should be regarded as the result, in effect, of state, county, city, town, village and school and road district taxation, and as taking the form of state funds by a constructive accounting between the state and the localities.

The effect of chapter 378, p. 601, Laws of 1903, is to exempt from taxation, in cases mentioned as personal property, any ordinary mortgage or lien in the nature of a mortgage, on realty, and the debt secured thereby to the extent of the value of the security, such value being regarded as an interest in the realty in place of such mortgage and such part of the mortgage indebtedness, and make the same taxable to the mortgagee separately from the value of the equity or to the mortgagor with the equity, the same as if the land were unincumbered, at the latter's option.

Under such law, so much of the mortgage indebtedness as measures the value of the security is excluded from that which the mortgagor may set off against his credits in determining the excess of the latter over his liabilities, and so subject to taxation, and is also not available to the mortgagee in making up his balance of credits over liabilities subject to taxation, but the excess of the mortgage indebtedness over the value of the security is a matter receivable as to the mortgagee and payable as to the mortgagor to be taken account of by them respectively in determining the amount of their respective credits subject to taxation.

The classification of mortgage indebtedness, as indicated, is legitimate under the doctrine of classification before stated.

The feature of chapter 315, p. 491, Laws of 1903, as to applying the average rate of taxation on general property one year on the value of railway property as to such year, in taxing the latter the succeeding year, is legitimate, regarded as a reasonable exercise of legislative judgment as to the method of burdening railway property with state and local taxes, except special assessments, the same as general property throughout the state, as near as practicable, and is consistent with section 1, art. 8, of the Constitution.

It must be presumed in favor of an act of the Legislature that the law making power intended a valid enactment, and it is to be sustained if in any reasonable view thereof it can be fairly read in...