Chicago, Milwaukee & St. P. Ry. Co. v. Pfaender

• Citation: 23 Minn. 217
• Parties: CHICAGO, MILWAUKEE & ST. PAUL RAILWAY COMPANY <I>vs.</I> WILLIAM PFAENDER.
• Decision Date: 01 January 1877
• Court: Minnesota Supreme Court

Page 217

23 Minn. 217

CHICAGO, MILWAUKEE & ST. PAUL RAILWAY COMPANYvs.

WILLIAM PFAENDER.

Supreme Court of Minnesota.

November 24, 1876 — March 26, 1877.

This was an action brought against the defendant, the state treasurer, for taking $150, the property of plaintiff; the purpose of the action being to determine the liability of plaintiff, as purchaser and owner of the line of railway formerly belonging to the St. Paul & Chicago Railway

Company, to the tax on gross earnings imposed by the statutes cited in the opinion. The case was submitted to the district court for Ramsey county, Simons, J., presiding, who ordered judgment for defendant, which was entered, and plaintiff appealed.

The line of the St. Paul & Chicago railway was one of those authorized to be built by the Minnesota & Pacific Railroad Company, whose franchises passed, in 1862, to the St. Paul & Pacific Railroad Company. Availing itself of the privilege granted by its charter, the latter company issued special stock in respect of certain of its lines, viz., the line between St. Paul and Watab, and that between St. Anthony and Breckenridge, (the only lines which it had attempted to construct,) and, in 1864, the holders of this stock became a distinct corporation, under the name of the First Division of the St. Paul & Pacific Railroad Company. A history of these proceedings, and a discussion of the charter under which they were effected, will be found in First Div. St. Paul & Pacific R. Co. v. Parcher, 14 Minn. 297. This latter company at once took possession of the lines forming such First Division, and the land grant appertaining thereto, and fully completed those lines. In 1864, when the agreement was made under which the special stock for the First Division lines was issued, no part of the St. Paul & Pacific lines had been completed, except the portion from St. Paul to Anoka, (being a part of the line between St. Paul and Watab,) a distance of not more than thirty miles; and, at the time of the passage of the act of March 2, 1865, quoted in the opinion, fifty miles of the lines of the St. Paul & Pacific Railroad Company had not been completed. The St. Paul & Pacific Railroad Company accepted the terms of the act of 1865, and the First Division company has annually paid the tax on its gross earnings required by the act. In 1867 the St. Paul & Pacific Railroad Company duly issued special stock in respect of its line of road from St. Paul to Winona, and thence to the state line, and on March 26, 1867, the holders of such stock organized as the St. Paul & Chicago Railway Company. This company completed the first thirty miles of its road after March, 1870, and completed its road to Winona, a distance of over 100 miles, prior to March 1, 1872, and to La Crescent, a distance of 128 miles, with the cars running thereon, prior to January 1, 1873. No part of this line was built by the St. Paul & Pacific company, nor had that company any control over or interest in it or its property or earnings. On January 3, 1872, the St. Paul & Chicago Railway Company sold its line to the plaintiff, which sale was confirmed by an act approved February 28, 1872, (Sp. Laws 1872, c. 93,) it being provided that, in respect of the line of road purchased, the plaintiff should be subject to all the duties and liabilities theretofore imposed, in respect thereof, upon the St. Paul & Pacific Railroad Company or the St. Paul & Chicago Railway Company. This act was duly accepted by plaintiff.

The plaintiff paid into the state treasury, in April, 1876, 2 per cent. of its gross earnings for the year 1875, and refused to pay any greater percentage thereon. The defendant claimed that, under the statutes cited in the opinion, the plaintiff became liable to a tax of 3 per cent. on its gross earnings for 1875.

Bigelow, Flandrau & Clark, for appellant.

Geo. P. Wilson, Attorney General, for respondent.

CORNELL, J.

It is conceded that the point presented for decision in this case depends entirely upon the true meaning and construction of the fourth and fifth provisos of section 1 of the act of March 2, 1865, entitled "An act to aid and facilitate the completion of the St. Paul & Pacific railroad and branches." Sp. Laws 1865, c. 6.

It is also admitted that these provisos were enacted as amendatory of section 18 of the original charter granted to the Minnesota & Pacific Railroad Company, May 22, 1857; (Laws 1857, Ex. Sess. c. 1;) and, if we understand aright the statement of plaintiff's counsel in regard to the action of the First Division company, under the statue of 1865, it is not seriously disputed that it was intended to apply to the same lines of railroad authorized to be built under such original charter and its amendments. Whether, however, we are correct in this, or not, is not very material, as it is clear, from its title, its express provisions, and the whole context of the statute, that it does so apply, and that the St. Paul & Pacific company is therein regarded and treated as holding the ownership and control of all such lines of road, and the franchises pertaining thereto; and, inasmuch as that company accepted the provisions of the statute and its benefits, neither it, nor any company subsequently acquiring title through it to any portion of such lines, is in a position to assert a different state of things than that assumed by the statute, upon the faith of which, apparently, its provisions were framed.

Section 18 aforesaid provides that, "in consideration of the grants, privileges, and franchises herein conferred on the said Minnesota & Pacific Railroad Company, the said company shall and will, on or before the first day of March in each year, pay into the treasury of the territory, or future state, 3 per centum of the gross earnings of the said railroad for the year ending on the last day of the preceding December, in lieu of all taxes and assessment whatever. * * * The first payment shall be made on the first day of March next, after fifty miles of said railroad shall be completed; * * * and, in consideration of such annual payments, the said company shall be forever exempt from all assessments and taxes whatever * * * upon all stock in the said Minnesota & Pacific Railroad Company, whether belonging to said company or to individuals, and upon all its franchises or estate, real, personal, or mixed, held by said company," as well as upon its congressional land grant, till the same should be sold and conveyed. To secure the payment of this per centum of gross earnings a lien was declared, in favor of the state, upon all the railroad and other property,...