Chicago, R. I. & P. R. Co. v. Robertson

• Decision Date: 24 May 1920
• Docket Number: 21150
• Citation: 84 So. 449,122 Miss. 417
• Parties: CHICAGO, R. I. & P. R. CO. v. ROBERTSON, REVENUE AGENT
• Court: Mississippi Supreme Court

84 So. 449

122 Miss. 417

CHICAGO, R. I. & P. R. CO. v. ROBERTSON, REVENUE AGENT

21150

Supreme Court of Mississippi

May 24, 1920

March 1920

TAXATION. Statute providing a fixed charge on gross receipts of freight line company in lieu of other taxes is unconstitutional.

The provision of section 112 of the state Constitution of 1890 that taxation shall be equal and uniform, and that property shall be asssessed for taxes according to its true value, can be complied with only by taxing all property at the same rate on its true value, and the legislature is without power to provide for the taxation of property by any other method. Consequently chapter 113, Laws of 1912, which provides for a fixed charged on the gross receipts of a freight line company in lieu of all taxes on the property of the company used in its business, is void.

STEVENS J., dissenting.

HON LAMAR F. EASTERLING, Chancellor.

APPEAL from Chancery Court of Hinds County, HON. LAMAR F EASTERLING, Chancellor.

Attachment in chancery by Stokes V. Robertson, State Revenue Agent, against the Chicago, Rock Island & Pacific Railroad Company, with the Illinois Central Railroad Company and another as garnishees to recover taxes due by the first-named company to the state. Cause heard on bill and answers, and decree for complainant for a penalty, with direction to first-named company to make discovery of its gross earnings, and it appeals. Reversed, and judgment entered dismissing the bill of complaint.

Reversed.

Wright, Miles, Waring & Walker, M. L. Bell and W. F. Dickinson, for appellant.

Green & Green, amici curiae.

Robt. B. Mayes, Clayton D. Potter, and V. J. Stricker, for appellee.

SMITH C. J. STEVENS, J., dissents. ETHRIDGE, J. specially concurring.

OPINION

SMITH, C. J.

This is an attachment in chancery by the state revenue agent against the Chicago, Rock Island & Pacific Railroad Company, a corporation chartered under the laws of the states of Illinois and Iowa, as the principal defendant, and hereinafter designated as the company, and the Illinois Central Railroad Company and the Alabama & Vicksburg Railway Company as garnishees; the bill alleging that they are indebted to the principal defendant or have property belonging to it in their possession. The recovery sought is for taxes alleged to be due the state of Mississippi by the company for the year 1912 under the provisions of chapter 113, Laws of 1912, the parts of which that are here material are as follows:

"Section 1. Every person or persons, joint-stock association or corporation, wherever organized or incorporated, engaged in the business of operating cars, or engaged in the business of furnishing or leasing cars not otherwise listed for taxation in Mississippi, for the transportation of freight (whether such cars be owned by such company or any other person or company) over any railroad line or lines, in whole or in part, within this state, such line or lines not being owned, leased or operated by such company, whether such cars be termed box, flat, coal, ore, tank, stock, gondola, furniture, or refrigerator cars, or by some other name, shall be deemed a freight line company."

Section 2 provides that such companies shall on or before the 1st day of May in each year file with the state auditor a statement setting forth, among other things:

"The total number of cars used and the whole length of the lines of railway over which the company runs its cars, and the length of so much of such lines as in without and is within the state of Mississippi."

"Sec. 3. For the purpose of taxation, all cars used exclusively within this state, or used partially within and without the state, are hereby declared to have a situs in the state, and the value of such property for the purpose of taxation is to be determined as provided by section four (4) and five (5) of the act.

"Sec. 4. Every freight line company as hereinbefore defined (1) shall annually, between the first (1st) day of January and the first (1st) day of February, . . . make and file with the state auditor of this a statement showing the total gross earnings received from all sources by such freight line company, within the state, for the year ending December 31st next preceding.

"Sec. 5. The term 'the total gross earnings received from all sources by such freight line companies within this state, as used in section four (4) of this act, is hereby declared and shall be construed to mean all earnings on business beginning and ending within the state, and a proportion, based upon the proportion of mileage over which such business is done, of earnings of all interstate business done, of earnings on all interstate business passing through or into or out of the state; and all such freight line companies shall, on or before the first day of February in each year, pay to the state treasurer of the state of Mississippi, a sum of money equal to three (3%) per centum upon the gross earnings of such company for the year ending on the last day of December next preceding, the same to be a tax on its property and in lieu of all other taxes upon the same."

Other sections provide for the collection of the tax, the method by which the auditor shall ascertain the gross earnings of a freight line company failing to make a report thereof to him and imposing a penalty of five hundred dollars on each freight line company failing to make such report.

The bill of complaint alleges that the company did a freight line business in Mississippi during the year 1912, but failed to make a report thereof to the auditor, and prays for a discovery of the gross amount earned by the company in such business for the year 1912, for a decree against it for three per cent. thereof and for the five hundred-dollar penalty imposed by the statute for the failure to make the report required of it.

The cause was heard on bill and answers, from which it appears that the company is, and was during the year 1912, a common carrier operating railroads in several states, none of which are in Mississippi, and which connect with other railroads making its railroads a part of the railway transportation system of the United States; that pursuant to the orders of the Interstate Commerce Commission, to which it is subject, it delivers its cars when loaded with commodities destined for points beyond its own lines to connecting and intervening carriers, by which they are moved to the destination of such commodities. From which it results that some of its cars move into and out of the state of Mississippi, and while being so moved and until returned to it the company receives from the carrier in whose possession the cars are "a per diem rental" therefor, such cars being the only ones owned by the company that come into the state of Mississippi at any time. The discovery prayed for was not made. The court below rendered a decree directing the company to pay to the complainant the five hundred dollar-penalty and to make the discovery of its gross earnings prayed for, from which decree the company prayed for and was granted an appeal to this court to settle the principles of the case.

Among the many questions raised by counsel for the appellant company, and the one on which our judgment will turn, is the power vel non of the legislature to enact a statute of the character of chapter 113, Laws of 1912. If the tax here sought to be collected is imposed directly on the company's gross earnings as such, they being derived partly, if not wholly, from interstate commerce, it is a burden on such commerce and consequently void. But if the gross earnings of the company's are simply taken as the measure of the value of the cars owned by the company that come into the state of Mississippi, and the amount of the tax is not in excess of what would be legitimate as an ordinary tax on the cars with reference to their use as a part of a going concern, it does not in fact restrain or burden such commerce, and will be valid if permitted by the state Constitution. Cudahy Packing Co. v. State of Minn., 246 U.S. 450, 38 S.Ct. 373, 62 L.Ed. 827.

The contention of counsel for the company therefore is, and sections 3 and 4 of the statute so declare, that the tax is on the cars of the company that are used partially within and without the state; the aggregate amount of the rentals received therefor by the company being simply taken as the measure of their value. The validity of the statute, then, assuming that the tax imposed amounts to no more than would be legitimate as an ordinary tax on the cars, will depend on whether or not it violates section 112 of our state Constitution, which is as follows:

"Taxation shall be uniform and equal throughout the state. Property shall be taxed in proportion to its value. The legislature may, however, impose a tax per capita upon such domestic animals as from their nature and habits are destructive of other property. Property shall be assessed for taxes under general laws, and by uniform rules, according to its true value. But the legislature may provide for a special mode of valuation and assessment for railroads, and railroad and other corporate property, or for particular species of property belonging to persons, corporations, or associations not situated wholly in one county. But all such property shall be assessed at its true value, and no county shall be denied the right to levy county and special taxes upon such assessment as in other cases of property situated and assessed in the county."

This section, as it appears in section 20, art. 12, of the Constitution of 1869, is as follows:

"Taxation shall be equal and uniform throughout the state. All property shall be taxed in proportion to its value, to be ascertained as directed by law.

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