City Of Richmond v. Commonwealth Ex Rel

• Decision Date: 22 November 1948
• Citation: 188 Va. 600,50 S.E.2d 654
• Court: Virginia Supreme Court
• Parties: CITY OF RICHMOND. v. COMMONWEALTH ex rel.

50 S.E.2d 654

188 Va. 600

CITY OF RICHMOND.

v.COMMONWEALTH ex rel.

Supreme Court of Appeals of Virginia.

Nov. 22, 1948.

Rehearing Denied Jan. 13, 1949.

Appeal from State Corporation Commission.

Proceeding by the City of Richmond for review and correction of the State Corporation Commission's assessment of the value of certain real estate and tangible personal property belonging to the Virginia Electric & Power Company. The Appalachian Electric Power Company and tensteam railroad companies operating in Virginia were allowed to intervene. From an order denying the application for review and correction, the City appeals. Affirmed.

Before HUDGINS, C. J., and GREGORY, EGGLESTON, SPRATLEY, BUCHANAN, STAPLES and MILLER, JJ.

Horace H. Edwards, J. Elliott Drinard, Wm. S. Cudlipp, Jr. and Henry R. Miller, Jr., all of Richmond, for appellant.

J. Lindsay Almond, Jr., Atty. Gen., Blake T. Newton, Jr., T. Justin Moore, E. Randolph Williams and Patrick A. Gibson, all of Richmond, F. M. Rivinus, of Roanoke, J. J. McLaughlin, of Erwin, Tenn., W. C. Plunkett and S. Burnell Bragg, both of Norfolk, J. L. Camblos and Albert H. Sandt, both of Big Stone Gap, Chas. T. Abeles, of Norfolk, Thomas B. Gay, of Richmond, J. M. Townsend, of Petersburg, W. D. Cardwell, Edw. M. Hudgins, and D. H. Leake, all of Richmond, and Woods, Rogers, Muse & Walker, of Roanoke, for appellees.

STAPLES, Justice.

This is an appeal by the city of Richmond from an order entered by the State Corporation Commission on October 3, 1947, denying the city's application for the review and correction of the Commission's assessment of the value of certain real estate and tangible personal property belonging to the appellee, Virginia Electric and Power Company, located in the city. The gravamen of the complaint is that, instead of assessing the said properties for taxation by the city at their fair market value, the Commission assessed them at only forty per cent. thereof. This was the result of applying a State-wide equalizing factor of forty per cent. in order to conform to the average ratio which real and tangible personal property assessments made by local assessors in the respective counties and cities of the entire State bear to the true value of such properties. Since this method of assessing railroads and other public utilities is now being employed by the Commission, the Appalachian Electric Power Company and ten steam railroad companies operating in Virginia were allowed to intervene in support of its validity.

The city contends that the Commission's assessment of these properties at less than actual market value is in violation of sections 168 and 169 of the Virginia Constitution.

Section 169 provides that, "Except as hereafter provided, all assessments of real estate and tangible personal property shall be at their fair market value, to be ascertained as prescribed by law." (Italics ours.)

Section 168 of the Constitution contains this provision: "All property, except as hereinafter provided, shall be taxed; all taxes, whether State, local or municipal, shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax, and shall be levied and collected under general law." (Italics ours.)

The city contends that the assessments of similar property owned by individuals and private corporations which have been made by its local assessors are at full market value, and the Commission is required by section 168 to conform thereto and to use the same true value in assessing the properties of the power company in the city of Richmond.

If the above were the only constitutional provisions bearing on the question, and if the properties of railroads and other utilities have not been differently classified for purposes of taxation by the State Constitution and statutes bearing on the subject, the disparity in the respective assessments of these properties would seem to be in violation of the requirement of uniformity prescribed by section 168. If, however, they have been classified differently from the properties assessed by the Richmond assessing officers, then they are not "the same class of subjects" and the uniformity requirement of section 168 has no application to the assessment of their values by the Commission. This section requires only hat taxes be uniform upon "the same class of subjects".

Section 176 of the Constitution of 1902 places upon the State Corporation Commission the duty of assessing thevalue of the roadbed and other real estate, rolling stock, and all other tangible personal property, of each railway corporation and the property of every canal corporation.

Section 169 of the Constitution was amended in 1928 so as to provide that as long as the State shall levy upon any public service corporation, other than a railway or canal company, a State franchise, license, or other tax, based upon or measured by its gross receipts, or gross earnings, its real estate and tangible personal property shall be assessed for taxation by the State Corporation Commission, or other central State agency, in the manner prescribed by law. A franchise tax of the type referred to is imposed on the appellee power company. Therefore its properties must be assessed by the Commission and not by the city officers who assess the properties of others than the public service corporations which are taxed in this manner.

We are called upon then to consider whether the provisions of the Virginia Constitution and statutes could lawfully have had the effect of placing the properties of railroads and other public service corporations in a different class of subjects of taxation from the properties assessed by the assessing officers of the city of Richmond.

The general rule with respect to the classification of subjects of taxation is thus stated in 51 Am.Jur., Taxation, section 173, pp. 230-231: "It is everywhere agreed that neither the Fourteenth Amendment to the Federal Constitution nor the equality and uniformity requirements of the state constitutions prohibit the making of classifications in state legislation relating to taxation. The power of a state to make reasonable and natural classifications for purposes of taxation, it has been said, is clear and not questioned. Such classifications may be made with respect to the subjects of taxation generally, the kinds of property to be taxed, the rates to be levied or the amounts to be raised, or the methods of assessment, valuation, and collection. Granting the power of a state to make classifications in tax matters, it has been said, we must then grant the right to select the differences upon which the classification shall be based." (Italics ours.)

And the same volume of Am.Jur., section 191, p. 253, adds the following: "The fact that the legislature may place corporations generally in a separate class for purposes of taxation does not mean that it is prohibited from making reasonable discriminations between various kinds of corporations or companies. Thus, street railways and steam railroads may be separately classified, as may surface and subsurface street railroad companies. A similar view has been taken with respect to railroad corporations and sleeping, dining and palace car companies, railroad corporations and other public utilities, railroad companies owning and operating trackage within the taxing state and those that do not, express companies employing railroad and steamboat companies to furnish transportation and companies doing an express business but owning their own means of transportation, * * *."

The above quoted text is abundantly sustained by the decisions of this court. In Virginia Electric & Power Co. v. Commonwealth, 169 Va. 688, 194 S.E. 775, 781, the Virginia Electric and Power Company contended that the imposition upon it of a tax on gross receipts from its bus operations, as well as from its electric lines, constituted an unlawful discrimination against it because no such tax is imposed on other corporations conducting the same or similar business. After pointing out that there was no other company which conducted "a single uniform transportation system, partly by rail and partly by motor vehicle, within any municipality, similar to appellant, " we held that the discrimination in the taxes imposed was justified because the classification of the Virgina Electric and Power Company separately from the other bus companies was supported by a substantial difference in its business. In the course of his opinion, Mr. Justice Hudgins (now Chief Justice) quoted with approval the following from State Boardof Tax Com'rs of Indiana v. Jackson, 283 U.S. 527, 51 S.Ct. 540, 75 L.Ed. 1248, 73 A.L.R. 1464, 7S A.L.R. 1536:

" 'The power of taxation is fundametal to the very existence of the government of the States. The restriction that it shall not be so exercised as to deny to any the equal protection of the laws does not compel the adoption of an iron rule of equal taxation, nor prevent variety or differences in taxation, or discretion in the selection of subjects, or the classification for taxation of properties, businesses, trades, callings, or occupations.

"'It is not the function of this Court in cases like the present to consider the propriety or justness of the tax, to seek for the motives, or to criticize the public policy which prompted the adoption of the legislation. Our duty is to sustain the classification adopted by the Legislature if there are substantial differences between the occupations separately classified. Such differences need not be great. The past decisions of the Court make this abundantly clear.' Richmond Linen Supply Co. v. [City of] Lynchburg, 160 Va. 644, 169 S.E. 554, 555; National Linen Service Corp. v. City of Lynchburg, et al., 291 U.S. 641, 54 S.Ct. 437, 78 L.Ed. 1039."

Pocahontas Consol. Collieries Co. v. Commonwealth, 113 Va. 108, 73 S.E. 446, involved the validity of a tax on the recordation of deeds imposing the full amount of the tax on all...