Cnty. of Todd v. St. Paul, M. & M. Ry. Co.

• Decision Date: 01 February 1888
• Citation: 36 N.W. 109,38 Minn. 163
• Court: Minnesota Supreme Court
• Parties: COUNTY OF TODD v ST. PAUL, M. & M. RY. CO.

38 Minn. 163

36 N.W. 109

COUNTY OF TODDvST. PAUL, M. & M. RY. CO.

Supreme Court of Minnesota.

February 1, 1888.

(Syllabus by the Court.)

The charter of a railroad corporation provided for the payment to the state of a stated percentage of its gross earnings, in lieu of all taxes and assessments, and that, in consideration of such payment, the company should be forever exempt from all assessments and taxes whatever upon its stock, franchises, or estate, real, personal, or mixed. Held, that such exemption was not applicable to large tracts of timber land purchased by the corporation, from which to take timber to be converted into ties and lumber for the use of the corporation.

Appeal from district court, Todd county; COLLINS and BAXTER, Judges.

Action by the county of Todd against the St. Paul, Minneapolis & Manitoba Railway Company, to recover the taxes assessed on certain lands owned by the company, and claimed by it as exempt from taxation. Judgment was given for the county, and the company appeals.

W. E. Smith, R. B. Galusha, (M. D. Grover and S. T. Campbell, of counsel,) for appellant.

E. B. Wood and Moses E. Clapp, for respondent.

DICKINSON, J.

This railway corporation in 1882 purchased 35,000 acres of land in Todd county, which, excepting an inconsiderable portion, was timbered land. The question to be determined is as to whether these lands are exempt from ordinary taxation. The lands were purchased on account of their being valuable timber lands. Since 1885 the corporation has been engaged in cutting the timber, and converting it into boards, plank, ties, and lumber of all kinds. The greater part of this has been used in constructing and repairing the railroad of this corporation in this state; the remainder (about one-third) has been used for a like purpose upon that part of the road which is in the territory of Dakota. In some places, where the timber has been cut, grass has grown up, a small quantity of which has been sold. Upon a part of one track a town-site had been platted before this land was purchased by the corporation, and a part of the lots are now owned by it. This corporation became the owner of a part of the line of the Minnesota & Pacific Railroad Company, and as to its line of road succeeded to the rights, franchises, and immunities of that company, including its exemption from ordinary taxation. As to this no question is raised; nor that the charter of the Minnesota & Pacific Company is to be referred to as defining the exemption to which the St. Paul, Minneapolis & Manitoba Company is entitled. By section 1 of this charter (chapter 1, Laws 1857, Ex. Sess.) corporate powers were granted, including the right to acquire, by purchase or otherwise, and to hold, convey, sell, and lease, property and estates either real or personal or mixed. Section 2 empowered the corporation to locate, construct, and operate a railroad. Section 3 authorized the appropriation, by virtue of the right of eminent domain, of a belt of land, not exceeding 200 feet in width, throughout the entire length of the road, and to take property even beyond that limit for certain necessary purposes. Section 16 regranted to the corporation the lands granted to the territory by act of congress. Section 18 provided for the annual payment to the state of 3 per cent. of the gross earnings of the railroad, “in lieu of all taxes and assessments whatever,” and that, “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, and said land granted by said act of congress *** shall be exempt from all taxation till sold and conveyed by said company.” Section 20 declared that the company should be “capable, in law, of taking and holding any lands granted by the government of the United States, or of this territory, or of the future state, or by other parties, which shall be conveyed to it by this act, or by deed, gift, or purchase, or by operation of law, and may mortgage, pledge, sell, and convey the same. ***”

It is a familiar rule declared and applied in almost all of the cases involving questions like that under consideration, that “statutes imposing restrictions upon the taxing power of a state, except so far as they tend to secure uniformity and equality of assessment, are to be strictly construed.” This is the language of the supreme court of the United States in Bank v. Tennessee, hereafter referred to, (104 U. S. 493.) In County of Ramsey v. Railway Co., 33 Minn. 537,24 N. W. Rep. 313, we had occasion to construe a similar statute. A statutory exemption of “the railroad, its appurtenances and appendages, and all other property, estate, and effects of said corporation, held or used for, in, or about the construction, equipment, renewal, repairing, maintaining, or operating its railroad, including the lands granted to said company to aid in the construction of said railroad, as also the stock and capital of said company,” was considered applicable only to such lands (apart from the land grant) as were held and appropriated to the proper purposes of the corporation in its business of constructing and operating a railroad. It has been considered that the purpose of such statutes has been, not to exempt property from taxation, but to provide a substituted method of securing to the state its proper revenue from the taxable property of these corporations. City of St. Paul v. Railroad Co., 23 Minn. 469; County of Hennepin v. Railway Co., 33 Minn. 534, 535,24 N. W. Rep. 196; Ramsey Co. v. Railway Co., supra. And the exemption of taxable property from direct taxation is based upon the assumption that such property will be held and used for the purposes for which the corporation was created, and through such use yield to the corporation an income, and to the state a percentage of the same in lieu of direct taxation. We think that the decision in the case last cited, and the reasoning upon which it is based, are applicable here...