Colorado & S. Ry. Co. v. People

• Decision Date: 07 February 1916
• Docket Number: 7534.
• Parties: COLORADO & S. RY. CO. v. PEOPLE.
• Court: Colorado Supreme Court

156 P. 1095

61 Colo. 230

COLORADO & S. RY. CO. v. PEOPLE.

No. 7534.

Supreme Court of Colorado, En Banc.

February 7, 1916

Rehearing Denied May 1, 1916.

Error to District Court, City and County of Denver; H. C. Riddle Judge.

Action by the People against one Cowie, former Secretary of State and another, as surety on his official bond; the Colorado &amp Southern Railway Company intervening. From a judgment sustaining a demurrer and dismissing its petition, intervener brings error. Affirmed.

White J., dissenting.

E. E. Whitted, of Denver, for plaintiff in error.

Benjamin Griffith, Atty. Gen., Archibald A. Lee Deputy Atty. Gen., Fred Farrar, Atty. Gen., and Francis E. Bouck, Deputy Atty. Gen., for the People.

HILL J.

The plaintiff in error (a domestic corporation) intervened in a suit by the people against Cowie (a former secretary of state) and the surety on his official bond, brought to recover a sum of money collected by him from various domestic corporations as their annual state corporation license tax, authorized by section 64 of the revenue act of 1902 (Laws 1902, p. 43). A motion to dismiss its petition of intervention was overruled. A demurrer to the petition was thereafter sustained. The petitioner declining to plead over, its intervention action was dismissed. Judgment was thereafter entered against Cowie and his surety in favor of the state, which became final against them. The petitioner in intervention only brings the case here. It alleges the trial court erred in sustaining the demurrer to its petition of intervention and in ordering that the former secretary of state turn over to the people $960 of the moneys sued for, which had been paid to him by the petitioner under protest and under an arrangement that it should be held by him until the Supreme Court of Colorado might determine whether said section 64, under which it was being exacted, was, as to petitioner, a valid act, etc.

The people's motion to dismiss the writ of error on the ground that the company had no right to intervene was heretofore overruled. See Colorado & Southern Ry. Co. v. People, 53 Colo. 571, 128 P. 886. For the reasons stated in the above opinion, we shall assume that the intervener has pleaded facts sufficient to show its right to intervene in this action, if entitled to recover at all, but we do not approve of this method of procedure by state officers, and our conclusion makes it unnecessary to decide whether the payment was to Cowie as secretary of state, or deposited with him as an individual, and whether it would act as a payment at all to the state so as to defeat the penalties for nonpayment in case the statute was upheld. Section 64, referred to, reads:

'In addition to all other fees and taxes now provided for by law, every corporation which has heretofore obtained, or which shall hereafter obtain, a charter or certificate of incorporation from this state, and having a capital stock of $25,000.00 or over, shall pay, on or before the first day of May of each year, or at the time of obtaining such charter or certificate of incorporation, and on or before the first day of May of each year thereafter, as the case may be, an annual state corporation license tax to the auditor of the state of Colorado, as follows:

'Two cents upon each one thousand dollars of its capital stock.'

Section 65 following, enacted at the same time, lays on foreign corporations which then had or thereafter obtained the right to transact business in Colorado a similar tax of 4 cents upon each $1,000 of capital stock, with certain exceptions where it was to be at the rate of 2 1/2 cents per 1,000 shares, etc. By a later act in 1903 it was provided that after the second Tuesday in January, 1905, these payments were to be made to the secretary of state instead of to the state auditor.

The petitioner alleges that section 64, when applied to it, violates section 8, par. 3, of the Constitution of the United States, in that it amounts to an interference with, and a regulation of, interstate commerce, for the reason that, although a domestic railway corporation, it is engaged in interstate, as well as intrastate, commerce, and for such purposes owns certain lines of railroad in Colorado and three other states. We cannot agree that these facts justify the conclusion that the imposition of this excise tax or fee amounts to any interference with, or regulation of, its interstate commerce. It is not a property tax, but an excise tax or fee. The statute, in substance, thus defines it, to wit, 'an annual state corporation license tax.' It was not intended as a property tax. It is annually levied upon all domestic corporations with a capital stock of $25,000 or more for the privilege of thus continuing as such, and for this purpose they are thus classified. It is not based upon the amount of their property in this state or elsewhere, nor the amount or kind of their business transacted in or out of the state or in foreign countries, nor upon the value of their capital stock. It is not limited to the stock already issued, subscribed for, paid up, or otherwise, but is intended to cover the entire capital stock of the corporation as permitted by the state in its certificate of incorporation. It makes no distinction between railroads or other corporations or where their business is being conducted, but simply says to all, If you wish to be a creature of this state, and after being created desire to thus continue with all the rights and privileges appertaining thereto, in addition to your other taxes, you must pay to the state, your creator, as long as it allows you to continue as its creature with these privileges, this 'annual state corporation license tax.' For these reasons it is held not to be a tax based on the property of the corporation or a property tax. Baltic Mining Co. v. Massachusetts, 231 U.S. 68, 34 S.Ct. 15, 58 L.Ed. 127; Flint v. Stone Tracy Co., 220 U.S. 107, 31 S.Ct. 342, 55 L.Ed. 389, Ann.Cas. 1912B, 1312; Provident Institution v. Massachusetts, 6 Wall. 611, 18 L.Ed. 907; American S. & R. Co. v. People, 34 Colo. 240, 82 P. 531; Parsons v. People, 32 Colo. 221, 76 P. 666; White Dental Mfg. Co. v. Commonwealth, 212 Mass. 35, 98 N.E. 1056, Ann.Cas. 1913C, 805; Baltic Mining Co. v. Commonwealth, 207 Mass. 381, 93 N.E. 831; Northern P. Ry. Co. v. Gifford, 25 Idaho 196, 136 P. 1131.

This section does not manifest a purpose to interfere with interstate commerce, and we are of opinion that it does not in any manner do so. To concede (with no further showing) because the petitioner is a railway company and engaged in interstate business, as well as intrastate, that this tax places a burden or regulation upon its interstate business, would be to concede that any tax upon any of its property does likewise, and for that reason no tax of any kind could be levied upon any of it. It would be to concede that the business of any corporation which buys and ships goods from other states into this state, as well as sells and ships goods from this state into other states, would be interfered with; also that our domestic mining corporations doing business in South America or elsewhere, which have occasion to ship from here there and from there here, would be thus interfered with; likewise the ordinary retail merchant corporation with its store in the city of Julesburg, within a mile from the Nebraska line, and which takes orders for, sells, and delivers its merchandise into that state. The same rule would apply to every mail-order house in the state which happened to be a domestic corporation. A good answer to this question is that used by the Supreme Court of the United States in the State Railroad Tax Cases, 92 U.S. 575, 23 L.Ed. 663. It reads: 'It was hard to believe that the proposition was seriously made.' It is not everything that affects interstate commerce that amounts to a regulation of it within the meaning of the Constitution. Delaware Railroad Tax, 18 Wall. 206, 21 L.Ed. 888; Railroad Company v. Peniston, 18 Wall. 5, 21 L.Ed. 787; Phila. & Reading R. Co. v. Pennsylvania, 15 Wall.

284, 21 L.Ed. 164; ...