Cudahy Packing Co. v. Stovall

• Decision Date: 06 November 1916
• Docket Number: 18064
• Citation: 112 Miss. 106,72 So. 870
• Court: Mississippi Supreme Court
• Parties: CUDAHY PACKING CO. v. STOVALL, STATE TREASURER

72 So. 870

112 Miss. 106

CUDAHY PACKING CO. v. STOVALL, STATE TREASURER

No. 18064

Supreme Court of Mississippi

November 6, 1916

APPEAL from the chancery court of Hinds county, HON. O. B. TAYLOR Chancellor.

Bill for injunction by the Cudahy Packing Company against P. S Stovall, state treasurer. Demurrer sustained, temporary injunction dissolved, bill dismissed and complainant appeals.

The opinion of the chancellor, referred to in the opinion of the court, was as follows:

The complainant in this case is an Illinois corporation, having its domicile and principal office in the city of Chicago. It is a packing house company, and in the conduct of its business of delivering its products to dealers and consumers uses refrigerator and other cars owned by it exclusively and used only for the purpose of transporting its own products. It does not own, nor has it leased, any railroad line in this state, but the various railroad companies haul its cars for hire into Mississippi and into many other states where the said company sells its products.

Chapter 113 of the laws of Mississippi of 1912 designates as freight line companies every person or corporation engaged in the business of operating cars, or of furnishing or leasing cars not otherwise listed for taxation in Mississippi for the transportation of freight on railroad lines in whole or in part within the state, the said railroad lines not being owned, leased, or operated by such person or corporation. The chapter provides for certain sworn statements to be made to the state auditor by such freight line companies, and declares that for the purpose of taxation all cars of such companies used exclusively or partly within and partly without this state have a situs within this state. The chapter further provides in section 5 for a tax upon the property of such companies, in lieu of all other taxes, of 3 per centum upon the gross earnings of such companies; the term "gross earnings" to be construed to mean all earnings on business beginning and ending with this state and a proportion, based upon the proportion of mileage over which such business is done, of earnings on all interstate business passing through, or into, or out of the state. The remaining sections of the act provide for the collection of the tax, and for penalties for failure to furnish statements, or for failure to pay the tax.

Complainant filed its bill in the chancery court and secured an injunction to prevent the collection of the tax, seeking to avoid it on the ground that it is not a freight line company within the meaning of the act, and further upon the ground that the act is in violation of certain provisions of both the state and the United States Constitutions. We are of the opinion that under this act the complainant is classed as a freight line company, and it only remains to consider whether or not the act violates any of the provisions of the Constitutions.

In the outset it should be noticed that the tax imposed is in lieu of all other taxes upon the said property of complainant. We do not think it is a privilege tax, but that the legislature, following the provisions of section 112 of the state Constitution, which recognizes the fact that it is necessary for a special mode of valuation to be provided for assessing corporate property not wholly within one county, has provided for a plan to arrive at the true valuation of the property to be taxed. In other words, the legislature simply means to say that the value of complainant's property for taxation does not only consist of the actual value of the cars used by it, but that the real value is reached by adding to this that increased value and worth which arises by reason of the fact that these cars are used in connection with and as a part of a great business, operating over many lines of railroad, through many states, and possessing valuable franchises, rights, and privileges, and forming one indivisible unit. In fact, doubtless, the principal value of its property consists in all this combination of units, all interwoven and interrelated to each other, and making, as stated, one great business. The right of the states to reach and tax this true value is conceded over and over again in decisions of the supreme court of the United States. We mention this to show that the contention that the tax is not uniform and equal with other taxes, that it is out of proportion to the value of the property, and that it denies complainant equal protection of the laws, is without merit. Aside from this, however, we think that under this act all property of the same kind and class is classed for taxation in the same way, and, as we understand it, is therefore equal and uniform in a constitutional sense.

To our mind, the real difficult problem in this case is the solution of the question as to whether or not this act does not violate the clause of the Federal Constitution in reference to interstate commerce. There are a great number of decisions of the supreme court of the United States construing this section from cases arising under taxation statutes of the various states, the statutes being somewhat similar to the act here in question. Some of these decisions sustain, others condemn, the statutes, and it is very difficult, indeed, to arrive at the true line between that class of statutes which have been upheld and those which have been condemned. As we have stated, the supreme court holds that not only is the physical property, such as cars, track, wire, etc., of corporations engaged in interstate commerce taxable within the state where situated, but that in addition to this the state has the power to tax all the property of such corporations used in interstate business, in proportion to the mileage within the state as compared with the mileage without the state, and that to this may also be added the proper proportion of the increased value of such property which arises and is created by reason of its separated articles of property being combined and used as one unit, and making an extensive business, possessing valuable franchises, privileges, and rights, and extending into many states and over many lines of railroad.

It has also consistently held that although the transportation of the subjects of interstate commerce, or the receipts received therefrom, or the occupation of the business of carrying it on, cannot be directly subjected to state taxation, yet property belonging to corporations engaged in such commerce can be, and, whatever the particular form of the exaction, if it is essentially only property taxation, it will not be considered as falling within the inhibition of the Constitution. The fact that the proper taxation of its property may have the effect of incidentally affecting interstate commerce makes no difference at all. It enjoys the protection of the laws of the state government, and is under obligation to contribute to its support. It matters not by what name a tax may be called, yet if it amounts to only a tax upon its property, then such a tax is valid. In this case we do not believe that the tax is imposed upon the gross earnings, but that these gross earnings are used simply and alone, as we have stated, for the purpose of arriving at the value of the property taxed. The statute plainly says that it is upon the property of complainant, and goes further in saying that it shall be in lieu of all other taxes.

We believe that a careful reading of the following cases will disclose the fact that under the law the property of complainant is properly taxable under the act and that the same is constitutional: Case note, 57 L. R. A. 59; Maine v. Trunk Ry. Co of Canada, 142 U.S. 217, 12 S.Ct. 121, 35 L.Ed. 994; Wisconsin & Michigan Ry. Co. v. Powers, 191 U.S. 379, 24 S.Ct. 107, 48 L.Ed. 229; Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 17 S.Ct. 305, 41 L.Ed. 683, and rehearing on same case, 166 U.S. 185, 17 S.Ct. 604, 41 L.Ed. 965; Henderson Bridge Co. v. Kentucky, 166 U.S. 150, 17 S.Ct. 532, 41 L.Ed. 953; Cleveland etc., R. R. Co. v. Backus, 154 U.S. 439, 14 S.Ct. 1122, 38 L.Ed. 1041; Western Union Tel. Co. v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790; American Refrigerating Transit Co. v. Hall, 174 U.S. 70, 19 S.Ct. 599, 43 L.Ed. 899; Union Ref. T. Co. v. Lynch, 177 U.S. 149, 20 S.Ct. 631, 44 L.Ed. 708. As to due process of law and equal protection of laws under the Fourteenth Amendment: Merchants' & Manufacturers' Bank v. Pa. , 167 U.S. 461, 17 S.Ct. 829, 42 L.Ed. 236.

For the foregoing reasons we are of the opinion that the demurrer is well taken and should be sustained.

Affirmed.

Boothe & Pepper, for appellant.

Geo. H. Ethridge, Assistant Attorney-General for appellee.

OPINION

STEVENS, J.

STATEMENT OF THE CASE.

Appellant is a nonresident corporation, chartered under the laws of the state of Illinois, extensively engaged in the slaughterhouse and packing business. This company, as complainant in the court below, filed its bill of complaint in the chancery court of Hinds county, seeking to restrain appellee as the treasurer of the state from collecting a certain tax and the penalty thereon imposed by chapter 113, Laws of 1912, entitled "An act providing for the taxation of freight line companies." Section 1 of this act reads as follows:

"Be it enacted by the legislature of state of Mississippi, that 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...