Harrison v. Fourche River Valley & Indian Territory Railway Company

• Decision Date: 02 February 1920
• Docket Number: 160
• Citation: 218 S.W. 208,142 Ark. 118
• Parties: HARRISON v. FOURCHE RIVER VALLEY & INDIAN TERRITORY RAILWAY COMPANY
• Court: Arkansas Supreme Court

218 S.W. 208

142 Ark. 118

HARRISON v. FOURCHE RIVER VALLEY & INDIAN TERRITORY RAILWAY COMPANY

No. 160

Supreme Court of Arkansas

February 2, 1920

Appeal from Perry Chancery Court; Jordan Sellers, Chancellor reversed.

Decree reversed.

Geo. W Emerson, prosecuting attorney, and G. B. Colvin, deputy prosecuting attorney, for appellant.

There are two questions involved:

1. Did the court have jurisdiction?

2. Is the evidence sufficient to sustain the findings and decree? On the first neither fraud nor mistake were alleged and the court had no jurisdiction. 63 Ark. 576; 40 S.W. 710.

No appeal from the decision of the commission was provided for in Act 257, Acts 1909, page 764. 90 Ark. 413; 119 S.W. 251. See also 94 Ark. 217; 126 S.W. 713.

The findings of assessors and boards are conclusive, except where otherwise provided. The assessment against the railroad is not arbitrary, discriminatory or unfair and did not constitute fraud, and the act of the assessing board or commission is final. 106 Ark. 248; 153 S.W. 614. The decree reducing the assessment should be reversed and the injunction dismissed. Supra.

Rose Hemingway, Cantrell & Loughborough, for appellee.

The testimony shows that all the facts were duly presented to the Tax Commission and it clearly appears that the assessment can not be sustained upon any known basis of valuation. On a stock and bond basis the valuation was grossly excessive, and on a net earnings basis the assessment was excessive, and it is impossible to sustain it on a basis of present sale value. Upon the facts the assessment was arbitrary and without any reasonable basis, and excessive, and therefore a fraud on the railroad. Kirby's Digest, §§ 6906-6974; 62 Ark 461; 124 Id. 569. The court properly granted relief. 2 Cooley on Tax., pp. 1406-7; 63 Ark. 576; 62 Id. 461; 124 Id. 569; 212 S.W. 317. Chancery courts enjoin such assessments. 75 Ill. 591; 175 Id. 383; 7 Okla. 198-206; 24 Mich. 170; 7 Wash. 101; 17 Id. 567; 88 F. 350; 101 U.S. 153. See also 10 Wis. 264; 74 Mich. 350-355; 106 Wis. 200, 204; 26 Idaho 445; 144 P. 1; 235 F. 333; 71 So. 926; 81 Id. 503; 121 N.E. 629; 114 F. 557; 214 Id. 180; 222 Id. 562. The assessment was arbitrary and unsustained by any evidence. The commission ignored the fact that the road had no present earnings and could not operate more than six years longer at all, which were fundamental facts. Appellee was clearly entitled to relief.

OPINION

SMITH, J.

This suit was brought by appellee railway company to enjoin the collection of the taxes assessed against its railroad for the year 1918, upon the ground that the valuation had been arrived at by the Tax Commission by adopting an illegal unauthorized and unjust basis of assessment, and, in an amendment to the complaint, it was alleged that the assessment was arbitrary and discriminatory, and constituted a fraud in law, and further that unless relief was afforded by a reduction of said assessment it would be unable to pay the taxes upon a proper assessment without incurring penalties.

Appellee is a corporation under the laws of this State, with its principal office at Bigelow, in Perry County, and it owns and operates a line of railway from Bigelow, on the Rock Island Railroad, in a southwesterly direction to Thornburgh, a distance of 18-3/4 miles, all of which is in Perry County except .238 of a mile, which is in Pulaski County.

In June, 1918, when property of this character was being assessed by the Arkansas Tax Commission, appellee furnished the commission a schedule of its property, showing, in detail, the several items listed and the aggregate value of the whole railroad, which statement had been duly verified. According to this schedule the valuation of the whole property did not exceed $ 90,000, but an assessment of $ 152,450 was made against that part of the property in Perry County, and one of $ 350 for that part in Pulaski County. It was shown that the outstanding capital of the company is $ 238,000, and that it has a bonded indebtedness of $ 100,000. That the railroad began operation in 1907, and for five years received a division of the freight collected on shipments originating on its line, and delivered to the Rock Island Railroad, but after 1912 it was no longer allowed to share the freight charges with the Rock Island Railroad because of a Federal decision in what was known as the Tap Line Cases. Prior to 1912 appellee paid its stockholders an average dividend of 7.6 per cent., and thereafter until 1915 it paid an average dividend of 2.9 per cent., but since 1915 no dividend has been earned or paid, and in 1917 an operating loss of $ 7,900 was sustained, and that loss was increased to $ 37,000 in 1918. It was further shown that 95 per cent. of the operating income was derived from freight paid by the Fourche River Lumber Company on logs and lumber, and that 75 per cent. of the passenger fares collected was paid by the employees of the lumber company, and that it would be impossible to operate the road but for the income derived from the lumber company, which owned enough timber reached by the railroad to keep the mill of the lumber company in operation for from six to ten years, after which time there would probably be no freight or passenger traffic which would justify the operation of the railroad, and that its value would be only its scrapping value, and that the present value of the property if scrapped would not exceed $ 118,650, and that the entire original cost of the railroad was $ 355,000.

An assessment of $ 7,000 per mile was made against the main line of this railroad, and it is insisted that no such value could be arrived at from a basis of income, market value, original cost, or in any other way, and that the assessment was made arbitrarily and capriciously and amounted to a fraud in law. The chancery court granted the reduction prayed for, and this appeal has been duly prosecuted.

This order and decree was based upon a finding made by the court ...