Harvey v. Bay State St. Ry. Co.

• Decision Date: 07 January 1920
• Citation: 234 Mass. 336,125 N.E. 614
• Parties: HARVEY v. BAY STATE ST. RY. CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

234 Mass. 336

125 N.E. 614

HARVEY

v.BAY STATE ST. RY. CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 7, 1920.

Report from Superior Court, Suffolk County; L. E. Hitchcock, Judge.

Action by Ernest C. Harvey against the Bay State Street Railway Company and Wallace B. Donham, its receiver. On report without decision for the determination of the Supreme Judicial Court. Judgment for plaintiff.

Wm. G. Rowe, of Brockton, for plaintiff.

Pillsbury & Dana, of Boston, for defendant Bay State St. Ry. Co.

RUGG, C. J.

This is an action at law by the collector of taxes of the town of Lakeville to recover the balance of the commutation excise tax assessed under the general tax act. St. 1909, c. 490, pt. 3, §§ 47, 48, 50. The tax was assessed upon the Bay State Street Railway Company for the period between October 1, 1917, and September 30, 1918, and was a single tax assessed as a unit. The street railway company operated its railway through its own officers until December 12, 1917, when the District Court of the United States for the District of Massachusetts appointed as its receiver the respondent Wallace B. Donham who immediately took possession of its property and franchises and operated the same for the remainder of the period. This action is brought by permission of the District Court of the United States.

The question is, whether under these circumstances the tax was lawfully assessed for one sum for the entire period without regard to the intervention of the fact of receivership.

The commutation excise tax upon street railways was established by the Legislature as a uniform rule for money payments to take the place of and to be in substitution for the heterogeneous requirements of the general law in connection with the varying conditions contained in grants of locations made by the several boards of aldermen and selectmen as to repairs of parts of streets in which street railway tracks were laid. The history is set forth in Springfield v. Springfield St. Ry., 182 Mass. 41, 64 N. E. 577, and Worcester v. Worcester Cons. St. Ry., 182 Mass. 49, 64 N. E. 581. The purpose of the legislation, which was first embodied in St. 1898, c. 578, was to impose upon the cities and towns responsibility for the care of streets and highways and to relieve the street railways therefrom (with exceptions not here material), and to provide in substitution for pre-existing obligations and privileges the obligation on the part of the street railway companies to pay, and the privilege on the part of the municipalities to receive, the commutation excise tax. The words of the statute, its history and the reasons for its enactment, lead to the conclusion that the tax is an excise upon the operation of the street railway in public ways. It manifestly is not a property tax upon the physical assets of the street railway company. That is covered by other sections of the law so far as concerns its real estate, poles and wires. Part 1, §§ 3, 15, 23, Second; part 3, §§ 40, 41, 42 and 45; Connecticut Valley St. Ry. v. Northampton, 213 Mass. 45, 99 N. E. 516; St. 1913, c. 458; Northern Mass. St. Ry. v. Westminster, 227 Mass. 547, 116 N. E. 895. That it is not an excise tax upon the franchise as a corporation and the right to exist and do business as such is equally clear. Part 3, §§ 43, 44, 46, provide for that kind of a tax. The terms of said sections 47 and 48 render certain the inference that the tax there exacted is for the privilege of operation of the street railway in public ways. No tax can be levied unless there have been receipts from the actual operation of the railway exclusive of revenue derived from other sources. Operation for revenue being the basis of this tax, there is no apparent reason why such a tax should not be paid if the tracks in the highways are used for operation of the railway for the purpose of obtaining receipts. The theory, upon which by general law and by conditions in the grants of locations the obligation was imposed upon street railways to keep parts of streets in which their tracks were laid in repair, was that the presence of the tracks in streets and the operation of cars over them imposed more frequent and extensive repairs than otherwise would have been required, and hence that some of this expense ought to be borne by the street railway. Newcomb v. Norfolk Western St. Ry., 179 Mass. 449, 61 N. E. 42; Worcester v. Worcester Cons. St. Ry., 192 Mass. 106, 78 N. E. 222. The title to the property of the street railway company was not transferred to the receiver. He became its custodian, not its owner. He was the officer of the court making the appointment and his possession was the possession of the court. The purpose of his appointment was to conserve the property of the company. The nature of the property and assets of the company could be best preserved by its continued operation. His operation of it as a common carrier was in the exercise of the rights and franchises of the street railway company. Although he was not the agent of the company, he used all its privileges. Property taxes still rightly would be assessed to the company. City National Bank v. Charles Baker Co., 180 Mass. 40, 61 N. E. 223;Harrison v. Warren Co., 183 Mass. 123, 66 N. E. 589. The corporation is not dissolved in form or in substance. Being a common carrier, its property is affected with a public interest. One object of the receivership of such a corporation is to enable it to continue the exercise of its corporate franchises and functions and to avert a suspension of their operation with the consequent inconvenience to the traveling public and loss of revenue and loss of good will, and the prevention of change of custom by the public as to their patronage of it. Property in the hands of a receiver is not withdrawn from taxation. Property taxes rightly are assessed against the company. It is the plain duty of the court to see that such taxes are paid. City National Bank v. Charles Baker Co., 180 Mass. 40, 61 N. E. 223;Harrison v. Warren Co., 183 Mass. 123, 66 N. E. 589;In re Tyler, 149 U. S. 164, 183, 13 Sup. Ct. 785, 37 L. Ed. 689;Kirkpatrick v. Board of Assessors, 57 N. J. Law, 53, 29 Atl. 442;Coy v. Title Guarantee & Trust Co., 220 Fed. 90, 135 C. C. A. 658, L. R. A. 1915E, 211. Since the franchises of the corporation are exercised for the benefit of its creditors, there is no reason on principle why excises based on such use of its franchise should not also be paid by the receiver. The authorities are to this effect. Central Trust Co. v. N. Y. City & Northern R. R., 110 N. Y. 250, 18 N. E. 92,1 L. R. A. 260;State v. Sessions, 95 Kan. 272, 279, 147 Pac. 789;New York Terminal Co. v. Gaus, 204 N. Y....