In re Assessment of W. Union Tel. Co.
| Decision Date | 29 October 1912 |
| Docket Number | Case Number: 2016 Ind Ter 3067 |
| Citation | 1912 OK 690,35 Okla. 626,130 P. 565 |
| Parties | In re ASSESSMENT OF WESTERN UNION TELEGRAPH CO., 1911, 1912. |
| Court | Oklahoma Supreme Court |
¶0 1. TAXATION--Assessment--Board of Equalization--Review of Decisions. In a case pending in the Supreme Court on an appeal from the action of the State Board of Equalization in assessing the property of an interstate corporation for taxation, wherein a referee is appointed to take the evidence and make findings of fact and conclusions of law, the court, after the referee makes his report containing the evidence taken before him, in which there is no conflict on any material point, is at liberty to set aside the findings and conclusions of the referee, if erroneous, and substitute therefor findings and conclusions of its own based on the same evidence.
2. SAME--Property of Corporation--Telegraph Company. In a proceeding for the purpose of ascertaining the value of the property of an interstate telegraph company for the purpose of taxation, in the absence of evidence to the contrary, the presumption is that any natural depreciations in the value of its instrumentalities are provided for by replacements paid for out of the net earnings of the company, and that the plant of the company as a whole is always kept in an ordinary state of efficiency.
3. SAME. In estimating, for purposes of taxation, the value of the property of an interstate telegraph company situate within a state, it may be regarded not abstractly or strictly locally, but as a part of a system operated in other states, and the taxing state is not precluded from taxing the property because it did not create the company or confer a franchise upon it, or because the company derived rights or privileges under an act of Congress, or because it is engaged in interstate commerce.
4. SAME. In the absence of evidence to the contrary, the presumption is that all the property of an interstate telegraph company is part of its corporate plant, and that its tangible and intangible property are equally distributed throughout its mileage.
5. SAME--Assessment--Nature of Proceeding. The valuation of property for taxation is in its nature a judicial act, and, in a proceeding for that purpose wherein the value of corporate property is in dispute, the judgment rendered must be based upon competent evidence, weighed in a judicial manner.
Cottingham & Bledsoe (Geo. H. Fearons and Francis N. Whitney, of counsel), for appellant.
Charles West, Atty. Gen., and W. C. Reeves, Asst. Atty. Gen., for the State.
¶1 The foregoing proceedings are appeals by the Western Union Telegraph Company from the action of the State Board of Equalization in assessing its property for taxation for the fiscal years ending June 30, 1911, and June 30, 1912, respectively. In a former opinion upon a motion to dismiss these proceedings, the jurisdiction of this court to entertain appeals from the action of the State Board of Equalization in assessing for taxation the property of corporations was upheld, and a motion for the appointment of a referee to take evidence on the trial in the Supreme Court was sustained. In re Assessment of Western Union Telegraph Co., 29 Okla. 483, 118 P. 376. The cases now come on to be heard upon exceptions to the report of the referee filed by the Attorney General on behalf of the state. In appointing the referee, the court directed him to make findings of fact and conclusions of law upon all the issues involved. The only question involved relates to the valuation placed upon the property of the company by the Board of Equalization for the purpose of taxation. Section 8, art. 10, of the Constitution, provides that all property which may be taxed ad valorem shall be assessed at a price it would bring at a fair, voluntary sale; and section 7585, Comp. Laws 1909, provides that the property of all public service corporations shall be assessed annually by the State Board of Equalization in the manner prescribed in this act. The state board found the cash value of the company's property to be $ 1,235,730 for the year ending June 30, 1911, and $ 1,450,684 for the year ending June 30, 1912, instead of the much lower valuations shown by returns made by the company. The referee "recommends that the assessed valuation of the Western Union Telegraph Company for the fiscal year ending June 30, 1911, should be $ 411,910.05, and for the fiscal year ending June 30, 1912, should be $ 414,481.25." The valuations found by the referee approximate those returned by the company, and are based upon "the price the physical property of the company would bring at a fair, voluntary sale, aside from any intangible value gained by its being a part of a system extending into and through other states and countries." The items making up these aggregates are so many miles of pole lines, worth so much; so many miles of iron wire, worth so much; so many miles of copper wire, worth so much; instruments valued at so much, and office furniture, valued at so much, from which total 50 per cent. of the original cost was deducted for depreciation. The referee seems also to have been influenced in reaching his conclusion by the fact that the Corporation Commission in a controversy between the Western Union Telegraph Company and the state with respect to the rates charged by it for transmitting messages fixed the value of its property for the year 1908 for rate making purposes at approximately the same figure. In one of his findings he "concludes as a matter of law that the valuation of property for the purpose of rate making within the state, and the valuation of property for the purposes of taxation should be one and the same." There is no conflict in the evidence on any material point, the only controversy arising out of the method of computation adopted by the referee in reaching his conclusion. The Attorney General denies that the state in exercising its taxing power is limited to assessing the material things used by the Western Union Telegraph Company, or that it is required to regard them as of no greater value than they had when reposing in the lumber yards and factories with cost added for putting them in place. He contends that the property of the company within this state ought to be assessed for taxation at such value as it has as an organic portion of a larger whole regarded not abstractly or locally, but as part of a system operating in practically every state in the Union; that it was error to value the property of the company merely as a congeries of unrelated items, without augmentation of value from the business in which it is employed, and to refuse to value it in its organic relations, "that is to say, not as so many poles, so much wire, so many instruments, or so much other property in the abstract, but valued in the concrete, in the relation that such property in the abstract bore to other property in the abstract which being brought into relation to each other. into a system, located partly in this state and partly in other states, giving each part a concrete value, which is much greater than its abstract value." The court is of the opinion that the conclusions of the referee cannot be sustained, and they are, therefore, set aside, and, as there is no conflict in the evidence adduced before him, the court examines the same, and bases its findings and conclusions herein thereon. In the first place, it was error to base the value of the company's property within the state upon what it would bring at a fair, voluntary sale, aside from any intangible value gained by its being a part of a system extending into and through other states and countries; and in the second place, we can find no evidence to justify the conclusion that the physical property of the company has depreciated 50 per cent. of its original cost, and is therefore at this time to be valued at half that figure. The Western Union Telegraph Company pretends to be, and is, a great and highly efficient transmission company, with offices in practically every city, town, or village in every state of the Union. There is nothing to indicate that any part of its property is in a state of decay, or that the efficiency of the company is not as great at the present time as it has been at any time since its organization. It is probably true that its physical instrumentalities depreciate in value from use and the ravages of time, but such depreciations are always provided for by replacements paid for out of net earnings, so that the plant of the company as a whole is always kept up to the ordinary standard of efficiency. In the absence of evidence to the contrary, we think this is the correct status to give to a company of this kind in attempting to determine the value of its property for the purpose of taxation. It has been many times held that, "as to railroad, telegraph, express, and sleeping car companies engaged in interstate commerce, their property, in the several states through which their lines or business extend, may be valued as a unit for the purpose of taxation, taking into consideration the uses to which it is put, and all the elements making up aggregate value; and a proportion of the whole, fairly and properly ascertained, as by taking that part of the value of the entire road which is measured by the ratio of its length in the state to its total length, or by taking as the basis of assessment such proportion of the value of the company's entire capital stock as the length of its line in the state bears to the whole length of its lines, may be taxed by the state without violating any federal restrictions." 1 Cooley on Taxation (3d Ed.) 163; Western Union Telegraph Company. v. Atty. Gen. of Mass., 125 U.S. 530, 8 S. Ct. 961, 31 L. Ed. 790; Pullman's Palace Car Co. v. Penn., 141 U.S. 18, 11 S. Ct. 876, 35 L. Ed. 613; Atty. Gen. v. Western. U. Tel. Co., 141 U.S. 40, 11 S. Ct. 889, 35 L. Ed. 628; Maine v. Grand Trunk R. Co., 142...
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