Michigan Railroad Tax Cases
| Citation | 138 F. 223 |
| Parties | MICHIGAN RAILROAD TAX CASES. v. POWERS, Auditor General. DETROIT & M.R. CO. PERE MARQUETTE R. CO. v. SAME. CHICAGO & N.W. RY. CO. v. SAME. TOLEDO, S. & M. RY. CO. v. SAME. MICHIGAN AIR LINE RY. CO. v. SAME. GRAND TRUNK WESTERN RY. CO. v. SAME. MICHIGAN CENT. R. CO. v. SAME. ANN ARBOR R. CO. v. SAME. CINCINNATI, S. & M.R. CO. v. SAME. CHICAGO, D. & C. GRAND TRUNK JUNCTION R. CO. v. SAME. MUNISING RY. CO. v. LAKE SUPERIOR & I. RY. CO. v. SAME. MINERAL RANGE R. CO. v. SAME. CHICAGO, M. & ST. P. RY. CO. v. SAME. MINNEAPOLIS St. P. & S.S.M. RY. CO. v. SAME. COPPER RANGE R. CO. v. SAME. GOGEBIC & M.R.R. CO. v. SAME. MAISTEE & N.E.R. CO. v. SAME. ESCANABA & L.S.R. CO. v. SAME. GRAND RAPIDS & I. RY. CO. v. SAME. WISCONSIN & M. RY. CO. v. SAME. |
| Decision Date | 19 May 1905 |
| Court | U.S. District Court — Western District of Michigan |
Frederick W. Stevens (Benton Hanchett, of counsel), for Pere Marquette C. co.
O. E Butterfield, for Detroit & M. R. Co.
O. E Butterfield, R. C. Flanigan, and Lloyd W. Bowers (J. H Krebs, of counsel), for Chicago & N. w. Ry. Co.
E. W Meddaugh and Harrison Geer (L. C. Stanley, of counsel), for Toledo, S. & M. Ry. Co., Michigan Air Line Ry. Co., Grand Trunk Western Ry. Co., Cincinnati, S. & M. R. Co., and Chicago, D. & C. Grand Trunk Junction R. Co.
O. E. Butterfield and Henry Russel (Ashley Pond, for counsel), for Michigan Cent. R. Co.
Alexander L. Smith, for Ann Arbor R. Co.
Hill & Smith (William P. Belden, of counsel), for Munising Ry. Co., Lake Superior & I. Ry. Co., and Marquette & S. E. Ry. Co.
Hill & Smith (Burton Hanson, of counsel), for Chicago, M. & St. P. Ry. Co.
A. E. Miller (A. B. Eldredge, of counsel1, for Mineral Range R. Co.
John H. Patterson, for Pontiac, O. & N. R. Co.
E. C. Chapin (Alfred H. Bright, of counsel), for Minneapolis, St. P. & S. S. M. Ry. Co.
Gray & Stone (A. R. Gray, of counsel), for Copper Range R. Co.
Howard Morris (Thomas H. Gill, of counsel), for Gogebic & M.R.R. Co.
Dovel & Smith, for Manistee & N.E.R. Co.
Charles C. Russell (Horace A. J. Upham, of counsel), for Escanaba & L.S.R. Co.
T. J. O'Brien, for Grand Rapids & I. Ry. Co.
E. C. Eastman (Jesse B. Barton, of counsel), for Wisconsin & M. Ry. Co.
Charles A. Blair, Loyal E. Knappen, Charles E. Townsend, and Timothy E. Tarsney (Roger Irving Wykes, of counsel), for Auditor General.
Until the legislation complained of in these cases, railroad corporations, express companies, car loaning companies, etc were taxed in the state of Michigan specifically upon their gross earnings. For the purpose of enabling the Legislature to pass an act for their taxation by an ad valorem system of assessment, placing their property for that purpose upon the same basis with that of other corporations and individuals throughout the state, the Constitution was amended in 1900. The amendment permitted the Legislature to provide for the assessment of the property of corporations at its true cash value by a State Board of Assessors, and provided for a uniform rule of taxation for such property, and that the rate of taxation on such property should be the rate which the State Board of Assessors should ascertain and determine as the average rate levied upon other property on which ad valorem taxes are assessed for state, township, county, school and municipal purposes. At the next session of the Legislature, in 1901, Act No. 173 (page 236), was passed, [1] which is entitled 'An act to provide for the assessment of the property of railroad companies, union station and depot companies, express companies, car loaning companies, stock car companies, refrigerator car companies and fast freight line companies; and for the levying of taxes thereon by the State Board of Assessors, and for the collection of such taxes,' under the provisions of which act the companies affected were required to make reports to the State Board of Assessors, which board was required to prepare an assessment roll and assess the property of such corporations, the property of the several corporations being described thereon by a general statutory description, which in the case of the railroad companies was required to be 'real estate, rolling stock, right of way and appurtenances thereto, and all other property used in carrying on the corporate business, and subject to taxation by the State Board of Assessors. ' In determining the true cash value of the property of the railroad companies, it is provided that the board should be guided by the relation which the number of miles of main track within the state of Michigan bears to the entire mileage of the main track of said companies, both within and without the state. After the completion of such roll the Board of Assessors is required to meet at the state capitol at Lansing on the third Monday of December of each year, and continue in session from day to day for so long a period as may be necessary, not later than the 15th day of January next thereafter, for the purpose of reviewing their assessment; and any company or persons interested shall have the right to appear during such period and be heard as to the valuation of the property of any such company, and the State Board of Assessors, on such application, or on its own motion, is given authority to correct the assessment of valuation of the property of such company in such manner as will, in its judgment, make the valuation thereof just and equal. It is made the duty of the clerk of the board of supervisors in each county in the state, not later than the 1st day of November in each year, to report to said board the equalization made by the board of supervisors of the assessment rolls of the several townships therein, which report shall contain a statement of the amount of ad valorem taxes to be raised in the several municipalities in such county for state, county, township, municipal, school, and other purposes, and a statement of the correct valuation of the property in each of said municipalities, as taken from the assessment rolls of said municipalities for the year in which such equalization is made. It is made the duty of the supervisor or other assessing officer of cities and villages governed by special charters, which provide for the collection of ad valorem taxes, which are not reported to the board of supervisors for the purpose of equalization or review, and the supervisors or other assessing officers of cities organized under general laws, to make within said time a report to said board of all ad valorem taxes raised in any of such municipalities which have not been reported to the State Board of Assessors, for the purpose of equalization and review. The act further provides, in section 12 (page 245), that after the receipt of such reports, and not later than the 15th day of December in each year, the State Board of Assessors shall ascertain and determine the average rate of taxation of the then current year levied upon other property upon which ad valorem taxes are assessed for state, county, township, school, and municipal purposes, and shall enter the same upon its record forthwith, together with the method by which such average rate was ascertained and determined. The board is required to tax the property of the several companies, as assessed by it, at the rate as determined, and the amount of the taxes is to be extended upon the assessment roll, opposite the description of the respective companies' properties. The taxes so extended are made a debt owing from the companies, and become a lien upon all the property, real, personal, and mixed, of said companies, from the time of extension until payment, which lien may be enforced by seizure and sale of the property, or so much thereof as is necessary to satisfy the same. The board is required to annex to its roll its warrant commanding the Auditor General to collect said sums, which warrant is authority, in case of the neglect or refusal of any company to pay its tax, for levying on the same by distress and sale of the property of the corporation. All taxes collected under the act are to be applied in paying the interest upon the primary school, university, and other educational funds, and the interest and principal of the state debt, in the order recited, until the extinguishment of the state debt, other than the amounts due to educational funds, when such taxes shall be added to, and constitute a part of, the primary school interest fund.
The State Board of Assessors proceeded under the act for the collection of the taxes for the year 1902, assessing the property of the companies at what they believed to be its true cash value. Acting under the provisions of section 12 of the act, to ascertain and determine the average rate of taxation for the year 1902 levied upon other property upon which ad valorem taxes were assessed at its true cash value and proceeded accordingly, and did ascertain and determine that such property had not been assessed by the assessors thereof at its true cash value, but that it had been assessed at a sum greatly less than its true cash value, and determined the true cash value of such property to be the sum of $1,715,000,000, making thereby the amount of the assessed valuation of said property as determined by them greater than the amount of valuation as assessed by the local assessors, as shown by the reports made to said board by the clerks of the boards of supervisors; and by such determination the board ascertained and determined the rate of taxation to be levied upon the properties of said companies to be $13,68905 per $1,000 of the assessed valuation thereof, and levied upon that basis, with the proper warrant of the board, was delivered to the Auditor General for collection. Thereupon application was made to the Supreme...
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