Miller v. Illinois Cent. R. R. Co.

• Decision Date: 28 February 1927
• Docket Number: 25853
• Citation: 146 Miss. 422,111 So. 558
• Court: Mississippi Supreme Court
• Parties: MILLER, STATE REVENUE AGENT, v. ILLINOIS CENT. R. R. CO. [*]

111 So. 558

146 Miss. 422

MILLER, STATE REVENUE AGENT, v. ILLINOIS CENT. R. R. CO. ^[*]

No. 25853

Supreme Court of Mississippi

February 28, 1927

APPEAL from chancery court of Hinds county, HON. V. J. STRICKER Chancellor.

(In Banc.)

1 TAXATION. Foreign railroad company, engaged in both intrastate and interstate commerce within state, held not liable for income tax before 1924 (Laws 1924, chapter 132; Laws 1912, chapter 101, section 4, as amended by Laws 1914 chapter 116). Before Laws 1924, chapter 132, went into effect, foreign railroad doing business within state and engaged in both intrastate and interstate commerce was not liable for income tax, since Laws 1912, chapter 101, as amended by Laws 1914, chapter 116, necessarily excludes from its operation such foreign railroads, when section 4 thereof levying tax on all annual incomes in excess of two thousand and five hundred dollars, is construed in connection with all other provisions.

2. COMMERCE. State cannot tax interstate commerce in any form whatever.

The state cannot lay tax on interstate commerce in any form whatever, whether the tax be on transportation of subjects of commerce, receipts derived therefrom, or occupation or business of carrying on commerce.

3. STATUTES. Tax laws are to be strictly construed against taxing power and doubts resolved in favor of taxpayer.

Tax laws are to be strictly construed against taxing power and if right to tax is not plain it cannot be implied, all doubts being resolved in favor of taxpayer.

ETHRIDGE, J., dissenting.

HON. V. J. STRICKER, Chancellor.

APPEAL from chancery court of Hinds county, HON. V. J. STRICKER, Chancellor.

Suit by W. J. Miller, state revenue agent, against the Illinois Central Railroad Company. Decree of dismissal, and complainant appeals. Affirmed.

Affirmed.

Wells, Stevens & Jones and J. H. Sumrall, for appellant.

The demurrer raised the question that transportation companies are not embraced within the terms of the act. There are, of course, domestic as well as foreign railroad companies operating in Mississippi. If the contention of the Illinois Central prevails, then no railroad or transportation company is liable and the result reached by the lower court necessarily makes the act discriminatory. Beyond question Hattiesburg Grocery Co. v. Robertson, Rev Agt., 126 Miss. 34, 88 So. 4, 25 A. L. R. 748, settled the liability of domestic corporations. See, also, section 4, chapter 101, Laws of 1912 (section 4936, Hemingway's Code), the amendment of 1914 being section 4937, Hemingway's Code.

The demurrer and argument thereon before the chancellor would exempt transportation companies. They were not especially exempted by the statute itself; but, on the contrary, there is an income tax on all annual incomes in excess of two thousand five hundred dollars. It is a flat tax. The old law is not even progressive. There is no internal evidence to exempt transportation companies. On the contrary, the language is all-embracive. It is levied upon every kind of income earned or made in Mississippi. Suppose the domestic railroads, instead of paying the tax had denied liability and presented this test case. Would the court hold that a domestic railroad company is exempt merely because it is a transportation company?

If foreign corporations are not embraced within the terms of the act, then the burden imposed falls unequally upon corporations themselves. The Hattiesburg Grocery Company was a domestic corporation. This court held it to be liable for the taxes and the supreme court of the United States dismissed the writ of error. Certainly that case settled the liability of all domestic corporations. Now a foreign corporation may be chartered under the laws of another state and yet have all of its business and derive all of its income in Mississippi. Is there any reason why it should be exempt? The statute says that the tax is levied "on all incomes." If the income was derived from business done within this state, then the tax is automatically imposed. Practical difficulties in determining the amount of taxes cannot strike down the law as unconstitutional.

It was not necessary for the statute expressly to exclude incomes derived beyond the borders of the state. When the sovereign state through its legislature imposes a flat tax on all incomes, it is manifest that the statute concerns incomes derived in Mississippi. Practical difficulties in arriving at the amount of the net income should not strike down the law or exclude or grant an exemption to a non-resident corporation doing business in Mississippi. Baltic Mining Co. v. Massachusetts, 231 U.S. 68, 58 L.Ed. 127.

The Illinois Central has a large mileage in Mississippi and derives a large income from business done in Mississippi. It is required to make reports to the State Railroad Commission, to our State Tax Commission and to the Interstate Commerce Commission, showing the amount of business done in Mississippi and, therefore, it is required to keep accurate records of both intrastate and interstate shipments and the amount of income from business done in Mississippi can be ascertained. That is certain which can be made certain, and in the case at bar the railroad company refused to exercise its privilege to make its own returns and is in no position to complain at the very fair assessment made by the State Tax Commission after study of all the records showing the business done for each of the years. New Orleans, etc., R. R. Co. v. State, 110 Miss. 290. For valuable annotation on "Income Tax on Non-Residents" see 15 A. L. R. 1326.

May, Sanders & McLaurin and R. V. Fletcher, for appellee.

The income tax act of 1912, as amended by the act of 1914, does not embrace transportation companies. Tax laws are strictly construed against the taxing power. 25 R. C. L. 1092, section 307; 4 R. C. L. Sup. 1621, section 307; Anderson v. Durr, 100 Ohio, St. 251, 126 N.E. 57, 17 A. L. R. 82; Schwab v. Doyle, 258 U.S. 529, 42 S.Ct. 391, 66 U.S. (L. Ed.) 747; U. S. v. Field, 255 U.S. 257, 41 S.Ct. 256, 65 U.S. (L. Ed.) 617, 18 A. L. R. 1461; U. S. v. Merriman, 68 L.Ed. 244; Eidman v. Martinez, 184 U.S. 578, 583, 46 L.Ed. 697, 701, 22 S.Ct. 515.

Foreign railroad corporations engaged in interstate commerce are not included in section 4 of the act, within the meaning of the rule quoted. There is no exemption provided for incomes derived from operations partly within and partly without the state; there is no formula provided for computing the income derived from operations partly within and partly without the state; there is no method provided for assessing such incomes; and it seems clear that the legislature did not undertake to deal with such incomes.

Railroad corporations and railroad property were assessed prior to the passage of the statute creating the State Tax Commission in 1918 by the members of the Railroad Commission who were constituted the State Railroad Assessors. Section 6573, Hemingway's Code (section 3856, Code of 1906); section 7023, Hemingway's Code (section 4384, Code of 1906), the former statute dealing with privilege taxation and the latter with ad valorem taxation.

By chapter 138, Laws of 1918, sections 7769-L et seq., Hemingway's Code Supplement, the members of the State Tax Commission were constituted state assessors of railroads and other public service corporations, and in these sections the imposition of taxes and the methods for ascertaining and assessing same are provided.

It will be observed, therefore, that the taxing statutes applicable to railroad corporations are entirely separate, apart and distinct from the statutes imposing taxes and providing for the assessment and collection thereof, of other persons and corporations. The distinction has been clearly pointed out by Justice ETHRIDGE in I. C. R. R. Co. v. Miller, St. Rev. Agt., 141 Miss. 223, 106 So. 636.

Reverting then to the income tax statute which provides for the assessment of incomes by counties, the assessment to be made in the county of which the taxpayer is a resident, it becomes obvious that the legislature was not imposing an income tax upon a foreign railroad corporation operating in and through many counties and operating into, out of and through the state of Mississippi into other states. The method provided for the ascertainment and assessment of the tax is not adaptable to a tax to be imposed upon an income derived from the transportation of commerce moving in many counties of the state, moving partly within and partly without the state; and applying the rule: "The assessor assesses the railroad as a unit," it becomes manifest that the statute does not apply--as the learned chancellor concluded--to transportation companies. This court has expressly adjudged that the method provided by the old law was, and is, the exclusive method for ascertaining, assessing and collecting the tax. Hattiesburg Gro. Co. v. Robertson, St. Rev. Agt., 126 Miss. 34, 88 So. 4. See, also, State v. Piazza, 66 Miss. 426, 6 So. 316; State Rev. Agt. v. Tonella, 70 Miss. 701; Ice Co. v. Adams, 75 Miss. 410.

Prior to 1924 there was no taxing law imposing an income tax liability upon transportation companies, and particularly foreign railroad corporations deriving income from operations partly within and partly without the state. The method of assessment and collection of taxes provided in the old law being exclusive, the formula for computing the tax being exclusive, the definition of "income" being exclusive, no officers other than the county assessor state auditor, and county tax collector having any power or authority to enforce the statute, the state railroad assessors having no power or authority to enforce the statute, it must have been concluded by all of these...