N. Pac. R. Co. v. McGinnis

• Decision Date: 08 November 1894
• Citation: 4 N.D. 494,61 N.W. 1032
• Parties: NORTHERN PAC. R. CO. v. McGINNIS, County Treasurer.
• Court: North Dakota Supreme Court

4 N.D. 494

61 N.W. 1032

NORTHERN PAC. R. CO.

v.McGINNIS, County Treasurer.²

Supreme Court of North Dakota.

Nov. 8, 1894.

Syllabus by the Court.

1. Chapter 99 of the Laws of 1883, commonly known as the “Gross Earnings Law,” was repugnant to section 1925 of the Revised Statutes of the United States, and void.

2. The exemption of the plaintiff's land grant thereunder falls with the statute, and such lands are therefore taxable.

3. The payment by the plaintiff of the gross earnings tax under the gross earnings law, and the acceptance of the same by the territory (said payment being made before the admission of North Dakota as a state), do not bar the right of the different counties in which plaintiff's land grant is situated to levy taxes against such land.

4. Said land grant was not exempt from taxation, because the question of its nonmineral character had not been finally settled.

5. Unsurveyed portions of plaintiff's land grant are exempt from taxation where the survey fees have not been paid, under the rule laid down in Northern Pac. R. Co. v. Trail County, 115 U. S. 600, 6 Sup. Ct. 201, as the act of congress providing that said land grant shall be taxable despite the nonpayment of survey fees is by its terms declared to be inapplicable to unsurveyed lands.

6. Plaintiff cannot avail itself of that provision of this act which excepts lands in unorganizedcounties, for the reason that it has failed to allege that the lands in question were situated in an unorganized county at the time the taxes were levied. The action being in equity to have tax proceedings annulled, the burden is on plaintiff to show the illegality of which it seeks to avail itself.

7. Certain irregularities held fatal to the validity of the tax proceedings, but not the taxes themselves in equity. They are the same as are set forth in the opinion in Railroad Co. v. Barnes, 2 N. D., at page 389 et seq., 51 N. W. 386. Judgment is therefore directed to be entered for the amount of such taxes, interest, and penalties, under section 1643, Comp. Laws, and the tax proceedings are set aside.

Appeal from district court, Stutsman county; Roderick Rose, Judge.

Action by the Northern Pacific Railroad Company against Samuel K. McGinnis, county treasurer. From a judgment for plaintiff on the pleadings, defendant appeals. Reversed.

This action was brought by plaintiff to restrain defendant from selling certain lands held by it under a land grant, part of which were situated in an unsurveyed township, for taxes assessed and levied thereon for territorial, county, and other purposes subsequent to March 9, 1883, on the ground that said taxes were illegal and void, by virtue of an act approved March 9, 1883, which provides that, in lieu of all other taxation upon property of railroad companies, there should thereafter be paid a certain percentage of the gross earnings of such railroad companies.

E. W. Camp and S. L. Glaspell, for appellant. Ball & Watson and F. M. Dudley, for respondent.

CORLISS, J.

The complaint in this action is the same as that in the case of Railroad Co. v. Barnes, 2 N. D. 310, 51 N. W. 386. The judgment appealed from was rendered on motion for judgment on the pleadings; but the answer failed to deny any of the material averments of the complaint, and therefore, for the purposes of this decision, all of its allegations must be regarded as true. The action was brought for the same purpose as the case of Railroad Co. v. Barnes, supra. Some of the questions of law presented are the same as those discussed in that case. On these points further discussion is unnecessary. We will merely state our conclusions.

We hold that the gross earnings law of 1883 was unconstitutional, as being repugnant to section 1925 of the Revised Statutes of the United States, regulating taxation in the territory of Dakota. We regard this question as not open to debate in this court, for the reason that it is a federal question, and has been passed upon by the United States circuit court for this district, both the circuit judge (Judge Caldwell) and the district judge (Judge Thomas) being agreed on the point. Railroad Co. v. Walker, 47 Fed. 681. Judge McCONNELL, who sits in this case, desires to have it appear that he yields his former view, as expressed in Railroad Co. v. Barnes, 2 N. D. 310, 51 N. W. 386, to the binding force of this decision of the federal court, while still adhering to his previous opinion. The gross earnings act being void, it follows that no exemption of plaintiff's land grant could be claimed under it.

It is urged, however, with great earnestness, that, in view of the fact that the plaintiff has paid its gross earnings tax for the year in which the taxes in question were levied on its land grant, the territory and the counties were estopped from collecting such land taxes. But if, as was held in Railroad Co. v. Walker, 47 Fed. 681, there was no power in the legislature to exempt this land, it is difficult to see how an estoppel can be built up. If the power of the legislature is restricted, that restriction cannot be removed by the act of state officials in receiving moneys which they have no right to receive, and which the party paying it is under no obligation to pay. The plaintiff, being bound to know the law, was chargeable with knowledge at the time it made this payment to the state that the legislature was powerless to exempt its land grant in consideration of such payment or for any consideration whatever. It would be a novel doctrine that, after the people had tied the hands of their representatives by inhibitions in the fundamental law, these very representatives could ignore these prohibitions by procuring the co-operation of state officials vested with no such power, but as much subject to the restrictions of the organic law as the representatives themselves. Such officials cannot, by the receipt of money, or by express agreement, or in any other way, infuse life into a void exemption statute. The assessor charged with the duty of assessing the land attempted to be exempted, and taxpayers in the taxing district, have a right to insist that the land shall be taxed, for a law higher than statute law has so decreed. The duty of the assessor to assess, the right of the taxpayer to insist that it shall be assessed, rest upon an authority which transcends legislative authority, and cannot be affected by legislative action, although state officials may lend to this attempted violation of the rights of other taxpayers their unlawful co-operation. If this exemption feature were void only because of the invalidity of that portion of the law which assumes to tax the local earnings on interstate traffic, then there would be much force in this contention of plaintiff; not, however, on the theory of estoppel, but on another theory,-i. e. that of an executed agreement. If the territorial legislature had had power to exempt the plaintiff's land grant,-and we were of the opinion that the only ground on which the exemption could be held void was that a portion of the consideration for the exemption must fail, because the state could not tax the local earnings of interstate traffic,-then it might possibly be urged that, in so far as the plaintiff had in any year voluntarily paid such unenforceable tax on gross earnings, the state, by receiving the same, had acted upon its standing offer to receive the gross earnings tax, and, in lieu thereof, exempt the plaintiff's land grant and other property, and therefore had executed for that year its proposal to exempt for a specific consideration by allowing plaintiff to accept and act upon the same. But, where there is no power to exempt at all, no matter what the consideration is, the receipt of consideration under an offer to receive it in full for all taxes cannot confer such power. That there was no power to exempt the land grant at all was held in the Walker Case, which we follow. The spirit of provisions like that found in section 1925 of the Revised Statutes of the United States is to prevent unfair discrimination in taxation. The right to the protection of such provisions is the right of the taxpayers; and the object of such provisions is to secure such right from invasion, although the combined power of the state essays to override and destroy it. If, in defiance of constitutional restriction, land can be exempted by a statute, followed by the receipt of money under it, then, for the...