Ozette Ry. Co. v. Grays Harbor County

• Decision Date: 09 February 1943
• Docket Number: 28448,28449.
• Court: Washington Supreme Court
• Parties: OZETTE RY. CO. v. GRAYS HARBOR COUNTY. POLSON LOGGING CO. v. SAME.

133 P.2d 983

16 Wn.2d 459

OZETTE RY. CO. v. GRAYS HARBOR COUNTY.

POLSON LOGGING CO. v. SAME.

Nos. 28448, 28449.

Supreme Court of Washington

February 9, 1943

Department 1.

Consolidated actions by the Ozette Railway Company, and by the Polson Logging Company, against Grays Harbor County to recover excessive taxes paid under protest. From judgments for defendant, plaintiffs appeal.

Affirmed.

Appeal from Superior Court, Grays Harbor County; John I O'Phelan, judge.

L. B Donley, of Aberdeen, for appellants.

Paul O Manley, of Aberdeen, and John L. Miller, of Montesano, for respondent.

STEINERT Justice.

The purpose of these two actions, which were consolidated for trial and for appeal, was to recover alleged excessive taxes paid under protest by the respective plaintiffs during two successive years. Defendant in its amended answers denied the material allegations of the complaints, and by way of affirmative defense alleged that the actions had not been commenced within the time allowed by law. Upon a trial to the court without a jury, findings of fact were made from which the court concluded (1) that the statute of limitations barred recovery of any portion of the taxes paid by plaintiffs for the first of the two years here involved; (2) that the taxes had not been paid under protest; and (3) that the assessments as levied by the defendant county were not excessive. From judgments dismissing their complaints, plaintiffs have appealed.

The two actions are identical except for the properties and the amounts involved. Appellants, Ozette Railway Company and Polson Logging Company, are corporations organized under the laws of the state of Washington. The railway company is a subsidiary of the logging company, all of its capital stock being owned and held exclusively by the latter. Each of these companies owns and operates, in its separate right, a logging railroad, used mainly for hauling logs from the logging company's timber lands to tidewater. The two railroads connect with each other, however, and all logs which are hauled over the Ozette Railway Company's road must of necessity be transported over the Polson Lgging Company's road in order to reach their destination. Both railroads and the timber to which they provide access are located wholly and solely within the geographical limits of Grays Harbor county, Washington.

During the year 1937, Polson Logging Company owned 30.72 miles of main line logging railroad and 25.20 miles of spur line railroad, subject to assessment and taxation. At the same time, the Ozette Railway Company was the owner of 12.21 miles of main line logging railroad, likewise subject to assessment and taxation. During the year 1938, Polson Logging Company owned 28.08 miles of main line logging railroad, 8.20 miles of branch line railroad 17.71 miles of spur line railroad, and 4.80 miles of abandoned railroad, all subject to assessment and taxation. In that same year, Ozette Railway Company was the owner of 12.21 miles of main line logging railroad and 2.80 miles of spur line railroad, similarly subject to assessment and taxation.

In 1937, the two companies hauled over these logging railroads 101,986,000 board feet of logs; in 1938, they hauled 74,673,273 board feet, of which 114,127 board feet were hauled for other parties, on contract; in 1939, they hauled 104,637,967 board feet, of which 6,147,489 board feet were hauled for third persons, similarly on contract. By the end of 1939, there were still left approximately 1,200,000,000 board feet of standing timber in the area tributary to these logging railroads, about one-half of which was owned by Polson Logging Company and allied interests. Thus, if the logging operations were, and should be, continued after 1939 at the same rate of progress as Before , it would require approximately twelve years to exhaust the timber tributary to these railroads.

It is conceded in these cases that neither of these logging railroads is a common carrier and that all hauling of logs for third parties was done under private contract.

For the year 1937, the assessor of Grays Harbor county assessed the logging railroad of appellant Polson Logging Company, for taxation purposes, at $125,255, and that of appellant Ozette Railway Company at $31,330. For the year 1938 the logging railroad of the Polson Logging Company was assessed at $113,870, and that of Ozette Railway Company at $34,975. These respective amounts represented computations of assessed valuations based on mileage of railroad track, as follows: Main line railroad assessed at $2,565 per mile, branch line trackage at $1,935 per mile, spur lines at $1,305 per mile, and the abandoned line at $600 per mile. There is no dispute concerning the assessed valuation placed upon the abandoned line. It is appellants' contention, however, that main lines, branch lines, and spur lines should all have been assessed upon a valuation of $1,171 per mile, which would represent fifty per cent of their alleged true valuation of $2,342 per mile.

In making these assessments, the county assessor and his deputies used a schedule based on recommended values suggested by the state tax commission. The assessing officers thereupon fixed the values of the logging railroads in question in the following manner: They first determined the original cost of the rails, ties, angle bars, spikes, and bolts, and of the clearing, grubbing, grading, surfacing, and ballasting of the roadbeds and the laying of the rails. From the total original cost of these items, there was deducted thirty per cent thereof for depreciation, and the reduced figure was taken to represent the true, or one hundred per cent, value at that time. The assessor then fixed the assessed valuation on a ration of forty-five per cent of the true value as previously determined. This same method of assessment was uniformly followed in assessing all logging railroads in Grays Harbor county for the periods here involved.

Appellants pleaded in their complaints that the assessor's valuations of the railroads were arbitrary, capricious, and without regard to the true values thereof, and that in making such assessments the assessor had taken into consideration, as elements of value, items that were incurred in the expense of building the railroads but which did not enter into their true values. Upon the trial appellants contended, and in their brief they now contend, that the only value of a logging railroad, for purposes of taxation, is the secondhand value of the removable equipment, namely, the rails, ties, angle bars, spikes, bolts, frogs, and switches, but that the costs of clearing, grubbing, grading, surfacing, and ballasting the roadbeds and laying the rails are to be considered merely as items of expense incident to logging operations, rather than as elements of substantial value.

In support of their contention that the only money value of a logging railroad is to be found in those items of removable equipment mentioned above, appellants produced several experienced loggers who testified that in a number of sales of logging railroads in that community the prices paid therefor were comparable to the sceap or salvage value of such equipment. However, the sales concerning which those witnesses testified involved transactions where the railroad ownerships were liquidated because logging operations had ceased; or where the use of the railroad as part of the logging operations had been discontinued; or where only a small amount of available timber was left, after which the purchaser of the railroad tore out the removable equipment and disposed of it elsewhere.

Appellants also called as witnesses two assessors from other counties in this state who testified that in assessing logging railroads in their counties they did not take into consideration the cost of clearing, grubbing, grading, surfacing and ballasting the rights-of-way, and laying the rails.

On the other hand, the respondent county introduced evidence as to the value of the logging railroads upon the theory of cost of construction and equipment used thereon, less depreciation, at the same time taking into consideration the facts that these railroads were in regular operation and that large timber holdings were tributary to them and would require their services for many years.

Upon the evidence as above outlined, the court found in favor of the respondent and dismissed the actions.

The first question to be decided on the appeal is whether any portion of appellants' claims for recovery is barred by the statute of limitations. Laws of 1931, chapter 62, § 6, p. 204 [Rem.Rev.Stat., § 11315-6 (P.C. § 6882-194)], reads, in part, as follows: '* * * No action instituted pursuant to this act [relating to the recovery of illegal taxes] or otherwise to recover any tax levied or assessed subsequent to the passage of this act shall be commenced after the 30th day of the next succeeding January following the date when said tax is payable.' That section was amended by Laws of 1939, chapter 206, § 48, p. 772 [Rem.Rev.Stat. (Sup.), § 11315-6 (P.C. § 6882-194)], which requires that such actions be brought not later than the thirtieth day of the next succeeding June following the year in which the tax became payable.

Taxes levied for the year 1937 became payable in 1938. Under the terms of the 1931 statute, any action for the recovery of taxes payable in 1938 would have to be instituted not later than January 30, 1939. If the 1939 amendment were for any reason applicable, the action for the recovery of taxes levied in 1937 and payable in 1938 would still have to be brought not later than June 30, 1939. The present actions were commenced November 27, 1939. Any recovery in these actions for 1937 taxes, payable in 1938, is...