People of the State of New York Metropolitan Street Railway Company v. State Board of Tax Commissioners

Decision Date29 May 1905
Docket NumberNo. 74,74
PartiesPEOPLE OF THE STATE OF NEW YORK ex rel. METROPOLITAN STREET RAILWAY COMPANY, Plff. in Err. , v. STATE BOARD OF TAX COMMISSIONERS
CourtU.S. Supreme Court

On May 26, 1899, the legislature of New York passed an act amending the tax law of the state. N. Y. Laws, 1899, chap. 712, p. 1589. The first section reads:

'Section 1. Subdivision 3 of § 2 of the tax law is hereby amended to read as follows:

'3. The terms 'land,' 'real estate,' and 'real property,' as used in this chapter, include the land itself above and under water, all buildings and other articles and structures, substructures and superstructures, erected upon, under, or above, or affixed to the same; all wharves and piers, including the value of the right to collect wharfage, carnage, or dockage thereon; all bridges, all telegraph lines, wires, poles, and appurtenances; and supports and inclosures for electrical conductors and other appurtenances upon, above, and under ground; all surface, underground, or elevated railroads, including the value of all franchises, rights, or permission to construct, maintain, or operate the same in, under, above, on, or through streets, highways, or public places; all railroad structures, substructures and superstructures, tracks and the iron thereon; branches, switches, and other fixtures permitted or authorized to be made, laid, or placed in, upon, above, or under any public or private road, street, or ground; all mains, pipes, and tanks laid or placed in, upon, above, or under any public or private street or place for conducting steam, heat, water, oil, electricity or any property, substance, or product capable of transportation or conveyance therein or that is protected thereby, including the value of all franchises, rights, authority, or permission to construct, maintain, or operate, in, under, above, upon, or through any streets, highways, or public places, any mains, pipes, tanks, conduits, or wires, with their appurtenances, for conducting, water, steam, heat, light, power, gas, oil, or other, substance, or electricity for telegraphic, telephonic, or other purposes; all trees and underwood growing upon land, and all mines, minerals, quarries, and fossils in and under the same, except mines belonging to the state. A franchise, right, authority, or permission specified in this subdivision shall, for the purpose of taxation, be known as a 'special franchise.' A special franchise shall be deemed to include the value of the tangible property of a person, copartnership, association, or corporation situated in, upon, under, or above any street, highway, public place, or public waters in connection with the special franchise. The tangible property so included shall be taxed as a part of the special franchise. No property of a municipal corporation shall be subject to a special franchise tax.'

The portions in italics are the new matter introduced by the amendment. Other section were added to tax law, of which § 46 is as follows:

'§ 46. Deduction from special franchise tax for local purposes.—If, when the tax assessed on any special franchise is due and payable under the provisions of law applicable to the city, town, or village in which the tangible property is located, it shall appear that the person, copartnership, association, or corporation affected has paid to such city, town, or village for its exclusive use within the next preceding year, under any agreement therefor, or under any statute requiring the same, any sum based upon a percentage of gross earnings, or any other income, or any license fee, or any sum of money on account of such special franchise, granted to or possessed by such person, copartnership, association, or corporation, which payment was in the nature of a tax, all amounts so paid for the exclusive use of such city, town, or village, except money paid or expended for paving or repairing of pavement of any street, highway, or public place, shall be deducted from any tax based on the assessment made by the state board of tax commissioners for city, town, or village purposes, but not otherwise; and the remainder shall be the tax on such special franchise payable for city, town, or village purposes. The chamberlain or treasurer of a city, the treasurer of a village, the supervisor of a town, or other officer to whom any sum is paid for which a person, copartnership, association, or corporation is entitled to credit as provided in this section, shall, not less than five nor more than twenty days before a tax on a special franchise is payable, make and deliver to the collector or receiver of taxes or other officer authorized to receive taxes for such city, town, or village, his certificate showing the several amounts which have been paid during the year ending on the day of the date of the certificate. On the receipt of such certificate the collector, receiver, or other officer shall immediately credit on the tax roll to the person, copartnership, association, or corporation affected the amount stated in such certificate, on any tax levied against any person, copartnership, association, or corporation on an assessment of a special franchise for city, town, or village purposes only, but no credit shall be given on account of such payment or certificate in any other year, nor for a greater sum than the amount of the special franchise tax for city, town, or village purposes, for the current year; and he shall collect and receive the balance, if any, of such tax, as required by law.'

Other sections provide the machinery for assessment. This assessment was to be made by the state board of tax commissioners, and one section authorized certiorari to review their proceedings.

Under this law an assessment was made of the franchises belonging to the plaintiff in error, a corporation created by the consolidation of several corporations, having franchises for the maintenance and operation of street railroads in the city of New York. A certiorari to review this assessment was finally decided by the court of appeals of the state, which, on April 28, 1903 (174 N. Y. 417, 63 L. R. A. 884, 67 N. E. 69), sustained the assessment, and remanded the case to the special term of the supreme court, by which court a final judgment was entered, June 22, 1903. Thereupon this writ of error was sued out. Plaintiff in error makes three assignments of error:

'I. Error in declining to hold that the act of the legislature of the state of New York, approved May 26th, 1899 (chap. 712, Laws 1899), entitled 'An Act to Amend the Tax Law in Relation to the Taxation of Public Franchises as Real Property,' in so far as it authorizes the assessment imposed by the state board of tax commissioners on March 20, 1900, upon the franchises of the [plaintiff in error] relator above named, deprives said relator of its property without due process of law, in contravention of the 14th Amendment of the Constitution of the United States.

'II. Error in declining to hold that said legislative enactment, in so far as it authorizes the said assessment denies to said relator the equal protection of the laws, in contravention of the 14th Amendment to the Constitution of the United States.

'III. Error in deelining to hold that said legislative enactment, in so far as it authorizes the said assessment, impairs the obligations of contracts, in contravention of § 10, article 1, of the Constitution of the United States.'

Prior to 1874 the legislature of New York made direct grants of franchises, rights, or privileges to use the streets of the city of New York. In that year the following amendment to the Constitution was adopted (Constitution 1846, as amended, art. 3, § 18):

'The legislature shall not pass a private or local bill in any of the following cases: . . .

'Granting to any corporation, association, or individual the right to lay down railroad tracks. . . .

'But no law shall authorize the construction or operation of a street railroad except upon the condition that the consent of the owners of one half in value of the property bounded on, and the consent also of the local authorities having the control of, that portion of a street or highway upon which it is proposed to construct or operate such railroad, be first obtained, or, in case the consent of such property owners cannot be obtained, the general term of the supreme court, in the district in which it is proposed to be constructed, may, upon application, appoint three commissioners, who shall determine, after a hearing of all parties interested, whether such railroad ought to be constructed or operated, and their determination, confirmed by the court, may be taken in lieu of the consent of the property owners.'

In 1884 an act was passed (Laws 1884, chap. 252, p. 309) giving to the local authorities power to grant franchised for street railroads. This act provided:

'Sec. 7. The local authorities of any incorporated city or village to whom application, under the provisions of this act, may be made for consent to the construction, maintenance, use, operation, or extension of a street surface railroad upon any street, road, avenue, or highway, may, at their option, provide for the sale of and sell at public auction the franchise, subject to all the provisions of this act, to so construct, maintain, use, operate, or extend such street surface railway. . . .

'Sec. 8. Every corporation incorporated under, or constructing or operating a railroad constructed or extended under, the provisions of this act, within the cities of the state having a population of two hundred and fifty thousand or more, as aforesaid, shall, for and during the first five years after the commencement of the operation of any portion of its railroad, annually, on the 1st day of November, pay into the treasury of said respective cities in which its road is located to the credit of the sinking fund thereof, 3 per cent of its gross receipts for...

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