People v. Illinois Cent. R. Co.

Decision Date08 June 1916
Docket NumberNo. 9412.,9412.
Citation112 N.E. 700,273 Ill. 220
CourtIllinois Supreme Court


Appeal from Auditor of Public Accounts.

Tax proceeding by the People of the State of Illinois against the Illinois Central Railroad Company. From an assessment by the auditor of public accounts, the company appeals. Aggregate value, as found by the court, ordered certified to the auditor of public accounts.W. S. Horton, and G. A. Dupuy, both of Chicago (Blewett Lee and J. G. Drennan, both of Chicago, of counsel), for appellant.

P. J. Lucey, Atty. Gen., and Hiram T. Gilbert and Charles Le Roy Brown, both of Chicago, for the People.


The Illinois Central Railroad Company on October 5, 1913, filed a schedule of its stock, property, and assets with the auditor of public accounts, giving as the value of its property to be assessed for state taxes for that year the sum of $189,185,593.49. On January 5, 1914, the company received a notice of the disapproval of the values given in said schedule and a statement of revaluation and assessment prepared by and under the direction of said auditor, fixing the valuation at $365,559,617.23. In the meantime the rate necessary to be levied to obtain the amount of tax required for state purposes had been fixed by the proper officers at 70 cents on the $100 valuation. The state auditor, in levying the state taxes against last mentioned at the rate of the full amount last mentioned at the rate of 70 cents. From that assignment this appeal was taken by the company to this court.

At its February term, 1914, this court appointed, with the approval of both parties, Hon. Leslie D. Puterbaugh as commissioner to take evidence and report the same, together with his conclusions as to the law and facts. Said commissioner proceeded to take evidence, and after full hearing of counsel for both parties made his report to this court at the February term, 1915, fixing the value of the property of said company at $117,466,638.94, which he found should be equalized at 70 per cent. of such total value, or at the sum of $82,226,647.25, and that the state tax should be levied only on one-third of this equalized value, or $27,408,883.41, and that this last-named amount should be assessed at 70 cents on each $100. To this report the state filed 133 exceptions in this court. The questions raised by these exceptions were thereafter fully argued in this court by counsel, both for the state and the company. We shall consider herein all questions that we deem essential to a decision of the points involved.

The General Assembly passed an act on February 10, 1851 (Priv. Laws 1851, p. 61), incorporating the Illinois Central Railroad Company. March 19th of the same year the company, having been duly organized by the election of a board of directors, accepted this act of incorporation. This act is the charter of said company. It invested the company with ‘all the powers, privileges, immunities and franchises, and of acquiring by purchase or otherwise, and of holding and conveying, real and personal estate which may be needful to carry into effect fully the purposes and objects of this act; authorized it to survey, locate, construct, complete, alter, maintain, and operate a railroad, with one or more tracks or lines of rails, from the southern terminus of the Illinois & Michigan Canal to a point at the city of Cairo, with a branch to the city of Chicago, on Lake Michigan, and also a branch, via the city of Galena, to a point on the Mississippi river opposite the town of Dubuque, in the state of Iowa; gave it a right of way, not exceeding 200 feet in width, for its entire length, with the authority to use any lands, streams, and materials of every kind for locating depots, constructing bridges, dams, embankments, station grounds, spoil banks, turnouts, engine houses, shops, and other buildings; fixed its capital stock at $1,000,000, and authorized a further increase from time to time, under certain conditions; granted certain lands in the state to said company for the purpose of assisting in locating, constructing, maintaining, and operating said road, granting to it, in addition to its right of way and other property, 2,595,000 acres of land. The sections of the act necessary to be particularly considered in passing on this question are 18 and 22 of said charter grant, and read as follows:

Sec. 18. In consideration of the grants, privileges and franchises herein conferred upon the said company for the purposes aforesaid, the said company shall, on the first Mondays of December and June, in each year, pay into the treasury of the state of Illinois five per centum on the gross or total proceeds, receipts, or income derived from said road and branches, for the six months then next preceding. The first payment of such percentage on the main trunk of said road to commence four years from the date of said deed of trust, and on the branches, six years from the date aforesaid, unless said road and branches are sooner completed, then from the date of completion. And for the purpose of ascertaining the proceeds, receipts or income aforesaid, an accurate account shall be kept by said company, a copy whereof shall be furnished to the Governor of the state of Illinois, the truth of which account shall be verified by the affidavits of the treasurer and secretary of such company. And for the purpose of verifying and ascertaining the accuracy of such account, full power is hereby vested in the Governor of the state of Illinois, or any other person by law appointed, to examine the books and papers of said corporation, and to examine, under oath, the officers, agents and employés of said company, and other persons. And if any person, so examined by the Governor or other authority, shall, knowingly and willfully, swear falsely, or if the officers making such affidavits shall, knowingly and willfully, swear falsely, every such person shall be subject to the pains and penalties of perjury.’

Sec. 22. The lands selected under said act of Congress, and hereby authorized to be conveyed, shall be exempt from all taxation under the laws of this state, until sold and conveyed by said corporation or trustees, and the other stock, property and effects of said company shall be in like manner exempt from taxation for the term of six years from the passage of this act. After the expiration of six years, the stock, property and assets belonging to said company shall be listed by the president, secretary, or other officer, with the auditor of state, and an annual tax for state purposes shall be assessed by the auditor upon all the property and assets of every name, kind and description belonging to said corporation. Whenever the taxes levied for state purposes shall exceed three-fourths of one per centum per annum, such excess shall be deducted from the gross proceeds or income herein required to be paid by said corporation to the state, and the said corporation is hereby exempted from all taxation of every kind, except as herein provided for. The revenue arising from said taxation, and the said five per cent. of gross or total proceeds, receipts or income aforesaid, shall be paid into the state of interest-paying state indebtedness, payment of interest-paying state indebtedness, until the extinction thereof: Provided, in case the five per cent. provided to be paid into the state treasury and the state taxes to be paid by the corporation, do not amount to seven per cent. of the gross or total proceeds, receipts or income, then the said company shall pay into the state treasury the difference, so as to make the whole amount paid equal at least to seven per cent. of the gross receipts of said corporation.’

Private Laws of 1851, pp. 71, 72.

In 1859 the General Assembly passed an act which referred particularly to the method of assessing the property of said company for the state tax, as required under said section 22 of the charter. Said act of 1859 provided, among other things, that if the company should neglect or refuse to list with the auditor, on or before the 1st day of April in each year, the stock, property and assets owned by said company, as required by its charter, then it should be the duty of the auditor to list the same and place a valuation thereon and assess thereon a tax, but he should only assess said property for state purposes, giving said auditor an opportunity to inspect the books of the companyand examine its officers, and providing further that if the company should list its stock, property and assets as required by its charter, and if the auditor believed the valuation placed by said company too low or that the company had not included all of its property, he should notify the railroad company of his disapproval thereof and proceed to make out a list himself, and then continued:

Sec. 4. That in order to make out the list herein provided to be made, the auditor may either make out the same in the aggregate, or by specifications of the particular kinds of stock, property and assets, owned by said company, as provided in section twenty-two of the charter of said company.

Sec. 5. That in either case provided herein, when the auditor shall make out the list and valuation, as herein provided, he shall notify said company thereof; and if said company shall be dissatisfied with such list and valuation they shall be allowed to appeal from the decision of the auditor to the Supreme Court, notice of which appeal shall be filed with the auditor, who shall thereupon transmit to the clerk of said Supreme Court a certified copy of said list and valuation; and it shall be the duty of said Supreme Court, at the term next succeeding the taking of such appeal, upon such evidence as may be presented by the state and said company, to hear and determine the aggregate value of the stock, property and assets owned by said company.

Sec. 6. That whenever an appeal is taken to...

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