Pullman Co v. Richardson Hines v. Same

• Decision Date: 12 March 1923
• Docket Number: Nos. 143-149,s. 143-149
• Citation: 67 L.Ed. 682,261 U.S. 330,43 S.Ct. 366
• Parties: PULLMAN CO. v. RICHARDSON, State Treasurer of California. HINES, Director General of Railroads, v. SAME
• Court: U.S. Supreme Court

261 U.S. 330

43 S.Ct. 366

67 L.Ed. 682

PULLMAN CO.

v RICHARDSON, State Treasurer of California.

HINES, Director General of Railroads,

v. SAME.

Nos. 143-149.

Argued and Submitted Dec. 4, 5, 1922.

Decided March 12, 1923.

Messrs.C. A. Severance, of St. Paul, Minn., Gustavus S. Fernald, of Chicago, Ill., and Burke Corbet, of San Francisco, Cal., for plaintiffs in error.

[Argument of Counsel from pages 331-333 intentionally omitted] Messrs.U. S. Webb and Raymond Benjamin, both of San Francisco, Cal., for defendant in error.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

These were actions by the Pullman Company against the Treasurer of California to (recover moneys paid under protest as state taxes. Each action related to a designated part of the tax for a distinct year and was brought on the theory that the part designated was invalid because imposed under constitutional and statutory provisions repugnant to the Constitution of the United States. The Treasurer prevailed in the court of first instance and in the Supreme Court of the state. 185 Cal. 484, 197 Pac. 346. The Pullman Company then brought the cases here on writs of error.

In 1910 California adopted an amendment to her Constitution, section 14 of article 13, one purpose of which was to effect a separation of state from local taxation by subjecting public service corporations to a designated tax for state purposes and relieving them from taxation for county and municipal purposes. Referring to this feature of the amendment, the Supreme Court of the state said in San Francisco v. Pacific Telephone & Telegraph Co., 166 Cal. 244, 248, 135 Pac. 971, 973:

'Under the old system, the property and franchises of the corporations above referred to were taxed for both state and local purposes. The amendment creates a new mode of taxing such property and franchises, and appropriates the revenue so raised to state purposes solely. The new method by which taxes are collected exclusively for the state, is substituted for the former system, under which the same subjects were taxed for both state and local purposes.'

The pertinent parts of the amendment are as follows (Laws 1910-11, p. xliv):

'Sec. 14 (a) * * * All sleeping car, dining car, drawing room car, and palace car companies, * * * operating upon the railroads in this state, * * * shall annually pay to the state a tax upon their franchises, * * * rolling stock, * * * and other property, or any part thereof, used exclusively in the operation of their business in this state, computed as follows: Said tax shall be equal to the percentages hereinafter fixed upon the gross receipts from operation of such companies and each thereof within this state. When such companies are operating partly within and partly without this state, the gross receipts within this state shall be deemed to be all receipts on business beginning and ending within this state, and a proportion, based upon the proportion of the mileage within this state to the entire mileage over which such business is done, of receipts on all business passing through, into, or out of this state.

'The percentages above mentioned shall be as follows: * * * On all sleeping car, dining car, drawing room car, palace car companies, * * * three per cent. * * * Such taxes shall be in lieu of all other taxes and licenses, state, county and municipal, upon the property above enumerated of such companies except as otherwise in this section provided. * * *

'(e) * * * In the event that the above named revenues are at any time deemed insufficient to meet the annual expenditures of t e state, including the above named expenditures for educational purposes, there may be levied, in the manner to be provided by law, a tax, for state purposes, on all the property in the state, including the classes of property enumerated in this section, sufficient to meet the deficiency.

'(f) All the provisions of this section shall be self-executing, and the Legislature shall pass all laws necessary to carry this section into effect, and shall provide for a valuation and assessment of the property enumerated in this section. * * * The rates of taxation fixed in this section shall remain in force until changed by the Legislature, two-thirds of all the members elected to each of the two houses voting in favor thereof.'

Several acts to carry the amendment into effect were adopted from time to time, but it suffices here to say of them, first, that the computing percentage applicable to sleeping car, dining car, drawing room car, and palace car companies was increased to 4 per cent. in 1913 (chapter 6, Laws 1913) and reduced to 3.95 per cent. in 1915 (chapter 2, Laws 1915); secondly, that provision was made for enforcing the tax by either the usual tax sale or a suit in the name of the state (chapter 335, §§ 20, 21, 24, Laws 1910-11; chapter 6, § 5, Laws 1913); and, thirdly, that there was further provision that if the tax was not paid within a designated period the delinquent company, if a domestic corporation, 'will forfeit its charter' and if a foreign corporation, 'will forfeit its right to do business in this state,' and that the transaction of any business in the state on behalf of a company incurring any such forfeiture, except to settle its affairs, should be punished by substantial fines (Laws 1911, c. 335, § 24; Laws 1913, c. 6, § 5, and chapter 320, § 9).

The taxes in question were levied under the new system in 1911 and six subsequent years. All were alike, save in particulars not material here; so it will be enough to state the facts relating to the tax levied in 1911.

The Pullman Company is an Illinois corporation engaged in operating sleeping and parlor cars on the railroads of the country. Some of its cars are operated between points in California, some between points within and points without that state and some through the state between points outside. In 1910 the company's gross receipts from all its operations within the state were $1,905,302.97. Of this sum $938,786.80 came from operations which began and ended in the state and $966,516.17 came from that part of the interstate operations which was within the state. The latter amount was arrived at by taking every service performed partly within and partly without the state and determining on a mileage basis what portion of the sum received therefor was attributable to the part of the service within the state. To illustrate: If a passenger was carried in a sleeping car from Oakland to Chicago for $14, and one-seventh of the mileage was in California, $2 was deemed the gross receipt for so much of the service as was rendered in that state.

The gross receipts were calculated and reported by the company and the state officers accepted the calculation. The amount of the tax was computed by applying to the gross receipts the percentage rule prescribed by the amendment to the state Constitution. In this way a tax of $57,159.08 was levied in 1911. Had the gross receipts from intrastate business alone been considered the tax would have been $28,163.61—that is, $28,995.47 less than the actual levy.

The company objected to the consideration of the gross receipts from the interstate business, although they came only from service within the...