Reinhart v. McDonald

• Decision Date: 17 August 1896
• Docket Number: 11,915.
• Citation: 76 F. 403
• Court: U.S. District Court — Northern District of California
• Parties: REINHART et al. v. McDONALD, State Treasurer.

76 F. 403

REINHART et al. v. McDONALD, State Treasurer.

No. 11,915.

United States Circuit Court, N.D. California.

August 17, 1896

C. N Sterry and E. S. Pillsbury, for plaintiffs.

W. F Fitzgerald, Atty. Gen. Cal., and W. H. Anderson, Asst. Atty Gen. Cal., for defendant.

McKENNA Circuit Judge.

The allegations of the complaint in this action are that the Atlantic & Pacific Railroad Company of which the plaintiffs are the receivers, is the lessee of a certain line of railroad situated in the state of California, known as the Southern Pacific Railroad Company; that, in the operation of such railroad, it was equipped with 89 cars and locomotive engines, of the value of $56,810, which rolling stock it had in use and operation at all times along the line of its road that all of said rolling stock has been assessed, and the tax thereon collected, in the territory of New Mexico; that the said rolling stock was used in interstate commerce carried on between the states of Illinois and California; that the railroad leased from the Southern Pacific Company as aforesaid was assessed by the state board of equalization to said Southern Pacific Railroad Company, and the assessment of said railroad, including the pro rata share of the entire rolling stock of the Southern Pacific in California, being levied thereon, was paid. The action is brought against the treasurer of the state of California, in accordance with section 3669 of the Political Code, which enables suit to be brought against the treasurer of the state for taxes claimed to be illegal. The defendant demurs to the complaint, on the ground of want of jurisdiction of the court to maintain the action, and also on the ground that the complaint does not state a cause of action.

The principal point made on the first ground of the demurrer is that the suit is essentially one against the state of California, and that such suit cannot be maintained against the state without its consent, and that the consent given in section 3669 of the Political Code is of suit brought only in the state courts. The view that this is a suit against the state is presented by the attorney general with great strength and plausibility. But, even if the contention be true, I think it is a fair deduction from the authorities, as from principle, that, the right of suit against the treasurer of the state being given, it may be brought in the federal courts when other grounds of jurisdiction exist, as they do in this case. I do not think it is necessary to review the cases. They are very numerous, and the care of counsel has cited all of them.

The claim of exemption from taxation of the property described in the complaint is based on the following grounds: First, that the property is engaged in interstate commerce; second, that its situs is New Mexico, where taxes on it have been paid; third, that the Atlantic & Pacific Railroad Company is not the owner of the railroad, and, under the constitution of the state of California, the rolling stock can only be assessed to the owner of the railroad.

The first two grounds are answered by the cases of Marye v. Railroad Co., 127 U.S. 117, 8 Sup.Ct. 1037, and Pullman's Palace-Car Co. v. Pennsylvania, 11 Sup.Ct. 876.

The constitution of the state of California provides as follows:

Section 1, art. 13: 'All property of the state, not exempt under the laws of the United States shall be taxed in proportion to its value, to be ascertained as provided by law. The word 'property,' as used in this article and section, is hereby declared to include moneys, credits, bonds, stocks, dues, franchises, and all other matters and things, real, personal and mixed, capable of private ownership.'

Section 10, art. 13: ' * * * The franchise, roadway, roadbed, rails, and rolling stock of all railroads operated in more than one county in this state shall be assessed by the state board of equalization, at their actual value, and the same shall be apportioned to the counties, cities and counties, cities, towns, townships, and districts in which such railroads are located, in proportion to the number of miles of railway laid in such counties, cities and counties, cities, towns, townships, and districts.'

These provisions seem to need no interpretation. The first section is so comprehensive that it can only be defined in terms of itself; and it certainly embraces-- as it exactly and carefully says it embraces-- all matters and things 'capable of private ownership.' Section 10 provides a means for the assessment of certain kinds of those things, and it was said by the supreme court of California in People v. Sacramento Co., 59 Cal. 325, to be self-executing. But it is urged by the plaintiff that there must be a union of them in the same ownership, as a condition of assessment. This view is supported by an ingenious and puzzling argument, aided (or apparently aided) by some remarks of Justice Harrison in People v. Central Pac. R. Co., 105 Cal. 587, 38 P. 907. The learned justice said:

'The franchise is a unit, and can be transferred only as a unit, and the rolling stock has no particular situs in any county, but, in connection with the roadway and roadbed, is essential for the enjoyment of the franchise, while the whole-- the franchise, roadway, roadbed, rails, and rolling stock--constitute an entirety incapable of division.'

The question and circumstances of that case were different from those of the case at bar. In that case the question before the court was the constitutionality of certain provisions of the Political Code of the state, making a class of railroads operated in more than one county. To sustain this classification, it was necessary for the court to find, and the court did find, a difference in the condition of property...