South Nashville St. R. Co. v. Morrow

• Decision Date: 27 February 1889
• Citation: 11 S.W. 348
• Court: Tennessee Supreme Court
• Parties: SOUTH NASHVILLE ST. R. CO. <I>v.</I> MORROW, Trustee.

Page 348

11 S.W. 348

SOUTH NASHVILLE ST. R. CO.

v. MORROW, Trustee.

Supreme Court of Tennessee.

February 27, 1889.

Error to circuit court, Davidson county; W. K. McALISTER, Judge.

Vertrees & Vertrees and Hill & Granbery, for plaintiff in error. Matt W. Allen, M. R. Priest, J. B. Daniel, T. M. Steger, and G. W. Pickle, for defendant in error.

LURTON, J.

The plaintiff in error is a corporation, organized in 1859 under a charter granted by the legislature of this state. As such corporation it obtained from the city of Nashville a right to lay down, maintain, and operate a line of street railway upon certain streets of that city. Under this charter and right of way granted by the city, it has, for many years, been running a line of street cars. In 1887 it was assessed by the regular assessor for purposes of state and county taxation upon the following valuations: Real property, $10,000; personal property, $50,000. In 1888 it was assessed as follows. Mules, $3,600; cars, $2,500; real estate $9,000; stockholders, $75,000. By section 24 of the assessment law of March 25, 1887, it is provided that if at any time after the assessments have been made it should come to the knowledge of the chairman or judge of the county court, or the clerk of the county court, the county trustee, or sheriff, that any person or corporation has not been assessed, or has been assessed upon an inadequate amount, it shall be the duty of such officer on motion of the attorney general to cite said person or corporation, their agent or attorney, or representative, to appear before the trustee for the purpose of being assessed according to law; "and said trustee is hereby authorized and empowered to make the proper assessment against such person, firm, or corporation; * * * and cause the same to be entered on the tax-books for collection." Acts 1887, p. 34. Under this authority the defendant, who is the county trustee for Davidson county, upon the motion of the attorney general, and upon notice to the corporation, reassessed the corporate property for both 1887 and 1888, and at the same time, and upon the same notice treating the corporation as the agent for and representative of the shareholders and bondholders of said company, he assessed the shares of stock in said corporation to the individual shareholders by name, and the outstanding coupon bonds of the company to "unknown owners." By this reassessment the valuation of the corporate property has been largely increased. The shares of stock and the bonds of the company, not having before been assessed, are assessed as omitted property. The company denied the right of the county trustee to increase the assessment for 1887, it having theretofore paid the tax assessed against it for that year. It denied the right of the trustee to assess the shares of stocks, or to assess its bonds in such manner as to compel the company to collect the tax thus assessed from its shareholders or bondholders, or to compel the company to pay such tax so assessed, or be liable for same. It likewise denied the liability of its bonds to assessment, and the legality of the assessment made. Both the shareholders and the company denied the right of the trustee to assess both the company's property and the shares of capital stock as being double taxation. Thereupon an agreed case was made up to have the validity of these several assessments determined, and to have the act of 1887 construed, and its constitutionality considered, and the liability of the company by reason of said assessments under the provisions of the act declared and ascertained. The parties to this agreed case are the company and its shareholders upon the one side and the county trustee upon the other. The bondholders are unknown, and of course are not parties to this suit. The agreed case was submitted to the circuit court of Davidson county, and all of the assessments were sustained as valid, except in so far as the franchise of the corporation had been, in the opinion of the circuit judge, assessed separately and independently of other property of the company. The action of the learned circuit judge is supported by an exceedingly able and exhaustive opinion, which, having been made a part of the record, has been of great service in reaching the conclusions we shall presently announce.

That part of the assessment quashed by the circuit court will be first disposed of. The assessor has undertaken to itemize the several properties of the company, and to value them separately. The franchises of the company, together with its easement in the streets of Nashville, under the ordinances of said city and the contract between the city and the street-railway company, are assessed as of a valuation of $50,000. This assessment was quashed under the authority of the case of Railroad Co. v. Bate, 12 Lea, 573, as being a separate and independent assessment upon a mere franchise. We think this is a misconception of the property included in the item valued at $50,000. The right of way in the streets of Nashville is an easement in realty, and is assessable as realty. This is well settled. 1 Desty, Tax'n, 300, 361, 405, 379. In the case of Railway Co. v. City of Chicago, the question as to whether the easement of a street-railway company in the streets of a city was assessable as property was determined in the affirmative. Concerning such an interest the court said: "It is true, as urged by counsel, that the railway company has not become the owner of any portion of these streets in fee, but it has certainly through its charter * * * and its contract with the city acquired a property in them of a most valuable character, which neither the legislature nor the city can take away without the consent of the company, and capable, like other property, of being sold and conveyed. The city council has made a contract with the company, by which it has granted to the latter what is substantially a leasehold interest in a portion of this street for a number of years. It has acquired rights in the street which neither any other person or company, nor the general public, possesses." 90 Ill. 573. This easement in the streets, together with the franchises, are assessed as of a valuation of $50,000. It would have been better to have assessed these elements of value with the iron rails, ties, spikes, etc., as together constituting so much street railway. In the case of Railroad Co. v. Bate, supra, we held that an assessment upon a line of railway, as a continuous line, without a separate and independent assessment upon its franchises as a corporation, was not error. This was sound law, and we adhere to it. But we do not think that case governs this. The franchise to be a corporation is property, and as such must be assessed. It ought, however, to be assessed with the tangible property of the company, and not separately. Here it has been assessed along with a valuable easement, an interest in realty, and we see no reason for quashing such an assessment as void.

The assessment of property omitted from the assessment made by the regular assessor is expressly authorized by the act of 1887. We have repeatedly sustained the validity of such assessments, and the constitutionality of the acts authorizing them. State v. Whitworth, 8 Lea, 594; Shelby Co. v. Railroad Co., 16 Lea, 401, 1 S. W. Rep. 32. That part of the act which authorizes an additional assessment when the original assessment has been upon an inadequate valuation is not new legislation. The same provision was contained in the act of 1873, and a reassessment made of the property of the Louisville & Nashville Railroad Company was sustained by this court as being authorized by that act. Railroad Co. v. State, 8 Heisk. 790. See, also, the case of State v. Bank, 16 Lea, 114. We do not see any constitutional objections to such legislation. The objection that the actual payment of the tax as originally assessed should preclude any further or additional assessment, does not go to the constitutionality of the act. The objection is not of serious import in any view of it. The reply of the circuit judge is complete in every aspect of the question. He said: "The constitution and laws prescribed that all property should be assessed according to its value, and if by the misfeasance or non-feasance or mistake of the assessor it is not assessed according to its value, but upon an arbitrary basis fixed by the assessor at far less than its value, why should the tax debtor escape simply because he has made payment? * * * It may be that such a law will work inconvenience and annoyance to the citizen, but all tax laws are odious and vexatious. It is said the citizen ought to know when he is through with the tax gatherer, but he will know when he has paid his taxes on his property according to its value. He will know then he is secure against reassessment, and the law will protect him."

The next objection to be considered is that the assessment of the corporate property and of the shares of stock is double taxation, and prohibited by that clause of the state constitution which requires that "all property shall be taxed according to its value." Conceding that the effect of this provision is to prohibit double taxation, the first inquiry is as to what is double taxation. It is not every indirect duplication of a tax which constitutes double taxation. If the duplication be only an incidence of the tax, it is not double taxation in the sense of the requirement that equality and uniformity shall be preserved. Taxes may be divided into two great classes, — direct and indirect. A "direct tax," as defined by Mr. Mill, is "one demanded from the very person who it is intended or desired should pay it." A tax assessed as a direct tax, in the sense in which Mr. Mill uses the term, may nevertheless fall ultimately upon one other than the one desired to pay it. To illustrate: Political economists are generally agreed that the greater part of a tax...