Southern Railway Co. v. Commonwealth
| Citation | 204 Ky. 388 |
| Parties | Southern Railway Company v. Commonwealth, By, etc. Southern Railway Company v. Commonwealth, By, etc. |
| Decision Date | 13 June 1924 |
| Court | Court of Appeals of Kentucky |
Appeals from Woodford Circuit Court.
HUMPHREY, CRAWFORD & MIDDLETON and WALLACE & HARRIS for appellant.
W. D. JESSE, L. W. MORRIS, HAZELRIGG & HAZELRIGG and HOBSON & HOBSON for appellee.
Upon former appeals of these cases, we held that "in each of the years involved (1914-1918, inclusive), defendant Southern Railway Company (a Virginia corporation), was the owner of and actually operated the lines of the `Southern Railway Company in Kentucky,'" and as a consequence, the lower court "should have assessed against defendant Kentucky's portion of its intangible property" on the mileage basis, as provided by section 4081, Kentucky Statutes.
As there had been no attempt to make the assessments, the cases were remanded to the circuit court, with directions "that it proceed to ascertain the amount of intangible property which should be assessed for each of the years involved in Kentucky according to the prevailing rule of law upon the subject." Commonwealth v. Southern Railway Co., 193 Ky. 474, 237 S. W. 11.
Upon the return of the cases, the defendant filed amended answers, and upon stipulated facts the court found that for 1915 Kentucky's portion of defendant's franchise had been fully assessed by and in the name of the Southern Railway Company in Kentucky, and that the value of its franchise employed in Kentucky not so assessed for each of the other years involved was as follows: 1914, $972,662.00; 1916, $2,018,561.00; 1917, $1,730,090.00; 1918, $3,028,592.00.
Judgments were entered accordingly, and the defendant has prosecuted an appeal in both cases, the first of which relates to the years 1914 and 1916, and the second to the years 1917-18, but it is admitted that the assessments for 1917 and 1918 were made in accordance with and are concluded by the former opinion herein, and the judgment in that case will therefore be affirmed without further discussion.
The grounds upon which we are urged to reverse the judgment in the other case relating to the years 1914 and 1916 are, that for those years there was no such unity of use and operation between defendant's line in Kentucky and its lines outside of the state as to permit the assessment of its franchise, as was done, upon the theory that all of its owned and controlled lines, in and out of the state, constituted a single system; that as a matter of fact its line in Kentucky for such years had neither physicial nor operative connection with lines outside of the state, unless it be with its line running from New Albany, Ind., to East St. Louis, Ill., and that to apply the notion of organic unity to all of its lines under such circumstances is violative of the Fourteenth Amendment of the Constitution of the United States, in that it brings into Kentucky for taxation purposes values wholly outside the state. Whether or not this is true is the sole question presented for decision upon these appeals.
The first contention, upon which there is but little if any emphasis, is that defendant's line in Kentucky is not connected with its line from Louisville through Indiana and Illinois to St. Louis, because of the fact the latter enters Louisville from New Albany, Indiana, over tracks of the Kentucky & Indiana Terminal Railroad Company. It is stipulated, however, that the latter company is equally and jointly owned by the defendant and two other railroad companies using its tracks and other terminal facilities at Louisville, and that the defendant operates through trains under a single management from St. Louis, Missouri, through Louisville to Danville, Kentucky, and we are sure that there is not only such unity of use and control but also a sufficient physical unity, if that were required, to warrant defendant's line from St. Louis to Danville, Ky., being regarded as a single unit, and that it would not be violative of the Fourteenth Amendment of the federal Constitution to assess its franchise in Kentucky upon the mileage basis, treating these lines in and out of Kentucky as a single system. L. & N. R. Co. v. Commonwealth, 181 Ky. 193, 204 S. W. 94; L. & N. R. Co. v. Greene, 244 U. S. 522; Pittsburgh v. Backus, 154 U. S. 431; Fargo v. Hart, 193 U. S. 499.
But according to our understanding of the record if this should be done and other lines owned by defendant excluded, the defendant has already, through the assessment made by and in the name of the Southern Railroad Company in Kentucky, been assessed the full value of its franchise employed in the state for each of these two years, and the assessments fixed by the lower court can be sustained only if the 566 miles embraced in the St. Louis-Danville line are considered as a part of a system embracing also about 8,000 miles of lines owned, operated, leased, and controlled by the defendant, and extending from Washington, D. C., south through Virginia, the Carolinas, Tennessee, Georgia, Florida, Alabama, and Mississippi.
The question for decision then finally narrows to whether for the purpose of valuing defendant's franchise employed in Kentucky, the line from Danville, Kentucky, to St. Louis, Missouri, is to be considered as a separate unit or as a part of a system including also defendant's eastern and southern lines. For convenience we shall refer to the former as the Northern branch and the latter as the Southern branch of defendant's lines.
It is admitted that these two branches, for the years 1914 and 1916, had no physical connection with each other, unless it be through the Mobile & Ohio Railroad Company, of which the defendant owns a majority of the capital stock, and which connects with defendant's northern branch at East St. Louis, Ill., and with its southern branch at Mobile, Ala. With...
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