State ex rel. Marr v. Luther

• Decision Date: 05 January 1894
• Citation: 57 N.W. 464,56 Minn. 156
• Parties: STATE EX REL. MARR v. LUTHER, COUNTY AUDITOR.
• Court: Minnesota Supreme Court

56 Minn. 156

57 N.W. 464

STATE EX REL. MARR

v.LUTHER, COUNTY AUDITOR.

Supreme Court of Minnesota.

Jan. 5, 1894.

(Syllabus by the Court.)

1. Sp. Laws 1865, c. 8, entitled “An act in relation to the taxation of lands granted to the Lake Superior and Mississippi Railroad Company,” passed March 3d, repealed the proviso attached to section 1 of the prior act, (Sp. Laws 1865, c. 2,) passed February 23d, and exempts the granted lands from taxation in the ordinary way as long as they continue to be owned by the company.

2. Assuming, without deciding, that laws passed subsequent to the adoption of the state constitution, providing for the payment of a percentage on the gross earnings of a railroad company in lieu of all other taxes on its railroad and granted lands, were invalid when passed, they were validated by the constitutional amendment of 1871, (article 4, § 32a.)

Appeal from district court, Aitkin county; Holland, Judge.

Action, at the relation of James N. Marr, against Samuel S. Luther, auditor of Aitkin county, for mandamus to compel defendant to assess for taxation certain lands. From an order discharging the preliminary writ issued, relator appeals. Affirmed.

A. Y. Merrill, for appellant.

Lusk, Bunn & Hadley, for respondent.

MITCHELL, J.

The question presented by this appeal is whether the “granted” lands of the St. Paul & Duluth (formerly Lake Superior & Mississippi) Railway Company are subject to be listed and taxed as other lands in the state. These lands were acquired in part under the “swamp-land grant” by the state to aid in the construction of the road, (Sp. Laws 1861, c. 1,) and in part under the congressional grant of May 5, 1864, to the state, in trust for the same purpose, and the act of the legislature (Sp. Laws 1865, c. 2) transferring the grant to the railway company. It is conceded that the railway company became entitled to the particular lands sought to be taxed more than five years before the commencement of these proceedings.

1. The first contention of the relator is that the lands are thus taxable by the terms of the proviso attached to section 1, c. 2, Sp. Laws 1865, which is “that said railroad lands shall be taxed as other lands in the state in five years after the said company shall become entitled to said lands.” On the other hand, the respondent claims that this proviso was repealed by Sp. Laws 1865, c. 8. In order to determine which of these contentions is correct, it becomes necessary to place the two acts side by side, compare their provisions, and ascertain the purpose of each.

Chapter 2 was passed February 23d, and chapter 8, March 3d, eight days later. The first was primarily a “land-grant act,” as indicated by its title,-“An act to execute the trust created by the act of congress,” etc., although it also provided for a system or mode of taxation of the lands and other property of the railway company. The second act was exclusively a tax law, the title being “An act in relation to the taxation of lands granted” to the railroad company. The system of taxation provided for in the first act was that the company should each year, “after said road is completed and in operation,” pay into the state treasury 3 per cent. of the gross earnings of the road, which should be in lieu and in full of all taxation and assessment upon the road, its appurtenances and appendages, and all other property, real, personal, and mixed, including the lands hereby and heretofore granted to said company; provided, however, that such granted lands should be subject, like lands of individuals, to be taxed as fast as the same are sold or conveyed or are leased by the company, or stumpage sold or contracted to be sold thereon. Had the act stopped here, then, clearly, the lands would have remained exempt from taxation in the ordinary way as long as the company continued to own them, and had not contracted to sell them, or leased them, or sold stumpage. The proviso referred to was attached, limiting this exemption to five years from the time the company became entitled to the lands. This method of taxation, for some reason, evidently proved unsatisfactory, for eight days afterwards the legislature, under suspension of the rules, and on the same day that the bill was introduced, passed chapter 8, revising the whole system of the taxation of the property and lands of the company. The system of taxation provided by this act was that, whenever any of the granted lands should be contracted to be sold, conveyed, or leased, the same should be placed upon the tax list for taxation as other real estate, but that, in enforcing the collection of taxes thereon, only the improvements and interest of the purchaser or lessee should be sold, and that the title or interest of the company, or of any trustee or mortgagee, should not be affected. The effect of this, by necessary implication, was that until sold, contracted to be sold, or leased, the lands were to be entirely exempt from taxation in the ordinary way.

The act further provided that the company should, during the first three years after 30 miles of its road were completed and in operation, pay into the state treasury 1 per cent., and during the next 7 years 2 per cent., and thereafter 3 per cent., of the gross earnings of the road, and “that the payment of such per centum annually as aforesaid shall be and is in full of all taxation and assessment whatever.” A repealing clause, usually found at the end of a statute, is found in the body of this act, which provides that “the provisions of the several acts [there were some prior to 1865] in relation to the taxation of the lands of said company, so far as the mode of taxing such lands conflict with the provisions of this act, shall be and they are repealed.” The extent and scope of this repealing clause is the chief point of difference between the parties. Does it repeal the “five-year” limitation in the act of February 23d? is the question.

Counsel for the relator invokes two rules of construction: First, that repeals by implication are not favored; second, that statutes granting exemption from taxation are to be construed strictly in favor of the state. Even conceding the applicability of these rules to the case, it seems to us perfectly apparent that, as respects taxation, the second act was intended as a revision of or substitute for the first, and to prescribe the only rule on the subject. The second act covers all the ground covered by the first, making various changes, some in favor of the state, and others in favor of the company, although, as usual in those days, mostly the latter. And it is also perfectly clear to us that under the second act, even if the repealing clause was absent, the legislature intended that the granted lands should remain exempt from ordinary taxation as long as they continued to belong exclusively to the company. But neither of the rules are applicable. The case is one of express, and not of implied, repeal. The second act contains an express repeal, and the only question is what or how much it repeals. Neither is the question whether there is a grant of immunity from taxation, but whether a commuted system or mode of taxation has been provided. It is a common error, in construing statutes like the present, to assume that because the commuted tax is fixed with reference to, and is wholly derived from, the gross earnings of the road, therefore the lands are exempted from taxation altogether. The percentage of the gross earnings is paid as taxes on both the railroad and the granted lands, and, although derived wholly from the former, is a commutation tax alike on both.

Passing now to the construction of the language of the repealing clause in the second act, we think it is perfectly plain that the phrase “mode of taxing such lands,” cannot refer to the mere machinery for taxation, such as listing, assessing, collecting, etc., for neither act furnishes any mode of doing these things. The phrase was evidently used in the broader sense of “method” or “system.” In this sense the first act provided the commuted system for five years, and ordinary taxation thereafter; the second act, a graduated commuted system, as long as the company continued to own the lands, without limitation as to time. The repugnancy or inconsistency between the proviso referred to and the second act is apparent, for the effect of reading the proviso into the second act would be to change and...