State ex rel. St. Louis County v. Evans

• Decision Date: 07 May 1940
• Docket Number: 36888
• Citation: 139 S.W.2d 967,346 Mo. 209
• Parties: State of Missouri at the relation of the County of St. Louis, Relator v. Clarence Evans, Jesse A. Mitchell, Jack Stapleton, Members of the State Tax Commission, and Lloyd C. Stark, Forrest Smith, Robert W. Winn, Dwight H. Brown and Roy McKittrick, Members of the State Board of Equalization, and W. N. Doss, Secretary of both Commissions
• Court: Missouri Supreme Court

139 S.W.2d 967

346 Mo. 209

State of Missouri at the relation of the County of St. Louis, Relator

v.

Clarence Evans, Jesse A. Mitchell, Jack Stapleton, Members of the State Tax Commission, and Lloyd C. Stark, Forrest Smith, Robert W. Winn, Dwight H. Brown and Roy McKittrick, Members of the State Board of Equalization, and W. N. Doss, Secretary of both Commissions

No. 36888

Supreme Court of Missouri

May 7, 1940

Motion for Rehearing Overruled May 7, 1940.

Opinion filed at September Term, 1939 April 18, 1940; Motion for rehearing filed; motion overruled at May Term, 1940, May 7 1940.

Record quashed.

C W. Detzen for relator.

(1) In providing for the assessment and taxation of railroads the Legislature intended to tax operating companies and the entire railroad systems controlled by them, rather than separate corporate entities holding title to small parts of the system, in order that the entire going value of the system, including intangible as well as tangible property may be taxed. The Terminal Railroad Association of St. Louis should be assessed by respondents under the statutes for all of the property controlled and used by it in its railroad system, regardless of the fact that the record title to parts of its main line is held by separate corporations which it owns completely, and the respondents erred in rejecting the order of the county court determining that the association should be assessed for the property returned by the Terminal Railway and the Belt Terminal. Chap. 59, Art. XIII, R. S 1929; State v. Wiggins, 208 Mo. 622, 106 S.W. 1005; Secs. 4812, 10010, R. S. 1929; Attorney General v Boston, 124 N.E. 257; People v. Lohmer, 112 N.E. 181; McCoach v. Minehill, 228 U.S. 295; Lewellyn v. Pittsburgh, 222 F. 177; Traction v. Collector, 223 F. 984; State ex rel. v. Railroad, 215 Mo. 479, 144 S.W. 986. (2) A principal purpose of the railroad taxing law is to allocate the taxes on railroads between all counties which contribute to their success, and the courts will not permit evasion of this legislative purpose through the medium of holding companies, but will disregard the legal fiction of distinct corporation existences. Taxes on all of the property controlled and used in the operation of the railroad system of the Terminal Railroad Association of St. Louis, whether owned by it or held in the names of separate companies which it owns completely, should be allocated by respondents between the city and county of St. Louis in proportion to the number of miles of mainline track in each of those jurisdictions. Chap. 59, Art. XIII, R. S. 1929; Sec. 10010, R. S. 1929; Douglas v. Minneapolis, 150 N.W. 422; Chicago v. County, 99 Neb. 208; State v. Wiggins, 106 S.W. 1012, 208 Mo. 622; State v. Liberty, 53 S.W.2d 899, 331 Mo. 386; C., M. & St. P. Ry. v. Minneapolis, 247 U.S. 487; Hunter v. Baker, 225 F. 1006; Westinghaus v. Allis, 176 F. 362; Fletcher, Cyclopedia of Corps., sec. 45, p. 63; United States v. Elgin, 298 U.S. 492.

Roy McKittrick, Attorney General, and Tyre W. Burton, Assistant Attorney General, for respondents; E. H. Wayman, Andrew J. Reis and Francis Finley of counsel.

(1) The State Tax Commission and the State Board of Equalization, having acted within their jurisdiction, their determination is final and conclusive. Wait v. A., T. & S. F. Ry. Co., 204 Mo. 491, 103 S.W. 60; State ex rel. Miller v. O'Malley, 117 S.W.2d 321, 342 Mo. 641; State ex rel. Kennedy v. Remmers, 340 Mo. 131, 101 S.W.2d 71; State ex rel. Shartel v. Skinker, 25 S.W.2d 478, 324 Mo. 955; State ex rel. Ball v. State Board of Health, 325 Mo. 41, 26 S.W.2d 777; State ex rel. v. Gilbert, 164 Mo.App. 139, 148 S.W. 125; State ex rel. Brunice v. Franklin, 283 S.W. 712, 220 Mo.App. 232; R. S. 1929, secs. 9854, 10017; R. S. 1929, Art. XIII, Chap. 59. (2) The action of the State Board of Equalization and the State Tax Commission in rejecting the order of the county court, which took the view that the Terminal Railroad Association should be assessed for the property returned by the St. Louis Terminal Railway Company and the St. Louis Belt & Terminal Railway Company, should be affirmed. (a) The St. Louis Terminal Railway Company and the St. Louis Belt & Terminal Railway Co., being distinct corporate entities, their roads being neither leased nor branch lines, were railroad companies within the meaning of Chapter 59, Article XIII, Revised Statute 1929, and each must make separate returns and be separately assessed. State ex rel. Hammer v. Wiggins Ferry Co., 208 Mo. 622, 106 S.W. 1005; Chap. 59, Art. XIII, R. S. 1929; R. S. 1929, secs. 10011, 10012; United States v. Baltimore, etc., Ry. Co., 226 U.S. 14, 57 L.Ed. 104, 33 S.Ct. 5; Paragraph 4 of Section 5 of the Interstate Commerce Act, as amended by Act of Congress 1933, 49 U.S.C. A., Title 49, Sec. 5, Par. 4 (1939 Cumulative Pocket Part, pp. 34, 35); Pullman's Palace Car Co. v. Mo. Pac. Ry. Co., 115 U.S. 587, 29 L.Ed. 499, 6 S.Ct. 195; Clark v. A., T. & S. F. Ry. Co., 319 Mo. 865, 6 S.W.2d 954; First Natl. Bank v. Davids, 43 Iowa 424; Guenther v. Patch, 140 N.Y.S. 223, 155 A.D. 27; City of Jeffersonville v. Louisville Bridge Co., 169 Ind. 645, 83 N.E. 337; People ex rel. Shipton v. Dunleith & Dubuque Bridge Co., 152 N.E. 526, 322 Ill. 99; State ex rel. Milwaukee Term. Railroad Co. v. Superior Court of King County, 103 P. 469. (b) The doctrine of corporate entity being one of substance and validity should be ignored with caution and only where used as a subterfuge or to accomplish an unlawful purpose, which is not present in this case, and respondents having determined as a fact that no such intimate relationship exists as to justify disregard of the corporate entity, their determination must be upheld. Pickwick Corp. v. Welch, 21 F. 669; St. Louis Union T. Co. v. Oregon Annual Conference, etc., 14 F.Supp. 41; Darlington Lbr. Co. v. Mo. Pac. Ry. Co., 243 Mo. 224, 147 S.W. 1052; Walker v. Gulf & I. Ry. Co., 269 F. 885; United States v. Elgin, Joliet & Eastern Ry. Co., 298 U.S. 492, 80 L.Ed. 1300, 56 S.Ct. 841; State ex rel. Hammer v. Wiggins Ferry Co., 208 Mo. 622, 106 S.W. 1005.

Arthur V. Lashly, Maurice P. Phillips, Marvin E. Boisseau, Oliver J. Miller, Glen Mohler, Arthur U. Simmons, Lashly, Lashly, Miller & Clifford and Atwood & Atwood for the School Districts and Municipalities of St. Louis County, amici curiae.

(1) By the statutes pertaining to the assessment and taxation of railroads it was the intention of the Legislature to give the State Tax Commission authority to assess for taxation only a complete operating entity or an entity actively engaged in transportion by rail. Such an entity referred to as a "railroad" in the statutes is the "System" or combined units considered as a whole and not its mere property owning affiliates separately. Chap 59, Art. XIII, R. S. 1929. This may be directly inferred from the language employed in the many sections and acts making up the railroad taxing statutes. (a) Only a railroad in its dynamic sense was intended to make a return to the state instead of to the local assessor. Sec. 10010, R. S. 1929. The term "every railroad company" means every person, association or corporation in charge of the operation of a railroad. State v. Wiggins Ferry Co., 208 Mo. 622, 106 S.W. 1012. (b) The terms "belonging to" or "owned by" as used in the statutes in reference to dynamic property are used interchangeably with the terms "control of," "hired," or "leased," and are intended to carry the meaning of "use of property in operation of transportation by rail," and not mere static ownership. Because the county court is to return all property to the State Tax Commission controlled by a railroad if it is omitted in its return. Sec. 10014, R. S. 1929. Because all property leased by a railroad if used in its operation is to be returned. Sec. 10010, R. S. 1929. Although under all other circumstances leased property is taxed in the hands of the owner. State ex rel. Glenn v. Bridge Co., 134 Mo. 321; State ex rel. Zeigenhein v. Thompson, 149 Mo. 441. Because hired property is ordinarily taxed in the hands of the owner, but when used in the operation of a railroad it is to be returned to the State Tax Commission for assessment. Sec. 10009, R. S. 1929. Because the Commission itself may find and include in its valuation or assessment of a "railroad" all property used, hired, leased, controlled and owned by it, if no return is made to it. Sec. 10014, R. S. 1929. (2) This clearly appears from a study of the compulsions underlying the adoption of the statutes and which gave them birth. The manifest purpose considered historically is important. Wallace v. Woods, 340 Mo. 452. "The reason for the law is the life of the law." State ex rel. Pollock v. Becker, 289 Mo. 660, 233 S.W. 641. A study of the pre-existing conditions should be made. State ex rel. City v. Hackman, 293 Mo. 313. (a) It was the amalgamation of local railroads into multi-county systems and later state-wide systems which created the necessity for a state assessing agency. Tendencies in Railroad Taxation by Prof. Roswell C. McCrea, 15 Annals of Am. Academy, p. 335; Taxation of Railroads by Wilbur O. Hedrick, Wynkoop, Hallenbeck Co., Lansing, 1912; 5 State Taxation of Railroads. (b) It was also the wealth and earning power represented in the combined unit, not the separate local units, which was intended to be reached by a state assessing agency. (c) It was the necessity for devising a method for equal distribution of rolling stock between the subdivision through which the railroad ran that suggested a central agency. (3) This may also be determined by the practical application or operation of the law and the inequalities produced by any other solution. Bowers v. Mo. Mutual, 62 S.W.2d 1058. (a) For seven years the State Tax Commission and the ...