State Treasurer v. Auditor General
| Decision Date | 15 June 1881 |
| Citation | 46 Mich. 224,9 N.W. 258 |
| Court | Michigan Supreme Court |
| Parties | STATE TREASURER v. AUDITOR GENERAL. |
The Michigan Southern Railroad Company was established by the state of Michigan under a special charter which defined the basis on which it was to be taxed. The state afterwards authorized it to consolidate with the Northern Indiana Railroad Company, with no change in the basis of taxation by the same, and a general railroad law was passed at about the same time. This law and various similar acts afterwards passed provided that "every corporation formed" thereunder should be taxed at a certain rate. The Michigan Southern & Northern Indiana Company meanwhile became part of the Lake Shore & Michigan Southern Railway Company under consolidation agreements with corpoporations in other states through which the route of the consolidated company lies and in which its business is done. A writ of mandamus sought for by the state treasurer to compel the auditor general to assess the company under the general law was denied; it is not a corporation framed under that law and taxes are properly assessed upon the basis fixed by the original special charter.
Mandamus.
Fitch R. Williams, for relator.
Jacob J. Van Riper, for respondent.
The controversy in this case concerns the proper basis for estimating the tax to be annually assessed by the state authorities against the Lake Shore & Michigan Southern Railroad Company in respect to that portion of its road in the state of Michigan. Its determination involves the construction of various statutes, but especially the general railroad law as originally passed and subsequently revised and the application to this company of the provisions of that law respecting taxation.
The Michigan Southern Railroad Company was originally organized under a special charter. Laws 1846, p. 170. The company purchased of the state an uncompleted railroad, and by its charter it was provided that "the said company shall pay to the state an annual tax of one-half of 1 per cent. upon the capital stock paid in, including the $500,000 of purchase money paid or to be paid to the state, until the first day of February, 1851, and thereafter an annual tax of three-fourths of 1 per cent. upon its capital stock paid in, including the $500,000 of purchase money aforesaid, and also upon all loans made to said company for the purpose of constructing said railroad, or purchasing, constructing, chartering, or hiring of steamboats authorized by this act to be held by said company, which tax shall be paid in the last week in January in each year to the state treasurer, and the property and effects of said company whether real, personal, or mixed shall in consideration thereof be exempt from all and every other tax charge and exaction by virtue of any law of this state now or hereafter to be in force, except penalties by this act imposed." Section 31.
Afterwards in the year 1855, an act was passed by the legislature of this state "to authorize the Michigan Southern Railroad Company to consolidate with the Northern Indiana Railroad Company." Laws 1855, p. 300. The latter company was at that time operating a railroad from the point where the Michigan Southern Railroad at its westerly end intersected the southern boundary of the state to Chicago, in the state of Illinois, and the consolidation would give to the consolidated company a continuous line from the eastern boundary of this state to Chicago, and also by means of the Erie & Kalamazoo Railroad, a leased road extending from Toledo, in the state of Ohio, westerly, and connecting with the line of the Michigan Southern Railroad at Adrian, a continuous line from Toledo to Chicago. One of the provisions of the act of consolidation was that "the said corporation so to be organized by virtue of this act, shall continue subject to the same rate of tax as though such consolidation should not take place, and the amount of its capital and loans hereafter upon which such taxation shall be paid, shall be such portion of the whole of its capital and loans as is actually employed in the state of Michigan, to be ascertained on or before the first of January of each year by the auditor general of this state, from the annual report of such corporation, or from such other reports on oath as he may deem necessary for the purpose, to be ordered by him from the office of such corporation." Section 3.
The consolidation authorized by this act immediately took place, and the consolidated company appears to have been treated and considered as a new corporation from this time on. The same legislature which passed this act of consolidation also passed a general law under which companies formed to construct railroads were authorized to incorporate themselves. By one of the sections of this law "every corporation formed" under its provisions was required to pay to the state an annual tax of 1 per cent. on the capital stock paid in. Comp.Laws 1857, p. 652. The general railroad law was amended in 1869, by an act approved April 3d of that year, and one of the amendments changed the annual tax to "an annual tax of 1 per cent. on the capital stock paid in," and also upon all such sums of money "as shall from time to time be invested in the original constructing and stocking or in any new constructing or stocking of said road." Laws 1869, p. 262. There was never any claim that up to this time the Michigan Southern & Northern Indiana Railroad Company was taxable otherwise than as provided by the charter of the Michigan Southern Railroad Company in the section above recited, and by the act of consolidation above mentioned.
Among other provisions of the general railroad laws of 1855 was one that "any railroad company in this state forming a continuous or connected line with any other railroad company, may consolidate with such other company either in or out of this state into a single corporation, provided that no such companies having parallel lines, or lines diverging and converging, but being continuous, shall be permitted to consolidate themselves." The act pointed out the method in which the consolidation should be effected, and provided that when the proceedings were completed and the consolidation agreement duly filed in the office of the secretary of state the consolidating corporations "shall be merged in the new corporation provided for in such agreement, to be known by the corporate name therein mentioned." Laws 1855, pp. 174, 175.
After the passage of the amendatory act of 1869 and within the same year, the Michigan Southern & Northern Indiana Railroad Company entered into consolidation agreements with certain Ohio, Pennsylvania and New York corporations, whereby it was intended to form a continuous line from Chicago to Buffalo, in the state of New York, with various branches or side lines which need not be particularly mentioned. It is assumed in this case that there were statutes in the several states above named purporting to authorize such consolidation agreements, and they were carried into practical effect, and the consolidation agreements duly filed with the secretary of state at Lansing as above provided. The consolidated company was now called the Lake Shore & Michigan Southern Railroad Company, and it paid taxes on the same basis on which they had previously been assessed against the Michigan Southern & Northern Indiana Railroad Company.
In 1871 the laws providing for the incorporation of railroad companies were revived and the basis of taxation was essentially changed. Every company was thereby required to make to the auditor general, an annual report which, among other things, should show the gross receipts of the company for the preceding year, and it was further required to pay to the state treasurer an annual tax computed as follows: Upon the gross receipts to the amount of $3,000 or less per mile of road regularly operated, 1 1/2 per cent.; upon the gross receipts in excess of $3,000 and less than $6,000 per mile, 2 per cent.; and upon the gross income in excess of $6,000 per mile, 3 per cent. Laws 1871, p. 354. No tax has ever been assessed against the Lake Shore & Michigan Southern Railroad under this law, or under the law next mentioned.
In 1873 the general railroad law of 1871 was revised and the basis of...
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