State v. Chi. & N. W. Ry. Co. State V. Chi.
| Decision Date | 16 July 1906 |
| Citation | 128 Wis. 449,108 N.W. 594 |
| Parties | STATE v. CHICAGO & N. W. RY. CO. STATE v. CHICAGO, ST. P., M. & O. RY. CO. STATE v. MINNEAPOLIS, ST. P. & S. S. M. RY. CO. STATE v. CHICAGO, M. & ST. P. RY. CO. |
| Court | Wisconsin Supreme Court |
Where the right of a matter to be determined upon appeal, with the logical basis therefor as regards legal principles, cannot be clearly discovered and satisfactorily stated without such a broad view of the matter as to include important matters of difference in other pending or known to be impending litigation, though the same were not presented by counsel, through oversight or otherwise,--that broad consideration of the case should be taken, rather than that justice in the particular case should be jeopardized or left in any uncertainty as to the grounds for the result reached.
Chapter 74, p. 92, Laws of 1854, the original act in this state for obtaining public revenue from railroads, is the same, in all essential features, as sections 1211 to 1214, inclusive, Rev. St. 1898, except as modified by chapter 174, p. 153, Laws of 1860.
The sections of the present statutes mentioned, except as they have been displaced by the ad valorem method of obtaining revenue from railroad companies, have not been changed except by chapter 308, p. 541, Laws of 1899, providing that the license shall issue only on approval by the railroad commissioner of the return required by section 1211.
The original law did not impose a tax on railroad property, or a tax at all, within the meaning of section 1, art. 8, of the Constitution, though it did impose a tax “in the just and proper sense of that term” in that it imposed on the owners of property the duty of contributing, indirectly, on account thereof to the public revenue.
The basic ideas of Laws 1854, p. 92, c. 74, are (1) an exemption of railroad property from ordinary taxation, such as is dealt with by the constitutional provision on the subject; (2) an exaction, tax so-called, in lieu thereof and in consideration of the exemption, based on the business in which the property is used.
The idea that an exaction in lieu of taxation mentioned in the Constitution is such taxation in fact, is a palpable non sequitur.
Chapter 174, p. 153, Laws of 1860, in connection with a companion enactment, neither, however, referring to the other, preserved the features of the law of 1854 as regards an exaction from the owner of railroad property, based on the business of the road, in lieu of and as compensation for exemption of such property from ordinary taxation--that under the constitutional provision referred to--but omitted all features giving rise to the controversy as to whether it was the latter, and added those features suggested in previous opinions in this court, as giving such an exaction the character of compensation for the privilege of operating the road.
Section 1212 of the statutes imposed an absolute obligation on every railroad company doing business in this state, to pay to the latter the proportion of gross earnings mentioned in section 1214, as compensation for operating its road.
The other features of section 1211 to 1214, inclusive, are administrative in character, and intended only to secure certainty of performance as to the obligation created by section 1212.
The purpose of the return of gross earnings required by section 1211, is to enable the state to determine the proportion of such earnings to which it is entitled as compensation for the privilege accorded of operating the road for the ensuing year, and, though approved by the railroad commissioner, it is only prima facie binding as to the real right of the matter.
The duty of the railroad commissioner under the law of 1899, as to approving the return of gross earnings made under section 1211, is administrative in character. The legislative idea is that the return, only when approved as required, shall be prima facie evidence of the correct basis for determining the amount to be paid to the state.
The law of 1899 contemplates that the approval of the return shall precede the application for the license.
The power of revocation of the license, reserved in section 1212, is exercisable in case of any default in performing the obligation, created by such section and acceptance of the privilege.
The statement of points decided by this court as to whether chapter 74, p. 92, Laws of 1854, imposed a tax in a constitutional sense, which appears in volume 9 of the Official Reports at page 449, is a verbatim copy of the decision of the question made by this court November 17, 1855.
The determination so made as to the law of 1854 not imposing a tax “within the meaning of the constitutional provisions” has been the settled law of this state since 1862, and so far as the features of such law, in letter or spirit, are included in sections 1211 to 1214, inclusive, such decision establishes the character thereof as regards whether they deal with taxation in a constitutional sense.
The character of the law of 1854, as regards not imposing a tax “within the constitutional provisions” is emphasized in sections 1211 to 1214 aforesaid, in that by exclusion and inclusion the idea of a tax in a constitutional sense was carefully omitted therefrom and repelled by its affirmative features, and the idea of a privilege tax resting on contract obligations was included.
A tax in the ordinary sense is not a debt: it does not involve any element of contractual obligation and is not enforceable by ordinary remedies for the collection of debts, without statutory authorization in that regard.
A privilege tax involves contract obligations. The acceptance of the privilege implies a promise to pay the statutory equivalent therefor, and the obligation may be enforced by ordinary remedies for the enforcement of ordinary contract obligations.
The ideas involved in a privilege tax are these: The state offers a privilege on condition of being compensated therefor. The acceptance of such offer creates a contract. The law operating upon the acts of the parties raises the implied promise to pay the required compensation. The full consummation of the transaction involves the exchange of equivalents, the same as in any other case of an executed contract.
The privilege tax exacted from a corporation for opportunity of conducting its business in this state is not within section 1, art. 8, of the Constitution. It is referable to the taxing power in the general sense, the contracting power, the right reserved to amend corporation charters, and the right to exempt property from taxation.
The grant of a charter to a corporation and its acceptance, create a contract between the grantor and the grantee, within the protection of the constitutional inhibition as to laws violating the obligations of contracts.
The contract between the corporation and the state, made as aforesaid, is subject to alteration under the power reserved in the Constitution to alter or amend corporate charters, which is deemed to be embodied in every such charter.
When a corporate charter, originally or by amendment under the reserved power of the Legislature in that regard, conditions the exercise of a corporate privilege upon the corporation paying to the state a proportion of its income, the acceptance of the charter, originally or as amended, by operating under it, creates a contract between the state and the corporation. The exaction, when plainly made for taxation is a tax in “the just and proper sense of the term,” in the broad view which includes all public revenues derived from persons, natural or artificial, but is, at the same time, a debt, not a tax in the constitutional sense: a tax merely involving the reciprocal duties between sovereign authority and those enjoying its benefits.
Section 1212, Rev. St. 1898, imposes an obligation for payment to the state by every railroad company of the full stated percentage of its gross earnings, as a consideration for the privilege of operating its road. The acceptance of the privilege creates a debt to the state for the full amount thereof.
Upon acceptance by a railroad company of the offered privilege to operate its road by actually operating the same, the obligation to pay the stated compensation therefor becomes fixed, rests on contract, and is fully redeemable only by fully paying the same, as in case of any other absolute obligation to pay money.
There is no difference, as regards the contract basis, between exactions from foreign corporations and those from domestic corporations for the privilege of doing business in this state.
A penalty imposed by the statute for failing to perform a legal duty as regards payment of a tax, strictly so-called: a tax not involving any contract element, when incurred becomes, in effect, a part of the tax, and cannot be avoided whether the default be excusable or inexcusable from a moral standpoint. It cannot be forgiven at all, any more than the tax itself, in the absence of legislative authorization to that effect.
The pecuniary penalty feature in section 1214, enforceable in respect to failure to pay any portion of the compensation due the state from any railroad company for the privilege of operating its road, being an instrumentality for the enforcement of a tax characterized by a contractual obligation to pay it, it does not necessarily follow from such a default that the penalty is collectible regardless of whether such default is excusable, testing the matter by principles of natural justice.
In case of a penal statute in aid of the enforcement of contractual obligations, such strict construction thereof in favor of the party upon which it bears is permissible as will avoid so reading it as to violate principles of natural justice, in the absence of unmistakable language in the act to the contrary. Such a statute if necessary to avoid manifest oppression may be construed by quite as arbitrary a...
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