State v. Galveston, H. & S. A. Ry. Co.

• Decision Date: 07 November 1906
• Parties: STATE v. GALVESTON, H. & S. A. RY. CO. et al.
• Court: Texas Supreme Court

Page 71

97 S.W. 71

STATE v. GALVESTON, H. & S. A. RY. CO. et al.

Supreme Court of Texas.

November 7, 1906.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Action by the state against the Galveston, Harrisburg & San Antonio Railway Company and others. There was a judgment of the Court of Civil Appeals (93 S. W. 464), reversing a judgment of the district court in favor of the state, and rendering a judgment for each defendant, and the state brings error. Reversed and rendered.

See 93 S. W. 469.

R. V. Davidson, Atty. Gen., and W. E. Hawkins, Asst. Atty. Gen. for the State. Baker, Botts, Parker & Garwood and N. A. Stedman, for defendants in error.

BROWN, J.

The defendants in error, the Galveston, Harrisburg & San Antonio Railway Company, the New York, Texas & Mexican Railway Co., the Gulf, Western Texas & Pacific Railway Company, and the Galveston, Houston & Northern Railway Company were all incorporated under the laws of the state of Texas prior to the year 1905, and each of them was engaged in operating its line of railroad, which was situated wholly within the state, during the year 1905. Under an act of the Legislature of the state of Texas, approved May 3, 1905, the Galveston, Harrisburg & San Antonio Railway Company acquired the property, franchises, and rights of each of the other companies named, and is responsible for all of the obligations of the said other railroad companies.

The Twenty-Ninth Legislature of the state of Texas enacted the following statute, approved on the 17th day of April, 1905, which took effect on the 15th day of July, 1905 (Gen. Laws 1905, p. 336, c. 141):

"An act imposing a tax upon railroad corporations, the receivers thereof, and other persons, firms, and associations of persons, owning, operating, managing or controlling any line of railroad in this state, for the transportation of passengers, freight, and baggage or either, equal to one per cent. of their gross receipts, and providing for the collection and payment thereof, and repealing the existing tax on the gross passenger earnings of railroads.

"Section 1. Be it enacted by the Legislature of the state of Texas: Every railroad corporation, or the receiver thereof, and every other person, firm or association of persons, owning, operating, managing or controlling any line of railroad in this state, for the transportation of passengers, freight and baggage, or either, shall pay to the state an annual tax for the year 1905, and for each calendar year thereafter, equal to one per centum of its gross receipts, if such line of railroad lies wholly within the state; and if such line of railroad lies partly within and partly without the state, it shall pay a tax equal to such proportion of the said one per centum of its gross receipts as the length of the portion of such line within the state bears to the whole length of such line; provided, that if satisfactory evidence is submitted to the Comptroller at any time prior to the date fixed in section 2 of this act for the payment of the tax herein imposed, that any other proportion more fairly represents the proportion which the gross receipts of any such railroad for any year within this state bears to its total gross receipts, it shall be his duty to levy and collect for such year from such railroad a tax equal to such other proportion of one per centum of its total gross receipts.

"Sec. 2. For the purpose of determining the amount of such tax, the president, vice-president, general manager, treasurer or superintendent of such railroad corporation, or the receiver thereof, or such other persons, firm or association of persons, shall, on or before the first day of October, 1905, and annually thereafter, report to the Comptroller of Public Accounts, under oath, the gross receipts of such line of railroad, from every source whatever, for the year ending on the 30th day of June last preceding, and shall immediately pay to the State Treasurer the annual tax herein imposed, calculated on the gross receipts so reported. The Comptroller shall have power to require such other reports and affidavits as may in his judgment be necessary to protect the interests of the state, and he shall estimate such tax on the true gross receipts thereby disclosed, and assess and enforce the collection of such tax.

"Sec. 4. Should such report not be filed with the Comptroller, and the annual tax thereon estimated paid to the Treasurer on or before the 1st day of October of any year, a penalty of ten per centum upon the amount of such tax shall accrue thereon and be added thereto; and in case such report is not made or such tax and the penalty thereon are not paid on or before the 1st day of November thereafter, or in case of a failure to furnish the additional report or affidavit required by the Comptroller, for a longer period than thirty days after demand therefor, or in case of failure to pay within thirty days any tax or additional tax assessed by the Comptroller under this act, every such railroad corporation, or receiver thereof, or other such person, firm or association of persons, shall forfeit and pay to the state the sum of two hundred dollars for each day any of said reports or payments may be delayed, after the expiration of such periods, respectively.

"Sec. 5. The Attorney General is authorized and required, upon request by the Comptroller, to bring suit, in the name of the state, in Travis county, against the proper parties defendant, to recover all taxes, penalties and forfeitures mentioned in this act, and venue and jurisdiction of such suits is hereby expressly conferred upon the courts of Travis county. Service of all process issued in such suits may be had upon any officer or agent of such person, firm, association of persons, corporation, or receiver thereof, within this state, and such service shall in all respects be held legal and valid.

"Sec. 6. The tax provided for by this act shall be in addition to all other taxes levied by law. Subdivision 36 of article 5049, Revised Statutes of 1895, and any existing statute imposing a tax upon the gross passenger earnings of railroads, is hereby repealed.

"Sec. 7. The tax imposed by this act shall not be levied upon or collected from any person, firm, association, corporation, or receiver, owning, operating, managing or controlling any line of railroad in the state, after such person, firm, association, corporation or receiver shall have paid the tax upon its intangible assets, as provided for in an act of the Twenty-Ninth Legislature, entitled, `An act for the taxation of the intangible assets of certain corporations, and to provide for the creation of a state tax board for the valuation of such intangible assets, and for the distribution of said valuation for local taxation, and for the assessment of said assets, and the levy and collection of taxes thereon,' while the same may be in force and effect."

Each of said railroad companies made report to the Comptroller as required by the second section of said act of "its gross receipts from every source whatever." The reports were accepted and the taxes against each of the said railroads were by the Comptroller assessed upon the gross receipts of each company derived from all sources. Each of the said railroad companies refused to pay the tax assessed as required by law and each of them continued to refuse to pay the same until after the first day of November, 1905. This suit was instituted by the Attorney General of the state of Texas, in the name of the state, in the district court of Travis county, to recover the tax assessed against each of the said railroad companies and 10 per cent. thereon for the failure to pay the same on October 1, 1905, and also to recover of the said railroad companies the penalties declared by the said act for the failure and refusal to pay the said sum after the 1st day of November, 1905; the state claiming a forfeiture of $200 for each day from the said 1st day of November until the filing of the suit on the 24th day of November, 1905, and $200 per day for each day from that time until the time the trial should occur. The defendants each filed general demurrers, presenting the question of the invalidity of the law because of its conflict with different provisions of the Constitution of the United States and the Constitution of the state of Texas. Special answers were also filed, which presented the same questions in different forms. It was alleged that each of said roads was engaged in the transportation of passengers, freight, and baggage within the state of Texas which was destined to and came from points beyond the limits of the state and to foreign countries, as well as in the carriage of passengers, freight, and baggage between points within the said state of Texas; and that the gross receipts of each of the said companies were made up of the earnings of such road in the carriage of interstate commerce as well as intrastate commerce, which allegation was sustained by the evidence.

In the district court the case was tried without a jury and judgment was entered in favor of the state for 169/365 of 1 per cent. of the gross receipts of each railroad company derived from the carriage of passengers, freight, and baggage within the state of Texas, including that which was destined to points beyond the line of the state, and also that which came from points beyond the line of the state to the defendants' road within the state. The court refused to enter a judgment for the penalties of $200 per day, claimed by the state, upon the ground that the penalties were so excessive and unreasonable that they were void. Each railroad appealed to the Court of Civil Appeals for the Third District, which, upon a hearing, reversed the judgment of the district court and rendered judgment for each railroad company.

It is contended by the railroad companies that the act under examination violates article 14, § 1, of the Constitution of the...