State v. N. Pac. Ry. Co.
| Decision Date | 16 July 1915 |
| Docket Number | No. 19328[20].,19328[20]. |
| Citation | 153 N.W. 850,130 Minn. 377 |
| Parties | STATE v. NORTHERN PAC. RY. CO. |
| Court | Minnesota Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Ramsey County; F. N. Dickson, Judge.
Action by the State against the Northern Pacific Railway Company. From a judgment for defendant, plaintiff appeals. Affirmed.
Where two carriers enter into an arrangement by which one becomes practically the hiring and disbursing agent of the other in the performance of duties partly owing by both, paying out for and receiving back from the other only the actual cost of the service, with no intention of gaining revenue or making a profit out of the transaction, held that, where such arrangement is made in good faith and not in fraud, subterfuge, or evasion of the obligations of either party to the state or to the public, such moneys are not subject to the gross earnings tax.
Where such services are included in the freight charges of the other railway companies, which pay a gross earnings tax thereon, held, that to compel defendant to pay a tax on these same receipts would be in the nature of double taxation, exacting the commutation taxes on the same property twice, which cannot lawfully be done.
Defendant and certain navigation companies agreed that defendant should employ stevedores to perform certain work, part of which it was the duty of defendant to perform; the navigation companies paying to defendant the actual cost of the labor. Defendant, in hiring the men to do the work, really acted for the boat companies as hiring and disbursing agent, paying for the actual cost of the work, making no profit, and receiving back from the boat companies only what it expended. Held that, in the absence of fraud, subterfuge, or evasion of the obligations of either party to the state or to the public, moneys received from such boat companies under such circumstances are not subject to the gross earnings tax. Lyndon A. Smith, Atty. Gen., and William J. Stevenson, Asst. Atty. Gen., for the State.
C. W. Bunn and Emerson Hadley, both of St. Paul, for respondent.
This is an appeal from the judgment for defendant entered in the district court of Ramsey county, Minn., in an action brought by the state to enforce a claim against the defendant for gross earnings taxes on two omitted items.
Defendant is a common carrier operating lines of railroad in this state.
From the year 1899 to 1911, inclusive, defendant as such common carrier operated certain freight warehouses at Minneapolis and Duluth on its line of railway, using them for the purpose of receiving and transferring to cars freight for shipment, for temporarily storing freight, and for receiving freight from its cars for delivery to consignees or connecting carriers. Certain other railway companies having lines of railway running into said two cities did not have freight house facilities at such points and during said years the freight of such other railway companies was handled at the freight houses of the defendant and by the employés and agents of the defendant; said agents and employés assuming to deal and treat with shippers as agents and employés of the said other railway companies. During said time such railway companies have paid to defendant as compensation for the use of its freight warehouses and the services of its employés in performing such services a certain flat rate per ton for the freight so handled. Defendant's employés in performing the services and in billing and collecting charges as between themselves and the public acted as the agents of such other companies. They reported and accounted directly to such other companies in all such matters, but were paid wages by defendant only.
The flat rate per ton received by defendant represented as nearly as possible the actual cost of the services performed, and was agreed upon for convenience and ease of accounting.
The sums received as aforesaid were all received for handling freight in the course of and as an incident to transportation by the other railway companies; the other companies received for such transportation, including the said services performed by defendant, their lawful published tariff rates, and all the freight charges so received by said other companies (except the Duluth, South Shore & Atlantic Railway Company), were duly returned by them to the state of Minnesota as a part of their gross earnings and taxes thereon were duly assessed and paid.
The defendant during all of said times performed services for the said Duluth, South Shore & Atlantic Railway Company in hauling its freight trains and cars over defendant's lines and in switching cars for said company. Defendant's earnings in Minnesota for such services were duly returned by defendant and taxes paid thereon.
During the years 1904 to 1911, inclusive, the defendant owned certain warehouses at Duluth, located on its lines and used in its railroad business. The warehouses were situated on wharves or piers and were so arranged that defendant's cars could be loaded or unloaded on one side of the warehouse and freight boats plying to and from the port of Duluth could be loaded or unloaded on the other side. Freight can be transferred through the warehouses from the cars to the boats and from the boats to the cars. It is sometimes temporarily stored in such warehouses.
During the times mentioned it was the duty of the companies operating the boats, as part of the transportation thereof by them, to unload the in-bound freight from the hold of its boats and put it into such warehouses and to load the out-bound freight into such vessels from such warehouses. Defendant's duty was to unload lake-bound freight from its cars into the warehouses and to load from such warehouses into cars all freight from such boats for points on its lines of railway. By arrangement with the boat companies the defendant employed stevedores to perform all the manual labor of handling all of said freight; the vessels furnishing the mechanical power for hoisting from and lowering freight into the holds of the vessels. Under the agreement the boat lines paid to the defendant a certain flat rate per ton for all freight handled in delivering said freight to and from the dock. This flat rate per ton was, as nearly as could be determined by long experience, the actual cost of handling this freight from the vessels to the warehouse and from the warehouse to the vessels.
The defendant did not during the...
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