State v. Nevada Cent. R. Co.

• Decision Date: 11 May 1905
• Docket Number: 1,662.
• Citation: 81 P. 99,28 Nev. 186
• Parties: STATE v. NEVADA CENT. R. CO. et al.
• Court: Nevada Supreme Court

81 P. 99

28 Nev. 186

STATE v. NEVADA CENT. R. CO. et al.

No. 1,662.

Supreme Court of Nevada

May 11, 1905

Appeal from District Court, Eureka County.

Action by the state against the Nevada Central Railroad Company and others. Judgment for plaintiff, and defendants appeal. Remanded for new trial.

This is an action by the state for the taxes for the year 1901 on 93 miles of main track and 2 miles of side track and the other real property of the Nevada Central Railroad Company, all situated in Lander county. The assessor placed the valuation at $158,100, and made the assessment at $5,684.97, which with the statutory penalties, aggregates $8,063.43, the amount demanded in the complaint, and for which the verdict and judgment were rendered. After denying the allegations of the complaint, the answer sets up the defense that the assessment was out of proportion to and above the cash value of the property, and asserts that in the year 1901 the property was not of any greater cash value in the aggregate than $60,944. It is also alleged that the tax levy in that county for the year 1901 is illegal because in excess of the rate authorized by law. Seeking to avoid penalties for delinquencies, the defendant made and pleaded a tender of $1,835 for taxes upon this property. Upon the trial the state introduced the delinquent list and rested. Thereupon the defendant submitted in evidence the minutes indicating that the taxes levied by the board of commissioners for that year for county purposes aggregated $1.57 on each $100 of taxable property, and introduced testimony showing that the road was finished in February, 1880; that it has iron rails weighing only 35 pounds to the yard, instead of much heavier steel rails used by all up to date railroads; that the ties are in poor condition; that for the most part it is ballasted only with sage brush dirt; that the cost of repairs in future years will be increased, and that the condition of business in the adjacent county will not tend to increase earnings that, if the Southern Pacific Railroad cuts off the curve at Battle Mountain, and runs directly by the river as surveyed and evidently contemplated by the purchase of rights of way the Nevada Central will be compelled to build two or three miles of new track in order to connect; that the removable value of the material which constitutes the 93 miles of road and all the property under the levy was $41,135.35 in 1901 that the rate of interest on different classes of loans in Lander county that year varied from 6 per cent. to 12 per cent; that San Francisco saving banks paid 3 1/8 per cent.; that money in New York was worth 3 1/2 per cent. to 5 per cent., and that United States bonds paid less than 2 per cent. per annum. There was testimony that so large an amount could not be placed in Lander county. Subject to the objection and exception of counsel for the state, J.M. Hiskey, the secretary and auditor of the Nevada Central Railroad Company, as a witness on its behalf, was allowed to testify that he had examined the books and vouchers of the company, and that for the calendar year 1901 the expenses from operation were $38,372.28, the earnings from operation were $37,737.29, the loss from operation $634.99, and that, in addition to this loss, the company paid $953.03 for taxes on its personal property for that year. Counsel for the defendant asked the witness if the company were not liable for the amount of taxes that the jury would assess in this case. The objection to this question was sustained. We quote from the record an important part of the examination of A.J. Maestretti, a witness for the state, regarding the income and expenses of the road: "Q. Have you examined the books of the Nevada Central Railroad Company for 1901? A. I have. Q. What is the result? Mr. Street: One moment, I desire to examine the witness as to his qualification as an expert accountant. Q. You have never kept books for a mercantile firm? A. I have not. Q. You never had any practical experience in bookkeeping did you? A. No, sir. Q. You took a course in Heald's Business College, did you? A. Yes, sir. Q. In that course, did you have any instruction whatever in railroad bookkeeping? A. Yes, sir; the course was designed to cover all branches of commercial and business bookkeeping. Q. Respecting the result of your examination of the books of the Nevada Central Railroad Company for 1901, I will ask you to state now if you included in this result all actual receipts of the Nevada Central Railroad Company for that year? Mr. Mayenbaum: I object. That question is entirely improper. Mr. Street: We desire to show by this witness that in the result which he is now called upon to testify about that he included fictitious receipts of money or sums which were never received by the Nevada Central Railroad Company at any time, or at all. We desire also to show that he did not include in the result actual expenses paid out by the Nevada Railroad Company during the year 1901, but used his own judgment in excluding items of expense which were actually paid in the year 1901 by the Nevada Central Railroad Company in the operation of its railroad, and we ask to examine the witness on this matter before he testifies to the result, for the reason, if our information is correct, the result would not be what is contemplated by the law, or competent in this case under any circumstances. Court: The question is not permitted. Mr. Street: We desire to note an exception to the ruling of the court on the ground that we have offered to show that this result about which the witness is asked to testify, and by the witness himself, included absolutely fictitious items of receipts never received by the Nevada Railroad Company in 1901, and in this result the witness did not include actual expenses of the Nevada Central Railroad Company incurred in its operation in the year 1901. Mr. Mayenbaum: You have stated that you examined the books of the company for 1901. I want you to tell me and tell the court and the jury what are the net earnings of that company in the operation of their railroad in Lander county for the year 1901. Just state to me the figures that you have arrived at as profits of the company for that year, and nothing else. Mr. Street: We desire to object, and make the same objection and exception as to the preceding question, and, further, this question does not show that it is any result of the entire books and figures of the Nevada Central Railroad Company respecting the matter inquired of for 1901. Mr. Mayenbaum: I mean the result of the entire books of the company. Mr. Street: We repeat our previous objection and exception, with the permission of the court. A. The result of my investigation shows that the Nevada Central Railroad Company should have made a profit of $10,645.28 for the year 1901. Mr. Street: We object, on the ground that the witness is not testifying as expert. Court: The objection is overruled. Mr. Street: We take an exception on the ground stated in the objection. I also desire to add that he has not testified as an expert on the actual result of the books of the company, and we move to strike out the answer of the witness on the ground that it is incompetent, and does not come within the provision of the statute. Court: The motion is overruled. Mr. Street: We note an exception on the same ground." Cross-examination by Mr. Street: "Mr. Street: You did include in your computation from which you figure this result a lot of items for receipts you knew never were actually received by the Nevada Central Railroad Company? A. No, sir. Q. Will you state to the court or jury that you included nothing in the receipts you figured up except items of actual receipts--that means money actually received? A. I included only what was shown by the books and papers of the company which I examined. Q. Will you please answer my question clearly? A. There is one item which does not show actual cash receipts. Q. What is that item? A. It is a record of passes issued by the Nevada Central Railroad Company and used by the persons to whom they were issued. Q. So that the result you have testified to includes fictitious receipts which were not actually received in cash by the Nevada Central Railroad Company, does it not? Mr. Mayenbaum: We object. He testified to the profits, and only profits, of the company of that year, and has no knowledge only that shown by the books. Court: The question can be answered. A. The item of passes is one of the items charged, and, if this is a fictitious receipt, then it does include fictitious receipts. Q. Then there was no receipt of money shown at all by the Nevada Central Railroad Company for this item on its books? A. No, sir. Q. In your computation you used your own judgment in rejecting, and did not include in your result, a considerable number of actual items of expense of operation of the Nevada Central Railroad Company for the year 1901? A. I rejected items charged in the Nevada Central Railroad Company's books as items of expense in operation. Q. So the result you are testifying to is not the actual expense and earnings of the Nevada Central Railroad Company, is it, for the year 1901? A. No, sir; it is not the expense as shown by their books. Q. You are a railroad man? A. No. sir. Q. Have you worked on a railroad? A. No, sir. Q. In a railroad office? A. No, sir. Q. In machine shops? A. No, sir. Q. Never had anything to do with buying railroad supplies? A. No, sir. Q. You are by profession a lawyer? A. Yes, sir. Q. And you were formerly district attorney of Lander county? A. Yes, sir; and before that I was a rancher for years. Q. In this so-called result, did you figure any taxes of the Nevada Central Railroad Company for 1901? A. No, sir. Q. You took upon yourself to exclude a...