State v. W. Union Tel. Co.

• Decision Date: 25 September 1905
• Citation: 96 Minn. 13,104 N.W. 567
• Parties: STATE v. WESTERN UNION TELEGRAPH CO.
• Court: Minnesota Supreme Court

96 Minn. 13

104 N.W. 567

STATE

v.WESTERN UNION TELEGRAPH CO.

Supreme Court of Minnesota.

Sept. 25, 1905.

Appeal from District Court, Ramsey County; George L. Bunn, Judge.

Action by the state against the Western Union Telegraph Company. From the judgment rendered, the state appeals. Reversed.E. T. Young, Atty. Gen., and C. W. Somerby, for the State.

C. M. Ferguson, for respondent.

JAGGARD, J.

The state of Minnesota brought suit against the Western Union Telegraph Company for taxes for the years 1899 and 1900, assessed by the state board of equalization. Those taxes were assessed and an action at law to recover them was instituted under chapter 180, p. 251, Laws 1901. The telegraph company previously to the year 1899 had been assessed upon a valuation of $865,500. In that year the board, after due notice to the company, raised the valuation of its property to $1,000,000. The Western Union refused to pay the tax based on that amount. It appeared from the return made in accordance with the said laws that the company owned and operated 19,164 miles of lines, with an average of 28 poles to the mile, and 627 stations in Minnesota during the year 1899, and 20,200 miles of lines, with the same average of poles per mile, and 670 stations in Minnesota in the year 1900. The trial court found that the admitted value of $600,000, as claimed by defendant's answer, was the true value for purpose of taxation for 1899, and that said value for 1900 was $665,294. As conclusions of law it found that the plaintiff was entitled to judgment in a sum based upon said valuations. An appeal was taken by the state from a judgment entered accordingly.

The conclusions of the trial court sustained the contentions of the telegraph company that under the law applying to the taxation of telegraph companies its tangible property only was to be assessed at a valuation to be determined in the same manner as that of other tangible property, namely, at its intrinsic worth, without the addition of any sum for supposed franchise or the like. Accordingly the record presents two questions, namely: First. Is this an instance of overvaluation to such an extent as to require a court to abate the official assessments? Second. Is this a case of an assessment made upon an illegal principle?

The principles involved in the first question as to overvaluation are as familiar as they are well settled. The original warrants of the State Auditor are by statute expressly made prima facie evidence of the valuation therein contained. When they were produced by the state on trial, the burden of proof rested upon the telegraph company to affirmatively show sufficient basis for interference by the court with that valuation. State v. Deering, 56 Minn. 24, 28, 57 N. W. 313. It is presumed, in the absence of evidence to the contrary, that public officials faithfully and legally performed their official duties, and that in making the assessment they proceeded upon sufficient and competent evidence to justify their action. La Selle & P. H. & D. R. R. Co. v. Donoghue, 127 Ill. 27, 18 N. E. 827,11 Am. St. Rep. 90;State v. Savage, 65 Neb. 714, 91 N. W. 717, 721;Union Ref. Co. v. Lynch, 177 U. S. 149, 154, 20 Sup. Ct. 631, 44 L. Ed. 708. To overcome this prima facie validity of the assessment, the objector must show more than a well-grounded claim of overvaluation. Mere differences in opinions or theories as to values, as inevitable as they are inconclusive, are not sufficient. ‘The determination of a board cannot be overthrown by the testimony of two or three witnesses that their valuation was other than that fixed by the board.’ Mr. Justice Brewer, in Pittsburg, etc., R. Co. v. Backus, 154 U. S. 421, 435, 14 Sup. Ct. 1114, 1120, 38 L. Ed. 1031. To require absolute correctness of assessment would be Utopian futility. On the contrary, it consists alike with good sense and good law to accept as practicable the approximation to equality in valuation made in the exercise of the judgment of those upon whom the state devolves the duty of appraisal. People v. Worthington, 21 Ill. 172, 74 Am. Dec. 86;Porter v. R. R. Co., 76 Ill. 576. The sovereign power of taxation enforced by ministerial officers in accordance with legislative provisions is not judicial in character. Courts do not interfere with assessed valuations, except when the taxing officials have acted fraudulently or maliciously, to the substantial prejudice of the taxpayer, or have made a mistake so gross as to be inconsistent with the exercise of fair and honest judgment, or where they have proceeded upon an erroneous rule of law, and then only upon sufficient proof addressed to proper legal standard of valuation. See Pittsburg, etc., R. Co. v. Board of Pub. Works, 172 U. S. 32, 39, 19 Sup. Ct. 90, 43 L. Ed. 354;French v. Barber Asphalt Co., 21 Sup. Ct. 625, 45 L. Ed. 879;State ex rel. v. District Court (Minn.) 103 N. W. 744;Pittsburg etc. R. Co. v. Backus, 154 U. S. 421, 435, 14 Sup. Ct. 1114, 38 L. Ed. 1031;Maish v. Arizona, 164 U. S. 599, 610, 17 Sup. Ct. 193, 41 L. Ed. 567;Danforth v. Livingston, 23 Mont. 558, 59 Pac. 916;Keokuk Bridge Co. v. People, 185 Ill. 276, 56 N. E. 1049;State v. Savage (Neb.) 91 N. W. 729, 730;State v. West Duluth Land Co., 75 Minn. 456, 78 N. W. 115. But, where property is valued at a sum so enormous as not to be within the range of reason or justice and common sense, the power of the court is sufficient, and should be exercised, to correct the wrong. State v. London & North American Mort. Co., 80 Minn. 277, 83 N. W. 339.

Measured by these rules, the testimony of the defendant wholly failed to entitle it to relief on the ground that its tangible property had been subjected to an illegally excessive valuation. That evidence was given by its local superintendent. He placed a valuation only on certain segreated items of tangible property within this state on the assessment day, to wit, for the year 1899, $600,000; for the year 1900, $665,294. Upon cross-examination, he stated that, in determining such values of such property, and of each item, he took into consideration no element of value whatever, except, first, the cost price (apparently in Chicago); and, second, reasonable deductions therefrom for natural deteriorations. This witness had examined personally only between 25 and 30 per cent. of the total system, and had never seen all the lines of the company in Minnesota. He could not state accurately the proportion of wires at various prices in use in the state. His estimates were at best an approximation as to the length of time wires had been used and poles placed, and the extent to which the property had depreciated by use. This same witness had given a previous estimate of the value of the property in the sum of $458,541.50, based on what is generally understood to be the proportion of actual value on which other personal property is assessed in the state of Minnesota, to wit, 50 per cent. The full value of the property, on this estimate of the telegraph company's own expert, would have been $917,082. He also testified that the cost of replacing the property in Minnesota at that time was about $900,000. The cost price (in Chicago) and natural wear and tear and deterioration do not constitute any reasonable basis for estimate of taxable value. In connection with testimony as to market value, or actual value, these items would doubtless be entitled to consideration. Here no such testimony was introduced, nor was there any evidence of fraud, misconduct, or mistake on the part of the board. The testimony referred to does not show an error of judgment, but, fairly construed, tends in a measure to confirm the official valuation of $1,000,000. The conclusion follows inevitably that, without considering the value of such property as a system, and without regard to taxable property omitted from the estimates of the telegraph company, the valuation contended for by it and sustained by the trial court, based as it is upon an improper legal theory and calculated upon uncertain estimates, does not furnish any sufficient foundation for interference by a court as the assessment of tengible property at an amount not necessarily inconsistent with a correct legal view of the objector's own testimony.

The second question presented by this record, and the more important one in principle, concerns the construction of the act in question with respect to its purpose to tax, not segregated items of tangible property, but to levy the tax upon tangible and intangible property united in use. Chapter 8, p. 70, Laws 1891, as amended by chapter 180, p. 251, Laws 1901, to which reference has been made, imposes upon the telegraph companies the duty of filing a statement showing the following facts (1) The total number of miles owned, operated, or leased within the state, with a separate showing of the number leased; (2) the total number of telegraph stations on each separate line, and the total number of telegraphic instruments in use terein, together with the total number of stations mentioned; (3) the total number of miles in each separate line or division thereof, together with the total number of separate wires thereon, and stating the counties through which the same are carried; (4) the average number of telegraph poles per mile used in the construction and maintenance of said lines. It is further provided by section 3 of said chapter 8 ‘that upon receipt of said statement * * * the Auditor of the State shall lay the same before the state board of equalization at its annuameeting, which board shall proceed to assess telegraph lines at the true cash value thereof.’

(1) Counsel for the telegraph company has pressed upon the court with earnestness and force that the statute under consideration does not authorize the taxation of franchises, intangible property, or of such property united in use with tangible property; that such an effect can be given it only by a forced construction; that a charge...