State v. Western & A.R. Co.
| Decision Date | 15 August 1911 |
| Citation | 71 S.E. 1055,136 Ga. 619 |
| Parties | STATE v. WESTERN & A. R. CO. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
The income tax referred to in section 11 of the act to lease the Western & Atlantic Railroad (Acts 1889, p. 362), viz "That said lessee or lessees shall be required to pay all taxes and assessments upon the property of this state in the state of Tennessee, and in Georgia upon all property owned or controlled by them, not received from the state, and such further taxes upon their income as is now paid by the Central Railroad & Banking Company," is a tax levied in the exercise of sovereignty, and not a contractual obligation springing primarily from the contract of lease executed pursuant to the act.
When the statute undertakes to provide adequate remedies, and those given do not embrace an action at law, a common-law action for the recovery of the tax as a debt will not lie.
(a) The statute provides adequate remedies for the collection of taxes imposed upon railroad companies.
An assessment made in the manner prescribed by the statute is indispensable in proceedings to enforce the collection of taxes.
As the petition assigned no specific breach of the lease contract it is not maintainable as an action for the recovery of damages for breach of contract.
Where discovery is merely incidental to the relief prayed, the petition will not be retained for decree, where it discloses that the plaintiff is not entitled to the relief in aid of which discovery is prayed.
Error from Superior Court, Fulton County; J. T. Pendleton, Judge.
Action by the State of Georgia against the Western & Atlantic Railroad Company. The petition was dismissed on general demurrer, and the State brings error. Affirmed.
The state of Georgia owns a railroad known as the Western & Atlantic Railroad, extending from Atlanta, Ga., to Chattanooga, Tenn. In November, 1889 (Acts 1889, p. 362), an act was passed by the General Assembly providing for its lease. It was stipulated that the Governor should advertise for bids, and no bids for less than a stated minimum would be received. Among other features it was provided, in section 7, that all improvements and betterments were to be made at the expense of the lessee, and that all attachments to the realty should be considered permanent, and the road be kept in the condition of first-class roads in Georgia. The Governor was empowered to appoint a board of examiners to ascertain and report the condition of the road. It was made the duty of the lessee to file with the Governor an annual report of the condition of the road, which report was to set forth the improvements to the physical property, rolling stock purchased, income from passengers and freight operating expenses, amount of freight transported and rates charged for the same, and all other facts necessary to furnishing complete information of the condition and operation of the railroad for each year. Section 9 provides for the observance by the lessee of the rules of the railroad commission, and further provides that "said lessee company shall have the exemptions, privileges, immunities, rights and guaranties, and shall be subject to the same laws, liabilities, disabilities, and public burdens on other railroad companies in this state, and no more, in all cases where this act is silent and has made no provisions on the subject." Section 10 is to the effect that the lessees forfeit six months' rental, as damages, if in default for the payment of the monthly rental for 20 days, and that, if the lessee fails to comply with the lease contract, the Governor, at his option, may declare the lease forfeited and take immediate possession. Section 11 is as follows: "That said lessee or lessees shall be required to pay all taxes and assessments upon the property of this state in the state of Tennessee, and in Georgia upon all property owned or controlled by them, not received from the state, and such further taxes upon their income as is now paid by the Central Railroad & Banking Company, and shall not sublet said road, or any part thereof, to any other company, corporation or party: Provided, the lessee may sublet any property not needed for railroad purposes: Provided, that, in the opinion of the Attorney General, that can be done without invalidating the state's title thereto; and all improvements put on said property by the lessees or their tenants shall belong to the state at the expiration of said lease." It was further provided that the lessee shall become a body corporate under the name of the Western & Atlantic Railroad Company during the continuance of the lease, and that, if the lessee be a corporation, it shall operate the road as the "Western & Atlantic Railroad Company."
On July 16, 1890, a contract of lease was entered into between the state and the Nashville, Chattanooga & St. Louis Railway Company, in pursuance of the leasing act, wherein the lessee agreed to pay a monthly rental of $35,001 for the leased property for the term of 29 years from December 29, 1890. In June, 1909, the state of Georgia, by its Attorney General and special counsel appointed by the Governor, filed its petition against the lessee, wherein it was alleged that at the time of the lease the equipment of the road was inadequate, which was known to both parties to the contract, and it was in the contemplation of both parties that the lessee would be obliged, for its own interest, to improve the roadbed and structures and add to the movable equipment. By its contract charter the lessee undertook and agreed to make to the state each year a full statement of all property owned or controlled by it not received from the state, and to pay to the state thereon a tax equal in rate to the ad valorem taxes paid by other persons and corporations. From the beginning of the lease the lessee has owned or controlled property and has used and employed the same in the operation of the road; but, in violation of its contract, it has never disclosed to the state either the fact of the existence of such property or the value thereof, and has not paid any sum on this account, except that it has for some four or five years past made partial payments on certain real estate and tracks and other fixtures, which it claims it owned in Georgia and not upon the right of way of said railroad, though the location and identity of said property is not known to the state. When these facts were discovered by the Governor he requested information in reference thereto; but, notwithstanding the express covenant to furnish all information necessary for a full understanding of the condition and operations of the road, the lessee has failed and refused to furnish such information. Neither the state nor its officers know the value or character and amount of said property, but it charges that it amounts to $1,500,000, or other large sum, and has at all times during the lease been that much. The lessee knows and has full records touching these matters; and the state has no means of ascertaining the same, except by resort to the equitable powers of the court and a discovery from defendant. Some of the property is used in the conduct of local business, and other property is used in operating through trains over its entire system, treating the Western & Atlantic Railroad as an integral part thereof.
The petition then proceeds to set forth what is claimed to be an equitable basis for ascertaining the amount of property subject to an ad valorem tax. The state tax rate for each of the years 1891 to 1908 was alleged, and that certain amounts for each of said years were due as taxes from the defendant to the state because of property used in local traffic, and certain other amounts because of property used in through traffic. It was further alleged that by its charter contract the lessee expressly agreed to make to the state each year a full statement of all its operations and expenditures, and to pay to the state, in addition to its ad valorem taxes, such further tax upon its income as is paid by the Central Railroad & Banking Company, to wit, one-half of 1 per cent. upon its annual net income. The lessee has never complied with this covenant. It has made certain annual statements purporting to so comply, but the same have not been properly made. The petition then proceeds to state what is claimed to be the true rule of calculation for ascertaining the net income, and wherein the lessee had departed therefrom. It was further alleged that the lessee, in violation of the contract, has made subleases and to parties unknown to the state, and collected from them large sums of money. Some of these subleases were in violation of the contract and some not, but the state has no knowledge and no means of knowledge as to which were and which were not, and how much the lessee derived from them, respectively, and how much was accounted for in the lessee's annual statements. There are many other matters in which the state believes the lessee's accounts have not been kept and rendered according to the contract, but the facts are not so known as to enable the state to allege the same, though they would be so known if the lessee had furnished the reports required by the contract, and many other particulars wherein the lessee has violated the lease contract. As to the things complained of the facts are peculiarly within the knowledge of the defendant; and, though bound by express contract to furnish said knowledge, defendant has failed and refused to do so, notwithstanding repeated requests for said information and repeated promises to furnish the same. The state has no adequate information nor means of procuring the same, except by resort to the knowledge and conscience of defendant and to records kept by it under its...
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