State v. Western Union Tel. Co.

• Decision Date: 03 December 1901
• Citation: 165 Mo. 502,65 S.W. 775
• Parties: STATE ex rel. GOTTLIEB, Collector, v. WESTERN UNION TEL. CO.
• Court: Missouri Supreme Court

65 S.W. 775

165 Mo. 502

STATE ex rel. GOTTLIEB, Collector, v. WESTERN UNION TEL. CO.

Supreme Court of Missouri.

December 3, 1901.

TAXATION — TELEGRAPH COMPANIES — FOREIGN CORPORATION — ASSESSMENT — DISCRIMINATION — BOARD OF EQUALIZATION — COLLECTION — DEFENSE — REMEDY — FEDERAL FRANCHISE — GOVERNMENTAL AGENCY — INTERSTATE COMMERCE — ASSESSMENT OF FRANCHISE.

1. Where a foreign corporation contends that it has been discriminated against by taxing its property in the state at its full value, while other property is taxed at a small per cent. of its value, in violation of Const. art. 10, § 4, requiring all property to be taxed in proportion to its value, and of the fourteenth amendment of the federal constitution, insuring equal protection of the laws, such corporation must show that the tax law is discriminative, or that a combination exists among the officials to discriminate against it; and it is insufficient to show that, in the judgment of one of the board of equalization, the valuation on property generally was only 35 per cent. of its value, as Rev. St. 1899, § 9180, requires property to be assessed at its true value, and it will be presumed that the officers have done their duty.

2. The action of the state board for the equalization of taxes is judicial, and cannot be attacked collaterally by a defendant in a suit to collect the tax levied, but the party aggrieved by overvaluation of its property should resort to equity to restrain the collection, with payment or tender of what is admitted due.

3. In an action against a telegraph company to collect taxes on property specified, and also a certain amount on "all other property," defendant answered that it was unjustly discriminated against in the assessment, and, further, that the tax on "all other property" included a franchise from the federal government, not taxable. It admitted having "other property" in the state than that specified, but contended that its value was only $1,000, instead of several thousands, as assessed. Held, that this last defense showed merely a difference of opinion as to valuation, and, the action being at law, wherein the defendant sought to defeat the whole levy, the defense must fail, as the court could not determine the true value.

4. Such defense must fail under Rev. St. 1899, § 9197, giving the courts authority to correct erroneous assessments, but providing that valuations by the assessor or board of equalization shall not be deemed erroneous assessments.

5. Where a telegraph company existing under the laws of another state accepted the benefits of Act Cong. July 14, 1866 (14 Stat. 221, 222), giving it the right to maintain its line over government, military, and post roads, and requiring it to give priority to and transmit government messages at rates to be fixed by the postmaster general, such corporation did not derive its franchise from the federal government, and it was not exempt from taxation.

6. Though such company was an agent of the federal government, this extended only to its relations with that government, and did not exempt its property from state taxation.

7. That the company was an instrument of interstate commerce did not exempt its property from state taxation.

8. In assessing the tax of a telegraph company existing under the laws of another state the board of equalization properly took into consideration its "franchises," together with its cost of construction, location, business, etc.; its franchise being taxable by considering it as impressed on its tangible property as a system, and then assessing the part of the system located within the state as of its proportionate value of the whole property constituting the system; and such company was not entitled to be taxed only on the actual cost or value of its tangible property.

In banc. Appeal from circuit court, Jackson county; John W. Henry, Judge.

Action by the state, on the relation of Chris. Gottlieb, tax collector, against the Western Union Telegraph Company. From the judgment, both parties appeal. The judgment, so far as against plaintiff, is reversed, and so far as against the defendant is affirmed.

This is an action at law by the collector of Jackson county to recover $1,027.22 back taxes for the year 1899. The answer contains two defenses: First, that the state board of equalization intentionally discriminated against defendant in assessing its property at its full value, while other property in the state is only assessed at from 35 to 40 per cent. of its value; and, second, that the assessment as to the item "all other property, $856,400.56," is an assessment on its franchise, and that the only franchise it exercises in this state is derived from an act of congress approved July 14, 1866 (14 Stat. pp. 221, 222), which constitutes defendant a governmental agency, and an instrument of foreign and interstate commerce, and that under the constitution and laws of the United States the board of equalization was without authority to impose that item of taxes. The record discloses the facts to be that the state board of equalization, whose duty it is under the law (section 9387, Rev. St. 1899) to assess all property, real and personal, "including franchises," of telegraph companies, made the following assessment of defendant's property on the 25th of July, 1899: "State of Missouri, Office of State Auditor. Be it remembered that heretofore, to wit, on the twenty-fifth day of July, 1899, the following among other proceedings were had by the state board of equalization, viz.: The state board of equalization having given to the Western Union Telegraph Company opportunity to be heard personally by the board, and having heard the said company through its officers and agents, and having carefully considered the facts set out in the returns and the statements of said company, and all evidences of value, and all matters bearing upon the question of the value of the property of said company, and considering the cost of construction and equipment of said Western Union Telegraph Company, and the location thereof, and its traffic and business, and the market and par value of its stocks and bonds, and the gross receipts and net earnings and franchise owned by said company and the value thereof, and having received evidence concerning the value of the cost of construction of said telegraph line, and the market value and par value of the stocks and bonds, and of the gross receipts and net earning power, and the franchise and the value thereof, and having heard evidence upon and considering all other matters ascertainable by said board bearing upon the question of the value of said company, which, in the opinion of the board, would assist in its findings, conclusions, and judgment in arriving at the actual cash value of the property of said telegraph company, on motion the state board of equalization assesses and values for taxes of 1899 the property of said Western Union Telegraph Company at $1,827,727.45; and it is further ordered by the state board of equalization that the assessed value thereof be distributed upon the said classes of property as follows: 6,075.98 miles of poles, at $71.50 per mile, $434,432.57; 23,767.34 miles of wire, at $22.02 per mile, $523,356.82; 2,375 instruments, at $5.70 each, $13,537.50; all other property at $856,400.56, — total, $1,827,727.45." Subject to the right of objection on any sufficient ground in law, it was stipulated between counsel as follows: That the tax book should be prima facie evidence of the validity of the taxes thereon assessed for the year 1899 against defendant, without proof by plaintiff of any of the steps leading up to its execution and issuance; and that said tax book was properly certified. It was also admitted: First, that defendant, since 1854, has been a corporation organized and existing under the laws of the state of New York; second, that, as pleaded in the answer, it accepted the provisions of the act of congress of July 24, 1866, and that said acceptance has not been withdrawn, and that defendant transmits telegrams for the government between its departments and officers at rates fixed by the postmaster general; third, that defendant is not incorporated under the laws of the state of Missouri, and has never applied for or secured from the state a license authorizing it to do business within the state under the laws thereof. Objection was made by plaintiff to the introduction of the admission contained in paragraphs 2 and 3, but such objection was overruled, and an exception taken. A general objection was also made by plaintiff to the introduction of any evidence by defendant, for the reason that the finding and assessment of the state board of equalization was final, and not subject to attack in this suit. This objection was overruled, and an exception noted. It was shown on the part of the defendant, by the testimony of A. A. Lesueur, secretary of state, and as such a member of the state board of equalization, that the property outside of St. Louis is assessed by the local assessors at what he believed to be about 35 to 40 per cent. of its full value, and in St. Louis at about 50 per cent. thereof, although the city assessor and city board of equalization thought it was 70 per cent. thereof. It was also shown by the testimony of Edward C. Crow, attorney general, and as such a member of the state board of equalization, that the item of assessment, "All other property at $856,400.56," was intended to include all the taxable property of the defendant other than that specifically mentioned in the three other items, and also its intangible property, including franchises, "but as to how much the franchise value or intangible property was valued at, and how much the tangible property other than that specifically enumerated included under the head of `All other property' was valued at, I could not say." The attorney general then further testified: "Q. What do you understand by the meaning of...