State v. Western Union Telegraph Company

• Decision Date: 22 September 1905
• Docket Number: 14,413 - (27)
• Citation: State v. Western Union Telegraph Company, 96 Minn. 13, 104 N. W. 567 (Minn. 1905)
• Parties: STATE v. WESTERN UNION TELEGRAPH COMPANY
• Court: Minnesota Supreme Court

104 N.W. 567

96 Minn. 13

STATE v. WESTERN UNION TELEGRAPH COMPANY

Nos. 14,413 - (27)

Supreme Court of Minnesota

September 22, 1905

Action in the district court for Ramsey county, under chapter 8, p 70, Laws 1891, and amendment, to recover from defendant $44,447.95 delinquent personal property taxes. The case was tried before Bunn, J., who found in favor of plaintiff for the sum of $1,499.70 and interest. From a judgment entered pursuant to the findings, plaintiff appealed. Reversed and remanded with instructions.

SYLLABUS

Taxation -- Valuation of Personal Property.

The prima facie validity of an assessment of personal property for general taxation is not overcome by a well-grounded claim of overvaluation. Courts do not interfere therewith, except when tax 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 fair and honest judgment, or when they have proceeded on an erroneous rule of law, and then only upon sufficient proof addressed to proper legal standard of valuation.

Cost Price.

The cost price of the tangible property of a telegraph company together with reasonable deduction for natural deterioration, is not a proper basis for valuation of such property for taxation on general lists.

Construction of Statute.

The language of a law providing for a constitutional method of taxation is to be construed fairly and reasonably, so as to effectuate legislative intention, and to compel property protected by the state to contribute its ratable share of public revenue, and to avoid discrimination in taxation between property owners.

Taxation of Telegraph Companies.

Laws 1891, p. 70, c. 8, amended by chapter 180, p. 251, Laws 1901, provides for the taxation of the tangible and intangible property of telegraph companies situated within this state as a system, and not merely for the taxation of items of tangible property only, and is constitutional. Adams Ex. Co. v. Ohio, 165 U.S. 194, on rehearing 166 U.S. 185, followed.

Edward T. Young, Attorney General, and Charles W. Somerby, for appellant.

C. M. Ferguson, for respondent.

OPINION

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. Wm. Deering & Co., 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 Salle v. Donoghue, 127 Ill. 27, 18 N.E. 827; State v. Savage, 65 Neb. 714, 91 N.W. 717, 721; Union R.T. Co. v. Lynch, 177 U.S. 149, 154, 20 S.Ct. 631. 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." Justice Brewer, in Pittsburgh, C. & St. L. Ry. Co. v. Backus, 154 U.S. 421, 435, 14 S.Ct. 1114, 1120.

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. 170, 172; Porter v. Rockford, 76 Ill. 576. 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 Pittsburgh Ry. Co. v. Board of Public Works, 172 U.S. 32, 39, 19 S.Ct. 90; French v. Barber Asphalt Co., 181 U.S. 324, 21 S.Ct. 625; State v. District Court of Ramsey County, 95 Minn. 70, 103 N.W. 744; Pittsburgh C. & St. L. Ry. Co. v. Backus, supra; Maish v. Arizona, 164 U.S. 599, 610, 17 S.Ct. 193; Danforth v. Livingston, 23 Mont. 558, 59 P. 916; Keokuk v. People, 185 Ill. 276, 56 N.E. 1049; State v. Savage, 65 Neb. 714, 91 N.W. 716, 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 & N.A. 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 segregated 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 twenty-five and thirty 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, fifty 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...