Western Union Tel Co v. Taggart

• Decision Date: 18 May 1896
• Docket Number: No. 662,662
• Citation: 16 S.Ct. 1054,41 L.Ed. 49,163 U.S. 1
• Parties: WESTERN UNION TEL. CO. v. TAGGART, Auditor, et al
• Court: U.S. Supreme Court

163 U.S. 1

16 S.Ct. 1054

41 L.Ed. 49

WESTERN UNION TEL. CO.

v TAGGART, Auditor, et al.

No. 662.

May 18, 1896.

This was a bill in equity, filed December 19, 1893, in the circuit court of the county of Marion, and state of Indiana, by the Western Union Telegraph Company against Thomas Taggart, the auditor of that county, and Sterling R. Holt, its treasurer, and against the auditors and treasurers of other counties of Indiana, to restrain them from apportioning and collecting a tax assessed upon the plaintiff by the board of tax commissioners of he state under the statute of Indiana of March 6, 1893, c. 171, the material parts of which are copied in the margin.¹ The principal allegations of the bill were as follows:

That the plaintiff was, and for many years had been, a corporation of the state of New York, and "the owner of a large amount and number of telegraph poles, lines, wires cables, fixtures, instruments, machinery, appliances, apparatus, and real estate, constituting a plant for the transmission and conveyance of telegraph messages, which said telegraphic plant extends into and through every state and territory of the United States, the dominion of Canada, and under the Atlantic Ocean to England and to Cuba," and that the plaintiff, by reason of rights under contracts with various persons and corporations in the United States and in other parts of the world, and under letters patent from the United States, and valuable franchises granted by the United States, and by New York and other states of the Union, but not by Indiana, and by many municipalities in those states, and by the governments of England and of Cuba, was "enabled to do a large and profitable business, by and by means of said telegraphic plant, and not only an amount which would be equivalent to rent upon said property, in case the same was owned by another corporation and leased by complainant, but also to make a profit for complainant in addition to said amount so applicable as rent of such telegraphic plant."

That the 'portion of said telegraphic plant situated within said state of Indiana is of the actual cash value of $686,126,—the said cash value being ascertained by taking the cost of original construction, as nearly as the same can be ascertained, and deducting therefrom a sum partially equal to the depreciation of the plant,—and could be replaced by an entirely new plant of the same extent and location, and of far more valuable and lasting material, for the sum of $1,226,625.'

That the pretended statute of March 6, 1893, was not a law of the state of Indiana (for reasons not insisted on in this court), and that on July 11, 1893, the plaintiff, reserving its rights to contest the validity of that statute, filed with the auditor of the state a statement and return, as therein required (a copy of which was annexed, and which included substantially the same objections as were stated in the bill, and showed that the entire mileage of the company was 189,576 miles, 6,436 of which were in the state of Indiana); that it had no real estate, machinery, and appliances in Indiana subject to local taxation. That the cost of its real estate in other states was $5,013,326, and the amount of its outstanding mortgage bonds was $1,211,000.

That the state board of tax commissioners on August 21, 1893, made its assessment and valuation of the plaintiff's property in Indiana, deducting the real estate, structures, machinery, and apparatus within the state and subject to local taxation, at the sum of $2,297,652, and at the rate of $357 per mile of telegraph line, 'and, in fixing said valuation upon complainant's said property in Indiana, acted under and by virtue of the assumed authority of said pretended statute, approved March 6, 1893, and placed upon complainant's said property additional values, beyond the true cash value of complainant's said property as measured by the cost of replacement of the same, making reasonable allowances for deterioration, by adding values of complainant's business, property, and good will, both in and outside of Indiana, and franchises granted by the state of New York, the United States, and foreign countries, and, in witness thereof, caused to be entered upon the official record of said board, required by law to be kept by said board, on said August 21, 1893, the following statement and certificate:

"In accordance with the requirements of the act of the general assembly of the state of Indiana approved March 6, 1893, the state board of tax commissioners, after full consideration, does hereby assess and value telegraph, telephone, palace-car, sleeping-car, drawing-room car, dining-car, express and fast-freight joint-stock associations, companies, co-partnerships, and corporations transacting business in the state of Indiana, which assessment and valuation is as follows, to wit: Assessment and valuation of telegraph and telephone companies in the state of Indiana by the state board of tax commissioners for the year 1893, exclusive of real estate, structures, machinery, fixtures, and appliances subject to local taxation within the state." The first line under that heading was: 'Western Union Telegraph Company. Miles, 6,436. Per mile, $357. Total, $2,297,652.'

'That the state board of tax commissioners, during its said session in the year 1893, did not attempt to specify or describe the property of complainant falling within the description of real estate structures, machinery, and appliances subject to local taxation.

'That in making said assessment said state board of tax commissioners assumed to take as the basis thereof the value of the entire capital stock of complainant, at a valuation per share based upon the price of the shares of complainant's capital stock dealt in in the stock-exchange market of New York City, dividing such aggregate value by the total number of miles of telegraph line of complainant, wherever situated, and both in and outside of Indiana, and thereby obtaining a pretended valuation per mile of the telegraph line of com- plainant, amounting to the said sum of $357 per mile, which said pretended valuation per mile said board, acting under the authority of said pretended statute, imputed to and imposed upon each mile of the whole number of complainant's telegraph line in Indiana, thereby imputing to and imposing upon the whole telegraph line of complainant in Indiana, which is of the length of 6,436 miles, said pretended valuation of $2,297,652, which said pretended valuation is grossly excessive and far beyond the true cash value of complainant's said property in Indiana.

'That said state board of tax commissioners, in reaching said valuation of complainant's said property in Indiana, did not consider and assess the value of the property of complainant situated in Indiana, otherwise than by pursuing the requirements of said pretended statute.

'That neither on April 1, 1893, nor at any time prior or subsequent thereto, was there any market value for all the shares of the capital stock of complainant.' That the whole number of shares was 948,200, of the par value of $100 each. That the number of shares sold or speculated in on April 1, 1893, on the New York stock exchange, was 1,168 shares, at the average price of $94.50, and only a part of those was actually delivered, and that the price so obtained did not fairly represent the actual value of the plaintiff's property.

'That any price at which any or all shares of complainant might be sold, by any holder or holders thereof, whether such price be calculated upon any market value, or upon actual value, includes, amongst other things, a consideration of franchises of great value, owned or exercised by complainant, granted by the state of New York, by the United States, by Canada, by Great Britain, by Cuba, and by other states, countries, and municipalities; a consideration of complainant's good will, its past earnings from every source, its probable future earnings from every source, the business ability, enterprise, and skill of the present managers of complainant's business, the probable continuance of business ability, enterprise, and skill in the future management of complainant's business, the contract and other relations of complainant to powerful railroad, telephone, and cable companies; a consideration of the real estate of complainant situated in the city of New York, which is of great value, to wit, of the value of $3,500,000, and in the city of Chicago, which is of great val e, to wit, of the value of $1,700,000, and of the real estate of complainant, of great value, situated in many other states and countries, none of which is situated in the state of Indiana; as well as the consideration of the actual value of all complainant's telegraph lines, poles, wires, cables, conduits, instruments, appliances, and office furniture, including that which is situated in Indiana, and taxable by the state of Indiana.

'That, in estimating such market or actual value of the shares of the stock of complainant, the values of said intangible franchises, rights, contracts, earnings, business, business ability, enterprise, skill, and management and good will, and of all said real and personal estate of complainant, are blended so as to render it impossible to separate and distinguish the portions of value applicable to any or each of said elements of value of said shares.'

That the plaintiff was the owner of many thousand miles of telegraph in the states of Massachusetts, New York, Pennsylvania and New Jersey, and in other densely populated portions of the United States, of the cost and value of $2,500 per mile, on the average, and requiring great expenditures for the maintenance thereof; of many thousand miles of cable under the high seas, of the cost and value of $3,500 per mile, on the average; and of many thousands of miles of lines of telegraph in uninhabited, or sparsely inhabited portions of the United States and Mexico, which, by...