Western Union Telegraph Co. v. Lakin

• Decision Date: 28 May 1909
• Citation: 53 Wash. 326,101 P. 1094
• Parties: WESTERN UNION TELEGRAPH CO. v. LAKIN, County Treasurer.
• Court: Washington Supreme Court

101 P. 1094

53 Wash. 326

WESTERN UNION TELEGRAPH CO. v. LAKIN, County Treasurer.

Supreme Court of Washington

May 28, 1909

Appeal from Superior Court, Pierce County; M. L. Clifford, Judge.

Suit by the Western Union Telegraph Company against E. M. Lakin, as County Treasurer of Pierce County. From a decree for complainant, defendant appeals. Affirmed.

H. G Rowland and Robert M. Davis, for appellant.

Harold Preston (Beverly L. Hodghead and George H. Fearons, of counsel), for respondent.

CHADWICK J.

This action was brought by the Western Union Telegraph Company, a corporation organized under the laws of the state of New York and doing business as a common carrier of telegraphic messages in this and other states in the Union, to restrain the county of Pierce from collecting a tax levied upon its franchise in Pierce county. The record shows that the poles, wires, office fixtures, and other tangible property belonging to the company were listed for taxation and that the assessor, of his own initiative, had listed the franchise of the company for taxation in the sum of $15,000. It also appears: That the company was operating and maintaining its lines upon the public roads and highways in Pierce county, and also upon the streets and alleys of the cities of Tacoma, Puyallup, Orting, Ruston, Steilacoom Sumner, and Buckley; that it had certain valuable contracts with the Associated Press, a right of way over the right of way of the Northern Pacific Railway Company, and a gross business of over $40,000 within the county for the year preceding the assessment. It also appears that three ordinances have been passed by the city of Tacoma granting rights to the company to operate in that city. Only one of these was admitted by the court, but the question left for our decision is not affected by this ruling. The nature of the business carried on by the company, its relation and importance to the federal government, induced Congress to fix upon it a federal character, and, although it was organized under the laws of the state of New York, it has extended its lines and business throughout the states and territories under an act of Congress in the nature of a franchise, and which we shall refer to as the 'federal franchise,' passed July 24, 1866 (chapter 230, 14 Stat. 221; Rev. St. § 5263 [U. S. Comp. St. 1901, p. 3579]), which reads as follows: 'Any telegraph company now organized, or which may hereafter be organized under the laws of any state, shall have the right to construct, maintain, and operate lines of telegraph through and over any portion of the public domain of the United States, over and along any of the military or post roads of the United States which have been or may hereafter be declared such by law, and over, under, or across the navigable streams or waters of the United States; but such lines of telegraph shall be so constructed and maintained as not to interfere with the ordinary travel on such military or post roads.' The obligations of this act of Congress were accepted by the company on June 8, 1867, and it now insists: That it has the right to construct, maintain, and operate lines of telegraph over and along any of the military roads and post roads of the United States; that the ordinance of the city of Tacoma did not, and could not, confer any greater right upon the company than it had under the federal franchise; that it was in effect only a police regulation, conveying or creating nothing that was tangible or taxable by the county or state. The briefs and arguments, as well as the record submitted for review, fairly raise the questions whether the federal franchise is exclusive, whether it is subject to taxation, and whether the company is entitled to any privileges under the federal franchise; it being organized under the laws of a sister state.

The principal case relied on by appellant is that of Western Union Telegraph Company v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790. The property of the company was assessed by the state of Massachusetts in the following manner: The capital stock, or such proportion thereof as the value of the plant in Massachusetts bore to the value of the plant in the United States, was listed for taxation. An estimate of all of the company's property in the state and all its property in the United States was made, but no deduction was made for the federal franchise. This method of taxation was upheld. In that case, and in all the cases cited by appellant, it is insisted that the court held that the state had a right to tax a federal franchise. If the cases be so construed, appellant is probably supported in his contention by the weight of authority. He cites and relies upon the following cases: Western Union Tel. Co. v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790; Attorney General v. Western Union Tel. Co., 141 U.S. 40, 11 S.Ct. 889, 35 L.Ed. 628; Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 15 S.Ct. 268, 360, 39 L.Ed. 311; Western Union Telegraph Co. v. Taggart, 163 U.S. 1, 16 S.Ct. 1054, 41 L.Ed. 49; Adams Express Co. v. Ohio, 166 U.S. 194, 17 S.Ct. 305, 41 L.Ed. 683; Western Union Tel. Co. v. Gottleib, 190 U.S. 412, 23 S.Ct. 730, 47 L.Ed. 1116; Western Union Tel. Co. v. Pa. R. Co., 195 U.S. 541, 25 S.Ct. 133, 49 L.Ed. 312; Western Union Tel. Co. v. Wright (C. C.) 158 F. 1004; Henderson Bridge Co. v. City of Henderson, 173 U.S. 592, 19 S.Ct. 553, 43 L.Ed. 823; State ex rel. Coleman v. Western Union Tel. Co., 75 Kan. 609, 90 Pac. 299. On the other hand, respondent contends, not only that the courts have not held that the state can tax a federal franchise, but that it has been held that it cannot do so. It relies upon the following cases: California v. Central P. R. R. Co., 127 U.S. 1, 8 S.Ct. 1073, 32 L.Ed. 150; San Francisco v. Western Union Tel. Co., 96 Cal. 140, 31 P. 10, 17 L. R. A. 301; Western Union Tel. Co. v. Texas, 105 U.S. 460, 26 L.Ed. 1067; Western Union Tel. Co. v. Visalia, 149 Cal. 744, 87 P. 1023.

We think that in all the cases cited by appellant the real question was the legality and constitutionality of the method employed to fix the value of the capital stock of tangible property for the purposes of taxation, and that the question of separate assessment of the franchise, as such, was not the controlling one. In the case reported in 125 U.S. 530, 8 S.Ct. 961, and 31 L.Ed. 790, the court said, in reference to the federal statute: 'While the state could not interfere by any specific statute to prevent a corporation from placing its lines along these post roads, or stop the use of them after they were placed there, nevertheless the company receiving the benefit of the laws of the state for the protection of its property and its rights is liable to be taxed upon its real or personal property as any other person would be. It never could have been intended by the Congress of the United States, in conferring upon a corporation of one state the authority to enter the territory of any other state and erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the state into which it thus entered, and was under no obligation to pay its fair proportion of the taxes necessary to its support. * * * The tax in the present case, though nominally upon the shares of the capital stock of the company, is in effect a tax upon that organization on account of property owned and used by it in the state of Massachusetts, and the proportion of the length of its lines in that state to their entire length throughout the whole country is made the basis for ascertaining the value of that property. We do not think that such a tax is forbidden by the acceptance on the part of the telegraph company of the rights conferred by section 5263 of the Revised Statutes, or by the commerce clause of the Constitution'--a conclusion with which we agree. The whole argument proceeds upon the theory that the method employed was a tax upon property, rather than upon the privilege of doing business in the state of Massachusetts. That a federal franchise, the privilege of doing interstate business, could not be interfered with by injunction, is additional proof that the court did not intend to sanction a tax upon the franchise, for, had it been considered a proper subject of taxation, it was subject to all the laws of the state enacted in aid of tax enforcement. An 'injunction' is a remedy provided by the statutes of Massachusetts for the enforcement of the tax, and upon appellant's theory should not have been denied. On this point the court said: 'The effect of this injunction, if obeyed, is to utterly suspend the business of the telegraph company, and defeat all its operations within the state of Massachusetts. The act of Congress says that the company accepting its provisions 'shall have the right to construct, maintain and operate lines of telegraph through and over any portion of the public domain of the United States, over and along any of the military or post roads of the United States.' It is found in this case that 2,334.55 miles of the company's lines, out of 2,833.05 on which this tax is assessed, are along and over such post roads, and of course the injunction prohibits the operation of the defendant's telegraph over these lines, nearly all it has in the state. If the Congress of the United States had authority to say that the company might construct and operate its telegraph over these lines, as we have repeatedly held it had, the state can have no authority to say it shall not be done. The injunction in this case, though ordered by a Circuit Court of the United States, is only granted by virtue of section 54 of chapter 13 of the Public Statutes of Massachusetts. If this statute is void, as we think it is, so far...