Western Union Telegraph Co. v. State Board of Equalization

• Decision Date: 22 January 1932
• Docket Number: 6851.
• Citation: 7 P.2d 551,91 Mont. 310
• Parties: WESTERN UNION TELEGRAPH CO. v. STATE BOARD OF EQUALIZATION.
• Court: Montana Supreme Court

7 P.2d 551

91 Mont. 310

WESTERN UNION TELEGRAPH CO. v. STATE BOARD OF EQUALIZATION.

No. 6851.

Supreme Court of Montana

January 22, 1932

Appeal from District Court, Lewis and Clark County; A. J. Horsky Judge.

Action by the Western Union Telegraph Company against the State Board of Equalization. From a judgment for defendant plaintiff appeals.

Affirmed.

Stewart & Brown, of Helena, for appellant.

L. A Foot, Atty. Gen., L. V. Ketter, Asst. Atty. Gen., and John W Mahan, of Helena, for respondent.

FORD J.

This action was submitted to the lower court upon an agreed statement of facts, from which it appears that plaintiff is a New York corporation doing business in this state, and owning telegraph lines and other property of a single and continuous character operated in more than one county in the state. It is engaged in the business of accepting and transmitting telegraphic messages in this state, other states of the United States, and foreign countries. In addition to its land lines in the United States, it owns and operates submarine cables for the transmission of telegraphic messages from points on its land lines in this and other states to points in foreign countries. The ocean cable construction and the operation thereof are entirely unlike land line physical property and operations, and the cables are not connected physically with the land lines of plaintiff. Telegraphic and cable messages to and from land line points in Montana and the United States are transmitted over its lines and transferred manually by an employee or agent of plaintiff from the land lines to the cables at their termini in the United States. For the services rendered plaintiff receives payment from its customers upon messages transmitted from points in this state to the addresses in foreign countries for messages transmitted in part over its land lines and in part over its ocean cables.

In the year 1929, plaintiff made return to the state board of equalization disclosing all of its property, indebtedness, stock issues, expenses, mileages of wire, and valuation of stocks, bonds, and other property as required to be furnished for taxing purposes. Plaintiff, in arriving at the value of its property subject to taxation in this state, excluded from consideration the ocean cables owned by it. The value of the property in the state, as determined by it, was $1,060,120.

The state board of equalization, in arriving at the value of the property of plaintiff subject to taxation in the state, took that portion of the total valuation of the entire system of plaintiff wherever situated, including 37,563 miles of submarine cables lying and being in the oceans of the world, that the total mileage of telegraph wires within the state bears to the total wire mileage of plaintiff's entire telegraph system, including the mileage of submarine cables, and fixed the value of the property within the state at $1,246,150.

It is agreed that, if the valuation of the ocean cables be not included in determining the valuation of plaintiff's entire plant or system for the purpose of arriving at the value of its property in the state, the total valuation of the property in the state is as returned by it, but, if the ocean cables shall be included, the valuation of its property is as determined by the state board.

From a judgment for defendant plaintiff appeals.

The questions presented for determination, as stated in the agreed statement of facts, are: "1 (a). In arriving at the total value of the entire plant or system of the plaintiff company, may the defendant board include the valuation of plaintiff's submarine or ocean cables; (b) if the foregoing is answered in the affirmative, may the board then take that portion of such total value that the total wire mileage within this state bears to the total wire mileage of plaintiff's system, wherever it is situated, including the mileage of ocean cables: 2. Whether or not the including of such ocean cables by the defendant in arriving at the value of plaintiff's property in Montana does not do violence to (a) section 11 of article 12 of the Constitution of the state of Montana, (b) section 17 of article 12 of the constitution of the state of Montana, (c) section 27 of article 3 of the constitution of the state of Montana: and 3. Whether or not an assessment under the laws of the state of Montana or rules and orders of the defendant herein, in thus including the value of plaintiff's ocean cables in arriving at the value of plaintiff's property in Montana does not deny it those guaranties contained in section 1 of the Fourteenth amendment to the constitution of the United States of America?"

It is contended by plaintiff that the assessment made by the board results in the taxation of a separate and distinct unit of property located outside the territorial limits of the state and not connected with or operated in physical or manual connection with any property within the state; in other words, that the assessment made by the board amounts to the taxation of property, i. e., cable lines, not situated within the state.

Section 2143, Rev. Codes 1921, provides that the value for taxation of the property and plant of each telegraph, telephone, electric power, and transmission line and other properties to be assessed by the state board of equalization "shall be that portion of the total value of the entire plant and property, wherever situated, that the total mileage within this state bears to the total mileage wherever situated, after deducting from such portion the total assessed value of all property which has been assessed for taxation in this state by the county assessors of the several counties of this state."

The agreed statement shows that plaintiff will accept a message at any of its stations in Montana to be transmitted to foreign countries over ocean cables owned and operated by it; that it has published rates covering such service effective in Montana; that telegraph and cable messages from land lines in Montana are transmitted over its land lines, and are transferred manually by its employees to cable lines, or from cable to land lines at the cable terminus. For such services plaintiff receives payment from its customers upon messages transmitted from Montana points to foreign countries over its land lines and ocean cables.

The agreed statement shows that the cable lines are owned and operated by plaintiff in connection with its land lines, and, in our opinion, they constitute a part of its entire system. The whole transaction from the acceptance of messages in Montana to and including the transmission thereof over its cables is a single and continuous transaction of plaintiff in the conduct of its general business, and the fact that there is no physical connection between the land lines and the ocean cables is of no consequence.

The unity of tangible property such as will support the application of the unit method of assessment is not dependent upon physical connection of the separate pieces of property composing the unit. "Doubtless there is a distinction between the property of railroad and telegraph companies and that of express companies. The physical unity existing in the former is lacking in the latter; but there is the same unity in the use of the entire property for the specific purpose, and there are the same elements of value arising from such use. The cars of the Pullman Company did not constitute a physical unity, and their value as separate cars did not bear a direct relation to the valuation which was sustained in that case. The cars were moved by railway carriers under contract, and the taxation of the corporation in Pennsylvania was sustained on the theory that the whole property of the company might be regarded as a unit plant, with a unit value, a proportionate part of which value might be...