Wis. Cent. R. Co. v. Taylor Cnty.

• Decision Date: 19 April 1881
• Citation: 52 Wis. 37,8 N.W. 833
• Court: Wisconsin Supreme Court
• Parties: WISCONSIN CENTRAL R. CO. v. TAYLOR COUNTY AND OTHERS.

52 Wis. 37

8 N.W. 833

WISCONSIN CENTRAL R. CO.

v.TAYLOR COUNTY AND OTHERS.

Supreme Court of Wisconsin.

Filed April 19, 1881.

Appeal from circuit court, Columbia county.Jones & Sanborn, Vilas & Bryant, and E. H. Abbott, for respondent.

S. U. Pinney, J. H. Parish, and E. L. Browne, for appellants.

CASSODAY, J.

This action was brought by the plaintiff, the Wisconsin Central Railroad Company, to restrain the defendants Taylor county and its officers from levying any tax upon or collecting the same from the lands described of the plaintiff, on the ground that they were exempt from taxation. It is urged, upon the part of the plaintiff company, that the lands in question could not be subjected to taxation by the state, nor any of its municipalities, for the reason that they were acquired by the plaintiff, under a grant from the United States, for the purpose of aiding in the construction of the plaintiff's railroad, and for no other purpose.

Marshall, C. J., in McCulloch v. Maryland, 4 Wheat. 429, said: “All subjects over which the sovereign power of a state extends are objects of taxation; but those over which it does not extend are, upon the soundest princiciples, exempt from taxation.” Again: “ That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that there is a plain repugnance in conferring on one government a power to control the constitutional measures of another, which other, with respect to those measures, is declared to be supreme over that which exerts the control,-- are propositions not to be denied.” Id. 431.

In Railway Co. v. McShane, 22 Wall. 444, it was held “that lands on which the costs of survey have not been paid, and for which the United States have not issued a patent to the company, are exempt from state taxation.” In Ross v. Outagamie, 12 Wis. 38, Cole, J., said: “It is conceded that, so long as the land remains a part of the public domain of the general government, it is not subject to taxation.” Section 2, art. 2, of the constitution of this state expressly provides, among other things, that “no tax shall be imposed on land the property of the United States.” So, as to lands which the state held title to as mere trustee of the United States, and as to which the trust remained unexecuted, the power of state taxation would not apply. In Tucker v. Ferguson, 22 Wall. 572, where the grant to Michigan by congress was substantially like this to Wisconsin, Swayne, J., said: “Upon general principle she (the state) could not tax the lands while the title remained in the United States, nor while she held them as the trustee of the United States, which, in the view of the law, was the same thing.”

These propositions are virtually conceded by counsel for the defendants, but they maintain that, as soon as the plaintiff perfected its title to the lands, and acquired the right to sell them, the case assumed an entirely different aspect, and they at once became subject to taxation by the state. On the other hand, it is claimed that the plaintiff company was merely the instrumentality or agent through which the state was executing the trust assumed, and hence, as the lands were exempt while held in trust by the state, the exemption continued while they were held by the railroad company as agent of the state. In support of this position we are referred to section 8 of the act of May 5, 1864, granting to the state the lands in question, which provided “that the said lands hereby granted shall, when patented as provided in section 7 of this act, be subject to the disposal of the companies respectively entitled thereto for the purposes aforesaid, and no other.”

We are also referred to section 10, art. 8, of the constitution of this state, declaring, among other things, that “whenever grants of land or other property shall have been made to the state, especially dedicated by the grant to particular works of internal improvement, the state may carry on such particular works, and shall devote thereto the avails of such grants, and may pledge or appropriate the revenues derived from such works in aid of their completion.” The seventh section of the grant referred to, among other things, provided: “That whenever the companies to which this grant is made, or to which the same may be transferred, shall have completed 20 consecutive miles of any portion of said railroads, * * * patents shall issue conveying the right and title to said lands to the said company entitled thereto, on each side of the road, so far as the same is completed, and coterminous with said completed section, not exceeding the amount aforesaid, and patents shall in like manner issue as each 20 miles of said road is completed.” There is no dispute but what the lands in question had, prior to levying of the taxes in question, been earned by the plaintiff by fully completing the requisite portion of its road, and that patents had been issued to the plaintiff, as required, thereby conveying to it the right and title to the lands in question.

The case of the Railway Co. v. Beniston, 18 Wall. 5, involved the power of Lincoln county, Nebraska, to levy a tax upon the road-bed, depots, wood stations, water stations, and other realty and personal property of the Union Pacific Railroad Company, which had previously been chartered by the United States. and in which many important rights and privileges had been reserved to the United States, and the majority of the court held that, as congress had not prohibited taxation by the state, it had the power to tax the property of the corporation, as distinguished from its franchises. Strong, J., giving the opinion of the majority of the court, said: “That the taxing power of a state is one of its attributes of sovereignty; that it exists independently of the constitution of the United States, and underived from that instrument; and that it may be exercised to an unlimited extent upon all property, trades, business, and avocations existing or carried on within the territorial boundaries of the state, except so far as it has been surrendered to the federal government, either expressly or by necessary implication,--are propositions that have often been asserted by this court.” Page 29.

The case of Tucker v. Ferguson, 22 Wall. 527, was a bill filed by the trustees of the bondholders to restrain the assessment of taxes at any time on the lands granted by congress to Michigan by act of June 3, 1856, being similar to the grant in question, and which lands the state had, in a qualified way, granted to a railroad company to aid in constructing its proposed road, during the term allowed for the completion of the road. The company not being able to “ sell” the lands in the manner contemplated by congress before the road was made through them, issued its bonds and mortgaged the lands to trustees, which mortgage contained a clause empowering the trustees to sell the lands so mortgaged, and to apply the proceeds to the payment of the bonds thereby secured, and the court “ held, upon this part of the case, that the lands had been sold within the meaning of the act of congress; and that though the state, while she held the title as trustee of the United States, could not tax them, she now could do so.” Swayne, J., delivering the opinion of the court, said: “It is a conclusive answer to the proposition we are considering that the United States have no more claim, legal or equitable, touching the lands here in question, than they have to lands which they have sold and patented to others in the regular course of the administration of the land department of the government, and that congress has not seen fit, either expressly or by implication, to impose any restriction upon the taxing power of the state. That subject was remitted, as, under the circumstances, it might well be, wholly to her wisdom and discretion. * * * The state did not in anywise abdicate her sovereignty by accepting the trust, but the former might be exercised to render more effectual the discharge of the latter. She was in nowise fettered, except as she had agreed to fulfil all the terms and conditions which accompanied the grant. * * * Upon general principles, she could not tax the land while the title remained in the United States, nor while she held them as trustee of the United States, which, in view of the law, was the same thing. But when the state, proceeding in the execution of the trust, had transferred her entire title to the company, and they had perfected their title and acquired the right to sell, the case assumed a very different aspect.” Pages 571, 572.

The case of Railway Co. v. Prescott, 16 Wall. 603, was a bill filed in the state court of Kansas to restrain the assessment of taxes upon, and the collection of taxes from, lands granted to the Kansas Pacific, but which bill was dismissed by the trial court and affirmed on appeal to the supreme court of that state, and then brought to the supreme court of the United States on writ of error; and Miller, J., among other things, said that “while we recognize the doctrine heretofore laid down by this court that lands sold by the United States may be taxed before they have parted with the legal title by issuing a patent, it is to be understood as applicable to cases where the right to the patent is complete and the equitable title is fully vested in the party, without anything more to be paid or any act to be done going to the foundation of his right.” Page 608.

The case of Railway Co. v. McShane, 22 Wall. 444, was a bill in equity to restrain the collection of taxes assessed upon lands belonging to the Union Pacific in Nebraska, and the court below dismissed the bill as to all lands patented to the company, but granted the injunction as to the lands not patented to the company, and held that--“(1) The Railway Co. v. Prescott, 16 Wall. 603, is modified and overruled so far as it asserts the contingent right of...