Adams Express Co. v. Poe
61 F. 470
S.D. Ohio
1894
Check Treatment
TAFT, Circuit Judge

(after stating the facts as above). The validity of the Nichols law has been considered in the opinion—filed at the same time with this—in the case of the Western Union Telegraph Company against the same defendants (61 Fed. 449), and all the questions of law therein considered are raised by the bill and demurrer and the motion for an injunction in this case. The question of jurisdiction by reason of the'amount involved is also the same as in the Western Union Telegraph Company Case. It is admitted that the difference between the aggregate amount of the certifications to the county auditors about to be made by the defendants against the Adams Express Company under the Nichols law, and the amount which that company will pay under previous laws, if the Nichols law is finally held invalid, amounts to $241,-918.34, which difference, at the rate of taxation prevailing in Ohio, makes a tax of from $6,000 to $7,000. It is true that in no single county does this tax difference equal or exceed $2,000; but, as already held in the Western Union Telegraph Company Case, I do not think that the difference in any one county is the measure of the amount in controversy in this action. There is very little to add to what has been said in the telegraph opinion. The lack of uniformity in the mode of assessment under the Nichols law with that generally prevailing in Ohio in respect to property of individuals and other corporations is more marked in the case of this complainant than it was in the case of the telegraph company. There is a suggestion in the report of the assessors that the. express, company did not return all its property, because its return did not include the safes and pouches which must be used in its business. But it is not claimed, and could not be, that the failure to return the safes is an explanation of the difference between $53,000, the amount returned by the company as the value of its property in Ohio, and the $460,000 at which the board has assessed the value of that property. The earning capacity of an express company, which largely determines the value of the shares, of its capital stock, is even more dependent than the earning capacity of a telegraph company upon its good will, skill and honesty of its employes, and upon its franchises and other rights and privileges not property. A very important source of the revenues of an express company is the business arrangements which it has with railroad companies, by vir*473iue of which, for a lump sum, fixed annual payments, or percentage of gross receipts, the railroad company permits a particular express company to use its cars for the transportation of its merchandise, and to use its stations, depots, and employes for the transaction of its local business. . It is very doubtful, in my mind, whether such a business arrangement is personal property, to be returned for taxation under the laws of Ohio. It certainly is not real estate, because it gives an express company no Interest in the land. It is intangible. The making of such a contract probably involves the personal character, so to speak, of the contracting express company, its good will, and its reputa tion for honesty and promptness, so that a contract made with it would be inalienable by it. It is certain that express companies have never been required to make returns of such contracts as personal property, and the definition of personal property, as given in section 2780, does not include it, for personal property, as there defined, is as follows;

“The term ‘personal property’ sita 11 be bold to mean and include, first, every tangible thing being the subject of ownership, whether animate or inanimate, other than money, and not Conning part of any parcel of real property, as hereinbefore defined; second, the capital stock, undivided profits, and all other means not forming part of the capital stock, of every company, whether incorporated or unincorporated, and every share, portion, or interest in such stock, profits, or moans, by whatsoever name the same may be designated, inclusive of every share or portion, right, or interest, either legal or equitable, in and to every ship, vessel, or boat, of whatsoever name or description, used or designed io lie used either exclusively or partially in navigating any oí the waters within or bordering on this state, whether such ship, vessel, or boat shall bo within the jurisdiction of this state or elsewhere, and whether the same shall have boon enrolled, registered, or licensed at any- collector's office, or within auy collection district in this state or not; third, the money loaned on pledge or mortgage of real estate, although a deed or other instrument may have been given for the same, il' between the parties the same is considered as security merely.”

Such contracts or business arrangements would seem to be more nearly included as “credits,” which are defined by the same section as follows:

“The term ‘credits’ shall be held to mean the excess of the sum of all legal claims and demands, whether for money- or other valuable thing, or for labor or service duo or to become due to the person liable to pay taxes thereon, including deposits in banks or with persons in or out of this state, other than such as are held to be money, as hereinbefore defined, when added together (estimating every such claim or demand at its true value in money), over and above the sum of legal bona fide debts owing by such person.”

And yet it is doubtful whether the right to enforce a contract unexecuted on cither side could be said to be a legal demand for services due or to become due. However this may be, even if the value of such contracts were taxable as property in Ohio, there still would remain the good will of the business, the skill and experience of the officers, the discipline among, and honesty of, the employes of the company, which contribute so largely to the earnings, and yet are not taxable property in Ohio.

The suggestion is made that the return of the company is an undervaluation, because no personal property, or a very small amount, is returned from any offices of the company in Ohio. I do not know why *474that should indicate undervaluation, because it plainly grows out of the fact that, at the many small stations along the lines of the railroad upon which the express companies operate, the express company uses the office furniture and the office of the railroad company, and has no property of its own. There was in this case no.mileage basis for the distribution of the capital stock, and the board of appraisers are unable satisfactorily to explain the basis upon which they affixed, to property returned by the express company as worth $53,-000, an additional value of over $400,000, except that in reaching, this additional value they considered the gross receipts of the company in Ohio, and the market value of its entire capital stock, and other evidence and information. This only confirms the conclusion ■ reached in the case of the telegraph company, that the board construed the Mchols law to mean that there should be apportioned, to the state of Ohio for taxation, as property within the state, a fair share of the aggregate market value of the capital stock of the company.

It is very true, as said by the supreme court in the case of Express Co. v. Seibert, 142 U. S. 339, 12 Sup. Ct. 250, that the tangible value of express companies is in a very small ratio to the protection which they receive from the government of the state, and therefore that it is entirely just that their burdens of taxation should not be proportioned to the visible tangible property upon which they may be taxed., J3ut the difficulty in Ohio is that, under the constitution, the' property of the corporations and individuals must be taxed by a. uniform rule, and the inequalities of taxation produced by the fact-that large earnings are made by corporations with small tangible property cannot be obviated by affixing to the property of such corporations a fictitious value, plainly not based on the true value of. it in money. The tax must be imposed on something other than property.

The same order of injunction will be made in this case which was directed in the case of the telegraph company. As, under the old law, the taxes paid by the express companies were proportioned to the gross receipts in each county, and the same method of distribution is prescribed under the Mchols law, it is apparent that the complainant will not have to pay, under the old law, any more taxes in any particular county than it would have to pay under the Mchols law. For this reason, the order of injunction will cover the certifications to all the counties, and will be made conditional on the complainant’s paying the taxes on its gross receipts from business done within the state of Ohio in each county for the year ending May 1, 1893, with interest and penalty, and, when an amendment to the bill showing such payments has been filed, the demurrer will be over-' ruled; otherwise, and unless this amendment is filed within 10 days, the bill will be dismissed.