| Iowa | Oct 24, 1877
Lead Opinion
. The act of 1872, being the law now in. question, made a radical change in the assessment and taxation of the property of railroad companies. By this act it is provided that the census board shall assess all the property of each railroad company in the State. It is required by the act that the officers of railroad companies shall make to the census board a sworn statement in detail, of the property of the company of every kind located in each county in the State. Said statement must also show the amount of rolling stock, and the gross earnings of the road. The act further provides that “ the said property shall be valued at its true cash value, and such assessment shall be made upon the entire road within the State, and shall include the right of way, road-bed, bridges, rolling stock, station grounds, etc., and all other real and personal property exclusively used in the operation of such railroad.”
The valuation made “ shall be in the same ratio as that of the property of individuals.” It is further provided by the act, that the census board shall transmit to the boai’dof supervisors of each county through which any of said roads run a statement showing the length of main track of road within such county, and llie assessed value per mile, of said road, as fixed by a fro rata distribution, per mile, of the whole property of the road.
The board of supervisors are required to make an order declaring the length of main track, and assessed value of such road lying within each city, town, township, and lesser taxing district, which amount shall constitute the taxable value of said property for all taxable purposes. And the amount due each city or incorporated town, under the provisions of the act, is required to be paid over to such city' or town, when collected by the county treasurer.
Section six, of the act, provides that “all such railroad property shall be taxable upon said assessment at the same rates, by
Counsel for appellee insists that this court in the case of The City of Davenport v. The Chicago R. I. & P. R. R. Co., 38 Iowa, 633" court="Iowa" date_filed="1874-06-19" href="https://app.midpage.ai/document/city-of-davenport-v-c-r-i--p-r-r-7096028?utm_source=webapp" opinion_id="7096028">38 Iowa, 633, and The City of Dubuque v. The Illinois Central Railroad Company, 39 Iowa, 56" court="Iowa" date_filed="1874-06-19" href="https://app.midpage.ai/document/city-of-dubuque-v-illinois-central-railroad-7096064?utm_source=webapp" opinion_id="7096064">39 Iowa, 56, held the act in question to be unconstitutional. It is true that a majority of this court held in those cases that, as the tax in question was valid, it was not within the power of the legislature to abrogate it, and that consequently the said ninth section of the act was unconstitutional. • No question was made as to the other provisions of the act, and we are now called upon for the first time to pass upon their validity.
Section 2, article 8, of the constitution, provides that “The property of all corporations for pecuniary profit shall be subject to taxation, the same as that of individuals.”
The argument of counsel for appellee in substance is that, by apportioning the valuation to the number of miles of road situated in each city, town, township, etc., there is an unjust discrimination against those cities where the machine shops, depots, engines, etc., are situated, and that thus the property of the railroad company is not assessed and taxed for municipal pitrposes in the same ratio or degree as that of individuals.
It is perhaps impossible to devise any system of taxation which in its practical operation will secure an exact equality of burden upon the whole property of the State. In the case of Tappan v. Merchants' National Bank, 19 Wallace, 490, it is said that “absolute equality in taxation can never be attained. That system is the best which comes the nearest to it. The same rules cannot be applied to the listing and valuation of all kinds of property. Eailroads, banks, partnerships, manufacturing associations, telegraph companies, and each one of the numerous other agencies of business which the inventions of the age ai’e constantly bringing into existence, require different machinery for the purposes of their taxation.” Leg-
The objection made to the act in question is not that by. its provisions any portion of the property escapes taxation of any kind. The act itself requires that the assessment shall be made at a cash value, and when thus made it is liable to the same tax as the property of individuals. For example, the city of Dubuque may levy municipal taxes to the same extent, on the amount apportioned to it, as it may upon the property of individuals. That it is within the power of the legislature to fix the situs of property for the purposes of taxation, we have no doubt. The question then remains, must- all property be assessed and valued by the same officers, or is it required by the provision of the constitution in question that all property must be taxed by the same method? In our opinion the true meaning and intent of. the constitutional provision in question is that all property, whether owned by corporations or individuals, shall be equally burdened with taxation, an.d that the legislature may adopt different methods of ascertaining values, adapted to the various peculiarities of the property. This has always been recognized as proper. And the power of the legislature to fix the situs of property for the purpose of taxation is not confined to personal property alone; it exists as to real property also. Under the Code of 1851, Sec. 462, the property of railroad companies, and other corporations of like character, was taxable only through the shares of the stockholders, and the stock held by non-residents was taxable in the county in which was either terminus of the road in this ■ state. Certain taxes were levied for. the years 1858 and 1859 upon lands granted to aid in the construction of a railroad from Dubuque to the Missouri river. The lands were situated in Butler county, and the taxes were levied by the local assessors in that county. In the case of Tallman v. The Treasurer of Butler Co., 12 Iowa, 531" court="Iowa" date_filed="1861-12-31" href="https://app.midpage.ai/document/tallman-v-treasurer-of-butler-county-7092438?utm_source=webapp" opinion_id="7092438">12 Iowa, 531, this court held that the act providing for taxation through the shares of stock was valid, and that the tax levied upon the lands in the county of Butler was void. In the opinion in the case just cited, Justice Wright
These difficulties attending a system of taxation adaj>ted to this class of property will readily be understood by any one. The road, with its right of way, embankments, excavations, iron rails, switches, depots, engine houses, machine shops, etc., is, in a certain sense, an entirety, extending from one terminus to the other. Its value largely depends upon its length of line, the country through which it is located, its proximity to other roads, and the business transacted by it. The extent of the line situated in any one city or town, township, or other taxing district, whatever improvements it may have therein in the way of machine shops and depots, is valuable chiefly by reason of its connection with the whole line. The value in each taxing district, without reference to the whole line, would be little more than the value of the iron rails, for the purposes of removal, and the value of the land used for machine shops, engine houses and other buildings. Under these circumstances it will be readily seen that, under our general revenue law, to impose upon local assessors throughout the length of our long lines of road, extending in some instances across the State, a distance of three hundred and fifty miles, exclusive of branches, the duty of ascertaining the value of the road in each assessment district, would be productive of anything but uniform results.
Whether the defendants would be liable to a greater aggregate taxation by pursuing the ordinary mode of valuation it is impossible, with the record before us, to determine. Under this system it is liable to the school districts, road districts, townships, counties, incorporated towns and cities, in proportion to the length of line in such taxing districts, for whatever taxes they may lawfully levy. Whether, by reducing the valuation in Dubuque and increasing it correspondingly in Clinton, McGregor, Lansing, and other cities and towns, school and road districts, the aggregate taxation would be increased or diminished, does not appear. If the aggregate be equal there is an equality of burden, whether tho taxes be paid in Dubuque, Clinton, McGregor, or other taxing districts.
This proposition needs no argument, assuming as wTe do that it is within the power of the legislature to locate the property for the purposes of taxation.
Y. In conclusion, our judgment is that it is not only within the power of the legislature to prescribe this special mode of valuation as aj>plied to this class of j>roperty, but that its provisions are wise and just, considering tho impracticability of arriving at anything like just results by leaving the assessment and valuation to be made by each township and city assessor in which the road may be in part situated.
Reversed
Dissenting Opinion
After a patient and careful consideration of the important constitutional question involved in this case, I am unable to concur in the foregoing opinion of the majority of this court. Mr. Justice Adams is also unable to assent to the conclusions and arguments found in the opinion, and unites with me in dissenting therefrom. The views which I shall attempt briefly to express are entertained by him as well as myself.
A railroad terminating in or passing through a city may own therein large tracts of land whereon are erected valuable buildings containing machinery, stores, etc., all reaching the value of hundreds of thousands of dollars; but two or three miles of the road may be within the city. In such a case the municipal taxation would be upon the road within the city limits valued at, say, $20,000, while the value of the property in the city owned by the corporation would reach, say, $500,000, if assessed for taxation as the property of individuals. The city could assess the road for taxation at $20,000. The half million of property which would be taxable at that value, if owned by individuals, iu the hands of the corporation is exempt from taxation except for the small amount which enters into the valuation of the railroad. This is a correct statement of the practical effect of the statute.
II. We will proceed to inquire whether this statute, enacted, as appears from its language and is made known by its legislative history, for the purpose of relieving railroad corporations
It is also held in those cases that the provision is mandatory and requires the property of corporations contemplated therein to be made subject to all taxes that are levied upon the property of natural persons. The doctrine recognized and the arguments supporting it may be better presented by the use of the following language found in the decision of the last of these cases:
“ The language of this provision (Art. 8, § 2 of the constitution), is so simple and direct that it cannot be made plainer by exposition. .
“ Its obvious meaning is that the property of artificial persons, existing for pecuniary profit, shall be assessed and taxes thereon levied and collected, for these acts are incidents in rendering property subject to taxation, the same as that of individuals. The same rule of taxation that extends to individuals, citizens, residents, who are taxpayers of the State, must be applied to corporations of the character contemplated. . “While the explicit language of the provision leaves no room for doubt as to its meaning, the reasons upon which it is based give double assurance of the correctness of our interpretation.
“ It is essential to the justice of taxation that it be uniform, bearing equally upon owners of all the property which is under the protection of the laws of the State. All not exempt must pay taxes, which are not to be imposed alone or unequally upon particular individuals or classes. Warren v. Henly, 31 Iowa, 31" court="Iowa" date_filed="1870-01-27" href="https://app.midpage.ai/document/warren-v-henly-7094808?utm_source=webapp" opinion_id="7094808">31 Iowa, 31.
• “ If classes or individuals be exempted from 'taxation, uniformity and equality is destroyed. This uniformity in taxa
“The history of corporations for pecuniary profit in this country shows that there long has been a disposition on the part of these artificial persons to seek, and on the part of legislatures to grant, immunities and exemptions from taxation.
“ It has often occurred that their charters provided for total exemptions from taxes or for rates of taxation, applicable to them, different from those affecting other property holders.
“Legislation in other forms has been often sought and granted, securing the same end.
“The law before us, as well as others enacted in this State, bear evidence of the correctness of this statement. Against such legislation, the evils of which existed and were felt when the constitution of 1857 was adopted, the provision above quoted was aimed. (See Code of 1851, § 462.) The end sought and attained thereby is equal and uniform taxation of the property of all the taxpayers of the State.
“ The language of the provision must be understood to be mandatory, and not permissive. If it be regarded as permissive, only, the provision is nullified.
“Undoubtedly, without it the legislature could provide for the taxation of the property of corporations the same as that of individuals, and justice would so demand. There is no restriction upon the legislative power forbidding uniform taxation or preventing its application to corporations. If, therefore, the language of the section be construed as ¡permissive, it grants no power and imposes no restriction upon the exercise of power, and is rendered meaningless.
“The provision is not limited in effect to any particular class or kind of taxes, considered either as to the property upon which they are levied or the purposes of their imposi-I tion, or the branch of the civil government for the support of which they arc collected. The language is general and comprehensive. The word taxation applies to all assessments for public purposes which are called taxes, and are authorized by
“The conclusion just, announced is supported by considerations of justice, which should always have controlling weight in construing laws, both constitutional and statutory, admitting of conflicting interpretations, in order to arrive at the true intentions of the law-makers, which, in such cases, must be presumed to accord with right.
“Under the statute involved in this case, and the doctrines upon which it is attempted to be supported, the legislature exempts railroad property from municipal taxation — relieving it by special enactment from taxes lawfully levied. The cities are charged with the.duty of giving protection to the property and business of the railroad corporations found and transacted within their limits. In many of them such property, both real and personal, of vast value is situated. In some instances many acres of ground, almost in the heart of the cities, are covered with,railroad cars and buildings, subject to conflagrations and other causes of destruction and loss.
“The business houses and dwellings of the people are endangered by proximity to such vast collections of combustible material. The city is charged with the protection of this property from destruction, and expensive machinery must be maintained for that purpose. The personal property of the railroad companies, as well as that carried by them, must be protected from pillage and larceny, and good order must be preserved in the throngs, of people that are constantly found about their depots, entailing largo outlay for the support of the police force of the cities. Those expenses and responsibilities
To exempt the property of railroad corporations from their equal burden of municipal taxation, where their property and business demands such great outlay by the cities for protection, is so grossly unjust that it is to be presumed the constitutional provision in question was intended to give protection from the evils of such legislation.
The doctrines of the cases just cited apply to the statute in question in this ease. If it be unconstitutional for the legislature to relieve the corporations wholly from municipal taxes, an attempt to partly exempt them therefrom is equally invalid. If a statute be in conflict with the constitution, on the ground that under it corporations are not taxed at all, one that provides they shall be liable for only a part of the taxes assessed against natural persons is subject to the same objection. In neither case is the taxation of the corporations the same as that of individuals. Each law, therefore, is in conflict with the constitution.
III. The validity of the statute in question is supported, in the foregoing opinion of the majority of the court, on the ground that it is impossible to frame revenue laws which, in all cases, will impose an equal burden of taxation, and that there must always be this inequality resulting from the cupidity of man and the inherent difficulty in devising laws under which all taxes will be uniform and equal upon all. It is quite true that exact uniformity and equality in taxation can never be attained.. When taxes are unequal because they cannot be made equal, it is no ground for holding the law under which they are levied void. I may be permitted to repeat, as applicable to this point, language which I have before used. “That a tax, or a system of taxation, may not bear equally upon all, when weighed in the nicest balance of equity and justice, is no reason for holding that it conflicts with the fundamental and essential rule under consideration. Such a result is inevitable from the nature of things, for it is practically impossible
But inequality in taxation resulting from necessity growing out of the imperfection of the human understanding, from the cupidity and disregard of law of tax-payers, from the great variety of pursuits and of classes and kinds of property and the like, is one thing, while inequality intended and avowedly and deliberately provided for by statute is another. ' The object and design of the statute in question is to exempt railroad corporations from taxation equal to that borne by individuals. Inequality is intended and provided for unequivocally by carefully prepared provisions that could have had no other purpose in the mind of the legislators. It is not an incident that could not be avoided, but is an object carefully provided for in the statute. It cannot, by any fairness, be claimed that real estate and personal property of railroad corporations, connected with the use of the roads, cannot be made subject to taxation the same as like property of individuals. There is not 'the least difficulty in providing a system of taxation which, in its theory at least, shall impose a burden upon such property equal to that provided for the property of individuals. The argument then, based upon necessity, fails, and seems but to expose the injustice of the statute and its conflict with the constitution.
IY. That part of the opinion which holds the legislature may, in providing for taxation, “ adopt different methods of ascertaining values adapted to the various-peculiarities of the property,” and may fix the situs of property, both real and personal, for the purpose of taxation, announces an undisputed rule. But this may not be done for the purpose of creating inequality of taxation. It may be done to promote equality, not to effect inequality. The statute involved in this case, in providing for the taxation of railroad property, requires the assess7 ment of lands, houses and personal property, situated in the city of Dubuque, to be made by the state officers, and the values thereof to be added to the value of the railroad, the aggregate to be regarded as the value of the road; the city is permitted to tax the road in its limits upon its value per mile, ascertained from its total value, fixed as aforesaid, and is forbidden to tax
Y. But it is said that property of the corporation situated in the city, while not subject to municipal taxation, may be taxed by the counties, school districts, etc., to an amount which it would bear, were it taxable in the city. Eor the present we will concede the correctness of the fact assumed. But it does not establish that the corporation property is subject to taxation as the property of individuals, according to the mandatory provision of the constitution. If all owners of property situated in the city of Dubuque are subject to municipal taxes in that city, the law, which provides that the railroad property, situated in the same city, shall be taxed in othér counties, surely prescribes for taxation of such property differently from the property of individuals. The objection is not to the manner of the taxation, but to the -taxation itself. The manner of assessing the valuation of the property may not be objectionable, Unequal taxation is forbidden by the constitution. It will not be valid because the manner of its enforcement is not unlawful.
But the position of fact upon which the argument we are now attempting to answer is based, cannot be admitted. The railroad corporations do escape from the payment of large amounts of taxes upon their city property, which, if the property were owned by natural persons, would be imposed thereon. Can it be supposed that the law would be upon our statute book if it had not been intended to have that effect? Its history is known to the world, and all men know that the object of its enactment was to lighten the burdens of taxation to be borne by the favored corporations. It is just as plain that in its practical workings it has the effect intended in its enactment. The defendants, the railroad companies, pay coun-. ty and school taxes in Clayton county under the law. If assessed as the property of individuals in Dubuque, they would pay county and school taxes there. Under the laws they do
VI. As we have said, the law is not invalid on account, of the method or manner of assessing the property and levying the taxfes. The point, therefore, made in the opinion, based upon the existence of different methods of taxation for different classes of taxpayers, does not support the validity of the law. "Whenever unequal taxation, such as is forbidden by the constitution, is provided for, it will be invalid though the method and manner of its enforcement may be in accord with the forms of law. In our opinion, the majority of the court fail to distinguish throughout their discussion of the case between illegal taxation and lawful forms of exercising the taxing power.
VII. With the policy of the statute we have nothing to do, but the ill effects of breaking down the constitutional requirement, relating to the taxation of the property of corporations, is a proper matter for consideration. There can be no safety to the people except in obedience to all laws, and especially to the supreme law of the State. That course of construction of the constitution which disregards its obvious meaning, which makes the instrument a palimpsest in the hands of the courts, upon which may be written other language than that found recorded there, will inevitably lead to the most threatening evils. If for expediency, or to gain a desired good end, to-day this course of construction is pursued, to-morrow it may be followed for mischief and oppression. And in no kind of legislation are such results to be more certainly apprehended and feared than in the exercise of the taxing power. If to-day, in favor of railroads, the corporations owning them may be exempted from taxation imposed upon individuals, to-morrow burdens in the way of taxes may be imposed upon them which natural persons will not share. The power to impose taxes upon corporations which are not equal to those of individuals may be exercised in levying more burdensome taxes upon corporate
YIII. Tallman v. Butler County, 12 Iowa, 531" court="Iowa" date_filed="1861-12-31" href="https://app.midpage.ai/document/tallman-v-treasurer-of-butler-county-7092438?utm_source=webapp" opinion_id="7092438">12 Iowa, 531, is cited in support of the conclusions announced in the opinion of the majority of the court. In our judgment it utterly fails to present any rule or principle applicable to the case before us.
Under the Code of 1851, the property of railway corporations was taxed through the shares of the stockholders. Certain lands granted by the United States and the State to a railroad company were assessed and taxed, as we understand the opinion, to the corporation. The case holds that the lands were properly taxable through the shares of the stockholders. The constitutional question involved in the case before us was in no manner raised, and not one word is found in the opinion thereon. The conclusion reached by the court is exclusively based upon the construction of the statute. All that is said in announcing the decision, and quoted in the foregoing opinion of the majority, is sound law and is applicable to the constitutional exercise of the taxing power. Whether the tax was in conflict with the constitution was not made a question and not, of course, decided. The reason this question was not decided is, it was not raised, and it was probably not raised for two reasons. The present constitution had but just superseded the constitution of 1816, which contained no provision similar to Art. 8, § 2, now a part of the paramount law of the State. The Code of 1851 was enacted under the old constitution and had not been made to conform with the new constitution. It may well be supposed that the constitutional question, if it really existed in the case, was overlooked. This presumption is supported by the fact appearing in the opinion that the court below held the tax levied upon the corporation invalid, and the county treasurer appealed. But there was no appearance in this court for the appellant and it was submitted without argument. The appellee, it is not to be supposed, would
In Faxton v. McGosh, 12 Iowa, 527" court="Iowa" date_filed="1861-12-31" href="https://app.midpage.ai/document/faxton-v-mccosh-7092437?utm_source=webapp" opinion_id="7092437">12 Iowa, 527; The City of Davenport v. The M. & M. Ry Co., Id., 539, and The Dubuque & Sioux City R. Co. v. The City of Dubuque, 17 Iowa, 120" court="Iowa" date_filed="1864-10-12" href="https://app.midpage.ai/document/dubuque--sioux-city-railroad-v-city-of-dubuque-7093069?utm_source=webapp" opinion_id="7093069">17 Iowa, 120, cited in the majority opinion, the question involving the constitutionality of the statute under which taxes were levied was not made and decided.
IX. The United States Express Co. v. Ellyson, 28 Iowa, 370" court="Iowa" date_filed="1869-12-31" href="https://app.midpage.ai/document/united-states-express-co-v-ellyson-7094452?utm_source=webapp" opinion_id="7094452">28 Iowa, 370, is also cited to support the conclusions of our brothers. The case, in our opinion, has no bearing whatever upon the constitutional question before us. It supports the rule, which we have again and again admitted, that the legislature may prescribe the method or manner of assessment of property, and that because of different methods being applied to different classes of property, or property held by different classes of owners, taxes for that reason are not invalid. The statute assailed in that case provided that the property, real and personal, of express companies should be assessed and taxed at the same rate as the property of other taxpayers. It' was taxed, too, in the same county or city in which like property of natural persons would be taxable. The act further provided that forty per centum of the gross incomes of such companies from their business should be assessed as personal property in the township or city in which such incomes were actually earned. The Express Company assailed the law on the ground that it was in conflict with Art. 8, § 2 of the constitution, to which we have so often referred. In answer to this objection this court used the following language: “It is a sufficient answer to this point to state that, by the very terms of the act, the property made subject to taxation by it is made liable to the same tax, whether it belongs to a body corporate or is the property of individuals, or a company. The law makes the property liable to taxation in the same manner, and to the same extent, where hold by individuals, or where held by a
X. The position is taken in the foregoing opinion that the law in question is applicable to all railroad property, whether owned by a corporation or an individual. The views of our brothers are clearly stated in the following extract from the opinion: “ It (the statute) does not provide a special manner .of assessing the property of railroad corporations, as such, but rather of railroad property. Although the act denominates the owners of the property as railroad companies, it does not name them as corporations, but the name is used as designating the owners of certain species of property, and we have no doubt 'that railroad property would be properly taxable under its provisions, whether owned by an incorporated company, a part- ■ nership, or an individual.”
We confess to astonishment that this view should be ad.vanced, in the face of the plain language of the act which provides for the taxation of railroad companies, aiid in view of the fact that the word compav/y is used by the people, the legislature and the courts, to indicate corporation. The word is so used more than once in the opinion of the majority. There is not -now, never has been and probably never will be, a railroad in this State owned by a partnership or individual. The law
Upon these grounds, and others that could be mentioned, we think the judgment of the District Court ought to be affirmed.
Rehearing
ON REHEARING.
Upon petition of plaintiff a rehearing was granT ted in this case. The cause has been re-argued exhaustively and elaborately. We have given to the re-examination of the case that careful consideration which the importance of the question involved demanded. The discussion of the points presented, and the conclusion reached in the foregoing opinion, are still satisfactory to the members of the court who concurred therein.
It is claimed that this section is compensation or inducement for the remainder of the statute, and that, this section being held unconstitutional, the whole act is void. It has been held to be a sound construction of a statute that when one section thereof is void and others valid, yet, if it evidently appears that one section is a compensation or inducement for another, and the connection between them is such as to warrant the belief that 'the valid part would not have been passed alone, then the whole should be held void. Slauson v. Racine, 13 Wis., 398" court="Wis." date_filed="1861-03-12" href="https://app.midpage.ai/document/slauson-v-city-of-racine-6598363?utm_source=webapp" opinion_id="6598363">13 Wis., 398, and other cases cited by appellee. It is insisted that it cannot be imagined that the legislature would have passed the balance of the act unless the roads had agreed to pay all delinquent taxes provided by chapter 106, above referred to. Rut this very thing is what, it is apparent, the legislature did do. The validity of the act is not made to depend upon the agreement of the railroads to pay taxes upon gross earnings, nor upon their payment of such taxes in fact. The section simply provides that railroads wdiich shall have paid taxes on gross earnings _ shall be released from all other taxes which may have been levied upon the road-bed, etc. This section simply exonerates roads from the payment of taxes levied upon road-beds, etc., which had, at the time of the passage of the act, paid taxes upon the gross earnings.
The connection between this section and the remainder of the statute certainly is not such as to warrant the belief that the remaining part would not have been passed alone. Indeed, we see no warrant for the conclusion that this section could, in any sense, have been considered as compensation or inducement for the remaining part of the statute. The statute prescribes a mode for the taxation of certain property. The