137 Mich. 587 | Mich. | 1904
Lead Opinion
The object of this suit is to enjoin the sale of ten parcels of land for the, nonpayment .of taxes assessed thereon by the city in 1901. The trial court gave complainant relief as to parcels 8 and 9, but held it liable to pay either all or part of the taxes assessed against the other parcels. Complainant paid the taxes on parcels 4 and 6, and asks this court on this appeal to decree that it is not liable to pay taxes on the other parcels. The principal ground upon which complainant seeks relief is that the parcels of land in question are by law exempt from taxátion.
■ The larger part of parcels 1, 2, 3, 5, and 7 were, by the consent of complainant, in 1901, in the exclusive possession of private individuals, who used the same for their own business. Two wood and coal yards were located on parcel 2, one on parcel 1, one on parcel 7. A wood yard was located on parcel 3, a lumber yard on parcel 5. The
Though the estate of these occupants is called a license,
Parcel 10 was in the form of a parallelogram, 800 feet in length north and south, and 350 to 400 feet in width east and west. A short distance from its eastern boundary was a side track. On the western 85 feet of the tract were four side tracks and a coal dock belonging to complainant. About midway between the tracks on the western side and the side track on the eastern side was another track — a stub track — which extended south about 100 feet from the northern line of this tract. All these side tracks were used by complainant as occasion demanded. While it is evident that when the assessor placed this tract upon the assessment roll he found it vacant, we are nevertheless satisfied from the testimony of complainant that the spaces between these various tracks were occasionally used, and necessarily used, for the storage, of bulky articles; e. g., xailroad material of various kinds and sewer pipe. This does not mean that every foot of space on this tract was actually used for storage purposes. The space was used for that purpose as occasion demanded, and we are bound to say that such use was occasionally demanded.
Was this property subject to taxation like other real estate ? This depends upon the proper construction of the following part of section 6277 of the Compiled Laws of 1897:
“The taxes so paid [the specific tax] shall be in lieu of all other taxes upon the properties of such companies, except such real estate as is owned and can be conveyed by such corporations under the laws of this State, and not actually occupied in the exercise of its franchises, and not necessary or in use in the proper operation of its road, but*591 such real-estate so accepted [obviously this should be “ excepted”] shall be liable to taxation in the same manner, and for the same purposes, and to the same extent, and subject to the same conditions and limitations as to the collection and return of taxes thereon, as in other real estate in the several townships or municipalities within which the same maybe situated.”
I agree with my Brothers Gbant and Hookeb that under this section parcel 10 is not liable to general taxation.
Are the other parcels liable to such taxation ?
As shown by the foregoing statement, the greater portion of parcels 1, 2, 8, 5, and 7 are, by the consent of complainant, in the exclusive possession of private individuals, and exclusively used by them for their individual business. In the case of the elevator, that business is the purchasing and storing of grain. In the case of the wood and coal yards, that business is the sale of coal and wood. In such business complainant could not lawfully engage. When, by the consent of a railway company, its land is exclusively devoted to a business in which it cannot lawfully en-' gage — a business foreign to the purpose of its organization —such land is not, in my judgment, “actually occupied” by it, and is “not necessary or in use in the proper operation of its road,” and is, therefore, under the statute above' quoted, taxable “like other real estate in the several townships or municipalities in which the same may be situated.”
It is true that there is a relation between complainant’s business and the business carried on uppn this land. That relation arises from the fact that complainant transported the coal, wood, and lumber sold on these several parcels, and will transport or has transported the grain purchased and stored in the elevator. If this relation affords a ground for exemption, I think we must say that all lands of a railway company used for the storage, purchase, manufacture, or sale of goods which have been or are to be carried by it are exempt from taxation. If so, land of a railway company occupied by a grocery store for the sale
Under a charter which provided “that no other or further tax or imposition [than the specific tax therein, provided] shall be levied or imposed upon the said company,” it was held by the supreme court of New Jersey that docks of a railway company leased for lumber yards, for which rent or equivalent compensation was paid, were liable to general taxation. See State v. Newark, 25 N. J. Law, 315. The judgment in that case was affirmed by the court of errors and appeals. See Id., 26 N. J. Law, 519.
Under a similar provision in a charter it was held by the last-named court that property leased by a railway company for a coal yard was liable to general taxation. See Cook v. State, 33 N. J. Law, 474
It appears from the case last cited that the test of tax-ability was the profit derived from renting the land. While I do not think this is the test under our statute, which, as already indicated, differs from the New Jersey statute, still, if that test were applied, it would not, in my judgment, help complainant. For while it appears that those who used the land in question paid no rent, it does appear that as a consequence of that occupancy the railway company materially augmented its earnings by carry
The decisions of our own and other States (see Detroit, etc., Station Co. v. City of Detroit, 88 Mich. 347 [50 N. W. 302]; Pennsylvania R. Co. v. Mayor, etc., of Jersey City, 49 N. J. Law, 540 [9 Atl. 782, 60 Am. Rep. 648]; Chicago, etc., R. Co. v. Bayfield Co., 87 Wis. 188 [58 N. W. 245]) which hold that elevators erected for the purpose of facilitating the loading and unloading of grain carried by railways are not liable to taxation clearly have no application to the land exclusively used by private individuals for the business of conducting coal or wood yards, as appears from the following quotation from the opinion in Detroit, etc., Station Co. v. City of Detroit, supra:
“ This elevator is as essential and necessary to the complainant in the handling of its grain as is its depot for the use of passengers, or its freight depot for the handling of the general merchandise it carries. ”
Neither do these decisions apply to the land occupied by the Brown elevator. Those decisions are authority for the proposition that, elevators which railroad companies are empowered to erect and operate are not liable to general taxation. Railway companies have not, as had the complainant station company in Detroit, etc., Station Co. v. City of Detroit, supra, any express authority to own and operate an elevator. They undoubtedly do have an implied authority to erect any elevator which enables them to better perform their obligation as common carriers of grain. It is obvious that such elevators — like the elevator in question in Detroit, etc., Station Co. v. City of Detroit, supra, and in the other cases last cited — afford equal advantages to all shippers. They are not, like the elevator in the case at bar, devoted to the exclusive use of a single person engaged in the business — a business which complainant itself could not carry on — of purchasing and shipping such grain.
It is contended that our own decision of Auditor General v. Railroad Co., 114 Mich. 682 (72 N. W. 992), is opposed to this decision. In that case the auditor general undertook to sell a part of the terminals and depot grounds of the railroad company situated in Bay City. It was held by this court that this could not be done, even though it appeared that two lumber firms “also occupied a part of the docks.” I think it may be inferred from the record in that case, as pointed out in the opinion of my Brother Hooker, that certain portions of the land assessed were in the exclusive occupancy of these lumber firms who used the same for carrying on their individual business of running a lumber yard. The contention that these portions of the land were taxable because they' were used exclusively for a business foreign to that of a railway company does not seem to have been presented to the court, or considered by it. And, if it had been, it would not have affected the decision. Had such a contention been made, the court could have answered it by saying the State has no power to sell this entire description of land, most of which is exempt from taxation, because a portion of it is not exempt. See Osborn v. Railroad Co., 40 Conn. 498. In my judgment, therefore, Auditor General v. Railroad Co., supra, is not opposed to the views stated in this opinion.
It is said that, as the State has once taxed these earnings, it is unjust for it to also tax the land the use of which contributed to augment them. This charge of injustice is
Neither is it true that the arrangement for the occupancy of these parcels of land was beneficial to the city because it resulted in the erection of buildings which are subject to taxation. It must be assumed that, if this arrangement had not been made, these buildings would have been erected in some other part of the city, where they would have also been subjected to taxation. It was, therefore, a matter of indifference to the city where they were erected. Nor would these buildings have escaped taxation if the railroad company had itself erected them. It is true that, if it had used them for some legitimate railway purpose, they would have been exempt; but, if they had been used as these were, it is clear that under the reasoning of this opinion they would not have been. We do not hold these parcels of land liable to taxation simply because of the use to which they are put, but because that use proves that
Complainant, as additional grounds for relief, contends .-
(a) That the description of the third parcel is fatally defective.
(b) The assessment of the first, second, and third parcels is void because included in one description, and under one valuation, are distinct parcels owned by complainant and the Michigan Central Railroad Company.
(c) - Included in every description are parts which are certainly exempt.
The ground upon which it is claimed that the third description is defective is that there is no means of knowing what is described by this exception: “Also except part used for G. R. & I. and M. C. R. R. Company’s right of way.” The right of way of the Grand Rapids & Indiana Railway Company is shown by a deed made in 1870 and duly recorded. There is nothing to indicate, and it should not be presumed, that the right of way of the Michigan Central Railroad Company is not also shown by a similar recorded deed. We cannot say, therefore, that the description was not good under our decision in Harts v. City of Mackinac Island, 131 Mich. 680 (92 N. W. 351).
The other objections, if valid, would prevail if they were asserted in a suit at law or as a defense to a suit to enforce the tax. See Auditor General v. Railroad Co., 114 Mich. 682 (72 N. W. 992). But here complainant is seeking relief in a court of equity. Part — the greater part — of these parcels of land is justly liable to taxation. Equitably complainant should pay the proportionate tax justly assessable against such part. It never offered to pay, and now objects to paying, that. Complainant seeks to be relieved from the entire burden of taxation, part of
It follows that, in my judgment, complainant is entitled to a decree enjoining the sale of parcel 10, and that the decree appealed from so far as it relates to the other parcels should be affirmed. Complainant will have costs in this court.
Dissenting Opinion
(dissenting). The object of this bill is to enjoin the sale of ten parcels of land owned by the complainant in the city of Grand Rapids for general city taxes for 1901. The principal claim of the complainant is that these parcels of land were actually occupied in its legitimate business and use, and were exempt from local taxation under 2 Comp. Laws, § 6277. A somewhat full statement is essential to a clear understanding and determination of the question. The southern terminus of the complainant’s road is at Richmond, Ind. It extends from that city north through the entire Lower Peninsula of Michigan to Mackinaw City, passing through the defendant city. Grand Rapids is the largest and most important point on the road, which is. divided into two divisions; that city being the dividing point and also being the division headquarters. There is a large passenger and freight business in and out of the city. For the purpose ■of carrying on its business it has obtained considerable
Complainant’s coal docks are situated on the west side of the tenth parcel. These docks are used exclusively for its own use in storing coal and coaling engines. The cars are run upon a trestle for dumping into the coal bunkers. There are in all seven tracks upon this parcel — one upon the east, called the “caboose track,” used for storing cabooses and sometimes other cars, and a track called the “Porter track,” running from the north about 200 feet south of Fifth avenue, used for loading and unloading cars. Teams drive there for the purpose of loading and unloading. Coal, wood, and lumber are unloaded there, and cars are loaded for shipment out. The space between the east and west tracks is used for depositing material such as is required for use in its shops. This parcel of land, or the greater portion of it, was assessed in the year 1900. In a decree dated March 6, 1901, in the usual suit brought by the auditor general for the foreclosure of tax liens, it was held that this land was exempt under the statute above cited. There was no change in the situation between that and the following year. Two or more tracks in legitimate use for freight purposes are located upon parcels 1, 2, 3, and 5. Two lumber dealers, who ship in and out large amounts of lumber, unload their cars and pile their lumber along the tracks upon parcel 5.
The statute taxing railroads in 1901 provided that on all gross income not exceeding $2,000 per mile railroads should pay 2|- per cent, on such gross income; upon that in excess of $2,000 and not exceeding $4,000 per mile, Si per
“The taxes so paid shall be in lieu of all other taxes upon the properties of such companies, except such real estate as is owned and can be conveyed by such corporations under the laws of this State, and not actually occupied in the exercise of its franchises, and not necessary or in use in the proper operation of its road, biit such real estate so accepted [excepted] shall be liable to taxation in the same manner and for the same purposes and to the same extent and subject to the same conditions and limitations as to the collection and return of taxes thereon as is other real estate in the several townships or’municipalities within which the same may be situated.” 2 Comp. Laws, § 6277.
If these lands are in actual present use for railroad purposes, they are exempt from further taxation, having already paid the tax under the law above cited. If they are not so used, but are held for future use, or for the accommodation of private parties, then they are subject to taxation.
An elevator built by a railroad company for the purpose of storing grain for hire after its liability as a common carrier has ceased is not exempt from taxation. Milwaukee, etc., R. Co. v. City of Milwaukee, 34 Wis. 271.
An elevator erected by a railroad company at a terminus of the road and used for transshipping grain and relieving cars of their lading, the grain remaining in the elevator until called for by the consignee, and a charge made if permitted to remain over 10 days, was held a necessary part of its equipment, and not subject to táxation. Pennsylvania R. Co. v. Mayor, etc., of Jersey City, 49 N. J. Law, 540 (9 Atl. 782, 60 Am. Rep. 648). See, also, In re Swigert, 119 Ill. 83 (6 N. E. 469).
A railroad company may lease its wharves and docks when not in use by it, and charge wharfage therefor, without being subject to taxation, provided that the use by the lessee is subordinate to the use of the railroad company. Osborn v. Railroad Co., 40 Conn. 498.
It is said in Milwaukee, etc., R. Co. v. Supervisors of Crawford Co., 29 Wis. 116, that provisions of this character should receive a fair and liberal construction in favor of the company, because they are not exempt from, taxation, but are required to pay their share of the public burdens by another method. If the grounds, buildings, and tracks are reasonably suitable and proper, and are in use for the furtherance of the business of the railroad company, they are exempt from other methods of taxation.
We held in Auditor General v. Railroad Co., 114 Mich. 682 (72 N. W. 992), that where two lumber firms, occupy a part of the docks, but paid no rent, and it was a convenience to the company in shipping lumber over its, road, and the entire lumber was so shipped, and the land was constantly used in shipping freight, it was not subject to general taxation.
This court held that an elevator used as a warehouse in connection with its regular business as a common carrier was not subject to a general tax. Detroit, etc., Station Co. v. City of Detroit, 88 Mich. 347 (50 N. W. 302).
Parcel 10, with its seven tracks, used for storing cabooses, coal, receiving and discharging freight, coaling engines, running its cars to its repair shops situated close to the south end of the parcel, and receiving material for its shops, is exempt. The circuit court for the county of Kent in chancery so held as to the tax of 1900 in a decree brought by the auditor general to foreclose lands delinquent for taxes. The condition was the same in 1901 as in 1900. Whether that decree is res adjudicata depends upon whether the city was party or privy to that suit. It is unnecessary to determine this question, inasmuch as we hold that the decree was right.
Decree should be reversed, and decree entered here for complainant, with costs of both courts.
Dissenting Opinion
(dissenting). Complainant’s bill was filed to restrain the city of Grand Rapids from collecting a tax levied upon several parcels of land, all of which were covered by tracks of the complainant’s railroad. As the law now stands, similar questions cannot hereafter arise, complainant’s claim being based on the law in force in 1901, which imposed a specific tax of per cent, upon the gross earnings of railroads, and relieved their property from other taxation, except such property as they should not actually occupy in the exercise of their franchises, and was not necessary or in use in the proper operation of the roads. While the land in controversy is described as separate and distinct parcels, such parcels are contiguous to each other, except as they are separated by city streets, and they are all within the yard of the company at Grand Rapids; and, as we view the testimony, all were used, in whole or in part, for railroad purposes, such as switching and storing cars, loading, unloading, and storing freight, etc. Upon some of the parcels there were wedge-shaped pieces between tracks, and strips of land of greater or less width outside of the tracks, which the defendant claims were either not used at all or were given over to the private use of individuals under leases or licenses, for the storage of wood, coal, and lumber.
As to the former- of these classes, we are of the opinion that the wedge-shaped and other parcels, if not used for tracks, or not occupied by cars or other property of the railroad, or used for the loading or unloading of freight, were nevertheless in use for railroad purposes. They were so located as to be comparatively, if not wholly, useless for any other purposes, and the safety of trains is promoted by an absence of crowding and by the increased advantages of vision which open spaces afford.
The authorities have been liberal in construing the law where railroads have not used land contiguous to their tracks for purposes foreign to railroad business. It is a fact well known that there are miles of right of way in the country crossed by but a single track. It has never been
The evidence shows that portions of this yard were devoted to the loading and unloading and storing of freight. We understand that defendant does not claim that land used for the loading or unloading of freight, to be drawn away immediately, is not used in connection with the business of the railroad. We are not sure that it would be claimed that such use would not properly include temporary storage of heavy and bulky commodities upon the ground or in sheds erected by the company for the purpose. At all events, we understand it to be a common and proper practice for railroads to store freight in depots and warehouses until called for, and that the practice is well within the proper management of their business, and in fact could not be safely omitted; and we know of no reason why the rule does not include grain, wood, coal, and lumber. These are bulky articles, and it is important that they be not subjected to the necessity of repeated drayage. It is the general practice for dealers in such commodities to deliver them to the consumer from the car where practicable, and otherwise store them where unloaded from the car until sold. Some dealers own or rent their sheds or yards, and induce the railroads to run sidings to them. In the present case the railroad appears to have been willing to allow such storage upon its land adjacent to its sidings.
The evidence shows that upon one of these parcels the
The statute in question need not necessarily be called a statute of exemption to be strictly and technically construed against the complainant. It provides a tax by appropriating a percentage of complainant’s gross income, and, instead of saying that it shall be exempt from other taxes, says that this specific burden shall be in lieu of all other taxes. Which method would be productive of the greater revenue may be an open question. Certainly there is no presumption against the specific tax. A reasonable construction would seem to be that the legislature proposed to apply the specific tax to all productive property of railroads where used for railroad purposes, but not to allow them to escape taxation upon property that they did not see fit to use at all, or to devote to other and perhaps less productive purposes. See Kimball v. Milford, 54 N. H. 406; Gardner v. State, 21 N. J. Law, 560.
In City of St. Paul v. Railway Co., 39 Minn. 112 (38 N. W. 925), it was said:
“ These charters do not exempt the property from taxes, but provide a substituted method of taxation, based upon the assumption that the property of the companies will be used for railroad purposes, and thereby an income be derived, the percentage of which received by the State will be equivalent in its results to taxation of the property.” Citing County of Ramsey v. Railway Co., 33 Minn. 537 (24 N. W. 313).
“ The payment of this sum into the State treasury, and which is called ‘license money,’ must, in the light of past legislation upon the subject, be regarded as, in the judgment of the legislature, an equivalent for the taxes which those companies would otherwise be required to pay if assessed and taxed according to the ordinary method prescribed by law. A strict construction of the statute, therefore, against the company, or a liberal one in favor of the public, can, with difficulty, be justified in view of what seems to have been the legislative intent, and it would seem that little or no effect can be given to the rule. We are at liberty, therefore, and, indeed, required, to give the statute a fair and liberal construction in favor of the company, or such an one as it should receive supposing there is no injustice in the claim made by the company, or advantage to he gained by it over the public or taxpaying community generally in avoiding the taxation complained of.”
If we were without authority upon this subject, and the case were therefore one to he decided upon “first impression,” justice would require that weight be given to the effect of such use. Manifestly, the earnings from freight handled for these persons in connection with their use of said parcels furnish revenue to the State; and, if the lands are also to be taxed, the public obtains additional revenue, although the use of the land has been directly instrumental in producing taxable revenue for the company, in the exact way that the statute contemplates, and not through uses foreign to the railroad purpose.
Mr. Justice Grant has alluded to several cases where elevators owned and operated by railroads have been held to be structures properly connected with the railroad business. We may take judicial notice that nearly all the grain of the country is the subject of shipment, and, as has been often said, the facilities for loading afforded by an elevator are as appropriate to the loading of grain as derricks or trucks are for loading heavy freight.
In Pennsylvania R. Co. v. Mayor, etc., of Jersey
“ It appears in the evidence that the elevator is used for transshipping grain and relieving cars of their lading. The elevator does by machinery what was before done by hand, and appears to be one of the necessary terminal facilities of a railroad engaged in the transportation of large quantities of grain. It further appears that the grain passing through this elevator, if not called for by the consignee, is retained there, and if it remains in store for over ten days a charge is made of one-quarter of a cent per bushel for each ten days thereafter. Before the elevator was built, grain was sometimes detained in the cars, and when so detained a demurrage charge of $5 or 110 a day per car, or two cents per bushel, was paid by the consignee. Other trunk lines to the west had erected elevators prior to the erection of the one in question. They are used as freight houses for grain, and seem to be as indispensable to the railroads in handling the immense quantity of grain which they carry as any other freight houses used for the reception or unloading of merchandise transported. If grain was allowed to remain in the elevator until called for without charge, it would unquestionably be an appliance for railroad purposes. The fact that a small penalty is added to the freight charge to induce shippers to remove their grain within a reasonable time does not withdraw this structure from that class of improvements which are necessary for railroad uses, within the meaning of that term as construed in State v. Hancock, 35 N. J. Law, 537.”
A similar case will be found in State v. Railway Co., 86 Tenn. 438 (6 S. W. 880). See, also, In re Swigert, 119 Ill. 83 (6 N. E. 469), and Gilkerson v. Brown, 61 Ill. 486.
The question is settled in this State where the Union Depot Company owns and operates the elevator, by the case of Detroit, etc., Station Co. v. City of Detroit, 88 Mich. 347 (50 N. W. 302).
In the present case the complainant did not own the elevator, and therefore derived no profit from the storage or handling of grain. It allowed another to erect an eleva
Stress is laid upon the claim that the owners of the elevator and those who owned the coal, wood, and lumber were allowed to use the land for their own private purposes, and it is argued that this is controlling. We should not feel justified in holding that a railroad company might escape local taxation upon lands leased by it to others and devoted to manufacturing or mercantile purposes ; but neither does it seem reasonable that land in its yards, which is in daily use for the unloading of freight from its cars, is to be taxed merely because the company permits its use for temporary storage until the property-can be transshipped or sold and delivered about town, or because, in the economical conduct of its business, it sets aside given portions for large shippers who manage their business from there. Great abuses of such privileges do not necessarily follow. Each case must rest ,upon its own facts, and evasions can be detected and excepted from the application of the rule.
The case of Auditor General v. Railroad, 114 Mich. 682 (72 N. W. 992), is in point upon this case. In that case the railroad company owned a piece of land in Bay City, near the river, and a dock. The company was said to have used that land constantly in “originating [whatever that may mean] and shipping freight.” The uncontradicted proof shows that the land was occupied by two lumber firms; i. e., “lumber dealers,” who “had lumber yards upon it,” and were in the habit of shipping such
The present case seems to be clearly within the principle laid down in the two Michigan cases cited. I concur in the opinion and conclusion reached by Mr. Justice Grant.
