Morrell Ref'g'r Car Co. v. Commonwealth

128 Ky. 447 | Ky. Ct. App. | 1908

Lead Opinion

Opinion of the Court by

Judge Barker

Revers: ing.

The Morrell Refrigerator Car Company is a corporation organized under the corporation laws of Kentucky, and has its principal place of business at Bard-well, Carlisle county, Ky. Its authorized capital stock is fried at $100,000, and it owns a large number *451of refrigerator ears, which it rents or hires to John Morrell & Co., Limited, of Ottumwa, Iowa. This latter corporation is engaged in the packing house business, and uses the ears it rents from the appellant company for the purpose .of carrying its products to, various points of shipment throughout the United States and Canada. To the various railroads which haul its cars west of the Mississippi river it pays one cent per mile per car, and to those which haul its products east of the Mississippi it pays three-fourths of a cent per mile per oar. A very small part of its products — perhaps not greater than 5 per cent, of the whole — is shipped to or through Kentucky. In 1903 this proceeding was commenced in the county court of- Carlisle county by T. C. Halteman, State auditor’s- agent, under section 4241, Kv. St. 1903, to have all of the property of the defendant corporation, including its franchise, assessed as omitted property for the years 1895 to 1903, inclusive. Pending the litigation an amendment was filed, including the year 1904. The county judge held that the five-year statute of limitation barred the State’s right for all the years included in the statement prior to 1899, but for the- years 1899 to 1904, inclusive, he reassessed the corporation for all of its property, including the total number of its cars and franchise. Prom this judgment an appeal was prosecuted to the Carlisle circuit court, where so much of it as assessed the -cars of the defendant was reversed, but the total value of the defendant’s franchise wa's assessed for State, county, and city purposes for the year 1899 to 1904, inclusive. To test the soundness of this judgment this appeal is prosecuted.

The appellant corporation at first denied that it was liable to a franchise tax at all, but now concedes *452that, under the opinion of this court in the case of Louisville Tank Line v. Commonwealth, 93 S. W. 653, 29 Ky. Law Rep. 257, its franchise is included among those corporations which section 4077, Ky. St. 1903, requires to- pay a franchise tax. The only question, then, on this branch of the case is whether or not the corporation shall pay a tax on all of its franchise to the State of Kentucky and other taxing districts therein to which it is subject, or whether, under section 4081, it is- entitled to an apportionment of its franchise after the plan therein set forth, and pay only on such proportion as is taxable in Kentucky. Section 4077 enumerates the classes of corporations subject to a franchise tax, and, as above said, it is now admitted that the appellant corporation is included in the general language, '£ £ and every other like company, corporation or association,” which follows the enumeration of the corporations required to pay a franchise tax; so that as said above it- only remains to- ascertain how the franchise is to be taxed. It is insisted by appellant that its franchise must be taxed under the provisions of section 4081, which is as follows: “If the corporation organized under the laws of this State or of some other state government be a railroad telegraph, telephone, express, sleeping, dining, palace or chair ear company, the lines of which extend beyond the limits of the State, the said board will fix the value of the capital shock as hereinbefore provided, and that proportion of the value of the capital stock, which -the length of the lines owned, leased or controlled in this State, bears to the-total length of the lines owned, leased or controlled in this State and elsewhere, shall be considered in fixing the value of the corporate franchise of such corporation liable for taxation in this State; and such *453corporate franchise shall he liable to taxation in each county, incorporated city, town or district through, or into which, such lines pass, or are operated, in the same proportion that the length of the line in such county, city, town or district bears to the whole length of lines in this State.” Appellant admits, of course, that it is not specifically named in the list of corporations set forth in the above section, but claims that it is fairly embraced within the spirit of the statute, and that the court should so construe the language of the law as to tax its franchise by the same method of pro rata apportionment as is given to the corporations specifically named in the section; and it is insisted that this should be done, not only because the language of the section will legitimately bear such construction, but that any other will render the law inimical to those provisions of the State and federal Constitutions which- require equality in the matter of taxation. On the other hand, the- State insists that the provision of section 4081 for a pro rata assessment of franchises should be limited to the corporations specifically named therein, and that a taxing statute may not be liberally construed as against the State and in favor of a partial exemption from taxation. It is undoubtedly true that a state may classify the various subjects of taxation within its territory upon a reasonable basis, and, so long as equality prevails within the limits of the classification established, no valid complaint can be made of a discrimination as between the classes. Section 174 of our Constitution requires equality of taxation, and the Fourteenth amendment of the Constitution of the United States provides that no State shall deprive any person of his “property, without due process of law; nor deny to any person within its jurisdiction *454the equal protection of the laws. ” Now, while, as said before, the State may classify its various subjects of taxation, this classification must not be arbitrary, and the State statute which makes an arbitrary classification is void, both under the Constitution of our own State- and of the provisions of the Fourteenth amendment above quoted. G., C. & S. Fe Ry. v. Ellis, 165 U. S. 150, 17 Sup. Ct. 255, 41 L. Ed. 666; A., T. & S. Fe Railroad Co. v. Matthews, 174 U. S. 96, 19 Sup. Ct. 609, 43 L. Ed. 909.

The State insits that the classification made, by including 'all of the corporations specifically named in section 4081, and excluding the appellant corporation, would be a reasonable classification, because the corporations named operate either raliroad, telegraph- or telephone lines both in this State and in other States or countries, and that it would be manifestly unfair to tax the whole franchise of a railroad which operates in two or more states in one of them. There would be more force in this suggestion if the subjects of franchise taxation enumerated in the section under discussion were limited to railroad, telegraph or telephone corporations. Unfortunately for this position express companies, sleeping car, dining, palace, and chair car companies are specifically enumerated as subjects of taxation whose franchises must be apportioned among the states or countries through, or into which, it operates. It is true that the appellant corporation does not either own or lease any lines of railroad over which it' operates; but it is a matter of com-' mon knowledge that express companies, sleeping car companies, dining, palace, and chair car companies do not own- or lease the lines over which they operate, but their cars are hauled, under contract, by the railroads over whose lines their cars are moved. There is *455not the slightest difference between the business done by the appellant corporation and that which is done by sleeping, dining, palace or chair car corporations. Louisville Tank Line v. Commonwealth, supra. All of these various organizations own cars with which they make a profit by having them hauled throughout the States by contracts with the various railroads over whose lines their cars are operated; and, unless we can say that a mere difference in the name of the corporation is' a reasonable basis for classification, it is not maintainable that there can be one rule for the taxation of appellant’s franchise and another and more favorable one for the taxing of the franchise of sleeping, dining, palace, or chair car corporations organized in this State. So that it can hardly be questioned that if the appellant corporation may not be included within the language used by section 4081, and thus obtain the same method of taxation of its franchise that is enjoyed by the corporations specifically enumerated therein, then this section is inimical to the Fourteenth amendment of the Federal Constitution, and necessarily void. It is a fundamental rule of statutory construction that the law should' be given, if possible, such a construction as will render it valid rather than one which will render it invalid.

We had occasion to review at some length thequestion when and how far the courts- are justified in expanding or contracting, adding to or subtracting from the language of a statute in order to preserve the integrity of the law, in the case of Commonwealth v. Rosenfield Bros. & Co., 118 Ky. 374, 26 Ky. Law Rep. 726, 80 S. W. 1178, 82 S. W. 433, and we said on this subject in the opinion: “The cardinal rule of statutory construction is that the intention of the Legislature shall be effectuated, even at the expense of the *456letter of the law; and, to accomplish this, the meaning of words may be modified, the structure of sentences changed, or some words rejected altogether, and others interpolated. Endlich, in his work on the Inter.pretation of the Statutes., section 295, thus, states the rule: ‘"Where the language of a statute in its ordinary meaning and grammatical construction leads to manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship, or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This is done sometimes by giving an unusual meaning to particular words, sometimes by altering their collocation, or by rejecting them altogether, or by interpolating other words, under the influence, no doubt, of an irresistible conviction that the Legislature could not possibly have intended what its words signify, and that the modifications thus made are mere corrections of careless language, and really give the true intention. The ascertainment of the latter is the cardinal rule, or rather the end and object of all construction; and, where the real design of the Legislature in ordaining a statute, although it be not precisely expressed, is yet plainly perceivable or ascertained with reasonable certainty, the language of the statute must be given such a construction as will carry that design into effect, even if in" so doing the exact letter of the law be sacrificed, or though the construction be, indeed, contrary to the letter. And this rule holds good even in the construction of criminal statutes. Of course, if the meaning of the Legislature is clear, every technical rule of construction must yield, and, though the words used to express that meaning be not apt for the purpose, they will be so construed *457as to serve the same. And, a fortiori, if there is an express declaration. of the intent and meaning of a statute by a provision in the same to carry out that intent, all other parts of the act are controlled in construction of it. A clause doubtful upon its grammatical construction will be controlled 'by the general intent of the Legislature, rather than, by the literal meaning of the language. ’ This principle is upheld in the case of Commonwealth v. Grinstead & Tinsley, 108 Ky. 59, 21 Ky. Law Rep. 1444, 55 S. W. 720, 57 S. W. 471. In the case of Sams v. Sams’ Admr., 85 Ky. 400, 9 Ky. Law Rep. 24, 3 S. W. 594, it i& said: ‘It is a well-settled rule of construction that the letter of a statute will not be followed when it leads to an absurd conclusion; but, on the contrary, the reason for the enactment must enter into its interpretation, so as to determine what was intended to be accomplished by it. ’ In the case of Bailey v. Commonwealth, 11 Bush 689, Judge Cofer, speaking for the court, said: ‘Words in a statute are always to be understood according to the approved use of language. But there are other rules of construction of equal dignity and importance, which rhust not be overlooked, and which, although not incorporated in our statute, are as binding upon the courts as if embodied in it. One of these rules is that “every statute ought to be expounded, not according to the letter, but according to the meaning;.’.’ and another that “every interpretation that leads to hn absurdity ought to be rejected;” and still another that a law “ought to be intepreted in such manner as that it may have effect, and, not be found vain and illusive.” ’ To the same effect is Feemster v. Anderson, 6 T. B. Mon. 537.”

We have no difficulty in reaching the conclusion that in enacting section 4081 the Legislature intended that *458it should embrace all corporations similar to those enumerated; in other words, to embrace all corporations which operate or carry on business over railroad, telegraph or telephone lines partly in this State and partly in other States or countries. And we are equally clear that, under the foregoing authority, we have the right to extend the term ‘ ‘ express, sleeping, dining, palace, or chair car company” to embrace all car companies or corporations which operate in this or other States over lines they own or lease, or which operate over the lines of railroads by having their cars hauled under special contract. It is impossible to conceive that the Legislature intended to make a distinction in the mode of taxation between a refrigerator car company and a palace car company doing business in precisely the same way. The refrigerator car company owns refrigerator cars which it rents out or hires for the purpose of transporting fresh slaughtered beef and other meats and vegetables and similar perishable products from one point of the continent to another. The palace car company owns specially constructed oars which it rents out or hires for the purpose of transporting live stock, such as beef cattle, horses, sheep, and other live animals from one point of the continent to another. In all of' their essentials the two businesses are precisely the same; both are common carriers; neither owns the lines of railroad over which its cars are transported. In the case of Louisville Tank Line v. Commonwealth, 93 S. W. 635, 29 Ky. Law Rep. 257, where the appellant corporation was denying that its franchise was taxable at all, it became necessary for the court to discuss the character' of business it did as compared with the business done by those corporations which are specifically mentioned in the statute; and, while the question we have *459here was not involved in that ease, the utterance in the opinion on the subject of the business- of the corporation throws a strong cross-light upon the question we have in hand; Speaking of the tank line company, it is said “It says it is not a common carrier, yet -its business is exclusively that of hiring its vehicles to carry commerce on railroads. So far as that is concerned, it is not one whit different- in nature from chair car, dining car, or sleeping car companies. We know that there are corporations who furnish ears of peculiar design to shippers, such as refrigerator cars for butcher products and the shipping of friiits, or ‘palace’ cars for horses and cattle, poultry cars, and so forth. All these are engaged in “like’ business to the sleeping car and chair car companies. The fact that the owner of these cars hires out its whole outfit to one customer does not change the character of its business. Refrigerator car companies, the horse palace ear companies, and dining car companies who do not operate railroads, in the absence of legislation, might not be compelled to serve the public. At any rate, they would be under no penalty to the public for failing to do so. Having the right to hire out all their cars to such members of the public as they may choose to serve, it follows that they could let them all to one customer. Still the business would be auxiliary to that of common carriers by supplementing their agencies with those of a special make and adapted to a particular and limited use by which commerce is handled by railroad companies over their tracks. It partakes of every essential feature of some of the companies specifically designated in the statute.”

There being no difference in principle between the business done by the appellant corporations and that done by some of the corporations enumerated in sec*460tion 4081, of necessity its franchise must be assessed and taxed in the same way as their franchises are assessed and taxed^ If not, then that uniformity demanded both by section 174 of our own Constitution and by the Fourteenth amendment of the Constitution of the United States is violated. The trial court erred, therefore, in refusing to assess the franchise of the appellant corporation under and according to the provisions of section 4081.

It was error to assess the franchise of appellant corporation for the benefit of the town of Bardwell (sixth class) under section 4241 of the Kentucky Statutes of 1903. All cities of this Commonwealth, by their charters, are given the power to levy and collect taxes. They have inherent power thereunder to retrospectively assess all omitted property. Citizens’ National Bank of Lebanon v. Commonwealth, 118 Ky. 51, 25 Ky. Law Rep. 2254, 80 S. W. 479, 81 S. W. 686; Botto’s Exr. v. City of Louisville, 117 Ky. 800, 25 Ky. Law Rep. 1918, 79 S. W. 241. The rule is that, where the statute gives a specific remedy, it is exclusive. And, as the cities have elaborate fiscal systems of their own, it must be presumed that the Legislature did not intend that section 4241 should be extended to give them a new and unnecessary remedy, but that it was intended to confine the section of the statute in question to State, county, and district taxes.

It is also urged by appellant that the court erred in enforcing the tax levies of the Bardwell graded school district, because they are void under the provisions of section 180 of the Constitution, which is as follows: “The General Assembly may authorize the counties, cities or towns to levy a poll tax not exceeding one dollar and fifty cents per head. Every act enacted by the General Assembly, and every ordinance and resolution *461passed by any county, city, town, or municipal board or local legislative body, levying a tax, shall specify distinctly the purpose for which said tax is levied, and no tax levied and collected for one purpose shall ever be devoted to another purpose.” It is said that the tax levies are void because the resolutions by which they were created failed to state the purpose for which the taxes were to be levied. The tax levies in question are for the years 1899, 1900, 1901, 1902 and 1903. They are all substantially alike, and a copy of one will serve our whole purpose here: “May 11, 1903. Board of trustees of Bardwell graded free school district met at the office of Dr. W. L. Mosby. Present: Anderson, Bodkin, Black, Mosby and Vaughn. W. L. Mosby, chairman. Motioned and carried that a property tax of fifty cents on each one hundred dollars’ worth of taxable property in said district and a poll tax on each white male citizen in said district over twenty-one years old be levied for scholastic year 1903. W. L. Mosby, chairman. J. H. Black, secretary.” In the case of United States Fidelity & Guaranty Co. v. Board of Education of Somerset Public Graded School, 118 Ky. v. 55, 27 Ky. Law Rep. 246, 80 S. W. 1191, the levy was as follows: “On motion, the levy for 1899 was fixed at $1.00 on every $100.00 worth of property, and $2.00 for each poll.” This was held to be void, because it failed to state the purpose for which the tax was levied, and therefore was inimical to section 180 of the Constitution. In the case of City of Somerset v. Somerset Banking Co., 109 Ky. 549, 60 S. W. 7, 22 Ky. Law Rep. 1129, the tax levy was embraced in the following order of the council: “E. M. Rousseau made a motion to fix the tax levy at seventy-five cents on each one hundred dollars, and one dollar poll. The motion was seconded by R. *462Kolker, and. carried on a call of yea and nay.” And it was held- that this was clearly in violation of section 180 of the Constitution, and' void.. The opinion in these cases are conclusive of the- question here. No distinction can be made between the levies irf the cases cited and’ those- at bar. They are therefore void, and the court erred in enforcing them.. But we are further of opinion, as said in the case last above cited, that the trustees-may yet enact, valid' resolutions or levies conforming to the provisions of section. 180 of the Constitution, for those years, not barred by the statute of limitations.

It is conceded by the appellant corporation that the circuit judge erred in his judgment that none of its cars were taxable as omitted property. A small number of the ears owned by appellant were operated in Kentucky, and these are taxable in this State under the principle laid down by the Supreme Court of the United States in the case of Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 26 Sup. Ct. 36, 50 L. Ed. 150. When the case returns to the circuit court, this will be corrected in the judgment to be entered.

For the reasons given, the judgment is reversed for proceedings herewith.






Dissenting Opinion

Judge Nunn

(dissenting): I can not agree to the •opinion herein for three reasons: First. Section 4081 of the Kentucky Statutes of 1903 is not applicable to this case. Appellant has no lines of railroads, telegraph, -telephone, or other lines in this State or any other State. Its only business is to manufacture cars and rent them to John Morrell & Co., Limited, which uses them upon lines of railroads. Appellant is a Kentucky corporation, and, so far as taxation is concerned, is a similar institution to a bank organized in this *463State which transacts business with the people of this State and with those of other States, and which pays its whole franchise tax to the State of Kentucky. The express, sleeping, dining, palace, or chair ear companies, referred to in the opinion as being like appellant herein, are very different.in my opinion; for these companies rent the privilege from the railroad companies to have their cars hauled over their lines, and they operate them, and in the meaning of the statute they do use lines of railroads passing through different States, but not so with appellant. It rents no line, operates no ears,- but only constructs and rents .them, and for this reason the Legislature did' not include in section 4081 corporations like appellant. But, suppose I am mistaken in this, the General Assembly in enacting section 4081 left out corporations like appellant, and left them to be taxed under section .4077, which requires them to pay the whole of their franchise tax to the State of Kentucky, and in my judgment this court has no power to amend section 4081 by construction or to interpolate it by inserting the words “or every like company or corporation,” transposed from section 4077, to aid this appellant in avoiding taxation. If the words- were in section 4081,- it would not include this appellant, because it is not a like company or corporation to those mentioned therein. The sole power to enact laws is with the General Assembly, and this court’s duty is to construe them, and not to amend them by inserting words and phrases. If the court’s construction of section 4081, as stated in the opinion, is correct — that is, that this appellant corporation is a like corporation to the chair car company and other corporations mentioned in the section — then the section as enacted by the General Assembly might unjustly discriminate against *464appellant and be in violation of section; 14 of the U. S. Constitution-; but, even if this is so, the court would have no power to amend the section, and in that case it would be this court’s duty to declare the whole section void and leave all corporations to be taxed on their whole franchise as provided in section 4077. But in my opinion the section is valid. Appellant is not a like corporation to those mentioned in section 4081. For these reasons, I dissent from the opinion of the court.