delivered the opinion of the court:
The Illinois Central Railroad Company on October 5, 1913, filed a schedule of its stock, property and assets with the Auditor of Public Accounts, giving as the value of its property to be assessed for State taxes for that year the sum of $189,185,593.49. On January 5, 1914, the company received a notice of the disapproval of the values given in said schedule and a statement of re-valuation and" assessment prepared by and under the direction of said Auditor, fixing the valuation at $365,559,617.23. In the meantime the rate necessary to be levied to obtain the amount of tax required for State purposes had been fixed by the proper officers at seventy cents on the $100 valuation. The State Auditor, in levying the State taxes against said company, levied on the full amount last mentioned at the rate of seventy cents. From that assessment this appeal was taken by the company to this court. At its February term, 1914, this court appointed, with the approval of both parties, Hon. Leslie D. Puterbaugh as commissioner to take evidence and report the same, together with his conclusions as to the law and facts. Said commissioner proceeded to take evidence, and after full hearing of counsel for both parties made his report to this court at the February term, 1915, fixing the value of the property of said company at $117,466,638.94, which he found should be equalized at seventy per cent of such total value, or at the sum of $82,226,647.25, and that the State tax should be levied only on one-third of this equalized value, or $27,-408,883.4!, and that this last named amount should be assessed at seventy cents on each $100. To this report the State filed 133 exceptions in this court. The questions raised by these exceptions were thereafter fully argued in this court by counsel, both for the State and the company. We shall consider herein all questions that we deem essential to a decision of the points involved.
The General Assembly passed an act on February 10, 1851, incorporating the Illinois Central Railroad Company. March 19 of the same year the company, having been duly organized by the election of a board of directors, accepted this act of incorporation. This act is the charter of said company. It invested the company with “all the powers, privileges, immunities and franchises, and of acquiring by purchase or otherwise, and of holding and conveying, real and personal estate which may be needful to carry into effect fully the purposes and objects of this act;” authorized it to survey, locate, construct, complete, alter, maintain and operate a railroad, with one or more tracks or lines of rails, from the southern terminus of the Illinois and Michigan canal to a point at the city of Cairo, with a branch to the city of Chicago, on Lake Michigan, and also a' branch, via the city of Galena, to a point on the Mississippi river opposite the town of Dubuque, in the State of Iowa; gave it a right of way, not exceeding two hundred feet in width, for its entire length,. with the authority to use any lands, streams and materials of every kind for locating depots, constructing bridges, dams, embankments, station grounds, spoil banks, turn-outs, engine houses, shops and other buildings; fixed its capital stock at $1,000,000 and authorized a further increase from time to time, under certain conditions ; granted certain lands in the State to said company for the purpose of assisting in locating, constructing, maintaining and operating said road, granting to it, in addition to its right of way and other property, 2,595,000 acres of land. The sections of the act necessary to be particularly considered in passing on this question are 18 and 22 of said charter grant, and read as follows:
“Sec. 18. In .consideration of the grants, privileges and franchises herein conferred upon the said company for the purposes aforesaid, the said company shall, on the first Mondays of December and June, in each year, pay into the treasury of the State of Illinois five percentum on the gross or total proceeds, 'receipts, or income derived from said road and branches, for the six months then next preceding. The first payment of such percentage on the main trunk of said road to commence four years from the date of said deed of trust, and on the branches, six years from the date aforesaid, unless said road and branches are sooner completed, then from the date of completion. And for the purpose of ascertaining the proceeds, receipts or income aforesaid, an accurate account shall be kept by said company, a copy whereof shall be furnished to the Governor of the State of Illinois, the truth of which account shall be verified by the affidavits of the treasurer and secretary of such company. And for the purpose of verifying and ascertaining the accuracy of such account, full power is hereby vested in the Governor of the State of Illinois, or any other person' by law appointed, to examine the books and papers of said corporation, and to examine, under oath, the officers, agents and employees of said company, and other persons. And if any person, so examined by the Governor or other authority, shall, knowingly and willfully, swear falsely, or if the officers making such affidavits shall, knowingly and willfully, swear falsely, every such person shall be subject to the pains and penalties of perjury.”
“Sec. 22. The lands selected under said act of Congress, and hereby authorized to- be conveyed, shall be exempt from all taxation under the laws of this State, until sold and conveyed by said corporation or trustees, and the other stock, property and effects of said company shall be in like manner exempt from taxation for the term of six years from the passage of this act. After the expiration of six years, the stock, property and assets belonging to said company shall be listed by the president, secretary or other officer, with the Auditor of State, and an annual tax for State purposes shall be assessed by the Auditor upon all the property and assets of every name, kind and description belonging to said corporation. Whenever the taxes levied for State purposes shall exceed three-fourths of one percentum per annum, such excess shall be deducted from the gross proceeds or income herein required to be paid by said corporation to the State, and the said corporation is hereby exempted from all taxation of every kind, except as herein provided for. The revenue arising from said taxation, and the said five per cent of gross or total proceeds, receipts or income aforesaid, shall be paid into the State treasury in money, and applied to the payment of interest-paying State indebtedness, until the extinction thereof: Provided, in case the five per cent provided to be paid into the State treasury and the State taxes to be paid by the corporation, do not amount to seven per cent of the gross or total proceeds, receipts or income, then the said company shall pay into the State treasury the difference, so as to make the whole amount paid equal at least to seven per cent of the gross receipts of said corporation.” (Private Laws of 1851, pp. 71, 72.)
In 1859 the General Assembly passed an act which referred particularly to the method of assessing the property of said company for the State tax, as required under said section 22 of the charter. Said act of 1859 provided, among other things, that if the company should neglect or refuse to list with the Auditor, on or before the first day of April in eactqyear, the stock, property and assets owned by said company, as required by its charter, then it should be the duty of the Auditor to list the same and place a valuation thereon and assess thereon a tax, but he should only assess said property for State purposes, giving said Auditor an opportunity to inspect the books of the company and examine its officers, and providing further that if the company should list its stock, property and assets as required by its charter, and if the Auditor believed the valuation placed by said company too low or that the company had not included all of its property, he should notify the railroad company of his disapproval thereof and proceed to make out a list himself, and then continued:
“Sec. 4. That in order to make out the list herein provided to be made, the Auditor may either make out the same in the aggregate, or by specifications of the particular kinds of stock, property and assets, owned by said company, as provided in section twenty-two of the charter of said company.
“Sec. 5.' That in either case provided herein, when the Auditor shall make out the list and valuation, as herein provided, he shall notify said company thereof; and if said company shall be dissatisfied with such list and valuation, they shall be allowed to appeal from the decision of the" Auditor to the Supreme Court, notice of which appeal shall be filed with the Auditor, who shall thereupon transmit to the clerk of said Supreme Court a certified copy of said list and valuation, and it shall be the duty of said Supreme Court, at the term next succeeding the taking of such appeal, upon such evidence as may be presented by the State and said company, to hear and determine the aggregate value of the stock, property and assets owned by said company.
“Sec. 6. That whenever an appeal is taken to the Supreme Court and the question herein provided to be heard and determined by said court is determined, it shall be the duty of the clerk to certify the aggregate value, so found, to the Auditor of Public Accounts, who shall assess a tax thereon for State purposes.
“Sec. 7. That the Auditor of Public Accounts shall draw his warrant upon the State Treasurer for all ex-' penses incurred under and by virtue of this act: Provided, that in case of an appeal to the Supreme Court, by said company, then said company shall pay all costs made by said company.
“Sec. 8. That the terms ‘list’ and ‘valuation,’ as used in this act, shall be deemed and taken to mean the stock, property, assets and other things owned by said company, set down in a list or schedule for taxation, and the value placed thereon, as above provided.
“Sec. 9. This act is intended to supply omissions in the law as heretofore existing, so as to enable the State to enforce the listing of the property of the Illinois Central Railroad Company, and the valuation and assessment thereof, and to make it the duty of the Auditor to value and assess the stock, property and assets owned by said company, for the years eighteen hundred and fifty-seven and eighteen hundred and fifty-eight: And it is further provided, that all the provisions of this act shall apply to the listing, valuations and assessments of said years,' as well as to all future listings, valuations and assessments. This act shall be in force from and after the date of its passage.” (Laws of 1859, p. 206.)
Under said section 22 of its charter the company paid no taxes for the first six years of its incorporation. The proof in the record shows that in 1857 it listed its property with the Auditor, placing thereon the value of $19,711,-559-59- This valuation was accepted by the Auditor and the regular State tax rate of sixty-seven cents per $100 was assessed against it for the State tax of the company. In 1858 the company listed its property at $7,650,000, and, so far as appears from the record, the Auditor assessed no tax that year upon this list and valuation. In 1859 the company listed its property with the Auditor at a total valuation of $4,952,000. The Auditor, acting in accordance with the provisions of said act of 1859, notified the company that he disapproved of such valuation and proceeded himself to make out a list, valuing the property at $13,000,000, upon which valuation he assessed the rate of sixty-seven cents, on the $100. The company, on being notified of the Auditor’s disapproval of its valuation, took an appeal to the Supreme Court under the provisions of said act of 1859. The Auditor thereupon certified the valuations to this court. The court, upon that appeal, heard the evidence in open court, and upon such testimony fixed the value of the property at $4,952,000 and directed the clerk, to certify to the Auditor the aggregate value so found. An opinion does not seem to have been published in our Reports as to this hearing, but in an action of debt which was brought in 1859 to recover the tax assessed for 1857 this court found the issues for the defendant in pursuance of a stipulation between the State and the company that the court might find the value of the property for 1857 from the evidence introduced on the appeal from the assessment for 1859. (State v. Illinois Central Railroad Co.
Under said sections 18 and 22 of its charter the company is required to pay the State, each„year, five per cent on the gross or total proceeds or income derived from its road and branches and in addition to pay “an annual tax for State purposes,” to “be assessed by the Auditor upon all the property and assets of every name, kind and description belonging to said corporation,” but when “the taxes levied for State purposes shall exceed three-fourths of one percentum per annum, such excess shall be deducted from the gross proceeds or income herein required to be paid by said corporation to the State,” and in any event it is provided that if the five per cent of the gross or total proceeds to be paid by the corporation, plus the annual State tax, “do not amount to seven per cent of the gross or total proceeds, receipts or income, then the said company shall pay into the State treasury the difference, .so as to make the whole amount paid equal at least to seven per cent of the gross receipts of said corporation.” Manifestly, the parties to this charter contract were of the opinion that the State taxes to be levied for any given year might be higher than three-fourths of one per cent per annum, and that the total amount raised by said levy for State taxes might amount in any given year to more than two per cent of the gross receipts of said corporation. The record shows that in the years 1857, 1858 and 1859, when the property was listed with and taxed by the Auditor, the tax assessed by said Auditor did not amount to more than two per cent of the gross receipts reported by the company to the Governor, and that therefore the amounts paid during all these years, when the property -was so listed with and taxed by the Auditor for State taxes, was seven per cent of the gross receipts of the company. While there is no definite proof in the record as to the reason why the property of the company was not listed with and taxed by the Auditor for State taxes from the years i860 to 1905, inclusive, it seems quite obvious that the failure to do this was due to the fact that the public authorities were of the opinion that two per cent of the gross proceeds would more than cover any amount of State taxes that could be levied, under the charter, on the property of the company. By the method of assessment adopted by the Auditor, under the advice of the Attorney General, for the year 1913 here under consideration, the assessment levied by the Auditor against the company for State taxes amounted to $2,558,917.32. Seven per cent of the gross receipts of the company for the year ending October 31, 1913, as reported by the company and paid into the State treasury, amounted to $i,355r 178.98. The item of State tax as thus assessed by the Auditor for the year here in question exceeded the entire two per cent of the gross receipts by $2,171,723.34, being, as can readily be seen by comparison, more than a million dollars in excess of the entire seven per cent of the gross receipts paid into the State treasury for that year.
Counsel for the State have cited other statutes which they argue bear on the proper construction to be given to the statutes already referred to. We do not consider it necessary to set out these statutes at length, as we do not deem that they materially change the construction that should be put upon the sections of the charter necessary to be construed.
State Tax.
One of the principal questions in dispute between counsel in this case is as to what was meant in said section 22 of the charter of the company by “an annual tax for State purposes.” Counsel for the company insist that by its charter it agreed to pay only the same State tax that other property owners were compelled by general law, from time to time, to pay, while counsel for the State insist that the company agreed to pay an annual tax for State purposes levied by the Auditor under the State charter, without any regard to the State taxes paid by other property owners. In support of their contention on this point, counsel for the State argue that the five per cent of the company’s gross receipts provided for in section 18 was compensation solely for grants, privileges and franchises secured to the company by said charter; that it had nothing to do with the company’s taxes and did not enter into and was not a part of the payment substituted for the payment of other taxes.
Counsel argue that the words “grants, privileges and franchises” were'not intended to include taxes of any kind. With this we cannot agree. Whatever doubt might have originally existed .as to the proper construction of sections 18 and 22 of the charter on this question has been settled by the decisions of this court in construing the charter of appellant. In Illinois Central Railroad Co. v. County of McLean,
The reasoning of this court in State v. Illinois Central Railroad Co.
When this charter was granted, the privilege or franchise to build this railroad was not considered of any special value. In the fifteen years, more or less, previous to the granting of this charter the public authorities had made several attempts to build a railroad similar to the one that was finally constructed by appellant company, and in one act the State had appropriated three and a half million dollars for that purpose. The Congress of the United States also in 1850 passed an act granting to the State of Illinois a right of way through the public lands and the ownership of every alternate section of land for more than six miles • in width on each side thereof,, to aid the State in constructing the railroad finally built by appellant. The history of a part of the legislation on this subject is found in State v. Illinois Central Railroad Co.
So far as the records and proof in this proceeding show, and so far as we are advised, this is the first time that anyone has ever questioned the fact that the- five per cent of the gross receipts in said section 22 was intended, in part, as a substitute payment for all other than State taxes. Not only have the public authorities and the officials of the company so construed these provisions of the charter, but, in the light of the history of the enactment of this charter, we think no other conclusion can be reached, if its provisions be fairly construed, than that heretofore reached by decisions of this court. We re-affirm what has already been said more than once by this court, that in consideration of the construction of appellant’s road and the payment by it of seven per cent of its gross income to the State it has been relieved from the payment of all other than State taxes, to be assessed as provided in its charter. Neustadt v. Illinois Central Railroad Co.
Is the State right in its contention that the State tax, so called, is in reality not a tax in the sense in which that term is used in the general Revenue law but only an agreed payment in lieu of the State tax, not to be determined or controlled by the general Revenue law of the State but only by the judgment of the State Auditor, limited by the provision in the charter that such State taxes shall not exceed three-fourths of one per cent, or seventy-five cents on the $100? The State tax provided for in section 22 is based upon a contract, (Illinois Central Railroad Co. v. County of McLean,
The usual rule is, as stated by Cooley, that in the “exercise of the power to tax, the purpose always is that a common burden shall be sustained by common contributions, regulated by some fixed general rule and apportioned by the law according to some uniform ratio of equality. So the power is not arbitrary but rests upon fixed principles of justice, which have for their object the protection of the tax-payer against exceptional and invidious exactions, and it is to have effect through established rules operating impartially.” (i Cooley on Taxation,—3d ed.—4.) Again, the same author states: “Apportionment of the burden is a necessary element in all taxation.” (Ibid. 411.) In the absence of a constitutional restriction on the State legislature there is no requirement that all taxes bé uniform or on an equal basis. (Eurigh v. People,
The rule is elementary that the Authority to impose upon property an unusual tax, or revenue liability upon an exceptional basis of value, must be given, under the law, in clear and unmistakable terms. (Fidelity Co. v. Board of Review,
Counsel for the State argue that if the legislature had intended by section 22 to provide for the ordinary State tax, levied in the same manner as regular State taxes -are levied under the Revenue law, they could easily have inserted a provision in the proper place in said section to -the effect that the Auditor should fix the assessable- value -for this. tax in the same manner as may be provided by law for fixing the assessable value of other property -throughout the State, and that he should levy thereon in each year, in the manner provided by law, from time to time, the tax for State purposes at the same rate at which this tax is levied upon other property throughout the State. Undoubtedly, such a wording could have been inserted, but the fact that it was not does not support the argument of the State on this question. If this argument of the State be a sound one, then it might well be asked, by the same line of rea.soning, why the legislature did not, in referring to the State taxes, simply provide that such tax should not be levied in excess of three-fourths of one per cent per annum, instead of providing, as they did, “whenever the taxes levied for State purposes shall exceed three-fourths of one percentum per annum, such excess shall be deducted from the gross proceeds or income herein required to be paid.” If the Auditor, alone, could settle the rate of State taxes, without any reference to the State taxes levied on other property, why insert a useless provision that might result in levying more than three-fourths of one per cent on the dollar and then require the deduction of the excess over and above three-fourths of one per cent? Manifestly, this provision of the charter as to levying more than three-fourths of one per cent and deducting the excess can only be given a reasonable construction if it is understood to mean that the rate of State tax is fixed by some other authority than the Auditor, and that official then is required to take that rate in levying a State tax on the property of appellant company.
Counsel for the State further insist that the charter made a perpetual liability on the part of the company to pay a State property tax, and it must have been known to the State legislature, at the time the charter was granted, that all other property might be relieved, under the provisions of the constitution, from paying State taxes, and that therefore the legislature must have intended that the Auditor was not to be governed in any way by the general Revenue law in assessing and levying this tax. It is true, as stated by counsel, that a general property tax, such as a tax on personal property of the kind existing in this State and other States at the present time, is being done away with in other countries, yet up to the time this charter was granted a personal property tax was not only general in this country but in other countries of the world. It is true, some writers assert that there is reason for abolishing the personal property tax, similar to, our State tax on that kind of property, in all jurisdictions, and while under the constitution of 1848 authority was given to exempt from State tax by a substituted form of taxation, the members of the constitutional convention of 1870 doubtless had little thought of its being practicable ever to abolish State taxes, for they provided in section 6 of article 9 of our present constitution, that “the General Assembly shall have no power to release or discharge any county, city, township, town or district whatever, or the inhabitants thereof, or the property therein, from their or its proportionate share of taxes to be levied for State purposes, nor shall commutation for such taxes be authorized in any form whatsoever.” If State taxes are ever done away with in this State, by a constitutional change or otherwise, it will then be time enough to consider whether the doing away with State taxes on other property will render nugatory the provision of section 22 of the charter of appellant company as to the payment of State taxes. The question is not before us in this case and need not be here considered or decided.
The further argument of counsel for the State that this State tax was to be assessed, levied and collected by other officers than those who assessed, levied and collected other State taxes, does not, in our judgment, tend to support their argument as to the nature of the State taxes provided for in this section. Other taxes at that time were assessed and levied by the Auditor. (Act to provide for a general system of railroad incorporation, laws of 1849,— 2d session,—sec. 30, p. 30; Private Laws of 1851, sec. 14, p. 50.) This court has held that the assessing and levying of taxes by the Auditor did not affect the tax levied. Porter v. Rockford, Rock Island and St. Louis Railroad Co.
Under the rulings of this court, in construing the charter of the company we can reach no other conclusion than that the State taxes referred to in said section 22 were, under the restrictions provided for in said section, the regular State taxes that were to be levied on other property. In Illinois Central Railroad Co. v. County of McLean,
If it be assumed that the meaning that should be placed upon the charter provisions of appellant company here under consideration is doubtful, then the contemporaneous, uniform and long continued construction placed upon these charter provisions by public officials will have great weight with the court. (Nye v. Foreman,
Equalized Value.
The record shows by the testimony of the members of the State Board of Equalization, and also by that of other public officers called from sixty-five representative counties of the State, including county treasurers, county clerks, members of boards of assessors, and others having practical knowledge of the methods of assessment in the counties, that during the year 1913, and for years prior thereto, the uniform practice throughout said counties was to adopt as the full value of taxable property, not the full cash value but an amount not in excess of 70 per cent of the full cash value of such taxable property, with the exception that in most of the counties moneys and mortgages listed by owners were assessed at full value. The testimony shows, also, that from 1903 until 1913 the State Board of Equalization had taken this same standard,—that is, not to exceed 70 per cent of the full - cash value,—as the standard to be followed by that body in assessing that class of property required by law to be originally assessed by that board. In some of the years from 1903 to 1913 the record shows that the State Board of Equalization passed a resolution to that effect. The proof shows that the property of all other railroad companies in this State for the year 1913 and prior thereto was assessed by the State Board of Equalization in accordance with this standard,—that is, fixing the “full value” of the property of all other railroads on a basis not to exceed 70 per cent of the actual cash value. The Auditor, in levying the assessment here in question, levied it upon what he had fixed as the full cash value of the property, while the commissioner appointed by this court recommends that the tax should be levied on only one-third of the total equalized value and that such assessment should be governed by the requirements of the statute as to levying all other State taxes. (Hurd’s Stat. 1913, p. 2081.)
It is insisted by counsel for the State that the assessment should be levied on the basis of the full cash.value and not on the one-third value, and that the charter provision found in section 22 provides that the tax shall be “upon all the property and assets of every name, kind and description belonging to said corporationthat said act of 1859 requires the Auditor to assess the stock, property and assets upon the full value, and that when an appeal is taken to the Supreme Court the question to be heard and determined is “the aggregate value of the stock, property and assets owned by said company,” and the tax is to be levied upon such “aggregate value” so found. Until 1898 the statute of this State always required the State tax to be levied upon the full cash or actual value of property, but it is a matter of common knowledge that before tjiat act was passed property was not usually assessed at its full value. This court has always taken notice of that practice as being long in vogue, unchallenged and recognized by the public authorities. (Bureau County v. Chicago, Burlington and Quincy Railroad Co.
Counsel for the State insist that, regardless of these statutes and regardless of the former practice that existed previous to the passage of these acts, the property of appellant should be assessed at its full cash value for these State taxes. With this we cannot agree. What we have already said with reference to these State taxes being the ordinary taxes levied on other property practically answers all the arguments urged by the State, but the question is so important that we deem it advisable to consider it further.
The words “the aggregate,” in the statute of 1859, in no way changed the duty of the Auditor in fixing the valuation or the duty of this court on appeal. In our judgment the fair meaning of these words is, that instead of finding the value of each separate item of the property the court shall find its total or aggregate value. They do not refer specifically to the finding of the equalized value or as to the duty of the court to decide whether the one-third of the full valuation should be the value upon which the assessment must be levied. Manifestly, however, in view of the issues raised in this case, it is the duty of the court to find whether the Auditor should extend the assessment for the State tax upon the full cash value or only upon one-third of the equalized value. This being an ordinary State tax, as already stated, t-he provision of the constitution of 1848, and of the present constitution, that the tax should be levied by valuation, “so that every person and corporation shall pay a tax in proportion to his, her or its property,” must control in levying this tax. This court, in discussing a similar question in Law v. People,
To assess implies more than to fix the full valuation at a given rate. It means to impose a tax according to some method or upon a basis of assessed valuation which may be provided by law and which does not violate the mandate of the constitution that every person and corporation shall pay a tax in proportion to the value of his or its property. It includes all the steps which the law requires to subject the property to the tax. The State tax levied under the provisions of section 22 of appellant company’s charter being practically an ordinary State tax, to levy it on a basis of full value when the State taxes on all other property were levied at a much less value would, be violative of every principle of uniformity and equality of taxation as laid down in the constitution. This should not be done, even though the standard or basis fixed by the public authorities for the assessed valuation is.less than that fixed by the statute. The requirements of the constitution that there shall be uniformity and equality in taxation must control over any statute or practice of assessing officers, so that the properties of persons and corporations shall pay a tax in proportion to their respective values.
The separate section to the constitution of 1870 which provides that no contract obligation or liability .whatever of the Illinois Central Railroad Company shall ever be released, suspended, modified, altered or omitted, does not in any way change the obligations of the charter of the company. If that section had not been adopted, the liability of the company to pay the State tax under existing legislation would be just as it is at the present time. The charter prescribes the tax to be assessed upon a valuation, which under our construction of the charter obligations and the laws bearing on the subject means that this tax is to 1 be assessed in just proportion under the provisions of the constitution. Before the constitution of 1870, the State, in levying this tax, was bound to do so with due recognition of the rule that every person and corporation should pay a tax in proportion to his or its property, and since the tax must have been so levied before 1870 so must it now be, because of this particular section to which reference is made by counsel.
Deducting Debts from Credits.
The further question is raised as to whether appellant company, in having its property assessed, is entitled to the deduction of its bona fide debts from the credits listed by it, as provided by the general Revenue law of the State. Section 3 of the Revenue law provides that personal property shall be valued at its fair cash value, less such deductions as shall be allowed by law to be made from credits. Credits, whether payable in money, labor or property, are taxable under the second paragraph of section 3 of the Revenue act of 1872. (Hurd’s Stat. 1913, p. 2025.) Section 27 of this last named act provides that “in making up the amount of credits which any person is required to list for himself, or for any other person, company or corpora-' tion, he shall be entitled to deduct from the gross amount of credits the amount of all bona fide debts owing by such person, company or corporation to any other person, company or corporation, for a consideration received,” etc. Section 28 provides that “no person, company or corporation shall be entitled to any deduction from the amount of any bonds, stocks, or money loaned,” etc., requiring that all intangible property be assessed under the description of capital stock, the actual valuation of which must necessarily take into account the balance between the credits and debts. (Hurd’s Stat. 1913, chap. 120, secs. 48, 108, pp. 2033, 2043.) This court, in First Nat. Bank v. Holmes,
But counsel for the State insist that the company has not brought itself within the provisions of the general Revenue law as construed by this court in Peirce v. Carlock,
Separation of Charter and Non-Charter Line Property.
The company has 705.5 miles of charter line railroad. Under due authority of law it has acquired additional lines of railroad other than its charter lines, some being held by fee title, some by lease and stock ownership and some controlled by stock ownership alone. These are called “non-charter lines.” Including said non-charter lines, in the year 1913 said company directly operated as one system 4763 miles of railroad. These non-charter lines are in some score or more different States, west, north, south and east of Illinois. The total length of said non-charter lines of railroad in Illinois is about 1348 miles, all of which, except about 26.03 miles, are owned in fee by the company. It appears that on March 31, 1913, "the company was possessed of a large amount of rolling stock, reasonably sufficient to equip said railroad owned and operated by it as one system; that said rolling stock consisted of 57,201 freight cars, 1038 passenger-train cars, 3373 work cars, 1460 locomotives, and other miscellaneous equipment; that part of said rolling stock was during the year 1913, and prior thereto, used exclusively on said charter lines; that the remainder was not assigned to specific portions of said railroad, either charter or non-charter lines, but was used in common on all parts of said railroad as the traffic conditions required; that said company, in listing its rolling stock with the Auditor of State in the year 1913, described all the rolling stock so owned by it at the time, and apportioned as the part thereof to be assessed as assets or property pertaining to said charter lines, percentages of said classes of rolling stock based upon the use thereof on said charter lines in comparison with the total use on said, operated system as shown by the mileage made on said respective parts; that by said method said company, in said schedule filed with the Auditor, assigned as the part of the charter lines 28.57 Per cent of the total locomotive value, 34.16 per cent of the total passenger-train car value, and 35-37 per cent of the total freight and other car value; that on said 31st day of March, 1913, said company owned and was in possession of a large amount of other tangible personal property, consisting of railroad supplies, steel rails, ties, bolts, plates, material for car and engine repairs, and other like classes of tangible property, a portion of which was intended for use on the charter lines and another portion of which was permanently located outside of Illinois in other States and intended for use upon said non-charter lines in other States; that said material outside of the State appeared never to have been upon the charter lines; that said company also held similar personal property on its charter lines for use thereon; that said property located in other “States was not returned as taxable in this State on said schedule for 1913.
The State claims that under section 18 of the company’s charter it was its duty to keep accurate accounts of .the operation, expense, etc., of its non-charter lines for the purpose of fixing the proper amount of tax to be levied upon charter line property. The provision of section 18 requiring the company to keep accounts reads: “For the purpose of ascertaining the proceeds, receipts or income aforesaid, an accurate account shall be kept by said company.” The record shows that the company has always had a system of keeping accounts in such a manner as to intend on its part to comply with said section 18. The proof shows that the State has at four different times,— in 1882, 1883, 1885 and 1899,—had a special accountant or commission examine the method of keeping the accounts of the company’s gross proceeds and income of the charter lines and has in each instance approved the method used by the company; that the manner of keeping the accounts in 1913 did not differ materially from the method so approved' by said State’s representatives, except as the accounting rules now prescribed by the Inter-State Commerce Commission required a change. In State v. Illinois Central Railroad Co.
The State contends that such intermingling of charter line equipment with non-charter line equipment as is here shown renders it impossible for the State Auditor to assess the property of the charter lines, and that therefore this case should be governed by the rules applicable to the wrongful intermingling of one person’s goods of his own business with the property and business of another person for whom he acts as agent and to whom he sustains some fiduciary relation; that the State Auditor, in levying the tax under such situation, should be authorized to treat as charter line property all the company’s non-charter line property which is not affirmatively shown to be non-charter line property, under the reasoning of the following and other like cases: Diversey v. Johnson,
Valuation of Railroad Track and Right of Way.
A question that has been argued-at length in the briefs is the method of valuing the tangible property of the company and the value which should be put upon it, whatever method is adopted. Section 22 of the charter requires that an annual tax shall be levied by the Auditor upon all the property and assets, of every name, kind and description, belonging to such corporation. The largest single item of tangible property is the railroad track of the charter lines, which the commissioner found to be 705.5 miles in length. He placed the fair cash value of this railroad track on March 31, 1913, at $75,000,000. The Auditor assessed the charter line railroad track at $125,000,000. The company, for the year 1913, on the form of schedule prepared by the State Auditor, returned to that official, among other items therein required, the aggregate value of the railroad track of the charter lines to be assessed, as $101,776,098. On the hearing before the commissioner much evidence was presented as to the proper method of valuing this charter line railroad track. Several expert witnesses familiar with the value of railroads testified as to the value of such charter line track and right of way. Testimony was given as to the market price on sales of stock and bonds of the company at the date in question. Evidence was also heard as to the value of this property, deduced, under the evidence, from the value" of the company’s operated system, and as to the value based upon the “cost of production less depreciation.” Evidence was also heard as to other methods of valuing. In the view we take of this question the company is not in a position to claim that its property known as railroad track is of less value than that fixed in" the return to the Auditor of Public Accounts for said year 1913. Proof was offered as to how this valuation was arrived at by the company in its return. This, we think, is not the material question. The authorities in this State, as well as the weight of authorities in other States, are to the effect that a tax-payer is bound by his own statements as to the nature, title and value of the property made in the list which he returns for taxation. “In the absence of any evidence of fraud, accident or mistake, a property owner is bound by a schedule of his taxable personalty given by him to the assessor.” (1 Cooley on Taxation,—3d ed.—618; 37 Cyc. 994, and cases cited; 27 Am. & Eng. Ency. of Law,—2d ed.—671, and cited cases.) This court held in People v. Atkinson,
The public has an interest in the collection of taxes from every property owner. The rule that the property owner cannot question the correctness of his schedule is not grounded upon the doctrine of estoppel as that doctrine is ordinarily applied. The decisions in the cases cited do not rest upon the usual principles of estoppel nor contain the elements usually required in courts of equity in the application of that doctrine. They seem to rest rather upon the principle that it is the duty of the tax-payer to see that the list of property is furnished to the p’roper officers, and that it is against public policy to permit him to make such schedule and then question its accuracy, whether the failure to certify the proper list of property was intentional or unintentional. The rule in this State being in accord with this reasoning, there can be no relief for an incorrect schedule, in the absence of fraud, accident or mistake. Counsel for the company argue that these authorities are not in accord with the authorities in certain other jurisdictions. This is true. In some of those jurisdictions the courts recognize plainly the fact that our decisions are not in accord with the rules laid down by.certain other courts.
Counsel for the company further argue that the decisions already cited are grounded on the fact that the schedule of the property owner is binding because he has misled the public officials, but that in this case the public officials have not been in any way misled, as the State Auditor did not follow the schedule of values. As already stated, the rule laid down in this State is not based on the doctrine of estoppel. The Connecticut cases heretofore cited are practically on all-fours with the facts as here presented, and it was there held that even though the assessing authority had seen fit to raise the value fixed by the property owner, the court, when it finally passed on the value, would not fix the valuation lower than that fixed in the return of the property owner. Here the vice-president of the company signed and swore to the correctness of the schedule returned to the State Auditor, and the statement of this official was the statement of the corporation. No claim can be made that the erroneous valuation of this railroad track and right of way was due to any fraud, accident or mistake, as those terms are used in the law, it being contended only that the railroad official who made up the schedule adopted the wrong theory for fixing the value of the railroad track and right of way, making the cost of reproduction, less depreciation, the basis of his valuation, and it is now insisted by counsel for the company that this is not a proper basis upon which to figure the actual cash value of the railroad track and right of way. The commissioner found that it was not the proper basis, and the weight of proof in this record tends to support that conclusion. But even though, as an original question, the conclusion of the commissioner on this point is correct it can not control here, in view of the rule of law in this State that the tax-payer who lists his property for taxation, in the absence of fraud, accident or mistake, is bound by the valuation given in such list or schedule.
Counsel for the company seem to argue that the law does not require it to value its property in making the return to the State Auditor, and therefore its schedule can not be binding. In this we think they are in error. Section 22 of its charter required that the president, secretary or other officer should list the stock, property and assets belonging to said company with the Auditor. Section 3 of said act of 1859 requires that said railroad company "shall list their stock, property and assets, as required by section 22 of their charter, with the Auditor of Public Accounts, and if the Auditor shall believe that the valuation thereof is too low, or that the whole of the stock, property and assets, owned by said company, other,” etc. Section 8 of said act of 1859 provides “that the terms ‘list’ and ‘valuation,’ as used in this act, shall be deemed and taken to mean the stock, property, assets and other things owned by said company, set down in a list or schedule for taxation, and the value placed thereon, as above provided.” The evidence shows that for the years from 1906 to 1912, inclusive, the company made its returns to the State Auditor on a schedule form similar to the one here under .consideration for 1913, and that in each schedule It gave the value of the various items of property in a manner similar to that in which it was given on this schedule. The aggregate total cash value for extending the tax on the railroad tracks and right of way of the charter lines should be the amount in such schedule returned,—that is, $101,776,098.
Valuation of Rolling Stock for purpose of Assessment.
The value of all the rolling stock of charter and non-charter lines is $42,675,857. The State Auditor held that this entire amount should be the aggregate or full cash value of the rolling stock to be assessed. The company in its return to the State Auditor gave the full cash value of the rolling stock as $14,095,530, and the commissioner, after a review of the evidence taken before him, held that this sum represented the fair proportion of said total rolling stock and its value assessable to the said charter lines. While the general rule is that th#e situs of personal property follows the domicile of the owner, it is a rule of convenience, subject to legislative change, and is not ordinarily applied to property distributed along an extended railroad system. It may well be doubted whether it can reasonably be applied to such property of a railroad corporation as between the different localities along its line of road. The general rule that personal property follows the domicile of the owner, after all is “merely the law of the State which recognizes it, and when it is called into operation as to property located in one State and owned by a resident of another, it is a rule of comity in the former State rather than an absolute principle in all cases.” State Railroad Tax cases,
Section 45 of the general Revenue law of this State provides that “the rolling stock shall be listed and taxed in the several counties, towns, villages, districts and cities, in the proportion that the length of the main track used or operated in such county, town, village, district or city bears to the whole length of the road used or operated by such person, company or corporation, whether owned or leased by him ór them in whole or in part. Said list or schedule shall set forth the number of miles of main track on which said rolling stock is used in the State of Illinois, and the number of miles of main track on which said rolling stock is used elsewhere.” (Hurd’s Stat. 1913, p. 2033.) In construing this statute this court held in Ohio and Mississippi Railroad Co. v. Weber,
. We deem it unnecessary to quote from the many other authorities referred to in the briefs on this question. Said section 45 of the Revenue law and all the authorities seem to be in accord that only that proportion of the rolling stock that the proof here showed was habitually used or employed within this State, found in accordance with the rules here laid down, should be included in the aggregate cash value of said rolling stock for the' levying of the said tax. Counsel for the State insist that the full valuation should be taken for assessing purposes. The commissioner found that the portion of the rolling stock that should be assessed amounted to $14,095,530. Counsel for the company agree that this is the correct amount. The proof in this record shows very clearly, in our judgment, that this amount is the valuation of the proper proportion of the rolling stock that should be assessable as charter line property. This is also the value in the schedule returned by the company. According to the authorities heretofore cited, the conclusion necessarily follows that this is the amount that should be taken as the total aggregate cash value of the rolling stock for the purpose of levying the State tax.
Valuation of Tangible Personal Property other than Rolling Stock.
Under the advice of counsel, the State Auditor, in- assessing this class of property, assessed all that was owned by the company, wherever situated, the total aggregate cash value being $6,982,517.18. It is now conceded by counsel for the State that under the decisions already cited and numerous other decisions of the Federal and other courts, such as Delaware, Lackawanna and Western Railroad Co. v. Pennsylvania,
Valuation of Intangible Property.
Under this heading the State Auditor valued and assessed cash, bonds, stocks and other credits. The commissioner, after he had heard evidence, made his report on this branch of the case under eleven different subdivisions or headings. As to the first, second, fourth, fifth, seventh, eighth, ninth and tenth subdivisions', counsel agree that the commissioner found correctly that the various items under these subdivisions should not be assessed by the State Auditor as charter line property, though there is a disagreement between counsel as to whether or not some of the items in these subdivisions should be assessed by the local assessors under the general Revenue law of the State. The questions of taxation as to practically all the items under these subdivisions are, so far as this cause is concerned, moot questions and need not be decided. There is, however, a difference of opinion as to the proper method of taxing items under subdivision 3, especially as to whether the company had the right to set off debts against credits, which the commissioner held it had, and also a difference of opinion between counsel as to the commissioner’s findings as to subdivision 6 and subdivision 11. In view of the conclusions that we have reached on other branches of this case no practical purpose can be served in this opinion by giving our views of the law as to the proper rules for levying taxes on any of these items. It appears as to the items in some of these subdivisions that there is now other litigation in which the question of proper methods of taxation is squarely at issue and must be settled to end that litigation. Indeed, considerable space in these briefs on this question is devoted to argument to prevent the court from pre-judging the questions involved in the other litigation. The State Auditor placed the fair cash value on cash, stock, bonds and- other credits at $190,901,243.05. In the' return of the schedule of the company to the State Auditor the aggregate value of this class of property to be assessed against the charter lines was given as $70,728,290.49. The commissioner valued this class of property for assessment at $23,950,993.40. Counsel for the company now insist that proof before the commissioner requires this class of property to be valued at $3,391,391.83, while counsel for the State insist that the proof in this record shows that this property should be valued for assessing purposes' at $16,329,588.89.
The conclusion heretofore stated, that the valuation given in its schedule as to the railroad track and right of way returned to the Auditor for the year 1913 must bind the company, applies as to the value of the intangible personal property. The evidence in the record tends to show that these returns were made on forms prepared by- the State Auditor, and included much property, especially intangible personal property, that did not belong to the charter lines. Similar returns had been made for some seven years previous on the same forms by the company to the State Auditor and the State taxes levied by that officer in accordance with said returns. Even though it be a fact that the company included in this schedule property that did not belong to the charter lines, that fact cannot alter the rule of law as to the binding effect in this case upon the company of the values fixed in the schedule for the assessment of the State tax for the year in question. The valuation given to the intangible personal property in the company’s schedule for 1913, namely, $70,728,290.49, is binding upon the company, and should be the total aggregate cash- value of this item of the company’s property for the purpose of levying the State tax.
Both counsel in their briefs and arguments- have discussed at length various ppints which we have not deemed it necessary to consider. Having in mind the fact that there is another cause in litigation wherein the question is involved as to a proper accounting between the State and the company under the rules laid down by this court in State v. Illinois Central Railroad Co.
Recapitulation.
The aggregate values that have been or are now placed upon the property of the company by the various authorities, before those values are equalized under the rules heretofore laid down in this opinion, are as follows:
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It is proper to state here that the aggregate value of all the property and assets of the company as returned by it in its schedules to the State Auditor for the various years from 1906 to 1912, inclusive, and which the State Auditor took as a basis in fixing the assessment for the State tax in accordance with the rules laid down herein, varies in these different years from $155,016,656.50 to $182,067,092.55.
In view of the conclusions that we have reached, the total aggregate cash value of the property of the company to be assessed as of March 31, 1913, should be in accordance with the figures set forth in the last column of the table given above,—that is, $191,020,034.03. The Auditor of Public Accounts, in assessing the tax thereon for State purposes, mus't proceed in accordance with the views set forth in this opinion. He must equalize its value on the same basis as has been applied to the other property throughout the State for assessing the taxes for the year 1913,—that is, to 70 per cent of said aggregate cash value,—making such equalized value $133,714,023.82. In harmony with the-general Revenue law of this State and under the reasoning of this opinion, only one-third of said total equalized value,— that is, $44,571,341.27,—should be taken by the Auditor as the value upon which said State taxes against the company should be assessed, and said State taxes should, be assessed at the rate fixed by the State for other State taxes for that year,—that is, seventy cents on each $100 of valuation. The clerk of this court will certify to the Auditor of Public Accounts the aggregate cash value as found by this court,—that is, $191,020,034.03.
Ordered certified accordingly.