72 Neb. 402 | Neb. | 1904
This action is begun in this court in the exercise of its original jurisdiction. The relators pray for a peremptory writ of mandamus to compel the respondents, the city council of Omaha, acting as a board of equalization, to reassemble and hear their complaint relative to the alleged low assessment of certain railroad properties situated within the corporate limits, and to equalize the assessment of such properties by raising the assessed value thereof to conform to the standard of value pertaining to all other property assessed for municipal purposes. The substance of the complaint is that the properties of the railroad companies mentioned in the alternative writ, situated within the city limits, are assessed at but a fraction of their true value, while all other property subject to municipal taxation is assessed at its commercial value. The return of the respondents to the alternative writ discloses that, in the assessment for municipal taxation of the railroad properties complained of, the assessing officer of the city accepted the valuations placed thereon by the state board of equalization and the distributive share thereof apportioned to the city of Omaha as the assessable value of such properties, and that, in the equalization thereof, the respondents, acting as a board of equalization, raised the assessments five times the value as fixed by the state board of equalization and returned by the city tax commissioner, which act of equalization, in the judgment of the board, brought the value of the railroad properties thus assessed to a uniform standard of value Avith other property assessed for municipal purposes and exhausted their poAvers in the premises. Reduced to its narrowest limits, the question presented for consideration by the pleadings and in briefs of counsel is in respect of the method of procedure by the tax commissioner and the city council in the assessment of railroad properties situated in part in such municipality and subject to municipal taxes, and also, whether the .statute providing for the
The legal questions presented, says counsel for relator, are: First, have the respondents correctly interpreted the statutes? Second, are the statutes in question valid?
The answer to the first question must, we think, be in the affirmative. The old revenue act under which the assessment in question was made provided for the assessment of railroad property of the character under consideration by one assessing body, viz., the state board of equalization, for all purposes of taxation — state, county township, school district and municipal. This assessing body, the statute declares, shall value and assess the property of raihoad corporations at its actual value for each- mile of said road or line, the value of each mile to be determined by dividing the sum of the whole valuation by the number of miles of such road or line. It is further provided that, after the valuation and assessment is made as aforesaid, the state auditor shall certify to the county clerks of the several counties in which the properties of such corporations are situated, or any part thereof, the assessment per mile so made on the property of such corporations, specifying the number of miles and the amount in each of said counties. Section 40, article I, chapter 77, Compiled Statutes, 1901. By section 98, chapter 12c, Compiled Statutes, 1903 (Annotated Statutes, 7547), the same being the charter act of cities of the metropolitan class to which the city of Omaha belongs, it is provided: “The tax commissioner shall take the valuation and assessment of railroad property within the city limits from the returns made by the state board of equalization to the county clerk.” Assuming, as we do for present purposes, that the legislature may rightfully provide for
“The legislature in its wisdom has decided that the value of railroad property can be more accurately and justly estimated by the state board of equalization than by local assessors, and has exercised its constitutional prerogative by providing that railroad property shall be assessed in that manner. Whether or not it is reasonable to suppose that the state board of equalization would have more knowledge and a better opportunity to make a just valuation of such property than local assessors is quite unnecessary to be determined in deciding upon respondent’s right to act as tax commissioner. Why may not. several valuers constitutionally act upon different kinds of property, or upon the same property, for the purpose of different taxes? The real objection to this act on the ground of uniformity is, evidently, the idea that value is not such a fixed quantity that it is possible for two independent appraisers to agree. If values are fixed for purposes of municipal taxation by one body of assessors, and for county and state by another, it is practically certain that the two will disagree. Enough is said above to indicate an opinion that the only uniformity required as to any tax is that it should be uniform throughout the jurisdiction, that is, that state taxes shall be uniform throughout the state, county taxes throughout the county, and city taxes throughout the city.” The result produced by this method of assessment is only that there are diiferent assessing authorities for different kinds of property, each exercising an independent judgment in arriving at the value of the property- assessed, and making due return thereof to the p.oper authorities. The inequalities in values thus returned, if any there be, is a proper subject for consideration by a body or tribunal authorized to discharge the functions of a board of equalization. If it be proper to assess railroad property as a nnit and distribute the total value thereof on a mileage basis, it is obvious that the distributive share going to any one taxing*408 district may be required to be taken as the assessable value and as the basis of valuation for equalization and taxing purposes. The value of such distributive share of the whole property may, it would seem, be raised or lowered by an equalizing board in order that it may be brought to a common standard and conform to the values placed on all other property. This, as we understand the record, is what was done by the respondents in the case at bar, and if so is, we think, in harmony with legislative intendment. It is the business of such boards, say this court in State v. Fleming, 70 Neb. 523, “To fairly and impartially equalize the valuation of all personal property assessed in their respective jurisdictions and raise or lower the same as the justice and equity of the case may «‘.quire. Whatever directions the law may give to the assessor in valuing the property in the first instance, and whatever result these directions may produce in the assessment of franchises or other property of the taxpayer, the work of the board of equalization is to equalize the valuations made, so that every one, as nearly as that may be attained, shall stand upon an equal footing, and pay an equal proportion of the tax laid, according to the real value of his property. * * * In this way, equality is attained and every interest protected.” It is manifest that the legislative plan for the assessment of railroad property situated in a municipality, for municipal purposes, has been followed by the city authorities in the case at bar, and that the interpretation given to these several provisions of the statute by the respondents as to their authority and power is in harmony with the expressed will of the legislature.
The very able and helpful arguments and briefs of counsel on both sides of the controversy are devoted almost exclusively to the second question presented, that is, the alleged invalidity of the statutes providing for the assessment of the property of a railroad company as a unit, and the distribution of the value of the whole on a mileage basis by one assessing body for all purposes of taxation, and it is to this phase of the case that we have given the
“And this rule of uniformity applies not only to the rate of taxation but as well to the valuation of property for the purpose of raising revenue. The constitution forbids any discrimination whatever among taxpayers, thus, if the property of one citizen is valued for taxation at one-fourth its value, others within the taxing district have the right to demand that their property be assessed on the same basis. The rule of uniformity is satisfied if observed by each jurisdiction imposing the tax.” To the same effect is High School District v. Lancaster County, 60 Neb. 147. See also State v. Poynter, 59 Neb. 417, and State v. Karr, 64 Neb. 514.
By section 6', of article IX of the constitution, it is provided that for corporate purposes all municipal corporations may be vested with authority to assess and collect taxes, but such taxes shall be uniform with respect to person and property within the jurisdiction of the body imposing the same. The requirements of uniformity in
We may assume that all the lines of railway in this state have been by the. state board of equalization assessed at a valuation uniform with the values placed on all other property assessed for revenue purposes, and that the total value of each of such lines of railway has been distributed to the different counties, townships, school and road districts, cities and towns through which such lines extend according to the length of the line in each division for whose benefit taxes are levied. If those portions of the road lying in the city of Omaha axe to be valued at a larger sum per mile than other portions of the same line, then it follows that there must be a corresponding reduction of the amount apportioned to the remainder of the line or else an overvaluation and double taxation would be the result, and this would violate the rule of uniformity the same as does undervaluation. The legislative plan contemplates a full valuation of all property of a railway line subject to taxation in this state, and the distribution
“The common sense view of the subject would seem to be that such pxxrpose was to enable the proper authorities to distribxxte the avails of such taxation equitably among all the municipal sxxbdivisions through which a road may pass, in the ratio which the number of miles within each subdivision bears to the total number of miles of road within the state, treating each mile as equal in value to every other mile, and regardless of whexxce came the power under*418 which any particular portion of the road is constructed. A railroad might have vast terminals at one point, worth as much as the remainder of the line, though it extended through a dozen counties. The subdivision in which these terminals are located is not, under this law, permitted to reap an advantage over other localities, by reason of the mere accident of location; but must share its advantages with these others pro rata. That evidently is the reason behind and under this legislation. How a franchise has been acquired, or whether a particular portion of a line is more expensive to construct than others, is unimportant in determining whether the property should be taxed locally or otherwise. As a matter of fact, this inequality of value was the principal motive for the legislation, which sought to obviate the evils attendant upon such a state of facts. Without such inequality, no legislation would have been necessary, the general laws being in that event adequate for the purpose.”
While the constitutionality of the statute was not directly involved, the discussion of the subject is valuable as showing the reasons for treating and assessing railroad property as a unit, and the difficulty of separating it into fractional parts, each piece for the purpose of assessment to be localized and treated as a specific item of property having a value independent of the other portions of the whole. In 1 Cooley, Taxation (3d ed.), p. 693, it is observed by the eminent author: -
“ ‘The property of railroad and canal companies constitutes a legitimate class of property for the purposes of taxation — a class which, in order to treat it fairly in the matter of taxation, must be treated separately.’ Indeed the difficulties of assessing, in the same way that property in general is assessed, lines of railroad extending through many municipalities are so great and so obvious that in many states it is not attempted, and a franchise tax is imposed as a substitute for all other taxation. But in other states a railroad is listed, assessed and valued as an entirety, and the value is then apportioned for taxation*419 among the several municipalities by some standard prescribed by law, which generally is the length of line within the municipalities respectively. There is no constitutional objection to that method of taxing this species of property, and it is perhaps more just than any other.”
The supreme court of .Colorado in the case of Ames v. People, 26 Colo. 83, 56 Pac. 656, in passing upon a controversy identical in principle with one in the case at bar, uphold the validity of statutory enactments providing for one body to value and assess all the property of a railway company as a unit and to distribute the value upon a mileage basis. The constitutional provisions as to- uniformity in that state, while not the same, are substantially so in principle, and the necessity for equality of taxation is recognized in the decision rendered. In the opinion, it is said:
“In the method of laying a tax, either as to the assessment or the apportionment, the general assembly is not restricted by the constitution, and unless the legislation is palpably unjust, oppressive or inadequate, courts will not substitute their judgment for that of the legislature. Many tribunals of final resort, including the supreme court of the United States and our own court, as will be seen from the cases already cited, have held that the method of ascertaining and distributing values of railroad property like that prescribed in the statute under consideration, if not the only rational one, is, at least, the best and fairest thus far invented.” And further on in the same opinion, the court treat the subject in the following manner: “It follows that, in order to secure a just valuation for taxation of this class of property, all of it that is used for the convenient and proper operation of the railway may be assessed as a unit, and the valuation thus ascertained may be apportioned to the various taxing districts upon a mileage basis. Indeed, construing, as we should, sections 3 and 10 together such of the property of a railroad company, real and personal, as is used for the convenient and proper operation of its railway can properly only be assessed ami*420 apportioned for taxation as a unit; and the apportionment upon a mileage basis, as this act prescribes, will come as near to doing exact justice as it is possible' to do. * * * This method of apportionment, in our judgment, gives to each local taxing district its just proportion of tax, that is to say, each taxing district gets for purposes of taxation the just valuation of the property physically situate within its territorial limits; for the value of property situate therein cannot be made to depend upon its so-called natural situs, entirely disassociated from the use made of it, but that value, in great measure, depends upon its connection with every other part of the corporation property so used, and situate in every other taxing district in which any part of its railroad lines, considered always in connection with the character of the use made of it. Thus the command of the constitution is obeyed, and, in fact, to each taxing district is given a fair valuation of the railroad property within its territorial limits, and that is all the section requires.”
Say the supreme court of Michigan: “The propriety of treating aggregations of property as a unit is as natural and proper for the purposes of assessment as for sale, and this is especially so where the various articles are so essential to the purpose for which they are combined that the withdrawal of one or any class would destroy, or substantially impair, the use of all for the purposes to which in their new form they are adapted.” Detroit Citizens Street R. Co. v. Common Council, 125 Mich. 673.
In People v. State Board of Equalization, 205 Ill. 296, it is said: “The right of way of a railroad company cannot be cut up, for the purposes of assessment, into parts, either by dividing it into sections by the lines of the different taxing bodies which it crosses, or by severing from its main track the portions that lie outside of some arbitrary line drawn through the center of the right of way. A railroad is a unit, and for the purposes of assessment its right of way must be treated as a whole. The switch or side track at which it receives coal, grain, stock or freight in a
Many other authorities could be cited, but the foregoing give a very accurate idea of the trend of judicial opinions regarding the propriety and legality of this method of assessing the property of railway companies. The principle justifying the assessment of railroad properties as a unit, and distributing the value on a mileage basis to the different tax dislricts through which the railway line or track extends, seems to be that in fact and in legal contemplation for the purpose of assessment, use and sale such property may rightfully be regarded as a physical whole or one entire property extending over the whole line of the railway, the value of which depends not on any separate* or fractional part, but upon the whole of the property as an entirety.
The fundamental idea underlying the relators’ contention as to the proper method of local taxation of these properties is that the fractional parts of the different railway companies located in the city of Omaha, consisting of the depot grounds, main track and side tracks, and the structures thereon, have a fixed and natural situs, and that they are of themselves of especial value greatly in excess of other portions of equal length of the lines of which they are parts, and that such values are separable from the remainder, and, therefore, to meet the requirements of the
The principle underlying the legislation complained of undoubtedly is that every portion of the property of a railway company going to make up the whole is interdependent, and that the situs must be determined with respect to the entire property and not any fractional portion of it. The legislature has fixed, or undertaken to fix, the legal situs of a railroad Avhere the organic structure is, in all the counties and subordinate districts through which the road is constructed, and has provided for the apportionment of a share of the total value to each taxing district in proportion to the length of the main track in such district, upon which taxes are to be levied for all purposes. It is the fractional proportion of the whole distributed to any one taxing district that represents the taxable property of such railroad line in such district, rather than the physical property found therein. This method does not effectuate a moving about of property having a fixed place of location — a change of situs — but amounts only to the valuing of the whole as a unit, and the distribution of the total value along the line and throughout the extent of the physical property, on what is regarded as a fair, just and equitable basis. The nature and characteristics of the property are such as to render it incapable of division into fragmentary parts and the valuing of each of such parts for assessment purposes as though it were a separate and
“Under section 6873, General Statutes of 1889, * * * all property used or held by a railway company for the purpose of operating its railroad, including its roadbed, right of way, etc., is to be appraised and assessed as personal property. The statute declaring such property personal property for the purposes of assessing a tax against it, it follows that such tax must be collected as a tax upon personal property. * * * The legislature had the power to enact the statute declaring the right of way, roadbed and other property held or used in the operation of the railroad to be personal property for the purposes of taxation.”
In Ames v. People, 26 Colo. 83, the court say:
“The whole argument, hoAvever, is based upon the proposition that the property is assessed not where it is physi*424 cally situated,, but all along tlie main track, each municipal corporation being given for taxation a value dependent not upon the actual value of the property therein physically located, but only such value of the entire property of the corporation as the length of the main track in the municipality bears to the total length of the line. This method of distribution is said to be contrary to the rule that property must be taxed at its actual situs. But it is settled by a long line of decisions that this rule is merely the law of the state that recognizes it; hence being a matter of legislation it is entirely competent for the legislature, unless restrained by the constitution, to fix for the purposes of taxation the situs of both real and personal property.”
The Arkansas supreme court regarding a similar question states the principle as follows:
“The nature of the property justifies classification and separation from the body of the real estate upon the grounds that justify the separate classification of realty and personalty. The requirement of an annual assessment of railways affords, therefore, no greater cause for complaint than does the like requirement for personal property, and the complaint of discrimination is groundless.” St. Louis, I. M. & S. R. Co. v. Worthen, 52 Ark. 529, 13 S. W. 254.
The supreme court of the United States in Columbus S. R. Co. v. Wright, 151 U. S. 470, 480, has said:
“The roadway itself of a railroad depends for its value upon the traffic of the company, and not merely upon the narrow strip of land appropriated for the use of the road, and the bars and cross-ties thereon. The value of the roadway at any given time is not the original cost, nor, a fortiori, its ultimate cost after years of expenditure in repairs and improvements. On the other hand, its value cannot be determined by ascertaining the value of the land included in the roadway assessed at the market price of adjacent lands, and adding the value of the cross-ties, rails and spikes. The value of land depends largely upon the use to which it can be put, and the character of the im*425 provements upon.it. The assessable value, for taxation, of a railroad track can only be determined by looking at the elements on which the financial condition of the company depends, its traffic, as evidenced by the rolling stock and gross earnings in connection with its capital stock. No local estimate of the fraction in one county of a railroad track running through several counties can be based upon sufficient data to make it at all reliable unless, indeed, the local assessors are furnished with the means of estimating the whole road.”
Again it is said by the supreme court of Wisconsin, in State v. Anderson, 90 Wis. 550:
“The utter impracticability, not to say impossibility, of treating it as real estate for the purposes of taxation, is illustrated, not only from the results that might follow tax sales, but in attempting to assess it as such under the provision that ‘all real property not expressly exempt from taxation shall be entered upon the assessment roll in the assessment district where it lies’ (R. S. sec. 1039) , and is Avell illustrated by the present case, Avhere the property claimed to be real éstate has a physical location in twenty-one assessment districts. Hoav could it be entered on the rolls by lots and blocks, or by reference to plat or deed, or how otherwise, under secs. 1045 and 1046? It is part on and part in the soil, and part in the air. How are the tAventy-one assessors to assess and value the tracts, ties, poles, trolley wires, etc., Avith certainty and in an intelligible manner in so many parcels? And are the tAventyone assessments to be folloAved by as many separate taxes and tax sales in case of nonpayment? It seems to us entirely clear that this property cannot be regarded as real estate for the purposes of taxation, and that it is not the ‘land’ and ‘real property’ described in these sections for assessment and taxation; and as already stated, it seems perfectly plain from the statute (secs. 1034, 1038, R. S.; ch. 285, laws of 1889), that this property is required by law to be assessed and taxed. * * * In vieAv of the use made of the specific lots upon which the power houses*426 are situated, and upon a fair construction of the statute, and with a view to carry out its evident meaning, we hold that such real estate, thus devoted to such uses, is not the real property required by section 1039 to be ‘entered upon the assessment roll in the assessment district where it lies’; it having acquired a peculiar character in the law by reason of having become a part of the entirety of a property subject only to assessment and taxation as an entirety, in the assessment district where the corporation owning it has its principal office and place of business.”
We are satisfied upon principle and authorities cited that the legislature has not exceeded its powers in providing, as it has done, for the assessment of the property of a railway company as a unit, and the distribution of the value thus ascertained over the entire line of the railway assessed, and to the different tax districts and municipalities into which the roadbed or right of way extends on a mileage basis; that when the values are thus ascertained and apportioned and the distributive share assigned to any one district or municipality; such proportionate share legally represents the value of the fractional part of the entire property situated in such district or municipality for the purposes of municipal taxation, and that the fundamental law as to uniformity is not violated by such a scheme of assessment and distribution of values of the entire property.
It is also contended that the sections of the statute providing for an assessment of railway property by the state board of equalization is void because of the alleged deprivation of property by taxation without due process of law, in that no sufficient notice is given of the meeting of the state board of equalization when assessing such property. This question has been under consideration for some time and is disposed of in an opinion in the case of Chicago, B. & Q. R. Co. v. Richardson County, post, p. 482. On the authority of that decision these sections in respect of the objection urged against them of which we have just made mention must be held valid. The constitutionality of these
The application for a peremptory writ of mandamus should be denied, which is accordingly done.
Writ denied.