64 Neb. 514 | Neb. | 1902
The relators obtained an alternative writ of mandamus from this court, directed to the respondents, as members of the city council and board of equalization of the city of Omaha, to compel them to reconvene as a board of equalization and consider and act upon the complaints of the relators alleging inequalities in the assessment of taxes for the year 1992. The respondents, made return and answer
It is alleged in the alternative writ that “said tax commissioner duly completed said assessment roll for said 1902 city taxes, and duly transmitted the same to the city council for equalization; that by said assessment roll so submitted to said city council for equalization the personal property of said Omaha Street Railway Company was assessed at $550,000, of said Omaha Water Company at $575,000, of said Omaha Gas Company at $400,000, of said Nebraska Telephone Company at $109,310, and of said New Omaha Tliomson-Houston Electric Light Company at $117,500; that no valuation or assessment whatever was placed upon, or made against, the franchises in said city of any one of said corporations, but said several franchises were omitted from said assessment, except as to said electric light company, as aforesaid, although each and all of said franchises are, and then were, of great value, that of said street railway company having a fair cash value of, to wit, $4,000,000, of said water company of, to wit, $1,000,-000, of said gas company of, to wit, $1,050,000, of said telephone company of, to wit, $1,000,000, and of said electric light company of, to wit, $140,000, that said 1902 assessment was made upon property generally in said city, except the property of said public-service corporations, on a basis of forty per cent, of its fair cash value; that said assessment upon the property of said five corporations was, and is, about ten per cent, of the fair cash value of their property and franchises, as will hereinafter more fully appear”; that the relators duly fthed written complaints with the board of equalization to procure an equalization of the assessment of the property and franchises
The referee, in his report, after stating at some length the facts found by him from the evidence in regard to the action of the board upon the said complaints, finds “that the action of the board of equalization overruling the complaints fthed upon procurement of the Real Estate Exchange did not estop the relators with reference to their five complaints, and was in no sense a matter of adjudication which forbade inquiry into the merits of the complaints of said relators. Upon said five complaints I find, further, that the action of the board in fixing a time for the hearing of the complaints by relators was a sanction of the sufficiency of said complaints in form and substance, and that the conduct of Hascall, Mount, Trostler, White-horn and Karr, who alone have answered in this case, was capricious, willful and arbitrary with respect to the complaints fthed by the relators and that thereby said relators were deprived of the right to have reviewed the proceedings of the said board of equalization with reference to their above complaints by error proceedings, for the want of a. final judgment, and that therefore, irrespective of the final result of this action, because of other considerations hereafter to be set forth, the costs of the case should be taxed against said Isaac S. Hascall, David T. Mount, Simon Trostler, William B. Whitehorn and Myron D. Karr, and judgment rendered accordingly.” This finding is excepted to by the respondents as not being supported by the evidence. We do not find it necessary to comment at large upon the evidence. It is sufficient to justify the findings of the referee, and the exceptions to the findings of fact by the referee are therefore overruled.
The referee’s conclusions of law, which are excepted to by the relators, are as follows:
“First. The manner in which companies and associations incorporated under the laws of this state (except insurance companies) shall be'assessed, is prescribed by section 32, chapter 77, Compthed Statutes, and this method I*518 find is exclusive of any other method. It is, however, abortive, if not unconstitutional, as to the four corporations, exclusive of the telephone company, which has no debt; for it requires the market or real value of the incorporate stock to be assessed after deducting corporate indebtedness, and this corporate indebtedness is twice deducted,—once in fixing the market or real value of the stock and again by an actual subtraction required by the statute.
“Second. The alternative writ, even as amended, shows that the basis of valuation for assessment purposes in Omaha is forty per cent, of the real value of all property assessed, except the property of the said corporations, and its mandate requires the respondents to ascertain and employ the basis employed generally, and to bring the property of the'five public-service corporations above referred to to that standard. By sections 4 and 5, article 1, chapter 77, Compthed Statutes, personal and real property is required to be assessed at its fair value. The peremptory writ must follow the alternative writ, and thereby the respondents would be required to violate the express provisions of sections 4 and 5 aforesaid if the averments in the alternative writ are true.
“Third. It is extremely doubtful whether the city council of the city of Omaha, sitting as a board of equalization, ..has power to review the proceedings of the board of review. I suggest that this is doubtful,' without definitely committing myself on that proposition. I do not hesitate, however, to recommend, and do recommend, that in the exercise of its discretion this court shall refuse to issue a peremptory writ, and that it dismiss this action at the costs of the answering respondents, Isaac S. Hascall, David T. Mount, Simon Trostler, William B. Whitehorn and Myron D. Karr. All of which is respectfully submitted.”
It was the duty of the board of equalization to hear and determine the merits of the complaints in question. The assessment is made by the commissioner and his deputies, and is reviewed and completed by the board of review.
When the capital stock of a corporation has a market value, that value may be taken as a basis to ascertain the value of its intangible property, since the value of the stock is the net value of its assets, and is found by deducting its indebtedness from the gross value of its tangible and intangible property; but when the capital stock has no market value it can not be used as a basis in ascertaining the value of the assessable property and franchises of the corporation, since the value of the intangible property must be ascertained before the true value of the stock can be determined in the sense in which the term is used in the statute quoted. But our constitution provides, in express terms, that the franchises of corporations must be assessed for taxation; and when, as in this case, it does not appear that the capital stock has any market value, its assessable value, after deducting the tangible property of the corporation, is the same as the value of its franchises. The legislature may direct the manner of ascertaining the value of property and franchises; but it can not prescribe rules that prevent the assessment of the property and franchises of corporations on an equality with property in general in proportion to value.
The constitution (art. 9, sec. 1) provides: “The legislature shall provide such revenue as may be needful, by levy
In State v. Duluth Gas & Water Co., supra, it was held that the requirement of the statute that the indebtedness
The referee’s second conclusion of law is that the peremptory writ must follow the alternative writ, and, as the alternative writ shows that the basis of valuation for assessment purposes in Omaha is forty per cent, of the real value of the property assessed, to issue the peremptory writ as prayed would be to require respondents to violate the express provisions of the statuta
The statute provides: “No other pleading or written allegation is allowed, than, the writ and answer. These are the pleadings in the case, and have the same effect and are to be construed and may be amended in the same manner as pleadings in a civil action; and the issues thereby joined must be tried, and the further proceedings thereon had in the same manner as in a civil action.” Code of Civil Procedure, sec.'653. And section 647 prescribes the form of the alternative writ, and provides that “the peremptory writ must be in a similar form.” No doubt the particular tiling commanded by the peremptory writ must be found in “a similar form” in the alternative writ; that is, nothing
It is therefore ordered that the peremptory writ issue as prayed. Costs taxed to respondents, Isaac S. Hascall, David T. Mount, Simon Trostler, William B. Whitehom and Myron D. Karr. Referee allowed $534.70, to be taxed as a part of the costs in the action.
Writ awarded.
Opinion of Referee.
The proper scope of a report as referee precludes extended discussions, for such a report should present only ultimate conclusions of law and fact. In the trial of this case, there were discussed, very ably and at great length, certain principles which I deem it my duty to present to the court in elucidation of my report, and I adopt this as the least objectionable means of so doing.
The most important question presented, was as to the manner in which corporations should be assessed so as to include the value of their franchises; since, in cases of public service, corporations like street railway companies, the franchise to use the streets is of paramount value, and yet, by reason of intangibility, the value of this franchise is very difficult of ascertainment. It is provided by section 32, article 1, chapter 77, Compthed Statutes, in effect that the value of the capital stock of all companies and associations except insurance companies shall, for the purposes of assessment, be ascertained by deducting from the market value of the entire stock the assessed value of the tangible personal and real property, assessed as is the property of individuals, and, by deducting also from said market value what may be designated as the fixed indebtedness of the company or association to be assessed. The deduction of
In Adams Express Co. v. Ohio State-Auditor, 166 U. S., 185, 220, the opinion was delivered by Judge Brewer, in the course of which he said:
Now, it is a cardinal rule which should never be forgotten that whatever property is worth for the purposes of income and sale it is also worth for the purposes of taxation. Suppose such a bridge were entirely within the territorial limits of a state, and it appeared that the bridge itself cost only $1,277,000, could be reproduced for that sum, and yet it was so situated with reference to railroad or other connections, so used by the traveling public, that it was worth to the holders of it in the matter of income $2,900,000, could be sold in the markets for that sum, was therefore in the eyes of practical business men of the value of $2,900,000, can there be any doubt of the state’s power to assess it at that sum, and to collect taxes from it upon that basis of value? Substance of right demands that whatever be the real value of any property, that value may be accepted by the state for purposes of taxation, and this ought not to be evaded by any mere confusion of words. Suppose an express company is incorporated to transact business within the limits of the state, and does business only within such limits, and for the purpose of transacting that business purchases and holds a few thousand dollars worth of horses and wagons, and yet it so meets the wants of the people dwelling in that state, so uses the tangible property which it possesses, so transacts business therein that its stock becomes in the markets of the state of the actual cash value of hundreds of thousands of dollars. To the owners thereof, for the purposes of income and sale, the corporate property is worth hundreds of thousands of dollars. Does substance of right require that it shall pay taxes only upon the thousands of dollars of tangible property which it possesses? Accumulated wealth will laugh at the crudity of taxing laws which reach only the one and ignore the other, whthe they who own tangible property not organized into a single producing plant will feel the
There is a seeming injustice in taxing corporations which are largely indebted, and whose earnings are insufficient to pay the accruing interest, as is alleged to be the fact in the present case, to the full extent of the value of all their property and privtheges^ without regard to their indebtedness, yet it has never been the policy of the legislature to make any discrimination in favor of individuals on this account, and corporations can not claim an exemption from taxation when, under like circumstances, an individual would not also be exempt to the same extent. The mode of valuation adopted by the board of equalization assumes: 1st. That the value of the aggregate shares of capital stock is equal to the value of all the property, including the franchise, belonging to the corporation, when it is not indebted. 2d. That when the corporation is indebted, the indebtedness proportionally reduces the value of the shares of capital stock. 8d. That the value of the debt is determined by the value of that belonging to the corporation from which its payment can be enforced, so that however great the nominal amount of the debt, its actual value can never exceed that sum. To illustrate: where a corporation is free from debt, and the aggregate value of its shares of stock is, say, $150,000, it is assumed that the value of its capital stock, including its franchise, is $150,000. If the same corporation, still retaining the same property, is, however, indebted $50,000, this will reduce the aggregate value of its shares of stock to $100,-000; but as the law does not exempt corporations or individuals from the payment of taxes on account of indebtedness, it would not be accurate to tax the corporation at this amount, because to do so would be to exempt it to the extent of its indebtedness. To ascertain, therefore, what would be the aggregate value of its shares of stock, if the corporation were free from debt, it is necessary to add the value of the debt to the value of the shares of stock. If the corporation is, in the given case, indebted $150,000, the shares of stock will be Avorth nothing, but the value of the debt will be $150,000, which is the value of that from which its payment can be enforced, and so, if the corporation is indebted in any greater sum the value of the debt will still be only $150,000.
It may be assumed for all practical purposes, and it is perhaps absolutely true, that every railroad in Illinois has a bonded indebtedness secured by one or more mortgages. The parties who deal in such bonds are generally keen and far-sighted men, and most careful in their investments. Hence the value which these securities hold in market is one of the truest criteria, as far as it goes, of the value of the road as a security for the payment of those bonds'. These mortgages are; however, liens on the road, and, taking precedence of the shares of the stockholder, may or may not extinguish the value of his shares. They must "in any event affect that value to the exact amount of the aggregate debts. For all that goes to pay that debt and its interest diminishes pro tanto the dividend of the shareholder and the value of his share. It is therefore obvious, that, when you have ascertained the current cash value of
At this point it may be profitable to note defects which have been actually found to exist in statutes like our own on the subject. In Michigan there was a statutory provision for the assessment of corporations very like section 82, chapter 77, Compthed Statutes,—the requirement as to deduction of indebtedness involving the same principles. In Detroit Citizens’ Street Railway Co. v. Common Council, 85 N. W. Rep. [Mich.], 96, the fifil paragraph of the syllabus is as follows:
The special provision of Compthed Laws, section 3842, for the assessment of corporations in general, that the value of stock, less the real estate, should be assessed, as well as the cash value of all the personal property, less bona-fide indebtedness, is unconstitutional and void, since it would result in double taxation if there were no real estate and no debts; and besides, the provision as to deducting debts is invalid, because it does not conform to the usual method of deducting debts from credits only.
Section 27, article 1, chapter 77, Compthed Statutes, limits deductions on account of indebtedness in Nebraska to taxable credits, and not only should this fact be considered with reference to the foregoing language but it should be borne in mind- in respect to the language of other cases hereinbefore referred to. As section 32, chapter 77, Compthed Statutes, now stands, it is applicable only to corporations formed within this state. The Omaha Water Company is not within this category, consequently there might be some other method adopted for its assessment, but I think a writ should not issue simply with reference to the assessment of this corporation for if forty per cent, is found to be the standard of valuation the claimed equalization could not be made as to this corporation for the rea
Again, the Nebraska Telephone Company is a domestic corporation, and has its principal office or place of business in the city of Omaha. Its- stock and franchise should therefore be listed and taxed in that city. Compthed Statutes, ch. 77, sec. 8. It is stated in the brief submitted on behalf of said corporation that its lines extend into Iowa and South Dakota as well as into fifty-seven counties in this state. There is no special provision in our statutes to adequately meet, these conditions. If this telephone company is assessed as the statute now requires the listing and taxation of its franchises and capital stock to be done, such listing and assessment must be in Omaha alone, notwithstanding the fact that the principal value of the company’s property is probably owing to use..of rural and urban public highways in fifty-seven counties in this state as well as the use of highways in the states of Iowa and South Dakota.
It has been held many times by the supreme court of the United States that the property of railroads, telegraph, sleeping car and express companies, engaged in interstate commerce,' may be valued as a unit for the purpose of taxation, and that a proportion of the whole, fairly and properly ascertained may be taxed by the state in which it is situated. Western Union Telegraph Co. v. Taggart, 163 U. S., 1; Pittsburg, C., C. & St. L. R. Co. v. Backus, 154 U. S., 421; Pullman’s Gar Co. v. Pennsylvania, 141 U. S., 18; Western Union Telegraph Co. v. Attorney General, Massachusetts, 125 U. S., 530; Delaware Railroad Tax, 18 Wall. [U. S.], 206, 208; Erie R. Co. v. Pennsylvania, 21 Wall. [U. S.], 492. It would seem that the necessary authority for apportionment by legislative action i's recognized in the above cases. In this state there has been no attempt to avail ourselves of that authority.
In argument it was suggested that if a writ should issue the equalization by the board of equalization, as to the
From the foregoing considerations I conclude that before the stocks of corporations, which include their franchises, can, be equitably and justly taxed, there must be legislation correcting the inefficiency and crudity of section 32, chapter 77, Compthed Statutes, in the respects indicated, and there should be such additional legislation as will apportion properly the taxation of corporations situated as are the Omaha Water Company and the Nebraska Telephone Company;—the one a company organized in another state; the other doing business in two other states, as well as in fifty-seven different counties in this state.
Robert Ryan, Referee.
For referee’s opinion see p. 524.