106 Minn. 176 | Minn. | 1908
The state, claiming that the Minnesota & International Railway Company failed to report the sum of $349,792.85, which should have been reported as a part of its gross earnings for the years 1899 to 1904, inclusive, brought this action to recover the gross earnings tax. 'The amount in controversy consists of seventeen items. The trial court found that items eleven and twelve constituted a part of the gross earnings and were taxable, but that the other fifteen items were not. Both parties appealed.
The railway company was operating under the provisions of chapter 111, p. 302, Sp. Raws 1873 (section 1667, G. S. 1894), which in part reads: “ * * * and shall from and after the expiration of ten years from the said first day of January, one thousand eight hundred and seventy-two, on or before the first day of March of each and every year, pay into the treasury of this state three per cent, of the gross earnings of said railroad, and the payment of such per centum annually as aforesaid shall be and is in full of all taxation and assessment whatever. And for the purpose of ascertaining the .gross earnings aforesaid an accurate account of such earnings shall be kept by said company, an abstract whereof shall be furnished by :said company to the treasurer of this state on or before the first day
In that case the charter of the Minnesota & Pacific Railroad Company was under consideration, and the act authorizing the organization of that company provided that the company should, on or before the first day of March of each year pay into the treasury of the territory or future state three per centum of the gross earnings of the railroad, and contained the following provision: “For the purpose of .ascertaining the said earnings an accurate account shall be kept by said company of all receipts and expenditures on account of the operation of said railroads, and abstracts thereof shall be furnished by said company to the treasurer of the territory or state.” [Raws 1857, Ex. Sess.' p. 12, c. 1, sube. 1, § 18.] The court decided that the annual rental of $40,000, paid by the Northern Pacific Railroad Company for the right to run its trains over defendant’s lines between certain stations, did not constitute a part of the gross earnings of the Manitoba Company, and the conclusion was based upon the ground that the express language of the act restricted the gross earnings to those receipts and expenditures on account of the operation of the railroad; and upon the further ground that, if the Northern Pacific Railroad Company was compelled to pay three per cent, upon its gross earnings received in operating that portion of the track leased, the result would be double taxation if the state were permitted to recover three per cent, upon the annual rental received by the Manitoba Company.
The statute under which respondent railway company was doing business from 1899 to 1904 did not contain any restrictive language with reference to operating the railroad. If we were disposed to make a distinction on this account in the meaning of the two acts, there is good authority for holding that under the statute involved in the present appeal all income, or earnings of whatever nature, received by the railway company should be included within the term “gross earnings.” Such was the view apparently taken by the supreme court of Wisconsin in State v. McFetridge, 64 Wis. 130, 24 N. W. 140. The Wisconsin statute provided that railroads should pay, in lieu of all other taxes, a certain per centum of their gross earnings, and it
However, the decision in State v. St. Paul, M. & M. Ry. Co., supra, was filed March 19, 1883. It has never been overruled or questioned, so far as our information goes, and in 1903 the legislature submitted to the people a constitutional amendment, which was adopted and became effective in 1905. Chapter 253, p. 375, Laws 1903,' is the enabling act under that amendment, and is the present law upon the subject of gross earnings taxation. That amendment and act provides, in section 1, that railroad companies shall pay a sum of money equal to four per cent, of the gross earnings derived from the operation of such line of railway within this state. In view of that decision it would seem that the words of limitation would not have been inserted if it had been the purpose of the legislature and the people, in adopting the amendment, to include all receipts from whatever source. But it should not be inferred that, by introducing the words “derived from the operation of such line of railway,” it was intended to apply the strict construction now contended for by respondent company. In that case the court was considering the effect of operating trains by one railway company over the tracks of another. The Northern Pacific Company had leased the right to operate its trains upon the Manitoba tracks. With reference to that particular state of facts, the court concluded it was not the intention of the act to require the lessee to pay the per centum upon the amount earned in operating trains, and at the same time require the lessor to pay upon the amount of the rental. That case is decisive upon that point, and
The operation of a railroad is not necessarily restricted to operating trains upon railway tracks. We believe it to have been the purpose of the legislature to require railroad companies to pay into the state treasury the stated percentage of the amount of earnings received in connection with all operations reasonably within the powers conferred upon them by the corporate acts. Such companies are organized and conducted primarily for transportation purposes, but they receive a considerable income from other sources incidental to the transportation business, though not directly from the operation of trains. We believe the proper meaning of the act under consideration to be that, when a railroad company is engaged in work reasonably within its charter powers, the receipts from such sources constitute gross earnings in the operation of the railroad. So considered, the additional reference to the operation of the road in the Minnesota & Pacific Railway Company’s charter, and in the constitutional amendment, and in the act of 1903, are not significant
We now proceed to a consideration of the items involved in this controversy, which may be classified as follows.
Cause remanded for further proceedings in accordance with this opinion.
On January 8, 1909, the following opinion was filed:
Application for reargument was granted in this case upon the question whether item No. 8, considered under division 2 of the opinion, constituted “gross earnings,” within the meaning of the statute. This item consisted of gross receipts from labor and work train service and material furnished in maintaining, laying, surfacing, extending, and taking up spur tracks.
A reconsideration of this item leads us to the conclusion that our former holding was erroneous in including it among the gross earnings. The purpose of constructing and repairing spur tracks for private parties was to secure facilities for the receipt of freight at the cost price. The railway company furnished the material and constructed these spur tracks at cost, and cheaper than could be done by private parties. There was no intention to make any profit out of such transactions and this class of services is distinguishable from the rental of equipment or work trains.
To this extent the decision heretofore filed is modified.
See opinion on page 184, for modification in respect to this item.