111 Minn. 21 | Minn. | 1910
Lead Opinion
The state of Minnesota, plaintiff and respondent, brought an action against the defendant and appellant under chapter 8, p. 70, Laws 1891, as amended by chapter 180, p. 251, Laws 1901, to en■force taxes for the years 1901 — 1904. A second action was brought under the same statute to recover taxes for 1905. By stipulation, both actions were tried together. The assessment made by the board of equalization for each of the five years in question was approximately one million dollars. Statements had been made by defendant as required by the statute concerning the extent of lines, poles and instruments and duly filed each year. Warrants were drawn for the payment of the full amount of taxes each year. They were only partially paid by defendant on the ground that the assessment in each year was excessive and illegal, and that the fair cash value of the property assessed was about $600,000. Judgment was entered for plaintiff against defendant for the sum of $49,047.63. From that judgment this appeal was taken.
1. Chapter 8, p. 70, Laws 1891, provided for the taxation of telegraph and telephone companies as a system. The validity of the law
Defendant’s contention is: This, expressly, not impliedly, repealed the law of 1891. “Where the meaning of a statute is plain, it is the duty of the courts to enforce it according to its obvious terms. In such case there is no necessity for construction.” Thornley v. U. S., 113 U. S. 310, 313, 5 Sup. Ct. 491, 28 L. Ed. 999. And see Doe v. Considine, 6 Wall. 458, 479, 18 L. Ed. 869; Gibbons v. Ogden, 9 Wheat. 1, 188, 6 L. Ed. 23; City of Beardstown v. City of Virginia, 76 Ill. 34, 40; Hills v. City of Chicago, 60 Ill. 86, 90, 91; Market Co. v. Hoffman, 101 U. S. 112, 115, 25 L. Ed. 782; Crozer v. People, 206 Ill. 464, 69 N. E. 489, 491; Perteet v. People, 65 Ill. 230, 233; Newell v. People, 7 N. Y. 9, 98. The act of 1897 expressly and clearly repealed the law of 1891. There is no reason or justification for so misconstruing these plain words of repeal as to permit it to survive in part or in whole.
This argument of defendant we have not been able to regard as sound. The title of the act of 1897 previously quoted did not purport to relate to the taxation of telegraph companies. It was not broad enough to cover that subject. The construction for which defendant contends would render it unconstitutional. It is elementary that laws must be construed so as to effectuate legislative intention. This court has done this with respect to this law, and it previously sustained the act of 1897 as applicable to telephone companies only, and the law of 1891 as applicable in 1900 to telegraph companies only. Compare State v. Western Union Tel. Co., supra, with State v. Northwestern Tel. Exch. Co., 107 Minn. 390, 120 N. W. 534. It was the obvious intention of the legislature to tax the telephone
In State v. Moorhouse, 5 N. D. 406, 67 N. W. 141, the court was called upon to construe a provision in a taxing law similar to the one at bar. In that case Mr. Justice Corliss said: “It is obvious that the broad letter of this repealing’ act is in conflict with the whole spirit and purpose of the revenue law passed at the same time. ' As both cannot stand, it is obvious that we must give effect to that, which expresses the true legislative purpose. * * * To give effect to that purpose wé must limit the broad language of the repealing act so that it will not defeat such purpose.” The facts in that ease have especial significance here. We conclude that the absolute repeal must be construed as a qualified or partial repeal where, as here, the statute construed as a whole shows such to have been the real intent. 1 Lewis, Sutherland, St. Const. 521, and see Home v. Nolan, 21 Mont. 205, 53 Pac. 738. In re Rochester Water Commissioners, 66 N. Y. 413, and see page 422.
2. The defendant further contends that, if these two laws be construed as being both in force as hereinbefore set forth, the taxation of telegraph companies as a system is void because it discriminates in favor of telephone companies and is therefore void at least to the extent of the excess claimed. We are at a loss to see how this view «can be logically sustained. It is practically conceded that each law
On the one hand the propriety of taxing telegraph companies as a system is obvious. Such companies, the court judicially knows, are few in number and are engaged in interstate communication. They possess a taxable value derived from a combination of tangible and intangible property “united in use.” The state has a right -to tax a proper portion of that value, and has so undertaken to do.
On the other hand, the appliances, locations and methods involved in telephone communication are substantially different. Especially are the corporate organizations dissimilar.. It is true that at least-two of such organizations have operated between states and are in active competition with telegraph companies, which they closely resemble. But there are also1 in existence, and coming into existence, many smaller local • companies which operate entirely within .the state and often within a very small portion of the state. Their facilities are limited, and their business essentially mutual. They are legitimate subjects of taxation. To apply to them the provisions which would be economically admirable in the ease of transcontinental telegraph companies would be mistaken and futile. The taxation of their gross earnings is an obviously advantageous method. of compelling their fair contribution to the public treasury. It would be difficult to perceive that there is not a greater difference-between telephone companies and telegraph companies than between, for example, surface street railways and underground street railways. Yet such a distinction has been recognized. People v. New York, 199 U. S. 10, 25 Sup. Ct. 705, 50 L. Ed. 65. Cf. Savannah v. Savannah, 198 U. S. 892, 25 Sup. Ct. 690, 49 L. Ed. 1097.
3. Defendant’s next insistence is that “if the system of taxation as provided by the Minnesota statutes for telegraph companies— sections 1031-1034 — shall be construed (and as so construed applied to the years 1901 to 1905), so that it allows the state board to
With respect to the notice and lack of opportunity to be heard, we think the law is clear and simple and entirely adequate. The defendant had notice of the time of meeting of the state board of equalization prescribed by statute. This could not conflict with the constitutional requirement. Backus v. Fort St. Union Depot Co., 169 U. S. 557, 18 Sup. Ct. 445, 42 L. Ed. 853. Cf. English v. Territory of Arizona, 214 U. S. 359, 29 Sup. Ct. 658, 53 L. Ed. 1030. He was not of right entitled to be present when the tax was assessed. McMillen v. Anderson, 95 U. S. 37, 24 L. Ed. 335. The tax was collected by action in which both notice of judicial hearing and opportunity to interpose any defense available to defendant was afforded. See Winona & St. Peter Land Co. v. State, 159 U. S. 526, 16 Sup. Ct. 83, 40 L. Ed. 247. Central of Georgia Ry. Co. v. Wright, 207 U. S. 127, 28 Sup. Ct. 47, 52 L. Ed. 134, is entirely consistent.
The court there held that the assessment of a tax is judicial in its nature in so far as is required for the legal assertion of a power subject to an opportunity to appear as the circumstances of the case require. It did not hold that the power of taxation was judicial in
The established doctrine of this com t is that, while not every well grounded claim of over-valuation (Cf. Maish v. Arizona, 164 U. S. 599, 17 Sup. Ct. 193, 41 L. Ed. 567) is a valid defense in a judicial proceeding to collect a tax, yet overvaluation may be so excessive as-to avail as a defense at least pro tanto. See for example: County of Otter Tail v. Batchelder, 47 Minn. 512, 50 N. W. 536; State v. London & Northwest Am. Mort. Co., 80 Minn. 277, 83 N. W. 339. The exact line of demarcation or an accurate definition of what is. such an excessive valuation to so constitute a defense is not before us for determination, for all that is here necessary to determine and all that is here decided is that the warrant created a prima facie case of correct valuation which was rebuttable by proof of sufficient overvaluation, and that defendant has failed to show a substantial overvaluation or, indeed, a well-grounded claim of overvaluation.
4. The assessment actually made presents a valuation of substantially a million dollars on defendant’s property for each year involved. Defendant, however, insists that the testimony, taken as a. whole, demonstrated that this valuation was unreasonably excessive, and that the actual value did not in fact exceed in amount from $450,000 to $600,000. The criterion of value adopted by those witnesses was the cost less deterioration. For example, one. witness testified that the cos. of reproduction of the property for 1903 including installation would have been $979,673.70. “Our experience'
For four reasons, each of which is sufficient, we regard this testimony as inconclusive.
In the first place, the cost of replacing property with allowances for deterioration, with that cost and that deterioration accurately determined, is neither the final nor the exclusive standard of the valuation of property for taxation. Atchison, Topeka, & S. F. Ry. Co. v. Sullivan, 173 Fed. 456; Western Union Tel. Co. v. Taggart, 163 U. S. 1, 16 Sup. Ct. 1054, 41 L. Ed. 49. Cf. State v. Western Union Tel. Co., 96 Minn. 15, 104 N. W. 567. The facts defendant established are entitled to consideration, but do not control. The true rule is that, in ascertaining the true value in money of property for purposes of taxation in the hands of its owner, every fact or circumstance, brought to the attention of the person, officer, or board charged with the duty of fixing that value, and which in its nature bears on the question, should be considered. Bradbury, C. J., in State v. Halliday, 61 Oh. St. 352, 56 N. E. 118, 49 L.R.A. 427. The board of equalization, for example, was entitled to consider the market value of defendant’s property, not at a forced sale, nor at auction sale, but a fair sale by private contract. Hurd v. Cook, 60 N. J. L. 70, 36 Atl. 892. It was in particular entitled to consider what the property was worth for purposes of income. “That the income-producing capacity of an article is an important factor in determining its value is so obvious as to seem beyond the bounds of controversy,” said Bradbury, C. J., in State v. Halliday, supra. And see Crescent v. Board, 51 La. An. 335, 25 South. 311. This principle has been repeatedly applied by the federal supreme court
The practical significance of this proposition appears upon referring to defendant’s omission to include in its estimates all its property which was assessable. It consistently but. erroneously charged itself with nothing for intangible property to change the figures, the effect of .which on income will be subsequently set forth, justifying an assessment at a considerable sum. Of course, the state was not bound by an opinion of defendant’s experts that this property had no value. Nor did defendant list its rights to put its poles or conduits in the ground. ■ That its privileges to maintain its lines pursuant to arrangements with railroads, with cities or with others were valuable and were legitimate subjects of taxation under the reiterated decision of the federal supreme court, it is idle to deny. If defendant’s proof be conceded to have demonstrated the facts for which defendant contends, it does not justify its deduction that the valuation resulting was adequate or was binding on the board of equalization or upon the courts. No basis is afforded by the record for presuming that the board did not consider other elements or criteria of value, and that these did not justify its conclusions. The prima facie case made out by the introduction of the tax warrant was not destroyed by defendant’s proof.
In the second place, defendant’s calculations are based on a formula whose correctness has not been established. This is demonstrated by the witness’ own statement of how this rule was derived. The witness.had stated that the average age of lines in Minnesota was eight years. He was then asked how this result was reached. He replied: “By taking that as the result of a very close examination that was made some’ time ago in a case similar to this, and it was found as a general proposition that the average age — not the life — • of a line in the system would show about eight years, allowing for
It is evident that the observation upon which the rule was based was exceedingly limited; that the time when experience was consulted was in an indefinite past; that the place and conditions generally of the experiment were unrevealed. One fact in particular necessitates a valuation of the estimate of deterioration, namely, the extent to which new lines have been built and repairs made. There is no reference whatever to the relative number of new lines in Minnesota during this testing period and in the place where the experiment was performed. This increase, as will hereafter appear, was material.
It also affirmatively appears that with advancing years the standard of maintenance of the plant was improved. The report of the president for 1906 says: “The large increase in the revenues for the year has warranted a continuance of the policy of making liberal appropriations from earnings for raising the standard and improving the stability and operating efficiency of the lines, by adding to the number of poles per mile on trunk lines, replacing small poles with larger ones, substituting copper for iron wire in reconstruction work, and renewing insulation and cross-arms, thus increasing the reliability of the service and developing the traffic, which shows an increase of over four million in the number of messages transmitted during the year. The expenditures for these purposes and for the general maintenance and repair of the lines during the year amounted
In the third place, defendant’s valuation was not controlling because of the testimony of its own witness that its appraisal was for less than the full value of its property as the law required. This consideration as appears in the testimony of some of defendant’s principal witnesses, is the estimate of value on which defendant founds its claim of which the following is an illustration: “Q. What has been your idea in making out those statements [referring to the statements of property returned to the state auditor] ? To give the actual full value in the state, or to give the value as you thought it ought to be, for the purpose of taxation? A. For the purpose of taxation. Q. And in that respect you have assumed that it ought to be taxed on about fifty per cent, basis, have you not; about that proportion ? A. What is that ? Q. The valuation you gave is about fifty per cent, of the full value. That is true, is it not? A. Yes.” Undoubtedly, the whole of the testimony on this point, not all of which is favorable to the state, must be considered together. But, as so construed, the board and the trial court were entitled to conclude that it substantially tended to destroy the foundations of defendant’s case.
In the fourth place, the figures which defendant itself has supplied, tend to justify the valuation of about a million dollars, placed by the board in a legal sense upon defendant’s taxable property and sustained by the trial court, although they may not demonstrate in
5. A number of assignments of error are addressed to rulings of the trial court on evidence. All have been examined. None have been found to be of sufficient merit to constitute reversible error or to justify an enlarged statement.
6. Chapter 82, p. 98, Laws 1907, did not apply to the case at bar.
The judgment entered must be affirmed, except in so far as it included the allowance of interest under the act of 1907. The judgment should be modified accordingly.
Modified.
See opinion after reargument, infra, page 36.
Rehearing
The state’s petition for a reargument of the question whether it was not entitled to recover interest having been granted, on May 13, 1910, the following opinion was filed:
On reargument the state insisted that the original opinion in this case by this court was in error in holding that chapter 82 of the Laws of 1907
In Western Union v. State, 146 Ind. 54, 44 N. E. 793, and Western Union Tel. Co. v. Indiana, 165 U. S. 304, 17 Sup. Ct. 345, 41 L. Ed. 725, it does not appear that the taxes had not been assessed and did not become delinquent until after the passage of the statute
So the facts in League v. Texas, 184 U. S. 156, 22 Sup. Ct. 475, 46 L. Ed. 478, tend to differentiate it from the case at bar. There the new law was enacted in 1897. In 1884 the land had become forfeited to the state for taxes. The forfeiture became absolute' in 1886. The only principle that was necessarily involved in the decision accordingly was that the state had waived its right of forfeiture on condition that taxes, with interest, should be enforced against the land. The land having, become the property of the state, the state might have prescribed the terms for sale or for redemption. And in prescribing the terms for redemption it could, of course, have determined upon any rate of interest. In the actual decision of the case, however, Mr. Justice Brewer did not rest the decision on this ground, but on another and different one, namely: “As the state may, in the first instance, enact that taxes shall bear interest from the time they become due, so, without conflicting with any provision of the federal constitution, it may in like manner provide that taxes which have become delinquent shall bear’ interest from the time the delinquency commenced. • This is adding no novel or extraordinary penalty, for interest is the ordinary incident to the nonpayment of obligations.”
In Webster v. Auditor General, 121 Mich. 668, 80 N. W. 705, an amendment to the tax law of 1893 by the act of 1899 was sustained. That amendment changed the rate.of interest payable on delinquent taxes from eight per cent, per annum to one per cent, per month, and increased the charge for advertising from seventy cents to one dollar. It was held that this law applied to all taxes delinquent at the time of such enactment, that the property owner who owed delinquent taxes had no vested right to have the rate of interest thereon remain unchanged, and that the law was constitutional. The court, by Moore, J., said, at page 674 of 121 Mich., and page 707 of 80 N. W.: “It is the duty of the landowner to pay his taxes, and to pay them when they become due. Incidental to the power to tax is the power to enforce payment. Because the state has been liberal in making provision for the redemption of the lands from the lien created by
That under these authorities the former holding of this court must be reversed is clear, unless sufficient basis for differentiation is afforded by the fact that the case at bar is peculiar, because in the ■cases cited no'proceedings for the enforcement or collection of taxes had been initiated and were pending at the time of the passage of -the law imposing the interest. In the instant case, such proceedings were pending when the act imposing interest was enacted. It is to be noted, however, that chapter 82 of the Laws of 1907 applied only to sums due the state as taxes which remained unpaid for a period «of thirty days, and which remained unpaid for thirty days after the passage of the act. In other words, the defendant had an opportunity for thirty days after the passage of the act in which to pay the delinquent taxes, and to thus avoid the payment of any interest. Under these conditions we-are unable to perceive that the general rule as laid down by the authorities stated does not govern this case.
The rate of twelve per cent, per annum was not unreasonable or excessive. It is the current rate of interest which ordinary real estate taxes bear after sale, in addition to a fifteen per cent, penalty imposed on nonpayment.
Accordingly the previous judgment entered herein is modified, in so far as it excludes the allowance of interest under the act of 1907.
R. L. Supp. 1909, §§ 976-1 to 976-3.
