Central Pacific R. Co. v. California
162 U.S. 91 (1896)

Annotate this Case

U.S. Supreme Court

Central Pacific R. Co. v. California, 162 U.S. 91 (1896)

Central Pacific Railroad Company v. California

No. 559

Argued January 15-16, 1896

Decided March 18, 1896

162 U.S. 91

ERROR TO THE SUPREME COURT

OF THE STATE OF CALIFORNIA

Syllabus

The Central Pacific Railroad Company, being required by the laws of California to make returns of its property to the Board of Equalization for purposes of taxation, made a verified statement in which, among other things, it was said: "The value of the franchise and entire roadway, roadbed, and rails within this state is $12,273,785." The Board of Equalization determined that the actual value of the franchises, roadway, roadbed, rails, and rolling stock of the company within the state at that time was $18,000,000. The company not having paid the taxes assessed on this valuation, this action was brought by the state to recover them.

Held:

(1) That the presumption was that the franchise included by the company in its return was a franchise which was not exempt under the laws of the United States, and that the Board had acted upon property within its jurisdiction.

(2) That if the Board of Equalization had included what it had no authority to assess, the company might seek the remedies given under the law to correct the assessment so far as such property was concerned, or recover back the tax thereon, or, if those remedies were not held exclusive, might defend against the attempt to enforce it.

(3) Where the property mentioned in the description could be assessed, and the assessment followed the return, the company ought to be

Page 162 U. S. 92

held estopped from saying that the description was ambiguous, and this notwithstanding the fact that the statement was made on printed blanks, prepared by the Board.

The decision of the supreme court of the state that the findings of the trial court on the question of whether the franchises taxed covered franchises derived from the United States was conclusive, and is binding on this Court.

The fact that a court, after giving its decision upon an issue, gives its opinion upon the manner in which it would have decided the issue under other circumstances does not constitute an error to be reviewed in this Court.

The Central Pacific company is a corporation of California, recognized as such by the acts of Congress granting it aid and conferring upon it federal franchises, and it was not the object of those acts to sever its allegiance to the state or transfer the powers and privileges derived from it, nor did those consequences result from the acceptance of the grant by the corporation.

The property of a corporation of the United States may be taxed by a state, but not through its franchise.

Although a corporation may be an agent of the United States, a state may tax its property, subject to the limitation pointed out in Railroad Co. v. Peniston, 18 Wall. 6.

It is immaterial in this case whether the railroad company operates its road under the franchise derived from the United States or under that derived from the state.

When it is considered that the Central Pacific company returned its franchise for assessment, declined to resort to the remedy afforded by the state laws for the correction of the assessment as made if dissatisfied therewith, or to pay its tax and bring suit to recover back the whole or any part of the tax which it claimed to be illegal, its position is not one entitled to favorable consideration; but, without regard to that, the Court holds, for reasons given, that the state courts rightly decided that the company had no valid defense to the causes of action proceeded on.

This was an action brought in the name of the the State of California against the Central Pacific Railroad Company in the Superior Court of the City and County of San Francisco under section 3670 of the Political Code of that state to recover a certain sum of money alleged to be due the state and various other sums of money alleged to be due eighteen counties of the state for taxes for the fiscal year 1887 upon the assessment of the state Board of Equalization, judgment being demanded for the several sums of state and county taxes delinquent and unpaid as stated in the complaint, with

Page 162 U. S. 93

five percent therein added for delinquency and nonpayment, and interest from the time of such delinquency, and also for costs of suit and attorneys' fees, as allowed by law.

The provisions of the state constitution on the subject of revenue are found in article XIII, and sections 1, 4, and 10 of that article and sections 3664-3671 of the Political Code of California are given in the margin. *

Page 162 U. S. 94

The complaint contained 19 counts on nineteen alleged causes of action, and each count averred that the defendant was at all times therein mentioned a corporation organized

Page 162 U. S. 95

and existing under the laws of the State of California and engaged in operating a railroad in more than one county of that state, and that, on August 13, 1887, the State Board of

Page 162 U. S. 96

equalization, for the purposes of state and county taxation for the fiscal year ending June 30, 1888, assessed to defendant, then the owner and operator thereof in more than one county

Page 162 U. S. 97

in said state, the franchise, roadway, roadbed, rails, and rolling stock of defendant's railroad, then situated and being within said state at the sum of eighteen million dollars.

Page 162 U. S. 98

The first count then averred that within ten days after the third Monday in August, 1887, the State Board of Equalization apportioned the total assessment of the franchise, roadway,

Page 162 U. S. 99

roadbed, rails, and rolling stock of defendant to the counties in the state in which the railway was located, in proportion to the number of miles of railway laid in such

Page 162 U. S. 100

counties, and the amounts of the total assessments so apportioned by the Board to those counties, and the number of miles of defendant's railway laid in said counties, were specifically set forth.

Page 162 U. S. 101

The count then proceeded as follows:

"V. That within ten days after the third Monday in August, 1887, said State Board of Equalization did transmit to each of the county auditors of said counties a statement showing the length of the main track of defendant's railway within the counties of said auditors, respectively, with a description of the whole of defendant's railway track within the counties of said auditors, respectively, including the right of way sufficient for identification, the assessed value per mile of the same, as fixed by said pro rata distribution per mile of the said assessed value of the whole franchise, roadway, roadbed, rails, and rolling stock of defendant's railway in said state, and the amount apportioned to the counties of said auditors, respectively. . . ."

"VI. That thereafter, and prior to the first Monday in October, 1887, the county auditor of each of said counties did enter said statement so transmitted to him upon the assessment roll of his county, and did enter upon said assessment roll of his county the said amount of said assessment apportioned by said State Board of Equalization to this county in the column of the assessment roll of his county which showed the total value of all property of his county for taxation. . . ."

"VII. That thereafter, and on the first Monday of October, 1887, the Board of Supervisors of each of said counties did levy the state tax of said State of California according to the rate theretofore fixed for such state tax for the fiscal year ending June 30, 1888, by said State Board of Equalization, upon the taxable property in its county, including the property of defendant assessed and apportioned to its county as aforesaid, and the taxes so levied in all of said counties for the purposes of state taxation upon said property of defendant assessed and apportioned to said counties as aforesaid was the sum of $109,440."

"VIII. That upon the 17th day of September, 1887, said State Board of Equalization did fix the rate of state taxation for the fiscal year ending June 30, 1888 at the rate of $0.608 on each one hundred dollars. "

Page 162 U. S. 102

"IX. That defendant has never at any time paid said state tax, amounting to said sum of $109,440, nor any part thereof; that said state tax became and was delinquent on the last Monday in December, 1887 at six o'clock p.m., and upon and at the time of, and by reason of, such deliquency, five percent of said state tax, to-wit, the sum of $5,472, was, by the Comptroller of said state, added to said state tax, and no part of said $5,472 so added for delinquency has ever been paid by defendant."

"X. That prior to the third Monday of October, 1887, the said State Board of Equalization did prepare, and transmit to the Comptroller of said state, a Duplicate Record of Assessment of Railways, and a Duplicate Record of Apportionment of Railway Assessments, for the fiscal year ending June 30, 1888, both certified by the chairman and clerk of said State Board of Equalization, and which said duplicate records included the said assessment of defendant's said property, and the said apportionment of the assessment of defendant's property to the said counties."

"Before the fourth Monday of October, 1887, said Comptroller did compute at the rates of taxation fixed and levied as aforesaid, and enter in separate money columns in the said Duplicate Record of Apportionment of Railway Assessments, the respective sums, in dollars and cents, to be paid by the defendant as the state tax upon the total amount of said assessment, and as the county tax upon the apportionment of said assessment to each county, and city and county, of the property assessed to defendant named in said duplicate record; that within ten days after the fourth Monday in October, 1887, said Comptroller did publish for two weeks in one daily newspaper of general circulation published at the state capital of said state, and in two daily newspapers of general circulation published in the City and County of San Francisco in said state, a notice that he had received from said State Board of Equalization said Duplicate Record of Assessments of Railways and said Duplicate Record of Apportionment of Railway Assessments, and that the said taxes were then due and payable, and would become come delinquent on the last Monday in December,

Page 162 U. S. 103

1887 at 6 o'clock p.m., and that unless paid to the state treasurer at the capitol prior thereto, five percent would be added to the amount thereof."

"That a reasonable compensation for legal services by Langhorne and Miller, attorneys for plaintiff, in the institution and prosecution of this cause of action, is a sum equal to ten percent of the tax in this cause of action alleged to be delinquent."

Then followed eighteen counts for the county taxes in the several counties, all averring in detail compliance with the law in relation thereto.

Defendant demurred to the complaint. The demurrer was overruled, and defendant answered, setting up various defenses, one of which was that the franchise assessed to defendant by the State Board of Equalization was derived by defendant from the government of the United States, through certain acts of Congress, and that the same were used by defendant as one of the instrumentalities of the federal government, and hence was not taxable by the state; that the assessment of this franchise was so blended with the whole assessment as not to be separable therefrom, and that the whole assessment was therefore void.

The plaintiff put in evidence the Duplicate Record of Assessments of Railways by the state Board of Equalization for 1887, and the Duplicate Record of Apportionment of Railway Assessments for 1887, filed in the office of the Comptroller of the State of California on the 11th of October, 1887. These were admitted subject to defendant's objection. The Duplicate Record of the Assessments of Railways stated that

"the State Board of Equalization being in session on this the thirteenth day of August, 1887, all the members being present, and having under consideration the assessment of the franchise, roadway, roadbed, rails, and rolling stock of the Central Pacific Railroad Company within the state for the year 1887, and it appearing to this Board that said company on the first Monday in March in the year 1887 at 12 o'clock meridian of that day, owned, and still owns, 719.50 miles of railroad within this state, which at said time and day

Page 162 U. S. 104

in March was, and still is, operated in more than one county, being the entire railway of said company within this state, and which, with the right of way for the same, is described as follows: [Here follows description of line of roadway, roadbed, rails, and right of way.] And it appearing that the actual value of the franchise, roadway, roadbed, rails, and rolling stock of said company within this state at the said date and time in March was, and still is, the sum of eighteen million dollars, therefore it is hereby ordered that the said franchise, roadway, roadbed, rails, and rolling stock, for the year 1887, be, and the same are hereby, assessed to the said Central Pacific Railroad Company at the sum of eighteen million dollars."

The Duplicate Record of Apportionment of Railway Assessments, under date of August 22, 1887, stated:

"The State Board of Equalization met this day. All the members present. The Board this day apportioned the total assessment of the franchise, roadway, roadbed, rails, and rolling stock of each railroad assessed by it on the 13th day of August, 1887, for the year 1887, to the counties and the City and County of San Francisco in proportion to the number of miles of railway laid in each county, and in the City and County of San Francisco, which apportionment is set out in the following table. The apportionment is based upon the proportion the number of miles in each county of a railway bears to the total number of miles of such railway laid in the state."

The annexed table gave the name of the corporation to which each railway was assessed, and the name of each railway assessed, in this instance as the "Central Pacific Railroad Company," the names of the counties and city and county to which the assessment was apportioned, the total number of miles of road in the state, the number of miles in each county and city and county, the value per mile, the total assessment of the franchise, roadway, roadbed, rails, and rolling stock of each railway assessed, the amount apportioned to each county and city and county for purposes of county and city and county taxation, rate of taxation for each county and city and county levied by the Board of Supervisors, amount of

Page 162 U. S. 105

state taxes at the state rate, and amount due of county and city and county taxes upon the assessment as apportioned.

It was admitted that the apportionment was made as the Political Code required it to be made, and that the mileage for each county was correctly stated.

Plaintiff then proved, under objection, that the taxes sued for had not been paid, or any portion thereof. Evidence was also introduced in regard to the value of services of counsel.

Defendant called as a witness C. M. Coglan, clerk of the Board of equalization, and identified the original minutes of the proceedings of the Board relating to the assessment of the property of the Central Pacific Railroad Company for the year 1888 under date of August 17, 1888. It appeared therefrom that the Attorney General recommended to the Board that the franchises of the Central Pacific and Southern Pacific Companies, derived from the state, be assessed, and that the valuation thereof be stated separately in the record of assessments; that the Board assess the moles, bridges, and culverts of each road separately, and, in respect of certain railroad companies, declare that the steamers used in operating those roads were not assessed. Whereupon the Board proceeded to make such assessment, and ordered that the franchise of the Central Pacific Railroad Company, derived from the State of California, be assessed at $1,250,000, and that the franchise of the Southern Pacific Railroad Company, derived from the State of California, be assessed at $1,000,000; that the moles, culverts, bridges, and wharves upon which the tracks of the Central Pacific are laid be assessed at $1,000,000; that the moles, culverts, bridges, and wharves upon which the tracks of the Southern Pacific are laid be assessed at $400,000. The original record of the assessment of the Central Pacific Railroad Company made by the Board for the year 1888 was offered in evidence, and was to the effect that the Board assessed the franchise derived from the State of California, the roadway, roadbed, and rolling stock of said company within said state at the total sum of $15,000,000.

On the cross-examination of Mr. Coglan, plaintiff offered, and the court admitted in evidence, under defendant's objection,

Page 162 U. S. 106

the verified statements furnished by defendant to the State Board of Equalization during the years 1887 and 1888, which were marked "Plaintiff's Exhibits 4 and 6." Exhibit 4 was the return made by the Central Pacific Railroad Company for 1888, which read thus:

"The Central Pacific Railroad Company answers the questions propounded by the Board as follows, and makes the following statement in relation to its property subject to taxation in the State of California, owned by it for the year ending on the first Monday in March, 1888, and of all property used in operating its railway during such year:"

"The length of railway owned and operated as a system, in and out of the state, is 1,344.14 miles."

"Length of track, sidings, and double track reduced to single track is _____; out of the state, 597 miles; in the state, 747.14 miles."

The value of the franchise derived

from the state within this state . . . . . . . . . $ 25.00

The value of the entire roadway, roadbed,

rolling stock, and rails within this state is. . . 9,376,607.00

-------------

$9,376,632 00

This was followed by a list of the mileage of the road in California in each of the counties through which it ran, and schedules of the rolling stock, the earnings and expenses of the road, as a system, in and out of the state, of the operating expenses, and of the earnings and expenses within the state. The return was duly sworn to.

Exhibit six was the return of the company for the year 1887. This opened with the same statement as the other, and after giving the length of the railway owned and operated as a system and the length of track, single and double, out of and in the state, continued: "The value of the franchise and entire roadway, roadbed, and rails within this state is $12,273,785.00." The usual lists and schedules were attached.

Defendant then called as a witness one Morehouse, a member of the State Board of Equalization, whose evidence tended

Page 162 U. S. 107

to show that the assessment for 1887 was intended by him to, and did, include defendant's federal franchise, but that he could not say that the value of the federal franchise operated on the minds of the other members of the Board in making up the items of the valuation. Defendant offered to prove by Morehouse that at every session from 1883, and prior to 1888, the Board, in making its assessment of the valuation of the property of the Central Pacific Railroad Company, included in its total estimate the value of the federal franchise held by that company by virtue of the acts of Congress referred to, and that the valuation of the federal franchise was blended into the general assessment of that company in such a manner as to be indistinguishable from it and not capable of separation. This was objected to as incompetent, irrelevant, and immaterial, the objection sustained by the court, and exception saved.

E. W. Maslin, secretary of the State Board of Equalization from April, 1880, to March, 1891, who was present at the Board meetings and kept the record of its proceedings, was called as a witness by defendant, and testified that from his acquaintance with the history of the assessment of the road since 1880, his relation to it with respect of the franchise and personal property, his conversation with many members through those years, the knowledge he had of how two members arrived at their conclusions, and the knowledge that he thought he had as to how three members arrived at their conclusions, he thought he could state what elements of value were considered by the Board in making their estimate for the total values for 1887. Thereupon defendant asked witness the following questions:

"Q. From the various sources of knowledge which you have enumerated, please state to the court what elements were taken into consideration by the State Board of Equalization in making the assessment of this company for the year 1887."

"Q. Did you here any conversation between the members of the State Board of Equalization during the meeting when the assessment of this company was made for the year 1887, with reference to the elements that they proposed to and did include in the assessment? "

Page 162 U. S. 108

"Q. At the time that the assessment of 1887 was made by the State Board of Equalization upon the property of the Central Pacific Railroad Company, what was said and done at the meeting of the State Board of Equalization on that day in your presence?"

To each of these questions plaintiff interposed objections, which were sustained by the court, and defendant excepted.

Defendant then made the following offer:

"Now, in view of the ruling of the court on this subject, we now offer to prove by this witness that from the time of the organization of the State Board of Equalization, in 1880, down to and including the year 1887, that Board had every year considered the value of the federal franchise (that is, the franchise derived from the United States by the acts of Congress of the government of the United States) belonging to and owned by the Central Pacific Railroad Company as an element of value in assessing the total value of the property of that railroad company, and that in 1888, in consequence of the decision of the Supreme Court of the United States upon the subject, the State Board of Equalization for the first time ceased to consider this federal franchise as an element of value, and hence reduced their valuation by the sum of three million dollars on the Central Pacific Railroad Company's property."

This offer was disallowed by the court, and defendant excepted.

Plaintiff, in rebuttal, called C. E. Wilcoxen and J. P. Dunn, who were members of the Board and participated in making the assessment of 1887, and they testified that the federal franchise was not included in the assessment for that year. On the cross-examination of Mr. Wilcoxen, an effort was made to introduce testimony that he had given before a committee of the General Assembly of California in 1889, which the court excluded except so far as it related to the year 1887.

The statement on motion for new trial then continued:

"In its written opinion, upon which the findings were based, the court, after determining as a fact, from a preponderance of the evidence before it, that the federal franchise of defendant was not assessed or included in the assessment of

Page 162 U. S. 109

the property of defendant by the State Board of Equalization for the year 1887, uses the following language:"

"But if the parol evidence offered did not weigh in plaintiff's favor, and if, by a preponderance of such evidence, defendants could have shown that the state intended to and did include a federal franchise in the assessment, I think the court would have to disregard it as incompetent. The effect of such parol evidence would be to contradict the record, which cannot be done."

"The best and only evidence of the acts and intentions of deliberative bodies must be drawn from the record of its intentions. . . . From both standpoints of fact and of law, the findings must be that a federal franchise was not included in these assessments."

On February 3, the superior court made and filed its written findings of fact and conclusions of law. The finding of fact included the following:

"XXX. That on the 13th day of August, 1887, the State Board of Equalization of the State of California did, for the purposes of taxation for the fiscal year 1887, assess as a unit, and not separately, the franchise, roadway, roadbed, rails, and rolling stock of defendant's railroad, then being and situate within the state at the sum and value mentioned in the amended complaint, and did then and there enter said assessment upon its minutes, and in its record of assessments; that such assessment is the one upon which the several taxes mentioned in the complaint herein are based, and no other assessment than the one aforesaid was ever made by said Board of equalization or other assessor of said property of the defendant for said fiscal year; that said State Board of Equalization did at the time and in the manner alleged in the amended complaint, apportion said assessment and transmit such assessment and the apportionment to the county and city and county auditors, and said assessment and the apportionment thereof were entered upon the assessment rolls of said counties and said cities and counties as alleged in said amended complaint, as hereinbefore found."

"XXXI. That the said Board of equalization, in making

Page 162 U. S. 110

said assessment, did assess the franchise, roadway, roadbed, rails, and rolling stock of defendant's railroad at their full cash value, without deducting therefrom the value of the mortgage or any part thereof or the value of said bonds issued under said acts of Congress, given and existing thereon as aforesaid, to secure the indebtedness of said company to the holders of said bonds, and in making said assessment said Board did not deem nor treat said mortgage or bonds as an interest in said property, but it assessed the whole value of said property as assessed to defendant in the same manner it would have done had there been no mortgage thereon. At the time said assessment and apportionment were made as aforesaid by said State Board of Equalization, the assessment books or rolls for the said fiscal year had been completed and were in existence, and the assessment and valuation of defendant's property for the purposes of taxation for said fiscal year had been ascertained and fixed as provided by law, and said Board, in making said valuation and apportionment, did exercise all necessary powers relative to the equalization of values for the purposes of taxation."

"XXXIII. Said State Board of Equalization, in making said assessment of defendant's roadway, did not include in the valuation of said roadway the value of any fences erected upon the land of coterminous proprietors, and did not value said roadway at a greater value than the value of other property similarly situated and greater than its actual cash value, and did not blend in said assessment the value of any fences. That said Board, in making its said assessment and valuation therefor, did not adopt a system of valuation which operated unequally or which was intended to or which did in any manner violate the rule prescribed in section 10 of article 13 of the state constitution, and said Board, in making its said assessment and valuation therefor, did not value the rolling stock of defendant at sixty (60) or any other percent above its actual value, and did not value nor assess defendant's franchise in excess of its actual value."

"XXXIV. That in making said assessment and valuation therefor, said State Board of Equalization did not include the

Page 162 U. S. 111

value of or assess any steamboats or boats, nor blend the value or assessment of any steamboats or boats with the value of, or assessment of, defendant's roadway, rails, roadbed, and rolling stock."

"XXXV. That in making its assessment and valuation therefor of defendant's franchise, said State Board of Equalization did not include, assess, or value any franchise or corporate power held or exercised by defendant under the acts of Congress hereinbefore mentioned, or under any act of Congress whatever. And said Board, in making said assessment and valuation therefor upon defendant's franchise, roadbed, roadway, rails, and rolling stock for purposes of taxation for the fiscal year 1887, did not include in its said assessment and valuation therefor any federal franchise then possessed by defendant, nor any franchise or thing whatsoever which said Board could not legally include in such assessment or valuation. That the franchise, roadway, roadbed, rails, and rolling stock of defendant's railroad were valued and assessed by said State Board of Equalization, for purposes of taxation for the fiscal year 1887, at their actual value, and in proportion to their values, respectively."

The conclusions of law were that plaintiff was entitled to recover the sums claimed, with five percent penalty, interest, and counsel fees, the amounts being stated, and costs.

Judgment was rendered in plaintiff's favor accordingly.

On the 19th of June, following, the statement on motion for new trial was approved and filed as part of the record, including an assignment and specification of errors. The defendant's motion for a new trial was overruled, and defendant appealed to the supreme court of the state from the judgment, and from the order denying the motion for new trial. January 6, 1895, the supreme court rendered judgment directing the court below to modify its judgment by striking therefrom the amount allowed for interest prior to the entry thereof, and also certain counsel fees, and that as so modified the judgment and order denying a new trial should stand affirmed. The opinion is reported in People v. Central Pacific Railroad, 105 Cal. 576.

Page 162 U. S. 112

MR. CHIEF JUSTICE FULLER, after stating the facts in the foregoing language, delivered the opinion of the Court.

The assessment of the State Board of Equalization is not attacked on the ground of fraud, but it is contended that the value of the federal franchise or franchises possessed by plaintiff in error was included therein, and that, as the assessment embraced all the property assessed as a unit, it was thereby wholly invalidated. Santa Clara Co. v. Southern Pacific Railroad,118 U. S. 394; California v. Central Pacific Railroad,127 U. S. 1.

By section 1 of article XIII of the Constitution of California, it is provided that

"all property of the state, not exempt under the laws of the United States, shall be taxed in proportion to its value, to be ascertained as provided by law. The word 'property' as used in this article and section is hereby declared to include moneys, credits, bonds, stocks, dues, franchises, and all other matters and things real, personal, or mixed, and capable of private ownership,"

and, by section 10, that

"the franchise, roadway, roadbed, rails, and rolling stock of all railroads operated in more than one county in this state shall be assessed by the State Board of Equalization at their actual value,"

and the Political Code provided that this must be, and the mode in which it should be, done.

Railway corporations were required to furnish the Board of equalization, before it acted, and as of the first Monday of March in each year, a statement, signed and sworn to by one of their officers, showing in detail the whole number of miles of railway in the state and, when the line was partly out of the state, the whole number of miles within and without owned or operated by each corporation and the value thereof; the value of the roadway, roadbed, and rails of the whole, and

Page 162 U. S. 113

the value of the same within the state; the width of the right of way; the rolling stock and value; the gross earnings of the entire road, and of the road within the state; the net income; the capital stock authorized and paid in; the number of shares authorized and issued, etc.

This verified statement for 1887 was made by plaintiff in error in due time, and purported to be a

"statement in relation to its property subject to taxation in the State of California owned by it for the year ending on the first Monday in March, 1887, and of all property used in operating its railway during such year."

And it was therein set forth, among other things, "[t]he value of the franchise and entire roadway, roadbed, and rails within this state is $12,273,785.00." The Board of equalization determined

"that the actual value of the franchise, roadway, roadbed, rails, and rolling stock of said company within this state at the said date and time in March, was, and still is, the sum of eighteen million dollars,"

and thereupon assessed "the said franchise, roadway, roadbed, rails, and rolling stock for the year 1887" at that sum.

By section 3670 of the Political Code, the Duplicate Record of Assessment of Railways, and the Duplicate Record of Apportionment of Railway Assessments, or copies thereof, were made prima facie evidence of the assessment, and that the forms of law in relation to the assessment and levy of such taxes had been complied with, and these were put in evidence.

Under this state of facts, the presumption was that the franchise thus included by plaintiff in error in its return, and by the Board in its assessment, was a franchise which was not exempt under the laws of the United States, and that the Board had acted upon property within its jurisdiction, rather than upon property which it had no power to include in the assessment. Indeed, as the supreme court points out, when plaintiff in error included the franchise in its statement, if there were two franchises, one of which could be assessed and the other could not, plaintiff in error ought not to be permitted to say that the one which was not capable of assessment was intended by it to be, or was, included therein. People v. Central Pacific Railroad, 105 Cal. 592. And the

Page 162 U. S. 114

court cited San Francisco v. Flood, 64 Cal. 504; Lake County v. Sulphur Bank Quicksilver Mining Co. 68 Cal. 14, and Dear v. Varnum, 80 Cal. 86 -- which rule that a party who furnishes a list of property for taxation is estopped from questioning the sufficiency of the description so furnished, in an action to collect the taxes. Undoubtedly, if the Board of equalization had included what it had no authority to assess, the company might seek the remedies given under the law to correct the assessment, so far as such property was concerned, or recover back the tax thereon, or, if those remedies were not held exclusive, might defend against the attempt to enforce it. But where the property mentioned in the description could be assessed, and the assessment followed the return, as it did here, the company ought at least to be held estopped from saying that the description was ambiguous.

It is said that plaintiff in error should not be bound by this statement, because it was on printed blanks prepared by the Board; but when plaintiff in error filled out and swore to the statement of its property "as being subject to taxation," and the blank form called on plaintiff in error to give a statement of the value of its franchise within the state for the purpose of assessment and taxation, if it had intended to claim that its state and federal franchises were so merged as to render the former not subject to taxation, or that it had no franchise subject to taxation, it was its duty to so indicate in making the return. Nothing in the law, and nothing in the blank form, could have compelled it to make a statement contrary to the facts.

Plaintiff in error attempted to rebut the case made by introducing evidence which it claimed tended to show that the franchise assessed covered franchises derived from the United States as well as from the state, but the findings of fact of the trial court were to the contrary, and, there being a conflict of evidence on the point, the supreme court treated the findings as conclusive, in accordance with the well settled rule on the subject in that jurisdiction. In Reay v. Butler, 95 Cal. 206, 214, it was said:

"It has been held here, in

Page 162 U. S. 115

more than a hundred cases, commencing with Payne v. Jacobs, 21 Cal. 39, in the first published book of Reports of this court, and ending with Dobinson v. McDonald, 92 Cal. 33, in the last volume of said Reports, that the finding of a jury or court as to a fact decided upon the weight of evidence will not be reviewed by this Court."

That rule is equally binding on us. Republican River Bridge Co. v. Kansas Pacific Railway,92 U. S. 315; Dower v. Richards,151 U. S. 658.

It was argued in the Supreme Court of California, as it has been here, that because the trial judge, after having determined as a fact, from the preponderance of the evidence before him, that the federal franchise was not assessed, stated that he thought that if the parol evidence offered had not weighted in plaintiff's favor, and that if by a preponderance of such evidence defendants could have shown that the Board intended to and did include a federal franchise in the assessment, the court would have to disregard it as incompetent because the effect would be to contradict the record, therefore the evidence had been disregarded by the court in making its decision, and that the rule in respect of the conclusiveness of a determination of facts on a conflict of evidence did not apply. We entirely concur with the disposition of this suggestion by the supreme court, which said:

"It clearly appears, however, that the court did not disregard the evidence, but that, after determining as a fact, from the preponderance of evidence before it, that the federal franchise had not been assessed, it stated that if the preponderance of evidence had been otherwise, it would have held as a matter of law that the assessment must be tested by its own language. The fact that a court, after giving its decision upon an issue, gives its opinion upon the manner in which it would have decided the issue under other circumstances does not constitute an error to be reviewed in this Court."

Counsel for plaintiff in error also urge that inasmuch as it appeared in the proceedings to assess for 1888 that the Board placed "the franchise of the Central Pacific Company derived from the State of California" at $1,250,000 and then assessed

Page 162 U. S. 116

"the franchise derived from the State of California, the roadway, roadbed, and rolling stock of said company within said state at the total sum of $15,000,000," it should be inferred, from the difference in the language used in the assessment of 1887 and the difference in the total amount, that the franchise then assessed included the federal franchise. But it also appeared that the return of the company for 1888, in respect of this matter, was as follows:

The value of the franchise derived from the

state within this state . . . . . . . . . . . . . $ 25.00

The value of the entire roadway, roadbed,

rolling stock, and rails within this state is . . 9,376,607.00

-------------

$9,376,632 00

And we think that neither the difference in valuation nor the difference in the mode of statement had a material bearing on the assessment of 1887. The proceedings in 1888 showed greater care on the part of the company in making the return, and on the part of the Board in making the assessment, and possibly, if plaintiff in error had been equally careful in relation to the assessment in 1887, it might have resulted that the valuation would have been less, although it does not follow that the reduction in 1888 might not be attributed to a change of financial conditions.

After all, these are considerations which were presented to the trial judge in connection with all the evidence, and they have been disposed of adversely to the company.

Exceptions were saved to the action of the trial court in respect of the exclusion of certain evidence, but we are unable to find in these rulings, or in the decision of the supreme court thereon, the denial of any title, right, privilege, or immunity specially set up or claimed under the Constitution or laws of the United States.

The rulings passed on by the supreme court, and which we must assume were all that were called to its attention, relate to the cross-examination of the witness Wilcoxen as to statements previously made by him, which the superior court confined to the assessment for 1887, in respect of which he had

Page 162 U. S. 117

been examined in chief. The supreme court held that, under the circumstances disclosed by the record, the superior court did not err in this particular.

And also to the exclusion of the evidence of Maslin as to the conversations of members of the Board, in making the assessment, in relation thereto. The supreme court held as to this that

"the intention of the Board or of any of its members, or the signification to be given to the term 'franchise' as used in the assessment, could not be shown in this manner, and the evidence could not be used for impeaching purposes unless the members of the Board had been previously questioned thereon."

The correctness of these rulings commends itself to us, but it is enough to say that it is impossible to predicate error raising a federal question as to these or any of the rulings on evidence referred to by counsel.

Clearly no such error was committed in the rejection of the general offers of proof, if we should treat them as open to consideration notwithstanding the apparent abandonment of the exceptions in that regard in the supreme court. The issue was upon the assessment for the year 1887. The decision in California v. Pacific Railroad Company,127 U. S. 1, as announced April 30, 1888, but the last of the judgments of the circuit court therein considered and affirmed was rendered July 15, 1886. And the action of the Board in years prior to 1887, as sought to be shown, was not necessarily relevant or material. Offers of proof must be offers of relevant proof, specific, not so broad as to embrace irrelevant and immaterial matter, and made in good faith. The exercise of the discretion of the trial court in rejecting these offers cannot properly be reviewed by us.

The errors assigned as to the nondeduction of outstanding mortgages from the valuation of the property are expressly waived, though it is assigned for error in the brief that the court erred in not holding that, as the state franchise was subject to the lien of a mortgage to the United States, the assessment was invalid, because in effect taxing the interest of the United States in that franchise created by the mortgage.

Page 162 U. S. 118

As to this, no such question was raised or passed on in the state court, and moreover, the objection is without merit, on principle and authority, on grounds hereafter stated.

We are thus brought to the consideration of the real question in the case, presented in various aspects, and argued with much ability by counsel for plaintiff in error -- namely, that the company's franchises are one and inseparable, constituting and indivisible unit which cannot be subjected to taxation by the State of California, because that would be necessarily to subject the federal franchise to taxation.

The argument is that the franchise of railroads authorized by the state constitution and the provisions of the Political Code to be assessed is nothing but the right to operate the railroad and charge and take tolls thereon; that the right of the Central Pacific Railroad Company to construct, maintain, and operate its railroad in California was conferred upon that company by, and derived by it from, the United States, and that the right is a single right, though granted also by the state.

The company is a corporation of California, made up of two California corporations consolidated by articles of association entered into under the laws of California, and recognized as a California corporation by the acts of Congress through which it obtained federal assistance and federal franchises subsequently to its incorporation, in 1861, Act of July 1, 1862, c, 120, 12 Stat. 489; at of July 2, 1864, c. 216, 13 Stat. 356; Act of March 3, 1865, c. 88, 13 Stat. 504; Act of May 7, 1878, c. 96, 20 Stat. 56, and never otherwise regarded in the legislation of the state. Indeed, by the Act of April 4, 1864, St.Cal. 1863-64, c. 417, passed to "enable the said company more fully and completely to comply with and perform the provisions and conditions of said act of Congress" of July 1, 1862, California authorized the company to construct, maintain, and operate the road and telegraph in the territory lying east of the state, with the usual incidental rights, privileges, and powers, also vesting in the company the rights, franchises, and powers granted by Congress, with the express reservation that the company should be

"subject to all the

Page 162 U. S. 119

laws of this state concerning railroad and telegraph lines, except that messages and property of the United States, of this state, and of the said company, shall have priority of transportation and transmission over said line of railroad and telegraph."

Sinking-Fund Cases,99 U. S. 754. Severance of the allegiance of the corporation to the state that created it, and deprivation or transfer of the powers and privileges conferred by the state, were not the object of the grant by the United States, nor the consequence of the acceptance of that grant by the corporation as thereto authorized by the state. Pennsylvania Railroad v. St. Louis, Alton &c. Railroad,118 U. S. 290, 118 U. S. 296. But it was not contended at the bar that the company ever became a corporation of the United States, or that it is other than a state corporation.

Even in respect of railway corporations created by act of Congress, the claim of an exemption of their property from state taxation has been repeatedly denied. This was so ruled in Railroad Company v. Peniston, 18 Wall. 5, 85 U. S. 30, 85 U. S. 36, and Mr. Justice Strong said:

"It cannot be that a state tax which remotely affects the efficient exercise of a federal power is for that reason alone inhibited by the Constitution. To hold that would be to deny to the states all power to tax persons or property. Every tax levied by a state withdraws from the reach of federal taxation a portion of the property from which it is taken, and to that extent diminishes the subjects upon which federal taxes may be laid. The states are, and they must ever be, coexistent with the national government. Neither may destroy the other. Hence the federal Constitution must receive a practical construction. Its limitations and its implied prohibitions must not be extended so far as to destroy the necessary powers of the states, or prevent their efficient exercise. . . ."

"It is therefore manifest that exemption of federal agencies from state taxation is dependent not upon the nature of the agents or upon the mode of their construction, or upon the fact that they are agents, but upon the effect of the tax --

Page 162 U. S. 120

that is, upon the question whether the tax does in truth deprive them of power to serve the government as they were intended to serve it, or does hinder the efficient exercise of their power. A tax upon their property has no such necessary effect. It leaves them free to discharge the duties they have undertaken to perform. A tax upon their operations is a direct obstruction to the exercise of federal powers."

"In this case, the tax is laid upon the property of the railroad company precisely as was the tax complained of in Thompson v. Railway Co., 9 Wall. 579. It is not imposed upon the franchises, or the right of the company to exist and perform the functions for which it was brought into being. Nor is it laid upon any act which the company has been authorized to do. It is not the transmission of dispatches nor the transportation of United States mails or troops or munitions of war that is taxed, but it is exclusively the real and personal property of this agent, taxed in common with all other property of the State of a similar character. It is impossible to maintain that this is an interference with the exercise of any power belonging to the general government, and, if it is not, it is prohibited by no constitutional implication."

In Thompson v. Pacific Railroad, 9 Wall. 579, the Union Pacific Railway Company, Eastern Division, a corporation created by the legislature of Kansas, received government aid in bonds and land, and, thus aided, constructed its road to become one link in the transcontinental line known as the "Union Pacific System," in accordance with the same acts of Congress relating to plaintiff in error, and conferring the same functions and privileges. The State of Kansas having subsequently taxed the roadbed, rolling stock, and certain personal property of the corporation, its stockholders sought to enjoin the collection of the tax on the ground that the property was mortgaged to the United States, and that it was bound under the congressional grant to perform certain duties, and ultimately pay five percent of its net earnings to the United States, and that state taxation would retard and burden it in the discharge of its obligations to the general government. But the contention was overruled, and Mr. Chief Justice Chase said:

Page 162 U. S. 121

"But we are not aware of any case in which the real estate or other property of a corporation not organized under an act of Congress has been held to be exempt, in the absence of express legislation to that effect, to just contribution, in common with other property, to the general expenditure for the common benefit, because of the employment of the corporation in the service of the government."

"It is true that some of the reasoning in the case of McCulloch v. Maryland seems to favor the broader doctrine. But the decision itself is limited to the case of the bank, as a corporation created by a law of the United States and responsible, in the use of its franchises, to the government of the United States."

"And even in respect to corporations organized under the legislation of Congress, we have already held at this term that the implied limitation upon state taxation, derived from the express permission to tax shares in the national banking associations, is to be so construed as not to embarrass the imposition or collection of state taxes to the extent of the permission fairly and liberally interpreted. National Bank v. Commonwealth, 8 Wall. 353."

"We do not think ourselves warranted, therefore, in extending the exemption established by the case of McCulloch v. Maryland beyond its terms. We cannot apply it to the case of a corporation deriving its existence from state law, exercising its franchise under state law, and holding its property within state jurisdiction and under state protection."

". . . No one questions that the power to tax all property, business, and persons, within their respective limits, is original in the states, and has never been surrendered. It cannot be so used, indeed, as to defeat or hinder the operations of the national government; but it will be safe to conclude, in general, in reference to persons and state corporations employed in government service, that when Congress has not interposed to protect their property from state taxation, such taxation is not obnoxious to that objection. Lane Co. v. Oregon, 7 Wall. 77; National Bank v. Kentucky, 9 Wall. 353. We perceive no limits to the principle of exemption

Page 162 U. S. 122

which the complainants seek to establish. It would remove from the reach of state taxation all the property of every agent of the government. . . ."

"The nature of the claims to exemption which would be set up is well illustrated by that which is advanced in behalf of the complainants in the case before us. The very ground of claim is in the bounties of the general government. The allegation is that the government has advanced large sums to aid in the construction of the road; has contented itself with the security of a second mortgage; has made large grants of land upon no condition of benefit to itself, except that the company will perform certain services for full compensation, independently of those grants, and will admit the government to a very limited and wholly contingent interest in remote net income. And because of these advances and these grants and this fully compensated employment, it is claimed that this state corporation, owing its being to state law and indebted for these benefits to the consent and active interposition of the state legislature, has a constitutional right to hold its property exempt from state taxation, and this without any legislation on the part of Congress which indicates that such exemption is deemed essential to the full performance of its obligations to the government."

In his dissenting opinion in Railroad Co. v. Peniston, 18 Wall. 48, Mr. Justice Bradley distinguishes Thompson v. Pacific Railroad from that case thus:

"That was a state corporation, deriving its origin from state laws and subject to state regulations and responsibilities. It would be subversive of all our ideas of the necessary independence of the national and state governments, acting in their respective spheres, for the general government to take the management, control, and regulation of state corporations out of the hands of the state to which they owe their existence, without its consent, or to attempt to exonerate them from the performance of any duties or the payment of any taxes or contributions to which their position as creatures of state legislation renders them liable."

Both these cases were referred to with approval by Mr.

Page 162 U. S. 123

Justice Miller in Western Union Telegraph Co. v. Massachusetts,125 U. S. 530, and by MR. JUSTICE BREWER in Reagan v. Mercantile Trust Co.,154 U. S. 413, 154 U. S. 416. In the latter case, it was contended that, as the Texas and Pacific Railway was a corporation organized under the laws of the United States, it was not subject to the control of the state even as to rates of transportation wholly within the state. The argument was that the company received all its franchises from Congress, that among those franchises was the right to charge and collect tolls, and that the state had not the power, therefore, in any manner to limit or qualify such franchise. But that position was not sustained, and MR. JUSTICE BREWER, delivering the opinion, said

"that, conceding to Congress the power to remove the corporation in all its operations from the control of the state, there is in the act creating the company nothing which indicates an intent on the part of Congress to so remove it, and there is nothing in the enforcement by the State of reasonable rates for transportation wholly within the state which will disable the corporation from discharging all the duties and exercising all the powers conferred by Congress."

Although the Central Pacific Company is not a federal corporation, it is nevertheless true that important franchises were conferred upon the company by Congress, including that of constructing a railroad from the Pacific Ocean to Ogden, in the Territory of Utah. But as remarked in California v. Central Pacific Railroad,127 U. S. 1, 127 U. S. 38-40,

"this important grant, though in part collateral to, was independent of, that made to the company by the State of California, and has ever since been possessed and enjoyed."

That case came up from the Circuit Court of the United States for the Northern District of California, and the circuit court found that the assessment made by the State Board of Equalization "included the full value of all franchises and corporate powers held and exercised by the defendant," and, as it could not be denied that that embraced franchises conferred by the United States, it was held that the assessment was invalid, but it was not held nor intimated that if the Board of equalization

Page 162 U. S. 124

had only included the state franchise, the same result would have followed.

Mr. Justice Bradley, delivering the opinion of the Court, said:

"Assuming, then, that the Central Pacific Railroad Company has received the important franchises referred to by grant of the United States, the question arises whether they are legitimate subjects of taxation by the state. They were granted to the company for national purposes, and to subserve national ends. It seems very clear that the State of California can neither take them away nor destroy nor abridge them nor cripple them by onerous burdens. Can it tax them? It may undoubtedly tax outside visible property of the company situated within the state. That is a different thing."

"But may it tax franchises which are the grant of the United States? In our judgment, it cannot. What is a 'franchise'? Under the English law, Blackstone defines it as 'a royal privilege or grant of the King's prerogative, subsisting in the hands of the subject.' 2 Bl.Com. 37. Generalized, and divested of the special form which it assumes under a monarchical government based on feudal traditions, a franchise is a right, privilege, or power of public concern which ought not to be exercised by private individuals at their mere will and pleasure, but should be reserved for public control and administration, either by the government directly or by public agents acting under such conditions and regulations as the government may impose in the public interest and for the public security. Such rights and powers must exist under every form of society. They are always educed by the laws and customs of the community. Under our system, their existence and disposal are under the control of the legislative department of the government, and they cannot be assumed or exercised without legislative authority. No private person can establish a public highway, or a public ferry, or railroad, or charge tolls for the use of the same without authority from the legislature, direct or derived. These are franchises. No private person can take another's property, even for a public use, without such authority, which

Page 162 U. S. 125

is the same as to say that the right of eminent domain can only be exercised by virtue of a legislative grant. This is a franchise. No persons can make themselves a body corporate and politic without legislative authority. Corporate capacity is a franchise. The list might be continued indefinitely."

Mr. Justice Bradley then referred to McCulloch v. Maryland; Osborn v. Bank, and Brown v. Maryland, to the proposition that a power given to a person or corporation by the United States cannot be subjected to taxation by a state, and added

"that these views are not in conflict with the decisions of this Court in Thomson v. Pacific Railroad, 9 Wall. 579, and Railroad Co. v. Peniston, 18 Wall. 5. As explained in the opinion of the Court in the latter case, the tax there was upon the property of the company, and not upon its franchises or operations. 18 Wall. 85 U. S. 35-37."

Thus it was reaffirmed that the property of a corporation of the United States might be taxed, though its franchises -- as, for instance, its corporate capacity -- and its power to transact its appropriate business and charge therefor could not be. It may be regarded as firmly settled that although corporations may be agents of the United States, their property is not the property of the United States, but the property of the agents, and that a state may tax the property of the agents, subject to the limitations pointed out in Railroad Co. v. Peniston; Van Brocklin v. Tennessee,117 U. S. 151, 117 U. S. 177.

Of course, if Congress should think it necessary for the protection of the United States to declare such property exempted, that would present a different question. Congress did not see fit to do so here, and unless we are prepared to overrule a long line of well considered decisions, the case comes within the rule therein laid down. Although in Thomson's Case it was tangible property that was taxed, that can make no difference in principle, and the reasoning of the opinion applies.

Under the laws of California, plaintiff in error obtained from the state the right and privilege of corporate capacity; to construct, maintain, and operate; to charge and collect fares

Page 162 U. S. 126

and freights; to exercise the power of eminent domain; to acquire and maintain right of way; to enter upon lands or waters of any person to survey route; to construct road across, along, or upon any stream, water course, roadstead, bay, navigable stream, street, avenue, highway, or across any railway, canal, ditch, or flume; to cross, intersect, join, or unite its railroad with any other railroad at any point on its route; to acquire right of way, roadbed, and material for construction; to take material from the lands of the state, etc. Stat.Cal. 1861, c. 532, 607; 2 Deering's Annotated Codes and Stat.Cal. 114.

It is not to be denied that such rights and privileges have value, and constitute taxable property.

The general rule, as stated by Mr. Justice Miller in State Railroad Tax cases,92 U. S. 575, 92 U. S. 603,

"that the franchise, capital stock, business, and profits of all corporations are liable to taxation in the place where they do business, and by the state which creates them, admits of no dispute at this day."

And the Constitution of California expressly declares that the word "property," as used in section 1 of article 13, providing that "all property in the state, not exempt under the laws of the United States, shall be taxed in proportion to its value," includes franchises, as well as all other matters and things capable of private ownership.

The question here is not a question of the value of the state franchise, but whether that franchise existed, for if in 1887 plaintiff in error possessed any subsisting rights or privileges, otherwise called franchises, derived from the state, then they were taxable, and the extent of their value was to be determined by the Board of equalization.

So far as the ability of the company to discharge its duties and obligations to the general government is concerned, it is difficult to see that taxation of the state franchise would tend to impair that ability any more than taxation of the roadway, roadbed, rails, and rolling stock. If the necessary effect of a tax on such tangible property is not to unconstitutionally hinder the efficient exercise of the power to serve the government, neither can it be so in respect of the state franchise.

Page 162 U. S. 127

Indeed, the taxation by the State of the franchise granted by it does not, and could not, prevent plaintiff in error from acting under its federal franchise.

This was an action to recover judgment against the company under the statute, and the franchise was only an element in arriving at the valuation in making the assessment; but if the power to tax the state franchise involved the power to dispose of it at delinquent tax sale or on execution, such sale would be subject to the superior and independent rights of the United States, and the fact that this would affect the value is of no consequence. If the state franchise should be voluntarily surrendered by the company to the state or forfeited by the state, yet the United States, through the federal franchise, could still operate the road in California. And on the other hand, should plaintiff in error in any manner be deprived of its federal franchise, it would not thereby be prevented from operating in California under its state franchise. The right and privilege, or franchise, of being a corporation is of value to its members, and is considered as property separate and distinct from the property which the corporation may acquire; but apart from that, if the state franchise to be assessed were confined to the right to operate the road and take tolls, such a franchise was originally granted by the state to this company, and as such was taxable property. If the subsequent acts of Congress had the effect of creating a federal franchise to operate the road, that merely rendered the state right subordinate to the federal right, and did not destroy the state right, nor merge it into the federal right, and no authority is cited to sustain any such proposition. No act of Congress in terms attempted to bring about this result, and no such result can be deduced therefrom by necessary implication. Whether plaintiff in error now operates its road under the franchise derived from the United States or from the state is immaterial, as the supreme court well said. The right to operate the road is valuable whether it is being exercised or not, and the question, we repeat, relates to the existence of the franchise, and not to the extent of its value.

When we consider that plaintiff in error returned its franchise

Page 162 U. S. 128

for assessment, declined to resort to the remedy afforded by the state laws for the correction of the assessment as made, if dissatisfied therewith, or to pay its tax and bring suit to recover back the whole or any part of the tax which it claimed to be illegal, we think its position is not one entitled to the favorable consideration of the court; but without regard to that we hold, for the reasons given that the state courts rightly decided that the company had no valid defense to the causes of action proceeded on.

Judgment affirmed.

MR. JUSTICE WHITE concurred in the result.

MR. JUSTICE FIELD, dissenting.

I am unable to concur with may associates in their opinion or judgment in the present case.

The case comes before us on writ of error to the Supreme Court of California, affirming the judgment of the Superior Court of the City and County of San Francisco, and an order of that court denying a new trial in an action brought by the people of the state against the Central Pacific Railroad Company to recover moneys alleged to be due by it to the state for taxes for the fiscal year of 1887, upon assessments made by the State Board of Equalization. The supreme court of the state affirmed the judgment of the superior court against that company in disregard, in my opinion, of the long established doctrine of this Court that the powers of the general government and the instrumentalities of the state called into exercise in enforcement of those powers cannot be impaired or their efficiency lessened by taxation or any other action on the part of the state. This doctrine has been constantly asserted by this Court when called upon to express its opinion thereon, its judgment being pronounced by the most illustrious Chief Justice in its history with the unanimous concurrence of his associates. It has become a recognized principle, made familiar in the courts of the country by the decision of this Court in McCulloch v. Maryland, 4 Wheat. 316, and Osborn v. Bank, 9 Wheat. 738. The disregard

Page 162 U. S. 129

of this doctrine in the present case recalls the aphorism of Coleridge, applied with equal force, but not more applicable, to moral principles. "Truths," he says,

"of all others the most awful and interesting, are too often considered as so true that they lose all the power of truth, and lie bedridden in the dormitory of the soul side by side with the most despised and exploded errors."

It would seem that the truth of the constitutional doctrine has lost some of its force by the very fact that it has heretofore been considered so true as never to be questioned.

By the Act of Congress of July 1, 1862, c. 120, 12 Stat. 489, the Union Pacific Railroad Company was organized by Congress and authorized and empowered to lay out, construct, furnish, and maintain a continuous railroad and telegraph, with the appurtenances, from a point on the 100th meridian of longitude west from Greenwich, between the south margin of the valley of the Republican River and the north margin of the valley of the Platte River, in the Territory of Nebraska, to the western boundary of Nevada territory, and was vested with all the powers, privileges, and immunities necessary to carry into effect the purposes of the act. In aid of the great work thus inaugurated, railway corporations by the states through which the overland railroad projected was to pass were called into existence. If rights, powers, privileges, and immunities were conferred by state authority upon these state corporations, they constituted a portion of their franchises, subordinate to those conferred by the general government, and comprised with those of that government an essential part of the means for the efficiency and usefulness of the auxiliary corporations.

The powers, privileges, and immunities conferred upon the state corporations by the United States were necessarily paramount to those derived from the state. When the powers, privileges, and immunities of such state corporations were derived solely from the authority of the state, they were generally designated, when spoken of collectively, as the state franchise or franchises of the corporation, and when the rights, powers, privileges, and immunities were supposed to be

Page 162 U. S. 130

derived solely from the United States, they were generally designated, when spoken of collectively, as the federal franchise or franchises of the corporation. When no indication of the source of the franchise or franchises was specified, the rights, powers, privileges, and immunities involved in that term held by the defendant were usually designated as the franchise or franchises of the company specifically, without other description, and the term included the powers, privileges, and immunities conferred by both federal and state authority. The term embraced all those powers, duties, and immunities which were conferred, or supposed to be conferred, upon the railroad company for its operation from either source or from both sources.

By section 9 of the general act of 1862, mentioned above, the Central Pacific Railroad Company was authorized to construct a railroad and telegraph line from the Pacific Coast at or near San Francisco, or the navigable waters of the Sacramento River, to the eastern boundary of California, upon the same terms and conditions in all respects as were contained in the act for the construction of the overland railroad and telegraph line, and to meet and connect with the railroad and telegraph line on the eastern boundary of California. Each of the companies was required to file its acceptance of the conditions of the act in the Department of the Interior within six months after its passage.

By the tenth section of the general act, the Central Pacific Railroad Company, after completing its road across the State of California, was authorized to continue the construction of the railroad and telegraph through the territories of the United States to the Missouri River, including the branch roads specified in the act, upon the routes indicated, on the terms and conditions provided in the act in relation to the Union Pacific Railroad Company, until the roads should meet and connect and the whole line of the railroad and branches and telegraph should be completed.

By section 16 of the act mentioned, power was given to the Central Pacific to consolidate with the other companies named therein.

Page 162 U. S. 131

By section 17, it was provided that in case the company or companies failed to comply with the terms and conditions of the act, Congress might pass an act to insure the speedy completion of the road and branches or put the same in repair and use and direct the income of the railroad and telegraph line to be thereafter devoted to the use of the United States, and further that if the roads mentioned were not completed so as to form a continuous line from the Missouri River to the navigable waters of the Sacramento River, by July 1, 1876, the whole of the railroads mentioned and to be constructed under the provisions of the act, together with all their property of every kind and character, should be forfeited to and taken possession of by the United States.

The eighteenth section provided that when the net earnings of the entire road should reach a certain percentage upon its cost, Congress might reduce the rates of fare thereon, if unreasonable in amount, and might fix and establish the same by law, and it declared that the better to accomplish the object of the act -- namely to promote the public interest and welfare by the construction of the railroad and telegraph line and to keep the same in working order, and to secure to the government at all times, but particularly in time of war, the use and benefits of the same for postal, military, and other purposes, Congress might at any time, having due regard for the rights of the companies named, add to, alter, amend, or repeal the act, and the companies were required to make annual reports as to the matters mentioned to the Secretary of the Treasury.

By the Act of Congress of July 2, 1864, amendatory of the Act of July 1, 1862, additional powers, rights, privileges, immunities, and property were granted to the companies engaged in the great national work proposed by Congress in the former act in order to secure the completion of that work, which at that time was of imminent necessity.

By section 16 of this last act it was provided that, should the Central Pacific Railroad Company complete its line to the eastern boundary of the State of California before the line of

Page 162 U. S. 132

the Union Pacific Railroad shall have been extended westward so as to meet the line of the first-named company, that company might extend its line eastward 150 miles on the established route, so as to meet and connect with the line of the Union Pacific Railroad, complying in all respects with the provisions and restrictions of the act as to the Union Pacific Railroad, and when it was completed, should enjoy all the rights, privileges, and benefits conferred by the act on the latter company.

It is found by the Court that the Central Pacific Railroad Company accepted the provisions of the acts of 1862 and 1864, and that, on or about October 21, 1864, that company assigned to the Western Pacific Railroad Company, a corporation created and then existing under the law of California, all its rights under the acts of Congress, so far as they related to the construction of the railroad and telegraph line between the cities of San Jose and Sacramento, in California, and that this assignment was ratified and confirmed by Congress in the Act of March 3, 1865, to amend the constituting acts of 1862 and 1864.

The Act of March 3, 1865, provided that section 10 of the Act of July 2, 1864, should be so modified and amended as to allow the Central Pacific Railroad Company, and the Western Pacific Railroad Company of California, the Union Pacific Railroad Company, and the eastern division of the Union Pacific Railroad Company, and all other companies provided for in the Act of July 2, 1864, to issue their six percentum thirty-year bonds, interest payable in any lawful money of the United States, upon their separate roads. And the companies were thereby authorized to issue, respectively, their bonds to the extent of one hundred miles in advance of a continuous completed line of construction, and the assignment, made by the Central Pacific Railroad Company of California, to the Western Pacific Railroad Company of the state, of the right to construct all that portion of the railroad and telegraph from the City of San Jose to the City of Sacramento, was thereby ratified and confirmed to the Western Pacific Railroad Company,

Page 162 U. S. 133

with all the privileges and benefits of the several acts of Congress relating thereto, subject to the conditions thereof.

The Central Pacific Railroad Company was empowered by the State of California to construct within its limits various lines of railroad, and to equip them with the appurtenances essential to give to their operations efficiency and usefulness. It is conceded that until April 4, 1864, the Central Pacific Railroad Company and other railroad corporations of the state exercised and enjoyed what are termed the franchises of its corporations -- that is, the rights, powers, privileges, and immunities conferred upon them by state authority -- and also various powers, duties, privileges, and immunities conferred upon them by the general government, and which are termed their federal franchises. But on that date, the 4th of April, 1864, the Legislature of California abrogated the state franchises of those corporations and substituted by adoption in their place the federal franchises, which have remained in force ever since.

The provisions of the Act of Congress of July 1, 1862, and of July 2, 1864, state with entire distinctness the rights, powers, duties, privileges, and immunities of the principal railroad -- that of the Union Pacific -- and of the auxiliary roads connecting therewith. The most essential features are the following:

I. The Act of July 1, 1862, authorized the Union Pacific Railroad Company to construct its road, vesting it with all powers necessary for that purpose, and requiring it to transport mails, troops, and munitions of war. This was a plain exercise of the express power "to establish post roads," and of the implied power to construct military roads.

II. The same act authorized the Central Pacific Railroad Company to construct its road on the same terms and conditions as those of the Union Pacific.

III. The third section of the Act of July 2, 1864, provided in the usual form for the exercise by both companies of the federal right to acquire the right of way for the construction of these post and military roads.

IV. The Central Pacific Company was thus made the agent of the government in its exercise of the constitutional

Page 162 U. S. 134

power to establish post roads and military roads. No state law could have obstructed or impeded the federal government in the exercise of this power, or in any degree whatever have limited or facilitated the Central Pacific Company in the enjoyment of the federal franchise thus conferred.

V. If the consent of the state was necessary to the establishment of this road by the United States, it will be found in the statute of California enacted in 1852, which, independent of its preamble, reads as follows:

"SEC. 1. The right of way through this state is hereby granted to the United States for the purpose of constructing a railroad from the Atlantic to the Pacific Ocean."

Statutes of California of 1852, p. 150,

Official Supreme Court caselaw is only found in the print version of the United States Reports. Justia caselaw is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.