The ruling in
United States v. Union Pacific Railroad,
168 U. S. 506,
that each question certified to this Court from a circuit court of
appeals
"had to be a distinct point or proposition of law, clearly
stated, so that it could be distinctly answered without regard to
the other issues of law in the case; to be a question of law only
and not a question of fact, or of mixed law and fact, and hence
could not involve or imply a conclusion or judgment upon the weight
or effect of testimony or facts adduced in the case, and could not
embrace the whole case, even where its decision turned upon matter
of law only, and even though it was split up in the form of
questions,"
is affirmed and followed, and, being applied to the questions
certified in this case, makes it necessary for the Court to decline
to answer the first, the second and the sixth questions.
Chapter 99 of the Laws of the Territory of Dakota of 1883
provided for the taxation of the lands of the Northern Pacific
Railroad Company granted to it by Congress, outside of its right of
way and not used in its business, while owned by the company and
not leased, through the payment of percentages on gross earnings as
provided for therein, the plain meaning of that act being to render
the railroad company and all its property, land grants as well as
right of way, free from the payment of all taxes excepting to the
amount and in the manner described in the act.
That legislation was not in conflict with the provision in the
Act of March 2, 1861, c. 86, 12 Stat. 239, providing that no
law
"shall be passed impairing the rights of private property, nor
shall any discrimination be made in taxing different kinds of
property, but all property subject to taxation shall be in
proportion to the value of the property taxed."
It is not necessary to decide whether the act of 1883 conflicts
with the Constitution in that it lays taxes upon earnings arising
from transportation of persons and property between different
states.
The objection that the act of 1883 violates the Fourteenth
Amendment is untenable.
Page 168 U. S. 652
The railroad company can avail itself of the payment of the
taxes under the act of 1883 as a full payment of the taxes for the
year 1888, and the Court answers the fourth question in the
negative.
The next and fifth question is answered in the affirmative. The
payments made by the railroad company for the year 1888, as set
forth in the bill, embraced the whole amount of taxes due from the
defendant for that year (as well as others) under the act of 1883.
Even if not paid at the exact time provided for in the statute, the
failure to so pay might be waived by the public authorities, and as
the moneys were in fact paid to and received by the officers of the
territory and went into its treasury, and never have been returned
or tendered back, there was an effectual waiver of any objection
which might possibly have been urged that the payment was not in
time.
This case comes here on a certificate from the United States
Circuit Court of Appeals for the Eighth Circuit, and that court
certifies several questions concerning which it desires the
instruction of this Court for the proper decision of the cause.
These questions are founded, among other papers, upon the bill of
complaint which forms part of the record herein. It appears that
the bill was filed by the complainants' predecessors (who were
receivers of the property of the Northern Pacific Railroad Company)
on the 22d day of March, 1894, in the District Court of the Fourth
Judicial District of North Dakota, sitting for the County of
Richland in that state. It was filed, among other things, for the
purpose of obtaining a decree adjudging that certain alleged and
pretended and attempted assessments, under state authority, were
null and void, and that all certificates and deeds executed by
virtue of such assessments were void, and constituted clouds upon
the title to the lands described therein, and which were alleged to
be owned by the corporation of which the plaintiffs were receivers.
Some of the individual defendants named in the bill were alleged to
have purchased at a tax sale under the assessments separate
portions of the property of the company situated in Richland
county, and to have received certificates or deeds from the county
officials purporting to convey to each of them certain portions of
such property. Upon a petition of one of the individual defendants,
named Sumner R. Clark, alleging diverse citizenship between the
parties and the existence of a separate controversy
Page 168 U. S. 653
between the petitioner and the complainants, a removal of the
cause to the United States Circuit Court for the District of North
Dakota was prayed for, and on the 5th of September, 1894, the court
granted the petition and made an order for the removal of the
cause. Upon a trial of the issues joined in the case, the Circuit
Court of the United States for the District of North Dakota
dismissed the complainants' bill, and the complainants thereupon
appealed to the United States Circuit Court of Appeals for the
Eighth Circuit.
It appears from the complainants' bill that the Northern Pacific
Railroad Company was a corporation created and existing by virtue
of an Act of Congress approved July 2, 1864, entitled
"An act granting lands to aid in the construction of a railroad
and telegraph line from Lake Superior to Puget Sound, on the
Pacific Coast, by the Northern route."
The third section of that act, for the purpose of aiding in the
construction of a railroad and telegraph line to the Pacific Coast,
granted to the railroad company, its successors and assigns,
certain portions of the public lands, as mentioned in the section.
Pursuant to the provisions of the act, and prior to the year 1888,
the company had definitely fixed the line of its railroad, and
prior to that year had constructed and put in operation a
continuous line of railroad and telegraph, extending from the
waters of Lake Superior westerly, and through the Territory of
North Dakota, to the waters of Puget Sound, and prior to and during
the year 1888 many thousand acres of land in North Dakota were
owned by the railroad company under the land grant above mentioned,
although patents for a portion of the same were not issued until
June 24, 1893, and for another portion not until June 18, 1894. (No
question is made by the complainants herein that the lands owned by
the company were not taxable in 1888 on account of the fact that
the company had not then received patents from the United States
therefor.)
On the 31st of May, 1870, Congress adopted a resolution
authorizing the company to issue bonds for the construction of its
road and to secure the same by mortgages on its property
Page 168 U. S. 654
of all kinds and description, real, personal, and mixed,
including its franchises as a corporation. Under that resolution,
the company executed at different times several mortgages to secure
the payment of a hundred millions or more of bonds issued to aid in
the construction of the road, and these mortgages covered all the
property of the company, including the lands granted to it by the
United States under the act of 1864.
In 1893, the company was insolvent and unable to meet the
interest upon its bonds or to pay its other indebtedness, and in
that year suits were duly commenced against it by creditors to
recover the amount of its indebtedness, and also, by the trustee
mortgagee, to foreclose the mortgages, in which suit receivers were
appointed, and the complainants are their successors.
On March 9, 1883, the legislature of the territory enacted a
statute entitled "An act to provide for the levy and collection of
taxes upon railroad property of railroad companies in this
territory," the first and fifth sections of which are set forth in
the margin.{1} This act was repealed by chapter 105 of the Laws of
1889.
Page 168 U. S. 655
Subsequently, and on the 7th day of March, 1889, the legislature
of the territory passed another act, entitled "An act for the levy
and collection of taxes upon property of railroad companies in this
territory."
Section 7 of the act of 1889 is set forth in the margin.{2}
Page 168 U. S. 656
The Northern Pacific Railroad Company, within thirty days after
the passage of the act of 1889, duly accepted its provisions, and
within thirty days from that date paid into the treasury of the
territory the entire amount of taxes and interest theretofore
claimed by the territory as due and remaining unpaid to it from the
company on local and interstate earnings under the act of 1883,
excepting that the second half of the sum due from the company to
the territory for the taxes of 1888, according to the provisions of
the act of 1883, was not paid to and received by the treasurer of
the territory until August 15, 1889. The whole tax for 1888, under
the act of 1883, amounted to nearly $100,000, while for all the
years in which the company was in arrears under the act of 1883
(including the year 1888), the amount paid was nearly $200,000.
In the year 1888, the usual proceedings were taken by the
officials of Richland County to assess all the property in the
county under the general assessment laws of the territory,
Page 168 U. S. 657
and in such assessment the land grant lands of the railroad
company were included (regardless of the act of 1883), and
thereafter, in due course, the taxes thus levied not having been
paid by the company, the treasurer of the county, on the 4th day of
November, 1889, attempted and pretended to sell many parcels of
land belonging to the railroad company, and being in the county
already mentioned, for the purpose of collecting the taxes unpaid
thereon, and, no redemptions of the lands having been made, the
county treasurer executed to the persons who purchased the lands or
their assignees (some of whom are defendants in this suit) deeds
purporting to convey the lands so sold to such persons, and these
deeds are alleged to be invalid, but still a cloud upon the title
of the company to the lands described therein.
The bill also sets forth a great many different alleged errors,
irregularities, and omissions on the part of the taxing authorities
in taking proceedings to levy the taxes, by reason of which, as
alleged, the taxation of the property of the company was illegal,
and the deeds were null and void.
A joint and several demurrer and answer to the bill was served
upon the part of the defendants, taking issue upon some of the
allegations of fact in the bill and demurring to other parts
thereof, but a sufficient statement of the case has already been
made to lead to a proper understanding of the questions hereinafter
discussed.
MR. JUSTICE PECKHAM, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The learned circuit court of appeals has certified to this Court
six questions concerning which it desires the instruction of this
Court for a proper decision of the cause. The following are the
questions so certified:
Page 168 U. S. 658
"1. Has the United States Circuit Court for the District of
North Dakota jurisdiction to hear and decide said case?"
"2. Were or were not the lands described in the bill of
complaint subject to taxation under the laws of the Territory of
Dakota in the year 1888, by reason of the facts stated in the bill
of complaint respecting the condition of the title thereof?"
"3. Was it the purpose of chapter 99 of the Laws of Dakota for
1883 to exempt from taxation lands granted to aid in the
construction of the Northern Pacific Railroad by the Act of July 2,
1864, which are outside of its right of way, and are not shown to
be used in its business as a common carrier?"
"4. If such was the purpose of the act, was the act void in
whole or in part as transgressing the limitations placed upon the
power of the territorial legislature?"
"5. Conceding that the purpose of chapter 99 of the Laws of 1883
was to exempt, among other things, the land grant of the Northern
Pacific Railroad Company, and that said law is valid, are the
payments of the percentage of the gross earnings for the year 1888
alleged in the bill to have been made sufficient to entitle the
complainant to the equitable relief sought?"
"6. Conceding the lands in controversy to have been subject to
taxation for the year 1888, were the appellants, by reason of any
of the alleged irregularities or defects in the mode of assessment,
entitled to equitable relief without first offering to pay the
taxes properly chargeable against said lands?"
Of these questions, we think we ought to answer only the third,
fourth, and fifth. The first, second, and sixth come within our
rulings in the cases of
Jewell v. Knight, 123 U.
S. 426;
Fire Insurance Association v. Wickham,
128 U. S. 426;
Maynard v. Hecht, 151 U. S. 324;
Graver v. Faurot, 162 U. S. 435;
Cross v. Evans, 167 U. S. 60, and
United States v. Union Pacific Railroad, ante,
168 U. S. 505.
In the case last cited, in speaking of the rules which govern
the certification provided for in sections 5 and 6 of the Judiciary
Act of March 3, 1891, c. 517, 26 Stat. 826, THE CHIEF JUSTICE
Page 168 U. S. 659
repeated those rules as derived from prior decisions, and said
that
"each question had to be a distinct point or proposition of law,
clearly stated, so that it could be distinctly answered without
regard to the other issues of law in the case; to be a question of
law only, and not a question of fact or of mixed law and fact, and
hence could not involve or imply a conclusion or judgment upon the
weight or effect of testimony or facts adduced in the case, and
could not embrace the whole case, even where its decision turned
upon matter of law only and even though it was split up in the form
of questions."
Guided by these rules, we find that the first question does not
comply with their requirements. No single question of law is
plainly raised therein. The record only shows that the case was
commenced in a state court, and was removed upon the petition of
one of the individual defendants into the Circuit Court of the
United States for the District of North Dakota. Neither party (so
far as appears from the record) raised any question of jurisdiction
in the circuit court to hear and determine the whole case. Whether
there is some defect supposed to exist in the petition for removal,
or whether the controversy was or was not a separable one, or
whether the citizenship of the different parties was not
sufficiently alleged or did not sufficiently appear, whether the
petition was filed in the proper time, or the bond was sufficient
in form, or the approval of the court was or was not sufficient --
all these questions are possible subjects of inquiry in order to
answer the general question submitted to us. We should not be asked
to grope our way through the papers submitted and examine every
objection that imagination could raise, with no hint as to what, if
any, objection is really supposed to exist. Some of the above
enumerated possible objections could not in any event be answered
in the present state of the record, which does not contain all the
facts necessary to be known in their consideration. If the whole
case were here upon writ of error or appeal, we should have to look
into any question of jurisdiction, whether raised or not; but we
are not obliged to do so when questions only are certified to us,
unless presented in proper form.
Page 168 U. S. 660
The second question we regard as equally objectionable. The
question certified is not a distinct point or proposition of law
clearly stated, so that it can be definitely answered without
regard to other issues of law or fact in the case. What is the
particular condition of the title to the lands which raises the
doubt as to their being subject to taxation, and induces the
certification of the whole question to this Court? This is not
stated, and we are left to discover any or all possible objections
by reading the bill and then conjecturing what the particular
objection may really be.
What might otherwise have been considered as an objection,
regard being had to the decision of this Court in
Northern
Pacific Railroad v. Traill County, 115 U.
S. 600, would seem to have been rendered of no force by
the Act of Congress of July 10, 1886, c. 764, 24 Stat. 143,
providing for taxation of railroad grant lands. The question of law
arising from the condition of the title is neither plainly stated
nor is the condition itself clearly presented.
The sixth question, for the same reasons, cannot be answered.
There is no plain statement of a distinct proposition of law. We
are left to read the whole of that part of the bill alleging many
different facts said to constitute various and separate
irregularities, each of which might be a separate and distinct
question of law, but all of which are joined together in an
inseparable mass.
Questions of the character of the three thus described are not
within the meaning of the act of 1891, and certifying them confers
no jurisdiction upon this Court to answer them.
We come, then, to the consideration of the third, fourth, and
fifth questions, and we will proceed to answer them.
The wording of the third question may at first sight render its
meaning somewhat obscure. We are asked whether it was
"the purpose of chapter 99 of the Laws of Dakota of 1883 to
exempt from taxation lands granted to aid in the construction of
the Northern Pacific Railroad by the Act of July 2, 1864, which are
outside of its right of way, and are not shown to be used in its
business as a common carrier?"
We
Page 168 U. S. 661
should answer, "No; it was not the intention to exempt from, but
to change the mode of, taxation."
This Court, in
Northern Pacific Railroad v. Clark,
153 U. S. 252, in
speaking of the act of 1889, which in this particular (that of
substituting an assessment upon gross earnings) is similar in
substance to the act of 1883, said that the act did not exempt the
property of the railroad company from taxation, but that it merely
substituted one method of taxation for another, upon the terms and
conditions specified.
But we take the true meaning of the question to be whether the
act exempts from taxation the lands granted to aid in the
construction of the railroad company in any other manner than as
provided for in that act. Thus, interpreting the meaning of the
question, we are of opinion it should be answered in the
affirmative.
The language of the act in its first section seems to be so
plain as to be beyond the necessity of construction. The act says
that the payments therein provided for are
"in lieu of any and all other taxes upon any railroads, except
railroads operated by horse power, within this territory, or upon
the equipment, appurtenances or appendages thereof, or upon any
other property situated in this territory belonging to the
corporation owning or operating such railroads, or upon the capital
stock or business transactions of such railroad company."
These payments are also said to be "in full of any and all other
taxation and assessments whatever upon the property aforesaid."
In addition to this plain language, the act, for the purpose of
securing the payment of the taxes as provided, gives to the
territory a lien upon the railroad of the company and upon all its
property, estate, and effects whatsoever, personal, real, or mixed.
This provision for a lien upon all property of the company,
together with the provision of section 5, that
"the lands of any railroad company shall become subject to
taxation in the same manner as other similar property as soon as
the same are sold, leased, or contracted to be sold or leased,"
is additional proof to conclusively show that the lands,
while
Page 168 U. S. 662
owned by the company and not leased, etc., shall not be taxed
other than as they are taxed by the act, and through the payment of
the percentages on the gross earnings, as provided for therein. The
principle that exemption from taxation must be clearly shown, and
that it generally applies (if at all) only to property used in the
business of the company claiming the exemption, is acknowledged and
assented to. The case of
Ford v. Delta & Pine Land
Co., 164 U. S. 662, is
an illustration of the principle, but it does not here apply. The
language of this act is clear and absolute. It is also not the case
of an exemption from taxation, but the substitution of one method
for another. The land here in question is, in addition, closely
connected with the business of the company. We shall show this more
at length hereafter.
The learned counsel for the defendants argues that if the
payment of the percentage of the earnings under this act was
intended to be in lieu of the land tax, then a part at least of the
payment would have been divided among the counties according to the
value of the granted lands unsold within such counties because, as
he says, it is a well known fact that many counties of North Dakota
contain large tracts of land owned by this company, but do not
contain a mile of the line of its road, and, under the provisions
of this law, a county thus situated received no part of the gross
earnings tax. But this argument goes only to the alleged injustice
of the appropriation of the tax when paid, and not to its extent or
character.
Under the act of 1889, it is admitted that the legislature
intended the exemption of lands like these in controversy from any
taxation other than the indirect kind arising from the taxation of
gross earnings, because under that act, a part of the proceeds of
the tax was divided among the counties according to the acreage of
the unsold granted lands, even where no portion of the railroad was
contained in such county. But the language of the exemption above
described is substantially the same in both acts. The later act
simply makes an appropriation of the proceeds of the tax somewhat
different from that of the earlier one. The exemption was the same
in each, and founded upon the same language.
Page 168 U. S. 663
While the later act, perhaps recognizing the injustice in
bestowing no portion of the tax collected upon those counties
through which the road did not run, although lands of the company
were therein situated, altered the disposition and appropriated a
portion to the counties in which some of the lands were situated,
yet no difference as to the intention of the legislature to exempt
all the lands can be properly based upon this alteration. The
exemption of the lands from a tax other than as therein provided
for is based upon the same language in each act, and is perfectly
plain in both.
It is also seen that, by the act of 1879, c. 46, p. 122, Session
Laws of Dakota, a system of taxation of certain specified property
of railroad companies by a tax on their gross earnings was provided
for, and the tax thus collected was stated in the act to be "in
lieu of all other taxation . . . of the roadbed, right of way,
stations or depot grounds, tracks, rolling stock, water stations,"
etc., "used in or incident to the operation of such railroad."
This act, by reason of the tax on the gross earnings, limits the
freedom from taxation to the roadbed, as above stated, and property
"used in or incident to the operation of such railroad." The act
also provides that
"all property of railroads not above enumerated, subject to
taxation, shall be treated in all respects, in regard to assessment
and equalization, the same as similar property belonging to
individuals, whether said lands are derived from the general
government or from other sources."
The difference between the language of the act of 1879 and that
of 1883 is most marked. Instead of enumerating the particular
property which is to be regarded as exempt from other taxation by
reason of the tax on gross earnings, and providing for the taxation
of the rest of the property of the railroad the same as similar
property of the individual, as in the case in the act of 1879, the
act of 1883 says the tax is in lieu of any and all other taxes upon
any railroad within the territory or upon the equipment or upon any
other property situated in the territory.
Page 168 U. S. 664
Does not this different language import, clearly and plainly, a
different intention?
We are unable to think of any language of plainer meaning than
that used in this statute, and there can be no doubt, as it seems
to us, that its meaning is to render the railroad company and all
its property, land grants as well as right of way, free from the
payment of all taxes, excepting of the amount and in the manner
described in the act.
This same question was argued in the supreme court of the state,
and decided by it in 1892, in accordance with the views we have
above expressed.
Railroad Co. v. Barnes, 2 N.D. 310. It
was afterwards decided in another way in
Railroad Co. v.
McGinnis, 4 N.D. 494, somewhat upon the theory that, as it was
a federal question, the court would follow the decision to that
effect by a federal court. 47 F. 681.
We are not embarrassed by these conflicting decisions, and we
have no difficulty in answering the third question in the
affirmative.
We come now to the fourth question, which involves, among other
things, the construction of one of the sections of the organic act
creating the Territory of Dakota (Act of March 2, 1861, c. 86, 12
Stat. 239, at sec. 6, p. 241), the material portion of which,
relating to the authority of the territorial legislature, provides
that no law
"shall be passed impairing the rights of private property; nor
shall any discrimination be made in taxing different kinds of
property; but all property subject to taxation shall be in
proportion to the value of the property taxed."
The same provision, in substance, is found in section 1925,
Revised Statutes, relating to the Legislative Assemblies of
Colorado, Dakota, and Wyoming.
It is argued by counsel that although under this provision of
the organic law the territorial legislature could generally select
the subjects of taxation and could classify property for that
purpose, and that these different classes of property could be
valued or taxed by different methods, nevertheless the act of 1883,
under consideration, is in excess of the lawful exercise of any of
the powers granted under the organic act,
Page 168 U. S. 665
notwithstanding that act in the section above alluded to
provided that
"the legislative power of the territory shall extend to all
rightful subjects of legislation consistent with the Constitution
of the United States and the provisions of this act."
There must be some solid ground for making a distinct
classification of property, and such ground does not exist, as is
contended, by reason of any of the facts herein mentioned.
Viewing the character, condition, and use of these lands, it is
said to be plain that they are simply "property owned by a
railroad," and not "railroad property," as described in the title
to the act of 1883, and that the two are not equivalent terms;
that, although railroad property might be taxed in a special method
and at a special rate, yet by the term "railroad property" is
simply meant property necessary for use in the usual daily conduct
of the business of the company as a common carrier by rail, and
that any lands outside of that use, although owned by a railroad
company, could not be classified and taxed in any different manner
from land owned by an individual; otherwise such classification
would be purely arbitrary, and the taxation in that way would be
illegal; that no earnings arise from these lands which are assessed
under the act, because the earnings upon which the tax is assessed
are by the terms of the act restricted to "the gross earnings . . .
arising from the operating of such railroad," and such earnings are
not created by nor do they arise from nor are they in any way
connected with these lands, which are therefore not taxed at all
under this act, and no justification for their special
classification for purposes of taxation can on that account be
found.
All these various statements are made in the course of the main
and general argument that these lands cannot be taxed under an act
like that of 1883, because there is no sound distinction between
such lands owned by the company and ordinary lands owned absolutely
by an individual.
We do not concur in the accuracy of the description as to the
condition of these lands, and we are not, therefore, impressed with
the force of the argument based upon it. The
Page 168 U. S. 666
lands are not purely and simply owned or held for sale or other
disposition for profit, and in no way connected with the use or
operation of the railroad, and in regard to them the company is not
a landed proprietor on the same footing with any other proprietor
of lands, and it is not correct to say that these lands do not
substantially, though indirectly, contribute towards the gross
earnings of the railroad company, as provided in the act of 1883,
nor can it be admitted that, in merely taxing the gross earnings
arising from the operation of the road, these lands are not taxed
at all. The lands are closely connected with the railroad and with
its operation, and they are not in the same condition as a subject
for taxation as are the lands of an individual. While we agree that
property of the same kind, and under the same condition, and used
for the same purpose, cannot be divided into different classes for
purposes of taxation, and taxed by a different rule simply because
it belongs to different owners, yet, where the situation and the
possible use and the present condition of the ownership of lands
are wholly different -- such as they are in this case -- from
ordinary ownership, a classification is not arbitrary nor
unreasonable which places such lands outside the class of lands
owned in the ordinary way by individuals.
Although the act here provides for the taxation of the gross
earnings arising from the operation of the road, the phrase means
earnings which arise because of its operation. The road is in
operation, and the earnings which it is thereby enabled to make are
to be taxed. Property which the company owns, and which has enabled
and continues to enable it to operate its road, is part of the
property from which the earnings arise by reason of such operation,
and is within the meaning of the act. These lands are of this
description. Although they are not taxed directly, yet the same is
true of the right of way, the roadbed, the engines, cars, and water
tanks, all of which are confessedly "railroad property" without
which the road could not be operated. In substance, it must be said
that without the existence of all the various pieces of property
just enumerated, gross earnings would be quite impossible. It is
also true in regard to these lands. It
Page 168 U. S. 667
is not a question of what might, under other circumstances, have
been their condition with relation to the railroad. We must take
the circumstances that actually did exist at the time this act was
passed for the purpose of determining this question. And, looking
at those facts, we see that unquestionably these lands have
indirectly contributed to the gross earnings derived from operating
the road, and that such earnings have arisen and been made possible
by reason of the lands. They have not only aided in making these
gross earnings possible, but they have formed, and do still form, a
material factor in the combination of circumstances contributing to
the construction of the railroad, to its operation, and to its
earnings.
They originally formed a part of the public domain, and were
granted by Congress for the purpose of aiding in the construction
of this railroad to the Pacific Coast, and were given to and
accepted by the company subject to the conditions named in the
eighth section of the act. When the lands finally became the
property of the company, they were impressed with a trust in favor
of the government, as representing the public, that they should be
used for the purpose for which they were granted, and the company
was not even allowed to mortgage or create any lien upon them in
any way except by the consent of the Congress of the United States.
Act July 2, 1864, 13 Stat. 365 at page 370, section 10.
Subsequently it was found that the road could not be built under
the conditions at first imposed, and Congress therefore, in 1870,
authorized the company to issue bonds for the construction of its
road and to secure the same by mortgage. Under such authority,
mortgages were thereafter made to secure bonds for more than a
hundred million of dollars, the proceeds of which were used in
building the road. These lands have therefore actually and directly
contributed in a large measure, and have formed a most potent
factor towards building the road and enabling it to be operated,
and to earn moneys by reason of such operation. How can it be
correctly said that they are not in any way taxed by a tax on the
gross earnings of the road arising from its operation, when the
road
Page 168 U. S. 668
could only be constructed and operated by reason (among others)
of the moneys raised upon the security of these very lands? The
present insolvency of the railroad company shows that the lands
must form a most important item in the ability of the company or
its successors to continue the operation of the road and make any
earnings whatever.
If it be assumed that, after the lands became the property of
the company, it was at that moment no more restricted in their sale
than any other corporation organized to buy and sell real estate,
and that it had the entire right to sell, or not to sell, or to
mortgage to whom and at what price it might obtain, and that it
owned the land like an individual, still the question is presented
as to what was the actual condition of affairs when the act of 1883
was passed. At that time, these lands were so closely connected
with the railroad, its construction and operation, as in effect to
be part and parcel thereof. They stood as security for millions of
bonds issued to secure the construction and operation of the road,
and, upon these facts, the reason and justification for a
classification such as was made in that act are plainly apparent.
At that time, totally different circumstances than those which
surround an individual in the absolute ownership of his property
existed in relation to these lands. As they made the gross earnings
possible, it cannot be said, with the least regard to the acts,
that those earnings did not in part issue out of the lands upon the
same principle that they partly issued out of the right of way the
roadbed, track, engines, cars, tanks, and other confessedly
"railroad property." There is no difference in principle between
the two classes of property so far as this question is concerned.
Then too, the road of the company runs through the whole state,
hundreds of miles. It owns thousands upon thousands of acres
therein, granted it for the purposes stated, and these lands it has
accordingly pledged to redeem its bonds issued as mentioned. Its
building was a work of national importance, and it was built for
use by the government, as well as for other purposes. Surely all
these various facts justify a classification of such an entity for
taxation by a different method and upon different lines than
the
Page 168 U. S. 669
individual, and lands thus situated and owned are in a
materially different condition from lands absolutely owned by an
individual.
It is said this reasoning, while it might be applicable to the
Northern Pacific Railroad Company, would not be applicable to many
other railroads which had no land grants, or which were not
situated as is the company in question, and that, as the law is in
its terms general and applies to all roads, this company cannot
obtain its benefit without showing that it is a valid provision in
regard to all railroad property. But if the property of this
company is so situated and the facts regarding it are so materially
different from other real estate as to fulfill the conditions upon
which a general classification may be proper, we think the company
could avail itself of the act even if some other companies could
not.
Many cases are cited in the brief of counsel from the different
states having provisions in their constitutions somewhat similar to
those found in the organic act of Dakota, and in which states it
has been held that the legislature is not confined to taxation in
precisely the same method for all classes of property, but that it
has power to classify and to provide different methods of taxation
of the property so classified. The particular facts arose in and
the cases are cited from Wisconsin, Iowa, Kansas, Louisiana,
Michigan, New Jersey, Pennsylvania, Mississippi, Missouri, and
Illinois. They are cited in the margin.{3}
Page 168 U. S. 670
Upon a full consideration of the subject, we are persuaded that
there is nothing in any provision of the act of 1883 for the
taxation of the gross earnings which violates the letter or the
spirit of the organic act.
Objection is also made to the act of 1883 on the ground that it
is in violation of the commerce clause of the federal Constitution
in that, by its terms, taxes are laid upon earnings arising from
the transportation of persons and property between different
states, etc. -- in other words, that the tax is not confined to
earnings which arise from the transaction of its business wholly
within the state. It is said that the case of
State Tax
on Railway Gross Receipts, 15 Wall. 284, holding
that the imposition of taxes upon gross receipts of railway
companies was not illegal, although the gross receipts were made up
in part of freights received from the transportation of merchandise
from one state to another, or through one state into another, has
been overruled by the subsequent cases in this Court, among which
are those of
Fargo v. Michigan, 121 U.
S. 230,
121 U. S. 244;
Philadelphia & Southern Steamship Company v.
Pennsylvania, 122 U. S. 326, and
it is claimed that the case is not brought under that of
Maine
v. Grand Trunk Railway Company, 142 U.
S. 217, in that there is no provision for ascertaining
the amount of gross earnings derived from interstate commerce, and
for the taxation of the balance only.
A perusal of the first section of the act does not render it at
all clear that there was intended to be a tax on any portion of the
gross earnings of the corporation which arose from interstate
commerce. The language of the act which declares that the tax
should be paid into the treasury of the territory upon a percentage
of all gross earnings of the corporation owning or operating such
railroad "arising from the operation of such railroad as shall be
situated within the territory" gives great reason to doubt the
correctness of the construction which would levy the tax upon the
earnings derived from interstate commerce. But there is great force
in the claim that the act is not subject to the objections
mentioned in the above cases reported in 121 and 122 United States,
and the cases
Page 168 U. S. 671
therein referred to. In those cases, there was a distinct tax
upon the gross earnings, without reference to any other tax, and
not in substitution or in lieu of another tax; while in this case,
the act plainly substitutes a different method of taxation upon the
property of a railroad company. It is a tax upon the lands and all
the other property of the company, but, instead of placing a
valuation upon the lands and other property and apportioning a
certain amount upon such valuation directly, as was the old method,
a new one is established of taking a percentage upon the gross
earnings as a fair substitute for the former taxes upon all the
lands and property of the company, and when it is said, as it is in
this act, that the tax collected by this method shall be in lieu of
all other taxes whatever, it would seem that it might be claimed
with great plausibility that a tax levied under such circumstances
and by such methods was not in reality a tax upon the gross
earnings, but was a tax upon the lands and other property of the
company, and that the method adopted of arriving at the sum which
the company should pay as taxes upon its property was by taking a
percentage of its gross earnings.
We do not think it necessary, however, to decide this question,
because we are of opinion that, by the act of 1889, the legislature
proffered the company a compromise as to the taxes claimed to be
due, and the company accepted the same. Construing the act of 1883
as we do, and as meaning to exempt the company from the payment of
all other taxes than those therein named, upon all its property, of
every name and nature, we find that, in 1889, this company had been
in default in the payment of its taxes under the act of 1883 for
the years 1886, 1887, and 1888. It owed nearly $200,000 in taxes
for those years under that act. The taxing authorities of the
County of Richland had also assumed to tax the lands of the company
for the year 1888 in the same way as if owned by individuals, but
the tax as thus assessed had not been paid by the company. In this
state of affairs, the act of 1889 was passed, the effect of which
was to say to the company, "If you will pay all the taxes that are
due under the act of 1883, you may then accept and come in
under
Page 168 U. S. 672
the provisions of this act." And there is, in addition to this
offer, a clear and necessary implication from the language used in
the act that if the company would pay those taxes in full which
were thus in arrears, such payment would operate as a discharge of
all claims for taxes, including those claims made by virtue of the
proceedings to tax the lands of the company under the general law.
It certainly is not possible to believe that the legislature
intended to make it a condition for the acceptance of the act of
1889 by the company that it should not only pay all the taxes which
were provided for under the act of 1883 (and which by the terms of
that act were in full of all other taxation), and for the payment
of which the company might be in default, and yet, and in addition,
should still be liable to pay the taxes as assessed in Richland
County under the general law. We cannot suppose the legislature
intended to compel the payment of taxes twice, and therefore the
language of the act of 1889, providing for the payment of all taxes
in arrears under the act of 1883 as a condition for the acceptance
of the act of 1889, implied that such payment should also be in
full of all other claims for taxes assessed for the same years.
Such a condition and proposition were entirely within the power of
the legislature to impose and make, and, when the proposition was
accepted and the condition performed by the payment of money into
the treasury of the territory, all claim for taxes under any
general law levied directly upon the lands necessarily fell with
such payment and acceptance. This implied release of the taxes for
the year 1888, which the authorities had assumed to levy under the
general law, and not under the provisions of the act of 1883,
arises from the language of the act of 1889, and is just as strong
and just as clear as if it had been stated in so many words in that
act. That which arises by plain and clear implication from the
language used in an act is as much a part of the act as if the
implication had been embodied in so many words.
It may be said that the money should have been paid, if at all,
within thirty days after the passage of the act. Possibly, if the
payment had not been made within that time, and the
Page 168 U. S. 673
company subsequently had offered to pay it, the money might have
been refused by the authorities of the territory, as not paid in
time. But the question of the time of payment was one which might
be waived by the public authorities, and the objection was in law
and in fact waived by the receipt and retention of the money.
The other objection made to the act of 1883 -- that it violates
the Fourteenth Amendment -- we think untenable under the views we
have above expressed.
Basing our opinion upon the facts of this case, we would say
that for the reasons herein stated, the company can avail itself of
the payment of the taxes under the act of 1883 as a full payment of
the taxes for the year 1888, and we formally answer the fourth
question in the negative.
The next and fifth question we answer in the affirmative. The
payments made by the railroad company for the year 1888, as set
forth in the bill, embraced the whole amount of taxes due from the
defendant for that year (as well as others) under the act of 1883.
Even if not paid at the exact time provided for in statute, the
failure to so pay might, as we have already stated, be waived by
the public authorities, and when the moneys were in fact paid to
and received by the officers of the territory, and went into its
treasury, and never have been returned or tendered back, we think
there was an effectual waiver of any objection which might possibly
have been urged that the payment was not in time.
To sum up, therefore, we do not answer the first, second, and
sixth questions. The answers to the third, fourth, and fifth we
make as above stated, and they will be
So certified.
"
Act 1883"
"Section 1.
Percentage of Gross Earnings to be Paid in Lieu
of Other Taxes. In lieu of any and all other taxes upon any
railroads, except railroads operated by horse power, within this
territory, or upon the equipment, appurtenances or appendages
thereof, or upon any other property situated in this territory,
belonging to the corporation owning or operating such railroads, or
upon the capital stock or business transaction of such railroad
company, there shall hereafter be paid into the treasury of this
territory a percentage of all the gross earnings of the corporation
owning or operating such railroad, arising from the operation of
such railroad as shall be situated within this territory, as
hereinafter stated, that is to say: every such railroad corporation
or person operating a railroad in this territory shall pay to said
treasurer each year for the first five years after said railroad
shall be or shall have been operated in whole or in part, two (2)
percentum of such gross earnings, and for and in each and every
year after the expiration of the said five years, three (3)
percentum of the said gross earnings, and the payment of such
percentum annually as aforesaid shall be and is in full of all
taxation and assessments whatever upon the property aforesaid. The
said payments shall be made one-half (1/2) on or before the
fifteenth day of February, and one-half (1/2) on or before the
fifteenth day of August, in each year, and for the purpose of
ascertaining the gross earnings aforesaid, an accurate account of
such earnings shall be kept by said company; an abstract whereof
shall be furnished by said company to the treasurer of this
territory on or before the first (1st) day or February in each
year, the truth of which abstract shall be verified by the
affidavits of the treasurer and secretary of said company, and for
the purpose of ascertaining the truth of such affidavits and the
correctness of such abstracts, full power is hereby vested in the
governor of this territory, or any other person appointed by law,
to examine under oath the officers and employees of said company,
or other persons, and if any person so examined by the governor or
other authorized persons shall knowingly or willfully swear falsely
concerning the matter aforesaid, every such person is declared to
have committed perjury. And for the purpose of securing to the
territory the payment of the aforesaid percentums, it is hereby
declared that the territory shall have a lien upon the railroad of
said company and upon all property, estate and effects of said
company whatsoever, personal, real, or mixed. And the lien hereby
secured to the territory shall have and take precedence of all
demands, decrees and judgments against said company."
"SEC. 5.
Lands Subject to Taxation. -- The lands of any
railroad company shall become subject to taxation in the same
manner as other similar property, as soon as the same are sold,
leased or contracted to be sold or leased, and on or before the
first day of April of each year each railroad company having lands
within this territory shall return to the county clerk of each
county full and complete lists, verified by the affidavits of some
officer of the company having knowledge of the facts, of all lands
of such company situated in such county, sold or contracted to be
sold or leased during the year ending the last day of December
preceding, and the list furnished on or before the first day of
April, A.D. 1883, in compliance with the terms of this section,
shall include a complete list of all lands sold or leased, or
contracted to be sold or leased, prior to the last day of December,
A.D. 1882."
"
Act 1889"
"SEC. 7.
Any railroad company which at the date of the
passage of this act owns or is engaged in operating any line or
line of railroad in this territory may at any time within thirty
days after the passage of this act, by resolution of its board of
directors, attested by its secretary and filed with the secretary
of the territory, accept and become subject to the provisions of
this act, and provided that any railroad company which is now in
arrears in the payment of taxes assessed under chapter 99 of the
Laws of 1883, shall, within thirty days after the passage of this
act, pay into the territorial treasury the full amount of the taxes
and interest due under the assessments under said law of 1883
before they can avail themselves of the provisions of this act by
accepting its terms, including taxes on both territorial and
interstate earnings. It is further expressly provided that any
company failing to strictly comply with the provisions of this act
within the term herein provided shall be immediately subject to
assessment and taxation in the manner provided for the assessment
and the taxation of the property of individuals of this territory,
and said taxes shall be collected in the same manner as is now
provided in cases of the property of individuals. Any company which
has not complied with the provisions of chapter 99 of the Session
Laws of 1883 by paying all taxes claimed on gross earnings, both
territorial and interstate, or by filing an account of gross
earnings, both territorial and interstate, shall prepare and file
such account in the manner therein provided within thirty days from
the passage hereof, and pay one-half of the entire amount due under
the agreement and acceptance herein referred to, for the current
year, and also the entire amount of taxes heretofore claimed by the
territory on local and interstate earnings of such companies but
remaining unpaid at the time of filing said account, and within
thirty days after the passage of this act, or the same shall not
apply to such company or companies. The balance of aid taxes due
for the current year shall be paid to the territorial treasurer on
of before the fifteenth day of August, 1889."
Wisconsin Central Railroad v. Taylor County, 52 Wis.
37;
Griswold College v. Iowa, 46 Ia. 275;
Missouri
River &c. Railroad v. Morris, 7 Kan. 210;
Francis v.
Atchison, Topeka &c, Railroad, 19 Kan. 303;
Louisiana
State Lottery Company v. New Orleans, 24 La.Ann. 86;
New
Orleans v. Kaufman, 29 La.Ann. 283;
New Orleans v.
Davidson, 30 La.Ann. 554;
New Orleans v. Fourchy, 30
La.Ann. 910;
People v. The Auditor, 7 Mich. 84;
Youngblood v. Sexton, 32 Mich. 406;
State v.
Runyon, 41 N.J.L., 98;
Kittanning Coal Company v.
Commonwealth, 79 Pa.St. 100;
Mississippi Mills v.
Cook, 56 Miss. 40;
Crow v. State, 14 Mo. 237;
Hamilton v. County Court, 15 Mo. 3;
State v.
North, 27 Mo. 464, 483;
Illinois Central Railroad v.
McLean, 17 Ill. 291;
State v. Crittenden County, 19
Ark. 360;
St. Louis, Iron Mountain & Southern Railroad v.
Berry, 41 Ark. 509;
Arkansas Midland Railroad v.
Berry, 44 Ark. 17.