A license fee is a charge for the privilege of carrying on a
business or occupation and is not the equivalent or in lieu of a
property tax, and a provision in the grant of a franchise for a
license fee does not, in the absence of express stipulations of
exemption, relieve the property employed in the business from the
ordinary burdens of property taxation and amount to a contract of
exemption from further taxation within the impairment of contract
clause of the federal Constitution.
The legislation challenged in this case, being in terms an
amendment of the general tax law of New York and subject to the
provisions of that law in respect to notice and review by
certiorari of the action of the assessing board, is not obnoxious
to the charge of a lack of due process of law; nor is due process
shown to be wanting by a failure to require a return of the
valuation of the franchise held by a corporation separately from
that of the tangible property held under the franchise.
This case, like the preceding, involves the special franchise
tax law of New York. The facts are these: on December 22, 1853, the
relator was authorized by the City of Brooklyn to construct,
maintain, and operate street surface railroads upon specified
streets, and required to enter into a good and sufficient bond
conditioned for the faithful performance of all the terms and
stipulations in the resolutions granting the authority. On December
30 of that year, a bond in the sum of $200,000 was duly executed by
the relator, and has ever since been kept in force. The terms and
stipulations as to the construction and operation of the railroad
need not be mentioned. The resolutions contained these further
provisions:
"The rates of fare for each passenger and the license fee
for
Page 199 U. S. 49
each car to be paid annually into the city treasury shall be on
the respective lines above mentioned:"
"1. Furnam Street route, fare not to exceed five cents, license
fee, $50. 2. Court Street route, fare not to exceed four cents,
license fee, $20. 3. Powers Street route, fare not to exceed five
cents, license fee, $20. 4. Flatbush Avenue route, fare not to
exceed five cents, license fee, $20. 5. Fulton Avenue route, fare
not to exceed four cents, license fee, $20. 6. Myrtle Avenue route,
fare not to exceed four cents, license fee, $20. 7. Sands Street
route, fare not to exceed five cents, license fee, $10. 8. Front
Street route, fare not to exceed five cents, license fee, $10."
This action of the City of Brooklyn was validated by the state
legislature. Other contracts were made by the City of Brooklyn with
other companies. Those companies were subsequently consolidated
with the relator, which, on the first of January, 1900, held
forty-five similar contracts with the municipalities for the
construction, maintenance, and operation of street surface
railroads in the present Boroughs of Brooklyn and Queens. Some of
these contracts required the annual payment of a certain percentage
of the gross receipts. Subsequently, under due legislative
authority, the contract arrangements between the relator and the
city were modified in respect to the amount of the annual license
fee. The statute authorizing the modification contains this
clause:
"The said license fees shall be taken in full satisfaction for
the use of the streets or avenues, but the same shall not release
said company from any obligations required by law to keep such
streets or avenues, or any part thereof, in repair, which said
obligations and the contracts, laws, or ordinances creating and
enforcing the same, are hereby continued in full force and
operation. "
Page 199 U. S. 50
MR. JUSTICE BREWER delivered the opinion of the Court.
Do these license fees stand as an equivalent for property taxes,
so that a stipulation in respect to them relieves the property from
liability to ordinary taxation? This certainly would not be the
general rule. A license fee is understood to be a charge for the
privilege of carrying on a business or occupation, and is not the
equivalent or in lieu of a property tax. Take the vast volume of
occupations which are subject to licenses from either the nation or
the states. Who supposes that, in the absence of some express
stipulation, the fees charged for those licenses operate to relieve
the property employed in the business from the ordinary burdens of
property taxation? The precise question as to the effect of an
ordinance imposing a license fee for cars used on a street railroad
was before the Court of Appeals in
New York v. Broadway &c.
R. Company, 97 N.Y. 275, in which, on page 282, the court
said:
"The contract of the defendant arises from the provisions of its
charter by which it agrees to pay a certain sum reserved therein in
consideration of the privileges conferred thereby. It is neither a
tax nor is it a penalty, and hence the technical rules as to penal
actions or suits to recover a tax which are invoked by the
appellant have no application."
Further, in the statute modifying the license fees, which was
accepted by the relator, it was expressly stated that they should
"be taken in full satisfaction for the use of the streets or
avenues." Clearly, therefore, the fees being imposed for a specific
purpose, they cannot exempt the relator's property from the tax
imposed by the special franchise tax law.
It is further objected that there was a failure of due process
of law in that the special franchise tax law did not indicate
Page 199 U. S. 51
any principle or method for ascertaining the value of the
intangible property included in the special franchise, and that the
state board did not make any separate valuation of the tangible
property, and did not adopt or proceed upon any principle or method
in valuing the totality of the tangible and intangible property,
but necessarily indulged in mere speculation and guesswork, instead
of exercising judgment in making the valuation.
We are of opinion that this objection is without merit. The
sections relating to the taxation of special franchises were
enacted as amendments to and part of the general tax law of the
state, and are to be construed accordingly. By one section, the
valuation is to be determined by the state board of tax
commissioners. By another, the owner of every such franchise is
required to make a written report to the state board, containing a
full description of the franchise, a copy of the special grant,
ordinance, or contract under which it is held, or, if possessed or
enjoyed under a general law, a reference to such law, a statement
of any condition, obligation or burden imposed upon the franchise,
together with such other information as the state board may
require, and that board is authorized to require, from time to
time, further reports containing information upon such matters as
it may specify. Not only that; after making the valuation, the
state board is required to give notice in writing to the owner of
the franchise stating the valuation, and that, on a day specified,
not less than twenty nor more than thirty days thereafter, it will
meet to hear and determine any complaint against such assessment,
and this notice must be served at least ten days before the day
fixed for the hearing. At the hearing, the owner may file a
statement under oath, specifying the respect in which the valuation
is incorrect; testimony may be taken and a full investigation had.
Another section provides for a review of the assessment by writ of
certiorari. These provisions were all complied with. Notice was
given to the relator, and on the day fixed for the hearing, it
appeared and filed its objections.
Page 199 U. S. 52
Thereafter, it took out a writ of certiorari to review the
proceedings of the tax board. Surely by this due process of law was
secured. It will not do to say that the valuation of a piece of
property is mere guesswork. True, it is often largely a matter of
opinion, and mathematical exactness is not always possible. Various
elements enter into and affect an opinion respecting the value of a
given piece of property, and all that can be required is that the
assessing board exercise an honest judgment, based upon the
information it possesses or is able to acquire. That valuation is
of the property as a totality, and it is unnecessary in making an
assessment to disintegrate the various elements which enter into
it, and ascribe to each its separate fraction of value. Oftentimes
the combination itself is no inconsiderable factor in creating the
value. We are of the opinion that the relator was not denied due
process of law in the valuation and assessment of its
franchise.
We see nothing else in the record calling for notice, and the
judgment of the Supreme Court of New York is
Affirmed.
