1. Where the case as made by the bill involves a real and
substantial question under the Constitution and the requisite
jurisdictional amount, the jurisdiction of the district court, and
of this Court upon a direct review of its action, extends to all
other questions involved, whether of federal or state law, and
enables the court to rest its judgment on the decision of such of
the questions as in its opinion effectually dispose of the case. P.
257 U. S.
482.
2. Equity will enjoin collection of an illegal tax in the
absence of an adequate and certain remedy at law. P.
257 U. S.
482.
3. The Act of North Dakota, Laws 1919, c. 222, which lays an
excise on foreign corporations of a percentage of their capital
actually invested in the transaction of business in the state
provides that, for one engaged in business within and without the
state, investment within the state shall mean that proportion of
its entire stock and bond issues which its intrastate business
bears to its total business; that, where the business within the
state is not otherwise
Page 257 U. S. 479
easily and certainly separable, it shall be held to mean such
proportion of the entire business as the property of the
corporation within the state bears to its entire property, and
that, in the case of a railroad or other specified public service
corporation whose line extends into the state from without,
property within the state shall mean the proportion of the entire
property of the corporation which its mileage within the state
bears to its entire mileage.
Held that the mileage basis
(declared unconstitutional in
Wallace v. Hines,
253 U. S. 66) was
intended to be the exclusive basis for computing the assessments of
such a railroad company, and that assessments based on the ratio of
the value of its railroad within the state to that of its entire
railroad were not authorized by the statute. P.
257 U. S.
482.
4. The unconstitutionality of an excepting provision in a
statute does not enlarge the scope of its other provisions. P.
257 U. S.
484.
Reversed.
Appeal from a decree of the district court, after a final
hearing on bill and answer, dismissing a bill filed by the Director
General of Railroads and five railroad companies to enjoin the
collection of a special excise tax sought to be imposed under North
Dakota Laws, 1919, c. 222.
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This is a suit by the Director General of Railroads and five
railroad companies to enjoin the collection of a special excise tax
assessed against each of the companies for the years 1918 and 1919
under a statute of North Dakota, c. 222, Laws 1919, which
declares:
"Every corporation, joint-stock company, or association now or
hereafter organized under the law of any other state, the United
States, or a foreign country, and
Page 257 U. S. 480
engaged in business in the state during the previous calendar
year shall pay annually a special excise tax with respect to the
carrying on or doing business in the state by such corporation,
joint-stock company, or association equivalent to 50 cents for each
$1,000.00 of the capital actually invested in the transaction of
business in the state:
Provided, that, in the case of a
corporation engaged in business partly within and partly without
the state, investment within the state shall be held to mean that
proportion of its entire stock and bond issues which its business
within and without the state, and where such business within the
state is not otherwise more easily and certainly separable from
such entire business within and without the state, business within
the state shall be held to mean such proportion of the entire
business within and without the state as the property of such
corporation within the state bears to its entire property employed
in such business both within and without the state; provided, that
in the case of a railroad, telephone, telegraph, car or
freight-line, express company, or other common carrier, or a gas,
light, power, or heating company having lines that enter into,
extend out of, or across the state, property within the state shall
be held to mean that proportion of the entire property of such
corporation engaged in such business which its mileage within the
state bears to its entire mileage within and without the state. The
amount of such annual tax shall in all cases be computed on the
basis of the average amount of capital so invested during the
preceding calendar year: provided, that, for the purpose of this
tax, an exemption of $10,000.00 from the amount of capital invested
in the state shall be allowed: provided further that this exemption
shall be allowed only if such corporation, joint-stock company, or
association furnish to the Tax Commissioner all the information
necessary to its computation. "
Page 257 U. S. 481
Each of the five railroad companies was subjected in the usual
way to a full property tax on all of its property within the state,
and that tax is not here in question. The suit relates only to the
special excise tax.
The companies were all organized under the laws of states other
than North Dakota, and all own lines of railroad extending from
other states into or through that state. These lines were under
federal control, and operated by the Director General during the
years for which the excise tax was assessed.
The taxing officers at first assessed the tax for the year 1918
against these companies by using in its computation the mileage
ratio prescribed in the second proviso of the statute, but this
Court held that the tax so assessed was an unwarranted interference
with interstate commerce and a taking of property without due
process of law.
Wallace v. Hines, 253 U. S.
66. Thereupon, the taxing officers assessed the tax for
that year, and also for 1919, by using in its computation the ratio
specified in the last preceding clause of the statute -- that is to
say, a ratio fixed by contrasting the value of the company's
railroad within the state with the value of its entire railroad
within and without the state.
In the district court, the validity of the tax assessed on the
new or substituted basis was challenged on the grounds (a) that, as
to railroad companies whose lines lie partly within and partly
without the state, the statute does not authorize or sanction a tax
assessed on that basis, (b) that the statute imposes the tax only
as a special excise on doing business in the state, and these
companies were not thus engaged during the years for which the tax
was assessed, their railroads being then under federal control and
operated exclusively by the Director General, and (c) that an
excise tax assessed against these companies on the new or
substituted basis operates necessarily to burden interstate
commerce and to take property
Page 257 U. S. 482
without due process of law, and so is in conflict with the
commerce clause of the Constitution and the due process clause of
the Fourteenth Amendment.
At an early stage in the suit, three judges granted an
interlocutory injunction against the enforcement of the tax, but on
the final hearing, which was on bill and answer, a decree was
entered dismissing the bill on the merits. The plaintiffs then
sought and were allowed a direct appeal to this Court under ยง 238
of the Judicial Code.
The case made by the bill involved a real and substantial
question under the Constitution of the United States, and the
amount in controversy exceeded $3,000, exclusive of interest and
costs, so the case plainly was cognizable in the district court. In
such a case, the jurisdiction of that court, and ours in reviewing
its action, extends to every question involved, whether of federal
or state law, and enables the court to rest its judgment or decree
on the decision of such of the questions as in its opinion
effectively dispose of the case.
Field v. Barber Asphalt Paving
Co., 194 U. S. 618,
194 U. S. 620;
Siler v. Louisville & Nashville R. Co., 213 U.
S. 175,
213 U. S. 191;
Louisville & Nashville R. Co. v. Garrett, 231 U.
S. 298,
231 U. S. 303;
Greene v. Louisville & Interurban R. Co., 244 U.
S. 499,
244 U. S.
508.
As respects the right to sue in equity, it is enough to say
that, in this case, we find the same absence of an adequate and
certain remedy at law that was found in
Wallace v. Hines,
supra, where the right to invoke the aid of a court of equity
was sustained.
The first of the objections made to the tax is that it was
assessed on a basis which the statute does not authorize or
sanction. Of course, if this be so, the tax must fall, and the
other objections need not be considered. The statute does not
prescribe a single or unvarying basis whereon the tax shall be
assessed, but designates several bases, and
Page 257 U. S. 483
defines the particular situation in which each shall be applied.
Where the business of the corporation is wholly within the state,
the tax is to be computed according to the "capital actually
invested" in the business. Where the business is partly within and
partly without the state, the computation is to be based on a
proportion of the company's "entire stock and bond issues," which
is to be taken as representing the "investment within the state."
But the proportion is to be determined by standards which vary
materially. In one situation, it is to conform to the ratio of the
company's business within the state to its total business, and in
another to the ratio of the company's property employed in its
business within the state to its entire property employed in its
business wherever conducted. In the instance of railroad companies
and other public utility corporations having lines partly within
and partly without the state, the statute specially provides that
it shall conform to the ratio of the company's mileage within the
state to its entire mileage. This special provision is embodied in
a proviso or excepting clause which comes immediately after the
clause relating to other corporations, and reads as follows:
". . . provided that, in the case of a railroad, telephone,
telegraph, car or freight-line, express company, or other common
carrier, or a gas, light, power, or heating company, having lines
that enter into, extend out of or across the state, property within
the state shall be held to mean that proportion of the entire
property of such corporation engaged in such business which its
mileage within the state bears to its entire mileage within and
without the state."
This provision shows that the legislature intended by it to put
the corporations which it describes in a separate class for the
purposes of the tax, to require as to them that the tax be computed
and assessed on the special basis there prescribed, and to exempt
them from the bases
Page 257 U. S. 484
applicable to other corporations. That intention hardly could
have been more clearly expressed.
True, this provision was held in
Wallace v. Hines,
supra, to be in conflict with constitutional limitations, and
indefensible as respects the railroad companies now before us, but
that does not make the provision any the less a key to the
intention of the legislature, or enable the taxing officers to
subject these corporations to other provisions from which the act
as a whole shows the legislature intended to except them.
Where an excepting provision in a statute is found
unconstitutional, courts very generally hold that this does not
work an enlargement of the scope or operation of other provisions
with which that provision was enacted, and which it was intended to
qualify or restrain. The reasoning on which the decisions proceed
is illustrated in
State ex rel. v. Dombaugh, 20 Ohio St.
167, 174. In dealing with a contention that a statute containing an
unconstitutional proviso should be construed as if the remainder
stood alone, the court there said:
"This would be to mutilate the section and garble its meaning.
The legislative intention must not be confounded with the power to
carry that intention into effect. To refuse to give force and
vitality to a provision of law is one thing, and to refuse to read
it is a very different thing. It is by a mere figure of speech that
we say an unconstitutional provision of a statute is 'stricken
out.' For all the purposes of construction, it is to be regarded as
part of the act. The meaning of the legislature must be gathered
from all they have said, as well from that which is ineffectual for
want of power as from that which is authorized by law."
Here, the excepting provision was in the statute when it was
enacted, and there can be no doubt that the legislature intended
that the meaning of the other provisions should be taken as
restricted accordingly. Only with that
Page 257 U. S. 485
restricted meaning did they receive the legislative sanction
which was essential to make them part of the statute law of the
state, and no other authority is competent to give them a larger
application. Had they been enacted without the excepting provision,
and had it been embodied in a subsequent amendatory act, a
different situation would be presented -- one in which that
provision would have no bearing on the meaning or scope of the
others -- because an existing statute cannot be recalled or
restricted by anything short of a constitutional enactment. This
was recognized in
Truax v. Corrigan, ante, 257 U. S. 312,
where, when an amendatory exception proved unconstitutional, we
held that the original statute stood wholly unaffected by it.
From what has been said, it follows that to sustain the tax in
question, we should have to hold that the taxing officers, on
finding that it could not constitutionally be assessed on the basis
specially prescribed in the statute, were at liberty to assess it
on another and different basis, which the statute shows was not to
be applied to corporations of the class to which these railroad
companies belong. Of course, we cannot so hold.
We are accordingly of opinion that the first objection to the
tax is well taken, and therefore that the tax is invalid, and its
collection should be enjoined.
Decree reversed.