The provision in the Act of July 27, 1866, c. 278, exempting
from taxation the right of way granted to the Atlantic and Pacific
Railroad Company, does not operate to exempt the right of way when
acquired from private owners and not from the United States, and
the judgment in this case made at this term and reported on page
172 U. S. 186 of
172 U.S. having been made under a mistake of facts, is modified to
that extent.
The assessments on the superstructures on so much of the right
of way as was taxable were not assessments of personal property,
but were clearly assessments of real estate, and the fact that the
improvements were designated by name, and some of them given a
separate valuation, did not invalidate their assessment as real
estate.
The statement of the case will be found in the opinion of the
Court.
MR. JUSTICE McKENNA, delivered the opinion of the Court.
This case was submitted with No. 106, which was between the same
parties, and on the authority of the opinion in that case the
judgment of the supreme court of the territory was affirmed.
172 U. S. 172 U.S.
171,
172 U. S. 186.
The cases were argued together, and it was supposed involved
identically the same questions, dependent upon a statement of facts
which was stipulated. No distinction between the cases
Page 174 U. S. 546
was indicated in the oral argument, and a reference of a few
lines in a brief of 35 pages was overlooked.
In the petition for rehearing, our attention was called to the
fact that there is a substantial difference between the matters
involved in this cause and those arising in No. 106. The difference
is this: in 106, the right of way was in Bernalillo County, through
land which was public domain, while in this case the right of way
is in Valencia County, across the public domain for 33 miles only,
and for 60.7 miles over land which was held in private ownership at
the time of the grant to the railroad by the act of 1866. In other
words, the railroad company derived its right of way for 33 miles
in Valencia County under section 2 of the Act of July 27, 1866, and
to 60.7 miles under the power conferred by section 7 of said act.
This difference was not adverted to in No. 106, and we will not
consider the effect of it. In the opinion in 106, we said:
"The right of way is granted to the extent of two hundred feet
on each side of the railroad, including necessary grounds for
station buildings, workshops, etc. What, then, is meant by the
phrase, 'the right of way'? 'A mere right of passage,' says
appellant.
Per contra, appellee contends that the fee was
granted, or, if not granted, that such a tangible and corporeal
property was granted that all that was attached to it became part
of it, and partook of its exemption from taxation."
"To support its contention, appellant urges the technical
meaning of the phrase 'right of way,' and claims that the primary
presumption is that it was used in its technical sense. Undoubtedly
that is the presumption, but such presumption must yield to an
opposing context and the intention of the legislature otherwise
indicated. Examining the statute, we find that whatever is granted
is exactly measured as a physical thing, not as an abstract right.
It is to be two hundred feet wide, and to be carefully broadened so
as to include grounds for the superstructures indispensable to the
railroad."
After further consideration of what was granted, we also
said:
"The interest granted by the statute to the Atlantic &
Pacific Railroad Company therefore is real estate of corporeal
quality, and the principles of such apply. One of these, and
Page 174 U. S. 547
an elemental one, is that whatever is erected upon it becomes
part of it."
And we concluded that not only the right of way was exempt, but
all its superstructures were exempt. But our conclusion was
expressly based on the terms of the statute, and we took care to
affirm the rule of construction which had been announced many times
and in many ways, that the taxing power of the state is never
presumed to be relinquished unless the intention be expressed in
terms too clear to be mistaken. If a doubt arise as to the
intention of the legislature, that doubt must be solved against
exemption from taxation.
Applying this rule to the Act of July, 1866, the exemption from
taxation must be confined to the right of way granted by the United
States by section 2 of the act, and to the superstructures which
become a part of it, and not to the right of way which the railroad
company may have acquired under section 7, or independently of that
section. Section 1 creates the corporation, and authorizes it to
construct and maintain a continuous railroad and telegraph line
from and to certain points, and invests the company with the
powers, privileges, and immunities necessary to effect that
purpose. Section 2 provides:
"That the right of way through the public lands be, and the same
is hereby granted, to the said Atlantic and Pacific Railroad
Company . . . for the construction of a railroad and telegraph line
as proposed. . . . Said way is granted to said railroad to the
extent of one hundred feet in width on each side of said railroad
where it may pass through the public domain, . . . and the right of
way shall be exempt from taxation within the territories of the
United States."
14 Stat. 292.
The right of way which is granted and the right of way which is
exempt from taxation is precisely identified by the natural and
first meaning of the words used and their relations. It would
require an exercise of construction to extend the exemption, and,
even if there are reasons for it, there are certainly reasons
against it, and in such conflict the rule requires that the latter
shall prevail.
2. It is contended by the appellee that the assessment was
invalid because the laws of the territory required the
assessment
Page 174 U. S. 548
of the right of way and its superstructures to be made as an
entirety.
The contention is technical. It is not complained that the
valuation of the superstructures was excessive, but that they were
assessed as personal property, and hence invalidly assessed,
because, by the laws of the territory, the term "real estate"
includes lands to which title has been acquired and improvements,
and the term "improvements" includes all buildings, structures,
fixtures, and fences erected upon of fixed to land, whether title
has been acquired or not.
The record does not afford the means of judging of the
contention as clearly as might be wished, but we think it is not
tenable.
The intervening petition, which is the basis of the proceedings,
proceeds upon the ground that omission were made in assessments of
property to the railroad company for a series of years beginning
with the year 1892 and ending with 1896, and that additions were
made of said property under the laws of the territory for said
years. The valuation of the property and the taxes levied against
it are stated, and a description of the property is attached.
It is alleged that the receiver of the company refuses payment
because he claims that the property is exempt from taxation under
the Act of July, 1866, but it is also alleged
"that the said exemption from taxation extends only to the right
of way granted to said railroad company on each side of its
railroad where it may pass through the public domain, and does not
extend to any improvements made upon the right of way, nor to the
said right of way itself where it passes through land not included
in the public domain."
It is prayed that "the said taxes, so levied as aforesaid," be
declared a lien on the property in the hands of the receiver, and
that he be ordered "to pay the said taxes." General relief is also
prayed.
To the petition of intervention, the receiver submitted pleas
respectively to the claim of taxes for each of the years. The pleas
were substantially alike, and alleged the assessment of the
company's property for each of the years, with a description
Page 174 U. S. 549
or designation of it, the value at which it was assessed, and
the taxes levied against it, and the amounts of taxes paid by the
company.
In the first plea, it is alleged that the company, through its
officers, made a return to the county assessor of its property
situated in the county, and a copy of the return is attached and
made part of the plea. Discriminating the property upon which the
taxes were paid and that in the return of the company and assessed,
the plea alleges:
"That the other property returned by the taxing officers of said
railroad company for said year was and is the property upon which
the taxes are paid as above stated, and as shown by Receiver's
Exhibits 3 and 4."
"That the only pretended or claimed levy of taxes against any
property of the Atlantic & Pacific Railroad Company for the
said year remaining unpaid is that shown to have been extended and
levied upon the 'right of way' of the Atlantic & Pacific
Railroad Company, which was and is assessed at the lump sum of
$327,103 upon the assessment roll for said year, together with the
further sums placed in said assessment roll in the column headed
'Value of Cattle,' opposite the words contained in the column in
said assessment roll headed 'Name of Property Owners,' save and
except as hereinafter stated."
"The names and sums referred to are as follows:"
Rio Puerco, 1st . . . . . . . . . $1,888.00
El Rito, 3d . . . . . . . . . . . 541.00
Laguna, 4th . . . . . . . . . . . 677.00
Cubero, 6th . . . . . . . . . . . 2,145.00
McCarty's, 7th. . . . . . . . . . 682.00
Grant's, 8th. . . . . . . . . . . 1,383.00
Blue Water, 9th . . . . . . . . . 3,150.00
San Jose,2d . . . . . . . . . . . 1,316.00
"All of which is shown by the said assessment and levy of taxes
upon said assessment roll, as will fully appear by reference to
said Receiver's Exhibits No. 1 and No. 2, and the indorsements
thereon. "
Page 174 U. S. 550
"That prior to the first day of January, 1894, the Atlantic
& Pacific Railroad Company paid each and every item of taxes
assessed and levied against it or its property in said Valencia
County, Territory of New Mexico, save and except only that levied
against the assessed value of its 'right of way,' and that levied
against the figures set opposite the names of the stations as
hereinabove set forth and described."
The right of way therefore was assessed in 1892, and whatever
taxes were due on it, or any part of it, were left delinquent.
As to the other years, the record is not much less definite. It
appears that the right of way was assessed, and the taxes levied
against it were not paid. In all the pleas there is a careful
allegation of payment of the taxes which were conceded to be valid,
and as careful a one that the company refused
"to pay the balance of the taxes because of the fact that the
assessment as made by the assessor was an assessment of the right
of way and station grounds of the Atlantic & Pacific Railroad,
which were and are exempt under the act of congress creating said
railroad company."
It is manifest that the right of way was assessed, and the taxes
were delinquent. In what manner were the additional assessments
made? It is shown in the exhibit to the intervening petition. We
select the assessment for 1892. The assessments for the other years
are the same, the amounts only being different to a small
extent:
The following was omitted in the assessment of the year 1892,
and was not put upon the assessor's book, and is now, in accordance
with the provisions of sections 2847 and 2848, here listed, valued,
and assessed by the collector:
The cross-ties, rails, fish plates, bolts, spikes, bridges,
culverts, telegraph line, and other structures erected upon
the right of way of the Atlantic & Pacific Railroad
Company
in the County of Valencia, and constituting "improvements"
upon the land embraced within said right of way where same
runs over what was public domain of the Untied states when
said right of way was granted to said company, 33 miles in
length, valued at $6,500 per mile . . . . . . . . . . . . . . .
$214,500
Page 174 U. S. 551
Also the cross-ties, rails, fish plates, bolts, spikes,
bridges, culverts, telegraph line, and other structures
erected upon the right of the Atlantic & Pacific
Railroad
Company in said County of Valencia, and constituting
"improvements" upon the land embraced within said right
of way where it runs over land which was held in private
ownership at the time of the grant of said right of way
to said railroad company, 60.7 miles, valued at
$6500 per mile. . . . . . . . . . . . . . . . . . . . . . . . .
$394,550
========
Station houses, depots, switches, water tanks, and all other
improvements at Rio Puerco station. . . . . . . . . . . . . .
$1,800
Station houses, depots, switches, water tanks, and all other
improvements at San Jose station. . . . . . . . . . . . . . .
540
Station houses, depots, switches, water tanks, and all other
improvements at El Rito station . . . . . . . . . . . . . . .
600
Station houses, depots, switches, water tanks, and all other
improvements at Laguna station. . . . . . . . . . . . . . . .
2,100
Station houses, depots, switches, water tanks, and all other
improvements at Cubero station. . . . . . . . . . . . . . . .
600
Station houses, depots, switches, water tanks, and all other
improvements at McCarty's station . . . . . . . . . . . . . .
1,300
Station houses, depots, switches, water tanks, and all other
improvements at Grant's station . . . . . . . . . . . . . . .
3,100
Station houses, depots, switches, water tanks, and all other
improvements at Blue Water station. . . . . . . . . . . . . .
1,300
------
$11,340
The assessments were not, as contended by appellee, of personal
property. They were clearly of real estate, and, because the
improvements were designated by name, and some of them given a
separate valuation, did not invalidate their assessment as real
estate. It was mere description, which did not change the essential
or legal character of the superstructures.
It follows from these views that --
The judgment of the supreme court of the territory must be
reversed, and the cause remanded for further proceedings in
accordance with this opinion.