-Caveat Lector-
from:
http://www.ratical.org/corporations/SCvSPR1886.html
-----
This is the text of the 1886 Supreme Court decision granting corporations the
same rights as living persons under the Fourteenth Amendment to the
Constitution. Quoting from David Korten's The Post-Corporate World, Life
After Capitalism (pp.185-6):
In 1886, . . . in the case of Santa Clara County v. Southern
Pacific Railroad Company, the U.S. Supreme Court decided that a private
corporation is a person and entitled to the legal rights and protections the
Constitutions affords to any person. Because the Constitution makes no
mention of corporations, it is a fairly clear case of the Court's taking it
upon itself to rewrite the Constitution.
Far more remarkable, however, is that the doctrine of corporate
personhood, which subsequently became a cornerstone of corporate law, was
introduced into this 1886 decision without argument. According to the
official case record, Supreme Court Justice Morrison Remick Waite simply
pronounced before the beginning of arguement in the case of Santa Clara
County v. Southern Pacific Railroad Company that
The court does not wish to hear argument on the question whether
the provision in the Fourteenth Amendment to the Constitution, which forbids
a State to deny to any person within its jurisdiction the equal protection of
the laws, applies to these corporations. We are all of opinion that it does.
The court reporter duly entered into the summary record of the
Court's findings that
The defendant Corporations are persons within the intent of the
clause in section 1 of the Fourteen Amendment to the Constitution of the
United States, which forbids a State to deny to any person within its
jurisdiction the equal protection of the laws.
Thus it was that a two-sentence assertion by a single judge
elevated corporations to the status of persons under the law, prepared the
way for the rise of global corporate rule, and thereby changed the course of
history.
The doctrine of corporate personhood creates an interesting legal
contradiction. The corporation is owned by its shareholders and is therefore
their property. If it is also a legal person, then it is a person owned by
others and thus exists in a condition of slavery -- a status explicitly
forbidden by the Thirteenth Amendment to the Constitution. So is a
corporation a person illegally held in servitude by its shareholders? Or is
it a person who enjoys the rights of personhood that take precedence over the
presumed ownership rights of its shareholders? So far as I have been able to
determine, this contradiction has not been directly addressed by the courts.
This file is mirrored from:
http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=118&p
age=394.
------------------------------------------------------------------------
U.S. Supreme Court
SANTA CLARA COUNTY v. SOUTHERN PAC. R. CO.,
118 U.S. 394 (1886)
118 U.S. 394
COUNTY OF SANTA CLARA
v.
SOUTHERN PAC. R. CO. 1
PEOPLE OF THE STATE OF CALIFORNIA
v.
CENTRAL PAC. R. CO.
SAME
v.
SOUTHERN PAC. R. CO.
Filed May 10, 1886
[118 U.S. 394, 396] D. M. Delmas, A. L. Rhodes, for Santa Clara County.
[118 U.S. 394, 397] E. C. Marshall, for plaintiffs in error.
Wm. M. Evarts, Geo. F. Edmunds, and S. W. Sanderson, for defendants in error.
After stating the facts in the foregoing language, Mr. Justice HARLAN
delivered the opinion of the court.
These several actions were brought-the first one in the superior court of
Santa Clara county, California, the others in the superior court of Fresno
county, in the same state-for the recovery of certain county and state taxes
claimed to be due from the Southern Pacific Railroad Company and the Central
Pacific Railroad Company under assessments made by the state board of
equalization upon their respective franchises, road-ways, road-beds, rails,
and rolling stock. In the action by Santa Clara county the amount claimed is
$13,366.53 for the fiscal year of 1882. For that sum, with 5 per cent.
penalty, interest at the rate of 2 per cent. per month from December 27,
1882, cost of advertising, and 10 per cent. for attorney's fees, judgment is
asked against the Souther Pacific [118 U.S. 394, 398] Railroad Company. In
the other action against the same company the amount claimed is $5,029.27 for
the fiscal year of 1881, with 5 per cent. added for non-payment of taxes and
costs of collection. In the action against the Central Pacific Railroad
Company judgment is asked for $25,950.50 for the fiscal year of 1881, with
like penalty and costs of collection. The answer in each case puts in issue
all the material allegations of the complaint, and sets up various special
defenses, to which reference will be made further on. With its answer the
defendant, in each case, filed a petition, with a proper bond, for the
removal of the action into the circuit court of the United States for the
district, as one arising under the constitution and laws of the United
States. The right of removal was recognized by the state court, and the
action proceeded in the circuit court. Each case, the parties having filed a
written stipulation waiving a jury, was tried by the court. There was a
special finding of facts, upon which judgment was entered in each case for
the defendant. The general question to be determined is whether the judgment
can be sustained upon all or either of the grounds upon which the defendants
rely.
The case as made by the pleadings and the special finding of facts is as
follows:
By an act of congress approved July 27, 1866, the Atlantic & Pacific Railroad
Company was created, with power to construct and maintain, by certain
designated routes, a continuous railroad and telegraph line from Springfield,
Missouri, to the Pacific. For the purpose-which is avowed by congress-of
facilitating the construction of the line, and thereby securing the safe and
speedy transportation of mails, troops, munitions of war, and public stores,
a right of way over the public domain was given to the company, and a liberal
grant of the public lands was made to it. The railroad so to be constructed,
and every part of it, was declared to be a post route and military road,
subject to the use of the United States for postal, military, naval, and all
other government service, and to such regulations as congress might impose
for restricting the charges for government transportation. By the [118 U.S.
394, 399] eighteenth section of the act, the Southern Pacific Railroad
Company,-a corporation previously organized under a general statute of
California passed May 20, 1861, (St. Cal. 1861, p. 607,)-was authorized to
connect with the Atlantic & Pacific Railroad at such point, near the boundary
line of that state, as the former company deemed most suitable for a railroad
to San Francisco, with `uniform gauge and rate of freight or fare with said
road;' and in consideration thereof, and `to aid in its construction,' the
act declared that it should have similar grants of land, `subject to all the
conditions and limitations' provided in said act of congress, `and shall be
required to construct its road on like regulations, as to time and manner,
with the Atlantic & Pacific Railroad.' 14 St. p. 292, 1, 2, 3, 11, 18. In
November, 1866, the Atlantic & Pacific Railroad Company and the Southern
Pacific Railroad Company filed in the office of the secretary of the interior
their respective acceptances of the act.
By an act of the legislature of California, passed April 4, 1870, to aid in
giving effect to the act of congress relating to the Southern Pacific
Railroad Company, it was declared that `to enable the said company to more
fully and completely comply with and perform the requirements, provisions,
and conditions of the said act of congress, and all other acts of congress
now in force, or which may hereafter be enacted, the state of California
hereby consents to said act; and the said company, its successors and
assigns, are hereby authorized to change the line of its railroad so as to
reach the eastern boundary line of the state of California by such route as
the company shall determine to be the most practicable, and to file new and
amendatory articles of association; and the right, power, and privilege is
hereby granted to, conferred upon, and vested in them to construct, maintain,
and operate, by steam or other power, the said railroad and telegraph line
mentioned in said acts of congress, hereby confirming to and vesting in the
said company, its successors and assigns, all the rights, privileges,
franchises, power, and authority conferred upon, [118 U.S. 394, 400]
granted to, or vested in said company by the said acts of congress, and any
act of congress which may be hereafter enacted.'
Subsequently, by the act of March 3, 1871, congress incorporated the Texas
Pacific Railroad Company, with power to construct and maintain a continuous
railroad and telegraph line from Marshall, in the state of Texas, to a point
at or near El Paso, thence through New Mexico and Arizona to San Diego,
pursuing, as near as might be, the thirty-second parallel of latitude. To aid
in its construction, congress gave it, also, the right of way over the public
domain, and made to it a liberal grant of public lands. The nineteenth
section provided `that the Texas Pacific Railroad Company shall be, and it is
hereby, declared to be a military and post road; and for the purpose of
insuring the carrying of the mails, troops, munitions of war, supplies, and
stores of the United States, no act of the company nor any law of any state
or territory shall impede, delay, or prevent the said company from performing
its obligations to the United States in that regard: provided, that said road
shall be subject to the use of the United States for postal, military, and
all other governmental services, at fair and reasonable rates of
compensation, not to exceed the price paid by private parties for the same
kind of service, and the government shall at all times have the preference in
the use of the same for the purpose aforesaid.'
The twenty-third section of that act has special reference to the Southern
Pacific Railroad Company, and is as follows:
`Sec. 23. That, for the purpose of connecting the Texas Pacific Railroad with
the city of San Francisco, the Southern Pacific Railroad Company of
California is hereby authorized (subject to the laws of California) to
construct a line of railroad from a point at or near Tehacapa Pass, by way of
Los Angeles, to the Texas Pacific Railroad, at or near the Colorado river,
with the same rights, grants, and privileges, and subject to the same
limitations, restrictions, and conditions, as were granted to said Southern
Pacific Railroad Company of California by the act of July 27, 1866: provided,
however, that this section shall in no way [118 U.S. 394, 401] affect or
impair the rights, present or prospective, of the Atlantic & Pacific Railroad
Company, or any other company.'
Under the authority of this legislation, federal and state, the Southern
Pacific Railroad Company constructed a line of railroad from San Francisco,
connecting with the Texas & Pacific Railroad (formerly the Texas Pacific
Railroad) at Sierra Banca, in Texas: and, with other railroads, it is
operated as one continuous line (except for that part of the route occupied
by the Central Pacific Railroad) from Marshall, Texas, to San Francisco. It
is stated in the record that the Southern Pacific Railroad Company of
California, since the commencement of this action, has completed its road to
the Colorado river, at or near the Needles, to connect with the Atlantic &
Pacific Railroad, and that with the latter road it constitutes a continuous
line from Springfield, Missouri, to the Pacific, except as to the connection,
for a relatively short distance, over the road of the Central Pacific
Railroad Company.
On the seventeenth of December, 1877, the said Southern Pacific Railroad
Company, and other railroad corporations then existing under the laws of
California, were legally consolidated, and a new corporation thereby formed
under the name of the Southern Pacific Railroad Company, the present
defendant in error, 59.30 miles of whose road is in Santa Clara county and
17.93 miles in Fresno county.
On the first of April, 1875, this company was indebted to divers persons in
large sums of money advanced to construct and equip its road. To secure that
indebtedness, it executed on that day a mortgage for $32, 520,000 on its
road, franchises, rolling stock, and appurtenances, and on a large number of
tracts of land, in different counties of California, aggregating over
11,000,000 acres. These lands were granted to the company by congress under
the abovementioned acts, and are used for agricultural, grazing, and other
purposes not connected with the business of the railroad. Of those patented,
3,138 acres are in Santa Clara county, and 18, 789 acres in Fresno county.
When these proceedings were instituted, no part of its above mortgage debt
had been paid, except the accruing in- [118 U.S. 394, 402] terest and
$1,632,000 of the principal, leaving outstanding against it $30, 898,000.
In the year 1852, California, by legislative enactment, granted a right of
way through that state to the United States for the purpose of constructing a
railroad from the Atlantic to the Pacific ocean; declaring that the interests
of California, as well as the whole Union, `require the immediate action of
the government of the United States for the construction of a national
thoroughfare, connecting the navigable waters of the Atlantic and Pacific
oceans, for the purpose of the national safety, in the event of war, and to
promote the highest commercial interests of the Republic.' St. Cal. 1852, p.
150. By an act passed July 1, 1862, congress incorporated the Union Pacific
Railroad Company, with power to construct and maintain a continuous railroad
and telegraph line to the western boundary of what was then Nevada territory,
`there to meet and connect with the line of the Central Pacific Railroad
Company of California.' 12 St. 489, 1, 8. The declared object of extending
government aid to these enterprises was to effect the construction of a
railroad and telegraph line from the Missouri river to the Pacific, which,
for all purposes of communication, travel, and transportation, so far as the
public and the general government are concerned, should be operated `as one
connected, continuous line.' St. Cal. 1852, 6, 9, 10, 12, 17, 18.
In 1864 the state of California passed an act to aid in carrying out the
provisions of this act of congress, the first section of which declared that
`to enable said company more fully and completely to comply with and perform
the provisions and conditions of said act of congress, the said company,
their successors and assigns, are hereby authorized and empowered, and the
right, power, and privilege is hereby granted to, conferred upon, and vested
in them, to construct, maintain, and operate the said railroad and telegraph
line, not only in the state of California, but also in the said territories
lying east of and between said state and the Missouri river, with such
branches and extensions of said railroad and telegraph line, or either of
them, as said company may deem necessary or proper, and also the right of way
for said railroad and telegraph line over any lands belonging to [118 U.S.
394, 403] this state, and on, over, and along any streets, roads, highways,
rivers, streams, water, and water-courses, but the same to be so constructed
as not to obstruct or destroy the passage or navigation of the same, and also
the right to condemn and appropriate to the use of said company such private
property, rights, privileges, and franchises as may be proper, necessary, or
convenient for the purposes of said railroad and telegraph, the compensation
therefor to be ascertained and paid under and by special proceedings, as
prescribed in the act providing for the incorporation of railroad companies,
approved May 20, 1861, and the act supplementary and amendatory thereof, said
company to be subject to all the laws of this state concerning railroad and
telegraph lines, except that messages and property of the United States, of
this state, and of said company shall have priority of transportation and
transmission over said line of railroad and telegraph, hereby confirming to
and vesting in said company all the rights, privileges, franchises, power,
and authority conferred upon, granted to, and vested in said company by said
act of congress, hereby repealing all laws and parts of laws inconsistent or
in conflict with the provisions of this act, or the rights and privileges
herein granted.'
In 1870 the Central Pacific Railroad Company of California and the Western
Pacific Railroad Company formed themselves into one corporation under the
name of the Central Pacific Railroad Company, the defendant in one of these
actions, 61.06 miles of whose road is in Fresno county. The company complied
with the several acts of congress, and there is in operation a continuous
line of railway from the Missouri river to the Pacific ocean, the Central
Pacific Railroad Company owning and operating the portion thereof between
Ogden, in the territory of Utah, and San Francisco.
When the present action was instituted against this company the United States
had and now have a lien, created by the acts of congress of 1862 and 1864,
for $30,000,000, with a large amount of interest, upon its road, rolling
stock, fixtures, and franchises; and there were also outstanding bonds for a
like amount issued by the company prior to January 1, 1875, and secured by a
mortgage upon the same property.
Such were the relations which these two companies held to [118 U.S. 394, 404]
the United States and to the state when the assessments in question were
made for purposes of taxation.
It is necessary now to refer to those provisions of the constitution and laws
of the state which, it is claimed, sustain these assessments. The
constitution of California, adopted in 1879, exempts from taxation growing
crops, property used exclusively for public schools, and such as may belong
to the United States, or to that state, or to any of her county or municipal
corporations, and declares that the legislature `may provide, except in the
case of credits secured by mortgage or trust deed, for a reduction from
credits of debts due to bona fide residents' of the state. It is provided in
the first section of article 13 that, with these exceptions, `all property in
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, and mixed, capable of private ownership.'
The fourth section of the same article provides: `A mortgage, deed of trust,
contract, or other obligation by which a debt is secured, shall, for the
purposes of assessment and taxation, be deemed and treated as an interest in
the property affected thereby. Except as to railroad and other quasi public
corporations, in case of debts so secured, the value of the property affected
by such mortgage, deed of trust, contract, or obligation, less the value of
such security, shall be assessed and taxed to the owner of the property, and
the value of such security shall be assessed and taxed to the owner thereof,
in the county, city, or district in which the property affected thereby is
situate. The taxes so levied shall be a lien upon the property and security,
and may be paid by either party to such security. If paid by the owner of the
security, the tax so levied upon the property affected thereby shall become a
part of the debt so secured; if the owner of the property shall pay the tax
so levied on such security, it shall constitute a payment thereon, and to the
extent of such payment, a full discharge thereof: provided, that if any such
security or indebtedness shall be [118 U.S. 394, 405] paid by any such
debtor or debtors, after assessment and before the tax levy, the amount of
such levy may likewise be retained by such debtor or debtors, and shall be
computed according to the tax levy of the preceding year.'
The ninth section makes provision for the election of a state board of
equalization, `whose duty it shall be to equalize the valuation of the
taxable property of the several counties in the state for the purpose of
taxation.' The boards of supervisors of the several counties constitute
boards of equalization for their respective counties, and they equalize the
valuation of the taxable property therein for purposes of taxation;
assessments, whether by the state or county boards, to `conform to the true
value in money of the property' contained in the assessment roll. Id . 9.
The tenth section declares: `All property, except as hereinafter in this
section provided, shall be assessed in the county, city, city and county,
town, township, or district in which it is situated, in the manner prescribed
by law. The franchise, roadway, road-bed, 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 same shall be
apportioned to the counties, cities and counties, cities, towns, townships,
and districts in which such railroads are located, in proportion to the
number of miles of railway laid in such counties, cities and counties,
cities, towns, townships, and districts.'
The assessments in question, it is contended, were made in conformity with
these constitutional provisions, and with what is known as section 3664 of
the Political Code of California. That section made it the duty of the state
board of equalization, on or before the first Monday in May in each year, to
`assess the franchise, roadway, road-bed, rails, and rolling, stock of
railroads operated in more than one county,'-to which class belonged the
defendants. It required every corporation of that class, by certain officers,
or by such officer as the state board should designate, to furnish the board
with a sworn statement showing, among other things, in detail, for the year
ending March 1st, the whole number of miles of railway owned, operated, or
leased by it in the state, the value thereof [118 U.S. 394, 406] per mile,
and all of its property of every kind located in the state; the number and
value of its engines, passenger, mail, express, baggage, freight, and other
cars, or property used in operating and repairing its railway in the state,
and on railways which are parts of lines extending beyond the limits of the
state. It is also directed that `the said property shall be assessed at its
actual value;' that the `assessment shall be made upon the entire railway
within the state, and shall include the right of way, road-bed, track,
bridges, culverts, and rolling stock;' and that `the depots, station grounds,
shops, buildings, and gravel beds shall be assessed by the assessors of the
county where situated, as other property.' It further declares:
`On or before the fifteenth day of May in each year, said board shall
transmit to the county assessor of each county through which any railway,
operated in more than one county, may run, a statement showing the length of
the main track or tracks of such railway within the county, together with a
description of the whole of said tracks within the county, including the
right of way by metes and bounds, or other description sufficient for
identification, and the assessed value per mile of the same, as fixed by a
pro rata distribution per mile of the assessed value of the whole franchise,
roadway, road-bed, rails, and rolling stock of such railway within this
state. Said statement shall be entered on the assessment roll of the county.
At the first meeting of the board of supervisors, after such statement is
received by the county assessor, they shall make, and cause to be entered in
the proper record book, an order stating and declaring the length of the main
track, and the assessed value of such railway lying in each city, town,
township, school-district, or lesser taxing district in their county through
which such railway runs, as fixed by the state board of equalization, which
shall constitute the taxable value of said property for taxable purposes in
such city, town, township, school, road, or other district.'
These companies, within due time, filed with the state board the detailed
statement required by that section.
At the trials below no record of assessment against the respective
defendants, as made by the state board, was given in evidence, and there was
introduced no written evidence of the a [118 U.S. 394, 407] ssessment,
except an official communication from the state board to each of the
assessors of Santa Clara and Fresno counties, called, in the special
findings, the assessment roll for the particular county. The roll for Fresno
county, in 1881, relating to the Southern Pacific Railroad Company, is as
follows:
Original - Assessment Book of the Property of Fresno County for the Year
1881. Assessed to all Known Owners or Claimants, and when Unknown to Unknown
Owners or Claimants. []
Value of Total the franchise, value Total roadway, of all value DESCRIPTION
OF PROPERTY roadbeds, property after rails, and after equalization Total
rolling-stock deductions. by the tax. Taxpayer's Real estate other than city
and town of railroads (Changes State Name lots. Subdivision of sectioons or
as apportioned by the Board metes and bounds. City and town lots. to the
county county of Improvements. Personal property. by the State boards of
equalization. Board of equalization Equalization. to be noted in red ink.) []
Southern SIR: The state board Pacific of equalization on the second day
$295,845 $602,869 $602,869 $10,246.78 Railroad of May, 1881, assessed, for
the year Company. 1881, the Southern Pacific Railroad Company for its
franchise, roadway, road-bed, rails, and rollingstock, in the state of
California, in the aggregate sum of $11,739,915. The entire line of main
track of said railroad of said company in the said state is 711.51 miles. The
length of the main track of said railway in Fresno county is 17.93 miles. The
description of the whole of the main track of the railway of the said
Southern Pacific Railroad Company, and the right of way for the same, in the
county of Fresno, is as follows: Beginning at the town of Huron, and running
easterly in the direction of Goshen, in Tulare county, to the east line of
Fresno county. The assessed value per mile of said railway, as fixed by a pro
rata distribution per mile of the assessed value of the whole franchise,
roadway, road-bed, rails, and rolling stock as such railway of the said
company within this state is $16,500. The apportionment of the assessment of
the said franchise, roadway, road-beds, rails, and rolling stock, by this
board, for and to Fresno county, is $295,845. WARREN DUTTON, CHAIRMAN, M. M.
DREW, D. M. KENFIELD, T. D. HEISKELL, State Board of Equalization, E. W.
MASLIN, Clerk. [] [118 U.S. 394, 408] There were similar rolls in reference
to the Central Pacific Railroad in the same county, for the same year, and
the Southern Pacific in Santa Clara county for 1882. For each of those years
the board of supervisors of the respective counties made an apportionment of
the taxes among the legal subdivisions of such counties.
It is stated in the findings that the delinquent lists for those years, so
far as they related to the taxes in question, were duly made up in form
corresponding with the original assessment roll; that, in pursuance of
section 3738 of the Political Code of California, the board of supervisors of
the respective counties duly passed an order, entered on the minutes,
dispensing with the duplicate assessment roll for that year; that the
comptroller of the state transmitted a letter to the tax collector of the
county, in pursuance of the provisions of section 3899 of that Code,
directing him to offer the property for sale but once, and, if there were no
bona fide purchasers, to withdraw it from sale; that the tax collector, in
obedience to the provisions of that section, transmitted to the comptroller,
with his indorsement thereon of the action had in the premises, a certified
copy of the entry upon the delinquent list relating to the tax in question in
these several actions; that such indorsement shows that the tax collector had
offered the property for sale, and had withdrawn it because there was no
purchaser for the same; and that the comptroller, in pursuance of the
provisions of the same section, transmitted to the tax collector of the
county a letter directing him to bring suit.
In each case there were also the following findings: `The state board of
equalization, in assessing said value of said property to and against
defendant, assessed the full cash value of said railroad, roadway, road- bed,
rails, rolling stock, and franchises, without deducting therefrom the value
of the mortgage, or any part thereof, given and existing thereon as
aforesaid, to secure the indebtedness of said company to the holders of said
bonds, notwithstanding they had full knowledge of the existence of the said
mortgage; and in making said assessment the said state board of equalization
did not consider or treat said mortgage as an interest in said property, but
as- [118 U.S. 394, 409] sessed the whole value thereof to the defendant, in
the same menner as if there had been no mortgage thereon. The state board of
equalization, in making the supposed assessment of said roadway of defendant,
did knowingly and designedly include in the valuation of said roadway the
value of fences erected upon the line between said roadway and the land of
coterminous proprietors. Said fences were valued at $300 per mile.'
The special grounds of defense by each of the defendants were: (1) That its
road is a part of a continuous postal and military route, constructed and
maintained under the authority of the United States, by means in part
obtained from the general government; that the company having, with the
consent of the state, become subject to the requirements, conditions, and
provisions of the acts of congress, it thereby ceased to be merely a state
corporation, and became one of the agencies or instrumentalities employed by
the general government to execute its constitutional powers; and that the
franchise to operate a postal and military route, for the transportation of
troops, munitions of war, public stores, and the mails, being derived from
the United States, cannot, without their consent, be subjected to state
taxation. (2) That the provisions of the constitution and laws of California,
in respect to the assessment for taxation of the property of railway
corporations operating railroads in more than one county, are in violation of
the fourteenth amendment of the constitution, in so far as they require the
assessment of their property at its full money value, without making
deduction, as in the case of railroads operated in one county, and of other
corporations, and of natural persons, for the value of the mortgages covering
the property assessed; thus imposing upon the defendant unequal burdens, and
to that extent denying to it the equal protection of the laws. (3) That what
is known as section 3664 of the Political Code of California, under the
authority of which, in part, the assessment was made, was not
constitutionally enacted by the legislature, and had not the force of law. (
4) That no void assessment appears in fact to have been made by the state
board. (5) That no interest is recoverable in this action until after
judgment. (6) [118 U.S. 394, 410] That the assessment upon which the action
is based is void, because it included property which the state board of
equalization had no jurisdiction, under any circumstances, to assess; and
that, as such illegal part was so blended with the balance that it cannot be
separated, the entire assessment must be treated as a nullity.
The record contains elaborate opinions stating the grounds upon which
judgments were ordered for the defendants. Mr. Justice FIELD overruled the
first of the special defenses above named, but sustained the second. The
circuit judge, in addition, held that section 3664 of the Political Code had
not been passed in the mode required by the state constitution, and
consequently was no part of the law of California. These opinions are
reported as the Santa Clara Railroad Tax Case, in 9 SAWY. 165, 210; S. C. 18
Fed. Rep. 385.
The propositions embodied in the conclusions reached in the circuit court
were discussed with marked ability by counsel who appeared in this court for
the respective parties. Their importance cannot well be over- estimated; for
they not only involve a construction of the recent amendments to the national
constitution in their application to the constitution and the legislation of
a state, but upon their determination, if it were necessary to consider them,
would depend the system of taxation devised by that state for raising
revenue, from certain corporations, for the support of her government. These
questions belong to a class which this court should not decide unless their
determination is essential to the disposal of the case in which they arise.
Whether the present cases require a decision of them depends upon the
soundness of another proposition, upon which the court below, in view of its
conclusions upon other issues, did not deem it necessary to pass. We allude
to the claim of the defendant, in each case, that the entire assessment is a
nullity, upon the ground that the state board of equalization included
therein property which it was without jurisdiction to assess for taxation.
The argument in behalf of the defendant is that the state board knowingly and
designedly included in its assessment of `the franchise, roadway, road-bed,
rails, and rolling-stock' of [118 U.S. 394, 411] each company, the value of
the fences erected upon the line between its roadway and the land of
coterminous proprietors; that the fences did not constitute a part of such
roadway, and therefore could only be assessed for taxation by the proper
officer of the several counties in which they were situated; and that an
entire assessment which includes property not assessable by the state board
against the party assessed, is void, and therefore insufficient to support an
action; at least, when-and such is claimed to be the case here-it does not
appear with reasonable certainty, from the face of the assessment or
otherwise, what part of the aggregate valuation represents the property so
illegally included therein.
If these positions are tenable, there will be no occasion to consider the
grave questions of constitutional law upon which the case was determined
below; for, in that event, the judgment can be affirmed upon the ground that
the assessment cannot properly be the basis of a judgment against the
defendant.
That the state board purposely included in its assessment and valuation the
fences erected on the line between the railroads and the lands of adjacent
proprietors, at the rate of $300 per mile, is undoubtedly true; for it is so
stated in the special finding of facts, and that finding must be taken here
to be indisputable. It is equally true that that tribunal has no general
power of assessment, but only jurisdiction to assess `the franchise, roadway,
road-bed, rails, and rolling stock' of railroad corporations operating roads
in more than one county, and that all other property of such corporations,
subject to taxation, is assessable only `in the county, city, city and
county, town, township, or district in which it is situated, in the manner
prescribed by law.' Such is the declaration of the state constitution. People
v. Sacramento Co., 59 Cal. 324; article 13, 10. It must also be conceded that
`fences' erected on the line between these railroads and the lands of
adjoining proprietors were improperly included by the state board in its
assessments, unless they constituted a part of the `roadway.' Some light is
thrown upon this question by that clause of section 3664 of the Political
Code of California-which, in the view [118 U.S. 394, 412] we take of these
cases, may be regarded as having been legally enacted- providing that `the
depots, station grounds, shops, buildings, and gravel beds' shall be assessed
in the county where situated as other property. From this it seems that there
is much of the property daily used in the business of a railroad operated in
more than one county that is not assessable by the state board, but only by
the proper authorities of the municipality where it is situated; so that,
even if it appeared that the fences assessed by the state board were the
property of the railroad companies, and not of the adjoining proprietors,
they could not be included in an assessment by that board unless they were
part of the roadway itself; for, as shown, the jurisdiction of that board is
restricted to the assessment of the `franchise, roadway, road-bed, rails, and
rolling stock.' We come back, then, to the vital inquiry, whether the fences
could be assessed under the head of roadway. We are of opinion that they
cannot be regarded as part of the roadway for purposes of taxation.
The constitution of California provides that `land, and improvements thereon,
shall be separately assessed,' (article 13, 2;) and, although that instrument
does not define what are improvements upon land, the Political Code of the
state expressly declares that the term `improvements' includes `all
buildings, structures, fixtures, fences, and improvements erected upon or
affixed to the land.' Section 3617. It would seem from these provisions that
fences erected upon the roadway, even if owned by the railroad company, must
be separately assessed as `improvements,' in the mode required in the case of
depots, station grounds, shops, and buildings owned by the company; namely,
by local officers in the county where they are situated. The same
considerations of public interest or convenience upon which rest existing
regulations for the assessments of depots, station grounds, shops, and
buildings of a railroad company operated in more than one county would apply
equally to the assessment and valuation for taxation of fences erected upon
the line of railway of the same company.
In San Francisco & N. P. R. Co. v. State Board of Equalization, 60 Cal. 12,
34, which was applica- [118 U.S. 394, 413] tion, on certiorari, to annul
certain orders of the state board assessing the property of a railroad
corporation, one of the questions was as to the meaning of the words
`road-bed' and `roadway.' The court there said: "The road-bed is the
foundation on which the superstructure of a railroad rests.' Webster. The
roadway is the right of way, which has been held to be the property liable to
taxation. Appeal of North Beach & M. R. Co., 32 Cal. 499. The rails in place
constitute the superstructure resting upon the road-bed.' This definition was
approved in San Francisco v. Central Pac. P. Co., 63 Cal. 467, 469. In the
latter case the question was whether certain steamers owned by the railroad
company, upon which were laid railroad tracks, and with which its passenger
and freight cars were transported from the eastern shore of the bay of San
Francisco to its western shore, where the railway again commenced, were to be
assessed by the city and county of San Francisco, or by the state board of
equalization. The contention of the company was that they constituted a part
of its road-bed or roadway, and must therefore be assessed by the state
board; but the supreme court of the state held otherwise. After observing
that all the property of the company, other than its franchise, roadway,
road-bed, rails, and rolling stock, was required by the constitution to be
assessed by the local assessors, the court said: `They are certainly not the
franchise of the defendant corporation. They may constitute an element to be
taken into computation to arrive at the value of the franchise of the
corporation, but they are not such franchise. It is equally as clear that
they are not rails or rolling stock. ... Are they, then, embraced within the
words `roadway' or `road-bed,' in the ordinary and popular acceptation of
such words as applied to railroads? These two words, as applied to common
roads, ordinarily mean the same thing, but as applied to railroads their
meaning is not the same. The `road-bed' referred to in section 10, in our
judgment, is the bed or foundation on which the superstructure of the
railroad rests. Such is the definition given by both Worcester and Webster,
and we think it correct. The `roadway' has a more extended signification as
applied to railroads. In addition to the part denominated [118 U.S. 394, 414]
road-bed, the roadway includes whatever space of ground the company is
allowed by law in which to construct its road-bed and lay its track. Such
space is defined in subdivision 4 of the seventeenth section and the
twentieth section of the act `to provide for the incorporation of railroad
companies,' etc., approved May 20, 1861. St. 1861, p. 607; San Francisco & N.
P. R. Co. v. State Board, 60 Cal. 12.'
The argument in support of the proposition, that these steamers-
constituting, as they did, a necessary link in the line of the company's
railway, and upon which rails were actually laid for the running of cars-
were a part either of the road-bed or roadway of the railroad, is much more
cogent than the argument that the fences erected upon the line between a
roadway and the lands of adjoining proprietors are a part of the roadway
itself. It seems to the court that the fences in question are not, within the
meaning of the local law, a part of the roadway for purposes of taxation, but
are `improvements' assessable by the local authorities of the proper county,
and therefore were improperly included by the state board in its valuation of
the property of the defendants.
The next inquiry that naturally arises is whether the different kinds of
property assessed by the state board are distinct and separable upon the face
of the assessment, so that the company, being thereby informed of the amount
of taxes levied upon each, could be held to have been in default in not
tendering such sum, if any, as was legally due. Upon the transcript before
us, this question must be answered in the negative. No record of assessment,
as made by the state board, was introduced at the trial, and presumably no
such record existed. Nor is there any documentary evidence of such
assessment, except the official communication of the state board to the local
assessors, called, in the findings, the assessment roll of the county. That
roll shows only the aggregate valuation of the company's franchise, roadway,
road-bed, rails, and rolling stock in the state; the length of the company's
main track in the state; its length in the county; the assessed value per
mile of the railway, as fixed by the pro rata distribution per mile of the
assessed value of its whole franchise, roadway, road-bed, rails, [118 U.S.
394, 415] and rolling stock in the state; and the apportionment of the
property so assessed to the county.
It appears, as already stated, from the evidence, that the fences were
included in the valuation of the defendants' property; but under what head,
whether of franchise, roadway, or road-bed, does not appear. Nor can it be
ascertained, with reasonable certainty, either from the assessment roll or
from other evidence, what was the aggregate valuation of the fences, or what
part of such valuation was apportioned to the respective counties through
which the railroad was operated. If the presumption is that the state board
included in its valuation only such property as it had jurisdiction under the
state constitution to assess, namely, such as could be rightfully classified
under the heads of franchise, roadway, road- bed, rails, or rolling stock,
that presumption was overthrown by proof that it did, in fact, include, under
some one or more of these heads, the fences in question. It was then
incumbent upon the plaintiff, by satisfactory evidence, to separate that
which was illegal from that which was legal,-assuming, for the purposes of
this case only, that the assessment was in all other respects legal,-and thus
impose upon the defendant the duty of tendering, or enable the court to
render judgment for, such amount, if any, as was justly due. But no such
evidence was introduced. The finding that the fences were valued at $300 per
mile is too vague and indefinite as a basis for estimating the aggregate
valuation of the fences included in the assessment, or the amount thereof
apportioned to the respective counties. Were the fences the property of
adjacent proprietors? Were they assessed at that rate for every mile of the
railroad within the state? Were they erected on the line of the railroad in
every county through which it was operated, or only in some of them? Wherever
erected, were they assessed for each side of the railway, or only for one
side? These questions, so important in determining the extent to which the as
sessment included a valuation of the fences erected upon the line between the
railroad and coterminous proprietors, find no solution in the record
presented to this court.
If it be suggested that, under the circumstances, the court [118 U.S. 394,
416] might have assumed that the state board included the fences in their
assessment at the rate of $300 per mile for every mile of the railroad within
the state, counting one or both sides of the roadway, and, having thus
eliminated from the assessment the aggregate so found, given judgment for
such sum, if any, as, upon that basis, would have been due upon the valuation
of the franchise, road-bed, roadway, rails, and rolling stock of the
defendant, the answer is that the plaintiff did not offer to take such a
judgment; and the court could not have rendered one of that character without
concluding the plaintiff hereafter, and upon a proper assessment, from
claiming against the defendant taxes for the years in question upon such of
its property as constituted its franchise, roadway, road-bed, rails, and
rolling stock. The case, as presented to the court below, was therefore one
in which the plaintiff sought judgment for an entire tax arising upon an
assessment of different kinds of property as a unit; such assessment
including property not legally assessable by the state board, and the part of
the tax assessed against the latter property not being separable from the
other part. Upon such an issue, the law, we think, is for the defendant. An
assessment of that kind is invalid, and will not support an action for the
recovery of the entire tax so levied. Cooley, Tax'n, 295, 296, and
authorities there cited; Libby v. Burnham, 15 Mass. 147; State v. City of
Plainfield, 38 N. J. Law, 94; Gamble v. Witty, 55 Miss. 35; Stone v. Bean, 15
Gray, 45; Mosher v. Robie, 2 Fairf. 137; Johnson v. Colburn, 36 Vt. 695;
Wells v. Burbank, 17 N. H. 412.
It results that the court below might have given judgment in each case for
the defendant upon the ground that the assessment, which was the foundation
of the action, included property of material value which the state board was
without jurisdiction to assess, and the tax levied upon which cannot, from
the record, be separated from that imposed upon other property embraced in
the same assessment. As the judgment can be sustained upon this ground, it is
not necessary to consider any other questions raised by the pleadings and the
facts found by the court. [118 U.S. 394, 417] It follows that there is no
occasion to determine under what circumstances the plaintiffs would be
entitled to judgment against a delinquent tax- payer for penalties, interest,
or attorney's fees; for, if the plaintiffs are not entitled to judgment for
the taxes arising out of the assessments in question, no liability for
penalties, interest, or attorney's fees could result from a refusal or
failure to pay such taxes. Judgment affirmed.
Footnotes
[Footnote 1]
S.C. 18 Fed. Rep. 385.[ Santa Clara County v. Southern Pac. R. Co. 118 U.S.
394 (1886) ]
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