Wm. A. Nimbish, for plaintiff in error.
Clifford Anderson and J. M. Terrell, Atty. Gen., for defendant in error.
Mr. Justice JACKSON delivered the opinion of the court.
The question presented by the record in this case is whether an act of the legislature of Georgia approved October 16, [151 U.S. 470, 471] 1889, entitled 'An act to provide a system of taxation of railroad property in each of the counties of this state through which said railroads run, and to provide a mode of assessing and collecting the same, and for other purposes,' violates that clause of the fourteenth amendment of the constitution of the United States which declares that 'no state shall deny to any person within its jurisdiction the equal protection of its laws.'
The act complained of provides as follows:
By an act approved in 1874 provision was made for the taxation of railroad property for state purposes, but this act of 1889 was the first statute enacted providing for the taxation of railroad property for county purposes.
The plaintiff in error is a corporation organized and existing under the laws of the state of Georgia, having its principal [151 U.S. 470, 474] office or domicile in the city of Columbus, Muscogee county, in that state, with its line of railway extending through the counties of Chattahoochee, Stewart, Terrell, Webster, and Lee, to the city of Albany, in the county of Dougherty. With the exception of its right of way, roadbed, superstructure, depots, and usual appurtenances along the line of its road, the undistributed property of the corporation, such as its choses in action, etc., is situated in Muscogee county.
Under the provisions of the first section of the act, set out above, the railroad company made return of its property for the year 1890. Upon the basis of that return the comptroller general of the state assessed and levied taxes for the benefit of the several counties through which the railroad extended, (after such counties had certified to him their respective tax rate and levies,) and on October 27, 1890, notified the company that the taxes so levied must be paid to the respective tax collectors of the several counties within 60 days from the date of the notice.
The tax rate upon the property thus assessed, as stated in the notice of the comptroller general, was different in the different counties. For Muscogee county it was 2 1/2 mills, for Chattahoochee it was 8 mills, for Stewart it was 5 mills, for Terrell it was 5.34 mills, and for Webster county it was 3.47 mills; these rates of taxation being imposed by the respective counties on other property situate therein and subject to taxation.
Before the expiration of the 60 days, within which the railroad company was required to make payment of the taxes thus assessed, it filed its bill or equitable petition in the superior court of Fulton county against William A. Wright, comptroller general, for an injunction, and relief against the payment of these county taxes.
In the petition it was alleged that the act was repugnant to the constitution of the state of Georgia, for various reasons: First, that it was inconsistent with that provision of the constitution which required that 'all taxation shall be uniform upon the same class of subjects and ad valorem on all property subject to be taxed within the territorial limits of the [151 U.S. 470, 475] authority levying the tax;' second, that the act was a special one, whereas the constitution required that all taxes should be levied and collected under general laws; third, that the act provided for a tax to be levied and collected by the state for the benefit of the counties, when the state had no authority, under the constitution, to tax for such a purpose; fourth, that the act embraced two subjects-matter, viz. the 'property of certain railroads' and also the 'net incomes as to certain other railroads,' while the constitution declares that 'no law or ordinance shall pass which refers to more than one subject-matter;' fifth, because the affidavit of illegality which a railroad company was authorized to file against an execution to collect the taxes authorized by the statute was required to be filed and tried in the superior court of Fulton county without reference to the domicile of the company, thereby conferring upon that court a greater jurisdiction than the constitution allowed; and, sixth, that the act violated the constitution of the United States, in that it conflicts with the clause of the fourteenth amendment, which declares that 'no state shall deny to any person within its jurisdiction the equal protection of its laws.'
The defendant interposed a general demurrer to the petition, which the superior court of Fulton county sustained, and dismissed the petition, holding that the act was not repugnant to the provisions of either the state or the federal constitutions in any of the respects alleged. From that judgment the railroad company prosecuted a writ of error to the supreme court of the state, which court fully reviewed and considered the questions, and in affirming the judgment of the court below held that the act of 1889 in no way violated the constitution of the state, and in no way discriminated against the railway company so as to deny it the equal protection of the laws, and was not, therefore, repugnant to the fourteenth amendment of the constitution of the United States. 89 Ga. 574, 15 S. E. 293. The present writ of error was sued out to reverse this judgment.
Upon this writ of error we cannot, of course, review the construction which the supreme court of the state has placed [151 U.S. 470, 476] upon its own constitution and the act in question. The federal question sought to be raised by the plaintiff in error is embodied in the two general propositions that 'the rolling stock and other unlocated personal property owned by the railway company is, by the provisions of the act, distributed for taxation purposes to and for the benefit of the several counties traversed by the railroad, while personal property of all other persons and companies is taxed in and by the county in which the owner resides; and, secondly, that the unlocated intangible personal property of railroad companies is distributed for taxing purposes to the several counties, while the intangible personal property of all other persons follows the domicile of the owner, and is there taxable.'
These two objections embody substantially the single proposition that the act in question discriminated against the railroad company in not taxing its unlocated or intangible personal property at the place of the railroad company's domicile or principal office; in other words, in the county of Muscogee. This proposition was disposed of by the supreme court of the state as follows:
This decision of the supreme court of the state establishes, what is conceded by plaintiff in error, that the rate of taxation and the mode of valuing the railroad property for assessment was in all respects the same as the rate and mode prescribed for other taxpayers. So that the only difference between the county taxation upon railroad property, real and personal, and that of other persons or companies, consisted in the method of distributing the transitory or unlocated personal property of the railroad company, as valued by itself, among the several counties entitled to share therein, for the purposes of taxation. In other words, the question is whether the railroad company has any constitutional right to have its transitory property assessed for taxation alone in Muscogee county, and whether the distribution among the several counties of such property is such a discrimination against the railroad as denies to it the equal protection of the laws?
This is hardly an open question. Various modes of taxing railroad property are adopted by the different states. In some, railroad companies are taxed upon their property as a unit; in others, the road and the property in each county are separately assessed; and in still other states the whole road is assessed, and then the assessment apportioned among the several counties and towns. These and all similar modes of taxation are subject to the legislative discretion of the respective states, and do not ordinarily present any federal question [151 U.S. 470, 479] whatever. But the mode of distribution of the unlocated or transitory personal property is a matter of regulation by the state legislature, which in no way involves a violation of the fourteenth amendment.
In Railroad Co. v. Severance, 55 Mo. 379, 388, the supreme court of Missouri, in dealing with this question, said: 'The rolling stock of a railroad company, as a general principle, should be assessed and taxed where the corporation has its residence; but the principle of law may be modified by the legislature. The notion of the situs of personal property following the personal residence of the corporation is a legal fiction, but is not an unbending and uncontrollable principle of law. It may be nodified by the legislature. The rolling stock of a railroad company has no more local existence in one county than another. This machinery by which the road is operated is constantly passing from one terminus to the other of the entire road, and, to save all cavil and dispute in respect to it, it was perfectly competent for the legislature to say that it should become a part of the road itself, and become property the same as the road; and that for the purpose of taxation it should be equally distributed through the counties, cities, or towns through which it passed, in proportion to its length in these respective localities.'
The principle here announced is repeated in the well-considered case of Franklin Co. v. Nashville, C. & St. L. R. Co., 12 Lea, 522, 537-539, which involved substantially the same question of the situs for the purpose of taxation of the rolling stock and personal property of railway companies. It was there said by the supreme court of Tennessee. 'The property of a railroad company for purposes of taxation consists of its realty, its local personalty, its rolling stock, its choses in action, and its franchises. The franchise is the privilege conferred by the charter of incorporation, namely, the right to exercise all the powers granted in the mode prescribed for the purpose of profit. It is a unit, not confined to any one county in which it may be exercised. The principal part of the franchise is the right to charge for freight and pas- [151 U.S. 470, 480] sengers, the charge being limited within a prescribed or reasonable rate for carriage in the proportion of the distance of transportation. Obviously, after ascertaining the value of the entire franchise in the state as a unit, no more approximate or just division of the value can be made for purposes of taxation than to allot it among the counties through which the track runs in the proportion of the length of the track in the county to the entire length of the road in the state. And this is what was done by the acts under consideration. The choses in action of a corporation, its rolling stock, and personal property, according to the principles of the common law, have their situs at the domicile or place of business of the company. Mayor, etc., of Gallatin v. Alexander, 10 Lea, 475; Mayor of Nashville v. Thomas, 5 Cold. 607; Cooley, Tax'n, 273. But the legislature may change the situs of such property. McLaughlin v. Chadwell, 7 Heisk. 389, 406; Bedford v. Mayor, etc., of Nashville, Id. 409; State Railroad Tax Cases, 92 U.S. 575 , 607; Cooley, Tax'n, 274. ... The rolling stock of a corporation, used in transporting passengers and freight over any and all parts of its line of road, cannot be said to have a situs which would give a preference to any county through which the road may run over any other county in like situation. The choses in action of a railroad company, created by the exercise of its franchises, on every part of the track, may be equally said to be without a situs so as to give a preference. The legislature might well treat them as the franchise itself, for or by the exercise of which they are created, and proportion the general valuation among the counties through which the road may run according to the length of road in each county. The roadway itself of a railroad depends for its value upon the traffic of the company, and not merely upon the narrow strip of land appropriated for the use of the road, and the bars and cross-ties thereon. The value of the roadway at any given time is not the original cost, nor, a fortiori, its ultimate cost after years of expenditure in repairs and improvements. On the other hand, its value cannot be determined by ascertaining the value of the land included in the road as- [151 U.S. 470, 481] sessed at the market price of adjacent lands, and adding the value of the cross-ties, rails, and spikes. The value of land depends largely upon the use to which it can be put, and the character of the improvements upon it. The assessable value, for taxation, of a railroad track can only be determined by looking at the elements on which the financial condition of the company depends, its traffic, as evidenced by the rolling stock and gross earnings in connection with its capital stock. No local estimate of the fraction in one county of a railroad track running through several counties can be based upon sufficient data to make it at all trustworthy, unless, indeed, the local assessors are furnished with the means of estimating the whole road.'
The principle set out in the above-quoted authorities is clearly sanctioned by this court in the State Railroad Tax Cases, 92 U.S. 575 , 607, where the same objection to the system of taxation by the state as here presented was made that the rolling stock, etc., was personal property, and that it and other personal property had a situs at the principal place of business of the corporation, and could be taxed in no other county but the one where it was situated. This court met that objection by saying: 'It may be doubted very reasonably whether such a rule can be applied to a railroad corporation as between the different localities embraced by its line of road. But, after all, the rule is merely the law of the state which recognizes it. ... Like all other laws of a state, it is therefore subject to legislative repeal, modification, or limitation; and when the legislature of Illinois declared that it should not prevail in assessing personal property of railroad corporations for taxation, it simply exercised an ordinary function of legislation. Whether allowing the rule to stand as to taxation of individuals, and changing it as to railroads or other corporations, it violated any rule of uniformity prescribed by the constitution of the state, we will consider when we come to the constitutional objections to the statute.'
In its further consideration of that case the court held that changing the situs of such unlocated property of a railroad [151 U.S. 470, 482] company, and distributing it to the counties through which the road extended, in no way violated the rule of uniformity, or discriminated against the railroad company. In that case, as in this, there was no claim that the rate of taxation levied by any county on the assessed value of the property within its limits was greater than on other property; nor was the valuation different from that placed upon other property. In the present case the railroad company, like other property owners, placed its own valuation upon the property. It was also held, in the case just cited, that taxes are uniform when the rate of taxation is the same on assessments ascertained by the same method.
Without reviewing authorities on this subject, the principle involved in the case under consideration is not distinguishable from the principle involved in State Railroad Tax Cases, 92 U.S. 575 ; and in Kentucky Railroad Tax Cases, 115 U.S. 321, 339 , 6 S. Sup. Ct. 57; Railroad Co. v. Beckwith, 129 U.S. 26 , 9 Sup. Ct. 207; and in Railroad Co. v. Gibbes, 142 U.S. 386 , 12 Sup. Ct. 255.
The whole complaint made by the plaintiff in error is that it had a constitutional right to have its rolling stock and other unlocated personal property taxed in the county of Muscogee, where it had its principal office; and to give such property a different situs, under the act complained of, by distributing it among the counties through which the road extended, was an unjust discrimination, and violated its constitutional rights. This proposition cannot be entertained for a moment, for the reason already stated, that it was clearly within the province of the legislature of Georgia to give such personal property a different situs, for purposes of taxation, from that of the company's principal office. The act in question having apportioned the transitory and unlocated property of the railroad company among the several counties through which the road extends for the purpose of taxation, and having subjected such property to the same rate of taxation imposed upon all other property in the respective counties, the fact that the rate of taxation varied in the different counties, according to their respective wants and necessities, [151 U.S. 470, 483] involved no discrimination against the railroad company. The state having the undoubted authority to fix the situs of such property, and having lawfully distributed it proportionately between the several counties traversed by the road, it thereby became subject to the same rate of taxation as other property in the respective counties. This involved no inequality, and violated no provision of either the state or federal constitution. It certainly did not involve a failure to extend to the plaintiff in error the equal protection of the laws.
The federal question involved in the case was correctly decided by the supreme court of the state, and the judgment of that court is therefore affirmed.