[257 U.S. 478, 479] Messrs. C. W. Bunn, D. F. Lyons, and M. L. Countryman, all of St. Paul, Minn., for appellants.
Mr. George E. Wallace, of Bismarck, N. D., for appellees.
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:
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 , 40 Sup. Ct. 435. 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 [257 U.S. 478, 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 section 238 of the Judicial Code (Comp. St. 1215).
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, 620 , 24 S. Sup. Ct. 784; Siler v. Louisville & Nashville R. R. Co., 213 U.S. 175, 191 , 29 S. Sup. Ct. 451; Louisville & Nashville R. R. Co. v. Garrett, 231 U.S. 298, 303 , 34 S. Sup. Ct. 48; Greene v. Louisville & Interurban R. R. Co., 244 U.S. 499, 508 , 37 S. Sup. Ct. 673, Ann. Cas. 1917E, 88.
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 [257 U.S. 478, 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:
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 [257 U.S. 478, 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:
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 [257 U.S. 478, 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, 257 U.S. 312 , 42 Sup. Ct. 124 (December 19, 1921), 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.