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These were two writs of error to review decrees of the court of chancery for the county of Franklin and state of [159 U.S. 630, 631] Vermont, denying, in accordance with mandates of the supreme court of the state, the right of the Rutland Railroad Company, which had leased its railroad to the Central Vermont Railroad Company, to recover the amount of taxes assessed upon the gross earnings of that railroad under the laws of the state, and paid by the Central Vermont Railroad Company, and by it deducted from the rent due to the Rutland Railroad Company under the lease. The case appeared by the record to be as follows:
On December 30, 1870, the Rutland Railroad Company leased its road, including a branch known as the Addison Railroad, for 20 years, to the receivers of the Vermont Central and Vermont & Canada Railroad Companies, at a fixed rent, payable semiannually. On June 21, 1873, the Central Vermont Railroad Company became the receiver of the Vermont Central and the Vermont & Canada Railroad Companies, and took possession of the Rutland Railroad under the lease. Disputes arose between the parties, and on February 23, 1876, they made an agreement in writing, modifying the lease, and by which the rent was made payable monthly, and was to be a certain proportion of the gross earnings, which the lessee guarantied should be not less that $250,000 a year. Neither of the contracts contained any provision for the payment of taxes.
Under the statutes of Vermont of 1874 and 1876, railroads were taxed by the mile in the towns through which they passed; and the supreme court of Vermont, at January term, 1878, in Rutland county, in a case between these parties, not reported, but stated in the opinion of the court below in this case, held that the lessor, and not the lessee, was bound to pay such taxes. See 63 Vt. 12, 25, 26, 21 Atl. 262, 731.
On November 28, 1882, the legislature of Vermont passed a statute, entitled 'An act to provide a revenue for the payment of state expenses,' which repealed all former statutes taxing the property of railroad companies, and required them to pay to the state a tax of a certain proportion of their gross earnings, and provide that the lessee of a railroad should pay this tax, and might deduct the amount from any payments [159 U.S. 630, 632] due to lessor. The material provisions of this statute are copied in the margin. 1
As required by this statute, blank returns of statements of gross earnings were sent in August, 1883, by the commissioner of state taxes, to the Central Vermont Railroad Company; and that company filled out the returns, and paid the taxes on such earning under protest.
A large part of the gross earnings so returned and taxed accrued from the transportation of persons and property between other states and countries through Vermont, and between Vermont and other states and countries. [159 U.S. 630, 633] The Central Vermont Railroad Company paid the rents, when due according to the agreement, until July 31, 1883, but afterwards delayed such payments, and deducted therefrom the sums paid for taxes on gross earnings.
On September 19, 1883, the treasuer of the Rutland Company, by directin of its officers, wrote a letter to the treasurer of the Central Vermont Railroad Company, claiming that the tax was invalid against the Rutland Company, and demanding payment of the rent in full, without deduction on account of the tax. The president of the Rutland Company afterwards, in conversation with the president of the Central Vermont Company, without intending to limit, or being understood to limit, the grounds of objection of the Rutland Company to the payment of the taxes, stated that it had no gross earnings, and therefore could not be liable for the taxes. No other reason for the denial of its liability for the taxes under the statute of 1882 was ever given to the Central Vermont Company.
By an order of court of January 19, 1884, the Central Vermont Railroad Company was discharged of the receivership, and ordered to transfer and make over all the property in its hands, including the lease of the Rutland Railroad, to the Consolidated Railroad Company of Vermont. On June 30, 1884, the transfer was made accordingly; and, on the same day, the latter company leased all the railroads to the Gentral Vermont Railroad Company, which afterwards continued in possession and operation thereof.
On November 9, 1886, the Rutland Company filed in the court of chancery a petition, praying that the Central Vermont Company and the Consolidated Railroad Company of Vermont be ordered to pay the rent due in full, with interest, and without deduction for taxes. The two defendant companies filed an answer denying their liability. The case was referred to a master, upon whose report, embodying the facts above stated, the court of chancery, on January 1, 1889, dismissed the petition.
The petitioner appealed to the supreme court of Vermont, which, at October term, 1890, delivered an opinion, copied in [159 U.S. 630, 634] the record, and reported 6o Vt. 1, 21 Atl. 262, 731, allowing the claim for interest on rents, reversing the decree, and remanding the case to the court of chancery, with the following mandate:
In August, 1891, the court of chancery entered a decree purporting to pursue the mandate, and allowed an appeal taken to the supreme court of the state by the respondents, claiming that decree did not conform to the mandate. The petitioner, on September 8, 1891, sued out a writ of error from this court to review that decree.
At October term, 1892, the supreme court of Vermont [159 U.S. 630, 635] affirmed that decree, and remanded the cause. 65 Vt. 366, 26 Atl. 638. The court of chancery, in August, 1894, entered a final decree accordingly. The petitioner, on October 9, 1894, sued out a writ of error from this court to review this decree.
The defendants in error moved to dismiss both writs of error for want of jurisdiction,-the first, because the decree which it sought to review was not a final one; and both, because no federal question was involved.
C. A. Prouty and Geo. F. Edmunds, for plaintiff in error.
[159 U.S. 630, 638] E. J. Phelps, for defendants in error.
B. F. Fifield was with him the the brief.
Mr. Justice GRAY, after stating the case, delivered the opinion of the court.
It was hardly denied at that bar that the first writ of error was prematurely sued out, before a final decree had been entered; but it is unnecessary to dwell upon that, because in other respects the questions arising upon the two writs of error are identical.
The decree below, as appears by the mandate of the supreme court of Vermont, and still more clearly by its opinion, made part of the record, and reported in 63 Vt. 1, 21 Atl. 262, did not proceed exclusively on the decision of a federal question, but also upon grounds of general law.
The conclusion of that court, following the decision of this court in Philadelphia & S. Steamship Co. v. Pennsylvania, 122 U.S. 326 , 7 Sup. Ct. 1118, that the statute of Vermont of 1882, so far as it sought to tax the earnings derived from interstate commerce, was unconstitutional, was in favor of the Rutland Railroad [159 U.S. 630, 639] Company, and therefore cannot be questioned on a writ of error sued out by that company.
The court did declare that the provision of the statute which requires the lessee to pay the tax, and deduct the amount from the rent, does not impair the obligation of a contract, because both railroad companies, as well as the rent due from the one to the other, were proper subjects for taxation under the laws of Vermont, and the method to be adopted for the collection of the tax was purely a question of legislative discretion.
But the decision of this part of the case (the only part decided against the plaintiff in error) was not put upon that consideration alone. On the contrary, the court went on to say: 'But it by no means follows, because the defendant has paid to the state taxes, under a law afterwards held to be void, by withholding the amount thereof from the rent, that the Rutland Company can now claim the balance of the rent for this reason.' And this proposition was rested on several distinct grounds.
The first of those grounds, as summed up by the state court, was as follows: 'Down to May 27, 1887, the date on which the decision in Philadelphia & S. Steamship Co. v. Pennsylvania, 122 U.S. 326 , 7 Sup. Ct. 1118, was promulgated, the doctrine of the cases decided by the supreme court upheld the constitutionality of the taxation in question. State Tax on Railway Gross Receipts, 15 Wall. 284; Delaware Railroad Tax, 18 Wall. 206.' 'The supreme court of the United States is the supreme arbiter when a federal question is involved. Down to 1887 that court had ruled the federal question now under consideration in a way that upheld the legislation in question. Its decisions then promulgated were the supreme law of the land, absolutely binding upon both parties to this cause. Hence all payments of taxes made under our law, which down to that time must be treated as valid for present purposes, were made in strict conformity to law. The subsequent change in the decisions of the United States supreme court is only operative prospectively, and all acts done in obedience to the former decisions are valid, and cannot be disturbed.' [159 U.S. 630, 640] But the conclusion that 'the defendants are not liable to pay as rent the amount paid by them as taxes upon the earnings of the Rutland Road' was also put upon other grounds,-namely, that the taxes upon the earnings of the Rutland Railroad were taxes which, as between the Rutland Company and the Central Vermont Company, it was the duty of the Rutland Company to pay; that, the lease being silent, the duty to pay, under the common law, rested upon the lessor; that this question had been decided in the former suit between the parties; that by the statute of 1882 the thing taxed was the property of the Rutland Company, and the Central Vermont Company was but the collector of the tax; that, the Central Vermont Company having been compelled by law to make the payments to discharge an obligation of another, the law implied a promise to repay, and the Central Vermont Company would have an action to recover the amount from the Rutland Company, and a court of equity would avoid circuity of action; that the Rutland Company, in its treasurer's letter of September 19, 1883, had simply objected that the tax was invalid, and had made no suggestion that the statute was unconstitutional, and no offer to indemnify the Ceneral Vermont Company, and the latter could not, in prudence, do otherwise than pay the taxes, and was under no duty to incur the expense and assume the perils of delay and of litigation, to test the constitutionality of the statute; and that the Rutland Company, in a court of equity, could not have relief for what, as between the parties, itself should have done, and what, by its own laches, it had suffered to be done, professedly in its behalf, by the Central Vermont Company.
These grounds involved no federal question, and were broad enough to support the judgment, without regard to the question whether the provision of the statute under which the Central Vermont Company paid the taxes, and deducted them from the rent, was or was not constitutional.
Such being the case, the conclusion is inevitable that this court has no jurisdiction to review the decision of the state court.
It is well settled, by a long series of decisions of this court, [159 U.S. 630, 641] that where the highest court of a state, in rendering judgment, decides a federal question, and also decides against the plaintiff in error upon an independent ground, not involving a federal question, and broad enough to support the judgment, the writ of error will be dismissed, without considering the federal question. Murdock v. City of Memphis, 20 Wall. 590; Jenkins v. Loewenthal, 110 U.S. 222 , 3 Sup. Ct. 638; Beaupr e v. Noyes, 138 U.S. 397 , 11 Sup. Ct. 296; Walter A. Wood Mowing & Reaping March. Co. v. Skinner, 139 U.S. 293 , 11 Sup. Ct. 528; Hammond v. Johnston, 142 U.S. 73 , 12 Sup. Ct. 141; Tyler v. Cass Co., 142 U.S. 288 , 12 Sup. Ct. 225; Delaware City, S. & P. Steam Boat Nav. Co. v. Reybold, 142 U.S. 636 , 12 Sup. Ct. 290; Eustis v. Bolles, 150 U.S. 361 , 14 Sup. Ct. 131,-in the last two of which many other cases to the same effect are cited.
In Williams v. Weaver the court of appeals of New York held that assessors of taxes were not personally liable in damages to the owner of national bank shares alleged to have been taxed in violation of a statute of the United States. 75 N. Y. 30. A writ of error to review the judgment was dismissed by this court, because, as was said by Mr. Justice Miller in delivering the opinion, 'if the defendants, in assessing property for taxation, incur no personal liability for any error they may commit, the fact that the error committed is a misconstruction of an act of congress can make no difference.' 100 U.S. 547 .
In Young v. Steamship Co., 105 U.S. 41 , it was held, in an opinion delivered by Mr. Justice Field, that the question whether fees exacted in violation of a statute of the United States, and paid without objection, could be recovered back, was not a federal question, the decision of which by the highest court of a state could be reviewed by this court on writ of error.
In Tyler v. Cass Co., above cited, an action was brought against a county to recover back money paid at a sale for taxes of lands alleged to be subject to a lien of the United States, and therefore exempt from taxation. The supreme court of North Dakota (while holding that, in view of the decision of this court in Northern Pac. R. Co. v. Traill Co., 115 U.S. 600 , 6 Sup. Ct. 201, the lands were not taxable, and nothing passed by the sale) gave judgment for the defendant. [159 U.S. 630, 642] 1 N. D. 369, 48 N. W. 232. In support of a writ of error sued out by the plaintiff from this court, it was argued that the assessor had no jurisdiction to decide whether the lands in question were or were not taxable; and that the state court, in holding that the act of the assessor, in assessing the lands against private parties in possession, though they in fact belonged to the United States, would not be without jurisdiction, decided against the immunity from the jurisdiction of the assessor. But this court dismissed the writ of error, and, speaking by the chief justice, said: 'The question arising for determination in the state court was whether the money which had been paid by the purchaser of the lands at the tax sale could be recovered back, either at common law or under the Dakota statute in that behalf. The ground upon which the tax title was held to have failed was that the United States had a lien upon the lands, and that, therefore, they could not, under the laws of the United States, be sold for taxes; but that fact did not impress with a federal character the inquiry as to the right of recovery.' 142 U.S. 290 , 12 Sup. Ct. 225.
That case cannot be distinguished in principle from the case at bar. In this case, as in that, it was argued that the state court, while it declared the statute to be unconstitutional, yet by its decision gave effect to the unconstitutional statute. But in each case the decision of the federal question was not an essential element in determining whether the plaintiff was entitled to recover against the defendant.
Writs of error dismissed, for want of jurisdiction.
[ Footnote 1 ] Sec. 8. A corporation, company, person or persons, failing to pasy the amount of any annual or semi-annual tax within the time required by this act, shall forfeit to the state the sum of one hundred dollars for each day's neglect to pay the same after the expiration of the time limited by law.
Sec. 11. Every corporation, person or persons, owning or operating a railroad in this state, whether as owner, lessee, receiver, trustee or otherwise, shall pay a tax to the state on the entire gross earnings of such railroad, if such railroad is situated wholly within the state. If such railroad is situated partly within and partly without the state, the tax shall be upon such proportion of the entire gross earnings of such railroad as the mileage of trains run in this state bears to the mileage of all the trains run on the entire main line of the road.
Sec. 12. The tax upon such earnings shall be rated according to the earnings per mile of road in this state, and is hereby assessed, at the rate of two per cent. on the first two thousand dollars a mile, or total earnings if less than that sum; at the rate of three per cent. on the first thousand or part thereof above two thousand dollars a mile; at the rate of four per cent. on the first thousand or part thereof above three thousand dollars a mile; and when the earnings exceed four thousand dollars a mile, at the rate of five per cent. on all earnings above that sum.
Sec. 13. Such tax shall be payable one half semi-annually in the months of February and August, and shall be based upon the gross earnings during the six months terminating with the last day of December or June next preceding.
Sec. 14. When a railroad is operated in this state by a corporation, person or persons, by virtue of a lease or other contract, the aforesaid tax shall be paid by the lessee of such railroad, or holder of such contract, as the case may be; and the said tax shall be charged against and deducted from any payments due or to become due the lessor of such railroad, or person, persons or corporation granting such contract, as the case may be, on account of such lease or contract; unless in the provisions of such lease or contract it is stipulated otherwise.
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