1] WESTERN UNION TELEGRAPH COMPANY, Plff. in Err., v.

THOMAS TAGGART, as Auditor of Marion County, Indiana, et al.

(See S. C. Reporter’s ed. 1-30.)

Taxation of telegraph company — burden upon interstate commerce.

States to a telegraph company, or of its property outside of the state, is not made by assessing for taxation its property within the stale at such proportion of the entire value of its property as the length of its lines within the state bears to the total length of its lines, after excluding real estate and machinery subject to local taxation, and by taking the aggregate value of its shares, if they have a market value, or, if not, the ac¬ tual value thereof, or of the capital of the com¬ pany, in ascertaining the true cash value of the entire property.

is not imposed by taxing property of a telegraph company within the state according to the pro¬ portion of its whole property, exclusive of real estate and machinery subject to local taxation, which the length of its lines within the state bears to the total length of its lines, and by tak¬ ing the market value of shares of its stock in fix¬ ing the valuation of its entire property.

[No. 662 ]

Argued January 16, 17, 1896. Bedded May 18, 1896.

TN ERROR to the Supreme Court of the I State of Indiana to review a judgment of

Note.— As to direct taxes, see note to Scboley v. Rew. 23: 99.

As to power of states to tac, see note to Dobbins v. Erie County Oomrs. 10: 1023.

As lo when taxes illegally assessed can he recovered bock, see note to Erskine v. Van Arsdale, 21: 03.

As to power of Congress to control commerce; state statute.when valid as being a regulation of commerce; drummers; vessels; railways; telegiaph companies; state tax on commerce, v ixen invalid,— Bee note to Harmon v. Chicago, 3": 216.

10J U. S. U. S., Book 41. 4

that court affirming the judgment of the Cir¬ cuit Court of the County of Marion, Indiana, in favor of the defendants, Thomas Taggart, Auditor of Marion County el al., in an action brought by the Western Union Telegraph Company, plaintiff, to restrain the defendant from apportioning and collecting a tax assessed upon the plaintiff by the tax commissioners of the state of Indiana. Affirmed.

See same case affirmed below, 141 Ind. 281.

Statement by Mr. Justice Gray:

This was a bill in equity, filed December 19, 1893, in the circuit court of the county of Marion and state of Iudiana, by the Western Union Telegraph Company against Thomas Taggart, the auditor of that county, and Ster¬ ling R. Holt, its treasurer, and against the auditors and treasurers of other enuuties in Indiana, to restrain them from apportioning and collecting a tax assessed unon the plaintiff by the board of tax commissioners of tha state, under the statute of Indiana of March 6, 1893, chap. 171, the material parts of which are copied in the margin.* The principal allega¬ tions of the bill were as follows:

*That the plaintiff was, and formanyyears[3

♦An Act Suoplementary to and Amendatory of an Act Entitled "An Act Concerning Taxaiion, Re¬ pealing all Laws in Conflict therewith, and De¬ claring an Emergency,” Approved March 6. 1 SOI, and Providing for the Taxation of Telegraph, Tele¬ phone, Palace Car, Sleeping Car, Draw .ng-Room Car, Dining Car, Express, and Fast Freight. Joint Stock Associations, Companies, Copartnerships, and Corporations Transacting Business in the State of Indiana. Repealing §8 d»-71 of said Act, and All Laws in Conflict therewith, and De¬ claring an Emergency.

Sec. 1. Any joint-stock association, company, co¬ partnership. or corporation, whether incorporated tinder the laws of this stateor of any other state or of any foreign nation, engaged in transmitting to, from, through, in, or across the state of Indiana, telegraphic messages, shall tie deemed and held to lie a telegraph company: and every such telegraph company shall, annually, between the 1st day of April aud the lsf day of June, make out and deliver to the auditor of state a statement, verified by the oat h of the i 'fficer or agent of such com puny making such statement, with reference to the 1st day of April next preceding, showing:

1st. The total capital stock of such association, company, copartnership, or corporation.

49

3-7

Supreme Court oe tub United States.

Oct. Term,

Lad been, a corporation of the state of New York, aDd ‘‘the owner of a large amount and nura- 4] ber of telegraph poles, lines, wires, oables, fixtures, instruments, machinery, appliances, apparatus, and real estate, constituting a plant for the transmission and conveyance of tele¬ graph messages, which said telegraphic plant extends into and through every state and terri¬ tory of the United States, the Dominion of f>] Canada, and under the Atlamic ocean to England and to Cuba;” and that the plaintiff, by reason of rights under contracts with various persons and corporations in the United States and in other parts of the world, and under letters patent from the United States, and valuable franchises granted by the United States and by New York and other states of Gjthe Union, but not*bv Indiana, and by many municioulilies in those states, and by the governments of England and Cuba, was “en¬ abled to do a large and profitable business, by ami by means of said telegraphic plant, and not ODly earn an amount which would be equivalent to rent upon said property, in case the same was owned by another corporation and leased by complainant, but also to make a profit for complainant in addition to said amount so applicableasrentofsucb telegraphic plant.”

That the “portion of said telegraphic plant, situated within said state of Indiana, is of the actual cash value of $686,12(5, tbe said cash value being ascertained by taking the cost of original construction, as nearly as the same can be ascertained, and deducting therefrom a sum partially equai to the depreciation of the

plant; and could be replaced by an entirely new plant of the same extent and ’o ation, and of far more valuable and' lasting ma erial, for the sum of $1,226,625.”

That the pretended statute of March 6, 1893, was not a law of the state o-f Indiana (for rea¬ sons not insisted on in this court), and that on July 11, 1893, the plaintiff, reserving its lights to contest the validity of that statute, tiled with tbe auditor of the state a statement and return, as therein required, — a copy of which was annexed, and which included subs aniially the same objections as were stated in the bill, and showed that the entire mileage of the com¬ pany was 189,576 miles, 6.436 of which were in the state of Indiana; that it had no real es¬ tate, machinery, and appliances in Indiana subjec* to local taxation; that the cost of its real estate in other states was $5,013,326, and the amount of its outstanding mortgage bonds was $1,211,000.

That ltbe state board of tax commissioners on August 21, 18 u3, made its assessment and val¬ uation of tbe plaintiff’s property in Iudiana, deducting ' t he real estate, structures, machin¬ ery, and apparatus within the state and sub¬ ject to local taxation, at the sum of $2,297,652, and at the rate of $357 per mile of telegraph line; “and, in fixing said valuation upon com¬ plainant’s said property in Indiana, acted under and by virtue of the assumed authority of said pretended statute, approved March 6, 1895, and placed upon complainant’s said *property [7 additional values, beyond the true cash value of complainant’s said property as measured by the cost of replacement of the same, making

2d. The number of shares of capital stock issued | anti outstanding, and the par or face value of each share.

3d. Its principal place of business.

4th. The market value of said shares of stock on the 1st day of April next preceding, and if such shares have no market value, then the actual value thereof .

5th. The real estate, structures, machinery, fix¬ tures, and appliances owned by said associati .n, company, copartnership, or corporation, ami sub¬ ject to local taxation within the state, and the location and assessed valuetbereof in each county or township where the same is assessed for local taxation.

tith. The specific real estate, together with the permanent improvements thereon, owned bv such association, company, copartnership, or corpora¬ tion. situate outside the state of Indiana and not directly used in the conduct of the business, with a specific description of each such piece, where locatpd, the purpose for which thesame is used, and the sum at which the same is assessed for taxation in the locality where situated.

7th. All mortgages upon t lie whole or any part of its property, together with the dates and amount thereof.

8th. (<x> Tito total length of the lines of said asso¬ ciation or company.

[hi The total length of so much of their lines as is outside the state of Indiana.

(rl The length of the lines within each of the counties rnd townships within the stateof Indiana.

Sec. 5. Upon the filing of such statements, the auditor of state shall examine them, and each of them, and if heshall doom the same insufficient, or in case he shall deem that other information is re¬ quisite, he shall require such officer to make such other and further statements as said auditor of siate may call tor. In case of the failure or refusal of anv association, company, copartnership, or cor¬ poration to make out and ucliver to the auditor of state any statement or statements toqu red bv this act, such association, company, copai tnersbip, or corporation shall forfeit and pay to hie state of Indiana SflflO for each additional day such report is delayed beyond the 1st day of June, to be sued and

50

recovered in any proper form of action, in the name of the state of Indiana, on the relation of the auditor of state, andsuch penalty, when collected, shall be paid into the general fund of the state.

Sec. 6. Upon the meeting of the state board of lax commissioners tor the purpose of assessing railroad and other property, said auditor of state shall lav such statements, with such information as may have been furnished him, before said board of tax commissioners, who shall theieupou value and assess the property of each association, com¬ pany, copartnership, or corporation in the manner hereinafter set forth, after exarniuing such state¬ ments. and after ascertaining the yulue of such properties therefrom, and from such other infor¬ mation as they may have or obtain. For that pur¬ pose they may require the agents or officers of said association, company, copartnership, or corpora¬ tion to appearbefore them with such books, papers, or statements as they may require; or they may re¬ quire additional statements to be made to them, and may compel the attendance of witnesses in case they shall deem it necessary to enable them to , ascertain the true cash value of such property.

Sec. 7. Said state board of tax commissioners shall first ascertain the true cash value of theentireprop- ertv owned by said association, company, copart¬ nership, or corporation from said statements or oth¬ erwise. forthai purpose taking the aggregate value ol all tlie shares of capital stock, in case said shares have a market value, and in case they have none, taking the actual value thereof or of the capital of said association, company, copartnership, or cor¬ poration. in whatever manner the same is divided, in case no shares of capital stock have been issued: Provided, however, that in case the whole or any portion of the property of such association, com¬ pany, cottar' nership, or corporation shall oe en¬ cumbered by a m rtgageor mortgages, such board shall ascertain the true cash value of such property , bv adding to the market value of the aggregate shares of s ock. or to the value of the capital, in case there stall be no such shares, the aggregate amounts of such mortgage or mortgages, and the result shall be deemed and treated as tbe true cash value of the property of such association, company, I copartnership, or corporation. Such board of tax

103 U. S

1895,

Western Union Telegraph Co. v. Taggart.

reasonable allowances for deterioration, by add¬ ing values of complainant’s business, property, and goodwill, both in and outside of Indiana, and franchises granted by the state of New York, the United States and foreign countries; and in witness thereof caused to be entered upon the official record of said board, required by law to be kept by said board, on said Au¬ gust 21, 1893, the following statement and cer¬ tificate:

“ ‘In accordance with the requirements of the act of the general assembly of the state of Indiana, approved March 6,* 1893, the state board of tax commissioners, after full consid¬ eration, does hereby assess and value telegraph, telephone, palace car, sleeping car, drawing¬ room car, dining car, express, and fast freight, joint stock associations, companies, copartner¬ ships and corporations transacting business in the state of Indiana, which assessment and valuation are as follows, to wit: Assessment and valuation of telegraph and telephone com¬ panies in the state of Indiana by the state board of tax commissioners for the year 1893, exclusive of real estate, structures, machinery, fixtures and appliances subject to local taxa¬ tion within the state.’” The first line under that beading was: “Western Union Tele¬ graph Company. Miles, 6,436. Per mile, $357. Total, $2,297,652.”

“That the state board of tax commissioners, during its said se.-sion in the year 1893, did not attempt to specify or describe the property of complainant, falling within the description of real estate, structures, machinery, and appli¬ ances subject to local taxation.

7, 8

“That, in making said assessment, said state board of tax commissioners assumed to take as the basis thereof the value of the entire capital stock of complainant, at a valuation per share based upon the price of the shares of com¬ plainant’s capital stock dealt in in the stock ex¬ change market of New York city, dividing such aggregate value by the total number of miles of telegraph line of complainant, wher¬ ever situated, and both in and outside of Indiana, and thereby obtaining a pretended valuation per mile of the telegraph line of *complainant, amounting to the said sum of [8 $357 per mile, which said pretended valuation per mile said board acting under the author¬ ity of said pretended statute, imputed to and imposed upon each mile of the whole num¬ ber of complainant’s telegraph line in Indiana, thereby imputing to and imposing upon the whole telegraph line of complainant in Indiana, which is of the length of 6,436 miles, said pre¬ tended valuation of $2,297,652, which said pretended valuation is grossly excessive and far beyond the true cash value of complainant’s said property in Indiana.

“That said state board of tax commissioners, in reaching said valuation of complainant’s said property in Indiana, did not consider and assess the value of the property of complainant situated in Indiana, otherwise than pursuing the requirements of said pretended statute.

“That neither on April 1, 1893, nor at any time prior or subsequent thereto, was there any market value for all the shares of the capi¬ tal stock of complainant;” that the whole number of shares was 948,200, of the par value

commissioners shall, for the purpose of ascertain¬ ing the true cash value of the property within the state ot Indiana, next ascertain, from such state¬ ments or otherwise, the assessed value for taxation, in the localities where the same is situated, of the several pieces of real estate situate without the state of Indiana and not specifically used in the general business of such associations, companies, coparnersbips, or corporations, which said assessed values for taxation shall be by said board deducted from the gross value of the property as above ascertained. Said state board of tax commissioners shall next ascertain and assess the true cash value of the property of such associations, companies, copartnerships, or corporations within the state of Indiana, by taking the proportion of the whole aggregate value of said associations, companies, copartnerships, or corporations, as above ascer¬ tained, alter deducting the assessed value of such real estate without the state, which the length of the lines of said associations, companies, copartner¬ ships, or corporations in the case of telegraph and telephone companies within the state of Indiana bears to the total length of the lim s thereof: and In the case of palace, drawing-room, sleeping, dining, or chair car companies, the proportion shall be the proportion of such aggregate value, after such deductions, which the length of the lines within the state, over which said ears are run, bears to the length of the whole lines over which said cars are run; and in the case of express com¬ panies, the proportion shall be the proportion of the whole aggregate value, after such deductions, which the length of the lines or routes within the state of Indiana bears to the whole length of the lines or routes of such associations, companies, co¬ partnerships. or corporations: and such amount so ascertained shall be deemed and held as the entire value of the property of said associations, com¬ panies. copartnerships, or corporations within the state of Indiana. From the entire value of the property within the state, so ascertained, there shall be deducted, by said board, the assessed value for taxation of all the real estate, structures, machinery, and appliances within the state and subject to local taxation in the counties and town¬ ships as hereinbefore described in item No. 5of §8 1-

163 U. S.

4 of this act; and the residue of such value so ascer¬ tained, after deducting therefrom the assessed value of such local properties, shall be, by said board, assessed to said association.

Bee. 8. Said state board of tax commissioners shall thereupon ascertain the value per mile of the property within the state by oividing the total value, as above ascertained, after deducting the specific properties locally assessed within the state, by the number of miles within the state: and the re¬ sult shall be deemed and held as the value per mile of the property of such association, company, co¬ partnership, or corporation within the state of In¬ diana.

Sec. 9. Said state board of tax commissioners shall thereupon, for the purpose of determining what amount shall be assessed by it to said associa¬ tion, company, copartnership, or corporation in each county in the state through, across, into, or over which the line of said association, company, copartnership, or corporation extends, multiply the value per mile, as above ascertained, by the number of miles in each of such counties, as re¬ ported in said statements or as otherwise ascer¬ tained, and the result thereof shall be, by said board, certified to the auditor of state, who shall thereupon certify the same to the auditors, re¬ spectively, of the several counties through, into, over, or across which the lines or routes of said as¬ sociation, company, copartnership, or corporation extend: and such auditors shall apportion the amount certified for their counties, respectively, among the several townships into, through, over, oracross which such lines or routes extend, in pro¬ portion to the length of the lines in such town¬ ships.

Sec. 10. To enable said county auditors to prop¬ erly apportion the assessments between the several townships, they are authorized to require the agent of said association or company to report to them, respectively, under oath, the length of the lines in each township: and the auditor shall there¬ upon add to the value so apportioned the assessed valuation of the real estate, structures, machinery, fixtures, and appliances situated in any township, and extend the taxes thereon upon the duplicates as in other cases.

51

8-11

Oct. Term,

Supreme Court of the United States.

of $100 each; that the number of shares sold or speculated in on April 1, 1893, on the New York stock exchange, was 1,168 shares, at the average price of $94 50, and only a part of t hose was actually delivered; and that the price so obtained did not fairly represent the actual value of the plaintiff’s property.

“That any price at which any or all shares of complainant might be sold, by any holder or holders thereof, whether such price be cal¬ culated upon any market value or upon actual value, includes, amongst other things, a con¬ sideration of franchises of great value owoed or exercised by complainant, granted by the state of New York, by the United States, by Canada, by Great Britain, by Cuba, and by other states, countries, and municipalities; a consideration of complainant’s goodwill, its past earnings from every source, its probable future earnings from every source, the busi¬ ness ability, enterprise, and skill of the present managers of complainant’s business, the prob¬ able continuance of business ability, enterprise, and skill in the future management of com¬ plainant’s business; the contract and other re- 91 lations of complainant to powerful ^railroad, telephone, and cable companies; a considera tion of the real estate of complainant situated in the city of New York, which is of great value, to wit, of the value of $3,500,000, and in the city of Chicago, which is of great value, to wit, of the value of $1,700,000, and of the real estate of complainant of great value, sit¬ uated in many other states and countries, none of which is situated in the state of Indiana; as well as the consideration of the actual value of all complainant’s telegraph lines, poles, wires, conduits, instruments, appliances, and office furniture, including that which is situated in Indiana and taxable by the state of Indiana.

“That, in estimating such market or actual value of the shares of the stock of complain¬ ant, the values of said intangible franchises, rights, contracts, earnings, business, business ability, enterprise, skill, and management, and goodwill, and of all said real and personal estate of complainant, are blended so as to render it impossible to separate and distin¬ guish the portions of value applicable to any or each of said elements of value of said shares.”

That the plaintiff was the owner of many thousand miles of telegraph in the slates of Massachusetts, New York, Pennsylvania, and New Jersey, and in other densely populated portions of the United States, of the cost and value of $2,500 per mile on the average, and requiring great expenditures for the maime- nance thereof; of many thousand miles of cable under the high seas, of the cost and value of $3,500 per mile on ti e average; and of many thousands of miles of telegraph in uninhabited or sparsely inhabited portions of the United Statesand Mexico, which, by reason of the great cost of tr nsportation of material, and cost of maintenance, were of great cost and value; that all the plaintiff’s lines in the state of Indiana, by reason of the proximity to supplies of material, and the very cheap transportation, were of minimum value, as compared with the plain tiff’s lines situated elsewhere; and that, by reason of these facts, the average m;le of the telegraph line of the plaintiff in Indiana was 52

of the value of 40 per cent of the value of the average mile of the whole line situated outside of the state of Indiana, reckoning such value *upon thecostof construction and mainten- [lO ance, and making allowance for deterioration.

That 66 per cent of the plaintiff’s whole business in transmitling telegraphic messages, and 60 per cent of its busine s in the state of Indiana, was interstate, and international business; and that the average net earnings of a mile of the line in the state of Indiana amounted to only 60 per cent of the net earn¬ ings of the average mile of its line outside of the state.

That the plaintiff duly accepted the provi¬ sions of the act of Congress of July 24, 1866, chap. 230, now U. S. llev. Stat. 5263, 52.9; that all the telegraph lines owned or operated by the plaintiff in Indiana were con¬ structed upon railroads streets, and other po3t roads of the United States, and thereby the plaintiff was an agent of the United States in the transmission of intelligence by electricity; and that the statute of Indiana of March 6, 1893, and the assessment of the valuation of the plaintiff’s property under that statute ren¬ dered its property in Indiana vsubstantially valueless, and prevented it from performing its obligations to the United States.

That much of the plaintiff’s capital stock, to the amount of $7,033,230, “is invested in and represented by the capital stock and boods of other telegraph and telephone corporations, whose telegraph or telephone plants are leased to or operated by complainant, which said tel¬ egraph or telephone corporations possess no property in the state of Indiana, and do not own or use any franchise granted by the state of Indiana, and are wholly situated outside of the'state of Indiana.

“That the attempted and pretended valua¬ tion of complainant’s said property by said state board of tax commissioners, in manner aforesaid, upon the value of complainant’s shares of stock, whether said board pretended to value said property upon a basis which in¬ cluded the consideration or estimation of mar¬ ket value or actual value of the shares of stock of complainant, necessarily includes, and does in fact include, values which aie no part of the true cash value of the property of com¬ plainant in Indiana; but are imputed and ficti¬ tious values ^distributed to complainant’s [1 1 said propertvin Indiana, as portionsof the value of the business, busiuess ability , enterprise, and skill of complainant, of the real and personal estate owned and leased by complainant and outside of the state of Indiana, and of com¬ plainant’s franchises granted by states other than Indiana and municipalities outside of Indiana and by the United States and by for¬ eign states and nations, and of the contract rehitinns and other relations existing bet ween comp’ainant and other corporations, all of which said property, things iu action, and other things and matters of value, are beyond the jurisdiction of the state of Indiana, whether for the purpose of taxation or for any other purpose.”

That the auditor of the state, on September 15, 1893, certified the valuation aforesaid to the auditors of the counties through which the plaintiffs’ telegraph lines extended; and that the

163 l. S.

Western Union Telegraph Co. v. Taggart.

11

county auditors were engaged in apportioning and distributing the same among the town¬ ships, and were preparing to deliver tax dupli¬ cates to the county treasurers, to the end that they might collect the tax from the plaintiff.

That the stat ute of 1893, chap. 171, was con¬ trary to the Constitution of Indiana in various particulars pointed out (but not now relied on), and that this statute, and the assessment and valuation of the plaintiff’s property by the state board of tax commissioners in compliance with its provisions, levied a tax upon interstate and international commerce, in violation of U. S Const, art. 1, £ 8, and deprived the plaintiff of its property without due process of law, and denied it the equal protection of the laws, in violation of the 14th Amendment to the Con¬ stitution.

The defendants demurred generally to the bill. The court sustained the demurrer, aDd, the plaintiff declining to amend its bill, entered final judgment for the defendants. The plain¬ tiff appealed to the supreme court of Indiana, which affirmed the judgment. 141 Ind. 281. The plaintiff thereupon sued out this writ of error.

Messrs. John F. Dillon, Rush Taggart , Alpheus H. Snow, Willard Broion, and Charles W. Writs, for plaintiff in error:

In the method of valuation prescribed by the statute and in the assessment now in ques¬ tion actually made by the hoard of assessors pursuant to the statute there was necessarily included a valuation of the Federal franchises of the plaintiff in error, which Federal fran¬ chises, or the value thereof, are not taxable by the state of Indiana.

Pensacola Teleg. Co. v. Western U. Teleq. Co. 96 U. 8. 1 (24: 708); California v. Central P. R. Co. 127 U. S. 1 (32: 150), 3 Inters. Com. Rep. 153; Minot v. Philadelphia, W. & B. R. ('o (“ Delaware R. Tax”) 85 U. S. 18 Wall. 206 (21: 888); Taylor v. Secor [“State R. Tax Cases”) 92 U. S. 575 (23: 663); Western U. Teleg Co. v. Massachusetts, 125 U. S. 530 (31: 790); Massachusetts v. Western U. Teleg. Co. 141 U. S. 10 (35: 628); People, Union Trust Co., v. Coleman, 126 N Y. 433, 12 L. R. A.

N. Y. 304; McCulloch v. Maryland, 17 U. S. 4 Wheat. 3 1 6 (4: 579); Osborn v. Bank of United States, 22 U. S 9 Wheat. 738 (6: 204); Brown v. Maryland, 25 II. S. 12 Wheat. 419 (6: 678); Thomson v. Union P. R. Co. 76 U S. 9 Wall. 579 (19: 792); Union P. R. Co. v. Peniston, 85 U S. 18 Wall. 5 1 21: 787); Pullman Palace Car Co. v. Pennsylvania , 141 U. 8. 34(35: 621), 3 Inters. Com. Hep. 595; Postal Teleg. Cable Co. v. Adams, 155 U. S. 688(39: 311), 5 Inters. Com. Rep. 1.

If the tax levied by a state is upon a Federal “franchise” it is settled that it is unconstitu¬ tional

Weston v. Charleston, 27 U. 8. 2 Pet. 449 (7: 481).

Nor is the Western Union Telegraph Com¬ pany, having accepted the act of Congress of July 24. 1866, subject to have imposed on it a license tax by the state of Indiana.

Leloup v. Port of Mobile, 127 U. S. 640 '32: 311), 2 Inters. Com. Rep. 134; Asher v. Texas, 128 U. S. 129 (32: 368), 2 Inters. Com. Rep. |

103 U. S.

241; Western U. Teleg. Co. v. Seay, 132 U. 8. 472 (33: 4o9), 2 Inters. Com. Rep. 726; hyngv. Michigan, 135 U. S. 165 (34: 153), 3 Inters. Com. Rep. 143.

A state may tax the “property” of a corpo¬ ration havingaFederal franchise, but it cannot tax the “Federal franchises” of a corpora ion.

California v. Central P. R. Co. 127 U. S. 1 (32: 150), 2 Inters. Com. Rep. 153.

Clearly such a tax on the Federal franchise of the Western Union Company would be void. Is it any less invalid by being fas in this case) included in a general assessment in which the value of the “franchises” and of the “property” of the company are combined.

None of the cases cited by the attorney gen¬ eral of Indiana so hold.

Such a holding is in conflict with the de¬ cisions or the principle of the decisions of this court in the following cases.

Murray v. Charleston, 96 U. 8. 432(24:760); New York v. New York Tax Comrs. 67 U. S. 2 Black, 620 (17: 451); New York v. New York Tax Comrs. (“Bank Tax Case”) 69 U. S. 2 Wall. 200 (17: 793).

The necessary effect of the method of taxa¬ tion adopted by ibe taxing authorities of In¬ diana in this case was to tiring within the operation of ihe statute of Indiana property, or the value of property, of the telegraph com¬ pany outside of the state of Indiana. Such taxation cannot be deemed due process of law under the 14th Amendment to the Constitution of the United Staes; and therefore the s at- ute requiring or permitting such a mode of assessment, and the assessment made under it, must be treated as unconstitutional and void.

Cleveland, C. C. & St. L. R. Co. v. Backus, 154 U. S. 446 (38: 1046), 4 Inters Com. Rep. 677; Pittsburg , C. C. & St. L. R. Co. v. Backus, 154 U. S. 431 (38: 1038).

The case at bar is distinguishable from and not controlled by (he Indiana railway cases.

Cleve and, C. C. & St. L. R. Co. v. Backus, and Pittsburg, C. C. & St. L. R. Co. v. Backus, supra.

The mode prescribed or allowed by the stat¬ ute (act of March 9, 1893, S 7), viz., the market value of its shares, etc., for ascertaining the true cash valuation of the entire property of the plaintiff in error, which mode it is admitted on the record was followed by the tax commis¬ sioners of Indiana in arriving at the assessment now complained of, is a mode under which, as applied to the plaintiff in error, it is legally impossible that it should result in ascertaining the true cash value of the property of the plain¬ tiff in error within the state of Iudiana, and therefore such assessment upon the plaintiff in error (which is a Federal agency and engaged in interstate commerce), is in violation of the commerce clause of the Constitution and of the 14th Amendment thereto.

Messrs William A,,jKetcham, Attorney General of Indiana, JAdson Harmon, and Alonzo Greene Smith, for defendants in error:

The act of March 6, 1891, concerning taxa¬ tion, e'c. (Acts of 1891, pp. 199-291; Burns’ Anno. Rev. of >894, 8408 et seq.), and the act

of March 6, 1893, supplementary to and amen¬ datory thereof (Acts of 1893, pp. 374-3(83; Burns’ Anno. Rev. of 1894, 8494-8506), are

in pari materia and should be construed to-

63

Supreme Court of the United States.

Oct. Term,

14, 15

gether as a homogeneous system providing for the taxation of all property in the state.

Western U. Ttleg. Co. v. Taggart, 141 Ind.

Therefore the constitutionality of the act of March 6, 1893, cannot he considered as pro¬ viding a separate system entirely distinct from the act of March 6, 1891.

So construed, the legislation attacked in this action is valid and constitutional, and is not subject to the objection tendered by the com¬ plaint of the plaintiff in error.

By such legislation and the action of the state board of tax commissioners in compliance therewith the plaintiff in error was deprived of its property without due process of law.

By such legislation and the action of the s'a'e hoard in compliance therewith the plaintiff in error was deprived of the equal protection of the laws.

By such legislation and the action of the state board in compliance therewith the state of Indiana had levied a duty on imports.

By such legislation and the action of the state hoard in compliance therewith the state of Indiana had levied a tax either upon interstate or foreign commerce.

Taylor v. Secor {“State R. Tax Cases”) 92 U. S. 575 (23: 663); Cincinnati, N~. O. & T. P. R. Co. v. Kentucky (“ Kentucky R. Tax Cases”) 115 U. S. 321 (29: 414); Pittsburg, C. C. & St. L.

R. Co. v. Backus, 154 U. 8. 431, 438, 439 (38: 1038. 1040).

The system of assessing and levying a tax upon property that has a unity of character, existence, and operation in several states, based upon the proportion that the mileage within bears to the mileage without the state, is in accord with the requirements of the United States Constitu ion.

Western U. Teleg. Co. v. Massachusetts, 125 U. 8. 530 (31: 790); Pullman Palace Car ('o. v. Hayicad, 131 U. S. 36 (35: 621); Ma»sachvsetts v. Western U. Teleg. Co. 141 U. S. 40(35: 623); Pullman Palace Car Co. v. Pennsylran ia, 141 U. 8. 18 (35:613), 3 Inters. Com. Rep. 595.

‘Whether it is or not, the statutes of the stale of Indiana, providing for the assessment of telegraph, telephone, etc., companies, does not require or permit the state board of tax com¬ missioners to assess a valuation based otdy on the proportion that the mileage wilhin bears to the mileage without the state, but requires it to assess and determine the true cash value of the property within the state, and in such assessment permits and requires the board to take into consideration such proportion upon the mileage basis,'' with all other matters that ■will enable it to ascertain and determine the true cash value of the property to be assessed.

Western U. Teleg. Co. v. Henderson, 68 Fed. Rep. 589.

The value of any given piece of property is not necessarily properly represented by the cost of construction less the depieciation that has taken place since the original construction

Columbus Southern R. Co. v. Wright, 151 U.

S. 470 (38: 240).

The value of any given piece of property is not necessarily to be determined by the cost of reproduction or replacement.

Essential ingredients to be considered in de¬ termining the value of any property are the 54

uses to which it can be put, its surroundings, whether it can or cannot, be made to produce earnings in its ordinary operation, and a valu¬ ation made after considering these in connec¬ tion with such other matters as tend to show the value cannot be said to be a valuation of the earnings the income, or the surroundings.

Columbus Southern R. Co. v. Wright, 151 U. S. 470 (38: 240); Cleveland, C: C. & St. L. R. Co. v. Backus, 154 U. 8. 439 (38: 1041), 4 Inters. Com Rep. 677; Cleveland. C. C. & St. L. R. Co. v. Backus, 133 Ind. 513, 18 L. R. A. 729.

A telegraph company is as essentially and properly a unit in its existence and operation as a railroad company, and in order to prop¬ erly ascertain the value to be placed thereon it is proper to pursue the same methods and apply the same principles that have been pur¬ sued and applied to ascertain the value of rail¬ road property.

Western U. Teleg. Co. v. Poe, 69 Fed. Rep. 557; Western U. Teleg. Co. v. Taggart. 141 Ind. 281; Union P. R. Co. v. United States (“Sink¬ ing Fund Cases"), 99 U. 8. 718 (25: 501).

Mr. Justice Gray delivered the opinion of the court: v

It is not and cannot he doubted that each state of the Union may tax all property, real and personal, within its borders, belonging to persons or corporations, although employed in interstate or foreign commerce, provided the rights and powers of the national government are not interfered with. Minot v. Philadel¬ phia, W & B. R. Co. (“ Delaware R. Tax”) 85 U. S. 18 Wall. 206, 232 [21: 888, 896]; West¬ ern U. Teleg. Co. v. Texas, 105 U. 8. 460, 4.64 [26: 1067, 1068]; Western U. Teleg. Co. v. Atty. Gen. 125 U. S. 530 [31:790]; Marye v. Baltimore & O. R. Co. 127 U. S. 117, 123, 124 [32: 94, 96, 97]; l.eloup v. Port of Mobile, 127 U. S. 640, 649 [32:311, 314, 2 Inters. Com. Rep. 134]; Pullman Pa7ace Gar Co. v. Penn¬ sylvania, 141 U. 8. 18 [35: 613, 3 Inters. Com. Rep. 5„5]; Cleve'and, C. C. A St. L. R. Co. v. Backus. 154 U. 8. 439, 445 [38: 1041, 1046, 4 Inters. Com. Rep. 677 1.

The principal grounds upon which the plain¬ tiff contends that the statute of Indiana of March 6, 1893, chap. 171, is unconstitutional, and the valuation and assessment of the plain¬ tiff’s property under it invalid, are that they necessarily included a taxation of franchises granted to the plaintiff bv the United 8tates, as well as of the plaintiff’s property outside of the state of Indiana, neither of which was sub¬ ject to that taxation in that state: and also by taking the market value of shares of the plain¬ tiff’s stock, in fixing the valuation of the entire *propertv of the plaintiff. and by apportion [ 15 ing that valuation according to the proportion thereof within the state of Indiana, of all the plaintiff’s telegraph lines everywhere, adopted an arbitrary rule and imposed an unlawful , burden upon interstate commerce.

But in e ch of these respects the case pre¬ sented by this record appears to us to be gov¬ erned by previous decisions of this court. The argument for the plaintiffs in error, in effect, if not in express words, invites the court to [modify or to overrule those decisions. It be¬ comes important, therefore, to state somewhat fully the scope and extent of those decisions,

153 U. S.

Western Union Telegraph Co. v. Taggart.

15-18

the reasons on which they proceeded, and the provisions of the statutes thereby construed.

The statutes of Massachusetts, the constitu¬ tionality of which w; s attacked by the present plaintiff and upheld by this court in the two cases of Western U. Teleg Go. v. Atly. Gen. 125 U. S. 530 [31:790], and 141 U. 8. 40 [35:628], were undistinguisbable in any ma'erial respect from the statute of Indiana now before us, and may, as suggested at the bar, have been the model upon which this statute was framed.

The material provisions of those statutes of Massachusetts were as follows: Every cor¬ poration chartered or organized in Massachu¬ setts or elsewhere, and owning a telegraph line in Massachusetts, was required to return an nually to the tax commissioner of the state a statement of the amount of its capital stock, the par v due and market value, of its shares, the locality and value of its real estate and machinery subject to local taxation within the state, the whole length of its lines, and the length of so much of its lines as was within the state. The tax commissioner was required to asceitain the true market valueof its shares, and to e-timate the fair cash valuation of all the shares constituting its capital stock; and the corporation was required to pay annually “a tax upon its corporate franchise at a valua¬ tion thereof equal to the aggregate value of the shares in its capital stock,” as so deter¬ mined by the tax commission; deducting, how¬ ever, from that valuation, such proportion thereof as was proportional to the length of that part of its line lying without the state, and lG]also an ^amount equal to the value, as de¬ termined by the tax commissioner, of its real estate and machinery within the state and sub¬ ject to local taxation therein. Mass. Pub. Stat. chap. 13, §§ 38-40. 42.

In the first of the Massachusetts cases, Mr. Justice Miller, delivering the opinion of the court, said that “the main ground on which the telegraph company resisted the payment cf the tax alleged to be due,” was that it was a violation of the rights conferred upon the com¬ pany by the provisions (which had been ac¬ cepted by the company) of the act of Congress of July 24. 1866. chap. 230, re enacted in U S. Rev. Stat. § 5263, bv which it was enacted that any telegraph company organized under the laws of any state, should “have the right to construct, maintain, and operate lines of telegraph through and over any portion of the public domain of the United States, over and along any of the military or post roads of the United States, . . . and over, under, or across the navigable streams or waters of the United States.” U. S. Rev. Stat. £ 5263; 14 Stat. at L. 221. The argument then made by counsel and the decision of the court upon this point are shown by the following passages in the opinion:

“The argument is very much pressed that it is a tax upon the franchise of the company, which franchise, being derived from the United States by virtue of the statute above recited, cannot be taxed by a state; and coun¬ sel for appellant occasionally speak of the tax authorized by the law of Massachusetts upon this as well as all other corporations doing busi ness within its territory, whether organized under its laws or not, as a tax upon their

163 U. S.

franchises. But by whatever name it may be called,, as described in the laws of Massachu¬ setts, it is essentially an excise upon the capital of the corporation. The laws of that common¬ wealth attempt to ascertain the just amount which any corporation engaged in business within its limits shall pay as a contribution to the support of its government upon the amount and value of the capital so employed by it therein.” Wes erix U Teleg. <'o. v. Atly. Gen. 125 U. S. 546, 547 [31: 792,' 703].

“While the state could not interfere, by any specific statute, to prevent a corporation from placing its lines along these post *roads, or [ 17 stop tbeuseof them after they were placed there, nevertheless the company, receiving the bene¬ fits of the laws of the state for the protection of its property and its rights, is liable to be taxed upon its real or personal property as any other person would be. It never could have been intended by the Congress of the United States, in conferring upon a corporation of one state the authority to enter the territory of any other sta'e, and erect its poles and lines therein, to establish the proposition that such a company owed no obedience to the laws of the state into which it thus entered, and was under no obli¬ gation to pay its fair proportion of the taxes necessary to its support." 125 U. S. 548 [31:

“ The tax in the present case, though nomi¬ nally upon the shares of the capital stock of the company, is, in effect, a tax upon that or¬ ganization on account of property owned and used by it in the state of Massachusetts; and the proportion of the length of its lines in that state to their entire length throughout the whole country is made the basis for ascertain¬ ing the valueof that property. We do not think that such a tax is forbidden by the ac¬ ceptance on the part of the telegraph compa¬ ny of the rights conferred by U. 8. Rev. Stat. § 5263, or by the commerce cl >use of the Constitution.” 125 U. S. 552 [31: 794]. See also Reagan v. Mercantile Trust Co. No. 1. 154 U. 8. 413, 416, 417 L38: 1028-1030]; Cen¬ tral P. R. Co. v. California , 162 U. S. 91, 123 [10:903,9141.

It was further argued in that case that the tax was excessive and invalid because, in as¬ certaining the whole valuation of the stock, no deduction was made on account of the value of real estate and machinery situated, and sub¬ ject to local taxation, outside of the state of Massachusetts; although it appeared that the company owned lands and buildings outside of the state, the cost of which was more than $3,000,000 and upon which it had been assessed and bad paid taxes of more than $48,000. 125

U. 8. 542, 544,552 [31:790, 792, 794].

The court, notwithstanding, declared that it did not feel called upon to defend all the items and rules by which the authorities of the state arrived at the taxable value on which its ratio of percentage of taxation should be assessed, or t.o*hold the tax void because the court [18 might have adopted a different system had it been called upon to accomplish the same result; and decided that the rule adopted to ascertain the amount of the value of the capital engaged in business within the boundaries of the state, on which the tax should be assessed, was not an unfair or an unjust one, and that the details

55

18-21

Supreme Court op the United States.

Oct. Term,

of the method by which this was determined did not exceed the fair range of legislative dis¬ cretion. 125 U. S. 553 [31: 795).

The same views were affirmed in the second case between the same parties. 141 U. S. 44, 45 [35: 630].

Those decisions clearly establish that a statute of a state requiring a telegraph com¬ pany to pay a tax upon its property within the state, valued at such a proportion of the whole value of its capital stock as the length of its lines within the state bears to the length of all its lines everywhere, deducting a sum equal to the value of its real estate and machinery subject to local taxation within the state, is constitutional and valid, notwithstanding that nothing is in terms directed to be deducted from the valuation, either for the value of its franchises from the United States, or for the value of its real estate and machinery situated and taxed in other states, unless there is sonde thing more showing that the system of taxa¬ tion adopted is oppressive and unconstitutional.

We are then brought to a consideration of the statutes of Indiana as construed by the supreme court of the state and by this court.

The statute of Indiana of March 6, 1891, chap. 91, repealed previous laws, and estab¬ lished a comprehensive and complete system of taxation. By § 3 all property within the jurisdiction x>f the state, not expressly ex empted, was declared to be subject to taxa¬ tion; and by subsequent sections the property of all corporations owning or operating rail¬ roads within the state was classified for the purposes of taxation as follows:

By £ 78 the “right of way, including the sup rstructure, main, side, or second track, and turnouts, turntables, telegraph poles, wires, instruments, and other appurtenances, and the stations and improvements of the rail road company on such right of way” (except- 1 9]ing machinery, fixtures, and stationary *en- gines) were considered real estate, and denomi¬ nated “railroad track.” By § 79 the value of such “railroad track” was taxed in the several counties, townships, cities, and towns, in the proportion that the length of the main track therein bore to the whole length of the road in the state, except that the value of the side or second track, and of all turnouts, station houses, and other buildings belonging to the railroad, was taxed in the county, township, city, or town in which they were situated. By § 80 the movable property belonging to a railroad company was denominated “rolling stock” and considered personal property and was taxed in the several counties, townships, cities, and towns in the proportion that the main track used or operated therein bore to the length of the main track used or operated by the corporation, whether owned by it or not. By §81 all other personal property, including ma cbinery, fixtures, stationary engines. tools, and materials for repairs, was taxed in the county, township, city, or town in which it was on the 1st day of April in each year; and by § 82 all real estate of any railroad company (other than that denominated “railroad track”), with all improvements thereon, was ta^ed in the county, township, city, or town where it was situated.

Each railroad corporation was required by

56

§ 83 to return annually to the county auditor an inventory of all these kinds of property, except “railroad track;” and by § 85, to return to the auditor of the state, to h* laid before the state board of tax commissioXers, a statement showing, among other things, “first, the property denominated ‘railroad track,’ giving the length of the main and side or second tracks and turnouts, and showing the proportions in each county and township, and the total in the state; second, the rolling stock, whether owned or hired, giving the length of the main track in each county, and tbe entire length of the road in this state;” and also the amount of its capital stock, and the market value, or if no market value, the actual value of its shares, the total amount of its indebtedness except for current expenses, and the total listed valuation of all its tangible property in the state.

*By £§ 129, 137, the state board of tax [20 commissioners was declared not to be bound by these returns; and was required to “appraise and assess all property at its true cash value, as defined by this act, according to their best knowledge and judgment, and so as to equalize the assessment of property throughout the state,” and to “assess the railroad property, denominated in this act as ‘railroad track’ and ‘rolling stock,’ at its true cash value,” and was authorized to examine persons and papers. And by § 130 each member of the board was required to declare, as part of his oath of office, that he would “in no case assess any property at more or less than its true cash value.”

This court, at the last term, in several cases affirming judgments of the supreme court of Indiana, held that the statute of 1891 did not, in the case of a railroad partly in that state and partly in another, require that the value of the part in Indiana should be determined ab¬ solutely by dividing t he whole value upon a mileage basis; but only that the total amount of stock and indebtedness should be taken into consideration in ascertaining the value; and that the statute was constitutional. Pittsburg, C C. & St. L. R. Co v. Backus, 154 U. S. 421, 430, 43 i [38: 1031, 1038, 1039], 133 Ind. 625; Indianapolis & V. R. Co. v. Barkus, 154 U, 8. 438 [38: 1040], 133 Ind 609: Cleveland. C. C. cf- SL L. R. Co. v. Backus, 154 U. 439 [138: 1041, 4 Inters. Com. Rep. 677], 133 Ind, 513 [18 L. R. A. 729].

In those cases, the objections to the consti¬ tutionality of that statute were answered by this court, speaking by Mr. Justice Brewer, as follows:

“It is not to be assumed that a state con¬ templates the taxation of any property outside its territorial limits, or that its statutes are in¬ tended to operate otherwise than upon persons and property within the state. It is not neces¬ sary that every section of a tax act should in terms declare the scope of its territorial opera¬ tion. Before any statute will be held to intend to reach outside property, the language ex¬ pressing such intention must be clear.” 154 U. 8. 428 [38: 1037].

“It is -obvious that tbe intent of this act was simply to reach the propertv of the railroad within the state. . . . No intent to the

^contrary can be deduced from the pro- [21 vision requiring the corporation to file a state-

163 U. 8.

Western Union Telegraph Co. v. Taggart.

21-23

ment of its total stock and indebtedness; for that is one item of testimony fairly to be considered in determining the value of that portion of the property within the state. The stock and the in¬ debtedness represent the property. As said by Mr. Justice Miller in Taylor v. Secor (“State

R. Tax Cases”), 92 U. S. 575, 605 [23: 663, 670J: ‘When you have ascertained the current cash value of the whole funded debt, and the current cash value of the entire number of shares, you have, by the action of those who above all others can best estimate it, ascertain the true value of the road, all its property, its capital stock, and its franchises; for these are all represented by the value of its bonded debt and of the shares of its capital stock.’” 154 U.

S. 428, 429 [38: 1037],

“It is not staled in this statute that when the value of a road running in two states is ascer¬ tained, the value of that within the state of In diana shall be determined absolutely by divid¬ ing the gross value upon a mileage basis; but only that the total amount of stock and indebt¬ edness shall be presented for consideration by the state board. Nevertheless it is ordinarily true that when a railroad consists of a single continuous line the value of one part is fairly estimated by taking that part of the value of the entire t oad which is measured by the pro¬ portion of the length of the particular part to that of the whole road. This mode of division has been recognized by this court several times as eminently fair.” 154 U. S. 430, 431 [38: 10n7, 1038],

In support of the last statement were cited Taylor v. Secor (“ St 'te R. Tax Cases”), 92 U. S. 608, 611 [-3:672, 673]; Minot v. Philadelphia, W. & H. R. Co. (“ Delaware R. Tax”), 85 U. S. 18 Wall. 206 [21: 888 1 ; Erie R Co. v. Pennsyl¬ vania, 88 U. 8. 21 Wall. 492 [22:595]; Western U. Teleg. Co. v. Atty. Gen. 125 U. 8. 530 [31: 790]: Pullman Palace Car Co. v. Pennsylvania , 141 U. S. 18 1 35: 613, 3 Inters. Com. Hep. 595]; Maine v. Grand Trunk R. Co. 142 U. S. 217 [35: 594, 3 Inters. Com. Rep. 807]; Charlotte, C. & A. R Co. v. Gibbs, 142 U. S 386 [35:1051]; Columbus Southern R. Co. v. Wright, 151 U. S. 470 [38: 238].

“The true value of a line of railroad is some thing more than an aggregation of the values of separate parts of it, operated separately. It 22] is the aggregate of those values plus that arising from a connected operation of thewhole; and each part of the road contributes, not merely the value arising from its independent operation, but its mileage proportion of that flowing from a continuous and connected op¬ eration of the whole. This is no denial of the mathematical proposition that the whole is equal to the sum of all its parts; because there is a value created by and resulting from the combined operation of all its parts as one con¬ tinuous line.” Cleveland, C C. & St. L. R. Co. v. Backus/ 154 U. S. 444 [38. 1045, 4 Inters. Com. Rep 677].

“Now, when a road runs into two states, each state isentitled to consider, as within its ter- fitorial jurisdiction, and subject to the burdens of its taxes, what may perhaps not inaccurately be described as the proportionate share of the value flowing from the operation of the entire mileage as a single continuous road. It is not bound to enter upon a disintegration of values, 163 U. S.

and attempt to extract from the total value of the entire property that which would exist if the miles of road within the state were operated separately. Take the case of a railroad run¬ ning from Columbus, Ohio, to Indianapolis, Indiana. Whatever of value there may be re¬ sulting from the continuous operation of that road is partly attributable to the portion of the ro id in Indiana, and partly to that in Ohio; and each state has an equal right to reach after a just proportion of that v.lue, and sub¬ ject it to its taxing processes. The question is. How can equity be secured between the stales? and to that a division of the value of the entire property upon the mileage basis is the legiti¬ mate answer. Takiog a mileage share of that in Indiana is not taxing property outside of the state.” 154 U. S. 444 445 "[38: 1046, 4 Inters. Com. Rep. 677J.

“The rule of property taxation is that the value of the property is the basis of taxation. It does not mean a tax upon the earnings which the property makes, nor for the privilege of using the property, but rests solely upon the value. But the value of property results from the use to which it is put, and varies with the profitableness of that use, present and pro¬ spective, actual and anticipated. There is no pecuniary value outside of that which results from such use. The amount and profitable character of such use determine the value; and if property is taxed at its actual cash value, it is*taxed upon something which is created |23 by the uses to which it is put. In the nature of things, it is practically impossible- at least in respect to railroad property — to divide its value, and determine how much is caused by one use to which it is put, and how much by another. Take the case before us; it is impos¬ sible to disintegrate the value of that portion of the road within Indiana, and determine how much of that value springs from its use in do¬ ing interstate business, and how much from its use in doiug business wholly within the slate. An attempt to do so would be entering upon a mere field of uncertainty and speculation. And because of this fact it is something which an assessing board is not required to attempt.” 154 U. S. 445, 446 [38: 1046, 4 Inters. Com. Rep. 677],

“It is enough for the state that it finds within its borders property which is of a cer¬ tain value. What has caused that value is im¬ material. It is protected by state laws, and the rule of all property taxation is the rule of value, and by that rule property engaged in interstate commerce is controlled, the same as property engaged in commerce within the state. Neither is this an attempt to do by indirection what cannot be done directly — that is, to cast a burden on interstate commerce. It comes, rather, within that large class of state action, like certain police restraints, which, whiie in¬ directly affecting, cannot be considered as a regulation of, interstate commerce, or a direct burden upon its free exercise.” 154 U. 8. 446, 447 [38: 1046, 4 Inters. Com. Rep 677J.

“It is true, there may be exceptional cases . . . as, for instance, where the terminal

facilities in some large city are of enormous value, and so give to a mile or two in such city a value out of all proportion to any similar dis¬ tance elsewhere along the line of the road, or

57

23-26

Supreme Court of the United Stater

Oct. Term,

where in certain localities the company is en¬ gaged in a particular kind of business requir¬ ing for sole use in such localities an extra amouDt of rolling stock. If tes imony to this effect was presented by the company to the state board, it must be assumed, in the absence of anything to the contrary, that such board, in making the assessment of track and rolling stock within the state, took into account the peculiar and large value of such facilities and such extra rolling stock.” Pittsburg, G. C. & St. Ij. It. Co. v. Backus, 154 -U. S. 431 [38: 1038.]

24] ' *This court further held that the question of the cash valuation of the company’s property was a question of fact, the determination of which was committed to the state board of tax commissioners; and that the decision of the board could not be overthrown by evidence going only to show that the fact was otherwise than as so found and determined. 154 U. S'. 434, 435 [38: 1039],

By § 69 of the statute of Indiana of 1891, teh graph companies incorporated under the laws of any other state, besides being taxable upon their tangible property in Indiana in the same manner as other tangible property was taxed, were required to make annual returns of their receipts from business in the state, in¬ cluding the proportion of gross receipts for business done in connection with the lines of other companies; and to pay a tax of 1 percent on such receipts.

The supplemental and amendatory statute of March 6, 1893, chap. 171, now in question, re¬ pealed that section of the statute of 1891, and substituted provisions very like those of the statutes of Massachusetts, above considered, for the taxation of the telegraph property, and not essentially different from those of the statute of Indiana of 1891 for the assessment of railroad property, except in being more favor¬ able to the company by expressly providing for a deduction of the value of real property outside the state from the total valuation.

By § 1 of the statute of 1893 every tele¬ graph company, whether incorporated under the laws of Indiana, or of any other state, engaged in telegraph business in Indiana, was required to return annually to the auditor of the state a statement of its whole capital stock, the par value of its shares, their market value, or, if they had no market value, the actual value thereof; its principal place of business; its real estate, machinery, and appliances, subject to local taxation in each county and township within the state; its real estate outside the state and not directly used in the conduct of its business, and the sums at w hich such real estate was assessed for local taxation; the mortgages upon the whole or any part of its property; the whole length of all its dines, the length of its lines outside the

25] state of Indiana, and the length of its*lines in each county and township within the state. By 6, 7, the state board of tax commission¬ ers, “after examining such statements, and after ascertaining the value of such properties therefrom, and from such other information as they may have or obtain,” and requiring books and papers to be produced, and witnesses to be examined “in case they shall deem it neces- 58

sary to enable them to ascertain the true cash value of such property,” were required to value and assess the property of each company by ascertaining the true cash value of us entire property, for that purpose takingthe aggregate value of its shares, if they had a market value, or if they had none the actual value thereof or of the capital of the company; then, for the purpose of ascertaining the true cash value of the property within the state (first ascertaining and deducting the assessed value for taxation, in the localities where the same was situated, of its real estate outside the state, and Dot specifi¬ cally used in the general business), taking the proportion of the whole aggregate value of its property, as above ascertained, which the length of its lines within the state bore to the total length of its lines; and deducting there¬ from the assessed value for taxation of real estate, machinery, and appliances within the state and subject to local taxation in the counties and townships.

The supreme court of Indiana considered the present case to be governed by the decisions of this court in the cases of the Railroad Com- vanies v. Backus, above cited; and, after refer¬ ring to some of the passages abovevquoted from those decisions, added: “All that is thus forci¬ bly and convincingly said as to the taxation of interstate railroad property is equally applic¬ able to the taxation of interstate property. It is not easy to see how one mile of appellant’s telegraph line connecting Chicago with New York could be of less value thao any other mile of the same line. Cut out one mile, even though it be through a swamp or under a lake, and the value of the whole line is practically destroyed. The property is a unit, valuable as a whole and by reason of its several connections, and not by virtue of any part taken by itself No way therefore, by which the value of the lines in this state *ean be determined seems so just [26 aDd equitable as to take that proportion of the whole value which the mileage in this state bears to the whole mileage.” 141 Ind. 294,

In that court (as now in this) the- telegraph company insisted that the statu'e of 1893, in applying the mileage bas s of valuation to the lines of telegraph, compelled the state board of lax commissioners to add large outside values totbe valuesof the Indiana portionsof the liues, because the parts of the company’s property outside the state were proportionately of greater value than the parts within the state. To which that court answered: “The act, it is true, provides a method of valuation, the mile¬ age method, as a basis for the taxation of cer¬ tain property within the state of Indiana. But this is simply a means for determining the true cash value of the property within the state; and if in the case of appellant’s property, or in any other case, it is shown to the board, or is discovered by them, that still further de¬ ductions should be made, on account of larger proportional values outside of the slate, or for any other reason, then the board must make such deductions, so that, finally, only the property within the sta e of Indiana shall be assessed and that at its true cash value.” 141 Ind 297.

The state court distinctly held that the stat-

1C3 U. S.

Western Union Telegraph Co. v. Taggart.

26-29

ute of 1893, being supplementary to and amendatory of the statute of 1891, must be construed in conneciion therewith, and be treated as part of one and the same general tax act; that the duties and the powers of the state board of tax commissioners, as defined and prescribed in the statute of 1891, were not abridged or changed, in any respect, by the statute of 1893; and therefore, interpreting the statute of 1893 in the light of the provisions of the statute of 1891 (which have been cited above), concluded ‘ that in the act of 1893 the legislature provided the mileage mentioned as the basis for the assessment of telegraph and other like property, both as to lines situated partly within and partly without this state, and also as to lines running through several counties or other subdivisions of the state; but that it was not the intention of the legislature, nor is it the meaning of that act, that any prop 27]erty *outside of the state should be assessed by importation of values or otherwise, or that any property should be assessed at more or less than its true cash value. Construing the acts of 1891 and 1893 together, it will therefore be presumed, in the absence of evidence to the contrary, that the state board has deducted from the total valuation of all interstate prop erty such values, if any, of extra-state property as will leave the remaining property, within and without the state, as near as may be, of equal proportional value. . . . The act of 1893 provides, generally, for a mode of ascertaining the true cash value of that part of interstate telegraph and other property which is wi hin the state of Indiana^to wit, the mileage method. But should there be particular cases where that method must be modified in order to reach the necessary result, namely, the true cash value of such part of the property as is within the jurisdiction of the stale, the law of 1893 itself supplies the means of doing so.” 141 Ind. 285, 297-300

The statute of Indiana of 1893 regarding: tele¬ graph companies, therefore, as construed and applied by the supreme court of the state, like the statute of 1891 regarding railroad com¬ panies, while it takes as the basis of valuation of the company’s property within tbe state the proportion of the value of its whole capital stock which the length of its lines within the state bears to the whole length of all its lines, makes it the duly of the state board of tax commissioneis to make such deductions, on account of a greater proportional value of the company’s property outside the state, or for any other reason, as to assess its property within the state at its true cash value only; and is therefore governed by the same considerations, upon which the provisions of the statute of 1891 for taxing railroad compan es were held to be constitutional by the decisions of this court in the Railroad Companies v. Backus, above cited.

I tie b II in the present case was filed before those decisions were rendered, and is so drawn as to make it somewhat difficult to distinguish matters of fact alleged with suCb clearness and precision as to be admitted by the demurrer, 281 from the *argumeuiative statements and the conclusions of law which are freely scat¬ tered throughout the bill.

1GJ V. 18.

The bill alleges that the state board of tax commissioners, in fixing the valuation of the plaintiff’s property in Indiana (deducting toe value of real estate, machinery, and fixtures subject to local taxation within the stat ). at the sum of $2,297,652, and at the rate of $357 per mile of telegraph line, placed upon that property, beyond its true cash value, as meas¬ ured by the cost of replacing the same, making reasonable allowances for deterioration, ad¬ ditional values of the plaintiff’s business, property, and goodwill, both in and out of the state, and the franchises granted by the United States, by the state of New York, and by for¬ eign countries. This allegation is made by way of preliminary and inducement to the concluding statement of the paragra h, that “ in witness thereof” the tax commissioners entered upon their record a certificate and state¬ ment, which is set forth, and which has no ten¬ dency to prove anythingof the kind, but merely shows an assessment and valuation made by the state board of tax commissioners, “after full consideration,” and “in accordance with the act of the general assembly of the state of Indiana, approved March 6, 1893.” Moreover, the cost of the.property, or of its replacement, is by no means a true measure of its value; tbe bill, while it elsewhere states the value of the plaintiff’s real estate in other states, and of its stocks and bonds of other companies, nowhere undertakes to fix the value of its franchises from the United States, the state of New York, and foreign countries; and the tax com¬ missioners, by the authorities already cited, had the right and the duty, in estimating the value of the plaintiff’s property in Indiana, to take into consideration those franchises and the other elements mentioned in this paragraph of the bill.

The bill further alleges that the state board of tax commissioners did not attempt to specify or describe the plaintiff’s real estate, machinery, and appliances subject to local tax¬ ation. But the statute did not require of them any such snecification or description; nor does the plaintiff appear to have requested them, or to have done anything towards ass sting them to do so.

*The bill then alleges that the commis [29 sioners took, as a basis of their assessment, the value of the plaintiff’s entire capital stock, esti¬ mating the value of the shares according to the price of such shares in the stork exchange market in New York city, and dividing such aggregate value by the total number of miles of the plaintiff’s telegraph lines, wherever situated, and thereby obtaining a pretended valuation of $357 per mile of its telegraph line in Indiana, which was “grossly excessive and far beyond the true cash value of complain¬ ant’s said property in Indiana.” But the bill immediately proceeds to allege that “ said state board of tax commissioners, in reaching said valuation of complainant’s said property in Indiana, did not consider and assess the value of the property of complainant situated in Indiana, otherwise than by pursu ng the requirements of said pretended statu e.” And the facts stated elsewhere in the bill demon¬ strate that- the commissioners did not obtain their valuation by merely applying the rule

59

29-33 Supreme Court of

stated in this paragraph. Had they done so, the result would have been that the whole number of shares of stock, being 948,200, at $94.50 a share, would have been $89,594,900, which, divided by 189,576, the whole number of miles of all the plaintiff’s lines, would give a value per mile of upwards of $472, or nearly one third more than the valuation adopted.

The bill further alleges that there was no market value for all the shares of the plain¬ tiff’s stock; that the price obtained for a very few shares, in the New York stock exchange did not fairly represent the actual value of the plaintiff’s property; and that any price at which any shares might be sold by holders thereof, whether calculated upon any market value or upon actual value, included a consideration of the plaintiff’s franchises, its contracts with other companies, its actual past and probable future earnings from many sources, skill and enterprise of its managers, and all its real and personal estate in Indiana or elsewhere, includ¬ ing real estate of great value in other states, all of which were “ blended so as to render it impossible to separate and disintegrate the por¬ tions of value applicable to any and each of said 30] elements of value of said ^shares.” This, is hardly more than an argument to show the difficulty of ascertaining the cash value of the plaintiff’s property in the state of Indiana. It certainly has no tendency to show that the tax commissioners did not, as they were re¬ quired to do by the statute as since construed by the supreme court of the state, assess the plaintiff’s property in Indiana at its true cash value, according to their best knowledge and judgment, and after making all proper de¬ ductions, on account of larger proportional Values of its property and business outside of the state, or for any other reason.

The remaining allegations of the bill are either repetitions or amplifications of those alteady consideted, or are averments of con¬ clusions of law. The allegation that the at- temp ed and pretended valuation of com¬ plainant’s said property by said state board of tax commissioners, in manner aforesaid, . . . necessarily includes, and does in fact include, values which are no part of the true cash value of the complainant in Indiana,” is but equivalent to an assertion that the decision of the tax commissioners upon the question of fact committed by the statute to their determi¬ nation was erroneous. As said by this court in Pittsburg, U. C. & St. L. R. Co. v. Backus, above cited, “Whenever a question of fact is thus submitted to the determination of a spe¬ cial tiibuoal, its decision creates something more than a mere presumption of fact; and if such determination comes into inquiry before the courts, it cannot be overthrown by evidence going only to show that the facts were other¬ wise than as so found and determined." 154 U. S. 434, 435 [38: 1039],

Judgment affirmed.

the United States. Oct. Term,