Hall v. American Refrigerator Transit Co.

Mr. Justice Goddard delivered the opinion of the court. The power of the state to levy the tax in question is challenged by defendant in error upon three grounds: First, because the cars being only transiently present within' the state from time to time, acquired no such situs within the. state as is necessary to give the state jurisdiction over them for the purposes of taxation; second, because such taxation would amount to a regulation of interstate commerce, and thus be repugnant to the exclusive power vested in congress to regulate such commerce; third, because even if taxable within this state, no proper provision has been made by the legislature to assess and tax such property. The first objection presents what we regard as the difficult question in the case, and its solution necessitates an inquiry as to the meaning of, and effect to be given to, the foregoing constitutional and statutory provisions. It will be seen by reference thereto that it is made the duty of the state board of equalization to assess all the property in this state owned, used or controlled by railway companies, etc. And it is made the duty of the officers of such companies to furnish the state board of equalization on or before March 15th of each year, a statement showing in detail, for the year ending on December 31 preceding “ a full list of rolling stock belonging to or operated by such railway company. * * * The statement shall show the actual proportion of the rolling stocle in use on the company's road, all of which is necessary for the transportation of freight and passengers, and the operation of the road within the state, during the year for which the statement is made.” The right of a state to tax all subjects within its jurisdiction is unquestionable; and this right may, in the discretion of the legislature, be exercised over all property coming temporarily within its territory, whether for trade, business or convenience, unless such exercise conflicts with some con-' stitutional limitation. R. R. Co. v. Peniston, 18 Wall. 5; Lane County v. Oregon, 7 Wall. 71; Pullman's Palace Car Co. — 297 — v. Pennsylvania, 141 U. S. 18; 25 Am. & Eng. Ency. of Law, 18. As was said in Pullman’s Palace Car Co. v. Pennsylvania, “ the state having the right, for the purposes of taxation, to tax any personal property found within its jurisdiction, without regard to the place of the owner’s domicile, could tax the specific cars which at a given moment were within its borders.” It is clearly manifest that the purpose of these constitutional and statutory provisions is to subject all property owned or used by a railway or other corporation within the territorial limits of the state, to taxation according to its value, regardless of the domicile of its owner; and in so doing, they exercise a well-recognized function of legislation. “For the purposes of taxation, as has been repeatedly affirmed by this court, personal property may be separated from its owner; and he may be taxed, on its account, at the place where it is, although not the place of his own domicile, and even if he is not a citizen or a resident of the state which imposes the tax.” Pullman’s Palace Car Co. v. Pennsylvania, supra. While it is true, as stated by counsel for defendant in error, that it has been uniformly held that property merely in transit through a state acquires no situs for the purposes of taxation; and, it may be further conceded that the property so in transit would not, within the letter and spirit of our legislation, acquire such situs, yet it by no means follows that the cars in question are entitled to exemption under this rule. As shown by the agreed statement of facts, these cars are more expensive than the ordinary freight cars, and the various railway companies within the state of Colorado have not deemed it a profitable investment to build or own such cars, and therefore rely upon securing them from defendant in error, or like corporations, when needed; that it is necessary for the railroad companies operating within the state of Colorado to have such character of cars in order to transport over their respective lines perishable freight; and — 298 — if they could not secure them when needed, it would be necessary for them to own and keep them as a part of their rolling stock. The sum and substance of which amounts to this : that such cars are a part of the necessary equipment of the different railroads using them in the state, and as essential to the transaction of their business as any other portion of their rolling stock. While it appears that said cars are not run in the state in fixed numbers or at regular times, and that certain or specific cars are only transiently in the state, yet it is shown that the average number of cars used hi the course of the business aforesaid within the state during the year for which such assessment was made, was equal to forty. Under these circumstances, we think the effect of our legislation is to give to the cars in question a situs for the purpose of taxation; and that they were “ habitually used and employed ” in the state, in the sense that these words are used in Marye v. B. & O. Ry. Co., 127 U. S. 117, and are assessable under the rule therein announced. Mr. Justice Matthews, who delivered the opinion of the court, in upholding the right of the state of Virginia to tax the B. & O. Ry. Co., whose situs was in Maryland, upon rolling-stock used interchangeably upon the main line and branches of its road in the states of Maryland, Virginia, Pennsylvania and states west of the Ohio river, as the necessities of the company required, said: “ If the Baltimore and Ohio Railroad Company is permitted by the state of Virginia to bring into its territory and there habitually to use and employ a portion of its movable personal property, and the railroad company chooses so to do, it would certainly be competent and legitimate for the state to impose upon such property, thus used and employed, its fair share of the burdens of taxation imposed upon other similar property used in the like way by its own citizens.” The status of the cars in question was also substantially like that of those under consideration in Pullman's Palace Car Co. v. Pennsylvania, supra, in that, there was an average number in use within the state 'during the period for which — 299 — the tax was levied; and we think that under the reasoning of that case, they were subject to taxation in this state. Pickard v. Pullman S. Car Co., 117 U. S. 34, and Pullman S. Car Co. v. Nolan, 22 Fed. Rep. 276, are mainly relied on as sustaining a contrary view. While the court uses general expressions touching the question of situs that seem to sustain the contention of defendant in error, it is to be observed that the question then under consideration was the validity of a license or privilege tax imposed upon cars employed in interstate commerce, and the language touching the situs of the property was used with reference to the right of a state •to impose such a tax, and not as to its jurisdiction to impose a property tax, as in the case under consideration. In Pullman’s Palace Car Company v. Pennsylvania, supra, Mr. Justice Gray, referring to these and kindred cases, says: “ Much reliance is also placed by plaintiff in error upon the cases in which this court has decided that citizens or corporations of one state cannot be taxed by another state for a license or privilege to carry on interstate or foreign commerce within its limits; but in each of those cases, the tax was not upon the property employed in that business, but upon the right to carry on the business at all; and was thereby held to impose a direct burden upon the commerce itself.” It wiR be readily seen, therefore, that the expressions of the court in regard to the question of situs could have no significance or bearing upon that question as presented in tins case. If it can be said that the court in those cases intended to hold that under the conditions therein disclosed, the cars acquired no situs that would subject them to a property tax, then its finding was in direct conflict with the conclusion reached in the later cases above referred to. The tax now under consideration is not a license tax, or in any sense a tax for the privilege of transacting interstate commerce, but only a property tax imposed upon certain cars employed in such commerce. The second objection urged against its validity is therefore clearly untenable. The power of a state to impose such a tax is too well settled to — 300 — admit of discussion. As was said by Mr. Justice Brewer, in passing upon the petition for rehearing in Adams Express Company v. Ohio, 166 U. S. 185: “Again and again has this court affirmed the proposition that no state can interfere with interstate commerce -through the imposition of a tax, by whatever name called, which is in effect a tax for the privilege of transacting such commerce; and it has as often affirmed that such restriction upon the power of a state to interfere with interstate commerce does not in the least degree abridge the right of a state to tax at their full value all the instrumentalities used for such commerce.” And as was said by Mr. Justice Gray, in Pullman's Palace Car Company v. Pennsylvania, supra: “ The cars of this company within the state of Pennsylvania are employed in interstate commerce; but their being so employed does not exempt them from taxation by the state; and the state has not taxed them because of their being so employed, but because of their being within its territory and jurisdiction.” To the same effect are The Postal Tel. Cable Co. v. Adams, 155 U. S. 688, and the original opinion, in Adams Ex. Co. v. Ohio, 165 U. S.194, in which this question is fully discussed and authorities reviewed. In the view we take touching the situs of the property, but little remains to be said upon the question presented by the third objection, since the reasons advanced in its support are mainly those relied on as sustaining the claim of defendant in error that its cars were only transiently here, and were not “used or controlled” in the state within the meaning of our statute, an assumption that we have found to be unwarranted under the agreed facts in the case. Constituting, as we have seen, a part of the necessary equipment of the railroad company using them, the cars clearly come within the class of property intended to be reached by the foregoing legislation; and consequently within the jurisdiction of the state board of equalization to assess and tax them. That the procedure prescribed furnishes a mode, convenient and equitable to all concerned, for the valuation and taxar — 301 — tion of this class of property, is settled by prior decisions of this court. Carlisle, v. Pullman Palace Car Co., 8 Colo. 320; Denver Rio Grande Ry. Co. v. Church, 17 Colo. 1. And the right to base the assessment upon the average number of cars in use within the state during the year is recognized in Pullman’s Palace Car Co. v. Pennsylvania, supra; and expressly upheld in Marye v. B. & Ohio Ry. Co., supra. In the opinion quoted from, Justice Matthews says: “ And such a tax might be properly assessed and collected in cases like the present where the specific and individual items of property so used and employed were not continuously the same, but were constantly changing, according to the exigencies of the business. In such cases the tax might be fixed by an appraisement and valuation of the average amount of the property thus habitually used.” Our conclusion therefore is that the tax in question is not obnoxious to either of the objections urged against it, and the court below erred in restraining its collection. Its judgment is accordingly reversed, and the cause remanded, with direction to the court below to dismiss the action. Reversed.