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About Omaha daily bee. (Omaha [Neb.]) 187?-1922 | View Entire Issue (July 19, 1902)
RAILROAD TAXATION IN Arguments of Counsel on the Case Before Nebraska Argument for the rpsporlnta by J. E. atelby of the Burlington Isw department M amicus curiae: If the court please. I artvan'ago myself of the courteous Invltatlrn of this hon orable court to pr-s'-tit my suggestion Upon the questions that arise upon the record In this case. I, for the time being, will liy asUe that yeke of which my friend Howe writes in his brief; that yoke about which he must slave learned so much and carried so long when he was genrral counsel of the Omaha road, and become, for the time being, a felnfranchlsed spirit. I shall appeal to this court simply upon the process cf rea son alone. That was a magnificent dem onstration on tha 14th day of May la6t, When that great cavalcade, composed of the general manager of the "public wel fare" of this state, on the one hand, and his eminent counsel ou the other, who. With heads high in the air like a Norman iped down the halls of this capitol, went before the Doard of Equalization and bom bastically demanded that It assess the franchises. Did Mr. Simeral undertake to tell the board at that time what a fran chise wast No. Has he undertaken to tell the court at tbla time what a fran chise 1st No. He preferred then, aa now, to prate learnedly about aovereiRnty, about the eminent domain power, about the exercise of a franchise, about Its value bolng worth J200,000,000, and left the board M he haa left the court In the darkness In which he found It. That is what Simeral and Rosewater did, and Mr, Simeral knows aa much today, and Mr. Roeewater and Mr. Howe, and Mr. Harrington, know as much today about the nature and Inherent characteristics of a franchise as the board did. And I have Bo doubt that my friend, the good, honest old 8tuefer, when he heard the word sov. erelgnty, thought It was some sort of a gift to the rallroada of thia state from Emperor William or King Edward. Nei ther Rosewater nor Simeral tried to ex plain K. Mr. Simeral, In whom reposes all wisdom: Mr. Harrington, who has made a atudy of this thing for months and yeara last past, and Mr. Rosewater, who haa rung the change on this thing for thirty yeara, never told the board what a franchise was; and they cannot tell. They Have not told and will not be able to tell this court what a franchise Is. Is this not a remarkable proceeding? It la an event. It is more. It la an epoch. For thirty long yeara Mr. Edward Rose water, this same custodian of the public morals and the public welfare of thia state, baa stood by year after year, haa seen tha Board of Equalisation of thia atate make lta assessments relatively to all other property, and ha never once protested ex cept this time. Is the assessment any dif ferent this year than It waa last year relatively T No. Haa Mr. Harrington pro tested heretoforeT No. Mr. Rosewater protested on behalf of himself and, if you will believe him. for the republican party, and It became necessary for the self-constituted representative of- the other polit ical party to do likewise; and this they did, and thus they act In concert so that tho republican party shall not have a monopoly of the protest bualnesa. That ia their purpoee. The people of this state are not protesting; they are attending to their business. They are satisfied. They are not here to protest. They have asked no one to protest for them. They cannot protest, have no cause for protest and do not protest. This protest is, aner an. nothing but airy persiflage on the part of the relators and their counsel. They have no cause for protest. They showed and how no grounds for protest. They are almplyjn here for the sake of atlrrlng up trouble. Now, my friend Howe asks me to tell this court what a franchise Is. That Is a difficult thing, but I am going to try to throw tome light upon that much abused term. It may be that my own definition will not be satisfactory to the court, as It may not be aatlsfactory to my own mind, which meana that the average man, even of trained Intellect, cannot fairly determine In his own mind the component elements that enter Into the thing. Now, Black atone eaye that "a franchise Is a branch of the royal prerogative aubslstlng In the hands of the subject by grant from the king;" Kent, "that a franchlae la a privi lege conferred by grants from government and Tested In private indlvlduala." Apply ing these definitions to modern time we would say that a franchise may be a grant conferred by government through the legislature on bodies corporate or In dividuals. Now, if your honors please. It la con ceived that there are two kinds of fran chisee and thoae may be denominated primary and secondary. A primary fran chise may be aaid to be that which In heres In the act of becoming a corpora tion. In the right or privilege of becoming an artificial entity. A secondary franchlae la a grant unto the body corporate or to the Individual which In lta nature Is prop erty per ae. A franchise may be conferred on an Indi vidual as welt as a corporation, for cer tainly there la nothing In the constitution or the law of thia atate which prohibits the legislature from conferring grants upon Individuals; and section I of article lx of our constitution aeems to contemplate that Individual aa well a corporations may own, enjoy and ua a franchise. The very worda used In that aectlon denote that proposition a "all persons, properties and corporation shall be taxed In proportion ' to the value of hi, her or lta property and franchlae." Now If there be reason and philosophy In the law (and we doubt not f " " ' , . ' . , . but there are) the franchise which 1 have denominated primary la a grant which vests la the Individuals of which the corporate entity la compoaed. It la a perpetual grant to them and not a grant to the artificial entity. The best proof of that fact Is that the corporation Itself by no deed ot TIIE LATEST COMBINATION It Interests the Ladlea. This I the age of combine and we read dally of new combinations of capital, but up to the preaeot we have not heard ot anybody trying to monopolise the cereal world and combining it Into one grand dish. We learn, however, that this nas teen ac complished by an expert chemlat and food specialist, who haa combined In a most sat isfying and appetizing manner the selected portions of nine ot the best knourn ctrea's, nuts, vegetable and trulls, and In uch proportion a to form a "balanced ration" or perfect food. While the produc: ia without a peer as a health or breakfast food, the peculiar feature concerning it Is that It la used aucceaafully In tuj making of pie, puddincs, salmon or veal loaf, cro quettes and a hundred more delicious dishes. Mrs. Nell McAullffe, the famous demon strator of pure foods at the Fan-American Exposltlou, Is thoroughly enthused over this latest production and wlsbea to meet the ladles of Omaha all this week at the Boston Store, main floor, treating them to a piece of Per-fo pie and having . tile heart-to-heart talk about Ter-fo, tbl lat est combination. . conveyance roild alienate the franchise, certainly without express statutory sane tlon; that Is something that ran only be conveyed away by the members of the Cor poration. Before a corporation can have capacity to receive or be capable of accepting a grant, It must exist and therefore the con stltutlon stems to have reference to those grants which are conferred upon corporate bodies already In existence, that are per forming the functions such as are enjoyed by anl conferred upon local utility compan ies. In respect of thcee purposes for which corporations are by our constitution and laws authorized to be created, they are doubtless Intended to be and to exist upon equal terms, within their mission, with In dividuals. As the natural person Is en dowed by nature with certain rights, ao also is It Intended, certainly within the place where they are Incorporated, that the artificial person shall have like rights with in the sphere In which they are authorized to act. The Individual Is born of nature; the corporation of the legislature; both are equal in a commercial sense. If, therefore, the primary franchise, that Is, the permis sion of the legislature to the Individual to exist and be as an artificial entity, la a privilege conferred upon the members who compose the unity rather than upon the unity itself, how can the legislature author ize that privilege to be taxed T It Is clearly not an asset of the corporation Itself, which Is clothed with neither control nor dominion over It. If there Is any virtue in this proposition it Is that persons aa well as bodies ccr porate may poni, own ud enjoy fran chises that are the essence of property, and as such are exclusive In their nature. Such are those grants to street railways, gas, telegraph and electric light companlea. These rights are exclusive. They are In the nature of vested rights which cannot during the term for which granted be In vaded or disposed of by the legislative power. At common-law franchise! of this character were exclusive. I mean those franchises, such as privileges to collect tolls from the operation of bridges or fer rles. They naturally excluded contiguous competition. All grants of thia kind were so construed as to give them due effect by I excluding all other persons from partici pating In the privilege, whether under an alleged later grant from the sovereign or otherwise; and any attempt on the part of any other person to trench upon the rlghta grauted, as by operating a ferry or bridge tn competition, waa denominated a nui sance which the law very soon abated. From the long recognition of the delu siveness of such right has undoubtedly grown up the doctrine ot "vested rights," so-called. The right, therefore, In a local utility company to operate, for example, a railway on a public street or streets, is an exclusive right, a franchise that Is prop erty, that can be sold or assigned, Is a most valuable right, one that la taxable as uch. My proposition la then, that a franchise of this sort Is ths franchise required to be taxed to the Individual or corporation. The mere right to do the business for which the corporation Is organized 1 surely not a thing to be taxed. For If you tax the cor poration upon that right you Immediately destroy the element . of uniformity com manded by the constitution. The right to Bo business Is not property and therefore not taxable. If you tax the manufacturing corporation upon the right to do business you at once permit It to be destroyed by competition. For In that case the corpora tion would be paying a tax which would re sult directly In the diminution of Its prof- Its as compared with, the profits ot the In dividual, and thia cannot be. If a corpora tion be created for the purpose we will say of selling dry goods, and Invests In that business $100,000 which Is denominated cap ital, and It sells $500,000 worth of dry goods each year and makes a net profit of 15 per cent, that profit would be reflected"! perhaps in lta capital stock so as to appre ciate it 15 per cent, or $115,000. Were you to tax It on the basts of capital stock at market value you would tax It as $115,000, while In the case of the Individual In the same business with the same capital pro ducing the same profit, you would Impose the tax on the value of the' merchandise on a particular day, thua using one rule for the corporation and a different rule for the In dividual. Surely, auch a course Is Inequal ity itself and a violation of our law and constitution. You do not tax the Individual upon hU earnings; but you attempt to tax the corporation upon Its earnings. But If this view be entirely fallacious, if it be without basis In logic, we are not neces sarily driven from our position, for after all It It be determined that tha right to be. the right to act, the right to do bualnesa, la a franch'se, then ws Insist that that right has been assessed by the Board of Equall xatlon In this caae. The property of railroads In this stats Is by statute designated for the purpoae ot taxation as personal property. A franchise Is personal property and, following the language of our statute In sections 39 and 40, It Is peraonal property used first in the construction, snd afterwarda in the sue cessful operation ot the road. It Is, In other words, the use ot the road Itself. You need It as much In the construction as you do tn the operation, and therefore It is Included within this section 49. Now, If your hoDor please, I want to call your attention spe cifically to the language ot this section, and I read: The number of miles of auch railroad and telegraph lines In each organised county In ine atate and the total number of miles In the state, Including the roadbed, right-of-way and superstructures thereon, main and sidetracks, depot buildings and depot f around, section and tool 1 stock and personal property the construction, repairs section ana tool nouses, roiling necessary for or successful operation of auch railroad and telegraph line. Now, your honors would necessarily give full Intendment to the expression of the legislature In performing the duties which ths constitution enjoins upon It. They were required by section 1 of article lx to provide a mode or manner for determining the valuation ot railroad property, Ws In slst that the enactment ot theas two sec tlons ars fairly intended to and muat be construed as giving effect to the require ment of that section of ths constitution, and that included in this Is the so-called fran chtae cr the right to be and exist, ths right to collect toll and ths right to operate the railroad. The matters generally Involved In this case have been very carefully gone over by my brothers Baldwin and White, and It ought not to be necessary for me to go over them again, except to briefly refer to them. In thia case It la charged that the board failed to consider and aaaess tb franchlae. If, as a matter of legal deduc tion, they did asseas thia franchise be- cauae It was their duty to' assess ths franchise because It was personal property ot the railroad company required to be as sessed by them personal property which Inhered In every part, in every wheel. In every tie, in every particle of coal con sumed and ticket and money collected- then they considered It, and If as a matter of law they did consider and assess It then tn s element of fraud melts entirely away; these is nothing ot It left, constructive, legal or otherwise. There la not any charge la the motion for the writ, or la TITE OMAHA DAILY BEE: SATURDAY, Issues Raised in Supreme Court - - the writ Itself, that In the matter of equalizing, bis board acted unfairly or dis honestly. All that la said Is that they did not consider the franchisee which were of a particular value. Therefore, there la no allegation here that they did not con sider the fair relative value of all railroad property, and with that element out of the way there Is no fraud charged In this case. There la nothing perhaps in modern days more complex for tte purpoee ot taxation than railroad property. 1 presume the framera of our constitution and of the con stitutions of every state, were well advised of that fact. Rallroada of modern time are no longer confined to one particular atate, but are made up of great trunk lines which penetrate dozens of states, and the difficulty of taxing these railroads fairly has been considered by the legislature of every state, by the great economist of modern times, and the difficulties are etlll considered Insuperable, Perhaps It was with that view of the case that the legislature in enacting this particular section aaid: "You must assess and you are required to assess all the property of the railroad In cluding the franchise, but we leave to you the formula by which that shall be accom plished, that la for you." Now If this board has reached a fair and satisfactory conclusion upon the thing com mitted to lta charge to be done, it Is not for this court to review its action. If It has fairly responded to the requirements of this act, then its act is conclusive, and Its judgment final unices reviewed In the manner pointed out by statute. The counsel for the relator Insist that the proper methods by which to admeasure the valuation of rallroada la by a considera tion of their stock and bonds. For this reason I have given aome conaideratlon to the stock and bond quotations or values of the Chicago, Burlington & Qulncy Railroad company, which operate a railroad In this state. I believe from a consideration or Inspection of lta annual report, that In 1901 It operated 8,374 miles. I understand that since that report waa issued It has added several hundreds of mile to that, at least that la the Information which I ob- talned by application to our auditor for that purpoee. This report, which the re- lators have Introduced In evidence, shows on page 22 the cost of the road and equip ments. On the same page are made deduc tions for stocks and securities held by this company Issued by other railroads. Now, assuming that the mileage of this road Is (.374 miles and that the cost of the road la $288,000,000, the cost per mile on the basis of the number of miles that I have given would be $36,638 that would be for the entire system traversing the eleven states, made up of the expensive terminals tn St. Louie, Kansas City, St. Paul, Minne apolis, Chicago and elsewhere. That Is the entire railroad from Its beginning point to Its ending point, and It only shows $36, 600 a mile. If you take the capital stock at $110,677,700 and multiply It by 2, because they say this stock sold in the market for $200 a Share, you get the sum of $221,155.- 400, and if you add to that the total bonded debt of about $111,000,000, which ia the total bonded debt lees the bonds held as repre senting other roads, you get about $34,000 per mile when you divide by the number of miles that I have given. So that by any theory that you may formulate, the assess ment of the Chicago, Burlington & Qulncy railroad in thia state, $4,100 a mile la an absolutely excessive assessment as com pared with the assessment of other property in this state. I have prepared here a number of tables on this proposition and I read from sched ule A. You take the funded debt at $147. 000,000 and the capital stock at par value, iuu.ouo.ooo, and the total would be $267, 000,000. Then you divide the total by the total number of miles, and you get a valuation per mile of $20,000. If you take schedule B, and take the stock at $192 per share (for It Is a fact, as : un- I derstand, that the great bulk of thia stock soM for $192 per share, and only a small part aold for $200), you call It $192 a share. Then you get for stock $212,000,000, and you get the funded debt at $147,000,000, and if you divide that by the mileage above, on that basis you get a little more than $40,000 a mile. Now, your honors, there has been sn ap peal made here for the method of de termining this value by the market quota tions. The average value of the Chicago, Burlington 4 Qulncy stock for the eleven years last past was a little over $103 a share. This Is shown by the table which Is found In ths brief, and which is correct, and shows the highest and lowest quota- tlona for each of thoae years. How do you propose to get at the Industrial worth ot the stock by using the market quota tions! Suppose that on March 1 of any year the market quotation of stock is be low par; on the 15th, par; on the 25th, $25 above par: on the 30th, par; on the day the board fixes the value, below or above par; is It going to use the quota tion of those day If perchance It 1 be low par, or will it rather ascertain the true Industrial worth of the property it self? My Insistence 1 that you cannot get at the value by a conaideratlon ot the market value of stocks and bonds. After the Ooggln case had been decided by the supreme court of Illinois some two months after the assessing board ot that state, which had power to assess the rail roads, met and, in response to that decis ion equalized and assessed tha railroad properties, and the result ot that considera tion has been introduced In evidence in this case, snd that board after applying the rules and principles set forth In that de cision, actually reduced the assessment as compared with ths previous assessment of the previous year. That was the assess ment of the railroads In Illinois. The Chi cago, Burlington Qulncy railroad, I think, was assessed at a little less than $8,000 a mile, Including, of course. Its expensive terminals In Cook county. The Chicago, Burlington A Northern Railroad company, which is a proprietary line of the Chicago, Burlington Qulncy. was aasessed, I think, at leas than $7,000 a mile, and the assess ment there was on a 20 per cent basis ot the railroad. If It Is valued on a 20 per cent basis, then the value of that railroad In Illinois was $42,000 or $43,000 a mile. Now, speaking about tha value of railroads, the Kansas City at Omaha line waa pur chased not long ago by the Chicago. Bur lington Qulncy Railroad company, It get ting aometblng like 200 miles of road In thia atate, and the purchaae price was some thing a little less than $6,200 a mile. Now, by what process ot legal alchemy can that road which was bought less than a year ago at $6,200 a mile, be entitled to abare In the higher valuation to which it has not con tributed ot the Chicago, Burlington Qulncy? If you come down to the earnings baala, which ws Insist Is unfair and unjust, tbs Chicago, Burlington ft Qulncy Railroad company's lines In this state ought to bs assessed far below the present amount. The only line of any Importance may be said to be the through line; sll tbs other lines are chiefly feeders and branches, snd thers Is net one of them earning more than $300 or $400 dollars a mi's net money, and many of them are operated at a serious lorn, as the reports of ths sudltor will show. Why then should the road In Nebraska be con COUiRT the Mandamus 7A' sidered as entitled to share the value ot the property in other states? For instsnce, the Iowa fines are fed by the lines from Missouri. Why should Nebraska be entitled to participate in thoss lines? Illinois is fed by lines in other states. Why should Ne braska be entitled to share In that valua tion? There Is no court and no economist has yet had the hardihood to aay that the atock and bond theory, or the market quo tations of stocks and bonds furnishes a fair atandard by which to measure the value ot rallroada. I have brought with me here a short address by Henry C. Adams, on the valuation ot railroad franchises. He Is pro fessor of political science. University of Michigan, and special expert on franchise 'uatlon for Michigan Tax commission. It Is an extract from hla recent address before the National Conference on Taxation, held by the Civic federation at Buffalo. He says: There are three reasons, as It appears to me, why the valuation of corporaie prop erty according to the market value of lta stocks and bonds falls to meet the re quirements of a valid assessment. 1. In the first place. It must be recognized that the market value of stocks and bonds is Influenced by consideratlona quite Inde pendent of the earning capacity of a prop erty, and, to the exunt that this Is true, a tax on the busls of such valuation would fall to conform to the generally accepted rule of equity In assessment. The value of a particular series of atock, for example, la frequently Influenced by the desire of the prumnter of a new organization to gain control of the property which they represent, in which case the price he Is willing to bid la Influenced more by his estimate of the ultimate advantage tn be gained from the contemplated organiza tion than by the earning capacity of the particular property purchased. The seller, on the other hand, demands whatever he thinks he can get. His reasoning is no longer that of an Investor, but of a strate gist. He Is In a position to block the or- r animation and values his property accord ngly. This fact Is so familiar as to re quire no Illustration. The market quota tion of stocks and bonds also Is frequently Influenced by speculation even more than by considerations of Investment. How, for example, could one arrive at the Industrial worth of the Burlington, the Northern Pacitlo, the Oreat Northern or the Union Pacific by considering the market quota tions of the securities of these properties during the last three months? It Is evi dent that the stock quotations of securi ties do not, and from the nature of the influence to which they are exposed, can not be acceded to as a test of the com mercial worth of the properties which such securities represent. Were corporations to be taxed on the basis of assessment de termined by the market value of stocks and bonds It la likely that those which are industrially weak, but strategically strong. would pay relatively more In taxes than those which are industrially strong, but strategically weak. The tax ought not In equity to be as sessed to corporations on the baals of market quotations. It is the Investor's valuation and not the valuation of the promoter or the speculator which should be accepted by the assessor as a guldo In the valuation of corporate franchises. 2. The second reason why market value of stocks and bonds cannot be ac cepted as a safe basis of appraisal reat upon the claim that the franchise value of a business is not a simple or homogeneous fact, lta analysis ahows it to be made up of several elements, each of which, In equity, may be Imposed with a different rate of taxation. This suggestion opens up a broad field of speculation which we can not now enter, but I desire to make clear the meaning of this theoretical criticism ana snail try to ao ao by a simple Illustra tion. The president of the American Steel company in his testimony recently given before the Industrial commission explained the basla of the company's capitalization. The capital of the new company, it will be remembered, exceeds the aggregate capital of companies organized by many millions of dollars, and this Increase in capitaliza tion was defended on the ground that the new company controlled not only the pro cess of manufacture, but the source of ma terial to be manufactured; that this con trol covered u per cent of the visible sup ply, and that In the case of ore this visible supply st the estimated rate of consump tion would laat for aixtv venra. All thia. he claimed, waa a sound asset of the com pany ana snouia re represented by capital. Admitting for the moment the accuracy of this presentation, and there Is no reason to believe that it fails to rem-esent trulv the situation, it is evident that the value of ao mucn or me capital or this organization as represents its beds of iron and of coal depends upon the fact that this organiza tion has monopolized the situation. Ordi narily an iron mine which cannot be uMt for sixty yeara would have little present value, but this steel company. It will be ob served, regards this future output as hav ing a. present worm, it nas placed upon the market a security which cannot be suo- ported by sale of product for sixty years and the only means by which it can float such a security is to charge a price for the current output adequate to cav a dividend upon a property which represents a process ui umnuiui'iure mat irom me nature ot the case cannot be performed for two generations. It seems tn me evident that the Ability of una urtstimzauon 10 noai tnese excess se curities la due to its monoply and not to Its assets, and the point I wish to make Is that such a form of property ought to pay a higher rate of taxation than property which represents a current process of In dustry under conditions which enarantee a fair price for services retiilnrpil ir nnw the franchise of such a corporation Is de termined by the market value of stocks and uouus, ine assessor is not able to dla- urguuMi between the two classes of value, and the legislature is not able to as elan a higher rate of taxation -toon the present worth of caDltal to a future nmri. uct than it assigns to the present worth of the current product. I cannot escape the luiitiuniun mi, insorar as tne commercial SUCeeSS Of tha ao-l'allpri InHmlrlnl. H- pends upon their ability to control the price to the consumer, the franchise value thus created should be made the basis of spe cial taxation, and this cannot be done under tne rule or valuing a franchise by tho market quotations of stocks and bonds. To express it another way, it seems essential for the realization of that equity which all admit should characterize the administra tion of the taxing system that the physical element In an industrv. hv which I its machinery and Its plant, should be valued separately from the nonphyslcal element, that the nonphyslcal element It self should be analyzed and a rate of taxa tion imposed upon it in harmony with Its Sl . V uasis ana us social significance ouuuiu line suggestion De admitted aa sound there Is no escape from the conclu sion that the anoraisal of franchlae valua tion on the basis of the market quotations of stocks and bonds falls to conform to thn mum recent pnase or industrial organisa- WISH. The third point Is practically along the same line. Great stress Is laid upon the proposition that railroad companies are given the right to exercise the power of eminent do main. That is a right which Is absolutely essential to the existence of the corpora tlon, and without which It could not ac complish the purpose for which It Is called into existence. That right as valuable to a railroad In Its lnclplenry, when it starts out to construct Its road, but after the road Is completed and has been In op eration for years, and desires no longer to extend In any particular direction the right become suspended as It were; It is no longer valuable. But, predicated upon that right, the state assumes the power to regulate and control these corporations and to prescribe and fix the rates which they shall charge for transporting persons and property, so that for the use of that power the railroad company surrenders to ths state more than the stats gives A great many other features of this case perhaps should be gone into, but whic'j time prevents, but I want to refer. to two or three decisions here as illustrating the proposition for which I have contended, vis: that by section 39, the words "all property" Includes the franchise. I read from the case ot City of Detroit agains Donovan, 23 Am. and Eng. R. R. Cases, $22: Ths legislature has provided that the track ahall be assessed as personal prop erty. In our oDlnlon. this term should be construed to Include not only the tracks, spike rails and switches, but also the rlishi to ua the bed upon which they are placed. The statute (subdivision 1S. sec tion Tax Law. 1 Comp. Laws, lfc7, sec tion 3M1) provides that the personal prop erty of a street railroad shall be assessed In the township, village or city where Its principal bualnesa ottlce is situated, and that tbs track, road vt bridge ot any such JTTLY 19, 1002. Company shall be held to h personal property, and may be assessed In the town ship, village or city where the same Is located, used or laid. If the franchise is to be treated as a part of the roadbed, within this provision of the statute, and attaching to everv part of it. as It does, and aa was held in Uetrolt Citizens' fctrect Railway rompany against Common Cnjncll of Ketrolt, it seems clear that the assess ment mould be made In the townships through which the railway runs, and this was decided In the repent unreported case of Called Railway company against Hoard of Assessors. As to the rolling stock, tools, etc., the statute Is equally clear that these should oe assessed In the city where the principal office of the company is looked. These are no part of the track, but ier- sonal property. It is contended that the determination or the assessing otneef Is, In the absence of fraud, final. If tho ques tion were whether the Judgment of the assessor as to value was tins I, we should not hesitate to hold that hla decision could not be reviewed collaterally. But the con- ention or tne railway company goes tur- ther. It contends that property not assess able was In fact assessed. Under the stat ute (1 Comp. Laws, 1897, section 3n;iH) this Inquiry seems to be open. (See also Pio neer Iron company against City of Ne gaunee, 116 Mich.. 430, 74 N. W. 700). The writ will be denied. I desire to read from the 22 Am. ft Eng. . R. cases, 658, entitled State v. Austin at . W. R. Co.: The statute requires all property to be assessed "at Its true and full value," and, in effect, defines that value to be what It would probably sell for at a voluntary sale for cash. Persons proposing to sell or buy railroad. In forming an opinion as to Its value, would doubtless consider the condi tion of its physical properties, but would Ultimately reach their conclusions by a careful estlmats of the probable net in come which its operation would produce. There are no especial "rights snd privi leges belonging to or In any wise apper taining" to the great mass of the real property of ths state, such as farming anas ana town or citv lots: out tne terms are applicable to the real estate of railroad companies, and suggest the thought that the legislature had such prop erty In mind when it inserted the provi sion, and that it was Intended that, in valuing a railroad for taxation, the valua tion should Include every right and privi lege Which was exercised in nrnriiirlna lta Income, and that It was not intended to disassociate the soul from the body of the living concern, and value by itself the lifeless remains. If we are correct In this conclusion, then It follows that it was not the Intention of the legislature to tax the franchise of a railroad as a property sepa rate from its real estate. To so tax it would lead to double taxation, which la not permitted. Hut there is another consideration whfrh gives strength to our conclusion. The statutes of many states Impose a tax upon wnat is canea tne "intangible property" of railroad corporations, and various methods have been devised bv whlrh the value of such property may be ascertained; and It seems to us tnat, ir it had been the pur pose of the legislature to tax this charac ter of property separately from that of tne rauroaa itself, a method would have been provided by which such value should be determined. Unless rhn nrnnertv he valued as an entirety, this Is the reasonable tning to oo. 'ine physical property of I railroad comnanv ia of comnarntivelv lit tie value, except for the uses for which It Is acquired. Its so-called Intangible prop erty Is of no value without the railroad ana lis equivalent. Br the amended answer Is shown, and that most conclusively, aa we have rea soned out In our briefs, that tha board assessed everything that belonged to the railroad companies in this atate the in. f&nglble as well as the tangible property everything. The first answer filed was In the nature of a concluaion. It was simply an opinion of the members of the board that they had not considered the fran chise. There Is nothing In the act which specincaiiy requires mem to consider a franchise, as such, by the name fran chlae; they are only required to assess all the peraonal property of every de scription, which includes all property, When they were asked to say ultimately what they did, then they had no heslta tlon in stating that they did consider and assess those things which entered Into the aggregate of railroad property tor use. I think this matter has been covered fully, and It is unnecessary to consume further time. Argument for the respondents by Mr. Ran' som, representing the Pullman Car company as amicus curias: I simply want to call the court's attention as to ths sleeping car company. The record ahows, as It has been made here, that there was no protest filed and no objection made to the manner In which they assessed the sleeping car com pany' property. The record as brought in and put In evidence, shows that the board followed law precisely. It take several pages In the record. It takes more pages In this record to assess the Pullman com pany than It does all the rest of the cor poratlons. The record as made up by this board and Introduced by the relator shows under sections 40a and 40b, which are added to sections 39 and 40 and were passed since sections 39 and 40 were passed, that this board complied precisely and strictly with those two sections. Section 40a provides what return shall be made, and that return Is here, and it takes more space and paper to make the return aa to the sleeping car companies than It does all of the railroad companies. It has Itemized everything that the statute' requires shall be Itemized There was no protest filed and no evidence introduced except Poor's Manual, and that simply shows that this Is a corporation or ganized under the laws of the state ot 1111 nols and Is a manufacturing concern. Mr. Howe The stock la worth 230. Mr. Ransom Why, It Is worth 234, that is, among people who speculate, but we have nothing to do with that. There Is no stat ute In this state that authorizes rats board to assess a corporation such ss this on Its stock. Why, In Ohio, where they talk of these express company cases, tbelr statute is nothing at all like ours. Our statute provides specifically how you shall assess sleeping car companies. The statute of Ohio provided bow they should assess ex press companies, and It, too, a page ror the legislature to lay down the rules by which express companies wsre to be assessed, but It did not take more than ten linen ror the Nebraska legislature to lay down the rules by whl.h the sleeping cars are to be as sessed, and ths rules are as different as daylight Is from darkness. They want to Impress upon this court that under ths law of this state you must assess the capital stock. Mr. Howe I beg your pardon, ao far as your company Is concerned, It Is an impor tant, almost a controlling Item or Impor tance, to know as an e'.ement, to show the value of the franchise under which their property Is moved over our state. Mr. Ransom Inasmuch as ths supreme court of this state has decided that we have no franchise and that we are not com mon carriers, and that we cannot be held a common carriers, I think that ought to dlsposs of that question. In the case of Lowe against Pullman Palace Car Com pany this court held It was not a com mon carrier and It liability could not be fixed by the rule that fix the liability of common carriers. I suppose the court remembere the two sections, though It may not be so. as their attention has not been called to It. I do not suppose the Ideas ot anybody ars going to be taken here as to what would be the proper method of as sessment, If It In any way conflicts with ths Ideas ot the legislature. This was com mitted to the legislature as to the method by which this company should be atsfrsed and the legislature has spoken on that and I expect, hard as It may bs on some people, this court and everybody else will have to follow the rule laid down by the legisla ture rather than some Imaginary theories that may be advanced here by people that eem to be dissatisfied with everything. Hers Is ths law and I will call It to the attention of the court, because In my brief and In every brief filed here, because the express company cases and the case of Backus against the railroad have been cited to the court. The revenue law waa passed, I believe. In 1879. At that tlms sections 40a and 40b were not In the law and were not passed until 1889. Prior to that tlms thers a sleeping cars run throua thia state, but there were no rules laid down by the legislature as to how they should be assessed. In Colorado they had the same kind of a statute, and In Illinois they had the ssmo kind of statute snd the courts of both of those states held that It was the duty of the railroad rompany to return all cars that It used In the operation of Its road, notwith standing that the statute said that they must return all property owned by them. That was the situation tip to 18S9 and. In order to Increase, perhars. the revenue of the state, and In order that It might be certain that the sleeping cars were being taxed the legislature passed these two sec tions and it takes all of this volume to make Its return. Now, the rule is laid down In this statute, and It Is upon a mileage basis and they muat assess the cars upon a mileage basis and there Is nothing tn that statute that authorizes them to assess any franchise. I want the gentleman to explain If he can what the Pullman company Is doing In the way of service In this state that an In dividual could not do. Is there any rea son why an Individual could not make the cars and hire them out to the railway com panies? What Is the necessity for being a corporation In order to make cars to loan them out? That Is not a franchise. It don't move any car in this state. It has been stated here that this la a trans portation company. Your honors can re member that not many years ago you had to show your ticket for your transporta tion over the road before they would let you Into a sleeping car; you could not go Into one until you bad paid for your trans portation. You could not say to the at tendant at the door, "I am going up on the train and will pay my fare." They did not want the Pullman company to collect any fare and they would not let them into the cars until the transportation was paid. That wa a stipulation I. .ween the rail road companies and the Bleeping car com pany and it was one of the conditions upon which you could get extra accommodations afforded by the railroad company that you must . first have your ticket that would entitle you to ride over the road. There Is no franchise connected with It. You or I or two or three of us might go Into partnership and manufacture these cars. The manufacture of cars Is Its prin cipal business, as is shown by the author ities cited hers and I suppose Is conceded here may be taken as evidence. In the 162 V. S. and the 8th Colorado, which we cite here, they set out there under what ar rangement these cars are furnished to the railroads and show that It Is by virtue of a contract and show the compensation that ths railroads pay for them and shows how much each one Is to get, and Poor's Manual that la Introduced here shows It Is a man ufacturing company, organized under the lawa of Illinois under a special act of the legislature passed in 1867, and says that that Is Its business. I haven't any doubt If the railroad companies should find out from these gentlemen here that this is a transportation company that they will be gin to look Into their contracts and change them, because under their contracts the Pullman company cannot transport any body; they simply must furnish the cars to the railroad companies. I know we have taken up a good deal of time, your honors, but I want to call atten tion to the fact that you may know that I have filed this brief here that states what the situation is as to this company. I claim that under the law, that having no protest filed and no objection being made, and the record shows In this sssessment they complied precisely and In strict com pliance with the statutes as to this com pany, that It would be rather strange If this court should say that In view of the facts sa to this company, this board, that has been maligned as It has been here, has been guilty of actual or constructive fraud. Notice the record here in this case. That shows an absolute compliance In the re ports filed, and there was no demand to as sess the franchise, and as none existed, It would have been foolish. Mr. Howe If the court please, Mr. Ran som I suppose desires to get away. He has taken up ten minutes extra time and I will simply reply to that and indicate a de ficiency In the proof, so he may supply that If he desires to. If the court will not take It out of my time. It Is fair to him to re spond to him now If the court will permit It. Mr. Ransom Of course there has been nothing said on either side about this com pany except the reference to Poor's Manual, except what has been said In, the brief, which of course does not cut much figure at all. Mr. Howe Then, if the court please, I will say In the first place, all the proof here Is the "return" of the company under the statute, which give the great right to have assessed the property of the transpor tation companies and which takes away the right from the local assessors to sesess transportation companies and places It In a state board, for some reason which they seem to value very highly. The gentleman has not Introduced ths charter of the company, nor has he Intro duced the contract under which the cars of that company ars moved over the sovereign stats of Nebraska, by reason of which those cars become valuable. They are moved by some franchise snd, prima facie, their re turn to the board says they are a transpor tation company. If Mr. Ransom wants to bring In ths charter of this company and also ths contracts he makes with these rail road companies, hs may do It. Ws want ths whole truth, and not a part of the truth. As the record now etands, we have a prima facie case against them. What does this authority say. Poor t Manual? It says ths Pullman company was Incorporated under the lawa of tha state of Illinois February 23, 1877, for the purpose of operating sleeping and parlor and other cars and of manufacturing all kinds of par lor cars. Just what I thought. "Operating" as well as manufacturing. Now, if the court please, no protest, they say, was filed before the board. None was needed. That fully answers that. Now, wa do know by their own report here that this company' cars and rolling stock, peculiarly railroad property, have been moved for thousands and thousands of miles over the territory of this state every week and have received the protection of this stats. Now, then, It Is ths equipment ot the Pullman company, as an' opsratlng company, entitled to corns here and do a transportation business under our comity, or It belongs to ths equipment of some other transportation company. Tbey have not shown us. This property must bs assessed as property under that greatest ot all franchises In private hands a transpor tation franchlssl It Is not mere wood and paint. Tbelr own agents stay In those cars and sell their tickets. They have our pro tection. They sr thus moving over this stats and It won't do for them to ssy tbey are simply a manufacturing company and offer no proof. If they are a manufacturing company, that law Is unconstitutional. Manufacturing companies ars not assessed by the stats board. They have to taks tbelr medicine with the rest of us with the local assessor. Now, If ths court please, thai sufficiently shows that the Pullman company la here, and Is In It, and up against ths real thing, after all these years, as It should bs, and as tbess transportation companies should be, snd as these main transportation companies are! Tbey have held tbs people of this ststs up against ths rssl thing for a whole generation; let them take their medicine! Mr. Ransom Will you admit an uncerti fied copy of the charter? You can verify It In the library. Mr. Howe If you will aay It Is a trus copy of their chartar, yea. Mr. Ransom I will say I asked tor it and Insanity Dne to Nervous . and Mental Troubles PAINE'S CELERY COMPOUND The Great Tower of Safety and Rock of Health in the Hot Weather. Nervous diseases when aggravated by mental disturbances produrs mors causes ot Insanity In the hot weather than at any other season of the year. Nervous head ache, nervous dyspepsia, sleeplessness and chronlo constipation Induce depression of spirits, extreme weskness, morbid fears, despondency and languor, irom these, dread Insanity comes slowly but surely. Nervous sufferers have a dread of hot weather. Finding themselves deeper in the pit of misery than they were In the spring and early summer, they are In utter despair. There Is hope for you, dear reader. If yo are one of the sufferers. You stand In need of Pnlne's Celery Compound, that great builder of the nervous system. Its vitaliz ing action commences with the first bottle you use. The volume of blood immediately Increases In the arteries, and the body la fully fed and nourished. Your appetite be comes regular and natural, the nerves and brain are strengthened, and you have im pulses of health that cheer the soul. This remarkable remedy will truly meet your ease and give you a new life; It will lay the foundation for happiness and long years. We counsel you to try this marvolou summer health-restorer at once, and enjoy the blessings ot health. that Is what they tent me. It got here last night after adjournment. Mr. Howe I will on this condition, then. If you will bring In the contract you make with these railroad companies. Mr. Ranaom I will not ask you, then. I will ask the court to allow me to Introduce this. I desire to ask the court to allow me to Introduce a copy of the charter of the Pullman company; It Is not certified to; It Is a very short paper, and whether It is a true copy or not can be verified by the clerk by examining the special acta of the state of Illinois In the library. . Mr. Harrington It does not dispute tha proof that it Is also an opsratlng company. Chief Justice Sullivan The copy of the charter will be received In evidence. Mr. Howe We ask that the contracts be offered In evidence also. Mr. Ransom I haven't them. BELLEVUE BOY SENTENCED Morris McDermot Mast Ser-ve for Forsrery- In Buffalo, Hew York. Tli BUFFALO, N. Y.. July 18. (Special.) Morris McDermut, who says hs Is the son of W. B. McDermut, mayor ot Bellevue, Neb., has capped the climax of an adven turous life for one so young, by being sen tenced to ths Elmtra reformatory. Judge Emery of the county court of thia county sent him to the reformatory on his plea ot guilty to forgery, McDermut, who also spells his name Mc Dermott, Is 21 years old. He left his father's home at the time of the Spanish-American war, enlisted In the army and 'taw service at El Caney and Santiago. Some months ' ago he came to Buffalo. He Joined a church here and one of the churchmen gave biro employment. The labor was of the manual order and McDermut quit it to go In the ticket brokerage business. He had some knowledge of printing and with his partners, Joseph Kelly and James E. Moore, he evolved the scheme of alter ing tickets, thereby greatly Increasing tbelr value. The firm would buy tickets to a 'nearby station, reading "Buffalo to Batavla." By means of acids and a print ing press they would change these tickets to read "Buffalo to New York." Batavia tickets could bs bought for 80 Cents. The firm sold the New York ticket at scalper rates for $7.60. They did such an Immense business that the New York Central railroad employed detectives to discover ths gang of forgers who were changing the tickets. Ths brokerage office on Exchange street, this city, was raided and the printing press and numerous tickets were seized.- McDermut snd his companions pleaded guilty to forgery In the third degree. It was reported that McDermut was the lead ing spirit In the gang and when he was arraigned for sentence it was the Intention of Judge Emery to send him to Auburn state prison, but owing to his military service and the fact that no previous con vlctlon could be brought up sgalnst htm, this was changed to an Indeterminate sen tence to the reformatory. He says that his father has a pretty home at Bollevue, where be Is highly respected. McDermut says hs lived tor awhile la Omaha. Cholera Infantum. This has long been regarded as ons of the most dangerous and fatal diseases to which Infants ars subject. It csn bs cured, however, when properly treated. All that Is necessary is to glvs Chamberlain's Colic, Cholera snd Diarrhoea Remedy snd castor oil, as directed with each bottle, and a cure Is certain. Application for Receiver. HOUSTON. T.ex.. July 18.-Appllcatlon has been filed In the United States court for the eastern district of Texas for a re ceiver for the well companies which have their lands and wells in the Veatch Iengue In the Heaumont oil fields. Annie Trench and Frederick Trench of England are the applicants. They have heretofore filed suit to test the title and now allege that the oil ia blng removed to their great loss. The application is set down for hearing July 28 before Judge Bryant. A Word to the Wise When you have a thirst for something delicious, wholesome and refreshing try ROSE'S Lime Juice It is the product of the choic est West Indian Lime Fruit, and has wou universal approval as the best' temperance drink and an excellent blood purifier. Ask your grocer or drug gist for it and insist on baring ROSE'S.
