§ 89a. Taxation by valuation-Gross receipts - Statutory rule or method of ascertaining value.- Where a State Constitution provides that the legislature shall have power to tax telegraph and express interests in such manner as it shall direct by general law uniform as to class upon which it operates, power is thereby vested in the State governing body to tax the gross receipts of telegraph corporations. But such taxation is not by valuation, it is a tax upon the business of the corporation. The taxation of franchises, however, must be by valuation and in proportion to value. The legislature also has power, where the State Constitution so permits, to direct the manner of ascertaining or arriving at the value of property and franchises for the purposes of taxation, but it cannot establish an arbitrary rule or standard, which has no relation to the ascertainment of value; it cannot prescribe rules that operate to prevent the assessment of the property and franchise of a corporation on an equality with property in general in proportion to value. Any rule or method, however, adopted by the legislature, of ascertaining the value of property or franchise, that is reasonably fair and just in its operation, and fairly well adapted to the attainment of the end required is sufficient, and while "gross receipts" are an item in estimating the value of a franchise, they are not a proper measure, when standing alone, of such franchise value; the amount of gross receipts taken in by telegraph and telephone companies during the year prior to assessment, taken alone, is not a proper and reasonable method of determining the value of the franchise of such corporations. Therefore, a State statute fixes an arbitrary rule where it establishes the gross receipts as the value of the franchise. Such a rule is not based upon any definite relation between the value of the franchises and the receipts, and violates the constitutional requirement that franchises shall be taxed by valuation, so that every person and corporation shall pay a tax, in proportion to the value of his, her or its property and franchises.37 37 Western Un. Teleg. Co. v. City, of Omaha (Neb., 1905), 103 N. W. 84; Const. Neb., § 1, art. 9; Laws 1903, p. 412, c. 73, § 78. See State v. Karr, 64 Neb. 520, 90 N. W. 298. Commerce $ 90. Federal Constitution Tax on United States Government messages.- A State tax on Government messages of the United States is a tax on the means employed by the Government to execute its constitutional powers and is, therefore, void.38 So an ordinance, enacted under a statutory authority, and which imposes a license fee on telegraph and other business, is held void, in that it fails to exclude taxation of United States Government messages.39 Again, a city may not impose a license fee upon a telegraph company or agency for business done for the Government, its officers or agents. 40 § 90a. Taxation of tangible and intangible property as a system. A State statute is constitutional which provides, not merely for the taxation of items of tangible property only of telegraph companies, but for the taxation of tangible and intangible property of such companies situated within the State, as a system. The cost price, however, of the tangible property of the company, together with a reasonable deduction for natural deterioration, is not a proper basis for valuation of such property for taxation on general lists.41 It is said in this case that: "While the freedom of interstate commerce from interference by the State government has been jealously guarded, the Federal Supreme Court has repeatedly sustained the economic propriety and constitutional validity of valuing the property of concerns engaged in interstate business as a unit, and of taxing by each State that proportion of the whole which the State protects. 42 The issue presented in this case 38 Telegraph Co. v. Texas, 105 U. S. 460, 1 Am. Elec. Cas. 373, 376, per Mr. Chief Justice Waite, citing McCulloch v. Maryland, 4 Wheat. (U. S.) 316. See Leloup v. Port of Mobile, 127 U. S. 640; Western Un. Teleg. Co. v. Fremont, 39 Neb. 692, both noted under the last section herein. 39 City Council of Charleston v. Postal Teleg. Cable Co. (C. P., So. Car., 1891), 9 Ry. & Corp. L. Jour. 129, 3 Am. Elec. Cas. 56. 40 Postal Teleg. Cable Co. v. City of Richmond, 99 Va. 102. 41 State v. Western Un. Teleg. Co. (Minn. 1905), 104 N. W. 567, Laws 1891, p. 70, c. 8, am'd chap. 180, p. 251, Laws 1901. 42 Citing American Transit Co. v. Hall, 174 U. S. 70, 19 Sup. Ct. 599, 43 L. Ed. 899; Pittsburg, C., C. & St. L. Ry. Co. v. Board of Public Works, 172 U. S. 32, 43 L. Ed. 354, 19 Sup. Ct. 90; Adams Express Co. v. Ohio, 165 U. S. 194, 220, 17 concerns particularly the constitutionality of taxation as a unit or system. Gloucester Ferry v. Pennsylvania 43 held unconstitutional a State tax based on the theory of homogeneous unity' of substantial and unsubstantial assets. The later decisions of the United States Supreme Court, however, have established beyond controversy that property in part tangible, and as such having a physical situs within a State, and in part intangible, having only a constructive situs therein, may be taxed upon a valuation derived from their connection as a system as a whole and as 'united in use.' 44 Fargo v. Hart 45 has sometimes been erroneously regarded a more or less complete reversal of this rule. 46 The limitation Sup. Ct. 305, 41 L. Ed. 683, rehearing 166 U. S. 185, 17 Sup. Ct. 604, 41 L. Ed. 96; New York, L. E. & W. R. Co. v. Pennsylvania, 158 U. S. 431, 15 Sup. Ct. 896, 39 L. Ed. 1043; Postal Teleg. Co. v. Adams, 155 U. S. 695, 39 L. Ed. 311, 15 Sup. Ct. 268; Cleveland, C., C. & St. L. R. Co. v. Backus, 154 U. S. 439. 14 Sup. Ct. 1122, 38 L. Ed. 1041; Maine v. Grand Trunk R. Co., 142 U. S. 217, 35 L. Ed. 994, 12 Sup. Ct. 121. 43 114 U. S. 196, 5 Sup. Ct. 826, 29 L. Ed. 158. 44 Citing Adams Express Co. v. Ohio, 165 U. S. 194, 41 L. Ed. 683, 17 Sup. Ct. 305; Id., 166 U. S. 185, 17 Sup. Ct. 604, 41 L. Ed. 965; Detroit Citizens St. Ry. Co. v. Common Council, 125 Mich. 673, 85 N. W. 96, 84 Am. St. Rep. 589; State v. Savage, 65 Neb. 714, 91 N. W. 716, 723. 45 193 U. S. 490, 48 L. Ed. 761, 24 Sup. Ct. 498. 46 Note by the author: It was held in that case that: While a State can tax property permanently within its jurisdiction, although belonging to persons domiciled elsewhere, and used in commerce between The decision in the States, it cannot tax the privilege of carrying on such commerce, nor can it tax property outside of its jurisdiction belonging to persons domiciled elsewhere. A State assessment upon an express com. pany of another State proportioned to mileage is bad when it appears that the total valuation is made up principally from real and personal property, not necessarily used in the actual business of the company, and which is permanently located in the State where the company is incorporated. Fargo v. Hart, 193 U. S. 490, 48 L. Ed. 761, 24 Sup. Ct. 498, cited in Delaware, Lackawanna & Western Rd. Co. v. Pennsylvania, 198 U. S. 341, 354, 49 L. Ed. 1059, 25 Sup. Ct. 686, which holds that a tax on the capital stock of a corporation is a tax on the property in which that capital is invested, and, therefore, no tax can be levied upon the corporation issuing the stock which includes property that is otherwise exempt. The same rule that requires the exclusion from the assessment of valuation of capital stock of tangible personal property permanently situated out of the State applies to property sent that case contains is that a tax on an express company of another State proportioned to mileage is bad, when it appears that the total valuation is made up principally from real and personal property not necessarily used in the actual business As a out of the State to be sold and which is actually out of the State when the assessment is made. State cannot directly tax tangible property permanently outside the State and having no situs within the State, it cannot attain the same end by taxing the enhanced value of the capital stock of a corporation which arises from the value of property beyond its jurisdiction. While an appraisement of value is in general a decision on a question of fact and final, where it is arrived at by including property not within the jurisdiction of the State, it is absolutely illegal as made without jurisdiction. The collection of a tax on a corporation on its capital stock, based on a valuation which includes property situated out of t'e State, would amount to the taking of property without due process of law and can be restrained by the federal courts. In assessing the value of the capital stock of a corporation of Pennsylvania under the Act of that State of June 8, 1891, coal which is owned by the corporation, but at the time of its assessment situated in another State, not to be returned to Pennsylvania, should not be included. This last case is cited in New York Central R. v. Miller, 202 U. S. 584, 596; cited Union Refrigerator Transit Co. v. Kentucky, 199 U. S. 194, 202, 210, 26 Sup. Ct. 36, which holds that the power of taxation is exercised upon the assumption of an equivalent rendered in the protection of the person and property of ence. the taxpayer, and if such equivalent cannot possibly be rendered because the property taxed is wholly beyond the jurisdiction of the taxing power the taxation thereof within the domicil of the owner amounts to a taking of property without due process of law. While there may be individual cases where the weight of the tax necessarily falls unequally on account of special circumstances, the general rule is tnat in classifying property for taxation, some benefit to the property taxed is a controlling consideration, and a plain abuse of power in this respect may justify judicial interferThe proper use of a legal fiction is to prevent injustice and the maxim mobilia sequuntur personam may only be resorted to when convenience and justice so require. That maxim does not apply to tangible personal property permanently located in another State where it is employed and protected, acquires a situs and is subject to be there taxed irrespective of the domicil of the owner; and an attempt on the part of the State in which the owner is domiciled to tax such property amounts to a deprivation of property without due process of law within the purview of the Fourteenth Amendment. The above was so held in regard to the taxation of cars owned by a transit refrigerating company and which were permanently employed without the State in which the company was domiciled. of the company, and which is permanently located in the State where the company is incorporated. The general principle remains untouched and unassailed, namely, that a State may tax property, not the privilege of doing business, so as to reach the intangible value due to the organic relation of the property in the State to the whole system.' To separate telegraph companies into a distinct class for peculiar methods of taxation upon their property, does not violate the constitutional requirements of uniformity and equality." 47 * * * § 90b. Taxation of property as a system - Board of Equali zation-Effect of State decision. The property of a telegraph company situated within a State may, in estimating its value. for the purpose of taxation, be considered as part of a system operated in other States and should not be regarded locally or abstractly; nor is the property of the company in such case immune from taxation by the State because it is engaged in interstate commerce, or has derived its rights and privileges under the Post Roads Act, and was not created by the State nor received its grant or franchise therefrom. And where the State laws have prescribed and authorized certain methods, and the highest court of the State has decided that the board. of equalization has acted in accordance with such methods, and that an order made by the board is legal under the State Constitution and Statutes, the decision constitutes an interpretation of the law of the State and is not open to dispute in the United States Supreme Court. So where proceedings before a board of equalization are quasi-judicial, and an order made by it is within its jurisdiction, it is not void and cannot be resisted in an action at law; nor can overvaluation, be made a defense at law. The action of the tax officers being 47 State v. Western Un. Teleg. Co. (Minn. 1905), 104 N. W. 567, per Jaggard, J., citing on this last point Western Un. Teleg. Co. v. Gottlieb, 190 U. S. 412, 419, 23 Sup. Ct. 730, 733, 47 L. Ed. 1116; Gottlieb v. Western Un. Teleg. Co., 165 Mo. 502, 65 S. W. 775, 8 Am. Elec. Cas. 390; Western Un. Teleg. Co. v. Taggart, 163 U. S. 122, 16 Sup. Ct. 1054, 41 L. Ed. 49; Pacific Express Co. v. Seibert, 142 U. S. 339, 35 L. Ed. 1035, 12 Sup. Ct. 250; Home Ins. Co. v. New York, 134 U. S. 594, 606, 607, 10 Sup. Ct. 593, 33 L. Ed. 1025; State v. Savage, 65 Neb. 714, 91 N. W. 716. |