Opinion
No. 35559.
March 27, 1944.
1. TAXATION.
Where an assessment against railroad property is made on returns made in accordance with statutes, the asssessment must be construed to contain all the items brought to the attention of the railroad commission by the returns made, considering them as being integrated into the assessment (Code 1942, secs. 9826, 9835).
2. EVIDENCE.
Parol testimony that the existence of a locomotive engine was called to the attention of State Tax Commission at time of making assessment was competent where adduced to support the assessment and not to attack it (Code 1942, secs. 9826, 9835).
3. TAXATION.
Where a railway company using a single locomotive filed returns of its property for assessment purposes on forms furnished by State Tax Commission, which revealed at least one locomotive and required that all rolling stock be included under valuation of track mileage which it assessed as a unit, and a nonpartisan appraisal expert testified that he had reported the existence of engine to the Tax Commission, the Commission's determination that engine was assessed and that taxes had been paid thereon was conclusive (Code 1942, secs. 9184, 9826, 9835).
4. TAXATION.
It is as much the duty of the State Tax Commission to avoid double taxation as it is to assess all taxable property in the first instance.
APPEAL from the circuit court of Adams county, HON. R.E. BENNETT, Judge.
E.H. Ratcliffe, of Natchez, and Hudson, Potts, Bernstein Snellings, of Monroe, La., for appellant.
The point of law here presented is whether or not the appellee, Craig, State Tax Collector, can compel the State Tax Commission to back-assess, for the ad valorem taxes of the tax years 1939, 1940 and 1941, against the Bankruptcy Reorganization Trustee of the Natchez Southern Railway Company, a Mississippi corporation operating a line of railroad in this state, one steam locomotive possessed and used by the latter under a lease from its nonresident owner, when the Natchez Southern Railway Company had, during those tax-years, paid the taxes levied against it upon an assessment regularly and uniformly made by said Tax Commission, under the so-called "unit" method of assessing railroads.
The "unit" method of valuing and assessing railroads has been always followed in Mississippi and has been approved by its courts.
Yazoo M.V.R. Co. v. Adams, 81 Miss. 90, 32 So. 937; Yazoo M.V.R. Co. v. Adams, 77 Miss. 764, 25 So. 355; Yazoo M.V.R. Co. v. Adams, 85 Miss. 772, 38 So. 348; Adams, Revenue Agent, v. Clarke, 80 Miss. 134, 31 So. 216; Western Union Telegraph Co. v. Kennedy, 110 Miss. 73, 69 So. 674; Illinois Cent. R. Co. v. Miller, 141 Miss. 223, 106 So. 636, 641; Coody Brochure, p. 25 et seq.
See also Pittsburg, C.C. St. L.R. Co. v. Backus, 154 U.S. 421, 14 S.Ct. 1114, 38 L.Ed. 1031; Cleveland, C., C. St. L.R. Co. v. Backus, 154 U.S. 439, 38 L.Ed. 1041; Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994; Union Pacific R. Co. v. Cheyenne, 113 U.S. 516, 5 S.Ct. 601, 28 L.Ed. 1098; State Railroad Tax Cases, 92 U.S. 575, 23 L.Ed. 663; 61 C.J. 694-695; 2 Cooley on Taxation 1919 et seq., Sec. 958.
In no event nor from any point of view does this record present any fact or circumstance or justify any legal concept, which would warrant the conclusion that the Missouri Pacific Railroad Company or its bankruptcy trustee is now or was ever liable for any ad valorem or other taxation in the State of Mississippi, consequent upon the leasing by it or him of a steam locomotive to the Natchez Southern Railway Company, or howsoever.
Street v. City of Columbus, 75 Miss. 822, 23 So. 773; Teche Lines, Inc., v. Board of Supervisors, 165 Miss. 594, 619, 142 So. 24; Illinois Cent. R. Co. v. Miller, 141 Miss. 213, 106 So. 635; Cruse v. Thompson, Trustee, decided August, 1943 by Allen Cox, U.S. District Judge, Northern District of Mississippi, unreported; Thompson v. Louisiana, 98 F.2d 108, 110; Detwiler v. C.R.I. P. Ry. Co., 15 F. Supp. 541; Conn. Spiritualist Camp-Meeting Assoc. v. East Lyme, 54 Conn. 152, 5 A. 849; Wash Market Co. v. District of Columbia, 15 D.C. 416 (11 S.Ct. 4, 137 U.S. 62, 34 L.Ed. 572); N. Park Bridge Co. v. Walker Tp., 143 Mich. 693, 107 N.W. 711; Piper v. Town of Meredith, 83 N.H. 107, 139 A. 294, 55 A.L.R. 148; Ocean Grove Camp Meeting Ass'n. of Methodist Episcopal Church v. Reeves, 79 N.J.L. 334, 75 A. 782 ( 80 N.J.L. 464, 79 A. 1119); Elmire v. Dunn, 22 Barb. 402; Cincinnati College v. Yeatman, 30 Ohio St. 276; Montgomery v. Town of Branford, 107 Conn. 697, 142 A. 574, 576; Dennis' Appeal, 72 Conn. 369, 44 A. 545; Norman v. Southwestern R. Co., 42 Ga. App. 812, 157 S.E. 531; State v. Nor. Pac. R., 32 Minn. 294, 20 N.W. 254; State v. St. Paul M. M.R. Co., 30 Minn. 311, 15 N.W. 307; Indianapolis, etc., R. Co. v. Vance, 96 U.S. 450, 24 L.Ed. 752; Wright v. Cent. of Georgia R. Co., 146 Ga. 406, 91 S.E. 471; Huck v. Chicago, etc., R. Co., 86 Ill. 352; Kennedy v. St. Louis, etc., R. Co., 62 Ill. 395; Com. v. Ingalls, 121 Ky. 194, 89 S.W. 156, 28 Ky. L. 164; Jefferson County v. Kentucky Board of Valuation, etc., 117 Ky. 531, 78 S.W. 443, 25 Ky. L. 1637; Comm. v. Kinniconick, etc., R. Co., 36 Minn. 207, 30 N.W. 663; State v. Northern Pac. R. Co., 32 Minn. 294, 20 N.W. 234; Atlantic, etc., R. Co. v. State, 60 N.H. 133; People v. Feitner, 171 N.Y. 641, 63 N.E. 786; People v. Reid, 19 N.Y.S. 528, 64 Hun. 553; Illinois Cent. R. Co. v. Kentucky, 31 S.Ct. 95, 218 U.S. 551, 54 L.Ed. 1147; Reinhart v. McDonald, 76 F. 403; Pullman's Palace Car Co. v. Comm., 107 Pa. 156, aff. 11 S.Ct. 876, 141 U.S. 18, 35 L.Ed. 613; Philadelphia, etc., R. Co. v. Baltimore City Appeal Tax Ct., 50 Md. 397; Denver, etc., R. Co. v. Church, 17 Colo. 1, 28 P. 468; N Y Guaranty, etc., Co. v. Tacoma R., etc., Co., 93 F. 51, 35 C.C.A. 192; Northern Mass. St. Ry. Co. v. Town of Westminister, 227 Mass. 547, 116 N.E. 895; City of N.Y. v. Thirty-Fourth St. Crosstown Ry. Co., 122 N.Y.S. 344, 147 App. Div. 644; Purcell v. City of Lexington, 186 Ky. 381, 216 S.W. 599, error dism. 40 S.Ct. 583, 253 U.S. 476, 64 L.Ed. 1021; San Pedro, L.A. S.L.R. Co. v. City of Los Angeles, 180 Cal. 18, 179 P. 393; In re Assessment of Metropolitan Bldg. Co., 144 Wn. 469, 258 P. 473 (foll. State v. Superior Court of Washington for Thurston County, 144 Wn. 701, 258 P. 477); Metropolitan Bldg. Co. v. King County, 62 Wn. 409, 113 P. 114; Crow v. Outlaw, 225 Ala. 656, 145 So. 133; Weber Fixture Co. v. Kaufman, 45 Ariz. 397, 44 P.2d 158; San Diego Co. v. Davis, 1 Cal.2d 145, 33 P.2d 827; Hinkle v. Grosjean, 181 La. 175, 159 So. 314; Myers v. Rental Corp., 101 Pa. Super. 438; Penick v. Atkinson, 139 Ga. 649, 77 S.E. 1055; Constitution of Mississippi, Sec. 112; Code of 1930, Sec. 3200, 3201, 3202, 3203, 3204; Laws of 1926, Chs. 127, 129; Bankruptcy Law, U.S.C.A., Title 11, Sec. 205(c) (2); Title 11, U.S.C.A., Sec. 205(a); Title 28 U.S.C.A., Sec. 124(a); 61 C.J. 632; 2 Cooley on Taxation, Sec. 593.
In truth and fact and at law the steam locomotive here involved was actually assessed to Guy A. Thompson, trustee of Natchez Southern Railway Company, for the tax years 1939, 1940 and 1941, here involved, and all ad valorem and other taxes due thereon were by him fully paid, hence, now, no back-assessing or back-taxing thereof is lawful or proper — as was correctly found and held by the Mississippi State Tax Commission.
Pennock v. Coe, 64 U.S. 117, 126 L.Ed. 436; Pittsburg, etc., R. Co. v. Backus, 154 U.S. 421, 38 L.Ed. 1031, 14 S.Ct. 1118; Flanagan Bank v. Graham, 42 Or. 403, 71 P. 141; Black Diamond, etc., Co. v. Glover Mach. Wks., 212 Ala. 654, 103 So. 853; Ohio M.R. Co. v. Weber, 96 Ill. 443, 448; Code of 1930, Secs. 3203, 3204.
Under the so-called "unit" method of valuing railroad property for assessment purposes in this state, as lawfully and properly required by the statutes of Mississippi and the lawfully authorized rules and regulations of the State Tax Commission, which is charged with that duty, that exclusive assessing authority is required, in determining the aggregate assessed valuation of railroads, to take into consideration the value of each and every class and item of railroad property subject to taxation in this state, whether or not same be shown upon the returns made to it by the taxpayer, upon the forms therefor prepared, prescribed and by it furnished to the taxpayer, or by it ascertained from its investigations required by law, or otherwise within its knowledge, actual or presumptive, howsoever. When that assessment has become final, the State Tax Commission is conclusively presumed to have done so; its judgment thereasto is conclusive and cannot, thereafter, be questioned in any court or other tribunal; and is res adjudicata, irrespective of how such items of railroad property came to its knowledge; provided, only, that it did, in fact, and was by the Commission considered in determining the aggregate valuation of the railroad, as a "unit," for assessment and taxation purposes.
Yazoo M.V.R. Co. v. Vicksburg, 95 Miss. 701, 49 So. 185; State ex rel. Forman v. Wheatley, 113 Miss. 555, 74 So. 427; Illinois Cent. R. Co. v. Miller, 141 Miss. 223, 106 So. 636; Robertson v. Bank of Yazoo City et als., 123 Miss. 380, 85 So. 177; Adams v. Luce, 87 Miss. 220, 39 So. 418; Yazoo Delta Investment Co. v. Suddoth, 70 Miss. 416, 12 So. 246; Miller v. Copeland's Estate, 139 Miss. 788, 104 So. 176; Gully v. J.J. Newman Lumber Co., 176 Miss. 48, 164 So. 891, 168 So. 258; Code of 1930, Secs. 3129, 3133, 3204; Sec. 7769 1 of Hemingway's Supplement of 1921; Mississippi Constitution, Sec. 112; Laws of 1916, Ch. 98.
The only substantial and competent proofs in this record conclusively demonstrate that, for assessment purposes, the value of the steam locomotive here in question could not exceed a maximum valuation of $1800; instead of the $25,000 valuation asserted by the tax collector, or the $6,000 valuation found by the circuit judge and decreed in the judgment herein appealed from.
Knox v. Southern Paper Co., 143 Miss. 870, 108 So. 288; Mississippi Tax Commission Bulletin, No. 20, July, 1939, p. 53, Bulletin 24, July, 1942, Ex. 5, p. 11; Brochure by Valuation Engineer W.H. Wallace of the Mississippi State Tax Commission, May 14, 1940; Brochure by Secretary A.S. Coody in 1934; 61 C.J. 667, 693, 694-6.
This court has repeatedly, persistently and uniformly denied the right of that state officer to back assess any species of property, where it could be shown that actual effort, no matter how abortive, had been made to place such property on the assessment rolls.
Miller v. Grand Lodge, 114 So. 37; Miller v. Copeland's Estate, supra; Gully v. Mississippi Valley Co., 181 Miss. 669, 180 So. 745; Adams v. Luce, supra; Long Bell Co. v. McLendon, 127 Miss. 636, 90 So. 356; Bailey Bean v. Wilson, 128 Miss. 49, 90 So. 362.
W.W. Ramsey, of Vicksburg, and Forrest B. Jackson, of Jackson, for appellee.
The locomotive engine was not actually assessed for the tax years 1939, 1940 and 1941 by the State Tax Commission and should bear its just proportion of the taxes due to the state and its several subdivisions.
Adams v. Vicksburg Waterworks Co., 94 Miss. 601, 47 So. 530; Adams v. Clarke, 80 Miss. 134, 31 So. 216; Adams v. Peoples' Bank, 108 Miss. 346, 66 So. 407; Darnell v. Johnston, 109 Miss. 570, 68 So. 780; Gully v. J.J. Newman Lumber Co., 176 Miss. 48, 164 So. 891; Gully v. Mississippi Valley Co., 181 Miss. 669, 180 So. 745; Illinois Central R. Co. v. Miller, 141 Miss. 223, 106 So. 636; Panola County v. C.M. Carrier Sons, 92 Miss. 148, 45 So. 426; Code of 1930, Sec. 3201; Laws of 1932, Chap. 291; Laws of 1942, Chap. 135.
The value fixed by the circuit judge was consistent with all the testimony, and under the authorities referred to by learned counsel for appellant, the value of $6,000 for assessment purposes is not contrary to the evidence.
Argued orally by Fred Hudson, for appellant, and by Forrest B. Jackson, for appellee.
On August 12, 1942, the State Tax Collector gave notice to the State Tax Commission that a locomotive engine owned by the Missouri Pacific Railroad Company had escaped taxation for the years 1939-1941 inclusive. 7 Miss. Code 1942, Section 9184 (Code 1930, Section 6991). The State Tax Commission thereupon entered a tentative assessment but gave notice thereof to the railroad company pursuant to 7 Miss. Code 1942, Section 9852 (Code 1930, Section 3226, as amended). At the hearing on the assessment the State Tax Commission entered an order adjudging "that since said locomotive had already been included in the assessments for the years in question, the said tentative assessment as made by this Commission . . . is hereby canceled, set aside and disapproved." The order further recited that the engine had been leased to the Natchez Southern Railway Company and that the assessment was against it. Upon appeal to the circuit court this order was reversed and the assessment and valuation fixed, whence the appeal here.
The Natchez Southern Railway Company operates 2.75 miles of main track in Adams County. It owns certain side tracks, realty and equipment, and requires and uses only a single locomotive in its switching and other operations. The Missouri Pacific Railroad Company was voluntarily dismissed as a party, as were all other parties except the Natchez Southern Railway Company. The status of such company as being operated by Guy A. Thompson, bankruptcy trustee, is noted but not further discussed. This appeal therefore concerns only the interest of the latter company.
The position of the Tax Collector may be summarized as including the following contentions: The tax schedules provided for railroads by 7 Miss. Code 1942, Section 9826 (Code 1930, Section 3201) must include "the number of engines and their respective value;" that by a letter from the real estate and Tax Commissioner for the railroad it had conceded that the engine in question had not been fully taxed for ad valorem taxes for the years in question; and that the engine had not in fact been included in the returns for assessment. There are other points provocative of extended argument but it is conceded by the State Tax Collector that the sole contention is whether the ad valorem taxes upon said engine have been assessed and paid.
The contention of the railway company is that the locomotive was shown upon the schedules returned and that the consequent assessment by the Tax Commission is presumed to have taken it into account; and that the Commission did in fact take it into consideration and so adjudged by its order. The reply of the Tax Collector is that such alleged facts were not provable by parol testimony as was here attempted. To the contention that the engine was shown and valued in the schedules under the heading "Equipment: Steam locomotive," the Tax Collector replies that its valuation as shown for the year 1937 in its report to the Interstate Commerce Commission (an abstract of which is filed as part of the schedules) showed "minus $6,886," apparently a bookkeeping device which showed an accumulated depreciation credit. It is further asserted that 7 Miss. Code 1942, Section 9826, requires the return of all property `owned' by the railroad and that therefore the engine in question being leased by the taxpayer was not to be included in its schedules either in fact or by inference. However, 7 Miss. Code 1942, Section 9835, (Code 1930, Section 3209), is cited to show that all property "owned, leased and/or operated" must be included in the schedules or returns.
These contentions bring into view such cases as Illinois Cent. R. Co. v. Miller, 141 Miss. 223, 106 So. 636, 641, wherein it is stated: "When an assessment is made on returns made in accordance with the statutes, we must construe the assessment to contain all the items brought to the attention of the Railroad Commission by the returns made, considering them as being integrated into the assessment." In holding that an assessment so made is conclusive, the court adverted to and approved the practice of assessing railroads on a unit basis.
In this connection attention is called to said Section 9226 which requires returns to be made "on forms prescribed and furnished by the State Tax Commission." It was upon such forms that the returns were here made. The prescribed schedules direct that all rolling stock shall be included in the columns designated "First main track" and "side track," and the valuation per mile is fixed at $14,000. It is argued that such valuation necessarily presupposes an operating railroad and that such operation in turn assumes the use of at least one engine and that the listing of a valuation in the accompanying schedules under the heading "steam locomotive" puts such disclosure beyond cavil. To support an inferential disclosure appellee cites Yazoo M.V.R. Co. v. Adams, 85 Miss. 772, 38 So. 348, wherein it is held that since it was the duty of the assessors to take the value of the franchise into account, it would be conclusively presumed that they did so. Adams v. Clarke, 80 Miss. 134, 31 So. 216, is cited by appellant to support his view that a deliberate undervaluation may not support an acceptance of an assessment as res adjudicata. However, the assessors there being unaware of the facts, were held not to have been precluded. Such is, of course, the rule when fraud is present.
Darnell v. Johnston, 109 Miss. 570, 68 So. 780, and Gully v. Newman Lbr. Co., 176 Miss. 48, 164 So. 891, 168 So. 258, are argued by both parties as illustrative of their respective views. We mention the foregoing authorities, not to apply them to the facts here, but to acknowledge the several contentions upon the issue whether the engine here involved was necessarily or inferentially included or excluded.
Clearly the purpose of Section 9826 is to effect a complete disclosure of all taxable property. As a means to this end the forms of the schedules are required to be prescribed and furnished by the Tax Commission. It is to it that the statute is chiefly directed. In compliance with their duty and to effectuate this purpose the Tax Commission supplied forms which revealed at least one locomotive and which required that all rolling stock be included under the valuation of track mileage which it assessed as a unit of a going concern. We need not examine the conclusive effect of the assessment in the light of inferences or presumptions, as plausible as the appellant's position on this point may be.
One of the witnesses for the appellant was W.H. Wallace, who qualified as a non-partizan valuation and appraisal expert. He testified that he was entirely familiar with the railroad and its property and had examined and valued it for the Tax Commission. He testified that he knew of the engine in question and had reported its existence and value to the Tax Commission. His testimony is not made incompetent by Panola County v. Carrier Son, 92 Miss. 148, 45 So. 426, where the oral testimony was not, as here, adduced to support the assessment, but to attack it. We shall not pause to discuss the purpose of the return as a disclosure of the taxpayer's property and the effect of such disclosure otherwise made, nor the relevancy of 7 Miss. Code 1942, Section 9825 (Code 1930, Section 3200), and 7 Miss. Code 1942, Section 9828 (Code 1930, Section 3203), which authorize the commission to prepare or amend the schedules. Nor would we lend encouragement to any informal procedure which would lessen the duty to employ the prescribed forms for a complete discovery of taxable property. Our concern is directed solely to an examination whether the particular engine was assessed and taxes paid thereon for the years mentioned. Or, as expressed in Illinois Cent. R. Co. v. Miller, supra, whether "the assessment returned by the railroad reflected all of the things contemplated in the return required to be made." Preclusion of the effect of the recitals in the returns is justified by the fact that the end sought to be effected by the schedules was made manifest by the testimony that the attention of the Commission had been actually called to the use and possession of the engine by the taxpayer, and by the solemn disclosure of the Tax Commission in its order that it had been taken into account, had been assessed and the taxes paid thereon. To disregard this finding would be to compel the Commission consciously to impose double taxation — a result whose avoidance is as much its duty as is its responsibility to assess it in the first instance.
The cause will be reversed and judgment entered here for appellant.
Reversed and judgment here for appellant.