Petitioner was not entitled to have any reduction on account of the existence of the mortgage against its road. The Constitution provides a different mode in making assessment of railroad property incumbered by mortgage than of other property so incumbered. It is provided that " except as to railroad and other quasi public corporations, in case of debts so secured, the value of the property affected by such mortgage, deed of trust, contract, or obligation, less the value of such security, shall be assessed and taxed to the owner of the property, and the value of such security shall be assessed and taxed to the owner thereof, in the county, city, or district, in which the property affected thereby is situate." (Art. xiii, § 4.) The above provision seems too plain to admit of construction. If in all cases" except as to railroads," etc., a deduction of the value of the security is to be made, it follows from an elementary rule of construction that, as to the exceptions made, no such deduction is to be allowed; or, in other words, in the case of a railroad, the entire value is to be assessed against the owner of the road, regardless of the question whether or not a mortgage or like incumbrance exists against the road. " All property in the State, not exempt under the laws of the United States, shall be taxed in proportion to its value, to be ascertained as provided by law." (Art. xiii, Section 1.) If the railroad of petitioner is to be taxed at its value, as provided in Section 1, and if the incumbrance existing against said railroad is not to be assessed to the owner of the security, the unavoidable inference follows: that the entire value of the railroad is to be assessed against the owner--the holder of the legal title to the road.
The power to make the said assessment, and to apportion the same, is clearly conferred upon the State Board of Equalization by Section 10 of Article xiii of the State Constitution, and that section is self-executing. (People v. Supervisors of Sacramento County , 8 P. C. L. J. 103.)
It is argued by petitioner, however, that the foregoing provision of the Constitution is in conflict with the Constitution of the United States, because, as is alleged by petitioner, no provision is made permitting the owner of a railroad, operated in more than one county, to obtain a reduction or equalization of its assessment by the local Boards of Equalization; that the railroad company is thus denied a privilege accorded to the owners of every other kind of property; and in support of this position, reliance is placed by petitioner upon that portion of Section 1 of the Fourteenth Amendment to the Constitution of the United States, which provides that " No State shall * * * deny to any person within its jurisdiction the equal protection of the laws."
The vice of this argument is, that it is based upon the assumption that no provision is made in the Constitution for the equalization of assessments made by the State Board of Equalization, when in fact such provision is clearly and unquestionably made.
Section 9, of Article xiii, provides that the " State and County Boards of Equalization are hereby authorized and empowered, undersuch rules of notice as the County Boards may prescribe as to the county assessments, and under such rules of notice as the State Board may prescribe as to the action of the State Board, to increase or lower the entire assessment roll, or any assessment contained therein."
In assessing railroad property the State Board of Equalization acts primarily, not as an equalizing, but as an assessing Board. The object of the framers of the Constitution, as clearly evidenced by Section 10 of Article xiii, was to provide a means of ascertaining the value of a railroad, as such, and taken as a whole, without being put to the necessity of assessing the value of its several parts or elements. Where the road is located entirely in one county, such a valuation may be made by the local authorities; but wherever the road runs through more than one county, some portion of the property extending beyond the local jurisdiction of the authorities of either of the counties through which it runs, the assessment, in order that it may cover the value as an entirety, must of necessity be made by the State Board, whose jurisdiction extends throughout all the counties. The reason for desiring the assessmentof the value of the road as a whole is obvious. Railroads, like all other property, possess a value for the purposes for which they may be used, and for none other; railroads are valuable for purposes of transportation, and in proportion to the profits which they are capable of producing. The value of such property is but slightly affected by the character of the land over which the roads run, or by the nature of the materials out of which they are constructed. The value of such property may be, and ordinarily is, determined by its location and its surroundings--by the amount of carrying trade it receives on account of the settled condition and population of the country to, from, and through which it runs. A part of a valuable road, if isolated from the balance, might possess no value.
The primary object of the framers of the Constitution was to arrive at the true value of the property of such railroads in each county; the means adopted was first to ascertain the whole value of the road, and then to divide or apportion the said value among all the counties in proportion to the number of miles of railroad in each county. By the method thus adopted the value of the railroad ineach county is assessed for purposes of taxation, and this valuation, together with a proper description of the property, is entered upon the assessment roll of the county. (Pol. C., § 3664.)
The only difference between the assessment of this and of other kinds of property, that can be found in the Constitution, is, that the value of the one is primarily determined by the State Board of Equalization, while the other is assessed by the County Assessors and other local authorities. All the assessments so made may be eventually equalized by the State Board of Equalization. Assessments of railroads, as of all other kinds of property, go upon the county assessment roll for the purposes of State and county taxation.
The language of Section 9 of Article xiii, conferring upon the Boards of Equalization the power to equalize by raising or lowering the " entire assessment roll, or any assessment contained therein," is sufficient, therefore, to cover assessments of the character herein complained of. Plainer or less ambiguous language could not have been used to express the will of the people; and in whatever manner the powers conferred by that section may be distributed, it can notbe denied that the sum total of all the powers possessed by both the Boards extend to the equalization of all kinds and classes of property, whether it belong to persons or to corporations. The object of the provision was to give to all property owners an opportunity to be heard as to the justice of the assessments made upon their property. The language of the section is such as to confer upon the several Boards general powers in matters relating to equalization. The rule established is a just and equitable one, and it is respectfully insisted that the Court should not, by mere construction or implication, place upon powers a limitation which must result in inequality or injustice.
The two Boards of Equalization, according to the language of the Constitution, have the power to equalize all assessments in the roll; and it is a rule, that when the language of the Constitution is unambiguous, no construction should be given to it which is opposed to the express words of the instrument. (Bourland v. Hildreth , 26 Cal. 161; French v. Teschemaker , 24 id. 518.)
The provision of the Fourteenth Amendment, relied on, that no State shall deny to any person the equal protectionof its laws, is, we claim, only to be applied to the ultimate result to be attained, not to the method of procedure by which such result is arrived at. When applied to the case under discussion, it can not well be said that the State Constitution denies to petitioner the equal protection of the law, if, in fact, a system is provided by which a fair and equitable assessment for the purposes of taxation is made of the property of petitioner, as compared with other property in the State.
It results that the State Board had the power, under the Constitution, to assess the property of the petitioner, and any error committed by that Board, whether of law or of fact, was committed in the exercise of an exclusive jurisdiction conferred by the organic law.
JUDGES: McKinstry, J. Ross and McKee, JJ., concurred.
OPINION
McKINSTRY, Judge
In addition to the points made in San Francisco and North Pacific Railroad Company v. The State Board of Equalization, the petitioner makes the following: 1. The whole of the road within this State has, by respondent, been assessed to petitioner; 2. The State Board, in making the assessment and apportionment, did not pursue the authority conferred by the State Constitution; 3. The Central Pacific Railroad is one of the means and instrumentalities employed by Congress to carry into operation the powers granted to the general Government. A tax upon its franchise--upon its right to exist--is, within the meaning of all the authorities, a tax upon the means and instrumentalities of the general Government. Without the express consent of Congress, no State can impose such a tax.
1. It is said that the Board had power only to assess the value of the real property of petitioner, less the amount of bonds issued to the company, which, by the " Railroad Act" of July 1, 1862, it is declared " shall ipso facto constitute a first mortgage on the whole line of the railroad and telegraph, together with the rolling stock, fixtures, and property."
The State Constitution declares: " A mortgage, deed of trust, contract, or other obligation by which a debt is secured, shall, for the purposes of assessment and taxation, be deemed and treated as an interest in the property affected thereby." (§ 4, Art. xiii.) But the same section proceeds: " Except as to railroad and other quasi public corporations, in case of debts so secured, the value of the property affected by each mortgage, deed of trust, contract, or obligation, less the value of such security, shall be assessed and taxed to the owner of the property, and the value of such security shall be assessed and taxed to the owner thereof, in the county, city, or district in which the property affected thereby is situate."
Reading the whole section it seems very plain that as to mortgages, deeds of trust, contracts, or other obligations secured upon the property of railroad and other quasi public corporations, they should not be deemed and treated as an interest in the property affected by them " for the purposes of taxation."
Under the Constitution of this State the property of such corporations is subject to assessment and taxation, without deduction of the amount of any mortgage or like lien thereon. The meaning is made clearer by the language " shall be assessed and taxed in the county, city, or district" in which the property is situate. By reason of Section 10, Article xiii, the property of railroads " operated in more than one county" can not be assessed in the counties, but must be assessed only by the State Board of Equalization.
The claim is, that thus to impose upon railroad corporations, operated in more than one county, a tax upon the full value of their property, while upon owners of other property is imposed a tax only upon the value of their property after deducting the amount of mortgage and other like liens, is to deny to such corporations the " equal protection of the laws," and therefore violative of the Fourteenth Amendment to the Constitution of the United States.
It may be urged that there is no practicable difference between taxing the railroad corporations at a higher rate or percentage upon the value of their property than is assessed upon the property of others, and establishing a mode of estimating the value of their property which results in the payment by them of more than is paid upon like property by others. But, if this be true, are the provisions of the State Constitution in conflict with the Fourteenth Amendment of the Constitution of the United States?
" The power to tax is the strongest and most pervading of all the powers of government." (Miller, J., in Loan Association v. Topeka, 20 Wall. 655.) No limitations or restrictions upon this essential attribute of government can be raised by implication; but the intention to limit or abridge it must be expressed in clear and unambiguous language. (Lane County v. Oregon, 7 Wall. 71; Munn v. Illinois , 94 U.S. 123.)
In The Insurance Company v. The City of New Orleans, it was held that an ordinance which levied a tax upon foreign corporations double that levied upon domestic corporations was not in conflict with the Fourteenth Amendment. The United States Circuit Judge said: " Are corporations within the meaning of the amendment? The word person occurs three times in the first section, in the following connections: 'All persons born or naturalized in the United States; ' 'nor shall any State deprive any person of life, liberty, or property,' etc.; 'nor' shall any State 'deny to any person the equal protection of the laws.' The complainants claim that this last clause applies to corporations--artificial persons.
" Only natural persons can be born or naturalized; only natural persons can be deprived of life or liberty; so that it is clear that artificial persons are excluded from the provisions of the first two clauses just quoted. If we adopt the construction claimed by complainants, we must hold that the word 'person,' when it occurs the third time in this section, has a wider and more comprehensive meaning than in the other clauses of the section where it occurs. This would be a construction for which we find no warrant in the rules of interpretation. The plain and evident meaning of the section is, that the persons to whom the equal protection of the law is secured are persons born or naturalized or endowed with life and liberty, and consequently natural, not artificial persons." (1 Wood, 85.)
2. The State Board of Equalization performs its function, with reference to the property of railroad corporations, by making the assessments of all such properties accord with the standard of " actual value." Section 9, of Article xiii of the Constitution has no relation to the assessments of the property of railroad corporations, operated in more than one county. (§ 10, Art. xiii.)
3. The petitioner derives its franchise, " its right to exist," solely from and under the laws of the State. When it ceases to exercise all the privileges thus derived (assuming that it may, of its own option, abandon them, and, at the same time, relieve itself of the duties and obligations necessarily joined with them), it may, perhaps, be in a position to contest the right of the State to tax the moneyed value of the franchise, as actually employed and in connection with the property acquired and held by means of the powers conferred with the franchise. The franchise, at least in such connection, is property subject to taxation.
We are not required now to decide whether the Congress of the United States has power to exempt from State taxation the property of a corporation created by, or organized under the laws of a State; or whether a corporation, the creature of a State law, can, by entering into contract relations with the general Government, withdraw itself from obligations to its creator--obligations which are essential elements of its existence.
For the purposes of the case at bar it may be admitted (in the language of counsel) that the Government of the United States can " seize upon" the railroad and rolling stock of a corporation, chartered by a State, as the " means or instrumentality" for carrying into operation a power of that Government, and that it can prohibit taxation by the State of the property thus seized. Admitting all this, there is nothing in McCulloch v. Maryland, 4 Wheat. 316, or in the other cases cited by petitioner, which lays down a rule necessarily subversive of the provisions of the State Constitution.
In Thomson v. Pacific Railroad, 9 Wall. 587, Chief Justice Chase said: " The main argument for plaintiff is, that the road, being constructed under the direction and authority of Congress, for the uses and purposes of the United States, and being a part of a system of roads thus constructed, is, therefore, exempt from taxation under State authority. It is to be observed that this exemption is not claimed under any Act of Congress. It is not asserted that any Act declaring such exemption has received the sanction of the national Legislature. But it is earnestly insisted that the right of exemption arises from the relations of the road to the general Government. It is urged that the aids granted by Congress to the road were granted in the exercise of its constitutional powers to regulate commerce, to establish post-offices and post roads, to raise and support armies, and to suppress insurrection and invasion; and that by the legislation which supplied aid, required security, imposed duties, and finally exacted, upon a certain contingency, a percentage of income, the road was adopted as an instrument of Government, and as such was not subject to taxation by the State."
After pointing out the wide difference between the case then under consideration and McCulloch v. Maryland, the learned Chief Justice proceeded: " We do not doubt, however, that upon the principles settled in that judgment, Congress may, in the exercise of powers incidental to the express powers mentioned by counsel, make or authorize contracts with individuals or corporations for services to the Government; may grant aids by money or land, in preparation for, or in the performance of such services; may make any stipulation and conditions in relation to such aids not contrary to the Constitution; and may exempt, in its discretion, the agencies employed in such services from any State taxation which will really prevent or impede the performance of them.
" But can the right of this road to exemption from such taxation be maintained in the absence of any legislation by Congress to that effect?
" It is unquestionably true that the Court, in determining the second general question, already stated, did hold that the Bank of the United States, with its branches, was exempt from taxation by the State of Maryland, although no express exemption was found in the charter. But it must be remembered that the Bank of the United States was a corporation created by the United States; and, as an agent in the execution of the constitutional powers of the government, was endowed by the act of creation with all its faculties, powers, and functions. It did not owe its existence, or any of its qualities to State legislation. And its exemption from taxation was put upon this ground ." * * * " That such (State) taxes can not be imposed on the operations of the Government, is a proposition which needs no argument to support it. And the same reasoning will apply to instruments of the Government, created by itself, for public and constitutional ends. But we are not aware of any case in which the real estate or other property of a corporation, not organized under an act of Congress, has been held to be exempt, in the absence of express legislation to that effect, to just contribution, in common with other property, to the general expenditure for the common benefit, because of the employment of the corporation in the service of the government."
" No one questions that the power to tax all property, business, and persons, within their respective limits, is original in the States, and has never been surrendered. It can not be so used, indeed, as to destroy or hinder the operations of the National Government; but it will be safe to conclude, in general, in reference to persons and State corporations employed in Government service, that when Congress has not interposed to protect their property from State taxation, such taxation is not obnoxious to that objection."
" We perceive no limit to the principle of exemption which the complainant seeks to establish. It would remove from the reach of State taxation all the property of every agent of the Government. Every corporation engaged in the transportation of the mails, or of Government property of any description, by land or water, or in supplying materials for the use of the Government, or in performing any service of whatever kind, might claim the benefit of the exemption," etc.
Orders affirmed.