Central Pacific Railroad v. State Board of Equalization

McKinstry, J.: 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 Eailroad 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 “ Eailroad 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 [59]of such security, shall he 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.