San Benito County v. Southern Pacific Railroad

Paterson, J. In view of the decisions of the supreme court of the United states in the cases of State [520]v. Central Pacific R. R. Co., and State v. Southern Pacific R. R. Co., 127 U. S. 1, it would seem useless to follow in this case the decisions of this court in Central Pacific R. R. Co. v. State Board of Equalization, 60 Cal. 35, Los Angeles v. Southern Pacific R. R. Co., 61 Cal. 59, and Santa Clara County v. Southern Pacific R. R. Co., 66 Cal. 642, for it is quite clear, we think, that the supreme court of the United States would hold, in a proper case, the ordinance before us herein, requiring the defendant to take out and pay for a license to continue its business of carrying persons or freight for hire by means of railroad cars in the county of San Benito, to be void; and of course we ought always to follow the rule of law laid down by that court, when our judgment, as in the case at bar, may be reviewed by it on writ of error. (Belcher v. Chambers, 53 Cal. 643.)

In the case referred to (State v. Southern Pacific R. R. Co., supra), it was held that the defendant therein (defendant herein), having been invested with certain franchises derived from the government of the United States, in connection with other railroad corporations, by certain acts of Congress, and having accepted all the terms and conditions of each of said acts, and fully complied therewith, “the state of California can neither take them away nor destroy nor abridge them, nor cripple them by onerous burdens.” The court in that case further said: “ It may undoubtedly tax outside, visible property of the company situated within the state. That is a different thing. But may it tax franchises which are the grant of the United States ? In our judgment it cannot.....No private person can establish a public highway, or a public ferry or railroad, or charge tolls for the use of the same, without authority from the legislature, direct or derived. These are franchises..... Corporate capacity is a franchise.....How can it be possible that a franchise granted by Congress can be subject to taxation by a state without the consent of [521]Congress? Taxation is a burden, and may be laid SO' heavily as to destroy the thing taxed or render it valueless. As Chief Justice Marshall said, in McCulloch v. Maryland, 4 Wheat. 316: ‘ The power to tax involves the power to destroy.’ Becollecting the fundamental principle that the constitution, laws, and treaties of the United States are the supreme law of the land, it seems to us almost absurd to contend that a power given to a person or corporation by the United States may be subjected to taxation by a state. The power conferred emanates from and is a portion of the power of the government that confers it. To tax it is not only derogatory to the dignity, but subversive of the powers, of the government, and repugnant to its paramount sovereignty. It is unnecessary to cite cases on this subject. The principles laid down by this court in McCulloch v. Maryland, supra, and Osborn v. Bank, 9 Wheat. 817, and Brown v. Maryland, 12 Wheat. 436, and in numerous cases since, which have followed in their lead, abundantly sustain the views we have expressed. It may be added that these views are not in conflict with the decisions of this court in Thompson v. Railroad, 9 Wall. 579, and Railroad Company v. Peniston, 18 Wall. 5. As explained in the opinion of the court in the latter case, the tax there was upon the property of the company, and not upon its franchises or operations. (Id. 25, 37.) Taxation of a corporate franchise, merely as such, unless pursuant to stipulation in the original charter of the company, is the exercise of an authority somewhat arbitrary in its character. It has no limitation but the discretion of the taxing power.....It only remains to consider whether the Southern Pacific Bailroad Company as well as the Central Pacific was invested with any franchise derived from the government of the United States. Of this we think there can be no question.....It follows that in each one of the cases now before us the assessment made by the state board of