McHenry v. Alford, 168 U.S. 651 (1898)
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McHenry v. Alford
No. 139
Argued December 2-3, 1897
Decided January 3, 1898
168 U.S. 651
CERTIFICATE FROM THE CIRCUIT COURT
OF APPEALS FOR THE EIGHTH CIRCUIT
Syllabus
The ruling in United States v. Union Pacific Railroad, 168 U.S. 506, that each question certified to this Court from a circuit court of appeals
had to be a distinct point or proposition of law, clearly stated, so that it could be distinctly answered without regard to the other issues of law in the case; to be a question of law only and not a question of fact, or of mixed law and fact, and hence could not involve or imply a conclusion or judgment upon the weight or effect of testimony or facts adduced in the case, and could not embrace the whole case, even where its decision turned upon matter of law only, and even though it was split up in the form of questions,
is affirmed and followed, and, being applied to the questions certified in this case, makes it necessary for the Court to decline to answer the first, the second and the sixth questions.
Chapter 99 of the Laws of the Territory of Dakota of 1883 provided for the taxation of the lands of the Northern Pacific Railroad Company granted to it by Congress, outside of its right of way and not used in its business, while owned by the company and not leased, through the payment of percentages on gross earnings as provided for therein, the plain meaning of that act being to render the railroad company and all its property, land grants as well as right of way, free from the payment of all taxes excepting to the amount and in the manner described in the act.
That legislation was not in conflict with the provision in the Act of March 2, 1861, c. 86, 12 Stat. 239, providing that no law
shall be passed impairing the rights of private property, nor shall any discrimination be made in taxing different kinds of property, but all property subject to taxation shall be in proportion to the value of the property taxed.
It is not necessary to decide whether the act of 1883 conflicts with the Constitution in that it lays taxes upon earnings arising from transportation of persons and property between different states.
The objection that the act of 1883 violates the Fourteenth Amendment is untenable.
The railroad company can avail itself of the payment of the taxes under the act of 1883 as a full payment of the taxes for the year 1888, and the Court answers the fourth question in the negative.
The next and fifth question is answered in the affirmative. The payments made by the railroad company for the year 1888, as set forth in the bill, embraced the whole amount of taxes due from the defendant for that year (as well as others) under the act of 1883. Even if not paid at the exact time provided for in the statute, the failure to so pay might be waived by the public authorities, and as the moneys were in fact paid to and received by the officers of the territory and went into its treasury, and never have been returned or tendered back, there was an effectual waiver of any objection which might possibly have been urged that the payment was not in time.
This case comes here on a certificate from the United States Circuit Court of Appeals for the Eighth Circuit, and that court certifies several questions concerning which it desires the instruction of this Court for the proper decision of the cause. These questions are founded, among other papers, upon the bill of complaint which forms part of the record herein. It appears that the bill was filed by the complainants’ predecessors (who were receivers of the property of the Northern Pacific Railroad Company) on the 22d day of March, 1894, in the District Court of the Fourth Judicial District of North Dakota, sitting for the County of Richland in that state. It was filed, among other things, for the purpose of obtaining a decree adjudging that certain alleged and pretended and attempted assessments, under state authority, were null and void, and that all certificates and deeds executed by virtue of such assessments were void, and constituted clouds upon the title to the lands described therein, and which were alleged to be owned by the corporation of which the plaintiffs were receivers. Some of the individual defendants named in the bill were alleged to have purchased at a tax sale under the assessments separate portions of the property of the company situated in Richland county, and to have received certificates or deeds from the county officials purporting to convey to each of them certain portions of such property. Upon a petition of one of the individual defendants, named Sumner R. Clark, alleging diverse citizenship between the parties and the existence of a separate controversy between the petitioner and the complainants, a removal of the cause to the United States Circuit Court for the District of North Dakota was prayed for, and on the 5th of September, 1894, the court granted the petition and made an order for the removal of the cause. Upon a trial of the issues joined in the case, the Circuit Court of the United States for the District of North Dakota dismissed the complainants’ bill, and the complainants thereupon appealed to the United States Circuit Court of Appeals for the Eighth Circuit.
It appears from the complainants’ bill that the Northern Pacific Railroad Company was a corporation created and existing by virtue of an Act of Congress approved July 2, 1864, entitled
An act granting lands to aid in the construction of a railroad and telegraph line from Lake Superior to Puget Sound, on the Pacific Coast, by the Northern route.
The third section of that act, for the purpose of aiding in the construction of a railroad and telegraph line to the Pacific Coast, granted to the railroad company, its successors and assigns, certain portions of the public lands, as mentioned in the section. Pursuant to the provisions of the act, and prior to the year 1888, the company had definitely fixed the line of its railroad, and prior to that year had constructed and put in operation a continuous line of railroad and telegraph, extending from the waters of Lake Superior westerly, and through the Territory of North Dakota, to the waters of Puget Sound, and prior to and during the year 1888 many thousand acres of land in North Dakota were owned by the railroad company under the land grant above mentioned, although patents for a portion of the same were not issued until June 24, 1893, and for another portion not until June 18, 1894. (No question is made by the complainants herein that the lands owned by the company were not taxable in 1888 on account of the fact that the company had not then received patents from the United States therefor.)
On the 31st of May, 1870, Congress adopted a resolution authorizing the company to issue bonds for the construction of its road and to secure the same by mortgages on its property of all kinds and description, real, personal, and mixed, including its franchises as a corporation. Under that resolution, the company executed at different times several mortgages to secure the payment of a hundred millions or more of bonds issued to aid in the construction of the road, and these mortgages covered all the property of the company, including the lands granted to it by the United States under the act of 1864.
In 1893, the company was insolvent and unable to meet the interest upon its bonds or to pay its other indebtedness, and in that year suits were duly commenced against it by creditors to recover the amount of its indebtedness, and also, by the trustee mortgagee, to foreclose the mortgages, in which suit receivers were appointed, and the complainants are their successors.
On March 9, 1883, the legislature of the territory enacted a statute entitled "An act to provide for the levy and collection of taxes upon railroad property of railroad companies in this territory," the first and fifth sections of which are set forth in the margin.{1} This act was repealed by chapter 105 of the Laws of 1889.
Subsequently, and on the 7th day of March, 1889, the legislature of the territory passed another act, entitled "An act for the levy and collection of taxes upon property of railroad companies in this territory."
Section 7 of the act of 1889 is set forth in the margin.{2}
The Northern Pacific Railroad Company, within thirty days after the passage of the act of 1889, duly accepted its provisions, and within thirty days from that date paid into the treasury of the territory the entire amount of taxes and interest theretofore claimed by the territory as due and remaining unpaid to it from the company on local and interstate earnings under the act of 1883, excepting that the second half of the sum due from the company to the territory for the taxes of 1888, according to the provisions of the act of 1883, was not paid to and received by the treasurer of the territory until August 15, 1889. The whole tax for 1888, under the act of 1883, amounted to nearly $100,000, while for all the years in which the company was in arrears under the act of 1883 (including the year 1888), the amount paid was nearly $200,000.
In the year 1888, the usual proceedings were taken by the officials of Richland County to assess all the property in the county under the general assessment laws of the territory, and in such assessment the land grant lands of the railroad company were included (regardless of the act of 1883), and thereafter, in due course, the taxes thus levied not having been paid by the company, the treasurer of the county, on the 4th day of November, 1889, attempted and pretended to sell many parcels of land belonging to the railroad company, and being in the county already mentioned, for the purpose of collecting the taxes unpaid thereon, and, no redemptions of the lands having been made, the county treasurer executed to the persons who purchased the lands or their assignees (some of whom are defendants in this suit) deeds purporting to convey the lands so sold to such persons, and these deeds are alleged to be invalid, but still a cloud upon the title of the company to the lands described therein.
The bill also sets forth a great many different alleged errors, irregularities, and omissions on the part of the taxing authorities in taking proceedings to levy the taxes, by reason of which, as alleged, the taxation of the property of the company was illegal, and the deeds were null and void.
A joint and several demurrer and answer to the bill was served upon the part of the defendants, taking issue upon some of the allegations of fact in the bill and demurring to other parts thereof, but a sufficient statement of the case has already been made to lead to a proper understanding of the questions hereinafter discussed.