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United States Supreme Court

121 U.S. 230

Fargo  v.  Stevens

This is a writ of error to the supreme court of the state of Michigan to bring here for review a decree sustaining a demurrer to the complainant's bill in chancery, and dismissing the bill. The complainant brought suit as president of the Merchants' Dispatch Transportation Company, averring that said company is a joint-stock association organized and existing under the laws of the state of New York, and by the laws of that state authorized to sue in the name of its president. The bill, so far as it presents the questions on which this court can have jurisdiction, charges as follows:

'Second. That, during the year ending with the thirty-first day of December. A. D. 1883, the said transportation company was engaged in the business of soliciting and contracting for the transportation of freight required to be carried over connecting lines of railroad in order to reach its destination; and, for the prosecution of its said business, it had agencies located generally throughout the United States and the dominion of Canada. The said transportation company issued through bills of lading for such freight, and caused the same to be carried by the appropriate railroad companies, and, as compensation for its service in the premises, the said transportation company was paid by the said railroad companies a definite proportion of the through rate charged and collected by said companies for the carriage of said freights.

'Third. That during the said year the said transportation company was possessed of certain freight cars which were used and run by the railroad companies in whose possession they chanced from time to time to be for the transportation upon their own and connecting lines of railroad of through freight, principally between the city of New York, in the state of New York, and Boston, in the state of Massachusetts, and Chicago, in the state of Illinois, and other points and commercial centers in the west, north-west, and south-west, without the said state of Michigan; that said cars were not used for the carriage of freight between points situate within the said state of Michigan, but wholly for the transportation of freight, either passing through the state, or originating at points without said state and destined to points within, or originating at points within said state and destined to points without; that the said several railroad companies thus making use of said cars, during the said year, paid to the said transportation company as compensation therefor a definite sum per mile for the distance traveled by the said cars over their respective lines.

'Fourth. That the said transportation company during the said year was not running or interested in any special fast, through, or other stock, coal, or refrigerator car freight line, or doing business in or running cars over any of the railroads of said state of Michigan otherwise than as in the preceding paragraphs stated.

'Fifth. That prior to the first day of April, A. D. 1884, the commissioner of railroads of the state of Michigan transmitted to the said transportation company certain blank forms of a report to be made to him pursuant to the provisions of an act of the legislature of the state of Michigan approved June 5, 1883, entitled 'An act to provide for the taxation of persons, copartnerships, associations, car-loaning companies, corporations, and fast freight lines engaged in the business of running cars over any of the railroads of this state, and not being exclusively the property of any railroad company paying taxes on their gross receipts,' with the requirement that the said transportation company should make up and return said report to the office of said commissioner on or before the first day of April, 1884, under the penalties of said act; that, on or about said first day of April, in compliance with said demand, but protesting that the same was without authority of law, and that said act was invalid, or, if valid, was not applicable to the said transportation company,-the said transportation company made and filed with said commissioner a report, duly verified, setting forth that the gross amount of the receipts of the said transportation company for the mileage of said cars during said year 1883, while in use in the transportation of freight between points without said state and passing through said state in transit, estimated and prorated according to the mileage of said cars within said state of Michigan while so in use, was the sum of $95,714.50; and while in the use of transportation of freight from points without to points within said state of Michigan, and from points within to points without said state, estimated and prorated according to the mileage of said cars within the state of Michigan while so in use, was the sum of $28,890.01, making in the aggregate the sum of $124,604.51; that during said year it received no moneys whatever on business done solely within the said state of Michigan, and no moneys which were or could be regarded as earned during said year within the limits of said state of Michigan other than as hereinbefore and in said report set forth.

'Sixth. That by the terms of said act it is the duty of said commissioner of railroads to make and file with the auditor general of said state of Michigan, prior to the first day of June each year, a computation based upon the report of each person, association, copartnership, or corporation taxable thereunder of the amount of tax to become due from them respectively, and each such person, association, copartnership, or corporation is required, on or before the first day of July in such year, to pay to the treasurer of said state of Michigan, upon the statement of the auditor general thereof, two and one-half per cent. upon its gross receipts as computed by the said commissioner of railroads, and derived from loaning, renting, or hiring of cars to any railroad or other corporation, association, copartnership, or party. It was also provided in said act that for the said taxes, and interest thereon, and the penalty imposed for delay in the payment thereof, the said state should have a lien upon all the property of the person, association, copartnership, or corporation so taxed, and, in default of the payment of said tax by and within the time so prescribed, the u ditor general of said state was authorized to issue his warrant to the sheriff of any county in said state, commanding him to levy the same, together with ten per cent. for his fees, by distress and sale of any of the property of the corporation or party neglecting or refusing to pay tax wherever the same may be found within the county or state.

'Seventh. That the said commissioner of railroads has computed and determined that the amount of the gross receipts of the said transportation company under the said act is the said sum of $28,890.01, and that there is due from said transportation company to the state of Michigan, as a tax thereon, the sum of $722.25, and has transmitted said computation to the said auditor general, and your orator shows that unless said tax is paid by the said transportation company on or before the first day of July, 1884, it will become the duty of the said auditor general under the said act, and the said auditor general threatens that he will proceed, to enforce payment of the said tax against said transportation company by the seizure and sale of the property of said transportation company under the provisions of said act.

'Eighth. That your orator is advised, and so charges, that the said act as to the said gross receipts of the said transportation company, or of any of its receipts or earnings from the use of its cars, within the state of Michigan, and the transaction of its business in the manner aforesaid, is in violation of the constitution of the United States and void, and that said act is inapplicable to the said transportation company, and inoperative for further reasons appearing upon its face, and that said transportation company is not amenable thereto.

'Ninth. That the chief office of the said transportation company for the transaction of corporate business was, during said year, and is, in the city of New York, in the state of New York, and that all the moneys earned by it, as set forth in the second and third paragraphs hereof, were paid to it at its said office; that said company, during said year, had no funds or property whatsoever within the state of Michigan, except cars in transit and office furniture in the possession of agents, and that during said year the said transportation company was subject to taxation, and was taxed, on account of its property and earnings, within and under the laws of the state of New York.'

The bill then prays for a subpoena against William C. Stevens, auditor general of the state of Michigan, and for an injunction to prevent him from proceeding in the collection of said taxes. To this bill the defendant Stevens demurred, and the circuit court for the county of Washtenaw, in which this suit was brought, overruled that demurrer. From this decree the defendant appealed to the supreme court of the state, where the judgment of the lower court was reversed, the demurrer sustained, and the bill dismissed. To reverse that decree this writ of error was sued out.

Ashley Pond, for plaintiff in error.

Edward Bacon, for defendant in error.

[Argument of Counsel from pages 235-237 intentionally omitted]

MILLER, J.

NotesEdit

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).