382 HARVARD LAW REVIEW to the right of way, which had been taxed locally on the assump- tion that the compulsory gross-earnings tax imposed by the law of 1883 was in heii only of taxation on lands which actually con- tributed to the earnings through their use in the business. In McHenry v. Alford^^ the receivers of the road brought a bill to have the tax deeds declared invalid, since the gross-receipts tax had been fully paid. The purchasers defended on the grovmds that the gross-receipts tax had no bearing on the local taxation of lands not adjacent to the right of way and, further, that it was not a valid tax and so could not operate to exempt the lands from other demands. Neither position was accepted by the court, al- though only the first was formally passed upon. As to this it was declared that, since the lands not adjacent to the right of way had been pledged for the payment of bonds issued to build and equip the road, and thus helped to make the earnings possible, their re- lation to the road and its operation was such that it was a proper classification to include them in all the property of the company which was relieved from local assessments and subjected to the gross-earnings tax, and that this was what the statute intended.^' The court was relieved from the necessity of passing explicitly on the question whether the gross-earnings tax was imconstitu- tional as a regulation of interstate commerce, because it found that the Act of 1889 was in the nature of a compromise which, when accepted by the company and complied with to the extent of pay- ing all arrearages due under the Act of 1883, operated as an im- plied release from any other taxes assessed for any period which the gross-earnings tax covered. Nevertheless Mr. Justice Peckham " 168 U. S. 651, 18 Sup. Ct. Rep. 242 (1898).
- ' Mr. Justice Peckham said that the language of the Act of 1883 "gives great reason
to doubt the correctness of the construction which would levy the tax upon the earn- ings derived from interstate commerce" (168 U. S. 651, 670). The doubt did not have to be resolved, since the company had paid all that had been assessed against it, and could not be in a worse position in recovering its lands because of the chance that it might have paid more than the legislature had intended to exact. The construction of Mr. Justice Peckham is strained and is inconsistent with the declaration in the Act of 1889 which reads: "Any company which has not compUed with the provisions of chapter 99 of the Session Laws of 1883 by paying all taxes claimed on ^oss earnings, both territorial and interstate, or by filing an account of gross earnings, both terri- torial and interstate, shall prepare and file such account in the manner therein pro- vided . . . and pay one half of the entire amount due. ..." 168 U. S. 651, 656, 18 Sup. Ct. Rep. 242 (1898).
