Railway Co. v. State 49 Ohio St. 189

Railway Co. v. State.

Railroads — “ One dollar per mile” fee — Act creating, construed— Constitutional law.

The act of April 15, 1889 (Section 251a Revised Statutes), requiring “ every corporation or company operating a railroad or any part of a railroad within this state" to pay to the Commissioner of Railroads and Telegraphs a “ fee ” of one dollar per mile for each mile of track operated hy it within this state, contravenes sections two and five of article twelve of the constitution of this state.

(Decided March 2, 1892.)

Error to the Circuit Court of Franklin county.

On May 1, 1890, the state of Ohio, by its attorney general, in an action theretofore begun and then pending in the court of common pleas of Franklin county, filed the following amended petition:

"The plaintiff says: That the defendant is a corporation duly incorporated under the laws of the state of Ohio, having its principal office in the city of Columbus, in said state, and that on the first day of September, 1889, it operated two *190hundred and seventy-four and sixty-three hundreths (274.63) miles of railroad within the- state of Ohio.

“ That on the 16th day of October, 1889, said defendant filed its annual report, duly verified, for the year ending on the 30th day of June, 1889, in the office of the Commissioner of Railroads for this state.

“ That it was the duty of the defendant to have filed said report oh the first day of September, 1889, and to have paid on that day to the Commissioner of Railroads, a fee of one dollar ($1.00) per mile for each mile of track operated by it within the state of Ohio; but that the defendant failed and refused, and still fails and refuses, to make said payment, or any part thereof, to the commissioner, or any one for him.

“Plaintiff says that by reason of the failure of the defendant to make said payment, or any part thereof, there is due it from the defendant, the sum of $274.63, for which it asks judgment, with interest from the 1st day of September, 1889.

“David K. WatsoN,

Attorney General."

To this amended petition a demurrer was interposed by the railway company, which was overruled by the court, and the railway company not desiring to plead further, a judg ment was rendered against it for the amount claimed with interest, which judgment was affirmed by the circuit court in a proceeding brought in that court by the railway company to obtain its reversal: whereupon the present proceedings were begun in this court to reverse the judgment of said courts.

Brief of Watson, Burr & Livesay, for plaintiff in error.

I. The first problem is to determine the nature of this law, and we respectfully ask the attention of the court to the following question, viz: What was the object and purpose of the legislature in laying this exaction ? Was it for the purpose of revenue, or was it an incident to the exercise in some of its forms of the police power? The answer to this question will, as it seems to us, go far towards settling the case. If it is the former, we hope to show the law to *191be clearly unconstitutional. If it is the latter, and the exaction ¿-oes no further than the police purpose to be attained, then it is not a revenue or tax law, but the fee is a mere incident to regulation.

From the original creation of the office of Commissioner of Railroads 'and Telegraphs, to the year 1889, a period of twenty-two years, the office has existed as a part of the executive branch of the state government, and has been supported from its general revenues.

The amendment in question (Ohio Raws, 86, 351) deals solely with the payment of a fee. No other change whatsoever was made in the law. No additional burden was put upon the state, no new duty upon the officer, nor was any corresponding benefit conferred upon the companies, by the passage of this supplementary section. Its whole and only object was to put money into the hands of the commissioner to be paid forthwith into the treasury to the credit of the general revenue fund.

There was no attempt, on the part of the general assembly, to disguise the true object of the law, or bring the exaction within the scope of any exercise of the police power. Home Ins. Co. v. State of New York, 134 U. S... 594; Henderson v. New York City, 92 U. S., 259; Brown v. Maryland. 12 Wheat. 419; State v. Hipp, 38 Ohio St., 199; Exchange Bank v. Hines, 3 Ohio St., 1.

The reasonable and natural effect of the law in question, and we may add its only effect, is to add the sum of one dollar per mile to the taxation of railroad property as prescribed in section 2774, and the other sections of the statutes relating thereto, and to increase by so much the general revenue of the state. Peyton v. Bliss, 1 Woolw., 170, 173; The Nashville, 4 Biss., 188.

That it'is not an assessment for benefits as understood in Ohio, is clear on several grounds.

It is a matter of common history that the office of Commissioner of Railroads and Telegraph s was not established for the benefit of railways, but for the benefit of the public as against the railroads. Field v. The Commissioners of. Highland Co., 36 Ohio St., 476.

*192The attorney general also seeks to maintain the charge in question as a license fee, and cites several cases in which license fees have been sustained. But it is not a license fee. Adler v. Whitbeck, 44 Ohio St., 539; Anderson v. Brewster, lb. 576; Senior v. Ratterman, lb. 661; Marmet'v. The State, 45 Ohio St., 64.

Again the attorney general likens the tax in question to an inspection fee, and cites the case of Gas Co. v. The State, 18 Ohio St., 238.

The supreme court in the case cited held this act constitutional, and the assessment valid, basing its decision however, purely upon the ground that the act was an inspection law, and that the fees to be paid were purely inspection fees.

All inspection laws, probably without exception, are both for the general benefit of the public and«the particular benefit of the individual whose goods are inspected. Gibbons r. Ogden, 9 Wheaton, 1.

Again, the attorney general cites the case of The State, ex rel. v. The Judges, 21 Ohio St., 1, in support of this law.

That case related to the fees paid the probate judge, clerk of courts, sheriff, auditor and treasurer.

The judgment of the court was based expressly, so far as concerns the question now at issue, upon the fees being compensation for official services rendered and facilities afforded to persons requiring, and who are- especially bene-fitted by, the performance of such services.

Finally, the attorney general seems to contend that the tax in question is valid, for the reason that the legislature alone has power to determine in what mode and how much corporations may be taxed. In the absence of constitutional restraints, no doubt this is true. But the doctrine is not peculiar to corporations. The extent of the taxation, and what property or kinds of business shall be taxed, whether of natural or artificial persons, are matters solely within the legislative discretion. Hill v. Higdon, 5 Ohio St., 243, 245; Cooley, Constitutional Limitations, 632, 633; Cooley on Taxation, 43 et seq.

*193II. We claim the law to be unconstitutional on two1 grounds. 1. The act in question violates article XII, sec. 5 of the constitution.

As the chapter relating to the Commissioner of Railroads and Telegraphs stood before the amendment of 1889 was interpolated, the payments of money therein provided for were limited to fines, forfeitures and penalties. These were not taxes or fees, and therefore the above constitutional provisions did not require the object to which the money was to be applied to be designated. They were simply to be paid into the state treasury (sec. 265). But the levy of one dollar per mile annually upon the mileage of each railroad is, by whatever name it may be called, a tax’, and before the legislature could lawfully levy such tax, it was necessary that the law imposing the tax should state distinctly the object to which the same should be applied. People ex rel. Hopkins v. Board of Supervisors of Kings Co., 52 N. Y., 556, 567; Dean v. Lufkin, 54 Tex., 264.

2. The chief objection which we urge against the law is its violation, as we believe, of art. XII, sec. 2, of the constitution. People ex rel. v. Albertson, 55 N. Y., 55; State v. Frame, 39 Ohio St., 899,414; Hipp v. State, 38 Ohio St., 199,

Brief of J. H. Collins, also, for plaintiff in' error.

The law is in violation of section 2, article XII, of the constitution.

It is also in violation of section 5, article XII, of the constitution.

The claim of the attorney general is that this fee partakes more of the nature of an assessment than a tax, and for that reason was clearly within the power of the legislature. The distinction between an assessment and a tax proper is that the former is a local taxation for the purpose of paying for some improvement whereby a peculiar benefit arises to the parties, and is in this manner distinguished from general taxation; and the claim is made that this is an assessment for a benefit peculiar to the railroads of the state, and that that benefit consists in the fact that the office *194of railroad, commissioner has been established, and that he from year to year publishes his reports, and that the publication of these reports and other services which he renders by virtue of his office are peculiarly beneficial to the railroad.

The court is not authorized to infer from the provisions of the law creating the office of railroad commissioner and prescribing his duties that they are beneficial to the railroads; but on the contrary, the office of railroad commissioner and the passage of laws conferring powers upon him which he possesses, partake rather of the visitorial powers of the state, coupled with what in common parlance is known as the police powers; police powers being alwaj^s exercised for the benefit of the people at large, and the same may be said with regard to the visitorial powers.

If it is a tax, then it is not assessed according to the true value in money of the property, but rather according to the length in miles of the railroad track; and if a tax, it is not levied in pursuance of law, nor does the- law state to what purpose the money arising therefrom shall be applied. If the theory of the attorney general is correct, that the fee should be paid for the number of miles operated on the first day of September of each year, it would seem to follow that the railroad commissioner was authorized to determine arbitrarily what number of miles each railroad company operated on that day, because no papers in his office would furnish the information; and there was no opportunity whatever for a hearing in any form, but the money was taken under the compulsory and arbitrary power of the railroad commissioner, and would amount to depriving them of property without due process of law, and, in fact, without-any process of law.

David K. Watson, Attorney General, for defendant in error.

Concerning the constitutional objections, to the effect that the action can not be maintained, it will be observed' that the sections of the constitution cited by counsel refer to taxes, and establish rules by which taxes shall be levied, *195and I assume it will be admitted by counsel that unless they can bring the act of April 15, 1889, within these provisions •of the constitution, that act will stand.

The position' I take is, that money paid by a corporation in compliance with an act of the general assembly, in consideration of a benefit received, is not, within the meaning of the constitution, such a tax as is ordinarily levied upon property, but that the money the railroad companies (in this •case) are required to pay by virtue of this supplementary section, partakes more of the nature of an assessment than of a tax, and it was therefore clearly within the power of the legislature to pass the act. Bouvier Raw Die.

It is in this sense, in which I claim the legislature transcends no constitutional provision when it requires railroads to pay a fee. The legislature did not assume any special control or government over, or require any special report or work from, the railroads in the state, until the passage of the act of 1867, other than such as was required of them generally by the Ohio statutes.

Unquestionably, the purpose of the legislature in requiring the railroads to furnish such reports was to establish a bureau of information for the benefit of the public, and the benefit of the railroads by the state and its expense. These corporations had' grown to enormous proportions. They had invested millions of money,' and controlled thousands of employes, and constituted the great channels of commerce. It was proper, therefore, for the general assembly to take hold of, and legislate upon, this subject. The annual report which the railroad commissioner was required to make by the act creating his office, was intended to be, and was, and still is, of almost incalculable benefit to the roads. Information dispersed through this department of the state government, is eagerly sought and taken advantage of by the various railroad companies.

No one will question that a special favor and benefit was conferred upon the railroads of the state by the establishment of the office of railroad commissioner. Such department of our state government was necessarily attended with large expense. The commissioner was paid a salarj’-. The *196act creating the office allowed him to employ one or more clerks, and the report which he is required to publish is a voluminous and expensive document. All this expense was borne by the state. The purpose of the general assembly in passing the supplementary section, the constitutionality of which is involved in this case, certainly was to require the railroads to bear a portion of the expense of the office of railroad commissioner, inasmuch as they received large benefits from the establishment of such an office. The word “tax” is not used in the act complained of. The language is, “ at the time of the filing of the report required by section 251, every corporation or company operating a railroad or any part of a railroad in this state, shall pay to the commissioner a fee,” etc. The word “fee”.as used in this sense, is synonymous with the word “assessment,” as defined by Bouvier. Questions of a similar character have frequently come before the courts of our state, and the levying of an assessment or a fee, has uniformly been sustained. State v. Gasley, 5 Ohio, 15; Marmet v. State, 45 Ohio St., 71; Cincinnati v. Buckingham, 10 Ohio, 257.

A subsequent case arose in the same city which involved! the right of the mayor to fine a party for neglecting or refusing to take out a license for a trade in that city according to the ordinance, which required draymen and those following similar occupations, to pay a given amount each. 15 Ohio; 644: Cincinnati v. Bryson, 15 Ohio, 625; Baker v. City of Cincinnati, 11 Ohio St., 540; Zanesville v. Richards, 5 Ohio St., 589-593; Hill v. Higdon, 5 Ohio St., 243-247; Reeves v. Treas. Wood County, 8 Ohio St., 333; Cincinnati Gas Light and Coke Company v. State, 18 Ohio St., 238; Western Union Telegraph Company v. Mayer, 28 Ohio-St., 521.

But the broad ground upon which the validity of this act rests, is that it is a matter of legislative discretion. Therefore, unless the act is plainly in violation of the constitution, the court will not interfere. What laws are wise or unwise, good or bad, necessary or unnecessary, is not for the determination 'of the court, but the legislature. In construing; constitutions, courts interpret the organic law of the state. *197They do not legislate by assuming to usurp legislative authority. “ legislative power in this state shall be vested in a general assembly,” .is the provision of article II, section 1, of our constitution. Here, then, is the source of legislative power. Here is found the authority for the general assembly to pass laws. The organic law of the state, the constitution, says the legislative power of the state — that is, the law-making power of the state — is vested in the general assembly. Such being the case, what are the limitations to this power? How far may it go? When does the legislature transcend its limits? The question is judicially answered. Baker v. City of Cincinnati, 11 Ohio St., 542; Marmet v. State, 45 Ohio St., 64; Milwaukee v. Helfen-stein et al. 16 Wis., 136; Leavenworth v. Booth, 15 Kansas, 627; New York v. The Home Insurance Co., 92 N. Y., 328; Delaware Railroad Tax Case, 18 Wall., 206-231; Californian. Pacific Railroad Company, 127 U. S., 1,41.