California v. San Pablo & T. Railroad Company
Statement by Mr. Justice GRAY:

This was action, brought March 10, 1886, by the state of California against the San Pablo & Tulare Railroad Company, a corporation of California, in the superior court of the city and county of San Francisco, (and thence removed by the defendant into the circuit court of the United States, upon the ground that it was a suit arising under the constitution and laws of the United States,) to recover taxes assessed by the state board of equalization, under sections 4 and 10 of article 13 of the constitution of California, (which are copied in the margin, ) as state and county taxes for the year July 1, 1885-June 30, 1886, upon the defendant's franchise, roadway, roadbed, rails, and rolling stock in the counties of Alameda, Contra Costa, and San Joaquin.

The defendant, in its answer, filed March 19, 1886, and averring the facts necessary to present the question, set up the following defense: 'The provision of section 4 of article 13 of the constitution of the state of California, providing for the assessment of the property of railroad and other quasi public corporations, is in contravention of the provisions of the fourteenth amend ment of the constitution of the United States, in that it discriminates against such corporations, in this: That whereas, under said section 4 of said article 13 of the constitution of the state of California, if the property of natural persons, or corporations not quasi public, has a mortgage, lien, or incumbrance thereon, they are not liable to assessment or taxation upon such property, but only upon the value of their interest in such property over and above the value of such mortgage lien or incumbrance, whereas, in the case of the property of railroad and other quasi public corporations, no such allowance or deduction is made, had, or allowed with respect to any mortgage, lien, or incumbrance there may be upon such property; and also in this: that while section 10 of article 13 of the constitution of the state of California provides the same mode for the assessment of the franchises, roadway, roadbed, rails, and rolling stock of all railroads operated in more than one county, whether such property be owned by railroad or other quasi public corporations or by private corporations or by natural persons, yet section 4 of article 13 of said constitution permits or allows indebtedness secured by mortgage, trust deed, or otherwise, to be deducted from the value of such property only when it is owned by natural persons or corporations not quasi public, and denies such deduction when the property is owned by railroad or other quasi public corporations.'

On July 14, 1886, the attorneys for the parties filed in this and three similar cases the following stipulation in writing:

'It is hereby stipulated that jury trials in the above-entitled actions are hereby waived, and that said causes may be submitted to the court upon the testimony referred to in the stipulation this day made and filed in the case of The People of the State of California v. The Central Pacific Railroad Company, subject to the same terms and conditions. It is hereby further stipulated that special findings of facts in all of the above-entitled actions are waived. It is hereby further stipulated and agreed that the said case of The People of the State of California v. The Central Pacific Railroad Company shall by the losing party be taken to the supreme court of the United States, and that the decision of said court in said case shall be applicable to, and be treated by each party as the decision of said court in, the above-entitled actions, it being the intention and desire of the parties hereto to save the expense of separate writes of error, and that all the above-entitled actions shall abide the final decision of said supreme court of the United States in the said case of The People of the State of California v. The Central Pacific Railroad Company, provided the said decision shall be made upon points involved therein; and, if not so made, then the judgments

On July 15, 1886, the circuit court gave judgment for the defendant in the present case.

In the case of California v. Central Pac. R. Co., referred to in that stipulation, this court did not decide the question now presented, but on April 30, 1888, reversed the judgment of the circuit court on other grounds. 127 U.S. 1, 45, 8 Sup. Ct. Rep. 1073.

On March 6, 1889, the parties, by another stipulation in writing, agreed that the previous judgment of the circuit court in the present case be set aside, and the case submitted to the circuit court upon an agreed statement of facts, 'on which findings shall be made and conclusions of law drawn by the court.'

On September 6, 1889, the circuit court, pursuant to this stipulation, ordered its former judgment to be set aside, and made and filed findings of fact in accordance with the agreed statement.

By these findings of facts it appeared that, before and at the time of the assessment of these taxes, the defendant owed a debt secured by mortgage of its railroad, its franchise, and its rolling stock and appurtenances, to the amount of more than $3,000 a mile; that the state board of equalization valued and assessed the defendant's franchise, roadway, roadbed, rails, and rolling stock, not separately, but together, (and not including any other kind of property,) at their full value, without deducting the value of the mortgage or any part thereof, although knowing of its existence, and did not deem or treat the mortgage as an interest in the property, and assessed the whole value of the property to the defendant as if there had been no mortgage thereon, but made the assessment upon the same basis for valuation as all other property in the state was valued for the purpose of taxation; and that there were at that time divers railroads in the state owned and operated by corporations other than railroad corporations, and by individuals and partnerships.

Upon the facts found, the circuit court concluded, as matter of law, that the defendant was entitled to judgment. Judgment was entered accordingly, and the state of California sued out this writ of error.

The attorney general of the state admitted in his brief, and, when this case was called for argument, stated in open court, the following fact:

'In the year 1893 the defendant offered and tendered to the plaintiff a sum of money equal to the taxes, penalties, interest, and attorney's fee, to recover which this action was brought, and costs of suit, which offer and tender have not been accepted; but the money has been deposited by the defendant in bank, in accordance with the provisions of section 1500 of the Civl Code of California, which reads as follows: 'An obligation for the payment of money is extinguished by a due offer of payment, if the amount is immediately deposited, in the name of the creditor, with some bank of deposit within this state of good repute, and notice thereof is given to the creditor."

W. H. H. Hart, Atty. Gen. Cal., for the People.

Harvey S. Brown, for defendant in error.

Mr. Justice GRAY, after stating the facts in the foregoing language, delivered the opinion of the court. 

Notes

Sec. 10. All property, except as hereinafter in this section provided, shall be assessed in the county, city, city and county, town, township, or district in which it is situated, in the manner prescribed by law. The franchise, roadway, roadbed, rails, and rolling stock of all railroads operated in more than one county in this state shall be assessed by the state board of equalization at their actual value; and the same shall be apportioned to the counties, cities and counties, cities, towns, townships, and districts in which such railroads are located, in proportion to the number of miles of railway laid in such counties, cities and counties, cities, towns, townships, and districts.
United States Supreme Court decisions on taxation Automated categorization