$1236e. Howell's: § 4011, Com 4. Payment of the Tax. The tax is to be paid on or before July 1st annually, to the state treasurer upon piled Laws, 1897. the statement of the auditor-general. 5. Default of Payment. It is provided that the state shall have a lien upon all the property of such persons, companies, etc., for all taxes herein imposed, interest on the same, penalty for delay in payment thereof, "and for all dues which may accrue to the state from said parties," such lien to "take precedence of all demands, judgments, decrees, or other liens of whatever character." "If the taxes above imposed are not paid within the time prescribed, the auditor-general may issue his warrant to the sheriff of any county in the state, commanding him to forthwith 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 such tax, wherever the same may be found in this state, and to pay over the same, reserving his fees, to the state treasurer, within ten days after the same is collected." The sheriff shall not give less than five nor more than ten days' public notice. of the seizure of such property, and of the time and place of sale thereof, by advertisement to be posted up in three public places in the township, city, or village where such sale is to be made, and such sale shall be by public auction, in the township, city, or village where such property is situated. The sheriff shall send a copy of such notice by mail to the corporation or party whose property is to be sold, if he can ascertain the post-office address of such corporation or party." "At the time advertised, the sheriff shall proceed to offer such property for sale. If there be no bidders therefor, or if for other reasons he deem it inexpedient to proceed with such sale, said sheriff may adjourn such sale to such other time, not exceeding thirty days, as he shall determine, when he shall again proceed to offer such property for sale, and shall sell the same to the highest bidder. If the property so distrained can not be sold, or if it be sold but for an amount insufficient to pay the tax and fees, the sheriff shall levy upon other property of such corporation or party, if any can be found within the county, and shall advertise and sell the same, as provided above, and so continue until the warrant is satisfied. If property sufficient can not be found, the sheriff shall return a statement to that effect to the auditorgeneral, who may for so much of the tax as is returned as uncollected, issue another warrant with like effect, to the sheriff of another county, who shall proceed in the same manner as above described.” References should here be made to Act 226, 1889 (§§ 1256a-1256g, Howell's; §§ 4028-4034, C. L., 1897), which act provides for the collection of unpaid specific taxes imposed by any law of this state upon any corporation, copartnership, party, or person." This is a general law applying to all specific taxes so imposed, hence is not given here in detail. A synopsis of it will be found under "The State Specific Tax on Gross Earnings" of railroads, under the heading "Default of Payment" thereunder, above. MINNESOTA. A.-GENERAL CONSIDERATIONS. I. CONSTITUTIONAL LIMITATIONS. The provisions for the taxation of the gross earnings of railroads was all unconstitutional before the adoption in 1871 of the amendment of Section 32a of Article 32a. Art. IV, IV (State ex rel. Marr vs. Stearns, 72 Minn., 200). The amendment reads: "Any law providing for the repeal or amendment of any law or laws, heretofore or hereaf Constitution of ter enacted, which provides that any railroad company now existing in this state, or operating its road therein, or which may be hereafter organized, shall in lieu of all other taxes and assessments upon their real estate, roads, rolling stock, and other personal property, at and during the time and periods therein specified, pay into the treasury of this state a certain percentage therein mentioned of the gross earnings of such railroad companies now existing or hereafter organized, shall, before the same shall take effect and be in force, be submitted to a vote of the people of the state and be adopted and ratified by a majority of the electors of the state voting at the election at which the same shall be submitted to them." Constitution of "Laws shall be passed taxing all moneys, credits, investments in bonds, stocks, 3. Art. IX. joint-stock companies, or otherwise, and also all real and personal property, accord- Minnesota. ing to its true value in money; but public burying-grounds, public schoolhouses, public hospitals, academies, colleges, universities and all seminaries of learning, all churches, church property used for religious purposes, and houses of worship, institutions of purely public charity, public property used exclusively for any public purpose, and personal property to an amount not exceeding in value two hundred dollars for each individual, shall by general laws be exempt from taxation." V II. GENERAL STATEMENT: SYSTEM AND DEVELOPMENT FROM 1890 TO 1900. 66 The system of taxation on gross receipts obtains in Minnesota. Act 111, section. 1, of the special laws of 1873 provided that the St. Paul, Stillwater and Taylor's Falls Railroad Company, in consideration of the annual payment of a percentage of its gross receipts, which percentage increased with time, should have its property, land, stock, etc., forever exempt from all taxation and from all assessments," provided, however, that the lands of such company should be subject to taxation as soon as sold, leased, or contracted to be sold or leased. And the section provided further for returns, etc., by the company. Section 2 of the same act provided that each railroad company owning or operating a line or lines in the state might, by resolution of the board of directors, attested by its secretary and filed with the secretary of state, become subject to the provisions of the act. Act 11, section 1, 1887, however, made such taxation imperative, in that it provided that any railroad company which had not accepted and become subject to sections 1 and 2 of Act 111 of the special laws of 1873, or some special act or acts relating to taxation, of the company accepting the same,' shall become liable to pay and shall pay a percentage of its gross earnings in lieu of all other taxes, in accordance with the provisions of the chapter hereinbefore referred to." The payment of this tax at the beginning of the decade exempts the railroad from taxation on any of its property, but as soon as such lands are sold or leased, or contracted to be sold or leased, or special stock or land stock or other instrument has been issued to any person, etc., intending thereby to secure to such person, etc., a right, title, or interest in such land, then and thereupon the said lands become subject to taxation like other lands. The property of railroad companies is, however, subject to special assessments for improvements, etc., like other property. (See §§ 1126, 1342, 7778, 7799, etc., Statutes of Minnesota, 1894.) Such, then, was the condition of railroad taxation proper at the beginning of the decade. Act 2, April 21, 1891, proposed an amendment to section 3, article 9, of the constitution, providing that there might be levied and collected annually a tax upon the gross earnings in the state of all railroads, sleeping, parlor and drawing-room car companies whose cars run in or into the state and on other companies named, or, in 1 The special acts referred to are acts providing for charters of railroad taxes. The system of taxation always provided for therein is that based on gross earnings, but the rate sometimes differs from that provided for in the general laws. These charters were passed by the territorial legislature, so are not affected by the constitution. § 1669, General Statutes, 1894. lieu of such tax on such companies, or any or either of them, an annual license fee, but providing that no tax upon the gross earnings of any corporation should be construed to prevent the taxation by law, of any real estate owned by the corporation, not used in its business. This proposed amendment was, however, defeated. Act 7, April 14, 1891, provided that taxes on railroad lands lying in Martin, Jackson, and Cottonwood counties purchased by bona fide purchasers prior to January 1, 1891, levied prior thereto, such taxes remaining unpaid, should be cancelled by the state auditor upon application, as prescribed, by the owners of such lands. Act 168, March 19, 1895, provided for the taxation of lands in the state granted by Minnesota or the United States to any railroad company and not held, used, or occupied for the operation and management of the road. Such law, it is stipulated, shall not defeat the gross-earnings tax law, except so far as the same may relate to the tax upon such lands. Act 34. March 5, 1897, provides that all railroad companies in the state to whom lands have been granted by Minnesota or the United States shall file a list of such lands with the state auditor, and that such lists shall be by him certified to the county auditors of the proper counties and by them entered, and assessed as prescribed by law. Act 229, April 15, 1899, provides that foreign corporations leasing or purchasing railroads shall be subject to the tax laws, and must comply with all laws governing foreign corporations. There was no specific provision for the assessment and taxation of sleeping-car and similar car and transportation companies at the beginning of the decade. Act 2, April 21, 1891, proposed an amendment to section 3, article 9, of the constitution, providing that sleeping, parlor, and dining-room car companies, with others, might be subjected to an annual gross-earnings tax or in lieu thereof, an annual license tax. But this amendment was defeated on its submission to the vote of the people. Act 7, April 26, 1895, proposed an amendment to the Constitution of Minnesota authorizing the imposition upon the property of sleeping, drawing-room and parlor-car and other companies and owners, of a tax "as uniform as reasonably may be with the taxes imposed upon similar property in said state, or upon the earnings thereof within this state, but may be graded or progressive, or both," etc. This proposed amendment was submitted to the people, voted upon at the general election of November 3, 1896, and was adopted, the vote being proclaimed by the governor on December 29, 1896. Accordingly, on April 20, 1897, an act was passed, being Act 159 of that year, providing that sleeping, drawing-room and parlor-car companies should pay an annual tax of three per cent on the gross receipts for fares between points within the state. Act 160, April 20, 1897, provided that freight-line and equip ment companies should pay a tax of two per cent on the proportionate valuation of stock used in the state, as assessed by the State Board of Equalization. B.—THE RAILROAD TAXES. I. THE TAX ON GROSS EARNINGS. 1. Nature and Application. All railroad companies owning or operating lines in the state are required to pay an annual tax to the state on their gross earnings. The process by which this tax developed from a tax imposed on the St. Paul, Stillwater and Taylor's Falls Railroad Company in lieu of other taxes, and on other railroad companies that might elect to be so taxed, to a tax imposed alike on all companies not accepting some special act, has been traced in the "General Statement," above. The provision which made this tax arbitrary read: "Any railroad company, owning or operating, or which may Statutes, 1894. hereafter own or operate, any line or lines of railroad in this state, which bas not accepted and become subject to sections one and two of chapter one hundred and eleven of the special laws of eighteen hundred and seventy-three, relative to taxation, or some special act or acts relating to taxation, of the company accepting the same, shall become liable to pay, and shall pay, a percentage of its gross earnings, in lieu of all other taxes, in accordance with the provisions of the chapter hereinbefore referred to." The rate of the tax is graduated according to the number of years during which it has been paid. It is declared that it "shall be and is in full of all 1667, General other taxation and assessment whatever," provided that the lands of the company shall be subject to taxation as soon as sold, leased, or contracted to be sold or leased.' Act 168, 1895, provides that lands granted to railroad companies by the state or territory of Minnesota or by the United States, unless used in the operation or management of such roads, "shall be assessed and taxed as other lands are taxed in this state." This act is construed so as not to affect the payment of the gross-earnings tax or repeal it in any way, except in so far as the same may relate to the tax upon said lands. Act 168, March 19, 1895. 2. Assessment. The assessment, if it may be so termed, merely consists in obtaining an accurate Ibid. report of the gross earnings. Section 1 of Act 111, 1873, relating primarily to the St. Paul, Stillwater & Taylor's Falls Railroad Company, and, by reference, afterwards made to relate to railroad companies generally, provided that an account of such earnings should be kept and an abstract thereof furnished by the company to the treasurer of state, on or before the 1st of February annually, duly verified by the affidavits of the treasurer and secretary of the company. And it is provided that the governor or other person authorized by law may examine for fraud or mistake in such reports, and thereto may examine the officers of the company and others under oath. Testifying falsely in such cases is perjury. Also, a report of the gross earnings must be made on or before February 1st $1678 ibid. annually, or, if the road pays semiannually, on or before January 20th and July 20th. This report must be made to the State Railroad Commissioner. In case the railroad company fails to make the report of its gross earnings as required, the Railroad Commissioner must notify the treasurer or accounting officer of the railroad of the default. If the default continues thirty days after the service of such notice, the company is subject to a penalty equal to twenty-five per cent of the tax imposed upon the company. And in case of such failure it is provided that the state treasurer shall fix the amount of the gross earnings, together with the penalty, on such evidence as he can obtain without expense to the state. And he is to make an entry of the tax and penalty, so determined, in the books of his office, which entry stands as the report of the company and is conclusive evidence. It constitutes a full warrant for collection by sale or otherwise 3. Determination of the Tax. The statute itself prescribes the rate of the tax, and, the gross earnings having been ascertained, all that is necessary is a simple computation. § 1676, ibid. 1 This exception in the gross-earnings statute includes all property used by the railroad, but does not include property incidentally owned by the company, such as land purchased and used for the purpose of cutting ties for the road (County of Todd vs. St. P., M. & M. Ry. Co., 38 Minn., 163), nor a hotel owned and operated by the railroad company (Hennepin Co. vs. St. P., M. & M. Ry. Co., 42 Minn., 238; 44 N. W., 63), nor the wharf that the railroad had leased to a coal company (St. Louis Co. vs. St. P. & D. D. R. R. Co., 45 Minn., 510; 48 N. W., 334). "The exemption extends only to such property as may fairly be said to be held and presently used for railroad purposes; and property not so used, although held with the purpose at some future time of devoting it to such use, is not within the exemption" (St. Paul vs. St. P., M. & M. Ry. Co., 39 Minn., 112). § 1679, General Statutes, 1894. § 1667, ibid. § 1668, ibid. §§ 1667, 1668, 1676, ibid. § 1674, ibid. § 1667, ibid. § 1673, ibid. § 1667, ibid. § 1644, ibi l. § 1645, ibid. The state Railroad Commissioner must certify the return of the railroad company sent him, to the state auditor, together with the per centum and amount of tax due thereon. The state auditor must then make a draft on the railroad company for the amount due and must put the same in the hands of the state treasurer for collection. It is provided that the St. Paul, Stillwater and Taylor's Falls Railroad Company must pay during the first three years after January 1, 1872, one per cent annually on its gross earnings; during the seven years next succeeding, two per cent; and after the expiration of ten years from the above date, three per cent. Other railroads are subject to the same graduation, the payment to commence "from and after the first day of March next after the completion of thirty miles of such line hereafter built, or of the entire line if the same shall be less than thirty miles in length." 4. Payment of the Tax. The tax is payable to the treasurer of state on or before March 1st annually, provided that the company may elect to pay semiannually on February 1st and August 1st. 5. Default of Payment. If the tax is not paid when due, the company is liable to pay an additional sum of five per centum, by way of a penalty. To secure the payment of the tax the state has a paramount lien on all property, real, personal, or mixed belonging to the road. In order to enforce the payment of the tax it is provided that goods, chattels, and other movable property, if found in the state, may be distrained at any time subsequent to March 1st annually, when such tax is due. By this act the state treasurer or his deputy has power to move the same, when distrained, over any road of the state for purposes of sale, and may seize any side track, engine houses, roundhouses, depots, or warehouses, or buildings of the company in default to keep the property seized therein, and may retain possession of the same as long as in the opinion of the treasurer may be necessary for the collection of the tax. Any person interfering with such seizure is guilty of a misdemeanor, and is subject to be imprisoned in the state prison for not less than one year. 6. Remedies. There are no specific provisions for remedies. Such as may be available are provided for by the general laws only. II. THE GENERAL TAXES ON REAL ESTATE. 1. Nature and Application. Under Act 111, 1873, and under its provisions as subsequently extended to railroads generally, it was expressly stipulated that the lands of a railroad company should be subject to taxation "as soon as sold, leased, or contracted to be sold or leased," otherwise not, if the company paid the gross-receipts tax. Act 128, section 1, 1887, provides that such land when so sold, leased, or contracted to be sold or leased, "shall become and be taxable, and shall be assessed and taxed as other real property in this state." Section 2 of the same act provides that whenever any special stock or land stock, or any other writing or instrument whatever, is or has been issued by any railroad company to any person or persons, with a view or intention to thereby grant or transfer or secure to the person to 66 Act 150, 1901, provided that the question of changing the gross earnings tax from three to four per cent should be submitted to the people at the next general election following. |