Omaha Daily Bee Newspaper, July 15, 1902, Page 7

THE OMAHA DAILY BEE: TUESDAY, JULY 15, RAILROAD TAXATION IN COURT Arguments of Counsel on the Issues Raised in the Mandamus Case Before Nebraska Supreme Courte«rar v. Argument by E. W. Stmeral for the re- lators It your honors please, in presenting to the court the argument, so far as I am concerned, 1 desire briefly to go over some of the salient points in the testimony and 1 will also present what the relators be- lleve to be the law governing this case. In the first place, I might say that when the brief of the relators was in the hands of the printer, or at least part of it, and almost all of it had been written, we were met by the second answer of the respondents, which they say changes ma- terially the fssues of fact to be determined o this o The only question, which was one of law, as the case originally stood, was whether or not under section 39 and 40 of the revenue law the words allroad property” included everything pertaining to or belonging to a rallroad, be that property physical, tangible, intangible, corporate stocks,” bonds or franchises. Theretore, we devoted our attention so far s the law was concerned to showing that under sections 30 and 40 it was the duty of the board to value the rallroad property as a unit—to value it in all of its factors, taking into consideration not alone the physical property, but also the in- tangible property and the franchise. That a rallroad must be ta a unit is virtually conceded by the briefs of coun- sel for the respondents. They now raise, and I belleve it s a question of law, the question whether or mot the franchise can be taxed separate and apart from the tangible property. As I sald in our first briet and in the answer, the question was whether or not under our law railroad property incitided the franchise. It now comes down to the question whether or not the franchise is such & plece of prop- erty pertaining to the rallroad that if it is omitted the court will require the board to reconvene and assess it. T care not what counsel may call this in- tangible property—this franchise. By some decisions it e called intangible property— & tax upon intangible property. In others it 1s designated & tax upon the fran- chise. 8o that now we propose to show by the authorities that it is the duty of the| board to uesess the franchise as such. In their second answer to this writ respon- dents say that all the property was assessed by the board as a unit—as a going concern but we find by the testimony of Mr. Wes- ton, the auditor, that they did not consider the franchise at all. We claim that a fran- chise s as much a separate and distinct plece of property, is as much of an entity, although intangible, as would be the depots and terminal facilities, and had this board 1o its mession in May last eliminated en- tirely all the terminal factlities of these rallroads, all the property that they owned in Douglas county, and we had shown it to be worth millions of dollars, undoubtedly the court would have ordered them to re- convene and assess that property. So here today we say that they have omitted the most valuable portion of this railroad prop- erty throughout this state, that by failing to assess the franchise they have omitted the Iife of the raircad, its very existence, #ts very power, and they should therefore be o.dered to reconvene and assess that property called a tranchise. Our constitution provides in so many words that the property and franchises of corporations thall be assessed. Another _ provielon of the constitution, and in the 4/ Bamo. aptiole, - provides that no property thall be exempt from taxation; therefore franchises must be aseessed. As to whether or not a franchise is a separate and distinct plece of property which is assess- able I shall first refer to the case of the Bouthern Rallroad company In Kentucky mgainst Gust G. Coulter, decided June 10 of this year. T do not suppose it has been reported in the Southwestern Reporter, but 1 sent to the clerk of the court of appeals of Kentucky and have here a manuscript copy of the opinion. I might say before read'ng from this opinion that in Kentucky they have two separate boards, one of the boards nesessing the physical or tangible property of the raliroads and other corpor- tions and the other, which meets the: after, aseesses the franchises of these vari- ous rallroads, deducting from - the total value of the roads the amount of the ai wessment made by the previous board, thereby getting at the value of the fran- chise. This opinion was delivered by Chiet Justice Gufty and this decision was based upon taxes which had been eased for four years back, from 1896 to 1000, so that the board of a ors in that state went back and assessed the rallroads for that which they had not been assessed for previous years. When the rallroads said, “Why, you bave no business to years,” their answer ‘was, the value of the money and got interest on it and new you have to pay the taxes.” If the board here should do that I think the ate debt might be pald offt. Among other things this court says: There 1s some evidence introduced by ap- peliants (that s the rairond companie ttempting to show that they did not take into consideration the value of the fran- chise, but we are not Inclined to the op! fon that the testimony suficiently shows that the commissioners did in fact fix any e: arger value upon th: LJ‘nat thought of the How applicable that is to this case and the testimony of Mr. Weston. Some comment has been made in regard to the spportionment of the tax in propar- tion to the length of the road or line in the county. However, it s fest that t intention of the legislature was that th! tax should be certified to the subdivision in proportion to the mileage without any [eeard to any other question, and such rule manifestly equitable, for, while it is true that the tangible property 'of the rallroads differ in estimates, yet the franchise does pot. For instance, take the tangible prop- erty of the road in Franklin,a distance of n miles of the track toward Loulsville, the total value of the tangible property would be worth much more than the ten [olles of the tangible property further on. ut the franchise of the last named ten miles is worth as much as the franchise of the first named ten miles, because the whole of the track is necessary to make franchise of any appreciable value it follows that the manner of certi- fying the v of the franchise as re- auired by the statute ls just and reason- able. 1 refer to that for the purpose of show- 1og that after that decislon they assessed the franchise as something separate and mpart from the tangible property. But that I8 not the only decision upon the question. I might cite a great many, but I have taken but one or two more. I mow refer o the case of Porter against Rock Island & Bt. Louls Ratiroad Company, 76 11, 863, whose syllabus covers the whole question a corporation is property | and as such s llable to taxation as well as | the capital stock and tangible property o the corporation. The franchise may also bo condemned for public use under the| right of eminent domain upon due com- gensation belng made. The fact that it is | iMicult to fix & true value upon a fran- chise furnishes no objection to the right of the state to tax it, &s no other specles of Jroperty can escape taxation on account of he difficulty of ascertaining its valie. Ab- solute acouracy in the assessment of prop- erty is not essential to the valldity of taxes based upon it Then the supreme court of the United States, in the case of the Central Pacific Raliroad Company against The People of the Stata of Californla, cited in 16 Sup Court Reporter—I read from page 779. This was & case in which the state of California through its board of assessors had assessed the franchise of the Southern Pacific Rail- being & government railroad, chartered by the general government, the franchise was that of the United States government and therefore could not be assessed by the state, but the state had also granted rights through their general laws to the Southern Pacific Rallroad company, and the supreme court held that it was the state franchise which was belng assessed and not the ted- eral franchise. This opinion was handed down by Chief Justice Fuller. I read a few sentences: * The question here 1s not a question of the value of the state franchise, but whether that franchise existed, for if, in 1887, plaintiff in error possessed any sub- sisting rights or privileges, otherwise called franchises, derived from ' the state then they were taxable, and the extent of thelr valile was to be determined by the board of_equalization S0 from that decision and from many others 1 might cite to your honors, I be- lleve It to be a trulsm that a franchise is to be mssessed as property, as much as the ties or the locomotives or the terminal facilities of the rallroad. Amother rule of law, and constitutional law, too, which per- tains to the taxing not omly of railroad property but of all other property, Is that it must be equal and uniform and that equality must extend to every part and every division of the state; it must be equal as to its valuation and uniform as to the amount of tax placed upon it. If two per- sons own a thousand dollars worth of prop- erty each and one is taxed at one-seventh and the other at one-tenth, that {s mnot equality and uniformity. They must both be taxed the same and for the same value of property. It has been clalmed by the briets and will undoubtedly be urged tn argument by counsel, that all they are asking and all that they are seeking is absolute uniformity in taxation so far ae the rallroads are concerned, with other property \n the state, of equal value. Now, there is a great difference between the manner of obtaining these values look- ing at It as a whole or as a unit. Here is the assessment in this state of $320,000,000 or $325,000,000 worth of raliroad propert It is not all scattered over the state in pleces, separate and distinct, as are the farms, the horses or tho cattle. It is not owned by the million of people within the commonwealth, but it is owned by a few companies, corporations held together by |the same powers—created for the very same purposes—and that 1s what makes up the large amount of value and that is what we were asking this board to assess—this tranchise—this homogeneous property, not the property scattered, as that of indl- viduale. And when they seek to say that they want taxes uniform and equitable, then we say, “What other property in this commonwealth can you liken to yours?' There is and I presume there always will be a great disagreement with regard to the manner of arriving at valuations. No tax, I presume, that the human mind can concelve of will be absolutely equitable. It cannot be to individuals. It cannot be to corporations. All we ask is that they bear thelr just proportion of the burdens of government. No more and no less. They claim, I belleve, that they pay 15.40 per cent of the taxes of this state. Grant, for the sake of argument, that that be true, and yet, if they have 25 per cent or on: fourth of the property in this state, con- stituted as it is of a homogeneous m ought they not to pay accordingly? It 18 asserted by these respondents that the board assessed the value of the fra; chise this year. I belleve I am ‘within the bounds of truth when I say that never be- fore in the history of the state of Ne- braska has this question of franchises ever been brought up before the State Board of Equalization. It was an original ques- tion, so far as this board concerned, and yot what do we find? Their whole excuse 1s, “Why, the other boards did nof Adam, they say, “Oh, Eve gave me apple and I did eat.'” They assessed the properties at the very same figures Almost that were assessed ten or twelve years ago. If anything, they have lowered the valuation of the railroad property per mile. T will call your honors attention to one thing in this book—in 1874 the Omaha & Southwestern Rallroad company was as- sessed $9,690 per mile. Here is a plece of property 47.05 miles long that was sessod eighteen years ago at $9690 a mile, and curing those years was their property worth A8 much as {t is today? Has there be Do increase in the population of this lh!:nP Has there been no increase in the valuation of that property since then? Has there been no increase in the terminal facllities of that property since then? Why, at that time what did they have? What kind of depots did they have. The; had a shed that they felt themselves Was & disgrace and they kept it up until 1898, Then they put in a bullding, and from that day to this the property of this Omaha & Southwestern Rallroad company has been assessed at $6,600, and for years back thelr property l::-m::lfll;y increased in value and the as- a8 as st o e steadily decreased. That The gentlemen may 18 it you want to assese? tranchise 1" “Why, what ol e wlh&l is this now as & franchise. I belleve T will laave 1y e the gentlemen who have studled that mat. ter more carefully, but I know what a franchise does, 80 far as these railronds are concerned. The owners of these roads way *It in their offices in Wall strect and they can {ssue bonds for millions of dollars, and then they travel through this commonwealtn and see the clties and towns and villages and farm properties, and they say, “Why, this 1s & £00d business community out here: to 18 wealthy and we have got to tarift that will pay interest on our s That s how a franchi: operates. . ave to have such a tariff as will pay vidends upon our st¥ocks. We will lay 1t, Dot for one year, to pay off these bonds and these dividen but for gemerations yet to come."” That s a franchise, and they lay & mortgage and llen upon every single thing that comes fnto this state and that goes out of it—the bat that you wear, the shoes upon your feet, everything you eat or dripk, everything that is created in this state s mortgaged to pay these divi- dends and this interest. These respondents say and their attorneys will claim that they have assossed these franchises. turther show £ the csugt 1hne Lohpndents :::g(u‘;:dhr.r:? losewater, l’e[‘reb(‘nl.ng lh: and ‘Tequested "hhd" demanded " iberohld d s such board to assess the {ranchises of the ' corporations ‘mentioned t of the relator: 5y and still have, doubts ‘witeinar iy Hid; the Jegal authority under the the Statute referred ‘fo, to value and: o sess the franchises of sald corporations and for the reason that said board had such doubis of its jurisdiction and powers it declined to comply with the said 1onuest and demand of relator's representative. That was their first answer. That has been introduced in evidence. In their sec- ond answer they say: Respondents further answering ss aver that on the I4th day of May Jeot the relator, by Edward Rosewa its president, made demand on the respond- ents while sitting ns such board that the l.fld boas ess, In addition to the tangi- ble property of said raliroad, telegraph and {leeping car companies which had aiready een assessed. the franchises of id cor- poratic which the relators. acting as rd. refused to do, for the reason - under the statute ercating sald board and ‘des) ea med;fln. Its powers, 1t doubted its right road gompany. The company claimed that, They say that tbhey bad siready sssessed | value these franchises. Now, your honors the tangible property on the 14th of May. NoWw the respondents, in their last answer, say. Respondents further represent that the t mentioned in the foregoing para- s are the matters and things which respondents took into consideration in arriving at the value of the property of the sald rallway, telegraph, sleeping and dining car compnies for the purpose of taxatlon: that eaid respondents did not be- lieve that under the law defining the pow- ers and duties of the respondent board it had authority to value and assess the cor- porate franchises of sald companles sepa- rately and apart from their tangible prop- erty, and here submit the facts that were actually taken into consideration by said board in the performance of its said duty Now, they assert by this second anewer, filed under very pecullar clrcumstances to say the least, that they doubted their power to aseess the franchises separate and apart from the other property, and it will be as- serted here that this first answer was a mere conclusion. Why len't it just as much a conclusion to say that they did not as sess the franchize? So I say that so far a the second answer is concerned it does not Im in s0 many words, in a straight-for- ward manner, that they did aseess the fran- chises. It leaves it for inference. And It T understand the rules of law with refer- ence to a return to a writ of mandamus it is that nothing must be left to inference; it must be positive—it must state exactly what they did or what thy did not do—and it anything is left to inference the presump- tion will be against them. We have said, your honors, that fraud is not only alleged but proven in this case. 1 care not whether you call it actual fraud or whether you call it a legal traud. . Cer- tainly the ignorance, the Egyptian dark- ness displayed by the respondents when they were upon the stand as to the value of raliroad property entitles these relators to believe that it was at least legal fraud. They did not know how to arrive at the value of any rallroad property. They sald | the court will interpose,” cording to the contention of counsel for ri spondent, would make the net total a sessed cash value of the capital stock and franchise of said thirteen omitted compa- nies of sald Chicago Consolidated Traction company and Chicago Union Traction com- pany aggregaté the sum of $700,00, while the uncontradicted evidence esta o8 be- yond a doubt that the cash value of the capital stock of the Chicago Consolidated Traction company and Chicago Union Traction company, together with the bonded indebtedne: to be deducted there- from, the assessed value of thelr tangible roperty alone exceeds that amount by a arge sum. It therefore clearly appears that the capital stock and franchises of id thirteen omitted companies, as a mat. r of fact, were not valued and assessed by the State Board of Equaligation of the sald several corporations, nor were the same included In the assessment of sald traction companies, but that the same were wholly omitted from the assessment of 1900, We have repeatediy held that an assess. ment may be impeached on the ground that property has been fraudulently as- sessed at too high a rate. In Hall against Licber, 83 1ll., we say: “Where the valua- tlon 18 so grossly out of the way as to show that the assessor could not have been honest in his valuation and must reasonably have known that it was ex- cessive, 18 accepted as evidence of a fraud upon his part as against the taxpayer and And in Raliroad Company agalnst Cole, 5 Til.: “‘Valuations must be the result of honest judgment and not of mere will The converse of the proposition must be true and that an as- sessment may be Impeached where the assessment has been fraudulently made at too low a rate.” 1 come now to Mr. Baldwin's brief. Mr. Baldwin, in one part of his brief, seems to be much afraid the Unlon Pacific railroad is not a monopoly, because he says that under the laws of this state a franchise may be granted balt a dozen persons to bulld a rallroad. Well, when the Union Pacific ceases to be a monopoly I do mot believe anyone within the sound of my volce will care very much. Mr. Baldwin takes up from page 15 to page 22 of his brief the argument that section 32 of the upon the stand in reference to the manner | in arriving at values that they couldn’t tell —din’t know anything about it. It was an exhibition for the gods. Call it fraud or| call it ignorance, I care not which. Call it/ a mistake if you please’ certainly it was re- | markable {gnorance and sométhing which | this court should correct and tell them how | to go to work to arrive at the value of this, property. Another evidence of fraud—it might be but little, but, nevertheless, I think it tends in the same direction—is the fact that they refused to make any record at all when requested to say whether or not they would must remember, as I sald before, that this board was the first one which ever had the question ralsed before it. They could not be in ignorance. They knew very well that there was a value connected with this property. And right here let me call the court’s attention to some of the docu- ments that were flled before them, and those which Mr. Weston had locked up In his safe. Here is the argument made by the Union Pacific tax shirkers. He shows that the total value of this property—and mind you he only takes the physical prop- erty alone, the right of way, etc—that the total value of the railroad property property throughout its entire length and breadth s $30,858,000.57. That is the value of this great Uamlon Pacific raflway, this transcontinental railway, for taxation pur- poses, though for tariff purposes, I pre- revenue act does not apply to the State Board of Equalization. Now, we never sald it did; we do not think it does apply, but we do say that under the law you have to assess all railroad property, that the only way they could value that railroad | was to take into consideration bonds and stocks, as provided by section 82. That Is the guide, that is the polar star. It may not be incorporated into those sections pro- viding for the board, but the words “rall- road property” include and suppose that when assessing that rallroad property they will take into consideration stocks and bonds, because no other way is known to the law to arrive at a just valuation of the raliroad without so doing. But the argument of counsel goés too far. It is a self-evident fact if they did not take into consideration the provisions of section 82 in valulng this railroad property that they had no data before them from which to arrive at a just valuation thereof. But Mr. Baldwin, on page 32, gives us something. Mind you, he has clalmed all the time that you cannot value the franchise separate and apart from the balance of the road— in the unlon under the domination of the raliroads, I presume that state would be Montana, and yet how does the board assess it there? GREAT NORTHERN. Franchises . Rotdway . Road) 4o Ralls . e Rolling stock sume it is inoreased considerably. And he gives here a list, to which he makes this note: ‘“Note—that this testimony was introduced for the purpose of maintaining rates and not for taxation purpos When Attorney General Smyth was taking some testimony, this was the value of thelr tangible property, and that is their argument right straight through, on which they appealed to this board to assess only the tangible property. And if anything was needed in confirmation of that fact we have only to turn to the argument the Burlington & Missour! River Rallroad com- pany made through Mr. Pollard, its tax agent, which I will take the liberty of read- ing B. & M., $16364%02, gro ex- penses, twelve millio; l‘:nd . Net earnings for the year ending June %, 11, $4,322.864.41; earnings per mile, gross, 34.306; net earnings per mile, 31137, Chicago, Burlington & Quincy, Missouri lines (I pre: sumeé that embraces all your lines), 657,000 gross earnings; 323,026,000 operating expenses, $11,661,000 net earnings for the year ending June 30, 1%1. Earnings per gross, $,422; earnigs per mile, net, X le, 80 that our lines east of t issouri i our franchises s more valuable than those west of the river, as they earn net nearly three times as much. I understand that the recelpts of Chicago station alone are nearly §1,000,00 per month, over twelve times ag much as any station on the B. & M. They have 15 miles of main and side track In Cook county, Illi- nois. 1 am sure I am safe in saying that they are worth five times as muc t number of miles of main and side track west of the Missouri river, either from an earning standpoint or cost of reproduction. The fact that we have double tracks prac- tlcally across Iilinols and Iowa must not be iost sight of. The bonded debt on June 3), 1901, on the whole Chicago, Burlington &' Quincy $183,264,464; capital stock, $110, mile.’ The net earnings east of the river are nearly three times as much as those west of the river. If it were not for the lines east of the river it is very doubtful if the lines west of the river could have any more than pald their proportion of in- terest on the bonded indebtedness of 316,400 per mile, and consequently the capital stock of the lines west of the river would ave been valueless. How, for instance would Thinols like to have 'its mileage that state valued at the same flgure per mile s _our line from Holdrege to Chey- enne? Would that be fair and equitable? The fact is that we have to return to the state of Illnols, Towa, etc., the property | we have there, and these bonds and stocks are issued largely on the value of the prop- erty we own east of the Missouri river, and not on our lines west of the Missouri river, which were more cheaply built and have a leas earning capacity. If, therefore, we are assessed on a stock and bond basis here in Nebraska, the most valuable part of our road has already been assessed in the states east of the Missourl based on what we have there, I*n't it second or double | assessment and consequently fliegal and | vold. It is not as if all our property was in one state, such as the Denver & Rio Grande in Colorado, or In one county, rch as the Street Rallway company in Omaha. | R.D. PC ARD, Tax Ag: Now, that is their statement. Here are | also eome figures from the Union Siock Yards as to hogs and cattle and horses, which ehow the value for taxation and how | much they sold for and I suppose we will hear a great deal about that. Mr. Kelby—Are those papers filed? Mr. Simeral—Yes, & Mr, Kelby—Introduced by Mr. Simeral—Yes, sir. assessment per mile in $4.660 per mile for essesement tevied by about that oa 5,704 the relator? | Now, what is the this state? About | these rallroads. The this board amounts to miles, 1 belleve, and something over 1,000 miles of sidetrack and various other things. That is what is taxed | at 34,800 and & little over per mile. Isn't| that undervaluation® And in any way that | you could figure on the value of the rallroad | property In this state, taking it as an ag- gregate, you cannot make it less than $300,- 000,000 to $325,000,000 worth of property. Now, what does the supreme court of Ili- nols say upon this question of undervalua- tion as an evidence of fraud? I shall read but just ome paragraph from this decision | ~—a case I presume your honors are thor- oughly familiar with—the Goggins case: That in the asscssment of the capital stock and franchise of the Consclidated Traction company over and above its tangi- ble property as assessed by the local as- sessors was fixed by the state board at compahy was Lxed at $000.000, which, ac- Making the total ' valuation, the franchise, which you wee Is separatuly valued there, of $5,432: Oregon Short Lime company, which i a part, I presume, of the lines controlled by the Unlon Pacific. There the bare franchise 1s valued at $162.50 and he goes on and shows the valuation of the other elements and, according to Mr. Baldwin's brief in Montana, ths Oregon Short Line is valued at $6,662 per mile and the Unlon Pacific raliroad here in Nebraska is valued at $6,572 per mile. But another item in Mr. Baldwin's brief which I think, to say the least, is vory puzzling to me, or peghaps I hould say it is astonishing, is this, on page 36, headed: _The correct statement is as follows: nion Pacific Raflroad company, Oregon Short Line Rallroad company, Oregon Rall- road and Navigation compai That all of the stocks and bonds issued for those three systems on June 30, 1901, was: Total bonds issued, $331,279,800; total stocks issued, $268,999,000; total bonds and stocks, $506,278,800. Then comes in the as- tonishing part. Mr. Baldwin takes out the bonded debt entirely. You eliminate it en- tirely there, wholly, Mr, Baldwin. And you knock out about & million dollars worth ot stock because you say, “Less securities owned by the three companies, $333,631,- 260.37.” You haven't stopped taking out then. Why, sir, If you go on taking out, you will have your road a “cadaver’-— “moonlight on a shovel." You haven't done yet. Then you take out land assets, $5,353,363.95; water line properties (esti- mated), $3,000,000. Now comes the mile- age. With the Union Pacific and the Ore- gon Short Line and the Oregon Rallway and Navigation company all united the rail- road mileage amounts to 5,670.88 miles and the entire bonds and stocks covering them, according to Mr. Baldwin's figur $264,207,186.68; for bonds and stock mile, $45,674. Now, where does h He ge out of the Union Pacific reports. He those before the board. He takes the total amount of the bonds and stocks of these three railroad companies that are outstand- ing ot $695,000,000. Then he takes out what? He takes out all the stocks and bonds owned by the rallway companies, owned by the Unlon Pacific Railroad com- pany and the Oregon Short Line and the Oregon Rallway and Navigation company —he takes out the total owned by the thre companies, amounting to $332,631,260.37. That is exactly the amount that you bave in your brief and which you sent before the board by this little plece of testimony. Ha forgets all about the fact that tbese are mostly aseets; he charges them up as lla- bllities. He says, “We are poor,” and he charges up the stocks and bouds as Mabili- ties instead of as assets. Yet I find they have 124 locomotives, which cost $1,914,000, or $15,000 aplece. Are they assessed at any- thing near that rate? 1 don't know where it 1s. So that when we get into Mr. Bald- wn's brief and also the annual statement of the road and knowing that they put this testimony before the board prior to the valuation, we see how the Union Pacific Railroad company, bond: and stocks and everything of that kin Why, the value as shown by the market r poris Is $131,000 & mile. The most conserva- tive estimate that can possibly be placed upon It is $100,000 & mile, yet they say it 1 can fully appre- | elate thet for taxes it is worth $45,000 when it comes to the question of imposing & teriff upon the pro- is worth only $45,000. ycu esk them, but when ducers in this state it is worth a great deal | more than $45,000 a mile. Then they have to make {nterest upon their bonds and divi- dends upon thelr stocks and these men sit- | ting in the money centers of this country do | not ask how they do it or why they do it, They say to the managers of the roads here in this coun- try the same as the managers of the East but just simply say, “Do it Indla company sald to Warren Hastings: Get your money and get it any way. want ‘dividends.” We want dividends nothing else will satisfy us. 1902 Speclal Exoursion leaves Om it cannot be done—but If there is a state g o including Then comes the they misrepresent the value of their road, $45,000 & mile for We and We must have 8100000, while that of the Union Traction | dividends upon our stock. ¥t don't make any difference bow many people may be Bmlingmh‘ | Route | itk Write for folder = FREE. J. FRANCIS, Gen'l Pass, Agent, OMAHA. Tuesday, Aug. 6, —_—_—n—— e crushed to earth by have divider.ds. And therefore I say that for dividend purposes the Union Pacific railroad is worth at the very lowest and most conser- vative estimate $100,000 a mile, but for taxation purposes it is worth, according to them, only $45,000. Let us now take up the B. & M. brief of General Manderson or Mr. Kelby. By thein united efforts they have produced some yes markable results. In the first place, on page 4—I will read this for the benefit of Mr. Kelby as well as the court—and fix the 1ight of the testimony given by Mr. Weston yesterday: Correlated to or supplementing sections 3 and 40 are other provisions of the law and constitution, one of the apparent ob- jects of which s to afford the board a means by which to obtain and utilize ‘‘re- liable information” relative to raiiroads as a basis for admeasuring values. These pro- visions are recited in full in relator's brief, for which reason It is unnecessary to copy them here. We have said that one of the apparent objects of these provisions ls to ard with information to en- able it to make a proper and just deter. mination of the value of rallroad proper- ties. But whether this was the purpose or not is f{mmaterial, If the railroads com- lied with these provisions this intorma- lon was accessible to the board. That the rallroads did return to and flle with the auditor information of the character pre- scribed by these provisions is not and can- not be questioned. The writers know that a printed copy of the annual report of the Chicago, Burlington & Quincy Railroad company for 1901 was, prior to the meetin 57 the board, flled with the auditor and r ns & pert of the public records of the state. Here 1s a report filed before this board on the 234 day of May, 1902. And yet they made the assessment on the 16th. They did not have this at all at the time they made the assessment. That is the first point that ve to make with regard to General Manderson's brief. I have already referred to that statement of Mr. Pollard of the Chicago, Burlington & Quinoy. Now on page 8 of General Manderson's brief he says: It were idle to claim, and we do not claim, that the assessment fixed by the board represents tha actual value of the raliroad property. What we do claim is that the assessment of railroad property Is far In excess of the average ratio of as- sessment to actual or cash value and that the average ratio of assessment in Ne- braska of actual value does not exceed 10 er cent, In other words, property of all Rifas “other than railroad’ property within the state of Nebraska is and always has been, as we propose to show herein, as- sessed at less than one-tenth of its actual or true value. Where he gets that I don't know. Prob- ably though he obtalns it from the cemsus report. Well, if I remember right, the census report showed that Omaha had 140,- 000 in 1890, but we did mot. That is all there is to it. They were not there—count- ing dead men and everything else, they were not there—and the report for 1900 shows it. So when they begin to talk about census reports, they must remember that when & census enumerator goes to one for the purpose of obtaining the value of his property, he is not golng to report on less than he ha It is & very different proposition, the cen- sus proposition, to values, than that of the return of the assessors, and it ls the retutns of the assessors that we must look to. And what do they show with regard to Nebraska? The auditor testified that he had returns from the county clerks of this entire state which showed that the assesed valuation all over this etate was from one-fifth to one-sixth of the cash value of the property, or from 16 2-3 per cent to 20 per cent. We have alleged in our writ that the property of other property owners in this state w asscesed at 20 { per cent of its actual value. The consti- | tution and the laws of this state provide | thay property shall be assessed at its true | cash value and this court cannot presume that all the assessors throughout the entire | state have failed to do their duty, where | there is nothing before this court directly showing that they have failed. We are here to impeach the action of this board of assessors with regard to raflread property and they come in snd say “Why here are all the assessors of all this stato that we propose to impeach.” By what? By the census report; by the sales that have taken place of propefty through- out the s What were the sales that these gentlemen were looking for. Who compiled these sales? Why, we know that they were complled by the railroads. The raliroads were not there for the purpose of showing that the sales were very much below; they waoted to put the eales s high as possible and, of course, to put the taxes down as low as possible. So, when the counsel make am argument that this exhibit here was before the board, showing & great number of sales in & number of counties throughout the state and that land was assessed there for §5 an acre and sold for $50 an acre, you must Te- member it comes from the rallroads. But here we have something that the board bad to obtaln and we have bere the statements of the improved lands and unimproved lands for the counties through- out the state, as to the value of assessments the sors agreed upon in their meeting In March, and what s 1t? As I said, it is between one-sixth and one-fth. That ls what it shows. But what has been the assessed valuation of the rallroads? From one-tenth to one-fifteenth General Manderson in bis brief has com- mented upon the funded debt of the C., B. & Q. rallroad. Let us see what that is so doing, we must He places the funded debt as $147,000,000 and the capital stock at $212,000,000, figured at 192 per cent. Now the Great Northern & Northern Pacific took over all the stock of the C., B, & Q. and it is now out of the market entirely. You do not find it quoted. Here is the report made to the directors. Here s the report made to the directors of the Northern Pacific Tor «the year 1001 on this question. It saye: Purchase of Burlington stock: The Great Rorthern Rallway company and the North- ern Pacific Rallway company have jolntly purchased 1,075,772 shares, or $107,577,300 of the capital stock of the Chicago, Burll ton & Quincy Rallroad company, being er cent of the total authorized issue, and n payment for same have issued their joint collateral trust bonds and secured 10 the amount of 315,164,400, Further bonds of the same series up to a total of $222,400, may be issued for acquiring the residué of the stock. The bonds are dated and draw interest from July 1, 1901, and mature July 1, 1821. and may redeemed on the first day of January or July after JARUATY 1, 1906, at 106 per cent, witn accrued inter- est, and draw interest at the rate of 4 per cent per annum, payable January 1 and July 1 of each year on coupon bonds, etc The shares of the Chicago, Burlington & Quincy stock thus acquired have been de- posited with the Standard Trust company of New York as trustees under collateral trust, under trust indenture, to secure the above bonds. A contract has been entered into between fhe Great Northern and the Northern Pacific defining the rights and responsibilities of the companies growing out of the acquisition of the stock. They pald 200 cents on the dollar for every share of stock they got. o So we find the actual sale of every single solitary bit of the Chicago, Burlington & Quincy stock for 200 cents on the dollar. Yet what does General Manderson figure it at? Why, this property he would figure to be worth in one place only about $20,000 a mile, and from that up to $30,000 & mile. But you have to add the stock and bonds, and when you do it you will find that he is not correct, for its 2,416 miles in the state of Nebraska are worth about $50,000 per mile, according to a conservative cal- culation. And one of the best pleces of testimony we have in this case is fur- nished by General Manderson on page 49 of his brief, whereln he says: The Chicago, Burlington & Quiney Ral- road company was one of the rallroads subject to assessment in Illino roperty was by that board assessed ut E5oh per mile for the year 101, The ratio of assesed to total value in Iilinols s 20 per cent. The actual value, per mile, there- fore, of the Chicago, Burlington & ‘Quincy Rallroad company, &8 fixed by the board, was $44,8%. Taking the same basfs for the iines in Nebraska, which is absurd, rela tive conditions considered_and compared, the assessed valuation in Nebraska would be 34,449 per mile, upon a ratio of 10 per cent. But while that s true upon & ratio of 10 per cent, upon the ratio of what other property 1s paylng throughout this state it would be at one-sixth—$7,481 per mil makes all the difference in the world as to the rate. Here s another strange thing I would like to bave counsel explain: General Mander- son, in his brief, figures the Chicago Burlington & Quincy road at 8842 mil According to their annual report you cannot find, to save your life, even taking in the ratiroad bought here the other day—you can't find over 8,000 miles. Mr. Kelby—Look again. Mr. Simeral—Yes, I will look. Look at your annual report, and your annyal report glves as the total number of miles of your entire system, including lowa, Illinois, Mis sour, Nebraska, Colorado, where you will, 7,992.60 miles, but what does their raiiroad tax shirkers say? I will get that. That is the B. & M. rallroad—that is, everything west of the Missouri river—3,800 miles— Chicago, Burlington & Quincy, Missouri lines and everything east of the Missourl river, 4,000 miles. Can you make more than 7,800 miles out of that? Mr. Kelby—I can; yes, sir. Mr. Simeral—Well, then you will have to figure different from anything I can find in your annual report. Mr. Kelby—No. Mr. Simeral—If you have lost some in the shuffle, it you have & lot more cadavers for assessment purposes, perhaps you can find it, but if you have live rallroads which are making dividends, which have a franchise upon them, you can't find more than 7,800 miles to save your life in any of your re- ports—any property that is covered by your bonds and stocks. Mr. Kelby—Read this. Mr. Simeral—"Leased lines.” Yes, that 1s & narrow gauge line of 178 miles in ad- dition to the standard gauge mlileage the Chicago, Burlington & Quincy rallroad con- trols. Mr. Kelby—“Operates. Mr. Simeral—No, It says ‘“‘controls.” One hundred and seventy-eight miles. That wouldn't make it. Mr. Kelby—And the Atchison, 204 miles. Mr. Simeral—That wouldn't make it. You are still short about 400 miles. Mr. Kelby—Add the second track. Mr. Simeral—Oh, the second track—I thought It was the second track. Why, Mr. Kelby, it you and Mr. Manderson can't Eot some better excuse than that you had better quit. Is the second track assessed in this state, the second track? We haven't any. Simeral—No, sir, you haven't any Why don't you add turnouts, switches and everything else, and that bridge down in Richardson county, and all. There you pay an assessment of $1,000 in Richardson county, and I presume at Plattsmouth you pay $1,000 a mile there for the bridge as- ment. It {s like the Union Paolfie, $1,600 for one-sixth of a mile of the bridge at Omaha, where they take in thousands ang thousands of dollars o month there for it, and yot they , “We want equality 4 uniformity in taxation.” They say, ‘'We must have equality and uniformity In taxation,” and yet the Union Pacifid bridge (s assessed on the Nebraska side at less than $1,600, although a few years 8go it was assessed at, $126,000, and Towa it was assessed at §260,000, I believ Thers {s one other brief here. 1 had forgotten that. That is the relator's brief, and {5 designated just ‘‘Memorandum brief” or “Memorial,” I don’t know which —Memorial, I think. The attorney general says “We don't know whother we ms- sessed $200,000,000 worth of property in this state or not, but we think we did. If we did not we want the court to tell us. That is exactly what he says. They don't know. It was lost In the shufie—this fran chise. They ask the court to tell them whether they assessed $200,000,000 worth of property. 1 hope the court will tell them they did not, because there is no evi- dence of the fact that they did. So that I say to your honors, if this board will just act honestly—will just act squarely with the people, as well as with the railroads, they will have no trouble in arriving at an honest conclusion in reaching the value of these properties, and, too, they will find that there is a great deal of exemption in favor of railroads and inst property owners of this state. Card from Mr. Howe. OMAHA, July 14.—To the Editor of the Bee: An article appeared in the World- H d Sunday, written by Charles Q. De- France, on the raliroad tax case, which ls interesting and instructive; but the writer fell into an error that does Injustice to others and to me. The erroneous statement refers to my severing my relations with the Omaha raliroad as its general solicitor some dozen years ago. The service was en- tirely pleasant. My relations with the other officers were always cordial. It was a mis- take of fact to intimate tbat anything was required of me, while I held that position, that was inconsistent with the highest con- coption of professional ethics. Mr. De- France was misinforwed. Please make the correction. Yours truly, JOHN D. HOWE. B. W, Grov This name must appear on every box of the genuine Laxative Bromo-Quinine Tab- lets, the remedy that cures a cold in one day. 26 cents. 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