Henderson Bridge Company v. Commonwealth of Kentucky/Opinion of the Court

This was an action brought by the commonwealth of Kentucky against the Henderson Bridge Company to recover the sum of $3,675.91, taxes levied against that company on an assessment made of its intangible property by the Kentucky board of valuation and assessment for the year 1893.

The Henderson Bridge Company is a corporation created by the commonwealth of Kentucky for the purpose of erecting and operating a railroad bridge, with its approaches, over the Ohio river, between the city of Henderson, in Kentucky, and the Indiana shore.

The record does not show that it was also incorporated under any law of Indiana, but the company alleged that, being incorporated by the laws of Kentucky, it was granted certain powers and privileges under the laws of Indiana; though it was not denied that the company actually constructed and now owned and operated the bridge and approaches under its Kentucky charter. It was, moreover, averred that the company built its bridge under and in accordance with the act of congress of December 17, 1872 (17 Stat. 398, c. 4), entitled 'An act to authorize the construction of bridges across the Ohio river, and to prescribe the dimensions of the same,' which provided that any such bridge should be recognized as a post route; and the act supplementary to that act approved February 14, 1883 (22 Stat. 414, c. 44).

It appeared that the bridge company owned 9.46 miles of railroad and .65 of a mile of siding, making its railroad connections in Indiana, which property was assessed for taxation in that state at $627,660; that the length of the bridge in the two states, measured by feet, was one-third in Indiana and two-thirds in Kentucky; that the tangible property of the company was assessed in Henderson county, Ky., at $649,735.54; that the capital stock of the company was $1,000,000, and that it had issued bonds to the amount of $2,000,000.

From the evidence before them, the board of valuation and assessment placed the value of the company's entire property at $2,900,000, and deducted therefrom $627,660 for the tangible property assessed in Indiana, which left $2,272,340, of which two-thirds, or $1,514,893, was held to be the entire value of the property is Kentucky. From this, $649,735.54, the value of the tangible property in Henderson county, was deducted, and the remainder, $865,157.46, was fixed by the board as the value of the company's franchise.

The company's stock was worth not less than $90 per share on the market, and the bonds took precedence of the stock. The evidence showed a large amount of assets and the receipt of a large income. From the total value, $1,385,107 was deducted for the tangible and intangible property in Indiana, and the taxes in Kentucky were levied on $1,514,893 of tangible and intangible property in that state.

The tax on the tangible property amounted to $2,762.08, and this, as we understand it, was paid by the company. The tax on the intangible property was $3,675.91, which the company refused to pay, whereupon this action was brought for its recovery.

The state circuit court rendered judgment in favor of the commonwealth for $595, which was reversed by the court of appeals, which held the commonwealth entitled to recover the full amount. 31 S. W. 486. The cause having been remanded, and judgment entered accordingly, by the circuit court, and affirmed by the court of appeals, this writ of error was sued out.

The company was chartered by the state of Kentucky to build and operate a bridge, and the state could properly include the franchises it had granted in the valuation of the company's property for taxation. Central Pac. R. Co. v. People of State of California, 162 U.S. 91, 16 Sup. Ct. 766. The regulation of tolls for transportation over the bridge considered in Covington & C. Bridge Co. v. Commonwealth of Kentucky, 154 U.S. 204, 14 Sup. Ct. 1087, presented an entirely different question.

Clearly, the tax was not a tax on the interstate business carried on over or by means of the bridge, because the bridge company did not transact such business. That business was carried on by the persons and corporations which paid the bridge company tolls for the privilege of using the bridge. The fact that the tax in question was to some extent affected by the amount of the tolls received, and therefore might be supposed to increase the rate of tolls, is too remote and incidental to make it a tax on the business transacted. This very question was decided in New York, L. E. & W. R. Co. v. Commonwealth of Pennsylvania, 158 U.S. 431, 439, 15 Sup. Ct. 896, 899, where it was said: 'It is argued that the imposition of a tax on tolls might lead to increasing them in an effort to throw their burden on the carrying company. Such a result is merely conjectural, and, at all events, too remote and indirect to be an interference with interstate commerce. The interference with the commercial power must be direct, and not the mere incidental effect of the requirement of the usual proportional contribution to public maintenance.' The only franchises treated here as the subject of taxation were those granted by the state of Ientucky. So far as the state of Indiana could be said to have conferred any franchise upon the company, it was a franchise that inhered in that portion of the structure that was within the state of Indiana, the value of which was not included in the tax complained of.

The acts of congress conferred no right or franchise on the company to erect the bridge or collect tolls for its use. They merely regulated the height of bridges over that river, and the width of their spans, in order that they might not interfere with its navigation. The declaration that such bridges should be regarded as post roads did not interfere with the right of the state to impose taxes, as was decided in Postal Tel. Cable Co. v. City of Charleston, 153 U.S. 692, 700, 14 Sup. Ct. 1094. The contrary view would withdraw from the taxing power of the states nearly all the railroads and stage routes throughout the country.

The tax in controversy was nothing more than a tax on the intangible property of the company in Kentucky, and was sustained as such by the court of appeals, as consistent with the provisions of the constitution of Kentucky in reference to taxation.

And for the reasons given, and on the authorities cited in Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 17 Sup. Ct. 305, we are unable to conclude that the method of taxation prescribed by the statute of Kentucky, and followed in making this assessment, is in violation of the constitution of the United States.

Judgment affirmed.