MR. JUSTICE BRANDEIS delivered the opinion of the Court.
These five cases were heard together and present largely the same questions of law. Each is an appeal from a decree entered by a federal District Court for North Carolina under § 266 of the Judicial Code denying an interlocutory injunction. In each a railroad company engaged in interstate commerce seeks to enjoin the taxing officials from collecting the ad valorem property taxes for the year 1921, imposed for local purposes, and the franchise tax imposed for state purposes. Some of the corporations plaintiff are foreign; some, domestic. One has its lines wholly within the State; four have lines also in other States. But these differences are without legal significance in this connection. The property taxes are assailed on the ground that, as assessed, they violate the equal protection clause, the due process clause, and the commerce clause of the Federal Constitution, the uniformity provision of the state constitution, and the statutory method of valuation. The franchise taxes are assailed on
The controversy arose in this way.
The relatively larger increase in the revaluations of real estate and of other property resulted in railroad taxes for 1920 lower than had prevailed theretofore; and these taxes were duly paid. But widespread objection to continuing the 1920 revaluations as a basis for the taxation of real estate developed in the latter part of 1920. A severe depression in business had occurred; there was an abrupt decline in commodity prices, particularly farm products; and real estate values were affected by this decline. The legislature, thereupon, made provision, Public Laws, 1921, c. 38, § 28, under which, upon application of taxpayers, the 1920 revaluations of real estate could be reviewed by county boards and those of railroad property by the state board. These boards were authorized to make corrections wherever assessments were found to exceed existing values. By proceedings under the Act of 1921 reductions were made in 67 counties, varying from 1 to 50 per cent. in the valuations of real estate (including that belonging to the railroads not used in the transportation service). In 33 counties no reduction in the valuations of real estate was allowed. The legislature of 1921 had made no provision for reviewing the revaluations of personal property; and the assessments thereon remained unchanged, although the valuations of personally had also been greatly increased in 1920. Under the Transportation Act, 1920, the Interstate Commerce Commission issued, in the latter part of 1920, orders pursuant to Ex parte 74, Increased Rates, 58 I.C.C. 220, raising freight rates in North Carolina 25 per cent. and passenger rates 20 per cent. over those prevailing when the revaluation of 1920
The contention of the railroads that the property taxes as assessed are obnoxious to the Federal Constitution was rested here mainly on the claim that there is a denial of equal protection of the laws. This claim is asserted on several grounds. It is contended, in the first place, that the Act of 1921 providing for the review of valuations is void. The argument is that the railroads were discriminated against, because real estate owners are given an appeal on assessments from the county board to the State Board of Equalization, but that no such appeal is provided from the assessment of railroads. It is also argued that there is discrimination in this: While c. 38, § 28g, provides for reduction by the state board in the valuation of a railroad only where it applies therefor, reductions in the value of all real estate within the county were, under § 28a, to be made provisionally, if the county board determined that the 1920 valuation was, as a whole, in excess of a fair value; and that in such event the percentage of the average excess would be applied to each parcel in the county, unless and until the assessment of individual real estate owners should be revised by the State Tax Commission. The differences in the classes of property, and in the conditions of ownership, obviously made difference in treatment unavoidable. Differences in the machinery for assessment or equalization do not constitute a denial of equal protection of the laws. New York State v. Barker, 179 U.S. 279.
The claim that the railroads' property taxes are void under the statutes of the State seems to rest, in the main, on the charge that in valuing them in 1920, and in passing upon the application for reduction under the Act of 1921, the state board failed to follow the method of valuation prescribed. It is argued, among other things, that there was no separate assessment of tangible and intangible property; or if so, that plaintiffs were not notified as to what that separation was; that there was no due consideration of the actual cost of replacement of the property, with just allowance for depreciation of rolling stock; that
The railroad franchise tax, equal to one-tenth of one per cent. of the value of the company's property within the State, is imposed wholly for the support of the state government. Such taxes are expressly authorized by the state constitution, Article V. Before 1920 the contribution of railroads toward the expenses of the state government was made partly by a small privilege tax dependent on gross earnings per mile, partly from a percentage of the ad valorem property tax paid by them; and in valuing railroad property there was included among the intangibles what is frequently called the franchise or the corporate excess. In 1920 this mileage privilege tax was abolished; payment for general state purposes of a percentage of the property tax was discontinued; and by § 82 (6 1/2) of c. 1, Laws Extra Session, 1920, and Revenue Act
Nor is there any basis for the claim that the franchise tax act violates the commerce clause. The tax appears to be upon the privilege of doing an intrastate business. Compare Armour Packing Co. v. Lacy, 200 U.S. 226. It is not of the character which is held a burden upon interstate commerce. St. Louis Southwestern Ry. Co. v. Arkansas, 235 U.S. 350; Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 119, 120; St. Louis-San Francisco Ry. Co. v. Middlekamp, 256 U.S. 226. Payment of the tax is not made a condition precedent to granting a railroad permission to do interstate business. Compare Leloup v. Mobile, 127 U.S. 640. Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113, 119. And there is no basis for the contention that the aggregate burden imposed by the property tax, the franchise tax, and the income tax, operates to obstruct interstate commerce.
The remaining objections to the franchise taxes relate merely to the amounts at which they are calculated. It is insisted that § 82 (3 1/2) of the Revenue Act of 1921 applies, and that therefore upon the facts stated the tax should be for one-twentieth, not for one-tenth, of one per cent. of the value of the company's property within
A further objection peculiar to the Atlantic & Yadkin Railway should be mentioned. This road is located wholly within North Carolina. Its entire capital stock is owned by the Southern; and it is operated as a part of the Southern System. The state board assessed all the lines operated by the Southern System at $101,960,413, and then apportioned to the Atlantic & Yadkin the sum of $4,104,710, a sum alleged to be grossly excessive. Defendants aver that the amount represents the actual value of the property. They say, further, that the apportionment was made in accordance with the plan suggested by the tax commissioner of the Southern System; that neither the Southern Railway nor the Atlantic & Yadkin was, in any way, prejudiced by assessing the property together; or by allocating this amount to the latter; that if the Atlantic & Yadkin was overassessed, the Southern was, to that extent, underassessed; and that the company is estopped by its conduct from questioning the assessment on this ground. A doubt is raised whether the taxes assessed upon this plaintiff should be sustained. But even if the objection can be availed of in this suit, the state of the record is not such as to justify us in reversing, on this ground, the decree denying an interlocutory injunction to the Atlantic & Yadkin. It will, of course, be open to this plaintiff to renew the objection upon the final hearing.
Revaluation Act, Public Laws, 1919, c. 84, § 6, provided that all real property should be valued as of May 1, 1919, and such value should be used for all tax purposes for 1920, 1921, 1922, and 1923. Section 31 provided for a complete revaluation of all railroad companies to be used as the basis for computing taxes for such companies for 1920, 1921, 1922 and 1923. Section 3 provided that the assessment made under said act was not to be used as a basis for computation of taxes until it had been approved by the legislature.
Act of Special Session, 1920, c. 1, § 1, approved the "assessment or valuation" made under Revaluation Act of 1919 and adopted it as the basis for levy of tax rates by the State and all subdivisions thereof for 1920, and the valuation of real property so fixed was adopted for 1921, 1922 and 1923, "except as such valuations may be hereafter changed according to law."
Machinery Act, Public Laws, 1921, c. 38, § 64, provided for the valuation of railroads (laying down rules therefor) "at such dates as real estate is required to be assessed for taxation."