Appeal from Sixth Judicial District Court, Humboldt County; Edward A. Ducker, Judge.
L. A. Gibbons and Hoyt, Gibbons & French, for Appellant.
Geo. B. Thatcher, Attorney-General, and J. A. Callahan, District Attorney, for Respondent.
By the Court, Norcross, C. J. (after stating the facts):
Section 52 of the general revenue act (Rev. Laws, sec. 3664) provides what defenses may be set up in an action for delinquent taxes. The section reads:
The defendant may answer, which answer shall be verified: * * * FifthFraud in the assessment, or in failing to comply with the provisions of this act; or that the assessment is out of proportion to and above the actual
cash value of the property assessed; provided, however, that in such last-mentioned case, where the defense is based upon the ground that the assessment is above the value of the property, the defense shall only be effectual as to the proportion of the tax based upon such excess of valuation, but in no such case shall an entire assessment be declared void.
We will assume that the defense interposed (that the tax sought to be recovered in this case is in effect an attempt to impose a tax on interstate commerce and for that reason void) is a legitimate defense to the action.
Three main questions are presented for determination:
FirstIs the tax sought to be recovered in whole or in part a tax on interstate commerce?
SecondIf not a tax on interstate commerce, but upon property of the appellant corporation within the state, was the assessment made in accordance with law?
ThirdIf property subject to taxation has been regularly assessed, is the assessment out of proportion to and above the actual cash value of the property?
[1-2] The law relative to taxation of express companies doing both intrastate and interstate business is stated in 7 Cyc. 479, as follows:
The state may tax the intrastate business of express companies, but a state may not tax the interstate business, either by a levy on the gross receipts of an express company from its interstate business, or by a tax worded to cover companies doing interstate business only, but may tax the property of an express company engaged in interstate business, and may fix the value of such property, either by reference to the whole capital or the gross earnings of the company, or by taxing its intangible property in proportion to mileage in the state compared with total mileage.
The case does not present a question of a license or excise tax, and we shall not consider at length authorities dealing with laws, where such taxes have been opposed or have been attempted to be imposed upon express companies. Suffice it to say that, where such a
tax has been held to be a tax on interstate commerce or the right to engage in interstate commerce, it has been held violative of the constitution of the United States and void. See Ohio Tax Cases, 232 U. S. 576, 34 Sup. Ct. 372, 58 L. Ed. 737; State v. Northern Express Co., 80 Wash. 309, 141 Pac. 757.
It was held by the Supreme Court of the United States in Adams Express Co. v. Ohio State Auditor, 165 U. S. 194, 17 Sup. Ct. 305, 41 L. Ed. 683, and same case, 166 U. S. 185, 16 Sup. Ct. 604, 41 L. Ed. 965 (quoting from the syllabus, 166 U. S.), that:
It is well settled that no state can interfere with interstate commerce through the imposition of a tax which is, in effect, a tax for the privilege of transacting such commerce; and also that such restriction upon the power of a state does not in the least degree abridge its right to tax at their full value all the instrumentalities used for such commerce. The state statutes imposing taxes upon express companies which form the subject of these suits grant no privilege of doing an express business, and contemplate only the assessment and levy of taxes upon the properties of the respective companies situated within the respective states. In the complex civilization of today a large portion of the wealth of a community consists of intangible property, and there is nothing in the nature of things or in the limitations of the federal constitution which restrains a state from taxing such intangible property at its real value. Whenever separate articles of tangible property are joined together, not simply by a unity of ownership, but in a unity of use, there is not unfrequently developed a property, intangible though it may be, which in value exceeds the aggregate of the value of the separate pieces of tangible property. Whatever property is worth for the purposes of income and sale, it is worth for the purposes of taxation; and, if the state comprehends all property in its scheme of taxation, then the good will of an organized and established industry must be recognized as a thing of value, and taxable. The capital stock of a corporation
and the shares in a joint-stock company represent not only its tangible property, but also its intangible property, including therein all corporate franchises, and all contracts, privileges, and good will of the concern; and when, as in the case of the express company, the tangible property of the corporation is scattered through different states, by means of which its business is transacted in each, the situs of this intangible property is not simply where its home office is, but is distributed wherever its tangible property is located and its work is done. No finespun theories about situs should interfere to enable these large corporations, whose business is of necessity carried on through many states, from bearing in each state such burden of taxation as a fair distribution of the actual value of their property among those states requires.
See, also, Adams Express Co. v. Kentucky, 166 U. S. 171; Wells, Fargo & Co. v. Johnson, 205 Fed. 60.
Since the decisions of the Supreme Court of the United States reported in the 165th and 166th U. S. Reports, cited supra, it has been the settled law in this country that the property of an express company doing both an interstate and intrastate business is in character both tangible and intangible; that such property may be subject to assessment and taxes and that the situs of this intangible property is distributed wherever its tangible property is located and the work is done.
 Counsel for appellant do not, as we understand, contend that a state may not under appropriate laws levy a tax upon the intangible property of an express company, but that the tax sued upon was not a property tax, and, further, that the State of Nevada had enacted no laws by virtue of which such a tax could be imposed.
Article 10 of the state constitution provides:
The legislature shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation for taxation of all property, real, personal and possessory, except mines and mining claims, * * * and, also,
excepting such property as may be exempted by law for municipal, educational, literary, scientific, or other charitable purposes. (Rev. Laws, sec. 352, as amended, Stats. 1913, p. 106).
Section 5 of the general revenue act (Rev. Laws, sec. 3621) provides:
All property of every kind and nature whatever, within this state, shall be subject to taxation except: (Here follows exceptions authorized by the ...