this state for purposes of taxation; and this sum shall be in lieu of all other taxes on its franchises, funded and floating debt, and railroad property in this state." The real estate owned by the company in the state and not used for railroad purposes, is, however, taxable like other real estate, and the sums paid for such taxes are to be deducted from the sum required to be paid on the stock and debt valuation.

The law applies to every railroad company any portion of whose road is in 3919, General

the state.

Statutes, 1888.

§ 3922, ibid.

It is provided that the taxes paid by the lessee of any railroad, under any contract or lease, existing on the 10th day of July, 1862, must be deducted from any payments due or to become due to the lessor, on account of such contract or lease. And it is provided that “In all cases in which the road and estate of any railroad § 3926, ibid. company shall have been, or shall hereafter be foreclosed under any mortgage executed by it for the security of its creditors, and any other railroad shall have or shall hereafter become, by purchase or otherwise, the owner of said road and estate so foreclosed, said company shall make the returns and payments required by this chapter, and any funded or floating indebtedness to which such railroad and estate is liable, shall be considered for the purpose of this enactment, as the indebtedness of said company, whether the same may have been contracted by it, or by some predecessor in its title."

2. Assessment.

The assessment is made by the State Board of Equalization. Return must be § 3920, ibid. made by the secretary or treasurer of every railroad company, any portion of whose road is in the state, or if the road be in the hands of a trustee or receiver, § 3919, ibid. then by such trustee or receiver, to the comptroller. The return must be made on or before November 15th annually, and must show the condition of affairs of the company as it existed September 30th preceding, "in the following particulars, namely, the number of shares of its stock, and if the same consists of different classes, then of those of each class, and market value of each share, the dividends. paid per share on each class of said stock during the year preceding said thirtieth day of September, and the dates of said payments, amount of its funded and floating debt, and the market value of any of such indebtedness which is below par in value, the number, amount, and market value of any unpaid bonds secured by mortgage on the property of said company by any of its predecessors in title and legally convertible into the capital stock of each company, the amount of bonds issued by any town or city of the description mentioned in section 3820, when the avails of such bonds, or stock subscribed and paid for therewith, shall have been expended in such construction, the amount of money actually on hand in cash in the treasury or in the possession of the proper officers or agents of the company or of any such trustee or receiver, the amount paid for taxes in this state during the year ending on said thirtieth day of September upon any real estate owned by said company, trustee or receiver, and not used for railroad purposes, the whole length of the road, and the length of those portions thereof lying without this state."

And it is provided that every railroad company in the state holding by lease or otherwise a railroad in another state which is not a part of its own road must state in its annual return "how much of its funded and floating debt was occasioned by, and how much of its capital stock was issued for any amount which has been expended by it in the construction or permanent improvement of such railroad in another state, or in the purchase of equipment for exclusive use thereon; and in computing the amount of tax to be paid by said company to this state, the amount of such funded or floating debt, and of such stock so occasioned or issued as aforesaid, shall be first deducted from the total amount of its funded and floating debt and stock."

§ 3923, ibid.

§ 3924, General Statutes, 1888.

§ 3930, ibid.

§ 3932, ibid.

§ 3930, ibid.

§ 3931, ibid.

Act 31, Mar. 30, 1899.

Act 31, March 30, 1899, provides that "Section 3923 of the General Statutes is hereby amended by adding thereto the words 'and such railroad company shall in said return report how much of its funded and floating debt was occasioned by, and how much of its capital stock was issued for, the purchase of the capital stock or obligations of any steamboat company operating a line of steamboats in connection with the line of said railroad company, and in computing the amount of tax to be paid by such railroad company to this state the amount of such funded and floating debt and of such capital stock shall be deducted from the total amount of its funded and floating debt and stock."" The mortgagee or trustee of any railroad lying in whole or in part in the state, coming into possession of the same by virtue of any mortgage thereof must within the first ten days of October annually, so long as they remain in possession of such road, deliver to the comptroller "a sworn statement of the value of said road, its equipment and other property located in this state, and in their hands, as such mortgagees or trustees."

In case such returns are not made as prescribed, or erroneous returns are made, the board is to make out the statement upon the best information it can obtain. For failure to make the return as prescribed the company is subject to a forfeiture to the state of five hundred dollars.

66

* * *

The State Board of Equalization meets at the state treasurer's office at the capitol "on the secular day next succeeding each of the last days limited by the preceding sections of this chapter for making any of the annual returns to the comptroller for purposes of taxation required by either of said preceding sections." Its purpose is to examine and correct such returns and the valuations required thereon." With regard to the manner of making and correcting the valuation, it is provided that "In case of any railroad company which, during the two years ending on the thirtieth day of September next preceding the time for making such annual returns, has paid regular dividends at the same annual rate per cent, on all or any class of its shares of stock, the market value of each share of such stock or class of stock, as the case may be, shall be the average of the closing bids or prices offered for said stocks or any shares thereof during the month of September preceding the time for making such returns, as regularly published by any board of brokers, such board being named in said returns; and every party whose duty it is to make such returns shall adopt, in making the same, such average price as the invariable standard of said market value, and the Board of Equalization in examining and correcting said return shall conform to and adopt such valuation, unless they shall be of the opinion that the interests of the state require that the market value of said stock shall be otherwise ascertained, in which case they may find, upon the best information they can obtain, and fix a different valuation. As to all other shares of stock in any railroad company, the market value thereof shall be ascertained and returned, as far as possible, in the same manner as is hereinbefore provided for the shares of stock upon which regular dividends have been paid as aforesaid, but in such returns any facts may be stated showing that such market value differs from the true value, and the Board of Equalization, in examining and correcting said returns and in making out the statements required to be made, shall regard said market. value, if it can be so ascertained, as the proper standard of the value of such shares, unless from the facts stated, or from other information, they shall think it proper to adopt a different valuation, which they in such cases may do. In all cases where, for any reason, it is not possible or feasible to fix or ascertain the market value for any stock in the manner aforesaid, it shall be returned by the party whose duty it is to make such return, at the price of the last reported market sale of said stock, and

*

*

in such cases the Board of Equalization may, in correcting said returns, and making out any statements so required to be made, fix and determine, according to the best information which they can obtain, any valuation for said stock which they may think proper."

Act 171, June 9, 1899.

The above section is amended by Act 171, June 9, 1899, by striking out after the words "shares thereof during the," near the beginning, the words "month of September" and inserting in lieu thereof the following: "twelve consecutive months."

Statutes, 1888.

The tax is payable on the stock as valued and corrected by the board, and on the 3920, General par value of the funded and floating indebtedness, or if any of such indebtedness is worth less than par, then upon the valuation made and corrected by the board "after deducting from such valuations the amount of any bonds or other obligations of said company, or of their market value, if below par, which may be held in trust for said company as a part of any sinking fund belonging to it, and also deducting from said sum required to be paid, the amount paid for taxes in this state during the year upon any real estate owned by said company, trustee, or receiver, and not used for railroad purposes."

When only part of the railroad lies in the state the company is required to pay § 3921, ibid. only on such proportion of the valuation "as the length of its road lying in this state bears to the entire length of said road." In fixing the valuation and lengths it is provided that "Neither the value nor length of any branch thereof in this state, which the Board of Equalization shall determine to be of less value per mile than one-fourth of the average value per mile of the trunk road, shall be included; but every such branch shall be estimated at its true and just value by the Board of Equalization."

The board is required to return a true copy of the statement as originally made by § 3930, ibid. the company and corrected by the board, or as made by the board on default of the company, to each cashier, treasurer, secretary, superintendent, or manager, "and the valuation of the several items of money, estate, amount and number contained in such statement shall be final, and the sums required shall be paid according to it."

3. Determination of the Tax.

The statute itself prescribes the rate of the tax, one per cent upon the assessable Ibid. valuations, the values of the stock and bonds taxable according to the rules above, and of inferior branches at the "true and just value," etc.

4. Payment of the Tax.

§ 3921, ibid.

These taxes are payable to the state on or before the 25th day of November § 3920, ibid. annually.

Mortgagees or trustees of a road who have come into possession of the same by § 3925, ibid. virtue of any such mortgage must pay to the state one per cent on the value of the road, equipment, and other property, less the amount of taxes paid by them on any real estate in their hands not used for railroad purposes, said payment to be made on or before October 20th annually.

5. Default of Payment.

For failure to pay within the time required the company is subject to a forfeiture § 3932, ibid. to the state of twice the amount required for the payment.

All such taxes constitute a lien on the road and property, paramount to all other liens and incumbrances whatsoever. No other provisions concerning default of payment are specifically made. The general revenue laws herein govern.

§ 3927, ibid.

§3930, General

Statutes, 1888.

6. Remedies.

By implication the law provides that parties making returns shall have a hearing upon the determination of their assessable valuation by the board, in that it is provided that such board shall meet for the purpose, among other things, of hearing such parties in regard to such valuations.

P. 47, General Laws, 1893. Ch.

of Delaware.

Ch. 367, vol. 14,

DELAWARE.

A. GENERAL CONSIDERATIONS.

I. CONSTITUTIONAL LIMITATIONS.

There is no constitutional provision specifically limiting or restricting railroad taxation. The general provisions on revenue and taxation alone control.

II. GENERAL STATEMENT: SYSTEM AND DEVELOPMENT FROM 1890 TO 1900.

The Delaware system is made up of a series of specific state taxes, local tax on real estate, and special taxes or options for special state taxes in the case of specified roads. The specific state taxes are as follows: A tax on passengers carried, a tax on net income, taxes on locomotives, passenger, freight and truck cars, and a tax on shares of capital stock. The Philadelphia, Wilmington and Baltimore Railroad pays stated sums yearly to the state, in lieu of other taxes, and it is provided that the Delaware Railroad may similarly commute. Counties and municipalities are allowed to assess and tax the railroad real estate, including buildings erected upon the right of way, but excepting the right of way itself.

There was no alteration in the law as applied to railroad taxation proper in the period 1890-1900. By Chapter 166, March 10, 1899, however, provision was made for a state tax on the gross receipts of parlor, palace and sleeping-car companies, which theretofore had not been taxed by any specific law.

B. THE RAILROAD TAXES.

1. THE STATE TAX ON PASSENGERS.

1. Nature and Application.

This tax is a specified sum upon every passenger carried in or through the state 458, vol. 12, Laws by steam power, whether on land or water, soldiers and sailors excepted. Or the P. 49, G. L., 1893. railroads each (excepting the P., W. & B. R. R., see below) may pay in the same Laws of Dela proportion to their gross receipts from their passenger business between points within the state that the sum of thirteen thousand dollars shall bear to the like busiP.49.G. L., 1893. ness of the Philadelphia, Wilmington and Baltimore Railroad Company. And it is Laws of Dela- provided that Chapter 458, Volume 12, Laws of Delaware (relative to the passenger tax) shall not be taken to apply to the Wilmington City Railroad.

ware.

Ch. 438, vol. 15,

ware.

P.48. G.L..1893.

Ch. 458, vol. 12,

ware.

2. Assessment.

The assessment is, through the railroad's returns, self-determining. The "perLaws of Dela- son conducting the aforesaid business of transporting passengers" is required to make a report each month, to the state treasurer of the number of passengers carried in the month preceding, giving a "full statement of the passengers carried on account of whom they are subject to the tax aforesaid." Such statement is to be under oath of the treasurer, principal accountant, or keeper of this fund.

Failure to report (and pay), as provided, is a misdemeanor, subjecting the offender on conviction by indictment to a fine of one thousand dollars. And in the case of a corporation such failure works a revocation of its charter. And it is unlawful for

such person or corporation further to conduct such business, persistence in so doing being a misdemeanor punishable by fine of not less than one thousand dollars and imprisonment not less than one year.

3. Determination and Payment of the Tax.

The amount of the tax is self-determining, upon the statutory provision that it shall be at the rate of ten cents on each passenger carried, for which the railroad company is liable to taxation. The tax is payable to the state treasurer monthly within the month following that for which it has accrued. When the passenger travels upon more than one road on the same occasion, the tax must be paid by the road on which the journey begins. Penalty for default of payment is coincident with that for failure of return (see "Assessment," supra.)

II. STATE TAX ON NET EARNINGS OR INCOME.

1. Nature.

P. 49, General Laws, 1893. § 1, Laws of Delaware.

Railroads are required to pay ten per cent upon the net earnings or income from all sources during the preceding year, i. e., the portion of said net earnings earned ch. 392, vol. 13, as by rule within the state.

2. Assessment.

1893.

The assessment is self-determining through the return of the railroad company, Pp. 49, 50, G. L. return and payment being made at the same time. The railroad company is required through its president or treasurer on January 1st or thirty days thereafter, annually, to send to the state treasurer a "full statement, in writing, showing the net earnings or income of such company from all sources during the preceding year." Such statement must be under oath.

There is no penalty provided for failure to make returns. But in case the report is not made or the tax paid within ten days from the time such duties should be performed, the state treasurer must assess the amount of the tax due, estimating from the best information he can obtain.

In case the road lies partly in and partly outside of the state, it is provided that the part of the net earnings subject to the tax shall be in that proportion to the whole net earnings which the length of the road within the state bears to the whole length.

3. Determination and Payment of the Tax

The amount of the tax is self-determined primarily by the railroad through its report, upon the provision that the rate shall be ten per cent, and that it shall be payable annually upon making the report, it being provided that the company shall report and "shall forthwith pay." But in case the report and payment are not made as required, the state treasurer, having made the assessment, issues a warrant to any collector of county taxes, with a duplicate of the assessment annexed, who has the same power for the collection of this tax that he has for the collection of county rates and levies.

There is no specific provision for penalty on default of payment-none but that to be inferred from the above.

III. STATE TAXES ON LOCOMOTIVES, PASSENGER AND FREIGHT CARS, AND TRUCKS.

1. Nature.

These taxes are of stated amounts, differing for each of the stated classes of rolling stock, on locomotives, passenger cars, freight cars, and truck cars owned in whole or in part by a company and at any time within the preceding year used by said company within the state. By truck or trucks is meant a pair of trucks.

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