Commonwealth v. New York, L. E. & W. R. Co.

NO. 26.

Opinion,

The only question in this case is whether or not the trackage *208received, by the New York, Lake Erie & Western Railroad Co. from the Delaware & Hudson Canal Co., for the use of the Jefferson branch under their agreement of April 7, 1885, and from the Buffalo, Rochester & Pittsburgh Railway Co., for the use of the Buffalo, Bradford & Pittsburgh road under their agreement of October 20, 1882, can be said to be “ received from passengers and freight traffic,” within the meaning of the twenty-third section of the act of June 1, 1889, P. L. 431. The constitutional questions involved were very recently settled in a case arising under the act of June 7, 1879, P. L. 112: Commonwealth v. Railroad Co., ante, 38.

The commonwealth’s counsel contend that gross receipts “ from passengers and freight traffic ” is comprehensive enough to include what under previous legislation was taxed as tolls, and under that designation. The opinion of the court below contains a concise, but correct, history of the legislation on this subject. By the first section of the act of August 25, 1864, P. L. 988, a tonnage tax was imposed upon all companies, “ upon whose works freight may be transported, whether by such company or by individuals, and whether such company shall receive compensation for transportation, for transportation and tolls, or shall receive tolls only; ” and corporations whose lines were used by others for transportation of freight, and whose only earnings arose from tolls charged for such use, were authorized to add the tax thereby imposed to the tolls, and collect the same therewith. In 1866, by § 2 of the act of February 23d, P. L. 82, the tax upon gross receipts was first laid, and this was upon all receipts. In 1868, by § 7 of the act of May 1, P. L. 108, the tonnage tax was continued, the identical language above quoted from the act of 1864 being repeated ; and by § 8 the tax on gross receipts was also re-imposed. Both these taxes were repealed by § 11 of the act of April 24, 1874, P. L. 68; but it was now restricted to receipts “for tolls and transportation, telegraph business, or express business; ” and in this form also it was laid by § 7 of the act of June 7, 1879, P. L. 112. But, by the twenty-third section of the act of 1889, the tax is. upon the gross receipts “received from passengers and freight traffic transported wholly within this state,” etc. It is certainly a matter of some significance, if it was intended to tax all sums received as tolls or rents, that these or other apt words were not employed to express that intention.

*209It will be observed that in the case of railroads, etc., which are operated under a lease for a proportion of the gross receipts, the tax is imposed, not only upon the company leasing to, but upon the company leasing from another. The tax is imposed upon every railroad company, etc., owning, operating, or leasing to or from another. Both the lessors and the lessees, in such cases, are liable to this tax. The tax is upon the gross receipts received from passengers and’freight traffic, transportation, etc.; that is to say, transportation upon the railroad in question under the lease; the lessor and the lessee, being liable upon the amount of the gross receipts received by each, respectively, according to the contract of lease. Provision is therefore made in the last clause of the section that the taxes shall be apportioned in accordance with the terms of the agreement or lease, and that the commonwealth shall first look to the company operating the road, and, upon payment of the tax by that company, the company from which the said works are leased shall not be held liable, under this section, for any of the tax upon the portion of said receipts received by it as rental for the use of said works.

But it will be seen, upon a reference to the agreement mentioned in the case at bar, that the tolls or trackage are paid, not by any proportion of the gross receipts, but, except as to the local passengers on the Jefferson branch, by a specified sum per ton or per passenger, in either ease not less than a sum specified, or in a gross sum named. The lessees, with the exception stated, are entitled to the entire gross receipts; the lessors receive nothing but the trackage, which is computed, not from the amount of the gross receipts, but at a certain rate per ton or per passenger. The trackage, therefore, is not a rent, for the lessors are themselves in possession of the road ; it is a toll paid for passage or for the privilege of using the way, not for carriage or transportation : Boyle v. Railroad Co., 54 Pa. 314.

For the reasons so well stated in the opinion of the court below, we are of opinion that these tolls are not embraced in the gross receipts taxable under the provisions of the act of 1889.

The judgment is affirmed.

*210nos. 27, 28, 29.'

Opinion,

For the reasons stated in Commonwealth v. New York, L. E. & W. R. Co. No. 26 May Term 1891,

The judgments are affirmed.