Opinion of the Court.

engines) were considered real estate, and denominated "railroad track." By § 79, the value of such "railroad track” was taxed in the several counties, townships, cities and towns, in the proportion that the length of the main track therein bore to the whole length of the road in the State, except that the value of the side or second track, and of all turnouts, station houses and other buildings belonging to the railroad, was taxed in the county, township, city or town in which they were situated. By § 80, the movable property belonging to a railroad company was denominated "rolling stock," and considered personal property; and was taxed in the several counties, townships, cities and towns in the proportion that the main track used or operated therein bore to the length of the main track used or operated by the corporation, whether owned by it or not. By § 81, all other personal property, including machinery, fixtures, stationary engines, tools and materials for repairs, was taxed in the county, township, city or town in which it was on the first day of April in each year; and by § 82, all real estate of any railroad company, (other than that denominated "railroad track,") with all improvements thereon, was taxed in the county, township, city or town where it was situated.

Each railroad corporation was required, by § 83, to return annually to the county auditor an inventory of all these kinds of property, except "railroad track;" and, by § 85, to return to the auditor of the State, to be laid before the state board of tax commissioners, a statement showing, among other things, "first, the property denominated 'railroad track,' giving the length of the main and side or second tracks and turnouts, and showing the proportions in each county and township, and the total in the State; second, the rolling stock, whether owned or hired, giving the length of the main track in each county, and the entire length of the road in this State;" and also the amount of its capital stock, and the market value, or if no market value, the actual value of its shares, the total amount of its indebtedness except for current expenses, and the total listed valuation of all its tangible property in the State.

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By S8 129, 137, the state board of tax commissioners was declared not to be bound by these returns; and was required to "appraise and assess all property at its true cash value, as defined by this act, according to their best knowledge and judgment, and so as to equalize the assessment of property throughout the State," and to "assess the railroad property, denominated in this act as railroad track' and 'rolling stock,' at its true cash value," and was authorized to examine persons and papers. And by § 130, each member of the board was required to declare, as part of his oath of office, that he would "in no case assess any property at more or less than its true cash value."

·

This court, at the last term, in several cases, affirming judgments of the Supreme Court of Indiana, held that the statute of 1891 did not, in the case of a railroad partly in that State and partly in another, require that the value of the part in Indiana should be determined absolutely by dividing the whole value upon a mileage basis; but only that the total amount of stock and indebtedness should be taken into consideration in ascertaining the value; and that the statute was constitutional.. Pittsburg &c. Railway v. Backus, 154 U. S. 421, 430, 435, and 133 Indiana, 625; Indianapolis & Vincennes Railroad v. Backus, 154 U. S. 43S, and 133 Indiana, 609; Cleveland &c. Railway v. Backus, 154 U. S. 439, and 133 Indiana, 513.

. In those cases, the objections to the constitutionality of that statute were answered by this court, speaking by Mr. Justice Brewer, as follows:

"It is not to be assumed that a State contemplates the taxation of any property outside its territorial limits, or that its statutes are intended to operate otherwise than upon persons and property within the State. It is not necessary that every section of a tax act should in terms declare the scope of its territorial operation. Before any statute will be held to intend to reach outside property, the language expressing such intention must be clear." 154 U. S. 428.

"It is obvious that the intent of this act was simply to reach the property of the railroad within the State." "No intent to

Opinion of the Court,

the contrary can be deduced from the provision requiring the corporation to file a statement of its total stock and indebtedness; for that is one item of testimony fairly to be considered in determining the value of that portion of the property within the State. The stock and the indebtedness represent the property. As said by Mr. Justice Miller in State Railroad Tax cases, 92 U. S. 575, 605, 'When you have ascertained the current cash value of the whole funded debt and the current cash value of the entire number of shares, you have, by the action of those who above all others can best estimate it, ascertained the true value of the road, all its property, its capital stock and its franchises; for these are all represented by the value of its bonded debt and of the shares of its capital stock."" 154 U. S. 428, 429.

"It is not stated, in this statute, that when the value of a road running in two States is ascertained, the value of that within the State of Indiana shall be determined absolutely by dividing the gross value upon a mileage basis; but only that the total amount of stock and indebtedness shall be presented for consideration by the state board. Nevertheless it is ordinarily true that when a railroad consists of a single continuous line, the value of one part is fairly estimated by taking that part of the value of the entire road which is measured by the proportion of the length of the particular part to that of the whole road. This mode of division has been recognized by this court several times as eminently fair." 154 U. S. 430,

431.

In support of the last statement were cited State Railroad Tax cases, 92 U. S. 608, 611; Delaware Railroad Tax case, 18 Wall. 206; Erie Railway v. Pennsylvania, 21 Wall. 492; Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530; Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18; Maine v. Grand Trunk Railway, 142 U. S. 217; Charlotte &c. Railroad v. Gibbes, 142 U. S. 386; Columbus Southern Railway v. Wright, 151 U. S. 470.

"The true value of a line of railroad is something more than an aggregation of the values of separate parts of it, operated separately. It is the aggregate of those values, plus

Opinion of the Court.

that arising from a connected operation of the whole; and each part of the road contributes, not merely the value arising from its independent operation, but its mileage proportion of that flowing from a continuous and connected operation of the whole. This is no denial of the mathematical proposition that the whole is equal to the sum of all its parts; because there is a value created by and resulting from the combined operation of all its parts as one continuous line." 154 U. S. 444.

"Now, when a road runs into two States, each State is entitled to consider, as within its territorial jurisdiction, and subject to the burdens of its taxes, what may perhaps not inaccurately be described as the proportionate share of the value flowing from the operation of the entire mileage as a single continuous road. It is not bound to enter upon a disintegration of values, and attempt to extract from the total value of the entire property that which would exist if the miles of road within the State were operated separately. Take the case of a railroad running from Columbus, Ohio, to Indianapolis, Indiana. Whatever of value there may be resulting from the continuous operation of that road is partly attributable to the portion of the road in Indiana, and partly to that in Ohio; and each State has an equal right to reach after a just proportion of that value, and subject it to its taxing processes. The question is, how can equity be secured between the States; and to that a division of the value of the entire property upon the mileage basis is the legitimate answer. Taking a mileage share of that in Indiana is not taxing property outside of the State." 154 U. S. 444, 445.

"The rule of property taxation is that the value of the prop'erty is the basis of taxation. It does not mean a tax upon the earnings which the property makes, nor for the privilege of using the property, but rests solely upon the value. But the value of property results from the use to which it is put, and varies with the profitableness of that use, present and prospective, actual and anticipated. There is no pecuniary value outside of that which results from such use. The amount and profitable character of such use determines the value; and if property is taxed at its actual cash value, it is

Opinion of the Court.

taxed upon something which is created by the uses to which it is put. In the nature of things, it is practically impossible -at least in respect to railroad property - to divide its value, and determine how much is caused by one use to which it is put, and how much by another. Take the case before us; it is impossible to disintegrate the value of that portion of the road within Indiana, and determine how much of that value springs from its use in doing interstate business, and how much from its use in doing business wholly within the State. An attempt to do so would be entering upon a mere field of uncertainty and speculation. And because of this fact it is something which an assessing board is not required to attempt." 154 U. S. 445, 446.

"It is enough for the State, that it finds within its borders property which is of a certain value. What has caused that value is immaterial. It is protected by state laws, and the rule of all property taxation is the rule of value, and by that rule property engaged in interstate commerce is controlled, the same as property engaged in commerce within the State. Neither is this an attempt to do by indirection what cannot be done directly, that is, to cast a burden on interstate commerce. It comes rather within that large class of state action, like certain police restraints, which, while indirectly affecting, cannot be considered as a regulation of interstate commerce, or a direct burden upon its free exercise." 154 U. S. 446, 447.

"It is true, there may be exceptional cases," "as, for instance, where the terminal facilities in some large city are of enormous value, and so give to a mile or two in such city a value out of all proportion to any similar distance elsewhere along the line of the road, or where in certain localities the company is engaged in a particular kind of business requiring for sole use in such localities an extra amount of rolling stock. If testimony to this effect was presented by the company to the state board, it must be assumed, in the absence of anything to the contrary, that such board, in making the assess ment of track and rolling stock within the State, took into account the peculiar and large value of such facilities and such extra rolling stock." 154 U. S. 431.