MITCHELL, J.1
These proceedings were instituted to enforce taxes for 1894 against specific tracts of land belonging to the defendant, which constitute a part of the lands granted by the acts of congress of March 3, 1857,2 and March 3, 1865,3 to the territory or state of Minnesota, in trust to aid in the construction of certain lines of railroad. The particular tracts in question are part of the lands granted to the old Minnesota & Pacific Railroad Company, to aid in the construction of a line of road from St. Anthony to Breckenridge. The trial court has certified 12 questions to this court, but they may [422]*422all be summed up in one, viz.: Are these lands, upon the facts, subject to taxation in the ordinary way? The taxes having been levied prior to the passage of the so-called “Anderson Bill” (Laws 1895, c. 168), the case stands as if that act had never been passed. ,
The history of the old territorial “land-grant” railroad companies, of the land-grant acts of congress, and of the legislation of Minnesota in execution of the trust thereby created, are matters of common knowledge in this state. How the lands here in question were successively granted to the Minnesota & Pacific Railroad Company and the St. Paul & Pacific Company, and how, on the division of the latter, its main line, with all its lands, franchises, etc., became the property of the First Division Company are so fully stated in First Division v. Parcher, 14 Minn. 224 (297), commonly called the “Parcher case,” that it need not be repeated, but merely supplemented by a statement of the following subsequent events.
By an act of congress passed March 3,1865 (13 Stat. 526), the land grant of March 3,1857, was increased from 6 to 10 sections per mile, and the “indemnity limits” were extended from 15 to 20 miles. By Sp. Laws 1865, cc. 6, 9, this additional grant was given on the terms and conditions therein specified to the St. Paul & Pacific Railroad Company. These two acts were accepted'together and at the same time by that company. The St. Paul & Pacific Railroad Company and the First Division Company executed mortgages or trust deeds purporting to convey and mortgage their lines of road, and all their lands, rights, franchises, immunities and exemptions, at. any time possessed by said companies or by either of them; and by purchase, upon foreclosure of these mortgages or trust deeds in 1879, the St. Paul, Minneapolis & Manitoba Railway Company, a corporation organized under Laws 1876, c. 30 (G. S. 1894, § 2727), became the owner of all the railroads, property, granted lands, and a.ll rights, franchises, privileges, immunities and exemptions at any time possessed by the mortgagor companies, or either of them, in so far as such rights, privileges, immunities and exemptions could be legally mortgaged, assigned or conveyed by said companies, or either of them, or acquired by purchase at such mortgage foreclosures or otherwise.
In February, 1890, the St. Paul, Minneapolis & Manitoba Railway [423]*423Company executed to the Great Northern Railway Company the lease and contract set out in the record. The lands in question still belong to the St. Paul, Minneapolis & Manitoba Railway Company, unless this lease and contract amounts to a sale thereof, within the meaning of the acts of 1865 already referred to. It does not appear whether the tracts of land against which the taxes are sought to be enforced were all included in the original grant of 1857, or whether part of them were acquired through the additional grant of 1865, and we shall assume that the list includes both classes of land. The defendant paid to the state 3 per cent, of the gross earnings of all its lines of road for the year 1894 and all prior years.
Counsel for the state concedes that, under the doctrine of the Parcher case, these lands, a.t least so far as included in the original congressional grant of 1857, were exempt from this form of taxation in the hands of the First Division Company. That case was decided 29 years ago, and has been repeatedly followed or recognized by this court as the law. It has become a law of property, and must be adhered to.
But the chief contention of the state is that this immunity of its road, lands, etc., from the ordinary form of taxation, was not a franchise or attached to the property, but a mere personal privilege to the First Division Company, which could not be transferred, by mortgage or otherwise, to any other company. And counsel has cited numerous authorities from other jurisdictions, and particularly from the supreme court of the United States, as supporting his contention. But we have in this state a body of law commencing over 40 years ago, made up of the acts of the legislature, the practical construction of these acts by the executive department of the government, and the judicial construction of them by our courts, which must control the decision of this question as applied to these old territorial “land-grant” railroad companies, without reference to the general doctrine or the decisions in other jurisdictions on the subject.
It is a part of the legislative history of Minnesota, both as a territory and a state, that its policy in regard to taxing land-grant roads was adopted with reference alike to facilitating the early construction of these lines of road, and to securing to the state what [424]*424was supposed an ultimate and adequate return for the value of the franchises conferred, and which would, in the long run, be the equivalent of the companies’ fair share of taxation. The policy adopted was to provide for these companies paying to the state a certain percentage of their gross earnings in lieu of all other taxation on their railroads, and also on their granted lands until sold by the company; this latter being (unfortunately, as subsequent experience has proven) without limitation as to time. The object of this was not to grant a personal favor to the original companies, but to secure the construction of the lines of road. Hence, as might naturally be supposed, the history of - legislation, as well as the decisions of this court, clearly indicate that the general understanding was that this system of taxation was not personal to the original company, but was to be alike applicable to any of their successors which might assume the completion of the road. The acts of the legislature on the subject, too numerous to be cited, all bear out this assertion.
The decisions of this court from the Parcher case down have all been to the effect that this exemption from ordinary taxation was not simply a personal privilege conferred upon the original' company, but was appurtenant to the line of road, and existed in favor of any company which, in consideration of the land grant, should assume the construction and maintenance of the line by which it was applicable; that the immunity as well as the burden passed to any company which acquired the road, and assumed its operation and the performance of all the other duties which the original company owed to the public; that the transfer of the road and land grant to such a company did not constitute a sale of the lands, within the meaning of either the act of 1857 or of acts similar to those of 1865 already referred to. First Division v. Parcher, supra; State v. Winona & St. P. R. Co., 21 Minn. 315; Chicago, M. & St. P. Ry. Co. v. Pfaender, 23 Minn. 217; City of St. Paul v. St. Paul & S. C. R. Co., 23 Minn. 469; County of Nobles v. Sioux City & St. P. Ry. Co., 26 Minn. 294, 3 N. W. 701; State v. St. Paul, M. & M. Ry.
Free access — add to your briefcase to read the full text and ask questions with AI
MITCHELL, J.1
These proceedings were instituted to enforce taxes for 1894 against specific tracts of land belonging to the defendant, which constitute a part of the lands granted by the acts of congress of March 3, 1857,2 and March 3, 1865,3 to the territory or state of Minnesota, in trust to aid in the construction of certain lines of railroad. The particular tracts in question are part of the lands granted to the old Minnesota & Pacific Railroad Company, to aid in the construction of a line of road from St. Anthony to Breckenridge. The trial court has certified 12 questions to this court, but they may [422]*422all be summed up in one, viz.: Are these lands, upon the facts, subject to taxation in the ordinary way? The taxes having been levied prior to the passage of the so-called “Anderson Bill” (Laws 1895, c. 168), the case stands as if that act had never been passed. ,
The history of the old territorial “land-grant” railroad companies, of the land-grant acts of congress, and of the legislation of Minnesota in execution of the trust thereby created, are matters of common knowledge in this state. How the lands here in question were successively granted to the Minnesota & Pacific Railroad Company and the St. Paul & Pacific Company, and how, on the division of the latter, its main line, with all its lands, franchises, etc., became the property of the First Division Company are so fully stated in First Division v. Parcher, 14 Minn. 224 (297), commonly called the “Parcher case,” that it need not be repeated, but merely supplemented by a statement of the following subsequent events.
By an act of congress passed March 3,1865 (13 Stat. 526), the land grant of March 3,1857, was increased from 6 to 10 sections per mile, and the “indemnity limits” were extended from 15 to 20 miles. By Sp. Laws 1865, cc. 6, 9, this additional grant was given on the terms and conditions therein specified to the St. Paul & Pacific Railroad Company. These two acts were accepted'together and at the same time by that company. The St. Paul & Pacific Railroad Company and the First Division Company executed mortgages or trust deeds purporting to convey and mortgage their lines of road, and all their lands, rights, franchises, immunities and exemptions, at. any time possessed by said companies or by either of them; and by purchase, upon foreclosure of these mortgages or trust deeds in 1879, the St. Paul, Minneapolis & Manitoba Railway Company, a corporation organized under Laws 1876, c. 30 (G. S. 1894, § 2727), became the owner of all the railroads, property, granted lands, and a.ll rights, franchises, privileges, immunities and exemptions at any time possessed by the mortgagor companies, or either of them, in so far as such rights, privileges, immunities and exemptions could be legally mortgaged, assigned or conveyed by said companies, or either of them, or acquired by purchase at such mortgage foreclosures or otherwise.
In February, 1890, the St. Paul, Minneapolis & Manitoba Railway [423]*423Company executed to the Great Northern Railway Company the lease and contract set out in the record. The lands in question still belong to the St. Paul, Minneapolis & Manitoba Railway Company, unless this lease and contract amounts to a sale thereof, within the meaning of the acts of 1865 already referred to. It does not appear whether the tracts of land against which the taxes are sought to be enforced were all included in the original grant of 1857, or whether part of them were acquired through the additional grant of 1865, and we shall assume that the list includes both classes of land. The defendant paid to the state 3 per cent, of the gross earnings of all its lines of road for the year 1894 and all prior years.
Counsel for the state concedes that, under the doctrine of the Parcher case, these lands, a.t least so far as included in the original congressional grant of 1857, were exempt from this form of taxation in the hands of the First Division Company. That case was decided 29 years ago, and has been repeatedly followed or recognized by this court as the law. It has become a law of property, and must be adhered to.
But the chief contention of the state is that this immunity of its road, lands, etc., from the ordinary form of taxation, was not a franchise or attached to the property, but a mere personal privilege to the First Division Company, which could not be transferred, by mortgage or otherwise, to any other company. And counsel has cited numerous authorities from other jurisdictions, and particularly from the supreme court of the United States, as supporting his contention. But we have in this state a body of law commencing over 40 years ago, made up of the acts of the legislature, the practical construction of these acts by the executive department of the government, and the judicial construction of them by our courts, which must control the decision of this question as applied to these old territorial “land-grant” railroad companies, without reference to the general doctrine or the decisions in other jurisdictions on the subject.
It is a part of the legislative history of Minnesota, both as a territory and a state, that its policy in regard to taxing land-grant roads was adopted with reference alike to facilitating the early construction of these lines of road, and to securing to the state what [424]*424was supposed an ultimate and adequate return for the value of the franchises conferred, and which would, in the long run, be the equivalent of the companies’ fair share of taxation. The policy adopted was to provide for these companies paying to the state a certain percentage of their gross earnings in lieu of all other taxation on their railroads, and also on their granted lands until sold by the company; this latter being (unfortunately, as subsequent experience has proven) without limitation as to time. The object of this was not to grant a personal favor to the original companies, but to secure the construction of the lines of road. Hence, as might naturally be supposed, the history of - legislation, as well as the decisions of this court, clearly indicate that the general understanding was that this system of taxation was not personal to the original company, but was to be alike applicable to any of their successors which might assume the completion of the road. The acts of the legislature on the subject, too numerous to be cited, all bear out this assertion.
The decisions of this court from the Parcher case down have all been to the effect that this exemption from ordinary taxation was not simply a personal privilege conferred upon the original' company, but was appurtenant to the line of road, and existed in favor of any company which, in consideration of the land grant, should assume the construction and maintenance of the line by which it was applicable; that the immunity as well as the burden passed to any company which acquired the road, and assumed its operation and the performance of all the other duties which the original company owed to the public; that the transfer of the road and land grant to such a company did not constitute a sale of the lands, within the meaning of either the act of 1857 or of acts similar to those of 1865 already referred to. First Division v. Parcher, supra; State v. Winona & St. P. R. Co., 21 Minn. 315; Chicago, M. & St. P. Ry. Co. v. Pfaender, 23 Minn. 217; City of St. Paul v. St. Paul & S. C. R. Co., 23 Minn. 469; County of Nobles v. Sioux City & St. P. Ry. Co., 26 Minn. 294, 3 N. W. 701; State v. St. Paul, M. & M. Ry. Co., 30 Minn. 311, 15 N. W. 307; State v. Northern Pac. R. Co., 32 Minn. 294, 20 N. W. 234; County of Hennepin v. St. Paul, M. & M. Ry. Co., 33 Minn. 534, 24 N. W. 196; County of Ramsey v. Chi[425]*425cago, M. & St. P. Ry. Co., 33 Minn. 537, 24 N. W. 313; County of Stevens v. St. Paul, M. & M. Ry. Co., 36 Minn. 467, 31 N. W. 942.
It has also been repeatedly held by this court, as well as by the supreme court of the United States, that the substitution of an assessment upon gross earnings in lieu of all other taxes on the road and the granted lands does not exempt the lands from taxation, but merely substitutes one method of taxation for another, upon the terms and conditions specified; and for that reason the latter court, which is very tenacious of the doctrine that an exemption from taxation must be clearly shown and strictly construed, has held that this doctrine does not apply, at least to its full extent, to such a case. Northern Pac. R. Co. v. Clark, 153 U. S. 252, 14 Sup. Ct. 809; McHenry v. Alford, 168 U. S. 651, 18 Sup. Ct. 242. And this court held to the same effect in City of St. Paul v. St. Paul & S. C. R. Co., supra.
In some of these cases the point decided was that any company owning and operating the road was liable to pay the 3 per cent, gross-earnings tax; but the converse of this must be true, inasmuch' as this is a tax on the granted lands (until sold) as well as on the railroads; and, if the burden is appurtenant to the road, so must be the reciprocal benefit, the two being parts of a unit. It will also be observed that, in some of the cases, the railway company which was a party to the suit was not one of those to whom the state granted the land, property and franchises of one of the original land-grant companies acquired by it under foreclosure of the mortgages executed to secure the state loan of credit in 1858. At least two of the cases (21 Minn. 315; 36 Minn. 467, 31 N. W. 942) involved the taxation of lands embraced in the increased grant of 1865; and in neither of them, nor in any of the other cases cited, was it even suggested that there was any distinction, as to taxation, between such lands and those embraced in the original grant of 1857. In fact, except as to lands outside of the 15-mile indemnity limits of the original grant, it would be impossible to distinguish between the two. The whole was treated and adjusted as one grant.
But there can be no question but that the acts of 1865, already cited, include the increased as well as the original grant, and in terms apply the commuted system of taxation to the whole. This [426]*426court has twice decided that the provisions of these acts exempting the roads and land-grant lands from ordinary taxation, in consideration of the payment of a percentage of the gross earnings of the road, were, as to the territorial land-grant companies, not in conflict with the provisions of the constitution relating to taxation. State v. Winona & St. P. R. Co., supra; City of St. Paul v. St. Paul & S. C. R. Co., supra. But it is immaterial whether these acts were or were not valid when originally enacted, for the reason that they were validated by the constitutional amendment of 1871 (State v. Luther, 56 Minn. 156, 57 N. W. 464); and it could not be claimed in any event that they were repealed or modified prior to the passage of the Anderson bill in 1895.
Whatever errors of law, if any, may be involved in the practical or judicial construction of either constitution or statutes on the subject of the taxation of “land-grant” lands of the old territorial railroad companies or their successors, after that construction has been adopted and acted upon by all departments of the government, and generally acquiesced in for so many years, it must now be adhered to. It is now too late to think of undoing the past. All these years the defendant has been paying, and the state accepting, taxes on these lands in the substituted or commuted form of a percentage of the gross earnings of the road. This was done for 1894, the very year for which the state is here seeking to enforce these taxes. The question whether the legislation on the subject involves the elements of a contract between the defendant or its predecessor and the state is not necessarily involved, and need not now be considered.
The lease and contract between the defendant and the Great Northern Bailway Company is too long, and its provisions too numerous, to be discussed in full; but an examination of it satisfies us that it does not amount to a sale of either the road or the lands. That such is not the effect of a lease is elementary. Morrison v. St. Paul & N. P. Ry. Co., 63 Minn. 75, 65 N. W. 141. The strongest or most plausible argument urged to the contrary is that, although the lands are not in terms leased or sold or contracted to be, still the proceeds of sales are to go to pay the debts of the defendant which the Great Northern has agreed to pay. But the defendant remains [427]*427a debtor. The debts are still its debts, and it has a direct interest in paying them. In paying them with the proceeds of land sales, it is applying those proceeds to its own use. Moreover, the provision by which the Great Northern Eailway Company agrees to pay these debts must be read in connection with the provisions by which the proceeds of these lands are to be applied towards their payment. The effect of the two, when taken together, is that the Great Northern Eailway Company only agrees to pay such amount of defendant’s debts as the proceeds of its lands shall be insufficient to pay.
Our conclusion is that the court below correctly decided that these lands were not subject to ordinary taxation in 1894, and that its judgment should be affirmed. It is so ordered.