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contractplaintiff

contractplaintiffplea

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Southern Express Co. v. Spigener, 118 S.C. 413, 110 S.E. 403

Facts

The Southern Express Company conducted its business as a common carrier of express matter in South Carolina and had its intangible property assessed for taxation in 1917 and 1918. Following the federal government's takeover of the railroads on December 28, 1917, the company continued its operations under existing contracts until it voluntarily surrendered these contracts in June 1918. The company sought to recover taxes assessed on its intangible property, arguing that its right to do business was no longer taxable due to federal control.

For many years prior to the 28th of December, 1917, plaintiff conducted within this state its business as a common carrier of express matter, both intra and inter state.

Issue

1) Did the plaintiff's right to do an express business in this state cease to be a taxable property right when the federal government assumed control of the railroads? 2) Was such property right exempt from taxation during 1918 because it was being used as a federal agency? 3) Was the assessment of this intangible property for 1918 erroneous as an exaggerated assessment?

The pleadings raise only three issues: (1) Did plaintiff's right to do an express business in this state under its contracts with several railroad companies cease to be a taxable property right, when the federal government assumed control of the railroads, December 28, 1917? (2) Was such property right exempt from taxation by the state during the year 1918, because it was then being used as a federal agency? (3) Was the assessment of this intangible property right for the year 1918 at the same valuation as in 1917 erroneous as an exaggerated assessment?

Rule

The court applied the principle that property rights continue to exist and are subject to state taxation unless explicitly exempted by federal law.

The Act of Congress approved March 21, 1918, provided: 'Nothing in this act shall be construed to amend, repeal, impair, or effect the existing laws or powers of the states in relation to taxation.'

Analysis

The court determined that the Southern Express Company's intangible property rights were not extinguished by the federal government's takeover of the railroads. It emphasized that the company continued to operate under its existing contracts and that the federal control did not negate the state's authority to tax the property. The court also referenced previous rulings that upheld state taxation of property used in federal service.

It is manifest that the federal control of such express business was based upon the war power, and is to cease upon the war's termination as provided in the Act of Congress of March 21, 1918.

Conclusion

The court affirmed the dismissal of the complaint, concluding that the intangible property rights of the Southern Express Company were subject to state taxation and had not been destroyed by federal control.

It is therefore ordered, adjudged, and decreed that the complaint in the above-entitled action be, and hereby is, dismissed.

Who won?

P. B. Spigener, Treasurer of Richland County prevailed in the case because the court upheld the state's right to tax the Southern Express Company's intangible property.

For the reasons therein stated, the judgment of the circuit court is affirmed.

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