Argued December 1, 1902. Decided January 19, 1903.
1. The village of Ontonagon, Michigan, has power, either under its charter or under the statute of 1899 of Michigan, to assess logs in the boom or sorting boom in the Ontonagon River belonging to plaintiff in error. 2. The legislature of Michigan could confer by statute upon the village of Ontonagon the power to tax logs in transit to Ontonagon as provided in the act of 1899 for taxing personal property; and property which was in transit through the Ontonagon River, and then by the Chicago, Milwaukee St. Paul Railway was properly assessed at Ontonagon, that being the place in the State nearest to the last boom or sorting gap of the stream in or bordering on the State in which said property naturally would be and was intended to be last floated during the transit thereof. 3. There may be an interior movement of property within the State which does not constitute interstate commerce though the property come from or be destined to another State; and where one hundred and eighty million feet of logs are cut, hauled and put into the Ontonagon River during two seasons for the purpose of saving, protecting and preserving the same, and the owner cannot use more than twenty to forty million in any year, and it was not the intention to take all the logs down at the opening of the streams but only to take down each season the number that could be used, the logs in the sorting gap cannot be regarded as property engaged in interstate commerce so as to be exempted from taxation under the laws of Michigan. Coe v. Errol, 116 U.S. 617, followed.
Mr. Edwin Walker for the appellants argued:
I. The village of Ontonagon had no power to assess property for taxation and levy taxes thereon, except as specially conferred by the general or special statutes of the State of Michigan. Compiled Laws of Michigan, vol. 1, p. 913, §§ 1, 2, 6; Cooley on Taxation, pp. 96, 209, 474; Dillon's Municipal Corporations, 4th ed. § 763; In re Second Ave. M.E. Church, 66 N.Y. 395; English v. People of the State of Illinois, 96 Ill. 566.
II. The State of Michigan could not by legislative grant authorize the village of Ontonagon to impose a tax upon the property of non-residents when the situs of such property was beyond its municipal limits and jurisdiction. Wells v. Weston, 22 Mo. 384; In re Assessment of Lands c., 66 N.Y. 398; Trigg v. Glasgow, 2 Bush, 594; City of St. Louis v. Ferry Co., 11 Wall. 430.
III. The statute of the State of Michigan, under and by authority of which the complainant's property was assessed for taxation, is in contravention of, and repugnant to, the Constitution of the United States. Coe v. Errol, 116 U.S. 517; The Daniel Ball, 10 Wall. 557-565; State Freight Tax Case, 15 Wall. 272.
IV. Under the admitted facts equity has jurisdiction to enjoin the collection of the tax. Cooley on Taxation, 2d ed. 784; Pacific Hotel Co. v. Lieb, 83 Ill. 602; Railway Co. v. Cole, 75 Ill. 591; Cook County v. Railroad Co., 35 Ill. 460; Bank of Kentucky v. Stone, 88 F. 383; Ogden City v. Armstrong, 168 U.S. 224; High on Injunctions, §§ 502, 530; Smyth v. Ames, 169 U.S. 515; Hazard v. O'Bannon, 36 F. 855; Parmalee v. Railroad Companies, 3 Dillon, 25.
Mr. T.L. Chadbourne submitted a brief on behalf of appellees.
The contention of appellant is presented in three propositions. (1) That the village of Ontonagon had no power to assess the property under its charter. (2) That the legislature could not confer such power. (3) That the property was in the course of transportation within the meaning of the commerce clause of the Constitution of the United States.
1. This proposition is unimportant. If the charter did not, the statute of 1899 did, authorize the assessment.
2. To sustain this proposition would embarrass the power of the State — indeed, make it impotent to deal with the conditions there existing. The statute, no doubt, was enacted as a means to subject property to taxation which had no definite or enduring locality, and because of the clash or confusion of jurisdictions. In such circumstances experience, probably, demonstrated that property escaped taxation or was difficult to tax, or that controversies arose. It was competent for the legislature to defeat either result by giving moving property a definite situs as of some day. Nor is that power impugned by the principle that protection is the consideration of taxation. There is protection during the transit through the municipalities of the State and at its termination in the State — protection accommodated to the kind of property and as efficient as links are to the continuity of a chain.
There is nothing in the cases cited by appellant which sustains the opposite view. Trigg v. Glasgow, 2 Bush, 594, seems to have turned upon the interpretation of a state statute. Under a statute of the State the town of Glasgow was authorized to subscribe to the stock of a railroad, and by the charter of the town it was the duty of the trustees to "levy an ad valorem tax on the property, both real and personal, within said town, that is listed for state purposes, including the amount given in under the equalization law, sufficient," etc.
By an amendatory act it was provided that "all the taxable property in said town on the 10th of April shall be subject to taxation for the payment of said subscription;" and it also provided that the taxable property in said town which may have been removed without its limits between the 1st of January and the 10th of April, for the purpose of evading the tax, should be listed for taxation.
The court held, as we understand its opinion, that property to be subject to taxation under the statute must be in the town. If it had been taken out to avoid taxation, it was subject to taxation when brought back.
St. Louis v. The Ferry Co., 11 Wall. 423, was also an interpretation of the state statute. The city of St. Louis had power to tax all property within the city. It was held under the circumstances of the case that the ferryboats of the ferry company had their situs in the State of Illinois. It was said:
"Their relation to the city was merely that of contact there, as one of the termini of their transit across the river in the prosecution of their business. The time of such contact was limited by the city ordinance. Ten minutes was the maximum of the stay they were permitted to make at any one time. The owner was, in the eye of the law, a citizen of that State, and from the inherent law of its nature could not emigrate or become a citizen elsewhere. As the boats were laid up on the Illinois shore when not in use, and the pilots and engineers who ran them lived there, that locality, under the circumstances, must be taken to be their home port. They did not so abide within the city as to become incorporated with and form a part of its personal property."
In Wells v. Weston, 22 Mo. 384, and In Assessment of Lands in the Town of Flatbush, c., 60 N.Y. 398, the property taxed was real estate.
The purpose of the statute of Michigan is to assess the forest products of the State — things which are a part of the general property of the State. Those "in transit" are assessable according to their destination. If that be "some place within the State," the property is to be "assessed in such place;" if that be "some place without the State," the property is to be assessed at the place in the State "nearest to the last boom or sorting gap of the same in or bordering on this State in which said property will naturally be the last floated during the transit thereof."
But it is also provided that "in case the transit of any such property is to be other than through any watercourse in or bordering on this State, then such assessment shall be made at the point where such property will naturally leave the State in the ordinary course of its transit."
We may assume for the present that the property was in transit and to some place without the State. Was the "transit to be other than through any watercourse in or bordering on" the State? The appellant contends that it was because it was to be by water and by rail; in other words, the transit was not to be exclusively "through any watercourse." But to give that meaning to the statute words must be added to it. It must be made to read other than exclusively or wholly or entirely "through any watercourse." One of these words must be added to make the sense contended for. The word "other" is used to express a difference — the difference being between a transit which is and one which is not through any (the word is significant) watercourse.
The transit in controversy was to be through (by means of) the Ontonagon River, certainly a watercourse, and by the Chicago, Milwaukee and St. Paul Railway, and, therefore, the property was properly assessed by the village of Ontonagon, that being the place in the State nearest to the last boom or sorting gap of the stream in or bordering on the State in which said property naturally would be and was intended to be last floated during the transit thereof.
3. Was the transit interstate commerce? We agree with counsel that it is unimportant in determining an answer whether the transit "was by water or by railroad, or both water and railroad." But no purpose to burden interstate commerce is evident in the statute, and the power of the State to tax everything which is part of what has been called "the general property" or "the general mass of property" of the State, is undoubted. But things which have been brought to a State may not have reached that condition. Things intended to be sent out of a State, but which have not left it, may not have ceased to be in that condition. The exact moment in either case may not be easy to point out — may be confused by circumstances, and the confident assignment of the property as subject or not subject to taxation is not easily made. Fortunately we are not without illustrations in prior cases, and in Kelley v. Rhoads, p. 1, ante, decided concurrently with this, we express the principles of decision.
In Brown v. Houston, 114 U.S. 622, the property (coal in barges) had reached the State, but was yet in the boats in which it had been brought into the State. While on the barges it was offered for sale. It was held it had become part of the property of the State and was subject to taxation. Pittsburg c. Coal Co. v. Bates, 156 U.S. 577, had facts assimilating it to the case at bar, and it was affirmed on the authority of Brown v. Houston. As in the latter case, the tax was on coal in barges shipped from the mines in Pennsylvania, and consigned to New Orleans, Louisiana. The coal, however, had not reached, as the coal in Brown v. Houston, its exact destination. To accommodate the exigencies of the owner's business, the barges, "about one hundred in number, were stopped and moored in the Mississippi River at a convenient mooring place about nine miles above the port of Baton Rouge." The coal was held subject to taxation.
In Coe v. Errol, 116 U.S. 517, logs which had been cut in the State of Maine, and others which had been cut in the State of New Hampshire, were floated in course of transit down a stream in New Hampshire to the town of Errol, in the latter State; thence to be floated down the Androscoggin River to the State of Maine. The town of Errol assessed upon the property a county, town, school and highway tax. The tax was sustained by the Supreme Court of the State of New Hampshire as to the logs cut in that State, and abated as to those cut in Maine. The judgment was affirmed by this court.
Mr. Justice Bradley, delivering the opinion of the court, expressed the contentions of the parties in two questions:
"Are the products of a State, though intended for exportation to another State, and partially prepared for that purpose by being deposited at a place or port of shipment within the State, liable to be taxed like other property within the State?
"Do the owner's state of mind in relation to the goods, that is, his intent to export them, and his partial preparation to do so, exempt them from taxation? This is the precise question for solution."
It is obvious that like questions could be framed upon the facts of the case at bar to express the propositions presented. Mr. Justice Bradley's observations, therefore, become pertinent and decisive. He discussed every consideration. He clearly exhibited the extent of the power of the State over the property within it, whether in motion or at rest, though destined for points out of it. He said:
"There must be a point of time when they (goods destined to other States) cease to be governed exclusively by the domestic law and begin to be governed and protected by the national law of commercial regulation, and that moment seems to us to be a legitimate one for this purpose, in which they commence their final movement for transportation from the State of their origin to that of their destination. When the products of the farm or the forest are collected and brought in from the surrounding country to a town or station serving as a entrepot for that particular region, whether on a river or a line of railroad, such products are not yet exports, nor are they in process of exportation, nor is exportation begun until they are committed to the common carrier for transportation out of the State to the State of their destination, or have started on their ultimate passage to that State. Until then it is reasonable to regard them as not only within the State of their origin, but as a part of the general mass of property of that State, subject to its jurisdiction, and liable to taxation there if not taxed by reason of their being intended for exportation, but taxed without any discrimination in the usual way and manner in which such property is taxed in the State."
"But no definite rule has been adopted with regard to the point of time at which the taxing power of the State ceases as to goods exported to a foreign country or to another State. What we have already said, however, in relation to the products of a State intended for exportation to another State will indicate the view which seems to us the sound one on that subject, namely, that such goods do not cease to be part of the general mass of property in the State, subject, as such, to its jurisdiction, and to taxation in the usual way, until they have been shipped or entered with a common carrier for transportation to another State, or have been started upon such transportation in a continuous route or journey. We think that this must be the true rule on the subject. It seems to us untenable to hold that a crop or herd is exempt from taxation merely because it is, by its owner, intended for exportation. If such were the rule in many States there would be nothing but the lands and real estate to bear the taxes. Some of the Western States produce very little except wheat and corn, most of which is intended for export; and so of cotton in the Southern States. Certainly, as long as these products are on the lands which produce them, they are part of the general property of the State. And so we think they continue to be until they have entered upon their final journey for leaving the State and going into another State. It is true, it was said in the case of The Daniel Ball, 10 Wall. 557, 565: `Whenever a commodity has begun to move as an article of trade from one State to another, commerce in that commodity between the States has commenced.' But this movement does not begin until the articles have been shipped or started for transportation from the one State to the other. The carrying of them in carts or other vehicles, or even floating them, to the depot where the journey is to commence, is no part of that journey."
These cases are referred to in Kelley v. Rhoads, 188 U.S. 1, as defining the taxing power of a State. And their substance is declared to be "that while property is at rest for an indefinite time or awaiting transportation, or awaiting sale at its place of destination, or at an intermediate point, it is subject to taxation. But if it be actually in transit to another State, it becomes the subject of interstate commerce, and is exempt from local assessment."
In further specialization of these propositions we may say that the cases establish that there may be an interior movement of property which does not constitute interstate commerce, though property come from or be destined to another State. In the one case, though it have not reached its place of disembarkation or delivery, it may be taxed. Brown v. Houston, 114 U.S. 662. In the other case, until it be shipped or started on its final journey, it may be taxed. Coe v. Errol, 116 U.S. 617.
The case at bar falls within this principle. It is alleged in the bill that during the winters of 1895 and 1896 the plaintiff cut, hauled and put into the Ontonagon River and its tributaries, one hundred and eighty million feet of logs for the purpose of saving, protecting and preserving the same; that said lumber was more than plaintiff could utilize in any one season at its mills, and it was not, therefore, the intention at the opening of the streams to make a clean drive of the same, but only to take down the streams the following spring and summer, and each succeeding driving season, the number complainant could utilize; that complainant was at the time the logs were cut and put in the streams an owner of lumber mills situated at or near the corporate limits of the village of Ontonagon; that said mills were destroyed by fire in the fall of 1896, and were not rebuilt, and that after the destruction thereof plaintiff destined the logs for its mills at Green Bay, Wisconsin, but that it was not its intention to take to said mills during any one summer any more than sufficient for its purposes, and not to exceed generally twenty million feet — according to the stipulation forty million feet. The route of the logs from the forests to the mills is described as follows:
"They are driven down the tributaries of said Ontonagon River into the stream of said river and thence down said Ontonagon River to a point at or near the mouth thereof, in the township of Ontonagon, to the sorting grounds and pier jams of the complainant; they are then loaded aboard cars and shipped by rail to Green Bay, Wisconsin, via the Chicago, Milwaukee St. Paul Railway, and pass out of the State of Michigan at a point near the village of Iron Mountain in said State."
The number of the logs shipped by rail from Ontonagon to Green Bay before the levy of the tax complained of is given in the stipulation of facts, and it is stipulated that "about five hundred thousand feet of complainant's said logs in said river have been (in said river of slough) constantly within said village since 1898, for the purpose of shipment by rail to the destination as aforesaid."
The appellant's contention is that the movement of the logs commenced at the opening of navigation of the river (presumably in the spring or summer of 1896 and 1897,) and from that date were in continuous transit as subjects of interstate commerce, and exempt from taxation. The contention is more extreme than that made and rejected in Coe v. Errol.