Central Railroad Company of Pennsylvania v. Pennsylvania

PETITIONER: Central Railroad Company of Pennsylvania
RESPONDENT: Pennsylvania
LOCATION: Brown Shoe Co.

DOCKET NO.: 400
DECIDED BY: Warren Court (1962)
LOWER COURT:

CITATION: 370 US 607 (1962)
ARGUED: Mar 20, 1962
DECIDED: Jun 25, 1962

Facts of the case

Question

Media for Central Railroad Company of Pennsylvania v. Pennsylvania

Audio Transcription for Oral Argument - March 20, 1962 in Central Railroad Company of Pennsylvania v. Pennsylvania

Earl Warren:

Number 400, Central Railroad Company of Pennsylvania, Appellant, versus, Pennsylvania.

Mr. Keefer.

Roy J. Keefer:

Mr. Chief Justice, may it please the Court.

The state statute at issue in this case imposes a tax on the capital stock of corporations organized under the laws of Pennsylvania.

It provides that tangible personal property permanently located outside the State should be excluded also exempt assets such as United States securities.

The tax has been construed by the Pennsylvania courts and by this Court as a property tax on the assets of the corporation.

This case presents the validity of the property tax assessment made by Pennsylvania upon the entire fleet of appellant's freight cars numbering 3074.

The assessment included tax also on all of appellant's locomotives numbering 30.

The tax was challenged under the Due Process and Commerce Clauses on the ground that an average number of the locomotives and freight cars had acquired a situs outside the State or were habitually and substantially employed outside the State and therefore, Pennsylvania lack power and jurisdiction to tax them.

The tax was challenged also under the Equal Protection Clause on the ground that the claim made by appellant for exclusion of certain freight cars denied to it, was allowed to other railroads under similar circumstances.

The Court of Common Pleas of Dauphin County Pennsylvania sustained the tax as assessed.

The Supreme Court of Pennsylvania modified the judgment of the trial court by excluding from the tax an average of 13 locomotives claimed by appellant to have acquired a situs outside the State.

But the court sustained the tax on all of appellant's locomotives or all of appellant's freight cars.

The tax on the freight cars is here on appeal.

Appellant, Central Railroad Company of Pennsylvania is a Pennsylvania corporation, having its nominal domiciliary office at Mauch Chunk, Pennsylvania, but having its principal business operating office at Jersey City, New Jersey.

The state court reached the conclusion that all of appellant's freight cars had their taxable situs in Pennsylvania.

Now, since the principal issue before this Court under the process of Commerce Clauses turns on the determination of the question of situs or of the power and jurisdiction of Pennsylvania to tax is within the province of this Court to analyze the facts in order to apply the law and thus ascertain whether the conclusion reached by the state court can be supported.

The facts have been stipulated by the parties and are not in dispute.

However, they are important and I shall summarize them as briefly as possible.

All of the capital stock of appellant is owned by the Central Railroad Company of New Jersey, which for brevity will be referred to hereafter as CNJ.

Appellant's railroad trackage of 207 miles lies wholly within Pennsylvania and extends from Scranton and Wilkes-Barre to the Pennsylvania, New Jersey border at Easton where it connects with railroad lines operated by CNJ of New Jersey to Jersey City and to points on the North -- North Jersey shore.

Appellant and CNJ share offices, officers, administrative and clerical personnel at offices in Jersey City, New Jersey and New York City.

Appellant conducts its railroad operations at and from the Jersey City office.

These operations consist of maintenance and repair of railroad equipment, assignment of locomotives to train movements, assignment of freight cars to meet the demands of shippers, accounting and settlement with all carriers and with all users of its equipment.

There are two separate and distinct types of use of appellant's railroad equipment, the one under the operating agreement between appellant and CNJ and the other, under the car service and Per Diem Agreement of the Association of American Railroads.

First, the operating agreement.

On August 5, 1946, Central Railroad -- I'm sorry, prior to August 5, 1946, CNJ operated its railroad lines in New Jersey and it operated also the railroad lines in Pennsylvania from Easton to Wilkes-Barre and Scranton.

On August 5, 1946, appellant with a consent of the Interstate Commerce Commission took over the operation of the railroad lines in Pennsylvania and entered into an operating agreement with CNJ in order to continue the existing through freight and passenger service over the respective lines of the two companies.

The agreement provided that each should furnish its fair share of locomotives and equipment necessary to operate the through service.

And also, that whenever any unit of locomotive or other equipment of the one party entered onto the lines of the other party, it should thereupon be temporarily leased to the other party until returned -- and operated by the other party until returned to the owner's lines.