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plan was pursued by it in making the assessments of the Henderson Bridge Company, involved in the case of Henderson Bridge Co. v. Com., 99 Ky. 623, 31 S. W. 486, 29 L. R. A. 73; Same v. Negley (Ky.) 63 S. W. 989. The stock and bond plan was pursued in making the assessment of the property of the Covington & Cincinnati Bridge Company, involved in the case of Com. v. Covington & C. Bridge Co. (Ky.) 70 S. W. 849. In the latter case Judge Hobson, in referring to the action of the board in the first Henderson Bridge Case said:

"But this action of that board did not prevent another board for another year from adopting a different line if the law warranted it. There is nothing, therefore, in any of these cases, determining that the board did not have a right to adopt another basis of assessment."

In the view we take of this case we do not find it necessary to express a preference between these two plans. It does seem to us, however, reasonable to hold that, if the stock and bond plan is adopted, the Board of Valuation and Assessment should, as a rule, not confine itself to the market value of the stock and bonds at the moment of assessment, or even to the average market value thereof for a year previous thereto, or, if the capitalization plan is adopted, it should not, as a rule, confine itself to the net income for the year previous to the date of assessment; but that in each case it should look to the average showing made by a series of years-say, not less than five. This because this is what we conceive that one proposing to purchase such a property would do in order to determine its fair cash value, and what he could afford to give for it, and we think a board of valuation and assessment in making a valuation thereof for taxation should place itself in the shoes of such a person. It should always hold before itself that the ultimate thing which it is attempting to do is to determine the fair cash value of the property in question, and that the market value of the stock and bonds or the net earnings are simply aids to that end. And that either may be a real aid to such an end, it is essential that it should cover a sufficient period to show the settled conditions of things. In the decision of Judge Grosscup, referred to above, he expressed the opinion that under the stock and bond plan a five-year period should be adopted. In saying that the showing of a series of years and that for as many as five years should be looked to, we would not be understood as laying down any hard and fast rule to be applied in every case. It is possible that in some cases it would not be reasonable so to do, and perhaps it is beyond our province to be laying down any rules for the guidance of said board. All that we would be understood as saying is that, in our opinion, it is reasonable, as a rule, to pursue such a course in making the valuation of such property for taxation, and that, if such a course is pursued, it cannot be said, nothing else appearing, that the result does not represent the fair cash value of the property.

Then, as to the plan to be pursued in ascertaining the proportion of the fair cash value of the entire property of complainant which properly belongs to this state. If the mileage of its property in and out of this state were of like character and equal value, no doubt

the proper plan to be pursued would be to ascertain what proportion the mileage in the state was of the entire mileage, and adopt that proportion of the fair cash value of the entire property as the fair cash value of that part in this state. The Legislature of this state at first acted upon the idea that in all cases of this kind the mileage in and out of the state should be assumed to be of like character and equal value, and by section 5 of article 3 (chapter 103, p. 302) of the act of November 11, 1892, provided as follows:

"That proportion of the value of the capital stock which the length of the lines operated, owned, leased or controlled in this state bears to the lines owned, leased or controlled in this state and elsewhere shall be the value of the corporate franchise of such corporation liable for taxation in this state."

But by the amendment thereto of June 9, 1893 (Acts 1893, p. 991, c. 217, § 4), it was enacted that the words "considered in fixing" should be inserted after the words "shall be," so that it was provided that such proportion should be considered in fixing such value, rather than should be the value thereof. This amendment was, no doubt, passed in order that the board should not be bound absolutely to accept such proportion of the cash value of the entire property as the value of that part of it in this state, and might be at liberty, in determining the value of such part, to consider the difference in character and value, if any, between the mileage in and out of this state.

Having thus indicated the matters to be determined in ascertaining the fair cash value of complainant's property in this state and the methods to be pursued in determining them, it is in order now to consider whether the defendants valued said property at its fair cash value. They put the fair cash value of the entire property at the sum of $129,566,663. They ascertained such to be its fair cash value on the capitalization plan, and in pursuing this method took into consideration the average net earnings of the entire property for the preceding four years; in other words, they capitalized the average net earnings for said four years. So doing, it gave the sum at which they valued the entire property. Had they taken into consideration the average net earnings for five years, and capitalized it, the valuation of the entire property would have been $7,625,447 less than what they put it at. Had they adopted the stock and bond plan, and taken into consideration, according to showing made by Financial Chronicle, as stated by counsel for complainant in their brief, the average market value of the stock and bonds for the preceding five years, the valuation of the entire property would have been $6,326,003 less than what they put it at. It seems that in making the tentative assessment they adopted the stock and bond plan, but considered only the average market value of the stock and bonds for the preceding year. This gave a valuation of $138,178,660, or $8,611,997 in excess of what they finally decided upon. But, after hearing complainant, they decided upon the capitalization plan on the four-year basis. And, as stated, had they pursued either plan on the five-year basis, it would have given a valuation less than that which they made. There is hardly room, then, for defendants to contend that the fair cash value of complainant's entire property was 131 F.-20

in excess of the sum at which they fixed it when acting as a board. And the only grounds upon which they now contend that it was more are not tenable upon any reasonable view of the matter. Those grounds are that the fair cash value of said property will be shown to be considerably in excess of the sum at which it was put if the stock and bond plan is adopted, and the highest market value of the stock within a year previous or its value on the date of assessment is alone considered, or if the capitalization plan is followed, and the net earnings for the previous year are alone regarded. But, as indicated above, it is, as a rule, not reasonable to limit the consideration of either plan to so short a period, and there is nothing in this case to show that it should be treated as an exception to the rule. Then, as to the proportion of the fair cash value of the entire property, which defendants took as the fair cash value of that part thereof in this state. They took 26 per cent. thereof. The facts in regard to this matter are these: Complainant operated in Kentucky 1,192.34 miles of road. It owned the Cecelia Branches, leased to the Illinois Central, and 46 miles long; the Clarksville & Princeton Division, leased to the Illinois Central, and 20.7 miles long; and a part of the Paducah & Memphis Line, leased to the Nashville, Chattanooga & St. Louis Railway, and 49.23 miles long; and controlled in a certain sense, if not in that of the statute, a part of the Nashville, Chattanooga & St. Louis Railway, 8.06 miles long. Adding these four sums to the mileage operated, makes a total of 1,316.33 miles of railroad operated, owned, leased, or controlled by complainant in this state. Out of this state complainant operated 2,238.86 miles of road. It owned the rest of the Paducah & Memphis Line, leased as above stated, 204.97 miles long. It held under a lease the Georgia Railroad, a one-half interest in which it had sublet to the Atlantic Coast Line, 624 miles long; and it controlled as aforesaid the rest of the Nashville, Chattanooga & St. Louis Railway, 933.60 miles long. Adding these three sums to the mileage operated, makes a total of 4,001.43 miles of railroad operated, owned, leased, or controlled outside of the state. Adding the mileage in and out of the state together makes a total mileage of 5,317.76. The per cent. that the mileage in Kentucky is of this sum is 24.75, or 1.25 per cent. less than the defendants took. They contend, however, that the mileage of the Georgia Railway and that of the Nashville, Chattanooga & St. Louis Railway Company should not be treated as part of complainant's mileage under the statute. If both are deducted, the percentage is 34.86; if the mileage alone of the latter is deducted, the percentage is 29.89; if the mileage alone of the former is deducted, the percentage is 27.87. So that it must be maintained that both mileages should be included in order to warrant a percentage as low as 26, though the whole of both mileages is not essential to bring it that low.

As to the Nashville, Chattanooga & St. Louis Railway Company, it is not contended that it was operated, owned, or leased by it. The right to include it is based solely upon the claim that it was controlled by complainant. The facts in regard to its control are that it owns over three-fifths of its capital stock, and thereby elects

its directors, and through them dictates and controls its policy. By virtue of said ownership it is entitled to share in the net earnings of said railroad, and said stock is pledged as security for part of its bonded indebtedness. The defendants contend that this railroad is not controlled by complainant within the meaning of the statute. They cite a number of authorities which they claim support this contention. They are principally to the effect that where one corporation owns the majority or the entire capital stock of another corporation, there is no merger of the latter into the former; that each is a separate entity; and that the former is not responsible for the contracts or torts of the latter. This is undoubtedly true, but we cannot see that this throws any light upon the sense in which the word "controls" is used in the statute in question. The only case cited which there is room to claim bears upon the proper construction of that word as so used is the case of Pullman Palace Car Co. v. Missouri Pac. Ry. Co., 115 U. S. 587, 6 Sup. Ct. 194, 29 L. Ed. 499. In that case the construction of a contract between the Missouri Pacific Railway Company and the Pullman Palace Car Company was involved. The former corporation had agreed to use the latter's cars on "its own line of road and all roads which it now controls or may hereafter control by ownership, lease, or otherwise." The question was whether the Missouri Pacific Railway Company, a new corporation of the same name as that which made the contract with the Pullman Palace Car Company, formed by à consolidation of it with other corporations, was bound by that contract to use said car company's cars upon the railroad of the St. Louis, Iron Mountain & Southern Company, all but a small part of the stock of which it had acquired. It was held that it was not bound to do so, and that on two grounds. One was that the new railway company was only bound to carry out the contract as to roads controlled by the old one, and not as to roads controlled by it. The other was that the ownership or acquisition of the majority of the stock of another railroad with all its incidents was not a control within the meaning of that word as used in the contract. But that case is not an authority for the position that within the meaning of the statute the word "control," as there used, does not include such a relation to a railroad. In that contract the word "operate" was not used at all, and particularly was it not used in juxtaposition with the word "control," as in the statute. There was, therefore, nothing in the contract to prevent it being given the sense of "operate.' On the other hand, it is evident that it was used therein in that sense. The roads upon which the railway company was to use said cars were those it controlled "by ownership, lease, or otherwise"; i. e., roads which it operated by virtue of ownership, lease, or some other contract. Besides, there was no reason why the word "control" should have been held to embrace a relationship to another railroad of the kind in question. How different here. The four words, "operated," "owned," "leased," and "controlled" are used in juxtaposition, and referred to in the alternative. Each, therefore, should be given some meaning not embraced in the other. "Controlled," therefore, cannot mean "operated." And the only distinct

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meaning which can be given to it is such as to embracè a relationship of the kind in question. And it was reasonable for the Legislature to have intended that, where such a relationship existed, the mileage of such corporation so controlled should be included in determining fair cash value of the entire property. The ownership of the majority of the stock of another railroad corporation with the indirect control arising therefrom adds to the fair cash value of the entire property, a portion of which is to be allotted to this state for assessment. The stock and bonds of the controlling corporation are increased in value thereby. If dividends are received on the stock, they represent a portion of the net earnings of the controlled corporation, and go to swell the net earnings from which, on the capitalization plan, the fair cash value of the whole property is ascertained. Nor are such dividends the only contribution which the controlled corporation makes to the net earnings of the controlling corporation. It is a feeder to other railroads, both in and out of the state, operated, owned, or leased by it, and in this way helps out those net earnings. It may be thought, though, that it is unreasonable to include the entire mileage, and that only such proportion thereof should be included as the stock owned by the controlling corporation bears to the whole stock. This, however, is not a consideration for excluding such relationship from the statute, but for the board in determining the percentage of the entire valuation that should be allotted to this state. But it cannot be said that, in the absence of an investigation as to the values of the different portions of a railroad system, and the contributions which they make to the value of the whole, it would be unreasonable for the board to include the entire mileage. For it is possible that a proportionate part of one portion of such system may be equal in value to the entire part of another portion on the mileage basis, and contribute as much or more to the value of the whole. Our conclusion, therefore, is that a relationship of the kind in question is within the meaning of the statute. This view of the matter receives support from the following extract from the opinion of Judge Thayer in the case of United States v. Northern Securities Co. (C. C.) 120 Fed. 721, to wit:

"It will not do to say that, so long as each railroad company has its own board of directors, they operate independently, and are not controlled by the owner of the majority of their stock. It is the common experience of mankind that the acts of corporations are dictated and their policy is controlled by those who own the majority of their stock. Indeed, one of the favorite methods in these days, and about the only method, of obtaining control of a corporation, is to purchase the greater part of its stock. It was the method pursued by the Northern Pacific and Great Northern Companies to obtain control of the Chicago, Burlington & Quincy Railroad. And, so long as directors are chosen by stockholders, the latter will necessarily dominate the former, and in a real sense determine all important corporate acts. The fact that the ownership of a majority of the capital stock of a corporation gives one the mastery and control of the corporation was distinctly recognized and declared in Pearsall v. Great Northern Railway, 161 U. S. 646, 671, 16 Sup. Ct. 705, 710, 40 L. Ed. 838. The same fact has been recognized and declared by other courts. Pennsylvania R. Co. v. Commonwealth (Pa.) 7 Atl. 368, 371; Farmers' Loan & Trust Co. v. New York & N. Ry. Co., 150 N. Y. 410, 425, 44 N. E. 1043, 34 L. R. A. 76, 55 Am. St. Rep. 689; People ex rel. v. Chicago Gas Trust Co., 130 III. 268, 22 N. E. 798, 802, 8 L. R. A. 497, 17 Am. St. Rep. 319. In opposition to this view counsel cite Pullman Car Co. v. Missouri Pacific Co., 115 U. S. 587, 596, 6 Sup.

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