volved to be unconstitutional because it "op- | mentality of the Federal government. And 149]erated upon the power" to borrow *money is it not manifest that in the case at bar that on the credit of the United States, and was principle protects the instrumentality here indeemed by the court to be "a burden, however volved from injury or destruction under the inconsiderable," on “the operations of govern- pretense that only that part of the unity which ment." comes from the state is taxed? Are not the effects and consequences the same?" The court, speaking by Chief Justice Marshall, in that case, again declared that the state cannot by taxation or otherwise "retard, impede, burden, or in any manner control the operation of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government." The case of Dobbins v. Erie County Comrs. adjudged that a state tax on an officer of the United States for his office or its emoluments was void, mainly because of "its interference with the constitutional means" employed by the government to execute its powers. The court, speaking by Mr. Justice Wayne, said: "Does not a tax, then, by a state upon the office, diminishing the recompense, conflict with the law of the United States, which secures it to the officer in its entirety? It cer tainly has such an effect; and any law of a state imposing such a tax cannot be constitutional, because it conflicts with a law of Congress made in pursuance of the Constitution." The principles declared in Weston v. Charleston, 27 U. S. 2 Pet. 467 [7: 487], governed the decisions of the court in New York v. New York Tax Comrs. 67 U. S. 2 Black, 620 [17: 451, and in New York v. Connelly (The Banks v. The Mayor") 74 U. S. 7 Wall. 16 [19: 57], which adjudged that the bonds and other securities of the United States are "as much beyond the taxing power of the states as the operations themselves in furtherance of which they were issued." The court again declared, in those cases, that any interference by the state governments tending to the interruption of, or in derogation of, the full legitimate exercise of the powers granted to the national government was prohibited by the Constitution. The fact that each government has granted the right does not create two rights. The two grants taken together confer nothing more than each of them separately conferred. A tax on "the franchise" of the Central Pacific Railroad, being nothing more nor less than a tax on the right of the company to operate its road, is a tax on its right to operate its railroad granted by the United States, or on the franchise grauted by that government. How is that part of the franchise granted by the state to be separated from that part granted by the general government? What part of the life of this being is at the mercy of the state? Upon what member of its body may the tax collector execute his judgment of death? If we should consider the right of the Central Pacific Railroad Company to operate its road, derived from the state, as one thing, and its same right derived from the United States *as another and distinct or different [151 thing, what results will follow? Plainly these: If the state can tax the right so derived from itself, it can levy a tax upon it as it pleases, and may sell the right assessed, in case of nonpayment of the tax. There can be no such thing as taxable property which cannot be sold for the tax, and the title to which cannot be transferred to the purchaser. By such a sale the property will pass from the delinquent to the purchaser. If a sale could be made of this particular right, then the Central Pacific would lose the right, and the purchaser would gain it. It is obvious that the right to operate its railroad cannot, by virtue of the state's taxing powers, be taken from the Central Pacific Railroad Company, or conferred upon any other corporation or individual. Nothing, then, would pass by such a sale, and as there nothing to sell or transfer, there can be nothing to assess. The theory of the majority of the court below was that the franchise of this railroad can be segregated into two franchises, a state fran-is chise and a Federal franchise. But the franchise of the railroad, or the right in the company If the position asserted by the defendant in to operate its railroad, is a single right from error, the state of California or the people of 150] how many sources soever *derived; and the state (considering both expressions as meanbeing derived from the national government, ing substantially the same contesting organizathat right could not be assessed for taxation, tion), that the so-called state franchise of the agreeably to the Constitution of the United Central Pacific Railroad can be separated from States, whether or not the right had been the Federal franchise of that company, and granted by the state also to the railroad com- separately valued, and subjected to taxation, pany. The theory of the separation of the be maintained, destructive consequences would franchise into two distinct rights for the pur-follow, as will be seen from a brief considerapose of taxation by California is effectually disposed of by Mr. Justice McFarland, at the close of his opinion, in these few words: tion. In Northern P. R. Co. v. Rockne (“Northern P. R. Co. v. Traill County") 115 U. S. 610 [29: "The court below found that the board 'did 480], the court, in referring to a sale, for taxes, assess as a unit, and not separately, the fran- of lands belonging to a railroad company, said: chise, roadway,' etc. And I cannot conceive "A valid sale, therefore, for taxes, being the how a court can, first, separate it, or second, highest exercise of sovereign power of the state, if it could, how it could determine which part must carry the title to the property sold, and to throw away. Moreover, the main founda- if it does not do this, it is because the assess. tion of the doctrine of McCulloch v. Maryland, ment is void. It follows that if the assessment 17 U. S. 4 Wheat. 316 [4: 579], is that the of these taxes [those previously stated to have power to tax includes the power to destroy, been levied upon the lands of the company] is and thus a state might, under the guise of tax- valid and the proceedings well conducted, the ation, destroy or materially cripple an instru-i sale confers a title paramount to all others, and Take, again, the provisions of the sinking fund act of May 7, 1878, which appropriates and applies the earnings of the company in the exercise of all the franchises of the company for the purposes and in the manner named. In the face of that act, it cannot be believed that Congress supposed that there was power reserved to the state to control or affect its interest or right in the franchise or franchises of the railroad, so long as it or they possessed any value. The United States selected this corporation as an agency for carrying out a national object, and the right of the corporation to oper [154 ate its railroad, or, in other words, the franchise of the railroad, whether conferred by state or national authority, or by both the state and nation, is an instrumentality by which the United States effects its objects. thereby destroys the lien of the United States | cases claims it to be, in the estimation of the for the costs of surveying these lands. If, on state board of equalization, it is a valuable the other hand, the sale would not confer such part of the security of the United States for a title, it is because there exists no authority the redemption of the subsidy bonds, which to make it." There would seem to be no doubt, the Secretary of the Treasury has the right to 152] *therefore, that the state cannot be held take possession of in the ntingency mento have had the power to tax the so called state tioned in the act. The franchise, if it existed franchise of the Pacific railroad so long as it and possesses any value, cannot, therefore, in was of any validity, and previously and subse my opinion, be taken from under the mortgage quently to its abrogation the state plainly pos- and transferred to a purchaser at a tax sale by sessed no such power unless the court is pre- the state of California. pared to decide expressly as the effect of the legislation that Congress intended that the state should be able to devest the company of that franchise, and to transfer by a tax sale the title of the franchise to the purchaser as against both the company and the United States; and in that way to destroy the right and interest of the government of the United States in the franchise. There is clear and conclusive evidence in the Pacific railroad legislation that Congress intended that the so-called state franchise so long as it remained of any value should There can be no doubt that a tax to be levied not be subject to state legislation, and that the on the so-called state franchise whilst it was right and interest of the United States therein, in existence was a tax upon the instrumentalwhilst of any value, should not be destroyed ity by which the government effects its obby the state in the exercise of its taxing power.jects, and a tax upon the operations of that inFor example, § 5 of the act of July 1, 1862, strumentality, within the doctrines of this provides that the issue and delivery of bonds court in the great cases to which I have reto the company, referring to bonds the issue ferred. and delivery of which were authorized by the act, shall ipso facto constitute a first mortgage on the whole line of the railroad and telegraph. together with the rolling stock, fixtures, and property of every kind and description, and on the refusal or failure of the company to redeem its bonds, or any part of them, when required by the Secretary of the Treasury in accordance with the provisions of the act, then the road, with all rights, functions, immunities, and appurtenances thereunto belonging, also all lands granted to the company by the United States, may be taken possession of by the Secretary of the Treasury for the use and benefit of the United States. The only change made in this provision in regard to the security of the United States for the subsidy bonds is by $10 of the act of 1864, which is that "the lien of the United States bonds shall be subor dinate to that of the bonds of any or either of said companies hereby authorized to be issued on their respective roads, property, and equipments, except as to the provisions of the 6th section of the act, to which this act is an amendment relating to the transmission of despatches, 153] *and the transportation of mails, troops, munitions of war, supplies, and public In First Nat. Bank v. Kentucky, 76 U. S. 9 stores for the government of the United States." Wall. 358 [19: 702], where the right of the The subsidy bonds are therefore a mortgage states to tax the shares of the national banks upon any subsisting state franchise of the rail- was reaffirmed, it was expressly conceded road, which may be taken possession of by the that the agencies of the national government Secretary of the Treasury for the use and ben- are uncontrollable by state legislation so far as efit of the United States, on the refusal or fail-it may interfere with or impair their efficiency, ure of the company to redeem the bonds, or any part of them, when required by the Secretary of the Treasury. Congress manifestly intended that the rights of the United States under this mortgage, in respect to the state franchise, if any such existed, should not be destroyed or disturbed by the state in the exercise of its taxing power, or any other power. If the so-called state franchise of the railroad is a thing of value, as the assessment in these As a tax on the franchise of the Central Pacific Railroad while in existence was nothing more nor less than a tax on the right of the company to operate its railroad, such a tax was a tax on its right to operate its railroad derived from the government of the United States, and therefore unconstitutional. There are no operations of the corporation, as an agency of the government, which are performed exclusively in the exercise of any state franchise in connection with its railroad, assuming the existence of any such franchise, but all its operations are in the exercise of its entire franchise, and a tax purporting to be levied on any state franchise is therefore a tax on the operations of the corporation in the exercise of the Federal franchise, and a tax directly on the Federal franchise itself. in performing the service or the functions for which they are employed or designed to perform. The supreme court of California in the case of San Benito County v. Southern P. R. Co. 77 Cal. 518, accepted the authority of the decision of this court in California v. Central P. R. Co. 127 U. S. 1 [32: 150, 2 Inters. Com. Rep. 153], and held that an ordinance of the board of supervisors of San Benito county im | posing a license tax upon corporations or indi viduals engaged in the business of carrying persons or freight for hire on railroad cars in the county was void, so far as it assumed to affect the Southern Pacific Railroad Company, as the tax was deemed to be levied upon the use of the franchise granted to the company by the United States, or the operations of the railroad in the exercise of that franchise. 155] *It was determined that the franchise of that company and its use were equally beyond the taxing power of the state, or any of its political subdivisions, agreeably to the decision of this court in California v. Central P. R. Co. supra, which the court felt constrained to obey. "The franchise" of a railroad, which is contemplated by the state Constitution and authorized to be assessed for taxation by the state board of equalization, is nothing but the right to operate the railroad, including the incident al right to charge and take tolls thereon and the like. The Constitution applies equally to all railroads, whether owned by corporations or associations or individuals, and the assessment provided for is wholly indeperdent of the own ership or the character of the ownership of the railroad property assessed. The tax proposed by the Constitution is consequently and necessarily a tax upon the operations of the railroad, in the exercise of the franchise or right to operate the property. The right of the Central Pacific Railroad Company to construct, maintain, and operate its railroad, in the state of California, was conferred upon the company by and derived by it from the government of the United States, and any assessment of the right of the company to maintain and operate its railroad, in that state, for state taxation, is void, under the Constitution and laws of the United States, whether or not the company received the same right from the state of California. The right of the company to operate its railroad in the state is a single right and a single thing, whether the right was derived by the company from one or more than one govern ment, and it cannot be subjected to taxation by the state of California. In conclusion it appears beyond all controversy that the state imposed burdens in the way of taxation upon the exercise of powers and privileges conferred by the Congress of the United States upon the Central Pacific Railroad Company and other companies of the state, rights, powers, and privileges which were granted in furtherance of the great object 156]*of Congress in the creation and operation of the overland railroad, and also imposed burdens by taxation upon the mortgage held by the United States as security for the subsidy bonds issued to the company. And for such irregular and illegal action the judgment of the supreme court of the state should be reversed. I have shown that the franchises granted by the state of California to the Central Pacific Railroad Company were abrogated and annulled by express legislation of the state on the 4th of April, 1864, and that the taxation was subsequently made against the railroad com pany upon an assessment of the value of its franchises thus discarded and thrown away, and after the Federal franchises that is, franchises derived by grant of the United States, had been substituted in their place and confirmed by the state, with a release of all inconsistent and conflicting provisions with the rights and privileges thus grauted. I have also shown that the assessment of the property of the defendant made in 1887 was twenty three years after the law was passed abrogating and annulling the franchises of the state upon which the valuation for taxation was made. I have also shown that the United States hold a lien, constituting a first mortgage on the whole line of the railroad and telegraph, together with the rolling stock, fixtures, and property of every kind and description, as security for certain subsidy bonds issued to the company, and on the refusal or failure of the company to redeem such bonds, or any part of them, when required by the Secretary of the Treasury, in accordance with the provisions of the act, then the road, with all rights, functions, immunities, and appurtenances thereunto belonging, also all lands granted to the company by the United States, might be taken possession of by the Secretary of the Treasury for the use and benefit of the United States. If the taxation levied in the present case can be enforced against the defendant, in face of the facts thus stated, there will be developed a new and unknown power of taxation possessed by the state, in the existence of which I shall not willingly believe. *It seems to me clear as the sun at noon-[157 day. that the taxation imposed by the state of California upon the exercise of the powers, rights, privileges, and immunities constituting the franchises of the United States, or of the state to the overland railroad company, or to any of its auxiliary companies, to aid in the construction of the overland railroad and its connecting roads, is directly inimical to the rights and interests of the United States, and that the blending of the franchises of the United States and of the state, and the subjection of either to taxation and to sale, which must follow if the taxation be valid, would necessarily lead to the direct and speedy destruction of the different roads; and thus we should see, in the same century in which this greatest enterprise of our country was undertaken by its government and carried to completion and successful operation, that enterprise utterly destroyed-the completeness of the ruin being marked by the contrast with its original construction and successful operation, rendering its destruction the more significant and deplorable. I am of opinion that the judgment of the supreme court of California affirming the judg ment of the superior court of the city and county of San Francisco, and an order of that court denying a new trial in an action brought by the people of the state against the plaintiff corporation, should be reversed and a new trial in that action granted. Mr. Justice Harlan dissenting: On the trial of this case in the state court of original jurisdiction, the secretary of the state board of equalization, from April, 1880, to March, 1891, was called as a witness by the defendant. His examination showed that he assessed by said state board of equalization, for purposes of taxation for the fiscal year 1887, at their actual value, and in proportion to their values respectively." was present at the meetings of that board and kept the record of its proceedings. He said that from his knowledge of what passed at such meetings he could state what elements of value were considered by the board in making their estimate for the total values for 1887. | He was asked the following questions separately: "From the various sources of knowledge 158] which you *Lave enumerated, please state to the court what elements were taken into consideration by the state board of equalization in making the assessment of this company for the year 1887? Did you hear any conversation between the members of the state board of equalization during the meeting when the as-lowing language: 'But if the parol evidence sessment of this company was made for the year 1887, with reference to the elements that they proposed to and did include in the assessment? "At the time that the assessment of 1887 was made by the state board of equalization upon the property of the Central Pacific Rail-regard it as incompetent. The effect of such road Company, what was said and done at the meeting of the state board of equalization on that day in your presence?" The state objected to each question, as it was propounded, and its objection was sustained, the defendant excepting. The company then made the following offer: "Now, in view of the ruling of the court on this subject, we now offer to prove by this witness that from the time of the organization of the state board of equalization in 1880 down to and including the year 1887, that board had every year considered the value of the Federal franchise-that is, the franchise derived from the United States by the acts of Congress of the government of the United States, belonging to and owned by the Central Pacific Railroad Company, as an element of value in assessing the total value of the property of that railroad company; and that in 1888, in consequence of the decision of the Supreme Court of the United States upon the subject, the state board of equalization for the first time ceased to consider this Federal franchise as an element of value, and hence reduced their valuation by the sum of $3,000,000 on the Central Pacific Railroad Company's property." This offer was disallowed, and the company duly excepted. Notwithstanding this action of the court, the state was permitted to prove by two members of the board, who participated in the assessment of 1887, that the Federal franchise was not included in that assessment. One of the findings of fact was in these words: "That in making its assessment and valuation therefor of defendant's franchise said state board 159]of equalization did not include, *assess, or value any franchise or corporate power held or exercised by defendant under the acts of Congress herein before mentioned, or under any act of Congress whatever. And said board, in making said assessment and valuation therefor, upon defendant's franchise, road bed, roadway, rails, and rolling stock, for purposes of taxation for the fiscal year 1887, did not include in its said assessment and valuation therefor any Federal franchise, then possessed by defendant, nor any franchise or thing whatsoever, which said board could not legally include in such assessment or valuation. That the franchise, roadway, roadbed, rails, and rolling stock of defendant's railroad were valued and A statement, on motion, was filed for a new trial and approved by the court. In that statement will be found the following: "In its written opinion, upon which the findings were based, the court after determining as a fact, from a preponderance of the evidence before it, that the Federal franchise of defendant was not assessed or included in the assessment of the property of defendant by the state board of equalization, for the year 1887, uses the foloffered did not weigh in plaintiff's favor, and if by a preponderance of such evidence defendants could have shown that the state intended to and did include a Federal franchise in the assessment, I think the court would have to disparol evidence would be to contradict the record, which cannot be done. The best and only evidence of the acts and intentions of deliberate bodies must be drawn from the record of its intentions. . . . From both standpoints of fact and of law, the findings must be that a Federal franchise was not included in these assessments."" It thus appears that the trial court permitted the state to prove by oral testimony that the state board did not include the Federal franchises in its assessment, but denied to the defendant the privilege of showing, by the same kind of evidence, that such franchises were, in fact, included in the *assessment. This,[160 in my judgment, was error, and directly affected the proper determination of the Federal ques tion. The recitals in the records of the board were not conclusive of the question. If, in fact, the board did include the Federal franchise in its assessment, the defendant should have been allowed to prove it by the best evidence capaple of being produced; otherwise, it would be without remedy against a false statement on the records of the board. Independently of this error, the judgment of the court below should be reversed upon the ground that the franchises of the Central Pacific Railroad Company are not subject to be taxed at all by the state, although some of its visible property may, according to the principles announced in former decisions of this court, be taxable for state purposes. In the Sinking Fund Cases, 99 U. S. 700, 727 [25: 496, 504], this court, speaking by Chief Justice Waite, and referring to the Central Pacific Railroad Company, said: "By the act of 1862, Congress granted this corporation & right to build a road from San Francisco, or the navigable waters of the Sacramento river, to the eastern boundary of the state, and from there through the territories of the United States until it met the road of the Union Pa cific Company. For this purpose all the rights, privileges, and franchises were given this company that were granted the Union Pacific Com. pany, except the franchise of being a corporation, and such others as were merely incident to the organization of the company. The land grants and the subsidy bonds to this company were the same in character and quantity as those to the Union Pacific, and the same right artificial being [the Central Pacific Railroad Company] as an instrumentality to accomplish national ends, and the relations between the United States and that corporation ought to be determined by the enactments which estab of amendment was reserved. Each of the 161] *In California v. Central P. R. Co. 127 U. S. 1,38 [32: 150, 157,2 Inters Com. Rep. 153], this court, referring to the Pacific Railroad acts, so far as they related to the Central Pacific Railroad, said: "Thus, without referring to the other franchises and privileges conferred upon this company, the fundamental franchise was given by the act of 1862 and the subsequent acts to construct a railroad from the Pacific ocean across the state of California and the Federal territories until it should meet the Union Pacific, which it did meet at Ogden in the territory of Utah." The relations of this railroad company to the United States as to the state is shown by the act of the legislature of California, approved April 4, 1864, entitled "An Act to Aid in Carrying out the Provisions of the Pacific Railroad and Telegraph Act of Congress and Other Matters Relating thereto," Cal. Stat. 1863-4, chap. 417, p. 471. That statute referred to the act of Congress of July 1, 1862 (12 Stat. at L. 489, chap. 120), and to enable the Central Pacific Railroad Company, therein named, more fully and completely to comply with and perform its provisions and conditions, provided that that company are hereby authorized and empowered, and the right, power, and privilege is hereby granted to, conferred upon, and vested in them, to construct, maintain, and operate the said railroad and telegraph line, not only in the state of California, but also in said territories lying east of and between said state and the Missouri river, with such branches and extensions of said railroad and telegraph line, or either of them, as said company may deem necessary or prop er; and also the right of way for said railroad and telegraph line over any lands belonging to this state, and on, over, and along any streets, roads, highways, rivers, streams, water, and watercourses, but the same to be so constructed as not to obstruct or destroy the passage or navigation of the same; and also the right to condemn and appropriate to the use of said company such private property, rights, In the case of United States v. Stanford, 161 U. S. 412 [ante, 751], recently decided, we said: "In United States v. Union P. R. Co. 91 U. S. 91 [23: 233], this court, speaking by Mr. Justice Davis, held that the construction of a railroad connecting the Missouri river with the Pacific ocean was a national work, because such a road would be a great national highway, under national control; that the scheme for establishing that highway originated in national necessities, the country being involved at the time in a civil war which threatened the disruption of the Union, and endangered the safety of our possessions on the Pacific; and that the enterprivileges, and franchises as may be proper, prise required national assistance, because necessary, or convenient for the purposes of private capital was inadequate for an under- said railroad and telegraph, the compensation taking of such magnitude. It appears upon therefor to be ascertained and paid under[ 163 the face of the act of 1862, as amended by the and by special proceedings, as prescribed in the act of 1864, that Congress had in view the pro- act providing for the incorporation of railroad motion of the public interest and welfare by companies, approved May twentieth, eighteen the construction of a railroad and telegraph hundred and sixty-one, and the acts suppleline that could be used by the government at mentary and amendatory thereof; said company all times, but particularly in time of war, for to be subject to all the laws of this state conpostal, military, and other purposes, and that, cerning railroad and telegraph lines, except that so far as the government and the public were messages and property of the United States, of concerned, such road and telegraph were to be this state, and of the said company shall have operated as one continuous line. These ends priority of transportation and transmission over were to be attained through the agency of a said line of railroad and telegraph; hereby concorporation created by Congress, and of certain firming to and vesting in said company all the corporations organized under state laws which rights, privileges, franchises, power, and auCongress selected as instruments to be em-thority conferred upon, granted to, or vested in ployed in accomplishing the public objects specified in its legislation." Again, in the same case: "Although the Central Pacific Railroad Company of California became an artificial being under the laws of that state, its road owes its existence to the national government; for, all that was accomplished by the corporation that constructed and owns it was accomplished 162] in the *exercise of privileges granted by, and because of the aid derived from the United States. . . . The relations between the California corporation and the state were of no concern to the national government at the time the purpose was formed to establish a great highway across the continent for governmental and public use. Congress chose this existing said company by said act of Congress; hereby repealing all laws and parts of laws inconsistent or in conflict with the provisions of this act, or the rights and privileges herein granted." Looking at the question in the light most favorable to the state, it may be said that the franchises which the railroad company possesses, with reference to the construction and maintenance of its road within California, came jointly from the United States and the state. If the rights, privileges, and franchises granted by the United States to this company were not all that was needed for the accomplishment of the objects had in view by the construction of a national highway between the Missouri river and the Pacific ocean, the state enactment of |