SANTA CLARA COUNTY V. SOUTHERN PACIFIC RAILROAD COMPANY

An 1886 U.S. Supreme Court decision, Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394, 6 S. Ct. 1132, 30 L. Ed. 118, is often cited for the principle that the term person as used in the equal protection clause of the fourteenth amendment applies to corporations as well as to natural persons.

The Southern Pacific Railroad Company refused to pay a tax assessed by the California Board of Equalization upon its franchise, roadways, roadbeds, fences, and rolling stock. The county brought an action in state court against the railroad to recover the delinquent taxes. The railroad had the action removed to the federal district court. The court agreed with the defendant that the assessment of the tax was void because the board had no jurisdiction to act. It also ruled that the defendant had been denied equal protection of the law because the assessment of the property was made at full monetary value without the discount that was given to individual property owners for outstanding mortgages on their property. The county filed a writ of error to the federal court, and the U.S. Supreme Court heard the case.

The Court agreed with the railroad that the state board had no jurisdiction to assess the tax. The assessment of taxes by the board on fences belonging to the railroad was deemed void because the board was authorized by the state constitution to assess only "the franchise, roadway roadbed, rails, and rolling stock." The Court rejected the argument that the fences constituted part of the roadway for purposes of taxation. The constitution required a separate assessment for "land, and improvements thereon" and a state statute expressly included the term fence within the categories of improvements. The state board acting through the county sought to have the plaintiff liable for a single sum, incorporating taxes assessed upon various types of property, including property that the board had no power to assess. The Court declared that since part of the assessment was illegal, it could not support an action for the county to recover the entire tax; therefore, it affirmed the judgment for the defendants.

The Court did not explicitly discuss the Fourteenth Amendment in its opinion, basing its decision on the invalidity of the assessment. In its statement of the facts of the case, it did, however, set out the Fourteenth Amendment claims of the railroad. The California constitution denied "railroads and other quasi public corporations" equal protection of laws as guaranteed by the Fourteenth Amendment to the Constitution because the board did not reduce the value of property for assessment purposes by the amount of any outstanding mortgage debts on it, as it did for property owned by natural persons or other corporations. Although the Supreme Court did not specifically rule on the constitutionality of the treatment of the railroad by the state, the case of County of Santa Clara v. Southern Pacific Railroad Company is cited to support the principle that both corporations and natural persons are entitled to equal protection of laws pursuant to the Fourteenth Amendment to the Constitution.