THE PEOPLE OF THE STATE OF NEW YORK ex rel. NEW YORK, ONTARIO AND WESTERN RAILWAY COMPANY, Appellant, Respondent,
AUGUSTUS B. SHAW and Others, as Assessors of the Town of Hamden, Delaware County, New York, Respondents, Appellants.
CROSS-APPEALS by the relator, the New York, Ontario and Western Railway Company, and the defendants, Augustus B. Shaw and others, as assessors, etc., from a judgment of the Supreme Court, entered in the office of the clerk of the county of Delaware on the 18th day of October, 1910, upon the decision of the court, rendered after a trial at the Chenango Special Term, modifying and confirming as modified the report of a referee.
This is a certiorari proceeding taken by the relator to review its assessment on four and eight hundred and twenty-five one-thousandths miles of its Delhi branch in the town of Hamden, which judgment was entered in Delaware county clerk's office October 18, 1910. The original assessment was $60,448, which the assessors determined was its fair valuation equalized with other property. It does not otherwise appear upon what basis they arrived at this amount. The referee and the Special Term properly determined that other property in the town was assessed only fifty-four and seventy-four one-hundredths per cent of actual value. The referee determined that the reproduction cost was the proper basis of valuation, which he fixed at $98,500, with an equalized value of $53,918.90. The Special Term, in the judgment appealed from, adopted the reproduction cost as the proper basis, which it fixed at $95,000, with an equalized value of $52,003.
S. H. Fancher [C. L. Andrus of counsel], for the relator.
A. G. Patterson, for the defendants.
The proper rule for determining the value of a part of a continuous railroad which is situated in a given tax district is indicated in People ex rel. Delaware, Lackawanna & W. R. R. Co. v. Clapp (152 N.Y. 490). The question then before the court was the assessment of seven and one-fourth miles of the main line, double track, of the Lackawanna railroad in the town of York, between Binghamton and Buffalo. The court laid down the rule at page 494: 'The cost of reproducing these seven miles of railroad seems to us to be the just and reasonable rule of valuation. There is no reason that we can perceive for assessing this property at a greater sum than the cost of replacement. It may not in every case be worth what
it would cost to reproduce it. That would depend upon the income or earning capacity of the road after it is built. But this is the case of a paying railroad, and, when valued at what it would cost to procure the land, construct the roadbed, put down the ties and rails and erect the buildings and other structures, all new, it is difficult to see any ground for assessing it at a larger sum.'
The reproduction cost is, therefore, the maximum valuation for the best and most profitable railroad, and may properly be considered the proper basis for valuation of a part of a paying road. It is manifest that if a larger amount of money is spent in building a line of railroad which produces no revenue, or no substantial revenue, that a great part of the money is practically lost, and that the reproduction cost is no real measure of its value.
It is manifest from the record that the relator's road is not a paying road within the meaning of the Lackawanna case. We may fairly infer that it is not producing an adequate income on the investment. While complaint is not made specifically to the application of the rule of reproduction cost in this case, it is urged that some items have been included in such cost which under the circumstances should not properly be considered. We refer particularly to the reproduction cost rule to show that in this case the relator's property is measured by a harsh rule which should not be applied too vigorously.
We have considered the several points raised by each party and conclude that the decision of the court does not err to the prejudice of the town authorities, and is more than liberal to them, and that they have no substantial cause of complaint. The specific items urged by them will not, therefore, be fully referred to in this memorandum, except we may say in passing that the item of interest was properly rejected by the court as speculative in amount and unsupported by the evidence. Of course, each dollar, as it was expended in the railroad, ceased to produce income until the road could be placed in operation. One witness thinks it would take eighteen months to put the road in operation. That must be mere guesswork. It is evident that about five miles of railroad may be built in much less time, and that the time employed would depend entirely upon the manner in which the work is pushed. There is no substantial basis upon which the item of interest may be computed.
The court disallowed the $1,000 item for procuring abstracts and for condemnation proceedings, etc., upon the ground that it was speculative, and that there is no proof that condemnation proceedings would be necessary. It does not appear from how many owners the different parcels of land ...