
    The People of the State of New York ex rel. New York, Ontario and Western Railway Company, Appellant, Respondent, v. Augustus B. Shaw and Others, as Assessors of the Town of Hamden, Delaware County, New York, Respondents, Appellants.
    Third Department,
    March 8, 1911.
    Tax—railroad—reproduction cost of property — interest — cost of condemnation— salaries — appreciation of embankment—value of land — costs.
    The reproduction cost is for tax purposes the maximum valuation to be put upon part of a continuous railroad situate in a given tax district.
    
      It seems, that, if the railroad be not a paying one, the fair value of its property may be less than the reproduction coat.
    The power of a town to assess the property of a railroad lying within its borders should not be used to relieve the other taxpayers from their just share of taxation, but the value of its property should be determined upon a fair basis in the same manner as the value of the property of individuals.
    Interest on the money invested in a railroad from the time of the investment to the time when the railroad is in operation should not be added to the reproduction cost in determining the value of the property.
    In finding the reproduction cost the court properly disallowed the claim of the town that there should be included an item for procuring abstracts and for condemnation proceedings, where it did not appear from how many owners the land used was taken, and there was no real basis on which the item could be computed.
    So, too, the salaries of a president and auditor were properly disallowed where the road taxed was not a separate and independent one, but was part of a system, and it does not appear that such expenditures would be necessary.
    An item for the alleged appreciation in value of an embankment caused by shrinkage and filling in is properly disallowed where it appears that this item has already been covered in other ways.
    Only the actual value of the land taken should be considered in determining the reproduction cost.
    The services and expenses of a right of way agent and traveling and other expenses are not proper items to be included in fixing the reproduction cost, especially where they are embraced in other items.
    Where on certiorari an assessment is reduced by less than one-half of the reduction claimed before the assessing officers, costs and disbursements are chargeable against the relator under section 294 of the Tax Law.
    Where the judgment of the Special Term on such proceedings was onerous to the relator and it prevails on appeal on substantially every question raised, it should be allowed the costs of the appeal.
    
      Cross-appeals by the relator, the ISTew 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.
    
      8. II. Fcmeher \_0. L. Andrus of counsel], for the relator.
    
      A. G. Patterson, for the defendants.
   Kellogg, J.:

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 c& W. P. 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 Lciekawanna, case. We may faii-ly 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 were taken, and there is no real basis upon which this item may be computed.

The salary of president and auditor was properly disallowed. This is not a separate, independent road, built by a separate company, and it does not appear that any such expenditures would be necessary.

The alleged appreciation of embankment was properly disallowed. One of the witnesses for the ' assessors claimed that there was a gradual shrinkage and filling in from time to time and such shrinkage might approach ten per cent. The relator’s witnesses quite well establish that this item was already allowed for ia the other items of shrinkage and in the items allowed for extra excavation. The decision of the court upon the merits is satisfactory until we approach the item of $15,000 for land, which is conceded to be three times the actual value of the land itself. Experience indicates that probably land through an agricultural country served by no railroad would be given gratuitously or upon reasonable terms for a right of way for a branch line like this. It is not fairly within probabilities that the farmers whose lands are to be taken and who are to be given the privileges of a railroad would expect additional damages over and above the actual value of the land taken. The evidence upon the subject is purely speculative. I think the $10,000 over and above actual land value is not part of the reproduction cost, and its allowance is not sustained by the evidence or the facts in the case. It should, therefore, be disallowed.

The services and expenses of a right of way agent and paying agent, and traveling and other expenses, $1,500, does not seem to be sustained by the evidence and is probably sufficiently embraced in other items, and I think the full reproduction cost of the property still remains if this item is deducted.

A railroad is owned by the stockholders of the corporation and is private property. . It is built for the profit of the owners and the reasonable accommodation of the public. The public, so far as the right to receive a reasonable service at reasonable rates, is interested in the road, and may dictate to a considerable extent the manner and rates of service. The fact that the railroad has this quasi public quality does not permit that it may be used to relieve the other •taxpayers of the town of their just share of taxation. For purposes of taxation the railroad is like any other property belonging to individuals, and its valuation should be determined upon a fair basis in the same manner, and while a railroad company should not escape any burden justly resting upon it as a property owner, it is not in the town for the purpose of having the burden of taxation which should properly fall upon the other taxpayers shifted upon it by local authorities. The assessors and the courts are not, therefore, called upon to indulge in imaginary or unwarrantable or unjustifiable figures to impose undue taxation upon a railroad company. An honest effort must be made to place the burden of taxation so that it will rest equally upon all property according to fair valuations. While other property was assessed at fifty-four per cent of actual value, the relator was assessed considerably more than its reproduction cost, which in this case is more than the fair value of the property.

The question of costs is made embarrassing by the indefinite manner in which the relator placed its claim for reduction before the assessors on grievance day. Its tax agent, in his affidavit, alleged that $60,448 is more than the full value of the property in the condition in which it was found, and unequal because none of the other property in the town is assessed for more than fifty per cent of its full value. He stated before the board that in his judgment $5,000 per mile would not be out of proportion to the value of the property, and that the company was willing to compromise on that basis. Later its treasurer was before the board and gave testimony as to the relator’s claim, and in answer to the question What reduction do you ask in the valuation of said real estate,” replied, “ That it be assessed at the same proportion of its full valuation ($51,439) as other pi'operty in said town.” This, with the petition, put the relator before the board as claiming that the actual value of its property was but $51,439, and that it should be assessed not more than fifty per cent of that amount in order to equalize it with other property. In other words, it claimed a reduction of at least $34,729. This opinion indicates $83,500 as the reproduction cost and $45,708 as the valuation for assessment, making a net reduction by these proceedings of $14,700. The assessment, therefore, is reduced by an amount less than one-half of the reduction claimed before the assessing officers, and costs and disbursements against the relator are chargeable under section 294 of the Tax Law.

The judgment of the Special Term was onerous to the relator, and it has been compelled to appeal and has prevailed substantially on every question raised. Costs of the appeal may, therefore, be allowed to it. The judgment is, therefore, modified by fixing the assessment value at $45,708, and as so modified is confirmed, with costs of this appeal to the relator.

All concurred.

Judgment modified as per opinion and as so modified affirmed, with costs of the appeal to the relator.  