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IRAC Brief

Halah Barre, Houman Kargar, Krystina Mastrandrea, Michael Stout

LAW/531 Business Law
July 16, 2014
Taleed El-Sabawi

IRAC Brief

In Santa Clara County v. Southern Pacific Railroad Company, the U.S. Supreme Court held that
Southern Pacific Railroad Company could not be assessed for taxes because the State Board of
Equalization did not have jurisdiction over the fences.


The legal issue brought before the court in Santa Clara County v. Southern Pacific Railroad
Company is that the railroad company refused to pay taxes assessed by the Board of
Equalization. Corporations and natural persons are entitled to equal protection from the law
based on the Fourteenth Amendment. However the Constitution denies railroads equal
protection because the Board did not reduce the value of the 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 (Farlax, 2008). This began because the Board of Equalization
assessed the length of fence alongside the railroad. Because the fences ran alongside the railway,
they are considered property of the corporation and the State Board assesses the valuation of
property of a corporation. The fences ran through a few counties so that the Board of
Equalization of California was required by law to assess the franchise of all railroads operated in
more than one county.


The Constitution of California provides that land, and improvements thereon, shall be
separately assessed. (Article 13, 2)


Santa Clara County performed a tax assessment of Southern Pacific Railroad Companys
property. Southern Pacific Railroad Company challenged the portion of the tax assessment for
the fences along the railroads lines.

The railroad company used six special grounds of defense. In its second ground of defense, the
railroad company defended that under the Fourteenth Amendment, it was being treated
differently that other corporations and natural persons, denying equal protection of the law. The
Supreme Court decided that, since this case could be decided on the grounds of the sixth defense,
there was no need to decide the case on the Constitutional question:

[118 U.S. 394, 410] That the assessment upon which the action is based is void, because it
included property which the state board of equalization had no jurisdiction, under any
circumstances, to assess; and that, as such illegal part was so blended with the balance that it
cannot be separated, the entire assessment must be treated as a nullity.

The Supreme Court decided that the State Board of Equalization had improperly assessed the
fences because the Board did not have jurisdiction to include the fences in its assessment of the

franchise, roadway, roadbed, rails, and rolling stock of railroad company property. Also, since
the tax assessment for the fences could not be separated from the rest of the property tax
assessment, the entire tax assessment was considered null and void. The railroad company did
not have to pay any of its tax assessment.

Works Cited

Farlax. (2008). Santa Clara County v. Southern Pacific Railroad Company. Retrieved from The
Free Dictionary: http://legal-