Norfolk and Western Railway Company v. Missouri State Tax Commission

In 1964 Norfolk and Western Railway Company (Norfolk) (defendant), a Virginia corporation, leased property owned by Wabash Railroad Company. Norfolk primarily hauled coal out of Virginia, West Virginia, and Kentucky to the East Coast and the Great Lakes. Before 1964, Norfolk owned no property in Missouri, and its rail cars rarely traveled through Missouri. After 1964, Norfolk was obligated to pay ad valorem taxes on property Wabash owned in Missouri. The Missouri State Tax Commission (the commission) (plaintiff) determined that Norfolk owed taxes on almost $20 million worth of railway vehicles. The commission calculated the tax liability using Missouri’s mileage formula, which instructed the commission to charge taxes to a railroad company on its railway vehicles in proportion to the length of the company’s railroad within the state. For Norfolk, the commission valued all the company’s railway vehicles, determined that approximately 8 percent of Norfolk’s tracks were in Missouri, and equalized the value of Norfolk’s national property with Missouri’s property values to calculate the $20 million assessment. Norfolk requested that the assessment be recalculated, arguing that less than 8 percent of its railway vehicles were in Missouri at any given time because it focused its business on coal regions outside Missouri. The commission’s assessment was upheld by a state circuit court and the Missouri Supreme Court. Norfolk appealed.