after stating tbe case: It may be conceded, as appellant alleges, that, from a procedural standpoint, tbe record is not in very satisfactory shape. Much of it is beside tbe point. However, as we understand it, tbe issues involved are comparatively simple. Tbe case easily falls upon one side or tbe other of tbe constitutional line.
Tbe defendant is a railroad, or public service corporation, operating-in part within and in part without this State. It has three branch lines of railroad in North Carolina, with termini at Winston-Salem, Durham, and Elkland. Each of tbe three branches connects directly with tbe defendant’s main line in Virginia at Eoanoke, Lynchburg and Abing-don respectively.
Tbe statutory formula for ascertaining tbe net taxable income for such a corporation is set out in section 312 of tbe Eevenue Act, 1927, and substantially repeated in tbe same numbered section of tbe 1929 act, as follows: “When their business is in part within and in part without tbe State, their net income within this State shall be ascertained by taking their gross 'operating revenues’ within this State, including in their gross *400'operating revenues’ witbin tbis State tbe equal mileage proportion witbin tbis State of tbeir interstate business and deducting from tbeir gross 'operating revenues’ tbe proportionate average of 'operating expenses/ or 'operating ratio/ for tbeir whole business, as shown by tbe Interstate Commerce Commission standard classification of accounts. From tbe net operating income thus ascertained shall be deducted 'un-collectible revenue’ and taxes paid in tbis State for tbe income year, other than income taxes, and tbe balance shall be deemed to be tbeir net income taxable under tbis act. That in determining tbe taxable income of a corporation engaged in tbe business of operating a railroad under tbis section, . . . when any railroad is located partly witbin and partly without tbis State, then said net operating income shall be increased or decreased to tbe extent of an equal mileage proportion witbin tbis State of any credit or debit balance received or paid, as tbe case may be, on account of car or locomotive hire.”
Tbe defendant filed its returns for tbe years in question under tbe Revenue and Machinery Acts applicable at tbe time. They showed no taxable or net income, and no tax was tendered with the returns. Upon examination and investigation, tbe Commissioner of Revenue found that tbe statutory method of determining deductions from gross operating revenues witbin tbe State bad not been followed by tbe defendant in making out its returns. He thereupon applied tbe “yardstick” of tbe statute and revised tbe returns by deducting from “gross 'operating revenues’ witbin tbis State,” as ascertained by him, “the proportionate average of 'operating expenses/ or 'operating ratio/ for tbeir (its) whole business, as shown by tbe Interstate Commerce Commission standard classification of accounts,” thus producing a net taxable income for each of tbe years in question.
It is stated in paragraph three of tbe judgment, to which no exception is taken, that no question is raised as to tbe Commissioner’s method of computing tbe “gross operating revenues” of tbe defendant in tbis State. Only tbe method of computing tbe “gross operating expenses,” or “operating ratio,” as deductible items, is challenged. “Neither is any question raised as to tbe correctness of tbe taxes paid by tbe defendant, if tbe Commissioner be correct in bis interpretation of tbe statute.”
We may say, in passing, that tbe Commissioner of Revenue was under tbe necessity of following tbe statute, whatever tbe consequences. A. C. L. R. Co. v. Doughton, 262 U. S., 413. If tbis produced an arbitrary or unwarranted result, by placing an unreasonable burden upon tbe defendant, tbe fault was not bis, but that of tbe law. Tbe burden of showing tbis alleged unconstitutional result was on tbe defendant. It carried tbe burden to tbe satisfaction of tbe referee (Hans Rees Sons v. Maxwell, 283 U. S., 123), but not to tbe satisfaction of tbe judge of *401tbe Superior Court, wbo beard tbe matter on exceptions. Maxwell v. Kent-Coffey Mfg. Co., 204 N. C., 365, 168 S. E., 397, 291 U. S., 642. In tbis state of tbe record, according to our uniform practice, tbe finding of tbe judge of tbe Superior Court prevails over tbat of tbe referee. Pickler v. Pinecrest Manor, 195 N. C., 614, 143 S. E., 8; Kenney v. Hotel Co., 194 N. C., 44, 138 S. E., 349; State v. Jackson, 183 N. C., 695, 110 S. E., 593; Justice v. Boone Fork Lumber Co., 181 N. C., 390, 107 S. E., 232.
It was said in Dumas v. Morrison, 175 N. C., 431, 95 S. E., 775, tbat tbe “findings of fact by a referee, tbougb entitled to weight, are not conclusive, and if not justified by tbe evidence may be disregarded, or set aside by tbe court and a decree entered according to its own view of tbe evidence. It must be remembered tbat a judge of tbe Superior Court in reviewing a referee’s report is not confined to tbe question whether there is any evidence to support bis findings of fact, but be may also decide tbat while there is some such evidence, it does not preponderate in favor of tbe plaintiff, and thus find tbe facts contrary to those reported by tbe referee. Tbe rule is otherwise in tbis Court, when a referee’s report is under consideration. We do not review tbe judge’s findings, if there is any evidence to support them, and do not pass upon tbe weight of tbe evidence.” See, also, Wilson v. Allsbrook, 205 N. C., 597, 172 S. E., 217, and Thompson v. Smith, 156 N. C., 345, 72 S. E., 379 (opinion in tbe latter case by Walker, J., pointing out tbe difference between tbe duties of tbe trial court and tbe appellate court in dealing with exceptions to reports of referees).
Nor would tbe defendant be entitled to succeed by simply assailing tbe method of computing deductible items in ascertaining net income. It must show tbe unreality of tbe resultant taxable income. Such was tbe bolding in Underwood Typewriter Co. v. Chamberlain, 253 U. S., 113, and Bass, Ratcliff & Gretton, Ltd., v. Stale Tax Com., 266 U. S., 271.
On tbe record as presented, tbe defendant has failed to make apparent any reversible error.
Affirmed.