# Erie Railway Company v. Pennsylvania (88 U.S. 492)/Opinion of the Court

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United States Supreme Court
88 U.S. 492
Erie Railway Company v. Pennsylvania
It is argued, in the first place, that the Erie company is not doing business in the State, in the sense intended by the act of 1868. To this argument the answer is twofold:
First. The Supreme Court of that State has held that this 'company was doing business in the State in the sense of that act.' This construction of a State statute by the Supreme Court of the State, involving no question under the laws or Constitution of the United States, is conclusive upon us. We accept the construction of State statutes by the State courts, although we may doubt the correctness of such construction. We accept and adopt it, although we may have already accepted and adopted a different construction of a similar statute of another State, in deference to the Supreme Court of that State.
Second. We are of the opinion that the Supreme Court of Pennsylvania was right in its construction of the statute of 1868.
Construing together the seventh and eighty sections of the act, it is enacted 'that every railroad company, steamboat company, &c., now or hereafter doing business in this State, and upon whose works freight may be transported, whether by such company or by individuals,' &c., shall be liable to the tax in question.
It can scarcely be doubted that this company is doing business in the State of Pennsylvania when it receives gross earnings to an amount exceeding nine millions per annum for transportation over its road, of which forty-two miles lie within that State. The statute does not limit the amount of business done, or the length of road upon which it is done, as fixing its liability to taxation. The legal effect of the appellant's argument would be the same if four hundred and thirteen miles of its road were within the limits of the State of Pennsylvania and forty-two miles only were in the State of New York, instead of lying as it now does.
We see no such difficulty in the machinery for the collection of the tax as should make us doubt the intention of the legislature. That, in fact, the State at once proceeded to, and has constantly persisted in, its exercise, affords strong evidence of its intention and of its understanding of its effect.
If it intended to impose the tax, and had the power to do it, the extent and the proportion to which it is carried belongs to the judgment and discretion of the State only. It is beyond our examination.
That it has the power to enforce the tax by direct action upon that part of the road within its territory would seem to be reasonably certain, and that it would attempt to lay taxation to an extravagant or oppressive extent has not yet appeared. That it has exercised less than the full extent of its power, and has apportioned the tax according to the length of the road within the State, is not a just subject of complaint by the company.
The second objection is that the act of 1868 impairs the obligation of the State not to impose such a tax upon the Erie company.
It has been held many times in this court that a State may make a valid contract that a corporation or its property within its territory shall be exempt from taxation, or shall be subject to a limited and specified taxation.
The court has, however, in the most emphatic terms, and on every occasion, declared that the language in which the surrender is made must be clear and unmistakable. The covenant or enactment must distinctly express that there shall be no other or further liability to taxation. A State cannot strip itself of this most essential power by doubtful words. It cannot, by ambiguous language, be deprived of this highest attribute of sovereignty. This principle is distinctly laid down in each of the cases referred to. It has never been departed from.
Tested by this rule, the contention of the appellant must fail.
On the occasion of the first act referred to, to wit, in 1841, by which the Erie Railroad Company was permitted to take lands and lay its tracks and run its cars through the county of Susquehanna, nothing was said in the act upon the subject of taxation. The value created or transferred to that county remained there like any other property of a corporation, and, like all other property, subject to the operation of the laws of the State.
The act of 1846, authorizing the building of the road through the county of Pike, contained two provisions in reference to taxation. But we find in neither any intimation of an intention to limit or to surrender the taxing power of the State. Two subjects of taxation are specified, and reports and details are required, from which it may be inferred that the legislature looked to other taxation thereafter. They taxed as far as was then thought proper, leaving the future to provide for the future. There is no suggestion of a release of any power or surrender of any authority possessed by the State. None of the cases decided by this court would justify a decision that, by the language we are considering, the general power of taxation was agreed to be surrendered by the State.
Nor do we find in New York and Erie Railway v. Sabin, cited by the appellant, anything in hostility to this construction. It was there held merely, as the State had imposed a tax upon the stock of the company to the extent of the cost of construction in that State, that implied an exemption from the ordinary taxation for State and county purposes. It was said that to hold otherwise would be to subject the same property to double taxation, which it cannot be supposed was intended. The remarks of Mr. Justice Woodward, in Erie Railway v. Commonwealth, give a full explanation of the meaning of the language employed in that case.
In Easton Bank v. The Commonwealth, it was held that the designation in the charter of the bank of the payment of taxes on its dividends at a fixed rate was a mere designation of a tax then to be paid, and did not affect the power to impose other or greater taxes. The decisions of the State courts of Pennsylvania are quite in harmony with our own on this subject.
None of the objections are well taken, and the judgment must be
AFFIRMED.

## Notes

* ↑ Randall v. Brigham, 7 Wallace, 530; Williams v. Kirtland, 13 Id. 306; Tioga Railroad Co. v. Blossburg Railroad Co., 20 Id. 137.
* ↑ State Tax on Railway Gross Receipts, 15 Wallace, 296; The Delaware Railroad Tax, 18 Id. 206.
* ↑ New Jersey v. Wilson, 7 Cranch, 164; Gordon v. Appeal Tax Court, 3 Howard, 133; Achison v. Huddleson, 12 Id. 293; Bank v. Knoop, 16 Id. 369; Dodge v. Woolsey, 18 Id. 331; Bank v. Skelly, 1 Black, 436; McGee v. Mathis, 4 Wallace, 143; Van Hoffman v. City of Quincy, Ib. 535; Home of the Friendless v. Rouse, 8 Id. 430; Washington University v. Rouse, Ib. 439; Wilmington Railroad v. Reid, 13 Id. 264; Tomlinson v. Branch, 15 Id. 460; Humphrey v. Pegues, 16 Id. 244.
* ↑ 66 Pennsylvania State, 84.
* ↑ 10 Id. 451, cited and approved in 18 Wallace, 227.
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