The New York herald., 1870-05-02
UHIYrD STATES SUPREME COURT.
Decision Of Chief Justice Chase Against
the Exemption Of Railroads
tsS from State Taxation.
WASHINGTON, May /. 1870.

9oVing opinion IN the case Oh JOhn IdRar THOMSON
w, rne Union Pacific Railroad Company, Eastern
Division, and otheis-
rae Union Pacific Railroad Company, Eastern
Division was originally Incorporated in 1885, by the
Legislature OF me Territory OF Kansas, as The
pany, with authority TO construct a road IRON. the
west bank OF the Missouri to the western boundary
s me Territory srgoyequenty In asi2 +, nnaer m,asen al
name, win authority to naIte or consai. .s,r
The H laws "tt q The unitcd States or Of any State
Or Territory. Some months later the Union Paclllc
Railroad Company was Incorporated ~ congress
with power Conferred by The original act OF 1892 and
various amendatOry actS) TO conSsruct u rarodu
ana aeegrspn weswara Tue we o. 'aS n
Greenwich 10 connect with te central facihc hail-
way Company, Incorporated by me state OF CalIoi-
MIA, and SO to ioru In connection with Eastern
roads, continuous line irom OCEAN 10 ocean, Scve-
raj other railroad conipantes already tncorg0ated
by Missouri and Iowa, swell o. tie company
lust mentioned chartered by Kansas, were
authorized 10 construct roads tnrol gh the
ncinc road on the huldredth meridian; ana TO an
these roads large grants OF land We're made aud
large subsidies engaged on the security Oh second
mortgage, upon the condition oil paying ~ maturity
the bonds advanced by the subsidies and q render
ing cersain services 10 the government in 'he trans
mission OF messages and in the transportation Of
malls, troops, munitions ana other property at
reasonable rates OF compensation. But neither by
original act nor by any amendment uid Consress
undertake TO incorporate any railroad company or
authorize the construction OF any railroad within the
limits Of any State without the consent OF the State
concerned. And this is as true o. the Union Pacic
Railway Company, Eastern DIVISION, as o. any other
Of the roads aided by Congress. Indeed, Inay be
truly said that whatever was done by Congress In
reference TO this last named road was done not
merely with the consent, bus the urgent solcl-
tation of the State of Kansas. The corporation,
ever, remained State corporation though entitled
" certain benefits and subject to certain duties
under the legislation OF Congtess. In tins ease we
have no concern with any of the con
nected roads which form or ere destined
70 form links IN this great cham OF Trans
sidcr the liabilities and rights OF the particular
corporation ia respect TO taxation under State egis
0f the connected corporations only because OF their
interest in the question, by reason of their similar
SITUATION and circumstances III reference TO Ike
The compiainants In the bill before us which was
ied In the Circuit Court OF the United States or the
district OF Kansas, state that they are stockholders
OF the Union Paciiic Railway Company, Eastern
Division one or the deendants; that three OF the
defendants, James Blood, John NJ. Funk and VIII
iiam Gov are freasurers respect,yeIy OF Dong
las, Wyandote and Jefferson counties, III the
the Iesature Of that Isl State Certain taxes 0' have
been imposed on the railroad and telegraph
properly OF the company, which the treasurers OF
the counties named are processing o COLLECTS that
the property OF the company Is norgaged 10 tle
United States; that the company Is bound to per-
foim certain duties and ultimately to pay five per
cent Of its let earnings TO the United States tnat
the company VIII be greatly hindered ana embar-
rassed IN the performance OF its obligations and u
tics TO the United Staes II he taxes imposed shai
be colected and tnat, 10 some extent taxes OF the
ucEcrlptiOn have been Already pad hy Inc
company, 10 the prejudice OF the Just rights or the
com claimants and OF the securities OF the Uniled
States. Upon this case the compartments prayed an
injunction TO restrain the company rom paying and
the other defendants from collecting the taxes
assessed; and temporay Injunction vas allowed by
The answer Of the company admits The aega-
tons oi the bill. The answers o. the three county
breasurers admit the assessment OF taxes under the
laws OF Kansas but deny that such taxes have been
imposed With any view TO Impede or einbarrass the
railway company. and insist that the properly OF the
n " n q VI
levied upon all the property III the state OF Kansas,
and that no discrimination is made against he com
no replication was put In, bnt an agreed
statement Of facts, was Med, Tecting
ture. ana urging npon Congress legislation in
AID OF the railway company; admitting that the
Kansas to pc taxed ior State, county ana municlpat
purposes; that The taxes complained OF have been
assessed IN conformity with the statutes OF the State
that the company has executed 1rar mortgage
prior In lien to the debt to the United states; and
thai table OF earnings and expenditures for 1867
and 1858 appended 10 the agreed statemeb6 Is cor
rect
Upon the pleadings and this agreed statement
the question arose whether the property OF he rail-
way company described ia the bin was subject 10
the tax which tine statutes OF Kansas authorized to
be levied on all other properly not specially ex-
empted for State county and municipal purposes.
Upon ms question the judges OF the Circuit Court
were divided In opinion, ana 1t has been certified
here for decision
The counsel for the compliments have very Justly
said that tile question Is one OF very grave npog-
W
of them hat the properly OF the State Is exempt by
the State constitution from taxation and that the
State having reserved 70 i.sef i'll the charter the
right to purchase the road al the end OF fifty years at
value sion then be made upon two years notice to
which cannot oe taxed but it is 100 lain for argu.
ment that the interest thus reserved Is too remote
and TOO contingent TO lie regarded as within the
meaning Of the exemption.
The main argument Tor the compiainants, how
ever, is that the road being CONSTRUCTED under the
sCVrection and authority OF Congress, for the uses
Al vi purposes OF the United States, and being part
OF system Of roads thus constructed, is therefore
exc Snpt from taxation under state authority. IL Is
to observed that this exemption is not claimed
lInd y any Of Congress- IL Is not asserted that
any vet declaring sucn exemption has ever received
the 81 vlcton OF tile national legislature But 1t Is
earne Ty insisted thai The right o exemption arises
from le relations OF the road 10 The general govern
TO the rpau were granted in the exercise of It's
sttutioLS,l powers to regulate commerce, to esiab-
port armfes and To suppress insuirection and lnya
supplied aid, required security imposed duties,
Contingency d perceptaae OF income, the road
was adopted as an instrument Of the government,
anG spch vas act subject TO taxation by TIC state
1e case oi McCuQougB vs.. Maryland Is much reiled
on in support ol ChIa position. But we apprehend
that the reasoning OF thar case will hardly warrant
tie Conclusion TAch counsel deauce rom 1t IN this
In plat case the main questions were whether the
incorporation Of he Bank of the United states with
power to establish branches was act u legisia-
Zion within the conaitutlonal powers Of Congress?
And whether the canS ald tae branches as actually
Visiati0n2 Both quesa0as were re2uived IN the
Nrmative. In deciding the first The court
i; 4 not bold, COUNSEL suppose, that Con-
~ ~ =, under the constitution has absolute aud
xs IIsive power TO neutrality-suspicious. an act or ies
iat I'm Is CT Is not necessary ard proper FOR carry
%i ND effect one or more OF lis enumerated powers.
e Dc 3pcd tie words 'ineccssa!y aDd pr0pero 10
,n;vs sent in meaning to tho wotds appropriate,
1a;niv adopted, not prohibited, br.a consistent wEh
20 ,ai,, aud spirit vi the constitution and held
~ the Incorporation Of bauk witl branches was
nscaSsa ~ and proper means 10 the Afectual eAer-
sn oS 90 puied power within the Ghinitiop thus
vor f. \eld farther that Congress wshs within this
mir ,be inclusive judge as 10 Tie Aleans best
oa RI We end proposed, and that it5 choice OF
- ,neons q, the defined character was restricted
NV nv Ire ou discretion. But the question whether
,e ',,oticuiay WeanS adopted was within the general
~ ~ ~ ncidc utal powers was determined by the
e',rt A great part OF the argument was directed
the nronositio, that the incorporation OF bank
,as Oh yercss incidental power, Within the true
nf fha to Nns necessary and proper as eN-