Source: https://supreme.justia.com/cases/federal/us/109/244/
Timestamp: 2019-04-22 08:34:33+00:00

Document:
The Legislature of Florida, acting under the constitution of the state, passed an improvement act exempting from taxation the capital stock of railroad companies accepting its provisions. The Alabama and Florida Railroad Company was organized, and constructed a railroad within the state limits, and became entitled to enjoy the exemption. In 1868, the State of Florida adopted a constitution which provided for a uniform and equal rate of taxation, and that the property of corporations theretofore or thereafter to be incorporated should be subject to taxation. The road and property, rights, privileges, and franchises of the A. & F. Co., being sold under decree of foreclosure, became by mesne conveyances vested in the Pensacola & Louisville Railroad Co. In 1872, the legislature enacted that the P. & L. Co., as assignees of the A. & F. Co., should be exempted from taxation during the remainder of the period for which the A. & F. Co. would have been exempted. In 1877, the title of the P. & L. Co. to its road and other property, and its franchises, rights, privileges, easements, and immunities were conveyed to the Pensacola Railroad Company, and the legislature authorized the P. R. Co. to acquire and enjoy them. The P. & L. Co. possessed, among other things, the power to lease to a railroad company out of the state. It was claimed that this right passed to the P. R. Co., and the latter leased its railroad and property, rights, privileges, easements and immunities to the plaintiff in error.
1. That the right of exemption from taxation did not pass from the A. & F. Co. to the P. & L. Co. by the sale under the mortgage.
3. The Legislature of Florida, after the adoption of the Constitution of 1868, could not make an original grant to a railroad, exempting its railroad property from taxation.
4. That any right of this kind that could have been created by the act of 1877 was personal, and not assignable.
5. That a demurrer to the bill does not admit the contrary of these facts in law which appear upon the face of the bill, and of which the court must take judicial notice.
Court is not necessarily governed by previous decisions of state courts except where they have been so firmly established as to constitute a rule of property.
The ground of our jurisdiction is, as stated and shown in the record, that in the cause wherein the decree complained of was rendered there was drawn in question the validity of a statute of the State of Florida, to-wit, "An act entitled an act for the assessment and collection of revenue," approved March 5, 1881, wherein and whereby certain taxes for state and county purposes were imposed upon the line of railroad extending from the City of Pensacola, in the State of Florida, to the northern boundary of the State of Florida, in the direction of Montgomery, Alabama, of which railroad the plaintiff in error is in possession and is owner, the validity of this statute being questioned on the ground that it was repugnant to the Constitution of the United States, in that it impaired the obligation of a contract, and the decision of the Supreme Court of Florida being in favor of its validity.
"The constitution of the state declares"
improvements in relation to roads, canals, and navigable streams. and to provide for a suitable application of such funds as may be appropriated for such improvements."
"That the capital stock of any railroad company accepting the provisions of this act shall be forever exempt from taxation, and the roads, their fixtures and appurtenances, including workshops, warehouses, vehicles, and property of every description, needed for the purpose of transportation of freight and passengers, or for the repair and maintenance of the roads, shall be exempt from taxation while the roads are under construction, and for the period of thirty-five years from their completion, and that all the officers of the companies, and servants and persons in the actual employment of the companies, be and are hereby exempt from performing ordinary patrol or militia duty, working on public roads, and serving as jurors."
"That a line of railroad to be constructed from the City of Pensacola or any other point or points on the waters of Pensacola Bay or the waters of St Andrew's Bay to the north line of the state, leading in the direction of Montgomery, Alabama, shall be considered proper improvements to be aided from the internal improvement fund in the manner provided for, or may hereafter be provided for, in 'An act to provide for and encourage a liberal system of internal improvements in the state,' approved January 6, 1855."
and connect with a railroad leading thence to the City of Montgomery. This company, it is alleged in the bill, built and for a time operated the line of railroad contemplated by its charter, and became entitled to the benefits and privileges of the Internal Improvement Act of 1855, by accepting its provisions and complying with its conditions. Its line of railroad was completed about January 1, 1860.
By virtue of a decree of foreclosure and sale at the suit of trustees of a first mortgage, to satisfy the bonds secured thereby, the railroad of the Alabama and Florida Railroad Company, and all the rights, privileges, and franchises of the said company, were sold and conveyed on August 7, 1872, to one A. E. Maxwell, his heirs and assigns, in trust, and by him were sold and conveyed on December 10, 1872, to the Pensacola and Louisville Railroad Company, a corporation created by the laws of Florida.
"That the Pensacola and Louisville Railroad Company, having become the assignee of the Alabama and Florida Railroad, of Florida, and the franchises of the said corporation, and being in possession of and operating the said line of road, which corporation was exempt from taxation for a limited period, the said Pensacola and Louisville Railroad Company and its property, now owned or hereafter to be acquired, shall also be exempt from taxation during the remainder of said period."
"SEC. 2. Be it further enacted, that the said Pensacola Railroad Company be, and it is hereby, authorized and empowered to acquire by purchase and assignment all the property, rights, franchises, privileges, and immunities of the Pensacola and Louisville Railroad Company, a corporation created by an act of the General Assembly of the state, approved July 16, A.D. 1868, whether the same were acquired under the laws of the states of Florida or Alabama, or the laws of the United States, or as the assignee and successor of the Alabama and Florida Railroad Company, and upon completion of the said purchase and assignment, the said Pensacola Railroad Company shall be deemed in law and equity to be fully invested with and entitled to all the said property, rights, franchises, privileges, and immunities of said Pensacola and Louisville Railroad Company, as though the same were originally granted to or acquired by the said Pensacola Railroad Company."
"It shall be lawful for said company to purchase, lease, acquire an interest in, to unite or consolidate with, lease or sell to, any other railroad company in or out of the state, and to make the same one company, with a consolidated stock and property, and with one board of directors,"
immunities of the Alabama and Florida Railroad Company, the Pensacola and Louisville Railroad Company, and the Pensacola Railroad Company, under the various acts incorporating these companies, and acts amendatory of the same.
"to operate, lease, or purchase, upon such terms or in such manner as they deem best, any railroad in any other state or states deemed necessary for the protection of the interest of the stockholders. "
connected with it, entitled to them by the terms of the law. This exemption therefore did not pass from the Alabama and Florida Railroad Company to the Pensacola and Louisville Railroad Company by the conveyances which passed the title to the railroad itself, and to the franchises connected with and necessary in its construction and operation.
"which corporation was exempt from taxation for a limited period, the said Pensacola and Louisville Railroad Company and its property, now owned or hereafter to be acquired, shall also be exempted from taxation during the remainder of said period."
Here, the original exemption is declared to be the privilege of the Florida and Alabama Railroad Company, the particular corporation to which it was granted, and the necessity for conferring it by a new legislative grant upon the assignee of the property and franchises of the original corporation, rests upon the implication that the exemption did not pass to it by the assignment between the parties. And the further inference is equally necessary that the exemption transferred or created in the new company by the terms of the legislative grant is identical in its character as a personal and unassignable privilege to the new grantee, with that it had when it belonged to the first company.
But the 2d section of the Act of February 27, 1877, incorporating the Pensacola Railroad Company, authorized and empowered it to acquire by purchase and assignment all the property, rights, franchises, privileges, and immunities of the Pensacola and Louisville Railroad Company, and, upon completion of such purchase and assignment, declared that the former should be deemed, in law and in equity, to be fully invested with and entitled to all the said property, rights, franchises, privileges, and immunities as though the same were originally granted to or acquired by the said Pensacola Railroad Company.
It is claimed that this language is broad enough to cover the assignment and transfer of the immunity from taxation granted to the Pensacola and Louisville Railroad Company by the eighteenth section of its charter. And we are of this opinion. The language is comprehensive and unequivocal, and the word "immunity" is apt to describe the exemption claimed. It admits of no doubt, we think, if the Pensacola and Louisville Railroad Company were entitled to this exemption, and if the legislative grant of authority to make and accept this assignment of it was valid and effective, that the right to be exempt from taxation according to its terms passed to the Pensacola Railroad Company. But it must be borne in mind that it must be taken to have vested in the latter, if at all, precisely as it had in the former; that is, as a personal privilege. The assignment in the particular instance, based upon the express authority of a new enactment, did not impart to the immunity the quality of general assignability to other successors in the title to the property and franchises, claiming only under a conveyance between the parties.
The title of the plaintiff in error therefore to the exemption claimed, must be supported by some other authority. This is claimed to be found in the general power given by the 13th section of its charter to the Pensacola and Louisville Railroad Company to lease or sell to or consolidate with any other railroad company in or out of the state, which power passed with others to the Pensacola Railroad Company by the second section of its charter. But as we have already seen, and as was decided in Morgan v. Louisiana, 93 U. S. 217, and Wilson v. Gaines, 103 U. S. 417, the exemption from taxation does not pass by virtue of a conveyance of the railroad and its franchises, which was all the Pensacola Railroad Company could pass under that authority, but requires for its transfer some particular and express description, indicating unequivocally the intention of the legislature that it might pass by an assignment. That does not exist in this case, and the exemption claimed by the plaintiff in error fails because it was not and could not be transferred to it, under the law, by the Pensacola Railroad Company.
question into one of pleading. It is said that the bill alleges, as a matter of fact, that the exemption passed to and vested in the complainant below, and that the truth of the allegation is admitted by the demurrer. But this is matter of law; the documents of title are exhibited with the bill and constitute part of the record, and we take judicial notice of their legal effect. A fact impossible in law cannot be admitted by a demurrer. In Wilson v. Gaines, 103 U. S. 417, it was inferred, in the face of a demurrer, claimed to be an admission of a contrary allegation, that the sale did not pass any rights of property, not described, as within the lien of the mortgage.
We have thus shown that the claim of the plaintiff in error to the exemption alleged fails, because the Pensacola Railroad Company, if it possessed it, had no power to convey it. It will appear on further examination that it fails for a distinct and deeper reason -- namely because the Pensacola Railroad Company was itself not entitled to any such exemption. That company was incorporated by the Act of February 27, 1877, which undoubtedly did purport to grant to it, as assignee of the Pensacola and Louisville Railroad Company, in terms sufficiently broad, the immunity from taxation which, by the 18th section of the Act of February 4, 1872, was expressly declared to be granted to the latter.
Both the statutes, however, were passed by the General Assembly of Florida, acting under the constitution of that state, which went into effect in 1868.
"The legislature shall provide for a uniform and equal rate of taxation, and shall prescribe such regulations as shall secure a just valuation of all property, both real and personal, excepting such property as may be exempted by law for municipal, educational, literary, scientific, religious, or charitable purposes."
"The property of all corporations, whether heretofore or hereafter incorporated, shall be subject to taxation, unless such corporation be for religious, educational, or charitable purposes. "
"The property of all corporations, whether heretofore or hereafter incorporated, shall be subject to taxation unless such property be held and used exclusively for religious, educational, or charitable purposes."
It is under the authority and in pursuance of the mandates of these constitutional provisions that the legislature passed the Act of March 5, 1881, under which the road of the plaintiff in error is subjected to taxation, and the validity of which is here under review.
It cannot be and is not contended that under these constitutional limitations, the Legislature of Florida could make an original grant to a railroad corporation exempting its railroad property from taxation. But the grant to the Pensacola and Louisville Railroad Company by the act of 1872, and that to the Pensacola Railroad Company by the act of 1877, though in form the renewal or transfers of previously existing grants, were in fact the creation of new ones. In Trask v. Maguire, 18 Wall 391, 85 U. S. 409, it was said, speaking of similar provisions in the Constitution of Missouri: "The inhibition of the Constitution applies in all its force against the renewal of an exemption equally as against its original creation," and in Shields v. Ohio, 95 U. S. 319, it was decided that in cases of corporations created by consolidation the powers of the new company did not pass to it by transmission from its constituents, but resulted from a new legislative grant, that could not transcend the constitutional authority existing at the time it took effect. It follows that the exemption from taxation in terms contained in the charters of 1872 and 1877 were void as unauthorized and prohibited by the state constitution of 1868.
following the title, like an easement or a covenant running with the land, which we have shown, however, not to be the case, for even on that supposition, the privilege is one that must be exercised by some person capable in law of accepting and exercising it. The conception of an immunity that is impressed upon the thing in respect to which it is granted is purely metaphorical. The grant is to a person in respect of a thing, and it is said to inhere in or be attached to the thing only when, by its terms, the grant is assignable by a conveyance of the thing, and passes as an incident with the title to each successor. There must always be a person capable not only of receiving the title, but also of accepting the conditions accompanying it, and which constitute the exemption; otherwise the conditions become impossible and void.
After the adoption of the Constitution of Florida of 1868, there could be no corporation created capable in law of accepting and enjoying such an exemption, for that was prohibited by the constitutional provisions that have been cited. In the case of the Pensacola and Louisville Railroad Company, in 1872, the capacity at that time to receive this privilege depended altogether upon the legislative act amending its charter to that effect, and if any doubt as to this might be reasonably entertained, certainly none can arise as to the Pensacola Railroad Company, which derived all its powers and its very existence from legislation dependent for its validity wholly upon the Constitution of 1868. The prohibition which forbids the legislature from exempting the property of railroad corporations from taxation makes it impossible for the legislature to create such a corporation capable in law of acquiring and holding property free from liability to taxation.
upon us as a conclusive determination of the law of Florida upon the point, particularly authoritative in the present case for the reason that, the plaintiff in error having, subsequently to that decision, acquired its title, may be presumed to have acted upon the faith of it.
This presumption is not pressed, however, to the extent of establishing a contract between the plaintiff in error and the State of Florida, the obligation of which has been impaired by any law subsequently passed, nor of working an estoppel against the state as res adjudicata, with an equivalent effect. The decision cited therefore cannot be allowed any greater effect as an authority than ought to be given, in cases of this description, to the judgments of state tribunals.
The question we have to consider and decide is whether, in the judgment under review, the Supreme Court of Florida gave effect to a law of the state which, in violation of the Constitution of the United States, impairs the obligation of a contract. In reaching a conclusion on that point, we decide for ourselves, independently of the decision of the state court, whether there is a contract, and whether its obligation is impaired, and if the decision of the question as to the existence of the alleged contract requires a construction of state constitutions and laws, we are not necessarily governed by previous decisions of the state courts upon the same or similar points, except where they have been so firmly established as to constitute a rule of property. Such has been the uniform and well settled doctrine of this Court. State Bank of Ohio v. Knoop, 16 How. 369 57 U. S. 391.
not been impaired by the law complained of. Now, in forming its judgment upon this subject, it can make no difference whether the instrument claimed to be a contract is in the form of a law, passed by the legislature, or of a covenant or agreement by one of its agents acting under the authority of the state."
To the same effect are the cases of Jefferson Branch Bank v. Skelly, 1 Black 436, and Bridge Proprietors v. Hoboken Co., 1 Wall. 116.
It is true that in all these cases, the state courts whose judgments were brought into review had construed the statutes as not creating a contract, but the principle is equally applicable in the converse case. Burgess v. Seligman, 107 U. S. 20.
It is undoubtedly true that the opinion of the Supreme Court of Florida, in the case of Gonzales v. Sullivan, 16 Fla. 791, is not consistent with that which we have expressed upon some of the principal questions involved in this case. It did declare, speaking of the effect of the Internal Improvement Act of 1855, "that an exemption from taxation resting in contract is annexed, by the terms of the law which created it, to the road itself, and not to the companies," and that, by the act of 1872, the Pensacola and Louisville Railroad Company, as assignee of the Florida and Alabama Railroad, became entitled to the exemption because "the property passed, and with it, as an incident, went the exemption." But the main topics in the discussion in the opinion were whether the Florida and Alabama Railroad was within the scope of the Internal Improvement Act of January 6, 1855, by virtue of the amendment of December 14, 1855, the constitutional authority to pass which was denied in argument but affirmed by the court, and the question as to the effect of the provisions of the Constitution of 1868, which we have considered, upon the capacity of the Pensacola and Louisville Railroad Company and the Pensacola Railroad Company to accept the privilege and benefit of the exemption, by legislative authority exerted in 1872 and 1877, does not seem to have been raised or noticed, much less adjudged.

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