Source: https://supreme.justia.com/cases/federal/us/183/66/
Timestamp: 2019-04-25 14:07:58+00:00

Document:
Although the certificate of the chief justice of a state supreme court that a federal question was raised is insufficient to give this Court jurisdiction, where such question does not appear in the record, it may be resorted to, in the absence of an opinion, to show that a federal question, which is otherwise raised in the record, was actually passed upon by the court.
A charter of a railroad company incorporated by an act of the legislature of Mississippi passed in 1882 contained an exemption from all taxation for twenty years. The state constitution adopted in 1889 provided that the property of all corporations for pecuniary profit should be subject to taxation the same as that of individuals, and that taxation should be equal and uniform throughout the state. Prior to the incorporation of the railroad company, the supreme court of the state had construed this provision of the constitution as authorizing exemptions from taxation, but had declared that such exemptions were repealable. Held that this Court was bound by this construction of the constitution, and therefore that the railroad company could not claim an irrepealable exemption in its charter. Held also that, the exemption being repealable, the question whether it had in fact been repealed was a local, and not a federal, question.
fact repealed by a subsequent statute is one which turns upon the construction of a state law, and is not reviewable here, although if the exemption were irrepealable and thus constituted a contract, it would be the duty of this Court to decide for itself whether the subsequent act did repeal it or impair its obligation.
A privilege tax upon a railroad corporation is a tax upon property.
This was a bill in equity filed in the Court of Chancery of Harrison County, Mississippi, by the railroad company, against the tax collector of that county, to enjoin the collection of certain property and privilege taxes assessed against the railroad company for the fiscal year 1896.
"that said company, its stock, its railroads and appurtenances, and all its property in this state, necessary or incident to the full exercise of all powers herein granted, shall be exempt from taxation for a term of twenty years from the passage of this act;"
that immediately thereafter, the corporation entered upon the construction of its road, and at the time of the filing of the bill had about seventy-five miles in operation; that, notwithstanding this charter exemption, the state railroad commission has returned its property for taxation, and that defendant has demanded not only a privilege tax, but a property tax levied for state and county purposes, and threatens seizure of its property. Wherefore an injunction was prayed.
and an appeal granted to the supreme court of the state, which affirmed the decree of the court below. Whereupon plaintiff sued out a writ of error from this Court, which defendant moved to dismiss.
such jurisdiction does not appear in the record, it may be resorted to, in the absence of an opinion, to show that a federal question which was otherwise raised in the record was actually passed upon by the court. Armstrong v. Athens County Treasurer, 16 Pet. 281; Yazoo & Mississippi Railroad v. Adams, 180 U. S. 41, 180 U. S. 48; Railroad Co. v. Rock, 4 Wall. 177; Parmelee v.Lawrence, 11 Wall. 36; Gross v. U.S. Mortgage Co., 108 U. S. 477.
"that, in order to encourage the investment of capital in the works which said company is hereby authorized to construct and maintain, and to make certain in advance of such investment, and as an inducement and consideration therefor, the taxes and burdens which this state will and will not impose thereon, it is hereby declared that said company, its stock, its railroad and appurtenances, and all its property in the state necessary or incident to the full exercise of all the powers herein granted shall be exempt from taxation for a term of twenty years from the passage of this act."
"that the property and investments of the company connected with this enterprise, within this state, shall not be subject to taxation until the road shall be in full operation and completed."
had never been abandoned, and that so late as 1872, the legislature had adopted a memorial to Congress praying that a land grant made by Congress in 1858 for the benefit of the Gulf & Ship Island Railroad Company, and which had lapsed to the United States by the intervention of the Civil War, might be revived in favor of that railroad.
"at its present session our legislature has granted a new act of incorporation with liberal provisions, thus again attesting the abiding and earnest interest felt by our people in this important work."
"that said Gulf & Ship Island Railroad Company are hereby subrogated to all the rights and privileges heretofore granted by the State of Mississippi to the Gulf & Ship Island Railroad Company, and shall have the right to use and enjoy such field notes, maps, and surveys as have been heretofore made in the interest of said road as were authorized and granted by the state under the Acts approved March 2, 1854, and December 3, 1858."
revival of the rights and privileges which had formerly belonged to the old company, such rights and privileges would be subordinated to the provisions of the new Constitution of 1869, which in the meantime had been adopted. Planters' Ins. Co. v. Tennessee, 161 U. S. 193, 161 U. S. 198. In addition to all this, however, the better opinion is that a subrogation to the "rights and privileges" of a former corporation does not include an immunity from taxation. Phoenix Ins. Co. v. Tennessee, 161 U. S. 174.
We are unable to see that there is anything in this legislation to indicate that the plaintiff company stands in a position to escape the application of the Constitution of 1869. Indeed, it seems to us entirely clear that the injection of the charter of 1850-1854 into this case was a mere afterthought, and that the charter upon which the plaintiff must rely is that of 1882, set forth in this bill, and that such charter must be construed in subordination to the Constitution of 1869, which we now proceed to consider.
"SEC. 13. The property of all corporations for pecuniary profit shall be subject to taxation the same as that of individuals."
"SEC. 20. Taxation shall be equal and uniform throughout the state. All property shall be taxed in proportion to its value, to be ascertained as directed by law."
authority of the state. Taylor v. Ypsilanti, 105 U. S. 60; Wade v. Travis County, 174 U. S. 499, 174 U. S. 509, and cases cited.
We are referred to the case of Mississippi Mills v. Cook, 56 Miss. 40, decided in 1878, four years prior to this charter, as settling the proper construction of these sections of the Constitution. Indeed, counsel stipulate that the stockholders invested their money in reliance upon this adjudication. The Mississippi Mills were chartered in 1871 for the purpose of manufacturing cotton and woolen fabrics, and in 1872 an act was passed, of which the Mississippi Mills were subsequently given the benefit, providing that all taxes upon the property of said company should be applied to the payment of debts which the company had incurred in the construction of their factory. In 1877, this act was so far amended as to be substantially repealed, and in 1878 the company filed a bill in chancery against the tax collector, setting up the acts of 1872 and 1873 as constituting a contract with the company, and alleging that the act of 1877 impaired the obligation of such contract, and was in violation of the Constitution of the United States.
(1) That it was not intended by § 13 of Article XII of the Constitution to confer power on the legislature to tax the property of corporations, because that existed without this section as an inherent legislative power.
(2) That the property of the corporations mentioned was declared to be subject to taxation -- that is, liable to taxation -- the same as that of individuals, but it was not necessarily to be subjected to taxation. Since overruled in Adams v. Yazoo & Mississippi Valley Railroad, 77 Miss.194.
(3) That any legislative act, "whether it be a charter or other form of law, which says it shall be exempt, and not subject to taxation, is in conflict with the Constitution." But that the legislature might exempt property of a certain class, whether the owners were corporations or natural persons, but corporate property could never be placed beyond the reach of the taxing power.
the same as that of individuals, for the Constitution so declares. The provision is mandatory as to universal liability to be taxed, but permissive to the legislature to tax the property of such corporations, or exempt it, as it may see proper, in common with the property of individuals, which may be taxed or not for the time being."
See also Vicksburg Bank v. Worrell, 67 Miss. 47; Natchez, Jackson & Columbus Railroad Co. v. Lambert, 70 Miss. 779.
(4) That it followed from this that it was competent for the legislature to modify or repeal the act of 1872, and that the repealing act of 1877 was constitutional, and operated as a repeal of the exemption. This was reaffirmed in Attala County v. Kelly, 68 Miss. 40; Natchez, Jackson & Colubus Railroad Co. v. Lambert, 70 Miss. 779.
(5) In a concurring opinion, delivered by the chief justice, he held that, if the exemption were granted in the form of a contract in the charter, it was prohibited.
Although the decision of the case was put upon the ground that the exemption from taxation contained in the acts of 1872 and 1873 was a mere bounty and subject to repeal by the legislature, the report would seem to indicate the opinion of the court to have been that no exemption was valid which was contained in the charter of a particular corporation (a question not necessarily involved); but whether this be so or not, it is entirely clear that the court intended to decide that, under the Constitution of 1869, any exemption granted by the legislature was a mere bounty, and subject to repeal.
Under this construction of the Constitution, it becomes unnecessary to decide whether the exemption contained in the charter of 1882 be void or not, since, as it appears by the certificate of the chief justice, the decision of the court below was put upon the ground that the subsequent legislation, and particularly the Annotated Code of 1892, which was construed by the court as repealing the exemption in the charter, was constitutional and valid. Indeed, counsel for the collector, in their brief, expressly disclaim any reliance upon the position that the exemption in this case was originally unconstitutional and void, putting their case expressly upon the ruling of the supreme court that such exemption had been repealed.
Holding, then, as we do, that the exemption was subject to repeal, it only remains to consider whether the Code of 1892 did in fact repeal and abrogate it. In this connection, the state relies upon section 3744 of the Annotated Code of 1892, which declares that "[the] following property, and no other, shall be exempt from taxation, to wit." Here follows a list of some twenty classes of property, among which, however, railroads are not included. If an exemption under a special act be repealed by the words "and no other," contained in a general act declaring what property shall be exempt from taxation, it would follow that this exemption was repealed by the Code of 1892, and the principle applied in Louisville Water Company v. Clark, 143 U. S. 1, 143 U. S. 11, would also be applicable here. The railroad company, however, insists that its rights are saved by section eight of the same Code, which declares that "private and local laws not revised and brought into this Annotated Code are not affected by its adoption unless it be expressly so provided herein." There being no such express provision in the Code respecting the act of 1882, it is insisted that the exemption contained in that act is saved. The supreme court, however, seems to have held, as it had already done with respect to a similar section in the Code of 1880, Adams v. Railroad Co., 77 Miss. 317, that the exemption was not saved.
no subsequent legislation could possibly impair the obligation of the contract, if such exemption can be called a contract at all. If no statute could impair it, it goes without saying that none did impair it. If, then, the decision of the supreme court, that the legislature had in fact repealed the exemption was right, the railroad company cannot complain, since the legislature had done no more than it had a right to do. If, upon the other hand, we should be of opinion that the supreme court was wrong in holding the exemption repealed, such exemption would be abrogated not by the act of 1892, but by an erroneous construction of that act. Our only authority to review the action of the state courts in this class of cases under Rev.Stat. sec. 709, arises when the validity of a state statute is drawn in question on the ground of its being repugnant to the Constitution of the United States, and the decision is in favor of its validity. Now if the statute adjudged to be valid does not impair the obligation of any contract, it is not repugnant to the Constitution. It is the fact that the act, as construed by the supreme court, impairs the obligation of a contract that gives us jurisdiction, and if there be in the act of 1882 no contract that can be impaired by subsequent legislation, it is of no consequence that the supreme court may have given it a wrong construction.
"Before we can be asked to determine whether a statute has impaired the obligation of a contract, it should appear that there was a legal contract subject to impairment, and some ground to believe that it has been impaired. New Orleans v. New Orleans Waterworks Co., 142 U. S. 79, 142 U. S. 88. Indeed, the whole foundation of our jurisdiction in this class of cases must rest upon a contract which cannot be legally impaired."
to be void which this Court might hold to be valid."
"But we are not authorized by the Judiciary Act to review the judgments of the state courts because their judgments refuse to give effect to valid contracts or because those judgments, in their effect, impair the obligation of contracts. If we did, every case decided in a state court could be brought here, when the party setting up a contract alleged that the court had taken a different view of its obligation to that which we held."
See also Central Land Co. v. Laidley, 159 U. S. 103, 159 U. S. 109.
We are therefore of opinion that we cannot review the action of the state court in holding this exemption to have been repealed.
4. A single point with regard to the privilege taxes included in the assessment sought to be enjoined remains to be considered.
"that such company, its stock, its railroad and appurtenances, and all its property in this state necessary or incident to the full exercise of all the powers herein granted, shall be exempt from taxation for a term of twenty years from the passage of this act."
This undoubtedly implies an exemption from privilege as well as ad valorem taxes, and such has been the construction given to it by the Supreme Court of Mississippi. Grand Gulf and Port Gibson Railroad v. Buck, 53 Miss. 246.
1869, providing that "the property of all corporations for pecuniary profit shall be subject to taxation."
Now, if privilege taxes are taxes upon the property of corporations, an exemption from such taxes was subject to repeal as much as we have already held an exemption of ad valorem taxes to be.
"It is insisted, however, that the tax on the franchise is something entirely distinct from the property of the corporation, and that the legislature therefore was not inhibited from taxing it. This position is equally unsound with the others taken in this case. Nothing is better settled than that the franchise of a private corporation -- which in its application to a railroad is the privilege of running it and taking fare and freight -- is property, and of the most valuable kind, as it cannot be taken for public use even without compensation. It is true it is not the same sort of property as the rolling stock, roadbed, and depot grounds, but it is equally with them covered by the general term 'the property of the company,' and therefore equally within the protection of the charter."
To the same effect are Adams Exp. Co. v. Ohio, 165 U. S. 195, and Veazie Bank v. Fenno, 8 Wall. 533, 75 U. S. 547.
This also appears to be the law in Mississippi. Coulson v. Harris, 43 Miss. 728; Drysdale v. Pradat, 45 Miss. 445.
Valley Waterworks v. Schottler, 62 Cal. 110; Nichols v. New Haven & Northampton Railroad, 42 Conn. 103, 125; Porter v. Rockford &c. R. Co., 76 Ill. 561, 574; State v. Anderson, 90 Wis. 561; Richmond & Danville Railroad v. Brogden, 74 N.C. 707.
It follows, then, that privilege taxes, being taxes upon property, are subject to the constitutional limitations of 1869, and their exemption was equally repealable as that of ad valorem taxes.
"exemptions from taxation to which corporations are legally entitled at the adoption of this Constitution shall remain in full force and effect for the time of such exemptions as expressed in their respective charters, or by general laws, unless sooner repealed by the legislature."
The words "sooner repealed" in this section apparently refer to a repeal before the expiration of the exemption under their respective charters, and as the supreme court has held that the exemption in this case was repealed by the Annotated Code of 1892 the company can gain no additional advantage by this section. Adams v. Tombigbee Mills, 78 Miss. 676.

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