Source: https://openjurist.org/183/us/66/gulf-ship-island-railroad-company-v-george-p-hewes
Timestamp: 2019-06-27 04:03:04
Document Index: 266525154

Matched Legal Cases: ['§ 13', '§ 3744', '§ 8', '§ 709', '§ 18', '§ 13', '§ 181']

183 U.S. 66 - Gulf Ship Island Railroad Company v. George P Hewes
183 US 66 Gulf Ship Island Railroad Company v. George P Hewes
GULF & SHIP ISLAND RAILROAD COMPANY et al., Plffs. in Err.,
It is also true that on March 13, 1884, the legislature passed another act to facilitate the construction of the Gulf & Ship Island Railroad, and for other purposes the 8th section of which declared '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.' This is an effort to subrogate the new railroad to the rights and privileges of the former one, but its language contains an implied admission that, without such subrogation, the rights and privileges of the former company had lapsed, and that a new act was necessary to revive them. But if the act be considered as a 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' F. & M. Ins. Co. v. Tennessee use of Memphis, 161 U. S. 193, 198, 40 L. ed. 667, 668, 16 Sup. Ct. Rep. 466. 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 F. & M. Ins. Co. v. Tennessee, 161 U. S. 174, 40 L. ed. 660, 16 Sup. Ct. Rep. 471.
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.
3. The only provisions of the Constitution pertinent to this case are the following sections of article 12:
'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.'
As it is not altogether clear from the language of these sections whether it was competent for the legislature to grant to a railroad company an exemption from taxation, it is conceded by both sides to this controversy that we are bound to look to the decisions of the supreme court of Mississippi at the time this charter was granted, for their proper interpretation. Douglass v. Pike County, 101 U. S. 677, 25 L. ed. 968. While the question of contract or no contract in a particular case is one which must be determined by ourselves, every such alleged contract is presumed to have been entered into upon the basis and in contemplation of the existing constitution and statutes, and upon the established construction theretofore put upon them by the highest judicial authority of the state. Taylor v. Ypsilanti, 105 U. S. 60, 26 L. ed. 1008;Wade v. Travis County, 174 U. S. 499, 509, 43 L. ed. 1060, 1064, 19 Sup. Ct. Rep. 715, 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 12 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 & M. Valley R. Co. 77 Miss. 194, 28 So. 956.
(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. 'It may not be taxed, but it must be ever liable. It need not be subjected, but it must always be subject, to taxation, 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, 7 So. 219; Natchez, J. & C. R. Co. v. Lambert, 70 Miss. 779, 13 So. 33.
(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 Supers. v. Kelly, 68 Miss. 40, 8 So. 376; Natchez, J. & C. R. Co. v. Lambert, 70 Miss. 779, 13 So. 33.
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 § 3744 of the Annotated Code of 1892, which declares that '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 Co. v. Clark, 143 U. S. 1, 11, 36 L. ed. 55, 57, 12 Sup. Ct. Rep. 346, would also be applicable here. The railroad company, however, insists that its rights are saved by § 8 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. Yazoo & M. Valley R. Co. 77 Miss. 317, 28 So. 956), that the exemption was not saved.
We do not find it necessary to pass upon the soundness of this conclusion, as we are of opinion that the question whether the ruling of the supreme court, that a repealable exemption has been in 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 our duty to decide for ourselves whether the subsequent act had repealed it or impaired its obligation. The only contract relied upon is one exempting the property of a particular corporation from taxation for a certain number of years; a contract which, in the light of the state Constitution and the prior decisions of the state courts, must be read as if it contained a proviso that the legislature might in the meantime alter, amend, or repeal the act. Hence, as the legislature is left entirely free to act upon subject, 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. § 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, 88, 35 L. ed. 943, 946, 12 Sup. Ct. Rep. 142. Indeed the whole foundation of our jurisdiction in this class of cases must rest upon a contract which cannot be legally impaired.
This court has repeatedly held that we cannot revise the judgment of the highest court of a state unless, by its terms or necessary operation, it gives effect to some provision of a state Constitution or law which, as thus construed, impairs the obligation of a precedent contract. In Mississippi & M. R. Co. v. Rock, 4 Wall. 177, 181, 18 L. ed. 381, 382, this court pronounced it a 'fundamental error that this court can, as an appellate tribunal, reverse the decision of a state court, because that court may hold a contract to be void which this court might hold to be valid.' So, too, in Knox v. Exchange Bank, 12 Wall. 379, 383, 20 L. ed. 414, 415, it was said by Mr. Justice Miller: '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.' To the same effect are Lehigh Water Co. v. Easton, 121 U. S. 388, 392, 30 L. ed. 1059, 7 Sup. Ct. Rep. 916, and New Orleans Waterworks Co. v. Louisiana Sugar Ref. Co. 125 U. S. 18, 30, 31 L. ed. 607, 612, 8 Sup. Ct. Rep. 741. In the latter case it is said by Mr. Justice Gray: 'In order to come within the provision of the Constitution of the United States which declares that no state shall pass any law impairing the obligation of contracts, not only must the obligation of a contract have been impaired, but it must have been impaired by a law of the state. The prohibition is aimed at the legislative power of the state, and not at the decisions of its courts, or the acts of administrative or executive boards or officers, or the doings of corporations or individuals.' See also Central Land Co. v. Laidley, 159 U. S. 103, 109, 40 L. ed. 91, 93, 16 Sup. Ct. Rep. 80.
By § 18 of the company's charter of 1882 it was declared '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 & P. G. R. Co. v. Buck, 53 Miss. 246.
But, as we have already held, this section must be construed as subservient to § 13, article 12 of the Constitution of 1869, providing that 'the property of all corporations for pecuniary profit shall be subject to taxation.'
Whatever may have been the fluctuations of opinion upon this subject,—and it is not to be denied that there are many cases in the state courts holding that a privilege tax is not a tax upon property,—the law in this court, so far as concerns railway franchises, must be deemed to have been settled by the case of Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568, in which an exemption in the charter of the Wilmington & Raleigh Railway Company, of 'the property of said company and the shares therein,' from taxation, was decided to extend to a tax upon the franchise and rolling stock. In delivering the opinion of this court, Mr. Justice Davis observed: '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 State Auditor, 165 U. S. 195, 41 L. ed. 683, 17 Sup. Ct. Rep. 305, and Veazie Bank v. Fenno, 8 Wall. 533, 547, 19 L. ed. 482, 487.
In West River Bridge Co. v. Dix, 6 How. 507, 534, 12 L. ed. 535, 546, the franchise of a bridge company was held to be property subject to condemnation under the law of eminent domain. See also Monongahela Nav. Co. v. United States, 148 U. S. 312, 37 L. ed. 463, 13 Sup. Ct. Rep. 622; Spring Valley Waterworks v. Schottler, 62 Cal. 110; Nichols v. New Haven & N. Co. 42 Conn. 103, 125; Porter v. Rockford, R. I. & St. L. R. Co. 76 Ill. 561, 574; State ex rel. Milwaukee Street R. Co. v. Anderson, 90 Wis. 561, 63 N. W. 746; Richmond & D. R. Co. N. C. Div. v. Brogden, 74 N. C. 707.
The railroad company also calls attention to § 181 of the Constitution of 1890, by virtue of which '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, 29 So. 470.
Inasmuch as the statute in question could not, and in the opinion of supreme court did not, impair the obligation of any prior contract, its judgment must be affirmed.