Source: https://en.wikisource.org/wiki/Yazoo_%26_Mississippi_Valley_Railroad_Company_v._Adams/Opinion_of_the_Court
Timestamp: 2017-08-22 02:11:04
Document Index: 333685190

Matched Legal Cases: ['§ 25', '§ 3875', '§ 20', '§ 180', '§ 21', '§ 709', '§ 709', '§ 180', '§ 181', '§ 180', '§ 191']

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Yazoo & Mississippi Valley Railroad Company v. Adams/Opinion of the Court
< Yazoo & Mississippi Valley Railroad Company v. Adams
Yazoo & Mississippi Valley Railroad Company v. Adams by Henry Billings Brown
830617Yazoo & Mississippi Valley Railroad Company v. Adams — Opinion of the CourtHenry Billings Brown
Argued: October 22, 23, 1900. --- Decided: January 7, 1901
It is very evident that the circuit court, in striking out these pleas, took the view that the supreme court had, upon the first hearing, settled the law to be that no valid contract of exemption existed, and that if such contract existed in favor of the Louisville, New Orleans, & Texas Railway Company (hereinafter styled the Louisville Company) it had been lost by the consolidation of October 24, 1892, and that the only effect of the special pleas was to inject a claim under the Federal Constitution as an argument for reversing its ruling. These pleas evidently raised precisely the same questions that had been settled in a slightly different form. The circuit court treated this as an attempt to induce it to overrule the action of the supreme court, which, of course, was impossible. The supreme court not only held that the circuit court was correct in this view, but that, the issues having already been settled, it would itself treat them as res judicata. This accords with what seems to be the uniform practice of the Mississippi courts. Thus, in Smith v. Elder, 14 Smedes & M. 100, it was held that where a demurrer to a plea, which had been sustained in the court below, was overruled by the supreme court, all the legal questions raised by the demurrer would be considered as having been settled by the decision overruling it; and that such decision would not only be binding upon the inferior, but also upon the appellate, court. So also in Bridgeforth v. Gray, 39 Miss. 136, it was held that, where the construction of a will had been settled upon demurrer to a bill in chancery, the court would not permit that question to be reopened upon a hearing upon the merits, notwithstanding the chancery court of Tennessee in the meantime had placed a different construction upon the will. This is also the rule in this court. Wayne County Supers, v. Kennicott, 94 U.S. 498, 24 L. ed. 260; The Lady Pike, 96 U.S. 461, sub nom. Pearce v. Germania Ins. Co. 24 L. ed. 672; Thompson v. Maxwell Land Grant & R. Co. 168 U.S. 451, 42 L. ed. 539, 18 Sup. Ct. Rep. 121. See also Hook v. Richeson, 115 Ill. 431, 5 N. E. 98; Brooklyn v. Orthwein, 140 Ill. 620, 31 N. E. 111; McKinney v. State ex rel. Nixon, 117 Ind. 27, 19 N. E. 613.
In this aspect the case is much like that of Union Mut. L. Ins. Co. v. Kirchoff, 169 U.S. 103, 42 L. ed. 677, 18 Sup. Ct. Rep. 260. In that case the insurance company had loaned money to Kirchoff, and had filed a bill to foreclose the trust deed. Pending this bill an agreement was entered into for the release to Kirchoff of two of the lots embraced in the foreclosure proceedings, but it was agreed that these proceedings should be prosecuted, and, as soon as the company obtained a deed from the master, it would convey to Kirchoff. No defense was made to the foreclosure, and the case went to a decree, and the property was sold. The case went to the supreme court of Illinois, which found the agreement between Mrs. Kirchoff and the insurance company as claimed by her, determined that she was entitled to the release sought, and remanded the case for the purpose of an accounting. As stated by the Chief Justice: 'The record does not disclose that any right or title was specially set up or claimed under any statute of, or authority exercised under, the United States in the courts below, or in the supreme court of Illinois prior to the decision of the latter court on the first appeal. . . . The errors there assigned nowhere in terms raised a Federal question. And in affirming the judgment of the appellate court the supreme court did not consider or discuss any Federal question as such in its opinion.' It appears to have turned upon questions of fact. 'It is now contended that it then appeared that defendant claimed to hold an absolute title to the lots in question by virtue of the foreclosure proceedings and the master's deed obtained thereunder, and hence that the title was claimed under an authority exercised under the United States; that a Federal question was thereby raised on the record; that the decision of the case necessarily involved passing on the claim of title.' Upon the second appeal it was assigned as a Federal question that the circuit court erred in entering a decree which would in effect nullify the decree of foreclosure of the circuit court of the United States, and in refusing to the defendant leave to file the proposed amendment to its answer. 'The appellate court on the second appeal held itself bound by the previous decision, and declined to enter on matters of defense which might have been availed of. The supreme court was of the same opinion, for it ruled that where a case had once been reviewed by the court, and remanded with directions as to the decree to be entered, error could not be assigned on a subsequent appeal for any cause existing at the time of the prior judgment.' This court dismissed the writ of error, holding that, as the supreme court did not reopen the case as to matters previously adjudicated, and as the Federal question was not set up upon the first appeal, there was no action of that court in relation to it which we were called upon to revise. See also Northern P. R. Co. v. Ellis, 144 U.S. 458, 36 L. ed. 504, 12 Sup. Ct. Rep. 724; Great Western Teleg. Co. v. Burnham, 162 U.S. 339, 40 L. ed. 991, 16 Sup. Ct. Rep. 850.
By another process of reasoning we are led to the same conclusion. No leave was applied for or granted to file these additional pleas after the issues had been made up, as seems to be required by the practice in Mississippi, where it is said that all such pleas must be presented, with the application to file them, to the court, that it may judge of the propriety of the proposed action (Hunt v. Walker, 40 Miss. 590; Pool v. Hill, 44 Miss. 306; Pfeifer v. Chamberlain, 52 Miss. 90); and even if leave had been asked to file them, it was a matter of discretion with the trial court to permit it, and a matter of state practice which cannot be inquired into here. Stevens v. Nichols, 157 U.S. 370, sub nom. Carr v. Nichols, 39 L. ed. 736, 15 Sup. Ct. Rep. 640; Mexican C. R. Co. v. Pinkney, 140 U.S. 199, 37 L. ed. 701, 13 Sup. Ct. Rep. 859; Long Island Water Supply Co. v. Brooklyn, 166 U.S. 688, 41 L. ed. 1166, 17 Sup. Ct. Rep. 718. We are therefore of opinion that the Federal question was 'specially set up and claimed' too late to be of any avail to the plaintiffs in error.
By the 21st section of an act to incorporate the Mobile & Northwestern Railroad Company, approved July 20, 1870, the state 'hereby agrees with said company (and which agreement is irrepealable) that all taxes to which said company shall be subject for the period of thirty years are hereby appropriated and set apart, and shall be applied to the debts and liabilities which the said company may have incurred in the construction of said road, or for money borrowed by said company, upon lands or otherwise, to be used in constructing said road, or paying debts incurred by said company in constructing the same. . . . Provided, however, That whenever the profits of said company shall enable it to declare and pay to the stockholders an annual dividend of 8 per cent upon its capital stock over and above the payment of its debts and liabilities, then the appropriation of the taxes aforesaid shall cease, and said taxes shall be paid by said company to the tax collector, to be by him paid over as required by law.'
By an act to incorporate the New Orleans, Baton Rouge, Vicksburg, & Memphis Short Line Railroad Company (hereinafter called the Baton Rouge Company), approved March 9, 1882, it was enacted (§ 25) 'that the company shall have power and authority to purchase and hold any connecting railroad, and to operate the same, or to consolidate the company with any other company under the name of one or both; but when such purchase is made, or consolidation is effected, the said company shall be entitled to all the benefits, rights, franchises, lands, and property of every description belonging to said road or roads so sold or consolidated.'
By a further act of February 17, 1882, the Yazoo & Mississippi Valley Railway Company (hereinafter called the Yazoo Company), was authorized 'to consolidate with any other railroad company in or out of Mississippi, upon such terms as the consolidating companies might agree upon, . . . and upon any such consolidation the said consolidated company shall have and enjoy all the property, rights, privileges, powers, liberties, immunities, and franchises herein granted; but such consolidation shall not have the effect of exempting from taxation the railroad or property owned by such other consolidating company prior to its consolidation with the company hereby chartered; nor of exempting from taxation any property which the consolidated company may, after such consolidation, acquire under the provisions of the charter of such other consolidated company.' Finally by the act of February 19, 1890, the Louisville, New Orleans, & Texas Company, and the Natchez, Jackson, & Columbus Company were authorized to consolidate with each other under the name of the Louisville, New Orleans, & Texas Company, and upon such terms as might be agreed upon by the companies.
By the Code of Mississippi of 1892, § 3875, a system of taxing the property of railroad companies by the railroad commission was put in force. This article provided for a complete schedule of the property of the company, the total amount of its capital stock, its par value, and the value of its franchise; and by a law subsequently enacted, February 7, 1894, a state revenue agent was provided for, whose duty it was to enforce the payment of taxes by all classes of property owners. It was under the provisions of the laws of 1892 that this action was begun.
The railroad companies went to a trial of these cases in an obvious reliance upon two previous decisions of the supreme court of Mississippi. In the first one (Mississippi Mills v. Cook, 56 Miss. 40) that court held the constitutional provision that 'the property of all corporations for pecuniary profits shall be subject to taxation' did not require that such corporations must always be subjected to taxation, but that their property could not be placed beyond the reach of the taxing power; and that the legislature might exempt property of a particular class, whether the owners were corporations or natural persons; in other words, that the provision was mandatory as to the liability of such property to be taxed, but permissive to the legislature to tax it or exempt it, as might seem proper. It further held that the provision of § 20, that 'all property shall be taxed in proportion to its value,' did not require that all property should be taxed, or deny to the legislature the right to exempt any; that the legislature might exempt property of a certain class, or property used for a certain purpose; that it had the power to select such objects of taxation as it might deem appropriate; but when any article of property was selected for taxation it must be taxed in proportion to its value, and not specifically.
But upon the hearing of the case under consideration the court (now differently constituted) overruled both of these cases, and held, first, that the legislature could not grant an exemption to a railway company under the Constitution of 1869; second, that it could not grant an irrepealable exemption under that Constitution; third, that a new company was formed by the consolidation of October 24, 1892, and no exemption passed into it; fourth, that if the consolidation were a technical merger, still, § 180 of the Constitution of 1890 prevented any exemption from passing into it; fifth, that any such exemption was repealed by the acts of 1884, 1886, and 1890. Manifestly, that court could not have held the railways liable for the taxes in suit without deciding either that the provision of § 21 did not constitute a legal contract in view of the Constitution of 1869, or that no such contract existed in favor of the plaintiffs in error in view of the consolidations, or that the subsequent tax legislation of the state of 1892 and 1894 did not impair the obligation of that contract. All these were Federal questions, the vital one being whether the acts of 1892 and 1894 impaired the obligation of the contract, if any existed.
In short, the case is one of those frequently arising under the 2d clause of Rev. Stat. § 709, in which the validity of a state statute under the Constitution of the United States is necessarily drawn in question, and, the decision of the state court being in favor of its validity, this court will take jurisdiction, though the Federal question be not specially set up or claimed. As we have repeatedly had occasion to hold, it is only in cases arising under the 3d clause of the section, where a right, title, privilege, or immunity is claimed, that the Federal question must be specially set up. The cases are collected in Columbia Water Power Co. v. Electric Street Railway, Light & Power Co. 172 U.S. 475, 488, 43 L. ed. 521, 525, 19 Sup. Ct. Rep. 247. Thus, in Willson v. Black Bird Creek Marsh Co. 2 Pet. 245, 7 L. Ed. 412, the record did not show that the constitutionality of an act of a state legislature was drawn in question; 'but,' said the Chief Justice, 'we think it impossible to doubt that the constitutionality of the act was the question, and the only question, which could have been discussed in the state court.' So, in Satterlee v. Matthewson, 2 Pet. 380, 7 L. ed. 458, it was said that, if it sufficiently appear from the record itself that the repugnancy of the statute of a state to the Constitution of the United States was drawn in question, this court has jurisdiction, though the record does not in terms declare that this question was raised. See also Crowell v. Randell, 10 Pet. 368, 9 L. ed. 458; Furman v. Nichol, 8 Wall. 44, 19 L. ed. 370; Chicago L. Ins. Co. v. Needles, 113 U.S. 574, 28 L. ed. 1084, 5 Sup. Ct. Rep. 681; Eureka Lake & Y. Canal Co. v. Yuba County Super. Ct. 116 U.S. 410, 29 L. ed. 671, 6 Sup. Ct. Rep. 429; Kaukauna Water Power Co. v. Green Bay & M. Canal Co. 142 U.S. 254, 35 L. ed. 1004, 12 Sup. Ct. Rep. 173. And the fact that the supreme court of the state did not expressly refer to the contract clause of the Constitution does not prevent our taking jurisdiction, if the applicability of such clause were necessarily involved in its decision. As was said by Chief Justice Waite in Chapman v. Goodnow, 123 U.S. 540, 548, 31 L. ed. 235, 238, 8 Sup. Ct. Rep. 211, 215: 'If a Federal question is fairly presented by the record, and its decision is actually necessary to the determination of the case, a judgment which rejects the claim, but avoids all reference to it, is as much against the right, within the meaning of § 709 of the Revised Statutes, as if it had been specifically referred to and the right directly refused.'
The decision of the supreme court that the exemption in the Mobile & Northwestern Railroad Company's charter of 1870 was void under the Constitution of 1869 was practically a decision that the contract of the state was beyond the power of the legislature, and void, and hence there was no contract to be impaired. But, conceding this contract to have been valid, another distinct question arose, whether that contract enured to the benefit of the plaintiffs in error by the successive consolidations; in other words, whether, as to the plaintiffs in error, there was any contract ever existing which the taxing legislation of Mississippi could impair. Both these questions were ruled against the railroads; and, while the contract clause of the Federal Constitution was not discussed, the case turned upon the existence of such a contract, and no question seems to have been made that, if there had been a contract, it was impaired by the taxing legislation of 1892. As we have often held that where an impairment of a contract by state legislation is charged, the existence or nonexistence of the contract is a Federal question, it is impossible to escape the conclusion that the foundation of the whole case was whether there was really a contract which had been impaired, and that this was necessary to the determination of the case. As already stated, this was a Federal question, and the fact that the supreme court did not in terms discuss the contract clause of the Constitution does not oust our jurisdiction. In view of this record and the opinions of the supreme court, the certificate of the Chief Justice, that the validity of the state statutes was actually drawn in question under the contract clause of the Constitution, was but a further assurance of a fact already appearing. The motion to dismiss must therefore be denied.
It is unnecessary to discuss the terms of the first consolidation of August 12, 1884, between the Tennessee Southern, the Memphis Company, the Baton Rouge Company, and the New Orleans Company, forming the Louisville, New Orleans, & Texas Company, since this was made prior to the adoption of the new Constitution of 1890. We are specially concerned with the articles of consolidation between the Louisville Company so organized, and the Yazoo Company, which were adopted October 24, 1892, and subsequent to the new Constitution. The question in that connection is whether such consolidation created a new corporation, or, in the language of § 180 of the Constitution of 1890, whether it was a 'grant of corporate franchises,' in which case, by the express language of that section, such new corporation became subject to the provision of the new Constitution. In their articles of consolidation these companies agreed 'to and with each other, to unite, merge, and consolidate their several capital stocks, corporate rights, franchises, immunities, and privileges, and properties of every kind, real, personal, and mixed.' The first article provided that 'such consolidation shall be effected by uniting or merging the stock, property, and franchises of the party of the first part (the Louisville Company) with and into the stock, property, and franchises of the said the Yazoo & Mississippi Valley Railroad Company, without disturbing the corporate existence of the last-named company, or the formation of any new, distinct corporation, unless such result shall be necessary to give legal effect to this agreement; but, whatever may be the legal consequence of the consolidation herein provided for, this agreement is to stand and be effective.' This article was evidently drawn in view of the decisions of this court upon the subject of merger and consolidation, and evinces a desire to avoid the legal results following from a consolidation of the two constituent companies into a new corporation, but, at the same time, expresses a doubt whether the agreement would not after all be construed to create a new corporation. These doubts were unquestionably well founded, and, if the effect of the agreement be in law the creation of a new corporation, the expression of a wish that it should not be so construed is of course entitled to no weight. The final clause, that in any event the agreement shall stand and be effective, shows that effect should be given to all its stipulations, whatever be its legal consequences.
Subsequent articles provided that the corporate name should be the Yazoo & Mississippi Valley Railway Company; that the capital stock should be $15,000,000; that the stockholders of either of the constituent companies should 'have all the rights of a stockholder of the consolidated company, as fully as if new shares of the consolidated company had been issued and exchanged therefor; and, in case the consolidated company shall determine to issue new shares, such shares shall be exchangeable at par for the now outstanding shares of each of the constituent companies;' that all the rights, powers, privileges, immunities, and franchises of the constituent companies should pass to the consolidated company, which should be managed by a board of directors, whose names, for the purpose of the organization, were given.
Reading this agreement in connection with the charters of the several companies, and especially with that of the Memphis & Vicksburg Railroad Company of March 3, 1882, providing that 'all of the companies so consolidating shall be merged into and become one company, and the company so formed by such consolidation shall be deemed and held to be a corporation created by the laws of this state,' it is impossible to eacape the conclusion that a new corporation was created with a capital stock of $15,000,000, and that the stockholders of the constituent companies were to become stockholders of the new company, share for share, 'as fully as if new shares of the consolidated company had been issued and exchanged therefor.' Some question was made in the state courts whether the shares were actually issued in the new company. But the supreme court having found that they were, we accept that finding as conclusive. Power was expressly given to issue new shares, and the usual course of business would justify us in inferring that that was the method adopted. A new name was taken, which was none the less a new one by reason of the fact that it was the name of one of the constituent companies.
It cannot be doubted that under this agreement it was contemplated that the constituent companies should go out of existence, and that their officers should resign their trusts in favor of the officers of the new company; that their boards of directors should be supplanted by another board, the names of whose members were contained in the agreement; that the stock of the constituent companies should be surrendered and new stock taken therefor, or, in lieu of that, that the old stock should be recognized as the stock of the new company; that the road should be operated by men holding their commissions from the new company, and that the entire administration of the functions of the constituent companies should be surrendered to the new corporation. In short, nothing was left of the constituent companies but the memory of their existence,-the mere shadow of a name. But the new company which took its place suddenly sprang into life with a new corps of officers and a full equipment for the successful operation of the road.
In Central R. & Bkg. Co. v. Georgia, 92 U.S. 665, 23 L. ed. 757, an act of the legislature authorized the Central Railroad and the Macon Railroad to unite and consolidate their stock and all their rights, privileges, immunities, and franchises under the name and charter of the Central Railroad, in such manner that each owner of shares of stock of the Macon Road should be entitled to receive an equal number of shares of the stock of the consolidated companies. 'Whether,' said Mr. Justice Strong, 'such be the effect [consolidation or amalgamation] or not, must depend upon the statute under which the consolidation takes place, and of the intention therein manifested. If, in the statute, there be no words of grant of corporate powers, it is difficult to see how a new corporation is created.' It was held that the act did not work a dissolution of the existing corporations and the creation of a new company, since there was no provision for a surrender of the stock of the shareholders of the Central, and none for the issue of other certificates to them. In that case the road whose charter contained the exemption from taxation was preserved intact by the consolidation, and it was held that its exemption continued, while the other road was to go out of existence. As already stated, in the act authorizing the consolidation, in this case, of the Memphis & Vicksburg Railroad Company, there is an express provision that all the companies so consolidated shall be merged into and become one company, and held to be a corporation created by the laws of the state.
Other cases to the same effect, holding that the consolidation did not operate as a dissolution of the constituent companies, are Chesapeake & O. R. Co. v. Virginia, 94 U.S. 718, 24 L. ed. 310; Green County v. Conness, 109 U.S. 104, 27 L. ed. 872, 3 Sup. Ct. Rep. 69, and Tennessee v. Whitworth, 117 U.S. 139, 29 L. ed. 833, 6 Sup. Ct. Rep. 645.
It may be observed that all these cases turn upon the question whether the new company inherited by consolidation certain privileges and immunities belonging to the constituent companies, or one of them, and that no question arose as to the applicability of a new constitutional inhibition intervening before the consolidation took place. This question, however, did arise in Shields v. Ohio, 95 U.S. 319, 24 L. ed. 357, where it was held that a consolidation, under a statute of Ohio, of two or more railroad companies worked their dissolution, and that the powers and franchises of the new company thereby formed were subject to 'be altered, revoked, or repealed by the general assembly' under a constitutional provision which took effect prior to the consolidation. The statute in that case expressly provided that the consolidated company should be a new corporation and subject to the constitutional provision. A like ruling was made under a similar statute of Maine in Maine C. R. Co. v. Maine, 96 U.S. 499, 24 L. ed. 836. In Atlantic & G. R. Co. v. Georgia, 98 U.S. 359, 25 L. ed. 185, two railroad companies were consolidated by an act of the legislature, which authorized the consolidation of their stocks, conferred upon the consolidated company full corporate powers, and continued to it the franchises, privileges, and immunities which the companies had held by their original charters. We held in that case that a new corporation was created, which became subject to the provisions of a statutory code adopted January 1, 1863, permitting the charters of private corporations to be changed, modified, or destroyed at the will of the legislature. The case was distinguished from Central R. & Bkg. Co. v. Georgia, 92 U.S. 665, 23 L. ed. 757, as being a consolidation, instead of a merger. 'Nor was it,' said Mr. Justice Strong, 'a mere alliance or confederation of the two. If it had been, each would have preserved its separate existence as well as its corporate name. But the act authorized the consolidation of the stocks of the two companies, thus making them one capital in place of two. It contemplated, therefore, that the separate capital of each company should go out of existence as the capital of that company.' To the same effect is St. Louis, I. M. & S. R. Co. v. Berry, 113 U.S. 465, 28 L. ed. 1055, 5 Sup. Ct. Rep. 529.
The latest declaration of this court upon the subject is found in Keokuk & W. R. Co. v. Missouri, 152 U.S. 301, 38 L. ed. 450, 14 Sup. Ct. Rep. 592. In that case, a railroad corporation chartered in Missouri in 1857, with a provision that its property should be exempt from taxation for a period of twenty years after its completion, which took place in 1872, was consolidated with an Iowa corporation in 1870, under a general law of Missouri; and in 1886 the consolidated road was sold under a deed of foreclosure to purchasers, who conveyed it to an Iowa corporation. It was held that the act of the legislature of Missouri authorizing the consolidation, making one company of the two, whose stock should be consolidated upon such terms as might be mutually agreed upon, authorizing the adoption of a new corporate name, and for the exchange of the stock of the constituent companies for stock in the new company, and providing for the filing with the secretary of state of a copy of the consolidation agreement, which should be conclusive evidence of the consolidation and of the corporate name of the new company, was in effect the extinguishment of the prior companies and the formation of a new one; and that an intervening constitutional provision, adopted in 1865, prohibiting exemptions from taxation, was thereby let in and to be read as a part of the charter of the new company.
In view of the terms of the consolidating agreement, to which reference has already been made, and of the several acts of the general assembly of Mississippi authorizing these consolidations, we are of opinion that a new corporation was contemplated, and that, taken together, these several documents should be read as if they had expressly provided, with legislative sanction, for the formation of a new association. Exemptions from taxation are not favored by law, and will not be sustained unless such clearly appears to have been the intent of the legislature. Public policy in all the states has almost necessarily exempted from the scope of the taxing power large amounts of property used for religious, educational, and municipal purposes; but this list ought not to be extended except for very substantial reasons; and while, as we have held in many cases, legislatures may, in the interest of the public, contract for the exemption of other property, such contract should receive a strict interpretation, and every reasonable doubt be resolved in favor of the taxing power. Indeed, it is not too much to say that courts are astute to seize upon evidence tending to show either that such exemptions were not originally intended, or that they have become inoperative by changes in the original constitution of the companies. In cases arising under the Mississippi Constitution of 1869, the method adopted in the charter of the Mobile & Northwestern Company, of commuting the taxes, was originally sustained under the theory that the provision of that Constitution declaring 'the property of all corporations for pecuniary profits shall be subject to taxation, the same as that of individuals,' did not mean that it should be necessarily subjected to taxation, but that it might be exempted altogether by the legislature. Mississippi Mills v. Cook, 56 Miss. 40. But by the Constitution of 1890, 'all existing charters or grants of corporate franchise under which organizations have not in good faith taken place at the adoption of this Constitution shall be subject to the provisions of this article,' one of which was (§ 181) that 'the property of all private corporations for pecuniary gain shall be taxed in the same way and to the same extent as the property of individuals.'
A similar remark may be made with regard to the provision that these companies might consolidate upon such terms as they should agree upon. Obviously such terms must be consistent with the law existing at the time of the consolidation. It could never have been the intention of the legislature, and if it were it would be vain, to permit these companies to adopt such terms as they chose, if such terms were inconsistent with existing laws. The language indicated evidently refers to the method adopted for the consolidation, whether it was to be anything more than a simple merger, or whether it was to provide for a surrender of the stock of the constituent companies, the issue of new stock, the adoption of a new name, and the choice of a new board of directors. Under no circumstances would they be interpreted as conveying rights to the new corporation which the legislature was incompetent to confer.
Great stress is laid by the railroad companies upon the fact that at the time these companies were incorporated the state was without credit, the treasury without money, the issue of state bonds in aid of public improvements forbidden by the Constitution, the levy of general taxes to assist in the building of the roads fruitless, the resources of the state having been exhausted by the civil war, which had left the community so poor that it was with difficulty the inhabitants could raise the taxes necessary for carrying on the government; that millions of acres of land were being abandoned and forfeited to the state for nonpayment of taxes and subsequently sold at incredibly low figures; that the paramount necessity was clearly the building of railroads to develop the resources of the state, and yet that the topography of the country was such that both the construction and the maintenance of the roads was difficult and expensive, and railroad enterprises promised very doubtful profits; that the lands along the river bottoms were waste and swamp, uncultivated and unexplored, and subject to annual inundations from the Mississippi; that the levees had been swept away again and again, and Congress asked for aid to rebuild them upon the ground of the impossibility of the state to do the work; that in this condition of affairs the best that could be done was to offer as a remuneration to vote taxes as a consideration for building the road; that these proposals were accepted and carried out in good faith; that the result has been to increase the value of property in portions of the state fully one hundred fold, and to immensely increase the revenues of the state and counties, and that under these circumstances the present repudiation of these contracts by the state, by pleading a technical incapacity to contract, is a gross breach of public faith, and should be discountenanced by the courts.
Being of opinion that the consolidation in question, which took place nearly two years subsequent to the adoption of this Constitution, was a new grant of corporate franchises within the meaning of § 180, it follows that it became subject to the provisions of § 191.
The judgment of the Supreme Court is therefore affirmed.
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United States Supreme Court decisions in Volume 180
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