Case Name: CHARLOTTE, COLUMBIA & AUGUSTA R. R. COMPANY v. GIBBES, TREASURER
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1887-10-18
Citations: 27 S.C. 385
Docket Number: 
Parties: CHARLOTTE, COLUMBIA & AUGUSTA R. R. COMPANY v. GIBBES, TREASURER.
Judges: 
Reporter: South Carolina Reports
Volume: 27
Pages: 385–408

Head Matter:
CHARLOTTE, COLUMBIA & AUGUSTA R. R. COMPANY v. GIBBES, TREASURER.
1. Under the 41st section of the Act of 1841 (II Staf., 368, now section 1361 of the General Statutes), every charter thereafter granted, amended, or renewed, was subject to amendment, alteration, or repeal, unless specially excepted from this provision by the act of incorporation or amendment; and under the constitution of 1868 (art. XII., I 1), “corporations may be formed under general laws, but all such laws may from time to time be altered or repealed.” Prior to 1868 two railroad corporations were chartered, both of which were excepted from the operation of the 41st section of the Act of 1841, but by an act passed in 1869, containing no such exception, these two corporations were consolidated into one. Held, that the charter of this consolidated company was subject to amendment by the legislature.
2. Where a railroad company holds its charter subject to legislativo amendment, an act requiring such company to pay into the State treasury an assessment of money towards defraying the expenses of a com-: mission appointed by the State to supervise railroads, is, in effect, an amendment of such charter, and therefore is legal, valid, and binding on the company.
3. Has a corporation the rights guaranteed by the constitution to natural persons ?
4. The assessment upon a railroad company to pay the expenses of a railroad commission, based upon the gross income of the company, is not a tax upon property, but is in the nature of a license tax upon the business of railroad companies.
Mr. .Justice McGowan concurred in the result, and Mr. Justice Mc-Iver dissented.
.Before Fraser, J., Richland, April, 1886.
The appeal came to this court from the following Circuit decree:
This case was heard by me at the term of the court held in March and April, 1886. As the case will be the subject of consideration in another court for the purpose of settling important questions involved, I will confine myself to a brief statement of the facts and the reasons for the conclusions reached by me.
The plaintiff, a corporation under the laws of this State, was charged on the books of the county treasurer, for the fiscal year 1883, with the sum of nine hundred and eighty-seven 75-100 dollars, as plaintiff’s proportion, according to gross income, of the salary and expenses of the railroad commissioners. This amount is by law collectible in the same manner as taxes, and has been paid under protest. This action has been brought to have this assessment declared illegal, and thereby to enable plaintiff to recover back the amount so paid.
In the case of The Columbia Grreenville Railroad Company v. Wade Hampton Gibbes, as Treasurer of Richland County, 24 S. C., 60, the Supreme Court held that the assessment was valid. The general provisions of the railroad commissioners’ act were enacted in 1879, and, therefore, were in force when the corporation in that case was organized under the general laivthen in force. It was held by the Supreme Court that the assessment was legal and valid, because the law under which the assessment was made was in force when the corporation was formed, and, therefore, one of the conditions of its existence. This conclu sion of the Supreme Courtmust have been reached on the assumption that this was one of the conditions which the legislature had a right to impose on new corporations, either under the power to levy taxes, or some other power which the constitution gives to the legislature.
In the case now before the court, the corporation was in existence when the general provisions of the railroad' commissioners’ act became law in 1879. By the act of March, 1869, the Charlotte & South Carolina Railroad Company and the Columbia & Augusta Railroad Company were consolidated, and with some slight modifications all the rights, powers, and privileges of these two companies were conferred on the plaintiff corporation under its present name. This consolidation act worked a dissolution of the old corporations and created one entirely new, and deriving all its powers, rights, and privileges from the consolidation act. This act contained no provision excepting this corporation from the act of 1841, now section 1361 of the General Statutes. The charter, 'therefore, became subject to “amendment, alteration, 'or repeal by the legislature, at its will.” Shields v. Ohio, 95 U. S., 319; 15 Wall, 454.
It is claimed that this assessment is an unconstitutional tax, and cannot be imposed on an existing corporation under this power to amend, alter, 'or repeal. I take it to be law that the legislature has no power in granting a charter to a corporation to exempt its property from the liability to equal assessment and taxation ordained by the constitution of 1868. The property of every corporation, as that of natural persons, is bound for its equal share of the taxes, and no more can be imposed.
Article IX., sec. 1, Constitution of 1868, requires “a uniform and equal rate of taxation,” and art. XII., sec. 2, makes corporations “now existing or hereafter created,” “subject to taxation.” If the property of corporations is under the control of the constitution, and cannot be exempted from taxation, it seems to follow that the constitution protects it from any greater taxation than is imposed on other property. If the constitution controls for one purpose, it does for the other. Corporations “hereafter created” cannot be subjected to any greater taxation than those “then existing,” all of which are liable only to the equal taxation.
If this be the correct view, then there could have been in the mind of the Supreme Court nothing in this assessment in itself obnoxious to these constitutional provisions, or the mere fact that the assessment was in pursuance of an act passed before the corporation was created could not have made it valid as one of the conditions of the charter. In other words, the legislature has no right to exempt any corporation then existing, or at the time of its formation, or afterwards to be created, from its liability to taxes, or to impose on them more than an equal share. If the fact that the validity of this assessment depended upon the fact that it was one of the conditions of the charter itself, then the liability would have been avoided if, instead of forming a new company, the private individuals who bought all the franchises of the old Greenville & Columbia Railroad Company had held and operated the road as private and natural persons and without the formation of the new company.
I infer, therefore, that in the case of the C. G. R. R. Co. v. Gibbes, supra, the court would not have held the assessment valid even if the corporation was formed after the passage of the railroad commissioners’ act, unless in the opinion of the court the assessment was free from constitutional limitations in reference to taxes, and within the range of those requirements which the legislature had a right to impose by way of amendment, alteration, or repeal, or which it had a right to enact as to future or even existing corporations by virtue of the police power. The struggle between corporations and the law-making power has been unremitting ever since the Dartmouth College case settled the question in favor of corporations that they were not subject to legislative will in this country as in England, but were protected from all interference under the constitutional provisions in reference to the inviolability of contracts. The general practice since then has been to reserve, as has been done in this case, the power to amend, alter,, or repeal. While the extent of this power is still not clearly defined, it has been freely exercised and liberally construed.
Besides this reserved power of amendment, there is the “police power,” “an inalienable attribute of sovereignty applicable to all corporations and persons alike, of which no State can by its leg islature divest itself.” By this power “persons and property are subjected to all kinds of restraints and burdens.” Thorp v. R. R. Co., 27 Vi., 140., Art. XIV., sec. 1, of the Constitution of the United States cannot, in my opinion, be construed either to interfere with this reserved power to amend, alter, or repeal charters, or to cut-down the police power of the States. Under, perhaps, the joint operation of the power to amend and the police power of control, railroad companies have been compelled to submit to legislative control of rates of freight and fare of passengers. They have been compelled to expend material, labor, and money in fencing their tracks for the purpose of protecting stock from harm and their trains from accidents involving the safety and lives of the travelling public. The railroad commissioners have a function of the same kind, perhaps intended for a more extensive and thorough control of the operations of the railroads in their relations to the public. They are the great public highways for commerce and travel, established not only for the benefit of shareholders, but for the public benefit. Munn v. Illinois, 94 U. S., 130. Is there any difference between making a litigant in coui't pay for the service of public officers rendered against his will and against his interest, and making the railroad companies pay for the services rendered in and about regulating the complicated and conflicting claims of themselves and the public ?
I therefore conclude that this assessment is not in violation of any provision of the constitution of 1868 in reference to taxation of property, or of the constitution of the United States; that the full power to amend the charter of the plaintiff has been reserved; that the subjection to the provisions of the railroad commissioners’ act in common with other corporations is within the reserved power to amend; and that the said act is also within the police power, if not within the power to amend.
I would prefer to have more decided convictions in a case of the importance of the one now under consideration, but I feel bound to resolve any doubts I may have in favor of the act of the legislature, satisfied that there is another tribunal which will correct any error I may make. It is therefore ordered and adjudged, that the complaint be dismissed with costs.
The plaintiff appealed upon the following exceptions :
I. For that his honor held that the decision of the Supreme Court of this State in the case of The Columbia & Greenville Railroad Company v. The Treasurer of Richland County was, by implication, applicable to this case.
II. For that his honor held that the assessment of taxes complained of was a proper enforcement of the police power of a State for the control of railroads.
III. For that his honor held that the act of March, 1869, consolidating The Charlotte & South Carolina -Railroad Company and The Columbia & Augusta Railroad Company, had the effect of working a dissolution of the original corporations; and that thereby the charter of the new corporation became subject to “amendment, alteration, or repeal by the legislature at its will.”
IV. For that his honor held that the assessment of taxes complained of was not in violation of section 1, of article XIV., of the Constitution of the United States.
V. For that his honor held that the imposition of the taxes complained of was not in violation of the requirements of the constitution of the State of South Carolina, that there should be a uniform and equal rate of taxation upon all property.
VI. For that his honor did not hold that the assessment and collection of taxes complained of were in violation of one or more of sections 12, 14, 23, and 36, of article I., and section 1, of article IX., of the Constitution of South Carolina; and,
VII. For that his honor did not hold that the collection of the taxes complained of was wrongful or illegal.
Messrs. J. O. Haskell and H H. Olear, for appellant.
Mr. Earle, Attorney General, and Mr. O. R. Miles, contra.
October 18, 1887.

Opinion:
The opinion of the court was delivered by
Mr. Chief Justice Simpson.
Section 1453 of the General Statutes imposes liability in certain proportions upon the railroad companies of this State for the salaries of the officers known as railroad commissioners. The appellant denies the constitutionality of this act, and claims exemption therefrom on that ground.
The appellant was brought into existence under its present name in 1869 by the consolidation of two other companies previously chartered and in operation at that time as separate companies. This consolidation was made by virtue of the act of March, 1869. The two original companies which, by consolidation, made t'he appellant company, it is conceded, were not subject to the 41st section of the act of 1841, whereby the power to alter, amend, &c., certain charters granted by the legislature was reserved; on the contrary, said companies were expressly excepted from the operation of said section, thus giving them vested rights which could not have been interfered with by any subsequent legislation had they remained separate and distinct, and continuing to exercise the rights and powers conferred upon them in the original charters. Dartmouth College Case. The consolidation, however, in 1869, dissolved the two original companies and created an entirely new company — the appellant — with rights and privileges not dependent or derived from the charters of the original companies, but upon the act authorizing the consolidation and the law governing corporations at the time.
Now, at the time of this consolidation the constitution of 1868, and the act of 1841, in reference to corporations, were of force. The constitution (art. XII., section 1) declares "that corporations may be formed under general laws, but all such laws may from time to time be altered and repealed." And further: "Thatthe legislature shall regulate the public use of all franchises, and limit tolls, imposts, and other charges and demands under such laws." Sec. 5. The act of 1841 provided in section 41, "That it shall be deemed a part of the charter of every corporation created under the provisions of any general laws, and of every charter granted, renewed, or amended by act or joint resolution of the general assembly (unless such act or joint resolution shall, in express terms, declare the contrary), that such charter, and every amendment thereof, should always remain subject to amendment, alteration, or repeal by the general assembly." Act of 1841, 11 Stat., 168, now section 1361, General Statutes.
It is hardly necessary to discuss the question whether the appellant company, having been brought into existence in 1869, since the adoption of the constitution of 1868, and while the act of 1841, supra, was of force, is subject to amendment, altera tion, and repeal at the discretion of the legislature, there being no exemption from section 41 of the act of 1841 in the act under which the consolidation took place. The case of Hoge v. The Railroad Company (99 U. S., 348) is full to this point, where the act of 1841 was construed, and where the court said : "Every charter amended or modified was subject to repeal, amendment, or modification. Such is evidently the meaning of the 41st section of that law, though the intention is inaptly expressed; and if an exemption from further legislative control had been originally acquired by the company, it ceased when the amendment to the charter was obtained." If such is the effect of a mere amendment, surely a consolidation of two companies into one, as was had here, thereby creating an entirely new company and destroying the others (Shields v. Ohio, 95 U. S., 319), would bring the new company under the legislative control of the act of 1841, whatever may have been the vested rights of the previous companies.
It is perfectly clear, then, that the appellant company cannot successfully claim exemption from legislative control by virtue of any rights derived from its charter. Nor can it deny that the general assembly has general power to amend, alter, or repeal said charter, as provided in section 41 of the act of 1841, and in the article XII., section 1, of the Constitution of 3868. This was the contract under which said company was created, and it is bound thereby. In fact, the rights of all corporations are founded in contract, which must be construed and enforced as all other contracts, to wit, according to the intent of the parties. It was upon this theory that the great Dartmouth College Case was decided. There being no reservation of power applicable to that case, either in the charter itself, or in any general law upon the subject, the court was compelled to hold that the rights of the college, as specified in the charter, were matters of contract, and were therefore inviolate, and could not be assailed or impaired in any way by subsequent legislation.
It has been upon this theory, too, that many cases have'since decided that where a corporation accepts a charter under a general law, or under a provision of the constitution of the State reserving control over all corporations created therein, or under a special provision of the charter itself to that effect, it is subject to such control, and may be amended and altered, as in the judgment of the general assembly the public interests may demand. See Black on Constitutional Prohibition, sections 33, 34, ec seq.,. and the cases there cited. And it was upon this theory also that the recent case of the Columbia & Greenville R. R. Co. v. W. H. Gibbes (24 S. C., 60) was decided, in which the constitutionality of the act now under consideration was sustained as to said company — this court holding that said company having organized since said act was passed, had thereby contracted with reference thereto, and was bound by its provisions as a part of the act of incorporation. And it is upon this theory that the appellant here must be held, bound. In fact, we can see little or no difference in the principle which controlled the court in that case and the one which must be applied here. It is true, that the Columbia & Greenville R. R. Company accepted its charter after the general railroad law of 1878 had been enacted, and thereby incorporated its provisions into its charter as a part and parcel thereof, but what is the difference in principle in accepting a charter with certain stipulations therein, and in accepting one with a consent and an agreement, that the legislature granting said charter may insert such stipulations afterwards, if in its discretion it sees proper to do so ? They both rest upon contract, and both may be enforced under the general law of contracts.
According to this view, if the act complained of, and which has imposed a liability upon the appellant to pay its proportion of the railroad commissioners'- salary, is a legitimate amendment under the act of 1841 and the constitution, then it can make no difference what it may be called — whether a tax for revenue, a police regulation, or a license fee. Whatever it may be, the company has contracted to pay it; and if it claims the privileges and rights of its charter, it must take them with the burdens imposed. It cannot enjoy the one and repudiate the other. So that it follows that the only question in the case is, has the general assembly in reference to the appellant transcended its power to alter, amend, and repeal the charters of corporations reserved in the constitution and the act of 1841, section 1361, of the General Statutes ?
There is no doubt but that the appellant received its existence with full knowledge that this reserved power hung over it — a power which, at least so far as the terms of the reservation are concerned, was unlimited as to alteration, amendment, and repeal. And the question now is not whether such power exists, but whether the act in question has gone beyond it. We think this has been settled in the recent case of the Columbia & Greenville R. R. Company, supra. There the same act was in controversy and the same question raised and based very much upon the same ground. The court held, in substance, that the act was a part of the charter, inasmuch as the charter was granted and accepted after the passage of the act. If, then, the legislature could incorporate into the charter the provisions of the act imposing the liability complained of at the beginning, without violating the sections of the constitution relied on here as to taxation, &c., why could it not do so after the organization of the company as well, the reservation of power to amend, &c., having prevented the vesting of rights beyond the reach of such amendment ? The ground upon which we held that this could be done in the Green-ville & Columbia case, was the consent of the company, thereby waiving all objection, constitutional or otherwise.
So here the appellant contracted to take its existence under an unlimited power in the legislature to alter, amend, and repeal. And it is too late now to complain. Consensus faeit jus. It may be said, however, that this consent was given under the protection of the constitutional provisions invoked, and therefore it was never understood or agreed that these guarantees of the constitution, as to the rights mentioned, should be violated ; but that this reserved power of amendment referred to the ordinary amendments, &c., such as would not affect the substantial rights conferred. The power reserved is very broad, according to the terms of the act. It covers the whole subject, "amendment, alteration, and appeal," and there certainly is no limitation in the language used. Nor do we know where to fix the boundary, except it should not go beyond the ends to be accomplished or intended to be subserved by the reservation, which no doubt was regulation, conti'ol, and supervision, to the end that public interests might be protected as well as that of the coi'porations. We do not see that the act in question transcends this boundary; on the contrary, it seems to be within it.
The constitutional guarantees invoked were primarily, at least, for the protection of natural citizens — those who had rights before the constitution was adopted, over and above it, and for the protection of which government was instituted; and the builders of the government fearing to give it unlimited power, inserted in the constitution, the organic law of the government, certain guarantees as a bill of rights. A corporation, however, differs in many respects from a natural citizen. It.has no natural existence or natural rights. It is a creature of the government, and by the act of government. It has life, if life at all, as a matter of grace, and can demand nothing. It is emphatically clay in the hands of the potter, and must take its life at the will of the government, or not at all. "Hath not the potter power over the clay?" Besides,, it can protect itself if it sees proper by simply refusing to enter into the contract proposed, or, if after having once accepted, by throwing up its charter if the subsequent burden imposed proves too onerous.
From our view of this case it is wholly unnecessary to follow the counsel into their able and interesting argument on the subjects of taxation, police regulations, and licenses, because, whether this assessment on the appellant is made and collected as the one or the other, it is yet made because the appellant has consented and contracted to pay it, in consideration of life and separate existence and large privileges granted; and if it claims these, it must submit to and abide the contract in its entirety.
But conceding that a corporation has the same right to invoke the sections of the constitution referred to, as a natural person would have, and to the same extent, does the act in question under that view violate said sections ? These sections are found in art. I., section 36, and article IX., section 1. The first declares that taxation upon property shall be ad valorem, and the second, that it shall be uniform. Does the act impose a tax on property, and is it objectionable because not "uniform" ? It is clearly not a tax on property assessed according to its value. It is a declaration in substance by the legislature that railroad companies may pursue their business upon condition that they shall pay each a proportion of the salary of the railroad commissioners, the proportion being fixed by a uniform rule applied to each. It is, therefore, moi'e in the nature of a license fee. It is true that the amount collected is to go into the public treasury, and it is collected as a tax ; but it is intended to reimburse the State for these salaries paid by the State to the commissioners, who are, to some extent, officials of said companies, or at least whose duties appertain to said companies, and not to the general public; and it therefore may be properly styled a license tax, collected and appropriated for the proper regulation- and benefit of the corporations paying it. And being assessed upon all railroad corporations alike, it is "uniform," in accordance with the true meaning of the constitution.
But can a tax be imposed and collected other than upon property and according to its value ? Is art. I., section 36, supra, exhaustive upon this subject? This question was fully and thoroughly examined and determined in State v. Hayne, 4 S. C., 403, the court holding, after a most elaborate review and discussion of the whole matter in all its phases, that this section was not exhaustive as to the powers of the general assembly on the subject of taxation, and while, when a tax is imposed on property (which, it is admitted, is the general subject matter for taxation), it must be assessed upon the value of the property, and not otherwise, yet that the State was not limited to property as the only basis of taxation, and in that case a tax on the profession of law in the shape of a license fee was held constitutional.
It is the judgment of this court, that the judgment of the Circuit Court be affirmed.