Court Opinion

ID: 8008752
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:55:52.94079+00
Date Added: 2024-06-11T16:35:59.151505
License: Public Domain

Black, J.
These suits were argued at the same time, present the same question, and will be considered together. The plaintiffs are collectors of the revenues, ■one of Sullivan and the other of Putnam county. They ■seek to recover delinquent taxes for 1881, 1882. The defendant claims to be the successor of the charter rights ■of the St. Joseph and Iowa Railroad Company, and by reason thereof, exempt from the payment of the taxes in suit.
,xThe St. Joseph and Iowa Company was created by *531the Act of January 22, 1857. This charter was amended by the acts of November 5, 1857, and March 19, 1868. The third section of the first named act provides that the -company shall be subject to the same restrictions, and entitled to all the rights, privileges and immunities ■which were granted to the Hannibal and St. Joseph Railroad Company, by the Acts of February 16, 1847, and two designated amendatory acts. The charter of that company contains a like reference to the act creating the Louisiana and Columbia Railroad. Company, approved on January 27, 1837. By these various acts the directors of the St. Joseph and Iowa Company were authorized to construct a railroad from St. Joseph to ■some point oh the Iówa linó, so as to connect there with any railroad in this or that state; “to make * * * branches along said road, or at the termination thereof, as they may deem necessary;” and it is also declared: “ Every person who shall cease to be a- stockholder shall ■cease to be a member of said company; and the stock of said company shall be exempt from state and county taxes.”
On the twenty-fifth of March, 1871, the directors passed a resolution asserting their desire to avail themselves of the act entitled “An act to aid the building of branch railroads in the state of Missouri,” approved March 21, 1868, the branch to be known as the Central North Missouri Branch, and to be built from a point on the main line near Unionville, through Putnam, Sullivan and Linn counties and the town of Linneus. Sullivan and Putnam counties subscribed to the stock of the road for the use of the branch. At the request of the agents of those counties, they being the only . stockholders, an executive committee for the branch was appointed, with power to survey, etc. Thereafter, and on May 23, 1871, the board of directors of the St. Joseph and Iowa Company, by their deed and contract, sold and conveyed the main line and all of the property of *532the company, including “all the rights, privileges, franchises, powers and authority owned or held” by said company to the Burlington and Southwestern Railway Company, a corporation created under the laws of the-state of Iowa. Afterwards, and in 1872, the directors of the Burlington Company, acting by the direction of the-stockholders of the branch road, then called theLinneus Branch, placed upon the branch road a mortgage to secure certain bonds. The main line had been previously mortgaged. The defendant purchased the branch road through a foreclosure sale, had upon the mortgage thereon. The taxes in suit were .assessed upon this branch road property.
1. The exemption of the stock of the St. Joseph and Iowa Company, it may be conceded, was also an exemption of the property represented by it. As between the state, the company, and the] stockholders, it is assumed, for all the purposes of this case, that the property of the company, including any branch road built solely under authority of the charter, would be exempt from state and county taxes. The further question then arises, is the property of the branch, avowedly built under the branch act of 1868, also exempt ? The power of the legislature to forever place property out of and beyond the reach of taxation, upon no other consideration than that which may be presumed to accrue to the public by the building of a railroad, is so far reaching in its logical consequences that the exemption should be confined to the clear and strict terms of the law. The abandonment of the right of taxation cannot be presumed, and must appear in clear and unequivocal terms. Railroad v. Cass County, 53 Mo. 17, and cases cited. The constitution of 1865 deprived the general assembly of all power to hereafter exempt this class of property. Art, 11, sec. 16. The branch railroad act of 1888 makes no such effort.
If this, property is free from taxation it is ber cause-of the charter privileges of the St. Joseph and *533Iowa Company. The charter has in view !main and branch lines, which are parts of one entire piece of property, with one management and one set of stockholders. The Branch Act, it is true, applies only to such roads as have power to build branches, but by the act, the stock subscriptions are to be made in aid of ■ the branch, and the certificates must so state. The cost and expenses of •construction and operation of that and the main line are to be kept separate. Neither can participate in the profits of the other. Neither can be held for the debts of the other. The branch stockholders ■ have nothing whatever to do with the main line ; they determine all matters specially affecting the branch, and the directors must be guided by their instructions. They may participate in the choice of officers only. Here we have a branch road by name, and while it has no separate corporate existence, yet for nearly all practical purposes it is a separate organization. It cannot be that stock and property of that character, and with these attributes, was ever contemplated by the legislature, when it said the stock of the St. Joseph and Iowa Company should be exempt from state and county taxes. Such ■exemption ought not to be extended or permitted to go further than the express terms of the law, and the cleár intention of the parties to the contract. Had the branch never been divorced from the main line, still projected as it was, under this act of 1868, the property ought to be held subject to taxation, even in the hands of the St. Joseph and Iowa Company.
2. Again the St. Joseph and Iowa Company had no authority, by any of the provisions contained in its •charter, to sell its franchises though it had to pledge them. The power to sell was only given by the act of March 24, 1870 (Acts of 1870, p. 90). The deed from the St. Joseph and Iowa Company to the Burlington Company was evidently made by authority of the second sec*534tion of that act, which after providing that any railroad company may aid another company in the construction, of its road for the purpose of forming a connection, and that any company of this state may extend into an adjoining state, provides also: “Or any railroad company organized in pursuance of the laws of this or any other state, or of the United States may lease or purchase all or any part of a railroad with all its privileges, rights, franchises, regl estate and other property; the whole or a part of which is in this state, and constructed, owned or leased by any other company, if the lines of said road or roads of said companies are continuous or connected at a point either within or without this state, upon such terms as may be agreed upon between said companies respectively, * * * provided that no such aid shall be furnished nor any purchase, lease, sub-letting, or arrangements perfected until a meeting of the stockholders; * * and provided further that if a railroad company of another state shall lease a railroad, the-whole or a part of which is in this state, or make arrangements for operating the same as provided, in this act, or shall extend its railroad into this state, such part of said railroad as is within this state shall be subject to taxation, and shall be subject to all regulations and provisions of law governing railroads in this state,” etc. It is true the last proviso speaks of a lease, but does not in terms of a purchase by the foreign corporation, as does the preceding portion of the section, but it does provide for all those cases where the foreign company shall lease a road, the whole or a part of which is in this state, or shall make arrangements for operating the same under the provisions of the act, or shall extend its road into* this state. Whexx the proviso speaks of the company of another state extending its road into this state or mating arrangements for operating a road the whole or a part of which is in this state, it includes an airangement by purchase. The proviso, though using different *535language, was evidently designed to be as broad as the previous portion of the section, and to include all those oases where the company of the other state is allowed to make arrangements for the operation of the road in this state, whether by lease, purchase or otherwise.
The legislature in giving a corporation of another state power to purchase a railroad in this state with the privileges and franchises belonging thereto had the undoubted right to prescribe the terms upon which the purchase could be made. As was said in Owen v. Railroad, 83 Mo. 455, when speaking upon another subject, the manifest policy was to get legislative control of all railroad corporations. The Burlington Company by availing itself of the provisions of this act of 1870 thereby signified its acceptance of the provisions thereof and is bound thereby.
It follows that the Burlington Company could not and did not acquire the immunity from taxation. It did not pass to that company at all; and the property acquired by the purchase became subject to taxation, including the branch. The part of the main line from Unionville to St. Joseph has never been built; the other portion, some fourteen miles in length, was built.by the Burlington Company. As to the branch it is not even shown that preliminary surveys had been made until after the date of the deed, though two counties had made subscriptions for stock thereto. From the date of the deed the directors of the Burlington Company occupied the same relation to the branch that the directors of the St. Joseph and Iowa Company had before occupied. If, as we have seen, the Burlington Company did not acquire the immunity from taxation it is difficult to see-how any branch built by it could take on the exemption. Any branch it might build became also subject to taxation.
3. Referring again to the mortgage on the branch road of date April 1, 1872, it will be seen it was *536made by the directors of the Burlington Company at the request of the stockholders in the branch. The authority contained in the branch act of 1868 is as follows: “They may borrow money and issue bonds secured by mortgage on such branch road to aid in its construction, and in general may operate, lease, sell or consolidate with any connecting road, distinct and separate from their main line and in any ether way may manage or dispose of such branch as by law they may be authorized with reference to their main line and separate therefrom.” There is a provision in the act of Nov. 5, 1857, which gives the St. Joseph and Iowa Company power to pledge their road and property “with the franchises of said road” to raise money to liquidate debts, etc. There is not a thing in the act of 1868 which can by any possibility be construed to authorize a transfer by mortgage or otherwise of the immunity from taxation, if any the branch road ever had. But if that act is to be read with the charter provision above quoted, still there is no authority to convey by mortgage or otherwise such right of exemption. Morgan v. Louisiana, 93 U. S. 217; Railroad v. Commissioners, 112 U. S. 617.
These decisions show that exemption from taxation is a personal privilege to the person or corporation to which it is given, incapable of transfer unless there is express statutory authority therefor. Franchises, it is said in the first of the above cases, “are positive rights or privileges without the possession of which the road of the company could not be successfully worked. Immunity from taxation is not one of them.” There is nothing in either of these acts or the act of 1870 which calls for a broader signification to be given to the term “franchises” than is given in the foregoing definition. It must follow that there never was any authority given by law to convey or assign by pledge the right to be exempt from taxation, and it is, there*537fore, immaterial what words were used either in the mortgage or decree of foreclosure. Other questions were discussed, but it is unnecessary to consider them as they cannot change the result.
The judgment in the first of these cases is, therefore, reversed and the cause remanded; that in the other is affirmed.
All concur.