Natchez, J. & C.R. Co. v. Lambert

Citation13 So. 33,70 Miss. 779
PartiesNATCHEZ, JACKSON & COLUMBUS RAILROAD CO. v. JAMES W. LAMBERT, TAX-COLLECTOR
Decision Date08 May 1893
CourtUnited States State Supreme Court of Mississippi

FROM the chancery court of Adams county, HON. CLAUDE PINTARD Chancellor.

Appellant the Natchez, Jackson & Columbus Railroad Company, filed this bill against James W. Lambert, sheriff and tax-collector of Adams county, to enjoin the collection of ad valorem taxes assessed against it for the years 1891 and 1892. Said company claims exemption from all taxation by virtue of its charter and under certain acts of the legislature, the material parts of which are stated in the opinion. A similar bill was filed at the same time by appellant to enjoin the collection of privilege taxes, and, as the points of law involved in both suits are the same, the two were heard together.

Prior to the institution of these suits, the Louisville, New Orleans & Texas Railway Company had filed its bill, in the same county, to enjoin the collection of taxes claimed for the year 1891, against that part of its lines which, before its purchase of the Natchez, Jackson & Columbus Railroad comprised that road. To evidence its right to said exemption it filed, as an exhibit to its bill, the affidavit of its cashier that the amount of taxes demanded had been applied to the payment of debts incurred in the construction of said road. The affidavit referred to the fact that the Louisville, New Orleans & Texas Railway Company was formed by the consolidation of the Memphis & Vicksburg Railway Company with several other railway companies, under authority of acts of the legislature, but the affidavit makes no mention of the Natchez, Jackson & Columbus Railroad. The plea of res judicata recites, and by its exhibits shows, that the demurrer to this bill was sustained, and that an appeal, taken from the decree sustaining the demurrer, was pending in the supreme court.

The court below held that the plea of res judicata was good as to the taxes of 1891. It also sustained defendant's demurrers to the bills as to the taxes of 1892, and from these decrees complainant appeals.

Reversed and remanded.

Mayes & Harris, for appellant.

It was competent, under the constitution of 1869, for the legislature to confer upon the appellant exemption from taxation, but acts granting such exemptions were always subject to repeal. Mississippi Mills v. Cook, 56 Miss. 40. This condition of the law was recognized also in McCulloch v. Stone, 64 Miss. 378; Railroad Co. v. Thomas, 65 Ib., 553; Bank v. Worrell, 67 Ib., 47; Attala County v. Kelly, 68 Ib., 40; Railway Co. v. Taylor, 68 Ib., 361.

It cannot be said that § 181 of the constitution of 1890 operates as a repeal of this exemption. It expressly saves rights then existing. Although the legislature, in granting exemptions, did not part with its right to repeal them, it has never done so in this case.

The immunity was not lost by the sale to the Louisville, New Orleans & Texas Railway Company. By this sale the latter company acquired all the privileges and rights granted by § 21 of the charter of the Mobile & North-western Railroad Company. Railway v. Taylor, supra. Besides, the Louisville, New Orleans & Texas Railway Company possessed all the rights and franchises of the several companies out of which it had been formed, and among these was the right to purchase any connecting road, and, in so doing, to acquire all the benefits, rights and franchises of said road or company. Laws 1882, p. 932. This power also came to said railroad company by its organization. The matter is set at rest by § 1 of the act of February 19, 1890, which expressly authorized the Natchez, Jackson & Columbus Railroad Company to sell all or any part of its railroad, together with its franchises, rights, powers and immunities. And by § 2 of said act it was expressly authorized to consolidate with the Louisville, New Orleans & Texas Railway Company. We may concede that a privilege or exemption does not, in the absence of legislative sanction, pass to a purchaser, but when such sanction is given, as we contend was done in this case, the immunity in question passes to the purchaser. The words used are more than sufficient to pass the exemption claimed. 16 Wall., 344; 3 F. 266; 24 Ib., 614; 109 U.S. 244; 146 Ib., 279. It is true that in the federal cases there is a controversy over the force of the word privileges, dissociated from any text bearing out the claim of continued exemption, but in a case like this the immunity from taxation passes to the purchaser, as is settled by the case of Tennessee v. Whitworth, 117 U.S. 139, and on this case we mainly rely. If the terms used are not sufficient to embrace exemption from taxation, then the Natchez, Jackson & Columbus Railroad Company itself never had it, for by these words the right claimed, and subsequently recognized by the legislature, was conferred upon that company. This is not a case where railroad property is alienated from a favored company into the hands of one not so favored. Both companies possessed the privilege or exemption.

This immunity was not lost by the consolidation of the Louisville, New Orleans & Texas Railway Company with the Yazoo & Mississippi Valley Railway Company. The latter company had authority by its charter to consolidate with any other railroad company, and, by the contract of consolidation, it was expressly provided that all the rights, powers, privileges, immunities and franchises belonging to either company should be vested in the consolidated company.

(Counsel for appellant here reviewed at great length all the cases relied on by appellee touching this branch of the case, contending that this case is controlled by the decision and reasoning in the case of Tennessee v. Whitworth, supra.)

The plea of res judicata was insufficient, and not sustained. The affidavits exhibited with the bill alleged disbursements on account of the construction of a railroad other than the Natchez, Jackson & Columbus Railroad. Moreover, the bill in that case was filed by different parties, and alleges a different state of facts.

Frank Johnston, attorney-general, for appellee.

The immunity granted by § 21 of act of July 20, 1870, was, in effect, if not technically, a conditional exemption from taxation, the conditions being (1) that it should not continue for more than thirty years; (2) that it should cease when the earnings of the company amounted to eight per cent.; (3) that each year a sum equal to the taxes should have been paid on debts incurred for construction. Such an immunity is a clear conditional limitation upon the taxing power of the state. Railroad Company v. Maine, 96 U.S. 499. The statute in form makes the dedication of the taxes to the railroad company, but, in fact, no taxes were to be paid. It was essentially an exemption from taxation. The power to donate public moneys, and the power to tax, are distinct. But transposition of terms, and the ingenious employment of particular phraseology, cannot confuse or confound the substantial thing accomplished by this statute. The purpose was, obviously, to evade the constitutional provision then in force declaring that property of corporations should be subject to taxation, and, by calling this immunity an appropriation, to make it irrepealable as a contract. This the legislature could not do. Mississippi Mills v. Cook, 56 Miss. 40. This exemption was clearly repealed by the code of 1880, and it is a serious question whether the act of 1884 revived exemptions that had been repealed by that code, and were not existing at the time of the adoption of the act, or whether it merely operated to preserve exemptions then in force. Under the rule of strict construction universally applied to statutes granting exemptions, it would seem that the act of 1884 did not revive exemptions that had been repealed. This reason applies, also, to the act of 1890.

The general rule is that exemption from taxation is the personal privilege of the corporation to which it is granted, and perishes with that corporation, unless the clear and express intention of the law requires the exemption to pass as a continuing franchise to a successor. Railroad Co. v. Commissioners, 112 U.S. 609; Picard v. Railroad Co., 130 U.S. 637. These cases also establish that the language used in § 1, act of February 19, 1890, cannot pass the exemption by the sale therein contemplated. The second section of said act, which provides for consolidation, is silent as to the transfer of the exemption to the new corporation contemplated. If the two companies had consolidated under the second section, the consolidated company would not have acquired the exemption from taxation. Railroad Co. v. Maine, supra; Railroad Co. v. Berry, 113 U.S. 465. It will thus be seen that the Louisville, New Orleans & Texas Railway Company claims to have acquired, by purchase, an exemption it could not have acquired under the consolidation.

The exemption from taxation claimed by the Louisville, New Orleans & Texas Railway Company for its own road and property did not pass to the Yazoo & Mississippi Valley Railway Company by the consolidation made in 1892. Upon the extinction of the former company, all exemptions enjoyed by it ceased. The immunity from taxation was not transmissible. 18 Wall., 206; 93 U.S. 217; 103 Ib., 421; 109 Ib., 244.

K. Palmer Lanneau, on the same side,

Filed a brief limited to the discussion of the question of res judicata, and, in support of the plea, contending that the question was open to inquiry and within the scope of the pleading in the former suit brought by the Louisville, New Orleans & Texas Railway Company, and, in support of this contention, cited Story Eq. Pl., § 736-738; 7 Wall., 102.

Argued orally by E. Mayes, for appellant, and ...

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