180 U.S. 1 (1901), 36, Yazoo and Mississippi Valley Railway Company v. Adams,

Docket Nº:No. 36
Citation:180 U.S. 1, 21 S.Ct. 240, 45 L.Ed. 395
Party Name:Yazoo and Mississippi Valley Railway Company v. Adams,
Case Date:January 07, 1901
Court:United States Supreme Court

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180 U.S. 1 (1901)

21 S.Ct. 240, 45 L.Ed. 395

Yazoo and Mississippi Valley Railway Company



No. 36

United States Supreme Court

January 7, 1901

Argued October 22-23, 1900




An action was begun in a state court for taxes. Defendants pleaded in bar, but did not set up a federal question. The case resulted in a judgment for a part of the taxes; was carried to the Supreme Curt which passed upon all the issues, reversed the judgment, and practically held that defendants were liable for all the taxes, and remanded the case for a new trial. Defendants then set up a federal question, which the court upon the new trial refused to consider, and the Supreme Court affirmed its action. Held that the federal question was "specially setup and claimed" too late to be available as a defense.

As it appeared from the record in this case and the opinion of the court that the defendants relied upon certain charter rights, which they insisted had been impaired by subsequent legislative action, and the Supreme Court held that no such rights existed, it was held that it sufficiently appeared that there was a federal question necessarily involved in the case, and not only must have been, but actually was, passed upon by the Supreme Court.

It is only cases arising under the third clause of Rev.Stat. sec. 709, where a federal right, title, privilege or immunity is claimed, that the question must be specially set up. Under the second clause, it is sufficient, if the validity of. a state statute or authority is necessarily involved in the disposition of the case.

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The Mississippi Constitution of 1890 provided that every new "grant of corporate franchises" should be subject to the provisions of the constitution. Where several railroads were consolidated, subsequent to the adoption of this constitution, by a contract under which the constituent companies were to go out of existence, their officers to resign their trusts in favor of officers of the new company, their boards of directors supplanted by another board, the stock of the constituent companies to 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, and that the road should be operated by men holding their commissions from the new company, it was held that a new grant of corporate franchises had been made, and the consolidated company was subject to the new constitution.

Where two companies agree together to consolidate their stock, issue new certificates, take a new name, elect a new board of directors, and the constituent companies are to cease their functions, a new corporation is thereby formed subject to existing laws.

This case originated in an action at law begun December 7, 1893, in the Circuit Court for the First District of Mississippi, by Wirt Adams, revenue agent, suing for the use of the state and of the counties through which the defendant railways pass, against the Yazoo & Mississippi Valley Railroad Company, incorporated under an Act of the Legislature of Mississippi of February 17, 1882, and also against the Illinois Central Railroad Company, as successors in interest, by consolidation, of a number of other railways, to recover taxes assessed by the railroad commission of that state for the year 1892.

Exhibits annexed to the declaration showed that the Yazoo & Mississippi Valley Railroad Company, as now constituted, was the result of a consolidation made October 24, 1892, between a company of the same name, chartered as above stated February 17, 1882, and the Louisville, New Orleans & Texas Railway Company, which latter company was itself formed by a consolidation made August 12, 1884, of the Tennessee Southern Railroad Company, the Memphis & Vicksburg Railroad Company, the New Orleans, Baton Rouge, Vicksburg & Memphis Railroad Company, and the New Orleans & Mississippi Valley Railroad Company.

On December 27, 1893, a plea was filed by the Illinois Central Railroad Company denying certain of the allegations in

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the declaration, and a separate plea was filed by the Yazoo & Mississippi Valley Railroad Company claiming in its own favor the benefit of the charter of the Louisville, New Orleans & Texas Railroad Company exempting such company from the assessment of these taxes by reason of the payment of the same in the construction of its road, and also denying material allegations of the declaration. No federal question appeared in either of these pleas. A demurrer to these pleas having been overruled, replications were filed.

On December 18, 1894, another action was begun against the same defendants for the taxes of 1893 and 1894, and on January 1, 1896, another for the taxes of 1895. An order was made consolidating these actions.

The three cases thus consolidated came on for trial before a jury, and resulted in a verdict and judgment July 25, 1896, in favor of the plaintiff for the taxes of 1895, and in favor of the defendants for the taxes of 1892, 1893, and 1894. Both parties moved for a new trial, which was denied. Both parties appealed to the supreme court, but neither assigned a ruling upon a federal question as error. The supreme court reversed the judgment of the court below and remanded the case for a new trial. 77 Miss.194. The court, June 20, 1898, filed a summary of its holdings to the effect, first, that the case of the Natchez, Jackson &c. Railroad Company v. Lambert, 70 Miss. 779, which apparently had been set up as res judicata, was an estoppel only as to taxes for the year 1892 on property originally belonging to the Natchez, Jackson & Columbus Railroad Company in Adams County, but not upon other property, or as to the taxes for other years; second, that the Yazoo & Mississippi Valley Railroad Company was a new corporation taking its life from the date of the consolidation, and overruling the Lambert case to the contrary; third, that the twenty-first section of the Mobile & Northwestern Railroad Company's charter was an effort to secure an irrepealable grant of exemption, was [21 S.Ct. 241] in violation of the Constitution of 1869, and that it would have been a violation even if it had not been irrepealable, and the case of Mississippi Mills v. Cook, 56 Miss. 40, to the contrary was overruled. 77 Miss. 305.

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A motion to strike out this "summary of holdings" was denied November 28, 1898. 77 Miss. 302.

Meantime, two new actions had been begun in the circuit court for the taxes of 1896 and 1897, which were also consolidated with the others.

Thereupon each of the defendants. July 6, 1898, filed special pleas to the declaration, setting forth at great length the exemption claimed under the charters of their constituent companies, and alleging that such exemption constituted a contract which had been impaired by the action of the state. Motion was made by the plaintiff to strike out certain of these pleas, viz., the third, fourth, fifth, sixth, and seventh, as constituting no defense to the action, which was granted by the court, and all of such pleas, except the seventh, which was withdrawn, were stricken from the files. Whereupon the defendants, "to meet the new aspect put upon the case by the decision of the supreme court herein rendered on June 20, 1898," withdrew "their joint plea filed by them prior to such decision, and all other pleas filed before that decision," and also withdrew the two pleas filed by them respectively at this term (No. 2), and declined to plead further herein. They did not, however, withdraw the pleas which had been stricken out by the court. A judgment was entered the same day nil dicit against the defendants for the amount sued for in said consolidated case, amounting in all to $548,676.99. The case was again appealed to the supreme court, and a new opinion rendered February 20, 1899, reiterating its former views and affirming the judgment of the court below. 77 Miss. 315. Whereupon defendants sued out this writ of error.

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BROWN, J., lead opinion

MR. JUSTICE BROWN delivered the opinion of the Court.

Motion was made to dismiss this writ of error upon the grounds: First, that the federal question was not raised until after the decision of the supreme court on June 20, 1898. Second, that the action of the defendants in withdrawing their pleas and permitting a judgment nil dicitto go against them, because the circuit court had struck from the files their additional pleas attempting to set up a federal question, was an admission that they had no defense upon the facts of the case, and deprived them of any right to insist upon a federal question. Third, that the petition for removal was not made until after the case had been tried in the state supreme court, and reversed and remanded. No claim of error in the action of the state court in this last particular was made in this Court. Indeed, the point seems to have been abandoned. Fourth, that the decision of the state supreme court on the first appeal, that the alleged exemption, if it existed at all, was lost by the consolidation of October 24, 1892, raised no federal question. Several other reasons are assigned for the motion, but they are either addressed to the merits of the case, or become immaterial in the view we have taken of those herein specified.

1. Was the federal question raised too late? The special pleas setting up distinctly the federal question were filed after the case had been decided by the supreme court, its mandate had gone down to the circuit court, and the case was ready for a new trial. As already stated, certain of these pleas were stricken out upon motion of the plaintiff as constituting no defense to the action, and all the pleas, except such as had been stricken out by the court, were then withdrawn, and a judgment

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nil dicit entered. On the case's being again carried to the supreme court,...

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