49 S.E.2d 26 (Ga. 1948), 16178, Musgrove v. Georgia Railroad & Banking Co.

Docket Nº:16178.
Citation:49 S.E.2d 26, 204 Ga. 139
Opinion Judge:BELL, Justice.
Party Name:MUSGROVE v. GEORGIA RAILROAD & BANKING CO.
Attorney:The charter of the plaintiff railroad company granted in 1833, Ga.L.1833, p. 256, provided: 'The stock of the said company and its branches shall be exempt from taxation for and during the term of seven years from and after the completion of the said railroads or any one of them; and after that, ...
Case Date:June 11, 1948
Court:Supreme Court of Georgia
 
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49 S.E.2d 26 (Ga. 1948)

204 Ga. 139

MUSGROVE

v.

GEORGIA RAILROAD & BANKING CO.

No. 16178.

Supreme Court of Georgia

June 11, 1948

Motion for a Rehearing and Supplement Thereto Denied July 16, 1948.

Second Motion for Rehearing Denied July 28, 1948.

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Syllabus by the Court.

The charter of the plaintiff railroad company granted in 1833, Ga.L.1833, p. 256, provided: 'The stock of the said company and its branches shall be exempt from taxation for and during the term of seven years from and after the completion of the said railroads or any one of them; and after that, shall be subject to a tax not exceeding one half per cent. per annum on the net proceeds of their investments.'

In the instant suit, brought by the company against the State Revenue [204 Ga. 140] Commissioner, it sought among other things to obtain a declaratory judgment decreeing that such charter provision constitutes a contract between the plaintiff and the State of Georgia, valid and binding upon the State and its officers in perpetuity, and prayed also for perpetual injunction to restrain the defendant and his successors in office from assessing certain of its railroad properties described as 'charter tax lines' from ad valorem taxation. Held:

Whether the petition be construed as one brought against the defendant in his official capacity or in his individual capacity, it was in substance and effect an action against the State and was not maintainable, the State not having consented to be thus sued. The court therefore erred in overruling the third ground of general demurrer presenting this contention. Other grounds of demurrer, whether general or special, should not have been passed upon, and direction is given that ground 3 of the general demurrer be sustained and that the petition be thereupon dismissed, without any ruling or judgment as to other grounds, and without prejudice to either party or the State with respect thereto.

On October 15, 1945, Georgia Railroad & Banking Company filed a petition in the superior court of Fulton County 'against M. E. Thompson, in his representative capacity as State Revenue Commissioner of the State of Georgia,' seeking a declaratory judgment and injunction, the object of the suit being in part to prevent the defendant from assessing for ad valorem taxation two lines of railroad owned by the petitioner, one extending from Augusta to Atlanta, and one from Union Point to Athens, Georgia; it being alleged and contended that, under its charter and also under previous adjudications, these railroad properties are exempt from ad valorem taxation. The petition was sanctioned and ordered filed, and a restraining order was issued.

On December 5, 1945, the defendant as thus sued filed a general and special demurrer to the petition. The plaintiff offered two amendments, both of which were allowed on December 16, 1946, subject to demurrer or other objection. One, designated as 'Amendment No. 1 of Dec. 16th, 1946,' prayed that the petition be amended by striking from the first and numbered paragraph the allegation that said petition is 'against M. E. Thompson, in his representative capacity as State Revenue Commissioner of the State of Georgia,' and by inserting in lieu thereof the allegation that said petition is 'against M. E. Thompson, who is State Revenue Commissioner [204 Ga. 141] of the State of Georgia.' No objection was ever made to the allowance of this amendment. The other

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amendment, designated as 'Amendment No. 2, of Dec. 16, 1946,' sought to add a third line of railroad, extending from Camak to Warrenton, Georgia, as to which third line it was alleged that the plaintiff is entitled to the same relief as prayed with respect to the other two lines. In his order allowing this amendment subject to demurrer or objection, the judge enlarged his former restraining order so that it would include such third line, as prayed.

On November 24, 1947, on a 'plea for substitution of party' filed by Glenn S. Phillips, who succeeded Thompson, as State Revenue Commissioner, the judge entered an order, substituting Glenn S. Phillips as a party defendant in the case and ordering that the cause proceed 'against the said Glenn S. Phillips in the same manner and with the same consequences as if he had been the original defendant therein.' Such 'plea for substitution of party' alleged the appointment of Glenn S. Phillips as State Revenue Commissioner, and his adoption of the pleadings of the original defendant in said case.

On the same date, November 24, 1947, the defendant Phillips filed objections to allowance of the amendment of December 16, 1946, adding the third line of railroad, and to the inclusion of this line within the former restraining order. Also on the same date, the defendant 'after all the amendments filed by the plaintiff have been allowed, subject to the objections to said amendments * * * adopts and renews its demurrers previously filed, both general and special, on each and every ground therein set out to the original petition, and also to the petition as amended, and says that said petition as amended should be dismissed for each and every reason set out in the original demurrers.' Other grounds of demurrer, both general and special, were then stated.

On the same date the judge entered an opinion and judgment (1) overruling 'the general and special demurrers, original and as made and renewed after the filing of amendments by the plaintiff * * * on each and every ground,' and (2) refusing 'to dissolve the restraining order heretofore granted.' It was stated in the order that 'Even if the case be construed as not being sufficient under the declaratory judgment act, it does set forth [204 Ga. 142] a cause of action as a bill of peace.' The defendant excepted.

In ground 3 of the general demurrer, it was expressly urged that the suit 'is in reality an action against the State; and the State has not consented to be made a party to this action or for the action to proceed against it.' The same contention is expressly urged in this court by Phillips as plaintiff in error.

The petition as amended contained substantially the following allegations:

3. The defendant, as State Revenue Commissioner, is empowered by statute to assess railroad property for taxation by the State and its political subdivisions and to issue executions therefor, but is exceeding the authority given to him by the statutes of the State of Georgia and is acting unlawfully and in violation of the constitution of the State of Georgia and of the United States, for the reasons hereinafter set out.

4. On August 28, 1945, the defendant wrote the following letter jointly to petitioner and to C. H. Phinizy, its president:

'Dear Sirs: The Georgia Railroad & Banking Company having failed to file full and complete tax returns with the State Revenue Commission of the State of Georgia for the years 1939 through 1945, inclusive, you are hereby notified of such delinquency and are demanded to make full and complete tax returns to the State Revenue Commissioner within twenty days, as provided by law, convering all taxable property of said Georgia Railroad & Banking Company, for State, County, Municipal and school taxes. Yours very truly, Department of Revenue, M. E. Thompson, Commissioner. Blanks will be furnished upon request.'

5. Petitioner denies that, for the years 1939 through 1945, inclusive, or for any one of those years, it failed to file full and complete tax returns, but alleges that it has filed such returns and paid all taxes for which it was lawfully liable. Petitioner has therefore declined to make any returns

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to the State Revenue Commissioner in addition to the returns already made.

6. Nevertheless defendant has thereatened to and will, unless restrained by this court, assess against petitioner ad valorem taxes with respect to certain of its lines of railroad and their appurtenances, namely, the main line from Augusta to Atlanta; the Athens Branch, from Union Point to Athens (the approximate[204 Ga. 143] length of each being stated); both of which lines were constructed under and by virtue of the act of the General Assembly of Georgia approved December 21, 1833, hereinafter referred to; and the branch from Camak to Warrenton, a distance of four miles, which was constructed under and by virtue of the act of the General Assembly of Georgia assented to December 22, 1835, which amended the charter of petitioner so as to authorize the construction of such branch line; said three lines of railroad being hereafter referred to as the 'charter tax lines.'

7. Petitioner's charter tax lines are not subject to ad valorem taxation, as will more fully hereinafter appear.

8. Petitioner is a railroad corporation chartered as 'Georgia Rail Road Company' by the State of Georgia by special act of the General Assembly approved December 21, 1833, the name of said company having been changed to 'Georgia Rail Road & Banking Company' by a special act of the General Assembly approved December 18, 1835.

9. By section 15 of said act approved December 21, 1833, which is now and at all times since its approval has been a part of petitioner's charter, it is enacted as follows: 'The stock of the said company and its branches shall be exempt from taxation for and during the term of seven years from and after the completion of the said rail roads or any one of them; and after that, shall be subject to a tax not exceeding one half per cent per annum on the net proceeds of their investments.'

10. The provision of petitioner's charter as above quoted is applicable to petitioner's said charter tax lines, all of which were completed many years prior to 1939.

11. In addition to its charter tax lines...

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