Georgia Railroad & Banking Co. v. Redwine

Decision Date11 August 1952
Docket NumberCiv. No. 185.
CourtU.S. District Court — Northern District of Georgia

Spalding, Sibley, Troutman & Kelley, Robert B. Troutman, Furman Smith, Atlanta, Ga., for plaintiff.

Eugene Cook, Atty. Gen. of Ga., for defendant.

Before RUSSELL, Circuit Judge, HOOPER, Chief Judge, and SLOAN, District Judge.


The present proceedings is another chapter in the history of the efforts of the Georgia Railroad and Banking Company to maintain its rights to the partial exemption from taxation provided by Section 15 of the Act of 1833 incorporating that railroad. Georgia Laws of 1833, p. 264. The facts of the present proceeding were outlined in a former ruling appearing in D.C. 85 F.Supp. 749.

Upon such former hearing of this case, it appeared that the field of dispute had been rather thoroughly explored and tested in past adjudications, which are there referred to, and whereby the validity of the exemption had been established. However, upon consideration of a point not theretofore urged, it was held that the suit was in effect one to compel specific performance of a contract by the State of Georgia and could not be maintained. The ore from what then appeared to be a new vein of legal truth1 upon assay in the final and controlling laboratory test, Georgia Railroad & Banking Co. v. Redwine, 342 U.S. 299, 72 S.Ct. 321, 96 L.Ed. 335, was found to be worthless. The cause was remanded for determination upon the merits. The plaintiff, by amendment, has alleged and, by answers to his requests for admission, has established that the expense of counsel fees and court costs of the former litigation2 were paid from the Georgia State Treasury by warrants drawn by the Governor, and approved by the Comptroller General. The plaintiff therefore contends that the prior decrees are res adjudicata as to the State of Georgia, the present defendant State Revenue Commissioner, and the counties and municipalities on behalf of which the defendant is threatening to collect taxes from the plaintiff. Plaintiff has renewed its motion for summary judgment, as amended. Fulton County and the municipalities of Athens and Union Point have moved to be allowed to intervene. A hearing has been had, and the contentions of the plaintiff and defendant fully presented, as well as argument on behalf of parties at interest, not parties to the record. The movers for intervention were also heard, subject to final determination by the Court of their right to intervene.

The points and counter-points of the parties have been fully and ably presented by arguments and briefs which disclose thoughtful consideration of the issues and careful research and presentation of the authorities bearing upon the three principal questions presented. These are: first, whether the judicial pronouncements in earlier litigations, especially that of the Supreme Court of Georgia in State v. Georgia R. & B. Co., 1875, 54 Ga. 423, and by the Supreme Court of the United States in Wright v. Georgia R. & B. Co., 216 U.S. 420, 30 S.Ct. 242, 54 L.Ed. 544, are res adjudicata in the present proceeding; second, whether, if such decrees be not res adjudicata, they are nevertheless binding as authority; and, third, whether in any event the provision of the charter of the plaintiff granting a partial exemption from taxation is unconstitutional and void because contrary to the provisions of Articles 22, 23 and 24 of art. 1 of the Constitution of Georgia of 1798, in effect at the time of the passage of the Act of 1833, supra.

In the view which we have of this case, we find it unnecessary to pursue to any determinative conclusion the question of whether the ruling of the Supreme Court of Georgia in 54 Ga. 423, supra, constitutes res adjudicata in the technical sense. Likewise, we do not find material or necessary a precise determination of whether the decision of the Supreme Court of the United States in 216 U.S. 420, 30 S.Ct. 242, 54 L.Ed. 544, supra, should be given the effect of res adjudicata, or of estoppel. For, in either event, our judgment is controllingly influenced by the decision in Georgia Railroad & Banking Co. v. Redwine, supra, that the proceeding is one which can be maintained as against the State Officer, and thus conclusively affect the State. We must conclude that, at least as to all questions put in issue in the former litigation, the decree there entered is binding upon the present defendant, for it is conceded that he stands as successor in office to William A. Wright, Comptroller General, the defendant in the original suit, the defense of which the State assumed, and the expenses of which it paid. Gunter v. Atlantic Coast Line R. Co., 200 U.S. 273, 26 S.Ct. 252, 50 L.Ed. 477; Warren v. Suttles, 190 Ga. 311, 9 S.E.2d 172; Coleman v. Fields, 142 Ga. 205, 82 S.E. 529. Even if this conclusion should be unsound, we nevertheless reach the same result when the question is considered as ruled and controlled by the decisions in State v. Georgia R. & B. Co., supra, and Wright v. Georgia R. & B. Co., supra, along with other decisions, which are persuasive authorities. There can be no doubt that the Courts of Georgia and the Supreme Court of the United States have uniformly upheld the validity of the exemption in question as against all attacks, except those presently presented, to which we will hereinafter refer. This question was precisely ruled in the two cases to which we have just referred. In State v. Georgia R. & B. Co., 54 Ga. 423, supra, the headnote is as follows:

"By the original charter of the Georgia Railroad and Banking Company it was, in terms, provided that `the stock of said company and its branches, shall be exempt from taxation for seven years from the completion of said railroads, or any one of them, and after that, shall be subject to a tax of not exceeding one-half of one per cent. per annum on the net proceeds of their investments:'
"Held, that under the settled rules of construction, it was competent for the legislature to grant this exemption, and forming, as it does, a portion of the contract of incorporation, any repeal of it by the legislature, without the consent of the corporation, is in violation of article 1, section 10, paragraph 1 of the constitution of the United States prohibiting any state from passing any law impairing the obligation of contracts."

In Wright v. Georgia R. & B. Co., 216 U.S. 420, 30 S.Ct. 242, 54 L.Ed. 544, supra, in dealing with the precise charter provisions now under consideration, the headnote states:

"An act of a state legislature attempting to tax the whole or any part of the capital or franchise of a corporation, whose charter contains an express limitation and method of taxation such as in this case, by any method other than that specified therein, impairs the obligation of the charter and is unconstitutional under the contract clause of the

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