Central Railroad and Banking Company v. Georgia
| Decision Date | 01 October 1875 |
| Citation | 92 U.S. 665,23 L.Ed. 757 |
| Parties | CENTRAL RAILROAD AND BANKING COMPANY v. GEORGIA |
| Court | U.S. Supreme Court |
ERROR to the Supreme Court of the State of Georgia.
The case was argued by Mr. Jeremiah S. Black, Mr. David Dudley Field, and Mr. A. R. Lawton, for the plaintiff in error, and by Mr. N. J. Hammond, Attorney-General of the State of Georgia, and Mr. Robert Toombs, for the defendant in error.
By an act of the legislature of Georgia, enacted in 1833, a charter, unlimited in duration, was granted to 'The Central Railroad and Canal Company of Georgia,' with power to make, construct, and maintain a canal or railroad from the city of Savannah to the city of Macon. The seventh section was as follows: —
'The said canal or railway, and the appurtenances of the same, shall not be subjected to be taxed higher than a half per cent upon its annual net income.'
In 1835, by an amendment to the charter, the name of the company was changed to 'The Central Railroad and Banking Company of Georgia;' its capital stock was declared to consist of $3,000,000: and the eighteenth section of the amendment enacted that 'the said railroad, and the appurtenances of the same, shall not be subjected to be taxed higher than one-half of one per centum upon its annual net income; and no municipal or other corporation shall have the power to tax said company, but may tax any property, real or personal, of the said company, within the jurisdiction of said corporation, in the ratio of taxation of like property.' Under this latter act the company was organized in 1836, and proceeded to build the railroad. By subsequent enactments, the capital stock was increased to $5,000,000, and the company was authorized to build its road into Macon.
In 1847, the legislature of the State, by a statute approved Dec. 27, 1847, incorporated 'The Macon and Western Railroad Company,' with power to build a railroad from Macon to Atlanta.
The charter contained no exemption from taxation, and affixed no limits to it. An amendment, however, was made to the charter by an act approved Feb. 9, 1869, and assented to by the company, by which authority was given to increase the capital stock to $2,500,000; and the chartered rights of the company were continued during the term of thirty years from its passage. The amending act contained the following proviso:——
'Provided, nevertheless, that such additional stock as may be issued, as well as the present stock of said company, shall hereafter pay the same annual tax to the State as the other railroad companies of this State now do; viz., one-half of one per cent on the amount of the net income.'
Under this charter the railroad was constructed to Atlanta. Thus the western terminus of the Central Railroad and Banking Company of Georgia, and the eastern terminus of the Macon and Western Railroad, were both fixed at Macon.
On the twenty-fourth day of August, 1872, the legislature passed an act authorizing the union and consolidation of the two railroad companies, under the name andc harter of the first named, 'The Central Railroad and Banking Company of Georgia.' As the true meaning and effect of this act is the basis of all the questions presented by the case, we quote the first section entire:——
'Be it enacted by the general assembly of the State of Georgia, that the Macon and Western Railroad Company, and the Central Railroad and Banking Company of Georgia, be, and they are hereby, authorized and empowered to unite and consolidate the stocks of the said two companies, and all the rights, privileges, immunities, property, and franchises belonging or attaching to said companies, under the name and charter of the said 'The Central Railroad and Banking Company of Georgia,' in such manner that each and every owner and holder of shares of the capital stock of the Macon and Western Railroad Company shall be entitled to and receive an equal number of shares of the capital stock of the consolidated companies: Provided, that nothing herein contained shall relieve or discharge either of said companies from any contract heretofore entered into, but that all such contracts shall be assumed by, and be binding on, the Central Railroad and Banking Company of Georgia, and all benefits and rights under the same shall accrue to, and vest in, the said last-mentioned company: And provided further, that, upon such union and consolidation, the capital stock of the Central Railroad and Banking Company of Georgia shall not exceed the amount of the authorized capital thereof, and the present authorized capital of the Macon and Western Railroad Company added thereto.'
The second section enacted, that the union and consolidation provided for should not take place until at least two-thirds of the stockholders of each company assented thereto.
By the third section it was enacted, that when it should be ascertained, in the manner provided, that the assent required in the second section had been given, it should be the duty of the board of directors of each company to complete said union and consolidation, and to certify the same under the corporate seals of said companies, to the governor of the State, to be filed in the office of the Secretary of State.
The fourth section is as follows:——
'Be it further enacted, that upon the union and consolidation herein provided for, each stockholder in the Macon and Western Railroad Company shall be entitled to receive a certificate of stock as a shareholder in the Central Railroad and Banking Company of Georgia for a like number of shares, upon the surrender of his certificate of stock in the former company, which new certificate shall entitle the holder thereof to the same rights, privileges, and benefits as attach to the holders of stock now held by the shareholders in said companies, or either of them.'
Under the provisions of this act, and in the manner prescribed, the two companies united, the stock of the Central Company being at the time $5,000,000, and that of the Macon and Western being $2,500,000.
Such was the legal status of the Central Railroad and Banking Company on the twenty-eighth day of February, 1874, when the legislature passed an act entitled 'An Act to amend the tax-laws of the State so far as the same relate to railroad companies, and to define the liabilities of such companies to taxation, and to repeal so much of the charters of such companies, respectively, as may conflict with the provisions of this act.' The act required from each company an annual return to the comptroller-general of the value of its property, without deducting indebtedness, each class or species of property to be separately named and valued, to be taxed as other property of the people of the State. It also required the railroad companies to pay the taxes assessed upon them, and it repealed conflicting laws. Pursuant to this act of 1874, the comptroller-general assessed a tax of $46,034.87 against the Central Railroad and Banking Company, and issued an execution to collect it. The company then paid the tax of one-half of one perc ent required by the prior law, and instituted proceedings in the mode provided by the statute to resist the exaction of the remainder of the tax assessed, on the ground that by its charter it was not subject to be taxed higher than one-half of one per centum of its annual net income, and that the tax-law of 1874 impaired the obligation of its contract with the State. Having failed in the State courts, the case has been brought here for review.
It is not denied that, by the provisions of the charter granted in 1833, amended in 1835, and accepted by the Central Railroad and Banking Company, a contract was made that the company should not be taxed higher than one-half of one per cent upon its net income. Nor is it denied that the protection thus promised was as perpetual as the existence of the company itself. But it is contended on behalf of the State that the charter granted in 1833, and amended in 1835, was surrendered by the union and consolidation of the company under the act of 1872 with the Macon and Western Railroad Company; that the company is now existing under a charter granted by the latter act, a charter which is subject to repeal or modification at the will of the legislature; and, therefore, that the act of 1874, which imposes a more onerous tax than one-half of one per cent on the net income, is a violation of no contract, but that it is a legitimate exercise of legislative authority.
If it could be admitted, as contended by the State, that the charter granted in 1835 is no longer in existence, if in fact and in law it was surrendered in 1872, and if the 'Central Railroad and Banking Company of Georgia' is a new corporation, created when it united with the Macon and Western Railroad Company, the consequences claimed by the State might, and probably would, follow. The Code of Georgia, which went into operation Jan. 1, 1863, has the following provisions:——
SECT. 1682. 'In all cases of private charters hereafter granted, the State reserves the right to withdraw the franchise, unless such right is expressly negatived in the charter.'
SECT. 1683. 'Private corporations heretofore created, without the reservation of the right of dissolution, and where individual rights have become vested, are not subject to dissolution at the will of the State.'
Chartered rights granted subsequent to the Code may, therefore, be withdrawn. It is equally certain that those granted before Jan. 1, 1863, cannot be impaired by any legislative act.
Hence, it is of vital importance to this case to examine the effect of the union of the two companies, under what is called 'the consolidation act of the legislature,' of Aug. 24, 1872. Did the act contemplate a surrender of its charter by the Central Railroad and Banking Company, and the grant to it of a new charter, or a re-grant of the old? It may be that the consolidation of two corporations, or...
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