City of Richmond v. Richmond & D.R. Co.

• Decision Date: 17 January 1872
• Citation: 62 Va. 604
• Court: Virginia Supreme Court
• Parties: CITY OF RICHMOND v. RICHMOND & DANVILLE R. R. CO.

62 Va. 604

CITY OF RICHMOND v. RICHMOND & DANVILLE R. R. CO.

Supreme Court of Appeals of Virginia.

January 17, 1872

Absent, Anderson, J.

1. The charter of the R. & D. Railroad Co. provides that " all machines, wagons, vehicles or carriages belonging to the company, with all their works, and all profits which may accrue from the same, shall be vested in the respective shareholders forever, in proportion to their respective shares, shall be deemed personal estate, and exempt from any charge or tax whatever. HELD:

1. The real estate owned and used by the company for the purposes of their business, is embraced in the provision, and is personal estate.

2. All the said property, real and personal, is exempt from taxation, both State and municipal,

3. The exemption from taxation of the real estate of the company in the city of Richmond, is not unconstitutional as being in conflict with the charter of the city, previously granted giving the city the power to tax real estate for the purposes stated in the city charter: the city having ample means of taxation left for the payment of her expenses and debts.

4. A city charter is not a contract between the State and the city, securing to the city the absolute power of taxation beyond the control or modification of the Legislature.

5. The power of exemption, as well as the power of taxation, is an essential element of sovereignty; and can only be surrendered or diminished, in plain and explicit terms.

6. Municipal corporations are mere auxiliaries of the government, established for the more effective administration of justice; and the power of taxation confided to them is a delegated trust.

The Council of the city of Richmond, in 1865 and 1866, assessed with taxes for these years, the real estate in the city of Richmond, owned by the Richmond and Danville Railroad Company, and used by the company as a part of its works; and the company refusing to pay the tax, the collector of the city levied upon one of the locomotives belonging to the company to enforce its collection. The company thereupon, in September 1866, obtained from the judge of the Circuit court of the city, an injunction to restrain the city of Richmond and the collector from proceeding to collect said taxes. There are several grounds stated in the bill, on which it is insisted that the injunction should be sustained; but only one of them was considered by the court below, or by this court. That is, that by the charter of the Richmond and Danville Railroad Company, all its property was exempted from taxation. The third section of the charter provides that " all machines, wagons, vehicles, carriages, belonging to said company, together with all their works, and all profits which shall accrue from the same, shall be vested in the respective shareholders forever; shall be deemed personal estate, and exempt from any charge or tax whatsoever."

The city of Richmond answered the bill, and insisted, first: that the exemption from taxation referred to in the charter of the company, was an exemption from State taxation, and not from municipal taxes; and, second, if it was intended to apply to the city taxes, it was unconstitutional, as impairing the obligation of the contract made by the State with the city of Richmond, in the charter of the city and subsequent acts of legislation, passed before the grant of the charter to the Richmond and Danville Railroad company; by which charter and subsequent legislation, the city of Richmond was authorized to tax all real and personal estate in the city, to borrow money, and issue its bonds; and by virtue of which legislation the city had subscribed to various works of internal improvements, and had executed other works in the city, which are set out in the answer; for the payment of which subscriptions and expenses, she had sold her bonds to a large amount; many of which, constituting a large indebtedness of the city, were still unpaid; and for the payment of the interest and principal of which the city was authorized, and was compelled to tax the property, real and personal, in the city. The statements in the answer as to the subscription by the city to the several works of internal improvement therein mentioned, and the creation of debts by the city to pay these subscriptions, and that said debts are now due, were admitted to be true.

The case came on to be heard on the 21st day of July 1868, when the injunction was perpetuated. And thereupon the city of Richmond applied to this court for an appeal; which was allowed.

R T. Daniel and Meredith, for the appellant.

Hallyburton and Ould, for the appellee.

STAPLES J.

The city of Richmond, by its officers and agents, assessed with taxes, for the years 1865 and 1866, certain lots supposed to lie within the corporate limits, the property of the Richmond and Danville Railroad Company, and occupied by its railroad tracks, depots and other structures. The company refusing to pay said taxes, the city collector levied upon a locomotive belonging to the company, to enforce their collection. The company thereupon applied for and obtained an injunction from the Circuit court of said city, restraining all proceedings under the levy, upon the ground that its property is exempt from every species of taxation whatever. This injunction was afterwards perpetuated by a decree of said Circuit court; from which an appeal was taken to this court. The company bases its claim to this exemption upon the provisions of the third section of its charter. The city, on the other hand, resists this pretension on various grounds, which will now be considered.

It is insisted, that it was not the intention of the Legislature to change the legal character of the property held by the company, but merely to define the nature of the shares therein; and that such shares only are exempt, and not the property of the corporation. The section of the charter referred to is as follows: " All machines, wagons, vehicles or carriages belonging to the company, with all their works, and all profits which shall accrue from the same, shall be vested in the respective shareholders forever, in proportion to their respective shares, shall be deemed personal estate, and exempt from any charge or tax whatsoever." Very slight consideration of this language will show that the construction sought to be placed upon it, is too restricted. The Legislature, clearly, did not mean to declare that the shares should be vested in the shareholders, and should be deemed personal estate. Such a provision in regard to the shares was wholly unnecessary. The obvious meaning is, that the property designated, that is, the machines and carriages belonging to the company, " with all their works," should be deemed personal estate, and exempt from any charge or tax whatsoever. If authority upon this point were necessary, it may be found in the case of the Mayor, & c., of Baltimore v. Balt. & Ohio R. R. Co., 6 Gill's R. 288. It was held in that case, that the real and personal property of the company was exempt from taxation, under a clause in the charter which provided " that the shares of its capital stock should be deemed personal estate, and exempt from the imposition of any tax or burden. The court say, the design contemplated by the Legislature, in the insertion of this clause, was to confer a substantial, not a nominal, benefit on the stockholders, and to induce capitalists to risk their money in a novel and hazardous enterprise.

To impute to the Legislature, in the case before us, an intention to exempt the shares of stock from taxation, and at the same time to reserve the right to tax everything which constituted it a stock, and gave it its value, would be gratuitously to cast an imputation upon the Legislature inconsistent with every principle of judicial courtesy.

It was also insisted, that the clause in question does not have the effect to exempt the real estate of the company, or in any manner to change it into personal property. The correctness of this proposition depends upon the construction of the phrase " with all their works." The word " works" is one of very extensive signification. In military engineering, it means fortresses, fortifications, ramparts, bastions and the like. In civil engineering it is often applied to depots, engine-houses, bridges, embankments and other structures essential to the franchise and the proper conduct of a railway, or other work of public improvement. It is very clear that it is in this sense the word is used in the present charter, and was intended to apply to all the property, real and personal, owned by said company, and necessary to the management of the road. If the exemption does not embrace the real property of the company, the Legislature has perpetrated the folly of declaring that mere chattels should be deemed personal estate. It would be attributing to the Legislature the grossest inconsistency to suppose it intended to release from all taxation the machinery and rolling stock of the company, and leave it exposed to the burdens of taxation of its depots, engine-houses, coal yards and other necessary structures. The consideration which dictated the exemption of the personal property, equally applied to the realty.

The terms employed in this section were not hastily or unadvisedly selected. They had been repeatedly used in the various charters granted by the Legislature to internal improvement companies. The identical language is found in the first charter ever granted in the State, for the construction of a railway: I allude to the Chesterfield railroad. It may be seen in the charter of the Petersburg Railroad Company the second railway of the State. And when in consequence of the increasing number of applications for charters, the...