City of Savannah v. Jesup

• Decision Date: 15 January 1883
• Citation: 106 U.S. 563,27 L.Ed. 276,1 S.Ct. 512
• Parties: CITY OF SAVANNAH v. JESUP, surviving Trustee, and another
• Court: U.S. Supreme Court

106 U.S. 563

1 S.Ct. 512

27 L.Ed. 276

CITY OF SAVANNAH v. JESUP, surviving Trustee, and another.

January 15, 1883.

A. R. Lawton, for appellant.

W. S. Chisholm, for appellees.

HARLAN,

In State of Georgia v. Jesup, ante, 363, will be found a brief statement of the history of a suit commenced on the fifteenth day of February, 1877, in the circuit court of the United States for the southern district of Georgia, by Morris K. Jesup, surviving trustee, etc., against the Atlantic & Gulf Railroad Company, a Georgia corporation, for the foreclosure of certain mortgages, covering the main line and branches of that company, with their respective appurtenances, rolling stock, equipment, etc. In addition to the facts there stated, it may be added that on the tenth day of April, 1879—the mortgaged property being then, as it had been since February 20, 1879, in the actual possession of receivers—the city of Savannah, a municipal corporation of Georgia, by leave of court, filed in said cause its petition pro interesse suo. It was therein alleged that the city was a creditor of the railroad company, in this: that the latter was indebted to the city for taxes 'upon real estate owned and used for its legitimate corporate purposes,' within the corporate limits of Savannah, in the sum of $2,853.75 for the year 1877, and $3,720 for the year 1878; and that for those sums execution had duly issued on the twentieth day of January, 1877, and March 1, 1879, respectively, and were then in the hands of the city mar- shal to be levied on the goods, chattels, lands, and tenements of the railroad company. The prayer of the city was that it be heard in its own interest; that the court would authorize it to proceed in the collection of said taxes by levy and sale, under its ordinances and the laws the state, else order the receivers to pay such taxes out of the funds and property in their possession, or give such other and immediate relief in the premises as to the court seemed proper.

This intervening petition, having been submitted and considered upon the merits, was, by order of the court, dismissed. Subsequently, the main cause was heard upon bills and answers, and the various interventions filed, and a final decree rendered, in which, among other things, it was recited that various persons had intervened for their interest, claiming to have liens against the property of the company as laborers, mechanics, or material-men, or claiming to have an equity to be paid out of moneys in the hands of the receivers before payment of the bonds secured by the mortgages. By the decree it was, among other things, ordered and adjudged that certain claims of laborers and mechanics were superior liens on the mortgaged property and its proceeds, but that the claims of those who have furnished material only, but not as laborers or mechanics, although entitled to liens therefor, be postponed to the mortgages therein mentioned, 'and no allowance is made, or to be paid, from the proceeds of said property, or from the money in the receivers' hands, to any other persons than to those who have such liens as aforesaid.'

The city of Savannah prayed, and was allowed, an appeal—the one now before the court—from the decree denying its claim for taxes for the years 1877 and 1878.

Upon the oral argument in this court, some question arose as to whether the present appeal brings before us for review the merits of these claims for taxes. We are of opinion that this question must receive an affirmative answer. If the city had a valid claim for taxes, paramount to the lien created by the mortgages, two courses were open to it,—to postpone action under its executions until the proceedings in the circuit court of the United States were concluded, and its possession of the property, by receivers, had ended; or, with leave of court, to file a petition pro interesse suo, submitting its claims for judicial determination. It adopted the latter course, and, in so doing, put itself in a condition to appeal from any order adverse to its interests, if such order involved an amount sufficient to give this court jurisdiction. This practice received the sanction of this court in Wiswall v. Sampson, 14 How. 65. The order dismissing the city's petition was followed by a final decree, which, in terms, limited the distribution of the proceeds of sale to certain claimants, (the city not among the number,) excluding all others. The orders in the court below, therefore, constituted, in every essential sense, a judicial determination adverse to the city's claims for taxes. Until those orders are reversed or modified, the city is concluded against any further assertion of its rights in the premises. Consequently, the appeal from the decree dismissing the petition and denying the claims for taxes, brings before us the question whether those claims were valid and enforceable against the property of the railroad company, or the proceeds arising from any sale thereof. That question we proceed to examine.

In conformity with an act of the legislature of Georgia, passed April 18, 1863, the Atlantic & Gulf Railroad Company was formed by the consolidation of two other companies—one, the Savannah, Albany & Gulf Railroad Company, incorporated December 25, 1847; and the other, the Atlantic & Gulf Railroad Company, incorporated February 27, 1856. The two constituent companies acquired, by their respective charters, an immunity from all taxation in excess of one-half of one per cent. upon its annual net income, or the annual net proceeds of its investments—whether the one or the other is not material in the present case. This immunity passed to the consolidated company, subject, however, to the right of the state, reserved in the Code of Georgia, (which was in force on and after January 1, 1863,) to withdraw it altogether. In Railroad Co. v. Georgia, 98 U. S. 365, we held that this immunity or limited exemption was, in law, withdrawn by the state in the act of February 28, 1874, 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 said companies to taxation, and to repeal so much of the charters of such companies respectively as may conflict with the provisions of this act.' As the present case turns mainly upon the construction and effect of that act, it is necessary to examine its provisions with some care.

By the first section it is enacted that from and after the passage of the act 'the presidents of all the railroad companies in this state shall be required to return on oath, annually, to the comptroller general the value of the property of their respective companies, without deducting their indebtedness; each class or species of property to be separately named and valued, so far as the same may be practicable, to be taxed as other property of the people of the state, and that said returns shall be made under the same regulations provided by law for the returns of officers of other incorporated companies which are required by law to be made to the comptroller general.' The second section provides that the presidents of railroad companies shall 'pay to the comptroller general the taxes...