County of Traverse v. St. Paul, Minneapolis & Manitoba Railway Co.
| Decision Date | 22 July 1898 |
| Docket Number | 10,978 - (36) |
| Parties | COUNTY OF TRAVERSE v. ST. PAUL, MINNEAPOLIS & MANITOBA RAILWAY COMPANY |
| Court | Minnesota Supreme Court |
Proceedings in the district court for Traverse county to enforce payment of delinquent taxes. The defendant railway company duly filed objections to the enforcement of payment against the lands described. The cause was submitted to Powers, J., on a stipulation of facts, and he found in favor of defendant. Judgment was entered in pursuance of the findings, and the case was then certified to the supreme court. Affirmed.
Railway -- Exemption of "First Division" from Taxation Appurtenant to Road and Transferable.
The exemption of the road and land grant of the First Division of the St. Paul & Pacific Railway Company from ordinary taxation, in consideration of the payment to the state of a percentage of the gross earnings of its road (see First Division v. Parcher, 14 Minn. 224 [297]), was not a mere personal privilege to that company, but was appurtenant to the line of road and the lands, and transferable to any other company which might acquire the road and assume its operation; and the transfer of the road and land grant to such company did not amount to a sale of the lands, within the meaning of Laws 1857 (Ex. Sess.) c. 1, and Sp. Laws 1865 cc. 6, 9; following former decisions.
Railway -- Benefits and Burdens Passed to Manitoba Company.
This immunity, with its reciprocal burdens, passed to the St. P M. & M. Ry. Co. by purchase on the foreclosure of a mortgage executed by the First Division Co. on its road, lands, franchises, immunities and exemptions.
Railway -- Additional Grant of 1865 Included.
This immunity applied to the "additional" congressional grant of March 3, 1865, as well as to the original grant of March 3, 1857.
Lease to Great Northern not a Sale of Lands.
A certain lease and contract between the St. P., M. & M. Ry. Co. and the G.N. Ry. Co. construed, and held not to constitute a sale of the lands, within the meaning of Sp. Laws 1865, cc. 6, 9.
H. W. Childs, Attorney General, and F. J. Steidl, for plaintiff.
The following may now be considered as rules established by the great weight of authority:
(1) The taxing power being a prerogative of government, its surrender or alienation will never be presumed or implied, but must be conferred in the clearest and most explicit terms. State v. Chicago, 89 Mo. 523; Kentucky v. Com., 87 Ky. 661; State v. Keokuk, 99 Mo. 30; Turnpike Cases, 92 Tenn. 369; Providence Bank v. Billings, 4 Pet. 514; State v. Bank, 95 Tenn. 221; Gillam v. Sioux City & St. P.R. Co., 26 Minn. 268; 3 Am. & Eng. Enc. 746, note 1.
(2) That tax exemptions granted without a consideration are not a contract, nor a franchise, but such grants belong to the same category of transactions which between individuals are designated as nude pacts, and may be revoked or repealed at the pleasure of the grantor. Rector v. County of Philadelphia, 24 How. 300; Tucker v. Ferguson, 22 Wall. 527; West W. Ry. Co. v. Board of Supervisors, 93 U.S. 595; Home Ins. Co. v. City Council, 93 U.S. 116.
(3) That immunity from taxation granted by the legislature is not a franchise, or attached to the land, but a personal privilege which can only be enjoyed by the person or corporation on whom conferred, and cannot be transferred by judicial or other sale, unless the intention of the legislature to make it assignable is clearly and explicitly expressed; and this immunity does not pass to the purchaser at judicial mortgage foreclosure, or other sale of the charter, property, rights, franchises, reservations, restrictions and liabilities of the corporation to whom granted. Kentucky v. Com., supra; State v. Chicago, supra; Bloxham v. Florida, 35 Fla. 625; State v. Mercantile, 95 Tenn. 212; Nashville v. Com., 97 Ky. 162; Turnpike Cases, supra; Com. v. Nashville, 93 Ky. 430; Morgan v. Louisiana, 93 U.S. 217; Memphis & L.R.R. Co. v. Railroad Commrs., 112 U.S. 609; Chesapeake & O. Ry. Co. v. Miller, 114 U.S. 176; Louisville & N.R. Co. v. Palmes, 109 U.S. 244; Picard v. East Tenn., V. & G.R. Co., 130 U.S. 637; Wilmington & W.R. Co. v. Alsbrook, 146 U.S. 279; St. Louis & S.F. Ry. Co. v. Gill, 156 U.S. 649; St. Louis & S.F. Ry. Co. v. Stevenson, 156 U.S. 667, note.
The St. Paul & Pacific and the First Division companies did not have the power or authority to convey, by mortgage or otherwise, this immunity from taxation, and defendant did not acquire it by its purchases at the foreclosure sales. It has often been decided that a charter conferring upon a corporation all the rights, immunities, privileges and franchises enjoyed by another corporation does not confer upon it the exemption from taxation enjoyed by the latter. Kentucky v. Com., supra; Nashville v. Com., supra; State v. Mercantile, supra; Turnpike Cases, supra; Wilmington & W.R. Co. v. Alsbrook, supra.
As to the taxability of lands granted to the state as trustee by the act of congress of March 3, 1865, and claimed to have been granted by the state to the St. Paul & Pacific Railroad Company, the question has never been squarely before this court for adjudication. If this land was exempted, a new exemption was created of every odd-numbered section for four miles on each side of the railroad, without any new consideration, except the payment of a 3 per cent. gross-earnings tax, annually, which the company was already obliged to pay. Such exemption was therefore gratuitous, is not a franchise, nor appendant to the land, could not be assigned or transferred, came within the category of nude pact contracts, could be revoked or repealed at pleasure, and was clearly in conflict with Const. art. 9, §§ 1, 3, and art. 1, § 2. Le Duc v. City of Hastings, 39 Minn. 110; Northern Pac. R. Co. v. Walker, 47 F. 681; State v. Keokuk, supra; Files v. State, 48 Ark. 529; Bloxham v. Florida, supra; State v. Chicago, supra.
The contract or written instrument executed between defendant and the Great Northern Railway Company on February 1, 1890, while in the form of a lease for 999 years, is in fact an absolute sale of all the railroads, railroad property and equipment of the defendant to the Great Northern Railway Company, and hence the lands are subject to taxation. For authorities that the transaction is a sale, see Com. v. Nashville, supra; State v. Winona & St. P.R. Co., 21 Minn. 472; St. Paul & C.R. Co. v. McDonald, 34 Minn. 195; County of Brown v. Winona & St. P.L. Co., 38 Minn. 397; Huck v. Chicago, 86 Ill. 352.
M. D. Grover and Young & Lightner, for defendant.
The acceptance by the predecessors of defendant of the charter exempting its lands from taxation, and containing a provision for a gross-earnings tax, constituted a contract based on a valuable consideration. A similar provision for a substituted mode of taxation has recently been held to effect, not an exemption from taxation, but the substitution of one method of taxation for another, and therefore not to be subject to the same rules of construction which obtain in the case of absolute gratuitous exemptions from taxation. McHenry v. Alford, 168 U.S. 651. See also City of St. Paul v. St. Paul & S.C.R. Co., 23 Minn. 469; First Division v. Parcher, 14 Minn. 224 (297); Chicago, M. & St. P. Ry. Co. v. Pfaender, 23 Minn. 217; County of Nobles v. Sioux City & St. P.R. Co., 26 Minn. 294; State v. Northern Pac. R. Co., 32 Minn. 294; State v. St. Paul, M. & M. Ry. Co., 30 Minn. 311; County of Hennepin v. St. Paul, M. & M. Ry. Co., 33 Minn. 534; County of Ramsey v. Chicago, M. & St. P. Ry. Co., 33 Minn. 537. As to the exemption contained in the increased grant of 1865, it has always been the doctrine of this court that such an act was a valid exercise of legislative power. State v. Winona & St. P.R. Co., 21 Minn. 315; City of St. Paul v. St. Paul & S.C.R. Co., supra; County of Stevens v. St. Paul, M. & M. Ry. Co., 36 Minn. 467; Huff v. Winona & St. P.R. Co., 11 Minn. 114 (180); Fitz v. Minnesota C.R. Co., 11 Minn. 304 (414); First Division v. Parcher, supra; Minnesota C. Ry. Co. v. Melvin, 21 Minn. 339.
The exemption of this land from ordinary taxation accompanied these lands when they passed into the hands of the defendant, the Manitoba Company. State v. Northern Pac. R. Co., supra; Chicago, M. & St. P. Ry. Co. v. Pfaender, supra; County of Nobles v. Sioux City & St. P.R. Co., supra.
The question in this case turns on the construction of the state constitution and of territorial and state statutes establishing a policy for the taxation of land-grant railroad companies, which has subsisted during the whole period of the existence of Minnesota as a state. A long and uniform series of decisions has settled the construction of the constitution and these statutes, and established a rule of property. In such case, so far is the question from being in any way affected by the decisions of the United States supreme court on cases arising in other states, so far are those decisions from being in any way authoritative, should this question at any time be presented to that court, it would be the clear duty of that court, as it is of this, to adhere to and follow the construction which has been so fully settled in this court. Secombe v. Railroad Co., 23 Wall. 108.
The lease and contract between the Manitoba Company and the Great Northern Company did not subject the lands to ordinary taxation. That a lease for 999 years is not a sale is elementary. Morrison v. St. Paul & N.P. Ry. Co., 63 Minn. 75. Besides, in order to make the land subject to ordinary taxation, it is not enough that the railroads have been contracted to be sold or leased. The defendant might sell all its lines, and still the lands would not be subject to ordinary taxation in its hands. Minnesota C. Ry. Co. v....
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