Illinois Cent. R. Co. v. City of Memphis

Decision Date06 July 1936
Citation110 S.W.2d 352
CourtTennessee Supreme Court

Burch, Minor & McKay, of Memphis, for appellants.

William Gerber and K. C. Larkey, both of Memphis, for appellee.


The Illinois Central Railroad Company appealed in error from a judgment of the circuit court holding it liable to the City of Memphis for an annual privilege tax of $750 levied by the city under Item 93, article 3, section 1, of the Revenue Act of 1932 (Pub. & Priv.Acts 1931, 2d Ex.Sess., c. 13), upon railroad terminal companies.

It was the contention of the city, which was upheld by the court, that the Illinois Central was exercising the privilege of a railroad terminal company in Memphis and had been doing so for the years 1932, 1933, 1934, and 1935, in that:

(a) It owned and operated a central passenger depot in Memphis which was used not only by the Illinois Central and its subsidiary, the Yazoo & Mississippi Valley Railroad Company, but also by the St. Louis & San Francisco Railroad Company, hereinafter referred to as the "Frisco," and the Chicago, Rock Island & Pacific Railway Company, hereinafter designated as "Rock Island."

(b) That it had a contract with the St. Louis Southwestern Railway Company, hereinafter referred to as the "Cotton Belt," made January, 1921, and still in effect, whereunder the Illinois Central performed for that company the functions of a railroad terminal company.

The Illinois Central contended that the tax in question was directed at railroad terminal companies such as were authorized by the Act of 1893, chapter 11, and not against an ordinary commercial railroad company which, as a small incident to and an "integral part" of its business as such, and for the greater convenience of the public and of commerce, extended the use of its terminal facilities to other companies; and that all business handled under its contracts with the other three railroads was interstate, for the doing of which the tax could not be levied. It further contended that all the service rendered and facilities furnished by it under the three contracts mentioned were such as it could have been compelled to perform and furnish and as to which it had no option.

As stated the trial before the circuit judge resulted in a judgment holding the Illinois Central liable for the tax for the years mentioned and as contended for by the city, and this judgment is challenged by appropriate assignments of error which we find it unnecessary to consider separately.

The facts are without substantial dispute. The Illinois Central is a corporation organized and existing under the laws of the State of Illinois, as a common carrier of freight and passengers, with lines extending through several states. One of its lines extends from Chicago through Memphis to New Orleans. The Yazoo & Mississippi Valley Railroad Company is a subsidiary of the Illinois Central and its lines are a part of the Illinois Central system. The Illinois Central has a large terminal station in Memphis which was built a number of years ago for its own use. The building is some eight stories in height. On the ground floor are ticket offices, a limited concourse, baggage room, and dining room. On the next floor are a large concourse with accommodations for the comfort of passengers, a news stand, and a barber shop. Neither the dining room nor the news stand is operated by the Illinois Central but it merely leases them to an operating company. The barber shop is leased to a barber. The remaining floors are used as offices by the Illinois Central, with two exceptions, namely, one room is set apart for the use of conductors of all lines entering the station, where they store their uniforms, change their clothing, and the like. Another room is rented to a claim agent of the Frisco, who has nothing whatever to do with the operation of the station. The Illinois Central does not receive, handle, or transfer passenger traffic of railroad companies other than for itself and its subsidiary at this station. It has not leased to any railroad company its facilities at this station except as hereinabove indicated by the contracts mentioned, one with the Rock Island and one with the Frisco. The Illinois Central also has several large freight yards in the City of Memphis used for the making up of trains and the storage of cars and the like. Each yard is connected with all others by railroad tracks which form a belt line practically encircling the City of Memphis. As a result a large number of important industries in Memphis and its environs are located on the tracks of the Illinois Central and are served alone by it.

It likewise maintains freight houses for receiving, delivering, and transferring freight; cotton loading and unloading platforms, teaming tracks, scale tracks, icing tracks, a roundhouse and machine shop used for the repairing and overhauling of locomotives and cars.

In its passenger station there is a terminal railway post office, which has been since prior to the year 1932 leased to the United States government, the present rental being $10,000 per annum. In the same station there is a space suitable for handling the express business devoted thereto, which is leased to the railway express agency and has been so leased prior to the year 1932, the rental being $10,229.51 per annum.

All of these facilities were constructed by the Illinois Central many years ago primarily and essentially for its own use as a commercial railroad and were being so used by the Illinois Central at and prior to the time that the contracts upon which the city's claim is predicated were entered into.

In 1911 the Illinois Central entered into contracts with the Frisco and the Rock Island which were continued in substantially the same form through the years 1932-1935, inclusive. Under these contracts the Frisco and Rock Island were permitted to use the passenger terminal facilities of the Illinois Central consisting of tracks, platforms, and that part of the station devoted to the accommodation of passengers, the sale of tickets, the checking of baggage, and such other facilities and appurtenances provided by the Illinois Central in the conduct and handling of the passenger, express, and mail business. Under these contracts the Illinois Central furnishes no space for parking cars or roundhouse for engines. It does no switching for either of these companies with these exceptions: (1) Both contracts provide that "the Central Company will switch through cars of one party thereto to the trains of the other at said station" without charge. The only service rendered under this provision is to transfer daily to the Rock Island the pullman running from Chicago, Ill., to Hot Springs, Ark., and to transfer the same pullman from the Rock Island to the Illinois Central on its return trip. (2) Beginning June, 1936, the Illinois Central started to switch one sleeper daily for the Frisco, the charge therefor being $2 per day. (3) Occasionally, during the strawberry season, the Illinois Central would transfer a car to the Rock Island, or the Frisco. The Frisco contract — the Rock Island contract is to the same effect — grants to the trustees of the Frisco the right to use jointly with the Illinois Central the passenger depot, including tracks, platforms, and the like and adds:

"Said Passenger Terminal shall be used by the Trustees only for the arrival, loading, unloading and departure of their passenger trains. * * * The trains, engines and cars of the Trustees shall remain within the Passenger Terminal only for a reasonable length of time to permit the unloading and necessary switching of such trains, engines and cars of the Trustees."

"The Trustees shall have the right to switch with their own engines their own engines their passenger trains and cars upon the tracks of said Passenger Terminal to the extent necessary to handle and conduct their business, and to switch their passenger trains and cars with their own engines to and from the tracks of said Passenger Terminal from and to the passenger storage and cleaning yard of the Trustees."

The trains of the Frisco and the Rock Island are made up in the respective yards of those companies and all such trains enter and leave the Illinois Central station under their own power. Such trains are broken up in the same yards. The contracts further provide that the tenant lines must furnish at their own expense all tickets, baggage checks, and other printed forms required for the handling of their business. The tenant lines provide their own inspectors for trains entering and leaving the station.

The Frisco contract provides for six classes of service to be furnished by the Illinois Central — light repairs, materials and supplies, water, coal, sand, and cleaning of cars. These services are to be furnished by the Illinois Central only in cases of emergency. The proof is that in fact the Illinois Central renders no such services to the Frisco. The Illinois Central furnishes no storage yards for the Rock Island and the Frisco. It does not receive, handle, deliver, or transfer passenger traffic of railroad companies other than itself and its subsidiary at this station.

All business done at the Illinois Central station by the Frisco and Rock Island is interstate, with the exception that passenger business is handled by the Frisco between Memphis and two small stations in Shelby County, 8 and 13 miles respectively, from Memphis, both of which are mere villages located on concrete highways as a result of which the business...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT