Illinois Cent. R. Co. v. Adams

• Decision Date: 25 April 1899
• Docket Number: 805-807.
• Citation: 93 F. 852
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: ILLINOIS CENT. R. CO. v. ADAMS, Revenue Agent of State of Mississippi, et al. (two cases). [1] YAZOO & M.V.R. CO. v. SAME.

93 F. 852

ILLINOIS CENT. R. CO. v. ADAMS, Revenue Agent of State of Mississippi, et al. (two cases). ^[1]

YAZOO & M.V.R. CO. v. SAME.

Nos. 805-807.

United States Court of Appeals, Fifth Circuit.

April 25, 1899

These three cases were argued together. The purpose of each suit is to enjoin the assessment and collection of taxes. A temporary restraining order was obtained in each case, a motion made for an injunction, and a motion made by the defendants to discharge the restraining order. The court in each case refused the injunction, and granted the motion to discharge the restraining order. The complainants brought the cases by appeal to this court.

In the case of the Illinois Central Railroad Company against Wirt Adams, revenue agent of the state of Mississippi, the railroad commission of the state of Mississippi, the Canton Aberdeen & Nashville Railroad Company, and others, the bill alleges that the legislature of the state of Mississippi, in the years 1882, granted a charter to the Canton, Aberdeen &amp Nashville Railroad Company. The charter provided that the property of the corporation should be exempt from taxation for a period of 20 years from the date of the approval of the act. The charter authorized the company to consolidate with any other railroad company and to lease its property. The complainant advanced $2,536,924.13 to build the Canton Aberdeen & Nashville Railroad, and received from it a lease of all of its property and rights, including 'its exemption from taxation' granted in its charter. It is alleged that, under legislation subsequent to the charter the office of state revenue agent and the railroad commission of the state of Mississippi were created; that laws were enacted to provide for the assessment and collection of taxes and escaped taxes; that the supreme court of the state of Mississippi had so construed these laws and the constitution of the state as to make void the exemption from taxation in section 8 of the said charter. The bill shows the railroad commission of Mississippi and the revenue agent have notified the complainant and the Canton, Aberdeen & Nashville Railroad Company that they are liable for taxes on the property of the latter road for the years from 1886 to 1897, inclusive. It is alleged that steps were taken to assess and collect these taxes, notwithstanding the charter exemption. The bill also shows that the complainant has a mortgage on the property of the Canton, Aberdeen & Nashville Railroad for a sum greater than its value. Then, in the tenth paragraph of the bill, it is alleged that the action of the defendants the revenue and railroad commission of the state of Mississippi 'has created, as they claim, a lien upon your orator's property known as the 'Canton, Aberdeen & Nashville Railroad,' in violation of the obligation of said charter contract and of article 1 of section 10 of the constitution of the United States. * * * ' And the complainant continues that, if its prior lien is displaced by these means, it will be 'in violation of the fourteenth amendment of the constitution of the United States. ' The twenty-third section or paragraph of the bill is as follows: 'Your orator further complains and shows that the fixing of a lien upon said railroad and your orator's property in said state, by the making of said assessment of taxes as aforesaid, and the collection of said taxes, as defendant the revenue agent will do, unless restrained, and is now in the act of doing, is a violation of the fourteenth amendment, section 1, of the constitution of the United States, in that it will deprive your orator, and also the Canton, Aberdeen & Nashville Railroad Company, and also its stockholders, and also its creditors, each, of property without due process of law, lien, seizure, sale, or claim for taxes for the years above named, and against the taking of its property, or fixing a lien thereon, for a payment of said alleged taxes; or without due compensation. ' In the twenty-sixth section of the bill it is alleged that 'said contract (referring to the charter) exempting said property from taxation by cities and towns is protected by article 1, Sec. 10, of the constitution of the United States.'

In the case of the Illinois Central Railroad Company against Wirt Adams, agent, etc., the railroad commission of the state of Mississippi, the Yazoo & Mississippi Valley Railroad Company, and others, the bill alleges that the Yazoo & Mississippi Valley Railroad Company became entitled, by reason of its charter, to exemption from taxation upon certain conditions stated. It is also alleged, in detail, how the complainant has become entitled to the benefit of such exemption, and that it would have to pay the taxes if they are collectible. There, as in the first case, it is alleged that the revenue agent and the railroad commission of Mississippi are taking steps to collect the taxes for certain years. It is shown that the proceedings to enforce the collection is by authority of statutes passed since the date of the charter creating the exemptions. It is also alleged that, under the later decisions of the supreme court of Mississippi, the exemption from taxation allowed by the charter is not effective. The gravamen of the complaint is that the acts passes by the Mississippi legislature, since the granting of the charter for the assessment and collection of taxes and escaped taxes, as now construed by the supreme court of Mississippi, impair the contract created by the charter, and that this is in violation of the constitution of the United States. The last sentence in the nineteenth section of the bill is as follows: 'And your orator says that such collections of said taxes will impair the obligation of your orator's contract of purchase of the said bonds as aforesaid, in violation of the protection afforded by the constitution of the United States; and also will deprive it of its property without due process of law, and will withhold from it the equal protection of the law, in violation of the fourteenth amendment of the said constitution.'

In Yazoo & Mississippi Valley Railroad Company against Wirt Adams, revenue agent of the state of Mississippi, and others similar averments are made as to exemption from taxation, and that said revenue agent in proceeding to enforce collection by virtue of legislation and judicial decisions made since the exemption was allowed by charter. In this case the complainant and defendants are all citizens of Mississippi, and the complainant relies on the case involving a federal question to establish the jurisdiction of the circuit court in which the bill was filed. The twentieth section of the bill is in these words: 'Your orator now avers that the said demands of the said defendants, and their threatened action in the prosecution thereof, are asserted under and are taken under the revenue laws of the state of Mississippi passed by the legislature of said state in the Annotated Code, and the various acts amendatory thereof, at subsequent sessions of the legislature, and the act of 1894, defining the office and powers of the state revenue agent, all of which were enacted and passed subsequent to the acts hereinbefore cited, and...