Louisville & N.R. Co. v. Gaines

• Decision Date: 01 January 1880
• Citation: Louisville & N.R. Co. v. Gaines, 3 F. 266 (M.D. Tenn. 1880)
• Parties: LOUISVILLE & NASHVILLE RAILROAD CO. v. GAINES, Comptroller, etc.
• Court: U.S. District Court — Middle District of Tennessee

3 F. 266

LOUISVILLE & NASHVILLE RAILROAD CO. v. GAINES, Comptroller, etc.

United States Circuit Court, M.D. Tennessee.

1880

Ed Baxter, for complainant.

B. J Lea, Attorney General, for defendant.

BAXTER C.J.

By the thirty-ninth section of the act of December 11, 1845 incorporating the Nashville & Chattanooga Railroad Company it is provided 'that the capital stock of said company shall be forever exempt from taxation, and the road, with all its fixtures and appurtenances, including workshops, warehouses, and vehicles of transportation, shall be exempt from taxation for the period of twenty years from the completion of the road, and no longer.'

The Tennessee & Alabama Railroad Company was chartered in 1851-2, with all the 'rights, powers, and privileges,' and to be subject to all the 'liabilities and restrictions,' conferred and imposed by its charter upon the Nashville & Chattanooga Railroad Company, and amendments thereto.

The Central Southern Railroad Company was incorporated in 1853-4, with all the 'powers and privileges,' and to be subject to all the 'restrictions and liabilities,' prescribed in the charter of the Nashville & Chattanooga Railroad Company and amendments thereto, with some exceptions, not material to the determination of this case.

These two last-named companies, the Tennessee & Alabama and Central Southern, have been consolidated into the Nashville & Decatur Railroad Company.

The Nashville & Memphis, subsequently designated the Memphis & Ohio Railroad Company, was chartered in 1851-2, with all the 'powers, rights, and privileges,' and to be subject to the restrictions, so far as such provisions may be applicable, contained in the acts incorporating the Nashville & Chattanooga and Memphis & Charleston Railroad Companies, together with the acts amendatory of them, 'as fully as if herein set forth at length, and the same are hereby declared to form and constitute a part of the charter hereby granted to the Nashville & Memphis Railroad Company.'

The Memphis, Clarksville & Louisville Railroad Company was incorporated in 1851-2, and vested with all the 'rights, powers and privileges,' and subject 'to all the restrictions and liabilities, of the Nashville & Chattanooga Railroad Company,' except as therein otherwise provided, which exceptions have no bearing in this case.

The complainant is lessee of the Nashville & Decatur Railroad Company.It has consolidated with the Memphis & Ohio Railroad Company, and is the owner of the Memphis, Clarksville & Louisville Railroad, by purchase, under the act of December 22, 1870, providing for the sale of delinquent railroads.

By virtue of this purchase, complainant succeeded to all the rights, privileges, and immunities appertaining to the franchises of the road so sold to it under its act of incorporation and amendments thereto.

From the foregoing it will be seen that the Tennessee & Alabama Railroad Company was vested with all the 'rights, powers, and privileges;' the Central Southern Railroad Company with all the 'powers and privileges;' the Memphis & Ohio Railroad Company with all the 'powers, rights, and privileges;' and the Memphis, Clarksville & Louisville Railroad Company with all the 'rights, powers, and privileges,' of the Nashville & Chattanooga Railroad Company.

The period named in said several charters, during which time the property of said companies was respectively exempt from taxation, had not elapsed when the assessment complained of was made.

The act of the twenty-fourth of March, 1875, entitled 'An act declaring the mode and manner of valuing the property of railroads for taxation,' enacts, section 1, 'that each railroad company owning and operating a railroad in the state shall, on or before the first day of May of each year, make out and file with the comptroller of the state treasury a complete schedule of all its property, real, personal, and mixed, setting forth therein the length in miles, or fractions thereof, of its entire road-bed, switches, and side tracks, and showing how many miles, or fractions thereof, lie in the state, in each county of the state through which the road passes, and in each incorporated town, and the value of the whole and each part thereof, as subdivided herein; the total amount of capital stock; the number of engines, and their respective values; the gross annual receipts; the number of cars of all character, their classes and value; the number of depot buildings and warehouses, and other buildings; in what county and incorporated town located, and the value of each, including the lands and lots on which the same are built; the value of all machine shops, and stationary machinery and tools therein, and in what county and incorporated town located, including the land on which the same are built; all real, personal, or mixed property belonging to the company within the state, not enumerated above, with its value.'

Said act further provides for the appointment by the governor of three commissioners, to be styled 'railroad assessors for the state at large. ' To these commissioners the comptroller is required to deliver the 'schedules aforesaid.'When this is done the commissioners are 'to proceed to ascertain, test, and value the property belonging to said company,' upon the basis prescribed in said act, and value said property and certify their estimates to the comptroller; and when such valuation is approved by the governor, secretary of state, and treasurer, the comptroller is directed to 'ascertain the amount of taxes due the state, and notify the company thereof, and if not paid he may issue his distress warrant to any sheriff in the state, to be levied upon any personal or real property or franchises of the company, with power to sell the same and make a deed to the purchaser;' and 'the governor is authorized to issue his warrant to any sheriff, along the line of said railroad, to put such purchaser into the possession of such road and all its property.'

Said act further directs the comptroller to certify to the county court clerk of each county through which a railroad runs the amount to be taxed by said county for county purposes, and likewise to the mayors of incorporated towns through which the road passes the amount to be taxed by such towns; and the clerk is required to enter the same upon the collector's books, specifying the amount of taxes to be collected, etc.

The legislature, by the eleventh section of said act, provided further: 'That every railroad company which will accept as a special amendment to its charter, for a period of ten years from the first day of January, 1875, and that will pay annually to the state 1 1/2 per cent. on its gross receipts from all sources, shall be exempt from the provisions of the foregoing sections, (there recited above,) and the payment of said 1 1/2 per cent. upon all gross earnings of said road shall be in full (for the period mentioned, ten years) of all taxation.'Complainant accepted the compromise thus offered, and made and delivered the schedule required by the act to the comptroller, and paid into the treasury 1 1/2 per cent. of its gross earnings for the year 1875, amounting to $52,712.92.But in December, 1876, the supreme court of the state, in the case of L. & N.R. Co. v. Ellis, held that the legislature had not the power, under the constitution of 1870, then in force, to enact said eleventh section, and that the same was in conflict with that instrument, and therefore inoperative and of no legal force.

Complainant then fell back on its chartered rights, claimed its 20 years' exemption, and made application to the legislature to refund the amount so paid by it under said section, which the legislature refused to do, but, in lieu, that body passed the act of the twentieth of March, 1877, entitled 'An act to amend an act entitled 'An act declaring the mode and manner of valuing the property of a railroad company for taxation,' passed March 20, 1875, and to adjust the rights of the state and railroads in Tennessee under the decision of the supreme court, holding that the eleventh section of said act is unconstitutional.'

This act revived substantially the machinery created by the first, and directed an assessment by the commissioners, etc., of the complainants' property aforesaid, as a basis for its taxation for the years 1875, 1876, 1877, and 1878, and then by the ninth section thereof provided:

'That all railroads of the state, which had accepted and complied with the provisions of the eleventh section of the act of March 20, 1875, shall be entitled to a credit for the amounts respectively paid by them to the state' under the assessments made by authority of said act for the years 1875, 1876, and 1877; 'and, if the amounts so paid by said companies shall exceed the assessments for said years, the excess shall be refunded by the state to said railroads, with interest.'

Commissioners were accordingly appointed to act under and pursuant to the provisions of the act last mentioned, who proceeded and assessed complainant's property aforesaid for taxation at the gross sum of $3,370,700, and certified their action to the comptroller.

At this juncture complainant filed its bill, in and by which it prays for an injunction restraining the comptroller 'from certifying to the county court clerk of each county, and likewise to the mayor of each incorporated town, the amount assessed as aforesaid to be taxed by said counties or towns respectively against complainant for the years mentioned;' and 'if, before this application for an injunction can be made, said defendant(the comptroller) shall have made said certificate, then that by mandatory injunction he be ordered to withdraw the same,' and for other and appropriate relief.

A...