Phoenix Fire Marine Ins Co of Memphis v. State of Tennessee City of Memphis

• Decision Date: 02 March 1896
• Docket Number: No. 269,269
• Citation: 16 S.Ct. 471,40 L.Ed. 660,161 U.S. 174
• Parties: PHOENIX FIRE & MARINE INS. CO. OF MEMPHIS et al. v. STATE OF TENNESSEE, to Use of CITY OF MEMPHIS
• Court: U.S. Supreme Court

161 U.S. 174

16 S.Ct. 471

40 L.Ed. 660

PHOENIX FIRE & MARINE INS. CO. OF MEMPHIS et al.

v STATE OF TENNESSEE, to Use of CITY OF MEMPHIS.

No. 269.

March 2, 1896.

Bill by the state of Tennessee, for the use of the city of Memphis, against the Phoenix Fire & Marine Insurance Company of Memphis, Tenn., and John Johnson. A decree dismissing the bill was affirmed by the state supreme court (19 S. W. 1044), and defendants bring error. Affirmed.

B. M. Estes, for plaintiffs in error.

S. P. Walker, for defendant in error.

Mr. Justice PECKHAM delivered the opinion of the court.

This was a bill filed by the plaintiff below in the chancery court of Tennessee for Shelby county, in October, 1891, to recover taxes alleged to be due from the corporation plaintiff in error, or its stockholders, to the city of Memphis for the years 1888 to 1891, inclusive. The complainant's bill alleged that neither the defendant company nor its shareholders had any immunity from taxation, and that, if any such immunity existed, it could not operate to protect both the shareholders and the capital stock. Judgment was accordingly prayed in the alternative against the corporation or the stockholders, according as the taxes might be held to have been laid upon one or the other. A demurrer was interposed to the bill, which was sustained in the court below, but upon appeal to the supreme court that judgment was reversed. 91 Tenn. 566, 19 S. W. 1044. The latter court held that the charter of the company contained no immunity from taxation, and that both its shares of stock and capital stock were subject to the taxing power of the state and municipality. The case was thereupon remanded to the court below for further proceedings. It having been determined by the supreme court that the complainant, upon the allegations of the bill, was entitled to a discovery of the names and residences of the stockholders, a stipulation was entered into between the parties to avoid the necessity of the discovery, by which it was agreed that the corporation would assume any liability that might be established against the stockholders, and that a decree might be entered accordingly, and that the defendant Johnson should be made a defendant in his capacity of a stockholder and as the representative of all the others.

By its answer the defendant company claimed immunity from taxation both for itself and its shareholders, and also set up a plea of res judicata, and alleged various objections to the validity of the several assessments upon which complainant claimed taxes due to the state. The case was duly tried, and judgment for the complainant was rendered by the trial court, in which it was adjudged that by the charter neither the defendant company nor its shares of stock had any immunity from taxation, and that both were, for the years mentioned in the bill, subject to the taxing power of the state. The court decided the federal question made by the defendants below against them, and adjudged that the state tax laws set up in the record, under which the taxes were levied, were not violative of the constitution of the United States, or void, as claimed by the defendants. This judgment was, in substance, affirmed by the supreme court, and the defendants below sued out a writ of error, and the record is now here for review.

The question first arising is as to the correctness of the judgment holding that the plaintiffs in error were not entitled to any immunity from taxation either as to the capital stock or the shares of stock in the hands of stockholders. The following are the facts: The Bluff City Insurance Company of Memphis was duly incorporated by an act of the legislature of Tennessee, and by section 10 of the act of incorporation it was enacted 'that said company shall pay to the state an annual tax of one-half of one per cent. on each share of the capital stock subscribed, which shall be in lieu of all other taxes.' On the 20th day of March, 1858, the legislature of Tennessee incorporated the De Soto Insurance Company, and that charter was amended on the 30th of March, 1860; and by section 11 of that act 'all the rights, privileges and immunities' of the Bluff City Insurance Company were granted to the De Soto Insurance Company. On the 11th day of March, 1867, the legislature incorporated the Washington Fire & Marine Insurance Company of Memphis, Tenn., and by that act 'all the rights and privileges' (omitting the word 'immunities') of the De Soto Insurance Company of Memphis, Tenn., granted to it in its charter or amendments, were granted to the Washington Fire & Marine Insurance Company, above named; and by the act of the legislature approved March 28, 1881, the name of the Washington Fire & Marine Insurance Company was changed to the Phoenix Fire & Marine Insurance Company of Memphis, Tenn., being the plaintiff in error. The act of incorporation and the amendments thereto were duly accepted by plaintiff in error and its stockholders, and since that time the business of fire and marine insurance has been conducted by it in Memphis under the last corporate name.

It will thus be seen that the Bluff City Insurance Company was to pay to the state a certain annual tax on each share of capital stock subscribed, which was declared to be in lieu of all other taxes, and the question is now presented whether, by virtue of these various statutes, the plaintiff in error was granted an immunity from taxation to the same extent as that given to the Bluff City Insurance Company and to the De Soto Insurance Company. Is immunity from taxation granted to plaintiff in error under language which grants 'all the rights and privileges' of a company which has such immunity? In statutes, as is sometimes the case in legal documents, more words are occasionally used than are necessary to convey the meaning of those who passed the statute or executed the document, and it may happen that this very excess of verbiage tends to confuse, rather than to enlighten, one as to the meaning intended. The words, 'rights, privileges, and immunities,' when used in a statute of the kind under consideration, are certainly full and ample for the purpose of granting an exemption from taxation contained in the first or original statute; and when, in granting to still another company certain rights, the word 'immunities' is dropped, its absence would seem and ought to have some special significance. In granting to the Do Soto company 'all the rights, privileges, and immunities' of the Bluff City company, all words were used which could be regarded as necessary to carry the exemption from taxation possessed by the Bluff City company, while in the next following grant—that of the charter of the plaintiff in error—the word 'immunities' is omitted. Is there any meaning to be attached to that omission? And, if so, what? We think some meaning is to be attached to it. The word 'immunity' expresses more clearly and definitely an intention to include therein an exemption from taxation than does either of the other words. Exemption from taxation is more accurately described as an 'immunity' than as a 'privilege,' although it is not to be denied that the latter word may sometimes and under some circumstances include such exemption. It must always be borne in mind in construing language of this nature that the claim for exemption must be made out wholly beyond doubt, for, as stated by Mr. Justice Harlan, in Railroad Co. v. Guffey, 120 U. S. 569, 7 Sup. Ct. 693: 'It is the settled doctrine of this court that an immunity from taxation by a state will not be recognized unless granted in terms too plain to be mistaken.' See, also, Railroad Co. v. Alsbrook, 146 U. S. 279, 13 Sup. Ct. 72. In leaving out a word which, if used, would be regarded as specially and particularly including an exemption from taxation granted to another company, it seems to us that a very grave doubt is cast upon the title of plaintiff in error to the exemption claimed, and in such case the existence of a well-founded doubt is equivalent to a denial of the claim.

The learned counsel for plaintiff in error have cited many statutes of the state of Tennessee in which it is said the word 'immunities' is sometimes used where no exemption from taxation was intended, and he quotes a section from one act (Priv. Acts 1866-67, § 49, of an act, p. 155), which grants 'all the powers, privileges and immunities' of another company that had no exemption, and in another case there was granted 'all the rights, franchises and privileges' of a railroad company which had an exemption from taxation. Many other instances of a like nature are cited. The result of it is to occasion great difficulty in determining what was really intended by the legislature in these various acts. The learned counsel for plaintiff in error also state that about the time these charters in question were granted the legislature customarily expressed the purpose to tax corporations when no exemption was intended. The inference is sought to be drawn in favor of exemption, if the legislature did not affirmatively grant the right to tax. We cannot assent to any such view, and we could come to no such conclusion from an examination of the General Statutes cited by counsel. It is a complete overturning of the universal rule in regard to taxation. The power and the right to tax are always presumed, and the exemption is to be clearly granted. Mere silence is the same as a denial of exemption.

We can see nothing in the 'surrounding circumstances' which counsel claim should influence our examination and conclusion, as to the meaning of these statutes, that in any way induces the belief that an exemption was plainly intended. Our attention has not been called to circumstances which we should regard as of that nature, nor is our judicial knowledge of them sufficient in kind or degree to cause us to conclude that this exemption was intended to be granted to plaintiff in error. We do not find...