Railroad Company v. Loftin

• Decision Date: 01 October 1881
• Citation: 105 U.S. 258,26 L.Ed. 1042
• Parties: RAILROAD COMPANY v. LOFTIN
• Court: U.S. Supreme Court

105 U.S. 258

105 U.S. 258

26 L.Ed. 1042

RAILROAD COMPANY v. LOFTIN.

October Term, 1881

ERROR to the Supreme Court of the State of Arkansas.

The facts are stated in the opinion of the court.

Mr. William Y. C. Humes for the plaintiff in error.

Mr. Augustus H. Garland, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

This was a suit in equity, brought by the Memphis & St. Louis Railroad Company in the Circuit Court of Jackson County, Arkansas, to restrain the collection of taxes imposed under the authority of the State upon certain lands in that county owned by the company. The Supreme Court of the State affirmed the decree of the Circuit Court dismissing the bill on demurrer. The complainant thereupon sued out this writ of error.

Two questions are presented for our consideration:——

1. Whether the State by imposing the tax has impaired the obligation of a contract in the charter exempting the capital stock of the company from taxation; and 2. Whether it has impaired the obligation of a contract made with the purchasers of its swamp and overflowed lands for exemption from taxation.

1. As to the charter.

The section of the charter relied on is as follows:——

'SECT. 21. The capital stock of said company, with all the immunities and franchises herein specified, and all machinery, cars, engines, or carriages, belonging to said company, together with all their works and property, and all profits which shall arise from the same, shall be vested in the respective stockholders forever, in proportion to their respective shares; and the capital stock of said company, and the dividends, shall be exempted from taxation until a dividend of six per cent is realized upon the capital stock, and the road, with all its fixtures, and appurtenances, including workshops, warehouses, and vehicles of transportation, shall be exempted from taxation for the period of twenty-five years from the completion of the road, and no tax shall ever be levied on said road or its fixtures which will reduce its dividends below ten per cent per annum. Said stockholders shall not be bound or liable for any greater amount than the respective shares of stock which they or either of them own.'

The averment in the complaint to bring the lands in question under this exemption is in the following words:——

'And that the said lands were acquired by the plaintiff and are now held by it for the purpose of raising money to build said road, and that it is a part of the property of said company, fully represented by its capital stock and not otherwise, and that said road has not as yet been completed, and that no dividend has as yet been realized on said capital stock, or any part thereof.'

In Railway Company v. Loftin (98 U. S. 559), in passing upon a provision of the charter of the Mississippi Valley Railroad Company, substantially like the section here relied on, this court held that the exemption did not extend to lands granted by the State to the company to aid in the construction of its railroad. Such lands, it was then said, were used in lieu of capital, and to the extent they could be made available relieved the company from the necessity of raising money through stock subscriptions. Like the court below, we are unable to distinguish the case made by this complaint from that. The only material averment of fact in this connection is that the lands in question are held by the company for the purpose of raising money to build its road. This is entirely consistent with their use in lieu of capital. It is true the complaint alleges that the lands are fully represented by the capital stock, but that is only as a legal conclusion from what was stated before. The facts showing why the lands represented the capital must be set forth. Those which have been stated are not enough, and consequently the legal conclusion...