Reagan v. Mercantile Trust Co

• Decision Date: 26 May 1894
• Docket Number: No. 1,167,1,167
• Citation: 38 L.Ed. 1028,14 S.Ct. 1060,154 U.S. 413
• Parties: REAGAN et al. v. MERCANTILE TRUST CO. et al
• Court: U.S. Supreme Court

154 U.S. 413

14 S.Ct. 1060

38 L.Ed. 1028

REAGAN et al.

v MERCANTILE TRUST CO. et al.

No. 1,167.

May 26, 1894.

C. A. Culberson, Atty. Gen. Texas, Henry C. Coke, and W. S. Simkins, for appellants.

John F. Dillon, E. B. Kruttschnitt, Henry B. Turner, John J. McCook, Winslow S. Pierce, Geo. R. Peck, and J. W. Terry, for appellees.

Mr. Justice BREWER delivered the opinion of the court.

The case is similar to that just decided, in which the same parties were appellants, and the Farmers' Loan & Trust Company and the International & Great Northern Railroad Company appellees. 14 Sup. Ct. 1047. It was commenced by the Mercantile Trust Company in the same court against the appellants and the Texas & Pacific Railway Company, with like purpose,—to restrain the enforcement of the railroad commission act,—and with like result. The Mercantile Trust Company was trustee in a deed of trust executed by the Texas & Pacific Railway Company to secure an issue of bonds, and, as a citizen of New York, invoked the jurisdiction of the federal court.

There are some matters of difference between the two cases which call for special notice. The Texas & Pacific Railway is a corporation organized under the laws of the United States (16 Stat. 573); and by reason of that fact it is earnestly insisted by counsel for it and the trust company that it is not subject to the control of the state, even as to rates for transportation wholly within the state. The argument is that it receives all its franchises from congress; that among those franchises is the right to charge and collect tolls; and that the state has not the power, therefore, in any manner, to limit or qualify such franchise. This is an important question, and deserves consideration, even though, in respect to other matters, the facts should present a case exactly parallel to that just decided, and calling for a like decision, because, if the state has no control in the matter, the decree should not be affirmed in part, but in toto.

We are of the opinion that the contention of the railway and trust companies cannot be sustained, and that the reasoning in the cases of Thomson v. Railroad Co., 9 Wall. 579, and Railroad Co. v. Peniston, 18 Wall. 5, 36, leads to this conclusion.

In the first of those cases these facts appeared: The Union Pacific Railway Company (Eastern Division), a corporation created by the legislature of Kansas, received government aid in bonds and land, and, thus aided, constructed its road, to become one link in the transcontinental line known as the Union Pacific System. After its construction, the legislature of Kansas having enacted a law laying certain taxes upon its property, a bill was filed to restrain the collection of those taxes, on the ground that the property of the company was mortgaged to the United States, and that it, under the congressional grant, was bound to perform certain duties, and ultimately pay 5 per cent. of its net earnings to the United States,—an obligation which would be greatly hindered if the taxes imposed should be collected. But this contention was not sustained, and while it was said by the chief justice, delivering the opinion of the court, that congress had the power to provide an exemption from state taxation in such a case, there was no exemption in the absence of legislation to that effect. This decision was followed by that in the other case, in which a like exemption was sought of the property belonging to the Union Pacific Railroad Company,—a corporation created, like the Texas & Pacific Railway Company, by an act of congress, and also, like the Kansas company, aided by the government in lands and bonds,—but here, too, by a majority of the court, the claim of exemption was denied. Mr. Justice Strong, in delivering the opinion of the court, said:

'It is therefore manifest that exemption of federal agencies from state taxation is dependent, not upon the nature of the agents, or upon the mode of their constitution, or upon the...