State of Tennessee v. Whitworth
Decision Date | 01 March 1886 |
Citation | 117 U.S. 129,6 S.Ct. 645,29 L.Ed. 830 |
Parties | STATE OF TENNESSEE v. WHITWORTH, Trustee, etc. 1 Filed |
Court | U.S. Supreme Court |
This is a suit in mandamus, brought by the state of Tennessee, in the circuit court of Davidson county, against George K. Whitworth, the trustee and tax collector of that county, to require him to assess for taxation the shares of stock in the Nashville, Chattanooga & St. Louis Railroad Company. After the suit had been begun in the state court it was removed by Whitworth to the circuit court of the United States for the Middle district of Tennessee, under the act of March 3, 1875, c. 137, (18 St. 470,) on the ground that the suit was one arising under the constitution of the United States.
The case is as follows: The Nashville & Chattanooga Railroad Company, now, by consolidation with the Nashville & Northwestern Railroad Company and a change of name, the Nashville, Chattanooga & St. Louis Railroad Company, was incorporated by the legislature of Tennessee, December 11, 1845, to build and operate a railroad. Section 38 of its charter is in these words:
The act incorporating the Nashville & Northwestern Railroad Company contained a provision identical with this.
The question is whether this provision has the effect of a contract by the state for the exemption from taxation in Tennessee of the shares of the capital stock of the corporation. The capital stock was by the charter divided into shares of $25 each, to be subscribed for on books opened for that purpose. It was also provided that as soon as the requisite number of shares had been subscribed 'the Nashville & Chattanooga Railroad Company shall be regarded as formed,' and 'the said subscribers to the stock shall form a body politic and corporate in deed and in law, by the name and for the purpose' specified. Fifty cents on each share was to be paid in money at the time of subscribing. Sections 9, 12, 15, 16, and 17 are as follows:
notice be given of such call in at least one public newspaper of the state in which any of the stockholders may reside; and a failure to pay, or secure to be paid according to the rules of the company, any of the installments so called, as aforesaid, shall induce a forfeiture of the share or shares on which default shall be so made, and all payments thereon, and the same shall vest in and belong to the company, and may be restored to the owner or owners by the board of directors, if they deem proper, on the payment of all arrears on such shares, and legal interest thereon; or the directors may waive the forfeiture after thirty days' default, and sue the stockholders for the installments due, at their discretion.
On the twenty-first of January, 1848, but before the corporation was organized by the election of directors, the charter was amended as follows:
The circuit court was of opinion that the shares of stock were by the charter exempt from taxation, and gave judgment accordingly. To reverse that judgment this writ of error was brought.
S. Watson, J. B. Heiskell, and Jas. M. Head, for plaintiff in error.
[Argument of Counsel from pages 133-135 intentionally omitted] E. H. East, for defendant in error.
It is apparent from the charter that the subscribers of shares and those claiming under them were to be the holders of the stock of the corporation, and that the money paid into the treasury upon subscriptions was to be used by the corporation in building and equipping its railroad. In this way the capital of the corporation was to be converted into the railroad and its appurtenances. A tax upon the railroad, therefore, after its completion, is necessarily a tax upon the capital, because, practically, the capital and that into which it has been converted are the same. The railroad of the...
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