State v. Keokuk & W. R. Co.

• Citation: 99 Mo. 30,12 S.W. 290
• Court: United States State Supreme Court of Missouri
• Decision Date: 04 November 1889
• Parties: STATE ex rel. WINE, Collector, v. KEOKUK & W. R. CO.

12 S.W. 290

99 Mo. 30

STATE ex rel. WINE, Collector, v. KEOKUK & W. R. CO.

Supreme Court of Missouri.

November 4, 1889.

CORPORATIONS — CONSOLIDATION — TAXATION.

Acts Mo. 1869, p. 75, § 1, authorizes railroad companies whose lines connect with any company organized under the laws of an adjoining state to consolidate the stock, making one company of the two. Section 2 requires that the agreement be approved by the holders of a majority of the stock in each of the companies. Section 3 authorizes a new corporate name, and an exchange of the certificates of stock for stock in the new company, and requires a copy of the agreement and resolutions of consolidation to be filed with the state. Section 4 provides that the new company shall be subject to all the liabilities, and bound by all the obligations, of the company within the state, and entitled to the same franchises and privileges. Held, that the former corporation was dissolved, when consolidation was effected under the act, and a new one was formed; and since Const. Mo. 1865, art. 11, § 16, providing that no property should be exempt from taxation, with certain exceptions, not including that of railroad companies, took effect before the consolidation, the consolidated company could not avail itself within the state of an exemption granted by the charter of the former corporation before the constitutional provision was passed.

Appeal from circuit court, Scotland county; BEN. E. TURNER, Judge.

F. T. Hughes, for appellant. John M. Wood and John C. Moore, for respondent.

BLACK, J.

This is a suit in the name of the state to the use of Wine, collector of Scotland county, to enforce the payment of state, county, school, and municipal corporation taxes levied on the property of the Missouri, Iowa & Nebraska Railway Company for the tax year ending in August, 1886. The defendant corporation became the purchaser of the railroad property after the taxes were levied, and the defense is that the property was exempt from taxation while owned by the Missouri, Iowa & Nebraska Railway Company. The circuit court ruled against the defendant, and hence this appeal.

The legislature, by the act of February 9, 1856, (Acts 1856, p. 94,) incorporated the Alexandria & Bloomfield Railroad Company, with power to build a railroad from Alexandria, in Clark county, in the direction of Bloomfield, in the state of Iowa, to a point on the line between this and that state. The act provides that the construction of the road shall be commenced within 10 years after its passage, and completed within 10 years thereafter, and that "the stock of said company shall be exempt from taxation for a period of twenty years after its completion." It is alleged in the answer, and not denied, that the company was duly organized in 1864, and then commenced and proceeded to carry out its proper business and railroad operations under the act. The name of the company was changed to that of the Alexandria & Nebraska City Railroad by authority of the act of February 19, 1866, (Acts 1865-66, p. 222.) There are several sections in this act, and the fourth section provides that the whole or any section thereof shall be adopted by the board of directors, and shall be in full force from and after the adoption. It is alleged, and not denied, that the company adopted the first section, which authorized the change of name; but it does not appear that any of the other sections were adopted. The Alexandria & Nebraska City Railroad Company and the Iowa Southern Railway Company, a corporation organized under the laws of the state of Iowa, were consolidated on the 3d May, 1870, under the name of the Missouri, Iowa & Nebraska Railroad Company; thus forming one continuous line from Alexandria, on the Mississippi, in this state, to a point in the state of Iowa near Nebraska City, on the Missouri river. It was admitted upon the trial that the railroad was constructed and put in operation through Scotland county in 1871, and completed to the state line in December, 1872. It does not appear how much work had been done in this state before the consolidation. In 1886, and after the taxes in question had been levied, the entire consolidated road was sold, under a decree of foreclosure entered in the circuit court of the United States for the southern district of Iowa, to certain individuals, who conveyed it to the defendant corporation, the Keokuk & Western Railroad Company. The period of 20 years' exemption had not expired when the taxes in question were levied by the county court of Scotland county. The general question, therefore, is whether the property was exempt from taxation while owned by the consolidated company.

It was held in the case of Scotland County v. Railroad Co., 65 Mo. 123, brought to recover taxes for the year 1872, that the exemption of the stock of a corporation is an exemption of the property represented by the stock. The court then proceeds to say "That the present defendant succeeded to all the privileges and liabilities of the Alexandria & Bloomfield Company is conceded. It is insisted, however, that section 16, art. 11, of the constitution of 1865, operated to repeal the exemption contained in the defendant's charter." It was then held that the designated section of the constitution did not, and could not, destroy rights existing when it was adopted, and that the legislature did not repeal the exemption by the tax law of March, 1871. As to the question actually considered in that case, it is sufficient to say we are satisfied with what was then said and ruled. The question whether the consolidated company succeeded to the right of immunity from taxation contained in the charter of the Alexandria & Bloomfield Company was then taken for granted, on what appears to have been a concession of counsel in this court; and that question we will now consider.

The consolidation of the rights, privileges, franchises, and properties of two or more railroad companies into one, where there is no provision of the statute or constitution to the contrary, leaves the portions of the road thus formed subject to the same rules of taxation that existed before the consolidation. That portion of new line which was exempt will continue to be exempt, and that portion which was subject to taxation will continue subject to taxation. This, we think, is the result of the following cases: Railroad Co. v. Maryland, 10 How. 376; Tomlinson v. Branch, 15 Wall. 460; Banking Co. v. Georgia, 92 U. S. 665; Railroad Co. v. Virginia, 94 U. S. 718. The Alexandria & Nebraska City Railroad Company was unquestionably exempt from taxation down to the time of the consolidation, namely, 3d May, 1870; and, under the rule of the cases just cited, the new company acquired that immunity, so far as concerns the Missouri property, unless the law under which the consolidation was effected by the voluntary act of the two corporations produces a different result. The sixteenth section of article 11 of the constitution of 1865, which went into operation before the date of the act under which the consolidation took place, provides: "No property, real or personal, shall be exempt from taxation, except such as may be used exclusively for public schools, and such as may belong to the United States, to this state, to counties, or to municipal corporations within this state." The plaintiff takes the ground that, when two railroad companies are consolidated, they thereby surrender their charters, and the resultant company takes its powers and rights from the law which authorized the consolidation; in other words, that the old companies are dissolved, and that a new one springs into existence. If it be true that the Alexandria & Nebraska City Company was dissolved by the act of consolidation, and the new company took its powers from the act authorizing the consolidation, then it must follow that the new company is not exempt from taxation; for the legislature had been deprived of the power to grant such immunity. Whether the old companies were dissolved must depend upon the terms and provisions of the act of March 2, 1869, (Acts 1869, p. 75,) under which the consolidation took place; and we therefore set out the important portions of it. Section 1 provides "that any railroad company, organized under the general or special laws of this state, whose track shall, at the line of the state, connect with the track of the railroad of any company organized under the general or special laws of any adjoining state, is hereby authorized to make and enter into any agreement with such connecting company for the consolidation of the stock of the respective companies whose tracks shall be so connected, making one company of the two, whose stock shall be so consolidated, upon such terms and conditions and stipulations as may be mutually agreed between them, in accordance with the laws of the adjoining states in which the road is located, with which connection is thus formed." By section 2, the terms and provisions of the agreement must be approved by the holders of a majority of the stock in each of the companies at a meeting called for that purpose, or by writing signed by them. Section 3 provides: After the terms of the consolidation have been agreed to in one or the other of the modes above set forth, "it shall be competent for the boards of directors in each of said connecting companies to carry the same into effect, and adopt by a resolution a new corporate name...