State v. Union Ry. Co.

Decision Date01 June 1914
Citation168 S.W. 575
PartiesSTATE et al. v. UNION RY. CO.
CourtTennessee Supreme Court

Appeal from Chancery Court, Shelby County; Julian C. Wilson, Special Chancellor.

Suit by the State of Tennessee and another against the Union Railway Company. From a decree for complainants, defendant appeals. Reversed in part, and affirmed in part.

J. W. Canada and Prather McDonald, both of Memphis, for appellant. Barton & Barton and D. B. Newsom, all of Memphis, for the State.

NEIL, C. J.

This bill was filed on the 28th of September, 1911, to recover of the defendant, as a railroad terminal corporation, the privilege taxes fixed by the Legislature on business of that kind for the years 1905 to 1911, inclusive. The chancellor rendered a decree in favor of the state for a total of taxes and penalties, $5,462.50, and in favor of the county for $4,750 taxes, and $712.50 penalty, and for the costs of the cause. From this decree, the defendant has appealed and assigned errors.

It is insisted in behalf of the defendant that it was chartered, not as a railroad terminal company, but as a commercial railway, and such is the fact. It is further insisted that this court, in the consolidated cases of Collier v. Union Railway Co. and State ex rel. Wellford v. Union Railway Co., 113 Tenn. 96, 83 S. W. 155, considered the business it was doing in connection with the terms of the regular form of charter prescribed for commercial railways under which the defendant was chartered and organized, and held that the work it was engaged in fell within the terms of the charter of such commercial railway. It is therefore urged that it is not guilty of exercising privileges not conferred by its charter, and conferred only by the charter of railroad terminal corporations.

State ex rel. Wellford v. Union Railway Co. was a quo warranto proceeding under which it was insisted that the Union Railway Company had no lawful right to exercise the functions it was exercising under the charter of a commercial railway company, and it was sought to forfeit the charter because of these ultra vires acts. Collier v. Union Railway Co. was a case in which the complainant asked an injunction against the railway company's condemnation of certain of the complainant's lands for right of way; the ground of objection being that its business was such that it had no right to condemn lands for the purposes of a commercial railway company. Both cases resulted in an affirmation of the decree of the trial court in favor of the railway company.

The road, as described in the opinion referred to, was a belt line, beginning and ending at the same point in the city of Memphis, running around the city in an irregular circle or loop, throwing out here and there spurs and feed lines for the purpose of connecting with the various railroads entering the city of Memphis, and also with the numerous industries that are located in that city.

It was stated in the opinion that the bulk of the business of the road would consist in the transfer of loaded and empty cars from one railroad to another, and from the various industries to the several lines of road centering the city of Memphis and back again; but at the same time, by its charter, it was obligated to do a general railroad business, both as to freight and passengers. The court said:

"In the present case it is shown by the principal officers of the road that it is the purpose of the company to switch cars from one road to another, to receive freight on the line of its road, and give bills of lading over its own and other roads to any part of the world — in other words, to perform all of the functions of an ordinary road. We think, therefore, that it is clearly established both by the charter and parol evidence that the road is intended to subserve a public use, to confer a public benefit, to meet a public necessity; in short, to do any and everything that is required of an ordinary public commercial railroad."

Again the court said:

"The fact that its principal and most important business is the transfer of loaded and empty cars from one point to another does not make it any the less a commercial railroad under the provisions of the general law. The fact that a railroad running through a coal section does most of its business in the hauling of coal does not make it any the less a commercial road such as is contemplated by the general statutes. The fact that passengers may rarely, if ever, pass over the line does not deprive it of its character as a railroad. The fact that it may run in a direction or through localities where passengers do not desire to go does not deprive it of its status as a railroad. The fact that its main business is freight business, and a business in bulk, does not make it the less a public use."

The evidence in the present case shows that defendant has failed in actual conduct to answer, in some respects, the description given of its anticipated activities. It does not perform any of the functions of an ordinary commercial railway, except in the matter of conveying freight from one industry to another situated on its line or lines. It does not transfer cars in the sense that commercial railroads do when they accept cars from a connecting line, and deliver on their own line, and return to the company from which they were received. It does no passenger business, nor does it issue any bills of lading in its freight business, but only orders to its trainmen showing where cars are to be taken up or delivered. It does not participate in a division of through rates with the railway companies it serves, but exacts a fixed charge prescribed by ordinances of the city; and its dealings are wholly with the railroads, and are not at all with the shippers, except in conveying freight from one industry in the city to another. But the court held in the cases referred to, to which the state was a party, that although the bulk of its business was to consist "in the transfer of loaded and empty cars from one railroad to another, and from the various industries to the several lines of road centering in the city of Memphis and back again," it was nevertheless a commercial railroad, because by its charter it was obligated to do a general railroad business both as to freight and passengers, and that its charter rights were not subject to forfeiture because of the nature of the bulk of its business above referred to, and that it might condemn property as a commercial railway. Whether that decision be sound or not, it is bootless to inquire with a view to the settlement of the present controversy. Vested rights of a very important nature are based on it, and are entitled to protection. Therefore, whether we view the case from the standpoint of res adjudicata, specially pleaded by the defendant, or on the broader ground of the necessity of standing by decisions in respect of rights based on them, although the decisions may have been originally erroneous (a subject discussed at length in Wilkins v. Railroad, 110 Tenn. 422, 452-461, 75 S. W. 1026), so much of the bill must be dismissed as is rested on the fact that the defendant transacts the bulk of its business in the manner already stated.

We are of the opinion, however, that a different result must be held to follow under a contract which the Union Railway Company entered into with the Iron Mountain Railroad Company of Memphis and the St. Louis, Iron Mountain & Southern Railway Company on October 1, 1909.

Under that contract the Union Railway Company leased from the two railroads mentioned their terminal facilities, consisting of sundry tracks in the city of Memphis, also a roundhouse, repair shops, a turntable, and freight and passenger depots. In return for the lease the Union Railway Company, in addition to keeping down certain fixed charges on the property, contracted to do the terminal business of the second named company, and also of an associated company, the St. Louis Southwestern Railroad Company. It agreed that it would provide and maintain a connection of its tracks with those of the Kansas City & Memphis Railway & Bridge Company, the bridge of which company had to be used by the St. Louis, Iron Mountain & Southern Railway Company to get into Memphis from the Arkansas side; that it would provide adequate terminal tracks, depots, or other facilities in the city of Memphis, and would perform all services that from time to time should be required during the full term of the contract to promptly and satisfactorily receive and forward the passenger and freight trains of the said railway company, and of the St. Louis Southwestern Railroad Company handled by the first-mentioned company; that upon the delivery of the trains of the said St. Louis, Iron Mountain & Southern Railway Company, called for brevity's sake in the contract the Iron Mountain Company, within the city of Memphis upon the tracks of the said Union Railway Company, designated by it for receiving said trains, the latter would promptly take possession thereof and switch and deliver the cars therein to their respective destinations within the Memphis switching district, including the delivery of cars destined to connecting lines; that it would promptly receive from connecting lines cars destined for forwarding via the Iron Mountain Company, or by the St. Louis Southwestern Railway Company, and would classify and assemble said cars into trains with such cars as might be made ready for forwarding upon the tracks of the said Union Railway Company, and those leased or operated by it; that the cars should be assembled into trains in such manner as the Iron Mountain Company should from time to time direct; that when so assembled the trains should be forwarded to a connection with the tracks of the Kansas City & Memphis Railway & Bridge Company with the locomotives and train crews of the Iron Mountain Company at such time and in such manner as the Iron Mountain Company should direct; that it would...

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