The State ex rel. O'Briant v. Keokuk & Western Railroad Company

• Decision Date: 19 December 1899
• Citation: 54 S.W. 559,153 Mo. 157
• Parties: THE STATE ex rel. O'BRIANT, COLLECTOR OF REVENUE FOR SCHUYLER COUNTY, v. KEOKUK AND WESTERN RAILROAD COMPANY, Appellant
• Court: Missouri Supreme Court

54 S.W. 559

153 Mo. 157

THE STATE ex rel. O'BRIANT, COLLECTOR OF REVENUE FOR SCHUYLER COUNTY, v. KEOKUK AND WESTERN RAILROAD COMPANY, Appellant

Supreme Court of Missouri

December 19, 1899

Appeal from Schuyler Circuit Court. -- Hon. Andrew Ellison, Judge.

Affirmed.

Felix T. Hughes and Edward Higbee for appellant.

(1) Section 18, chap. 63, G. S. 1865, on the subject of railroad subscription provides that "upon the making of such subscription by any county, city or town as provided for in the previous section, such county, city or town shall thereupon become like other subscribers to such stock and entitled to the privileges granted and subjected to the liabilities imposed by this chapter." If the county could under the guise of taxation or otherwise withhold or collect back from the corporation or its property any part of the price of its stock, in so far it would be paying less for its stock than other stockholders, such a claim violates the statute and is inequitable and unjust. Rorer on Railroads, p 1500; Applegate v. Ernst, 3 Bush (Ky.) 648; Louisville & N. R. Co. v. Hopkins Co., 9 S.W. 76; Owensboro & N. R'y Co. v. Logan Co., 11 S.W. 76; Macon v. Jones, 67 Ga. 439; Murray v Charleston, 96 U.S. 432. (2) If the revenue laws of the State in force when the tax in question was levied authorize such levy, then such laws are in bad faith, violate the contract of subscription, impair the obligation of said contract and are therefore in violation of the Constitution of the United States and void. Murray v. Charleston, 96 U.S. 432; Hartman v. Greenow, 107 U.S. 769; Miller v. Wilson, 60 Ga. 505; Macon v Jones, 67 Ga. 489; Dillon on Mun. Corp. (5 Ed.), secs. 742 and 786. (3) The refunding of the original bonds created no obligation on the defendant to pay taxes levied to pay such refunding bonds. It is not claimed that either the defendant or the Missouri, Iowa and Nebraska Railway Company were in anywise parties to such refunding scheme. Therefore, as to these parties, refunding does not pay the original price of the stock. Randolph on Com. Sec., 1151 and 1571; Lipold v. Held, 58 Mo. 213; Christian v. Newberry, 61 Mo. 451; Wemer v. Peacock, 31 Mo.App. 245; Lee v. Hollister, 5 F. 752.

Fogle & French and Thomas W. Baird for respondent.

(1) As this defendant is the successor of the M., I & N. Railway Company, and as that road was not and could not be exempt from taxation under the Constitution of the State of Missouri, of 1865 and 1875, the defendant is taxable the same as other property in the State. K. & W. Railway Co. v. State, 152 U.S. 450; Atlantic & Gulf R. Co. v. Georgia, 98 U.S. 59; Maine Central R. Co. v. Maine, 96 U.S. 499; Memphis & L. R. R. Co. v. Berry, 112 U.S. 609; St. Louis, I. M. & S. R. Co. v. Berry, 113 U.S. 465; State ex rel. v. Keokuk & Western Ry. Co., 99 Mo. 30; State v. Atlantic & G. R. Co., 60 Ga. 268. (2) It is elementary law that the law of taxation, like all other law, enters into and becomes a part of a contract; that is, the contract is made subject to the power of taxation and changes thereof, otherwise why have an examination clause in a charter? State v. Railroad, 60 Mo. 143. (3) In order to exempt property from taxation, there must be a law clearly granting the exemption. State ex rel. v. K. & W. Ry. Co., 99 Mo. 30; Bank v. Billings, 4 Pet. 514; McCullaugh v. Maryland, 4 Wheat. 428; Nathan v. Louisiana, 8 How. 82; Phil. & Will. R. R. Co. v. Maryland, 10 How. 393; K. & W. R. R. Co. v. State, 152 U.S. 450. (4) The power of a sovereign government to impose taxes extends to all the persons and property belonging to the body politic, and has its foundation in the very nature of society itself. It is granted by all, for the benefit of all, and resides in the government as a part of itself. Bank v. Billings, 4 Pet. 514; Charles River Bridge v. Warner Bridge, 11 Pet. 420; Nathan v. Louisiana, 8 How. 73; State ex rel v. Shortridge, 56 Mo. 126; Hannibal & St. Joseph R. R. Co. v. State Board, 64 Mo. 294. (5) Every statute will be presumed to be constitutional until the contrary plainly appears, and it is only when it manifestly infringes some provision of the Constitution, that it can be declared void. State v. Cape Girardeau & State Line R. Co., 48 Mo. 468; Phillips v. Railroad, 86 Mo. 540; Railroad v. Shambaugh, 106 Mo. 557; Deal v. Miss. Co., 107 Mo. 464; State ex rel. v. Wofford, 121 Mo. 61; State ex rel. v. Yancey, 123 Mo. 391. (6) The exercise of the taxing power must become wanton and unjust -- be so grossly perverted as to lose the character of a legislative function -- before the judiciary will feel invited to interpose on constitutional grounds. To arrest the legislation of a free people, especially in reference to burdens self-imposed for the common good, is to restrain the popular sovereignty, and should have clear warrant in the letter of the fundamental law. Schenly v. Alleghany City, 25 Pa. St. 128; Broadhead v. Milwaukee, 19 Wis. 624; Speer v. School Directors, 50 Pa. St. 150.

Felix T. Hughes and Edward Higbee for appellant in reply.

No claim is made that the railroad company was exempt from taxation by the Legislature of the State for the general taxes; but the simple proposition is that that company can not be made to pay any portion of the subscription made by the county under section 18, chapter 63, G. S. 1865. Under this section the Legislature authorized the county to subscribe for stock in the railroad company and provided the conditions upon which subscription could be made and positively stated that upon taking such subscriptions the county would be entitled to the privileges granted and subjected to the liabilities of other stockholders. Now there is no possible way to avoid this language; either the county must pay as much for its stock as other subscribers and have the same dividends and privileges as other subscribers or else this statute has no meaning.

VALLIANT, J. Sherwood, J., is absent.

OPINION

In Banc.

VALLIANT J.

-- This is a suit for delinquent taxes assessed for the year 1894, against property of the defendant corporation in Schuyler county. The pleadings are in due form and the cause was submitted to the court upon the following agreed statement of fact:

"Upon the consent of the parties, a jury was waived and the cause submitted to the court for hearing. It was agreed in open court by both parties that this is a suit against the defendant, the Keokuk & Western Railroad Company, for taxes levied to pay interest on county bonds of said Schuyler county issued in 1892, and to pay the interest on Liberty township bonds of said county, described in this suit, issued in the same year. And it is further agreed that all the necessary steps have been legally taken for the assessment and levying of the taxes sued for, and that there is no dispute as to the amounts of the taxes sued for provided that the court shall hold that the plaintiff is legally entitled to recover the said taxes under the other facts and agreements herein made.

"It is further agreed that all the taxes herein sued for were levied to pay interest on the said township and county bonds; that said bonds were issued by said county on behalf of itself and said Liberty township for the purpose of taking up and exchanging same for other bonds which had been issued in 1871 by said county and township and delivered to the Missouri, Iowa & Nebraska Railroad Company for stock subscribed and taken in the last named railway company to aid said company to then construct its railway through said county, and said bonds were received and disposed of and the proceeds used in such construction. It is agreed all the county bonds in suit are the third issue of the original bonds issued for stock, to the Missouri, Iowa & Nebraska Railroad and are renewal and refunding bonds.

"That the railroad was constructed and completed through said county and township in about the year 1871, and was operated and remained in about the same condition until 1886, when the said railway and its franchise were purchased by this defendant, the Keokuk & Western Railroad Company, under a decree of foreclosure and sale of a mortgage placed upon the said railway and franchise by the said Missouri, Iowa & Nebraska Railway Company in the year 1870.

"That this defendant has owned and operated said railway and franchise since its said purchase in 1886, and still owns and operates the same, and that the property is practically in the same condition as when purchased.

"The foregoing stipulation was all the evidence offered or received in the cause. Whereupon the defendant prayed the court to declare the law to be as follows: "The court upon the evidence and pleadings in this case, will find for the defendant "which declaration the court refused to give, to which refusal of the declaration prayed for, the defendant, by its counsel, did then and there at the time except."

The finding and judgment were for the plaintiff for $ 1,128.81, upon which a motion for new trial followed, which was overruled, and this appeal taken. The statement of the case on behalf of the respondent contains a history of the transactions relating to the county's subscription, issuance of original and afterwards refunding bonds, foreclosure sale of the original railroad, its purchase by the defendant, etc. But appellant's counsel in their supplemental brief object to those details as no part of the record and insist that the review of the case on this appeal should be limited to the agreed statement of facts, and we will do so.

The proposition of the appellant is that the county having subscribed to the capital stock of the railroad company to assist in the construction of its road, has no right to include the railroad company's property in the assessment levied...