William Wright v. Louisville Nashville Railroad Company

• Decision Date: 22 March 1915
• Docket Number: No. 162,162
• Citation: 35 S.Ct. 475,59 L.Ed. 788,236 U.S. 687
• Parties: WILLIAM A. WRIGHT, Comptroller General of the State of Georgia, Petitioner, v. LOUISVILLE & NASHVILLE RAILROAD COMPANY and Atlantic Coast Line Company
• Court: U.S. Supreme Court

236 U.S. 687

35 S.Ct. 475

59 L.Ed. 788

WILLIAM A. WRIGHT, Comptroller General of the State of Georgia, Petitioner,

v LOUISVILLE & NASHVILLE RAILROAD COMPANY and Atlantic Coast Line Company.

No. 162.

Argued January 29, 1915.

Decided March 22, 1915.

Messrs. Samuel H. Sibley, John C. Hart, and Mr. T. S. Felder, Attorney General of Georgia for petitioner.

Messrs. Alexander C. King and Joseph B. Cumming for respondents and cross petitioners.

Mr. Justice Holmes delivered the opinion of the court:

This is a bill brought by the railroad companies, respondents, to prevent the collection of a tax upon the Georgia Railroad, operated by them under a lease and assessed to them as their property. The district court made a decree for the plaintiffs with certain exceptions, which was affirmed on appeal and cross appeal by the circuit court of appeals for the reasons given by the district court. 199 Fed. 454; 119 C. C. A. 282, 201 Fed. 1023.

The main question is similar to that disposed of in Wright v. Central of Georgia R. Co. just decided [236 U. S. 674, 59 L. ed. , 35 Sup. Ct. Rep. 471].

By its charter granted on December 21, 1833, the stock of the company and its branches is subject only to a 'tax not exceeding one-half 1 per cent per annum on the net proceeds of their investments.' § 15. This language is interpreted and held to constitute a binding contract in Wright v. Georgia R. & Bkg. Co. 216 U. S. 420, 54 L. ed. 544, 30 Sup. Ct. Rep. 242. So it is admitted that the present tax could not be levied on the lessor. By § 12 of the same charter the company is authorized to 'rent or farm out all or any part of their exclusive right of transportation or conveyance of persons, on the railroad or railroads, with the privilege to any individual or individuals, or other company, and for such term as may be agreed upon.' So the state has covenanted that the company's property shall be exempt from tax except upon its income, which it is authorized to make in any of three ways. And as bearing on the different uses of the company's franchise that were deemed possible in that day, as we remarked in the other case, we may add that by § 13, if any persons intrude upon the railroad by any manner of use thereof, they shall forfeit to the company all the vehicles and animals that may be so intrustively introduced and used; that by § 14 the company, if it sees fit to farm out any part of its exclusive right, may prescribe the value and size of vehicles to be used or pass on its road, and the locomotive power; and that by § 22, the company, if it prefers, instead of railroads, may construct common roads and use steam carriages thereon.

The plaintiffs are operating the roads in question under a lease made to one Wadley, to whose rights they have succeeded. Georgia R. & Bkg. Co. v. Maddox, 116 Ga. 64, 42 S. E. 315. This instrument purported, in the language quoted above from § 12 of the charter, to 'rent and farm out' the privileges and roads of the lessor for a term of ninety-nine years from April 1, 1881. For the reasons given in the other case we cannot believe that if the company saw fit to gain 'the net proceeds of their investments' (to 1/2 of 1 per cent of which their tax was limited) by letting the whole road instead of allowing others to introduce carriages, the statute silently opened the right to resume as against the lessee all that had been renounced as against the lessor. If the fee of the roads is taxable to no one while the liability of the lessor to the above-mentioned 1/2 of 1 per cent remains, an attempt to collect a tax upon the fee from the plaintiffs is an attempt on the part of the state to tax the leased property which was completely beyond the reach of its taxing power except in so far as...