Tennessee v. Whitworth
117 U.S. 139 (1886)

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U.S. Supreme Court

Tennessee v. Whitworth, 117 U.S. 139 (1886)

Tennessee v. Whitworth

Argued January 22, 1886

Decided March 1, 1886

117 U.S. 139

Syllabus

The right to have shares in its capital stock exempt from taxation within the state is conferred upon a railroad corporation by state statutes granting to it "all the rights, powers, and privileges" or granting it "all the powers

Page 117 U. S. 140

and privileges" conferred upon another corporation named if the latter corporation possesses by law such right of exemption, and there is nothing in the provision of Art. XI, Sec. 7, of the Tennessee Constitution of 1834 to change this general rule when applied to a statute of that state.

A state statute enacted that a railroad company should "for its government be entitled to all the powers and privileges, and be subject to all the restrictions and liabilities imposed" upon another railroad company. Held that the words "for its government" implied for its regulation and control.

When two railroad corporations whose shares are by a state statute exempt from taxation within the state, and a third company created under the laws of another state and whose road is in the latter state consolidate into a new company and issue shares in the new company in exchange for shares in the old company, the right of exemption from taxation in the first state passes into the new shares and into each of them unless a law of the first state makes provision to the contrary.

This, like the case between the same parties just decided, ante,117 U. S. 129, is a suit in mandamus brought by the State of Tennessee to require the trustee and tax collector of Davidson County to assess for taxation the shares of the capital stock of a railroad company, and the only question not already disposed of is whether the Nashville and Decatur Railroad Company has the same charter contract for the exemption of its capital stock from taxation as the Nashville and Chattanooga Railroad Company. The facts are these:

The Tennessee and Alabama Railroad Company was incorporated by the Legislature of Tennessee on the 23d of January, 1852, to build a railroad from Nashville, by the way of Franklin, to the line between Tennessee and Alabama in the direction of Florence, Alabama. This company was granted by its charter "all the rights, powers, and privileges," and subjected "to all the liabilities and restrictions, conferred and imposed upon the charter of the Nashville and Chattanooga Railroad Company." The Central Southern Railroad Company was incorporated by the Legislature of Tennessee on the 30th of November, 1853, to build a railroad from a point of intersection with the Tennessee and Alabama Railroad at Columbia, by way of Pulaski, to the Alabama state line, in the direction of Athens and Decatur, Alabama, to connect with any railroad that might be

Page 117 U. S. 141

constructed from Decatur to the state line in the direction of Pulaski. This company also was given "all the powers and privileges," and subjected to "all the restrictions and liabilities, prescribed in the charter of the Nashville and Chattanooga Railroad Company."

The Tennessee and Alabama Central Railroad Company was incorporated by the Legislature of Alabama on the 19th of December, 1853, to build a railroad from Montevideo, Alabama, in a northeasterly direction through Decatur to some point on the boundary between Alabama and Tennessee to connect with a railroad leading through Pulaski to Columbia, Tennessee. This company was by its charter authorized

"to unite and consolidate into one road all or such part of the said road with any railroad that may connect with the said Tennessee and Alabama Central Railroad at the Tennessee line."

Each of these corporations completed its railroad in accordance with the requirements of its charter, and on the 19th of April, 1866, the Legislature of Tennessee passed another act, Acts Tenn. 18651866, pp. 217, 220, §§ 5, 6, 9, and 10 of which are as follows:

"SEC. 5. Be it further enacted that for the purpose of uniting and consolidating the Tennessee and Alabama Railroad Company and the Central Southern Railroad Company into one, the directors of said companies be, and they are hereby, authorized to agree upon the terms thereof and to adopt all necessary and proper measures, agreements, and obligations to effect the same, provided said terms of consolidation, when perfected by the directors of said companies, shall be submitted to a vote of the stockholders of said companies, and if assented to by a majority of the stockholders, the same shall be binding upon said companies, and that thereafter, and upon official report thereof to the president of the respective companies and the comptroller of the state, said consolidated and united companies shall be known and styled the 'Nashville and Decatur Railroad Company,' by which name it shall sue and be sued, and be entitled to all the rights and privileges, and be subject to all the liabilities and restrictions, of a body corporate. "

Page 117 U. S. 142

"SEC. 6. Be it further enacted that the said Nashville and Decatur Railroad shall, for its government, be entitled to all the rights and privileges and subject to all the restrictions and liabilities conferred and imposed upon the Nashville and Chattanooga Railroad Company, provided that no state aid is intended to be extended to said Nashville and Decatur Railroad, and provided further that no new liability to the state of Tennessee is intended to be imposed hereby upon said Tennessee and Alabama Railroad Company and the Central Southern Railroad Company."

"Sec. 9. Be it further enacted that the Tennessee and Alabama Railroad and the Central Southern Railroad, thus consolidated, may, through their directors thus elected, be consolidated with the Alabama and Tennessee Central Railroad upon such terms as may be agreed upon between them, and approved by the stockholders of said roads, to be hereafter known as the 'Nashville and Decatur Railroad,' such terms not to be in conflict in any wise with those herein contained, but may be supplementary or in addition thereto, provided the consolidation herein provided for be approved by act of the Legislature of the state of Alabama, heretofore or hereafter passed, and said railroad, thus consolidated, may, by their stockholders, regularly convened, upon thirty days' notice in the newspapers of Nashville and Huntsville, elect directors to serve them for the term of twelve months, and until their successors shall be elected."

"SEC. 10. Be it further enacted that the capital stock of said united companies shall be the aggregate amount of their respective charters, with the addition thereto of ____ dollars, and that this act shall take effect from and after its passage."

Under the authority of this act and of section 22 of the act to incorporate the Tennessee and Alabama Central Company, the three companies were "united and consolidated under the style of the Nashville and Decatur Railroad" upon the terms indicated in the following resolution confirmed at a convention of the stockholders:

"Resolved that under the authority delegated to the executive committee by the respective stockholders of the Tennessee and Alabama, Central Southern, and Tennessee and Alabama Central Railroad Companies, the committee have agreed that the capital stock of each company shall represent the value of its road, and that therefore each of the companies herein mentioned shall surrender to the Nashville and Decatur Railroad Company all of its rights, franchises, and property, the Nashville and Decatur Railroad Company assuming to pay all debts owing by the several companies, and being hereby especially pledged to protect all persons who have made themselves individually liable for the debts of any of the several companies, and that the stockholders of each company shall be entitled to, and receive credit for, the same amount of stock in the Nashville and Decatur Railroad Company that they own in any of the several companies, these constituting and comprising the whole basis of settlement."

This union was afterwards confirmed and declared valid by the Legislatures of Tennessee and Alabama. The capital stock of the Nashville and Decatur Company is the aggregate of the stock of all three of the original companies. Upon these facts, the circuit court held that the shares of the capital stock of the Nashville and Decatur Company were exempt from taxation, and gave judgment accordingly. To reverse that judgment, this writ of error was brought.

Page 117 U. S. 145

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