Tomlinson v. Jessup - 82 U.S. 454 (1872)
U.S. Supreme Court
Tomlinson v. Jessup, 82 U.S. 15 Wall. 454 454 (1872)
Tomlinson v. Jessup
82 U.S. (15 Wall.) 454
1. The Northeastern Railroad Company was incorporated by the Legislature of the State of South Carolina in 1851 for fifty years, and the usual powers of railroad companies were granted to it. At that time, a general law of the state was in existence, passed in 1841, which enacted that the charter of every corporation subsequently granted, and any renewal, amendment, or modification thereof, should be subject to amendment, alteration, or repeal by legislative authority unless the act granting the charter or the renewal, amendment, or modification in express terms excepted it from the operation of that law. In 1855 the legislature passed an amendment to the charter of the company, providing that its stock and the real estate it then owned or might thereafter acquire connected with or subservient to the works authorized by its charter should be exempt from taxation during the continuance of the charter. This act contained no clause excepting the amendment from the provisions of the general law of 1841. In 1868, the constitution of the state was adopted, which requires that the property of corporations then existing or thereafter created, shall be subject to taxation except in certain cases not affecting this case. The subsequent legislation of this state carried out this requirement and provided for the taxation of the property of railroad companies, and under it the property of the Northeastern Railroad Company was taxed. Held that the taxation was legal and constitutional; that the power reserved to the state by the law of 1841 authorized any change in the contract created by the charter between the corporators and the state, as it originally existed or as subsequently modified, or its entire revocation.
2. The object of the reservation was to prevent a grant of corporate rights and privileges in a form which would preclude legislative interference with their exercise if the public interests should at any time require such interference, and to preserve to the state control over its contract with the corporators, which would otherwise be irrepealable and protected from any measures affecting its obligation.
3. Immunity from taxation, constituting a part of the contract between the government and the corporators or stockholders, was, by the reservation of power contained in the law of 1841, subject to be revoked equally with any other provision of the charter whenever the legislature might deem it expedient for the public interest that the revocation should be made. The reservation affected the entire relation between the state and the corporation and placed under legislative control all rights, privileges, and immunities derived by its charter directly from the state.
Jessup, of New York, and owner of a number of shares
in the Northeastern Railroad Company, a corporation created in 1851 by the State of South Carolina, filed a bill in the court below against Tomlinson and others, officers of the State of South Carolina, to enjoin them from levying a tax on the property of the road.
The question was whether the property was liable to taxation under the legislation of the state.
The act incorporating the company contained a grant of the usual powers of railroad companies, and the charter was for the term of fifty years. At the time of its passage, the 41st section of an Act of the General Assembly passed in December, 1841, was in force, as follows:
"It shall become part of the charter of every corporation, which shall, at the present or any succeeding session of the General Assembly receive a grant of a charter or any renewal, amendment, or modification thereof (unless the act granting such charter, renewal, amendment, or modification shall, in express terms, except it) that every charter or incorporation granted, renewed, or modified as aforesaid, shall at all times remain subject to amendment, alteration, or repeal, by the legislative authority. [Footnote 1]"
The act of incorporation did not except the charter of the company from the operation of this section. The company received extensions of their powers and privileges at various times subsequently, but in no case did the amendatory acts except the company from the operation of that section. [Footnote 2]
By an Act passed December 19, 1855, entitled "An Act to amend the charter of the Northeastern Railroad Company, and for other purposes," it was enacted as follows:
"That the stock of the said company, and the real estate that it now owns or may hereafter acquire, which is connected with or subservient to the works authorized in the charter of the said company, shall be, and the same is hereby exempted from all taxation during the continuance of the present charter of the said company. [Footnote 3] "
This latter act did not except in terms the charter of the company from the provisions of the 41st section of the act of 1841, above recited.
The present Constitution of South Carolina was adopted in 1868, and article 9, section 1, is as follows:
"The General Assembly shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation for taxation of all property, real, personal, and possessory, except mines and mining claims, the proceeds of which alone shall be taxed, and also exempting such property as may be exempted by law for municipal, educational, literary, scientific, religious, or charitable purposes."
Article 12, section 2, is as follows:
"The property of corporations now existing or hereafter created, shall be subject to taxation, except in cases otherwise provided for in this constitution."
On the 15th of September, 1868, the General Assembly passed an act entitled "An Act providing for the assessment and taxation of property," the first section of which declares
"That all real and personal property in this state, and personal property of residents of the state, which may be kept or used temporarily out of this state, with the intention of bringing the same into the state, or which has been sent out of the state for sale and not yet sold; all moneys, credits, investments, in bonds, stocks, joint stock companies or otherwise, of parties resident in this state, shall be subject to taxation. [Footnote 4]"
Subsequent acts provided specially for the taxation of the property of railroad companies, under which the officers of the state were proceeding to assess and tax the property of the Northeastern Railroad Company, when the present bill was filed.
The court below granted an injunction, at first temporary and then final, and from the final injunction the officers of the state appealed.