Bailey v. Magwire - 89 U.S. 215 (1874)
U.S. Supreme Court
Bailey v. Magwire, 89 U.S. 22 Wall. 215 215 (1874)
Bailey v. Magwire
89 U.S. (22 Wall.) 215
1. A claim of exemption from county and municipal taxation cannot be supported, any more than a claim from state taxation, except upon language so strong as that, fairly interpreted, no room is left for controversy. No presumption can be made in favor of the exemption, and if there be reasonable doubt, the doubt is to be solved in favor of the state.
2. The fact that in an act amending the charter of a railroad corporation, special provision is made for ascertaining the taxes to become due by the corporation to the state (nothing being stiid about the manner of ascertaining other taxes), is not of itself enough to work an exemption of the property of the corporation from all taxation not levied for state purposes. Silence in regard to such other taxes cannot be construed as a waiver of the right of the state to levy them. There must be something said affirmatively and which is explicit enough to show clearly that the legislature intended to relieve the corporation from this part of the burdens borne by other real and personal property before such an act shall amount to a contract not to levy them.
3. A provision in such an act prescribing a mode for ascertaining the tax due the state, by which provision the president of the company is required to furnish to the auditor of the state a statement under oath of the actual cash value of the property to be taxed, on which the company is directed to pay the tax due the state, within a certain time, to the treasurer under penalties does not amount to a contract that the state will not pass any law to assess the property of the company for taxation for state purposes in a different manner.
4. But if a particular mode has been prescribed for assessing the property of a particular company, that mode should be followed until in some way a different mode is prescribed.
5. Whether or not an act prescribing such particular mode has been impliedly repealed by a general revenue act not in terms repealing it is a matter peculiarly within the province of the highest courts of the state, whose acts are the subjects of the question, to decide. And when such courts have decided the question, their decision is controlling.
Bailey and others, foreign stockholders, in the Pacific Railroad Company, a corporation existing and organized under different special acts of the State of Missouri, filed a bill in the court below against a certain Magwire, collector of state, county, school, and city taxes for the county and city of St. Louis, Missouri, to enjoin his collection of such taxes assessed for the year 1869, on the said railroad company under the general tax law of the state, the ground of the application being that by acts of the Missouri Legislature governing the said railroad company, and which acts, as the company asserted, made a contract with it, the company:
1st. Was not liable for any county, school, or city taxes at all.
2d. Was not liable for state taxes under the act in virtue of which they had been assessed, but was liable for them only under another act -- a special act relating to itself and prescribing a manner for assessment &c., different from the manner which had here been followed.
The case was thus:
The charter of the Pacific Railroad Company was granted in 1849, and counties, cities, and towns along its line were authorized to subscribe to it, but it contained no provision exempting its property from taxation. [Footnote 1]
By an act of 1851, amendatory of the charter, [Footnote 2] it was enacted that the capital stock, together with all their works
and other property, and all profits which should arise from the same should be vested in the respective shareholders of the company forever, in proportion to their respective shares, and that the same should be deemed personal estate and be exempt from all public charge or tax whatsoever, for the term of five years from the passage of the act. This exemption, of course, would have expired in 1856.
At the time of the passage of this act, as before and since, there existed in Missouri, under its public statutes, a general scheme of taxation of all property in the state; this scheme embracing all property of corporations over and above their capital stock, as well as the property of citizens in the counties where it was situated.
In this state of things, the exemption given by the Act of 1851 not having yet expired, the Legislature of Missouri, on the 25th of December, 1852, passed another act amendatory of the charter. This act lent its credit to the company by issuing to it state bonds to the amount of $1,000,000, to be used after the expenditure of a like sum raised from other sources, and it gave to the company a large body of lands which Congress had given to the state.
By a twelfth section, it made the following enactment as to taxation:
"SECTION 12. The said Pacific Railroad shall be exempt from taxation until the same shall be completed, opened, and in operation, and shall declare a dividend, when the roadbed, buildings, machinery, engines, cars, and other property of such completed road, at the actual cash value thereof, shall be subject to taxation at the rate assessed by the state on other real and personal property of like value."
"And for the purpose of ascertaining the value of the same, it shall be the duty of the president of said company, on the first day of February in each year after such road is completed, opened, and put in operation and declares a dividend, to furnish to the auditor of the state a statement under his oath, of the actual value of the roadbed, buildings, machinery, engines, cars, and other property appertaining to such completed road, and from said statement, the auditor shall charge said company with
the amount appearing to be due to the state, according to the statement furnished by the president of the company."
"And in case said company shall fail to pay into the state treasury, within thirty days after the first day of December in each year, the amount charged against said company as aforesaid, said company shall forfeit and pay to the State of Missouri, in addition to the sum with which said company may stand charged by the auditor, ten percent per month, after the expiration of said thirty days, on the amount charged to said company, which sum charged against said company, together with the ten percent per month hereinbefore specified, may be recovered in the name of the State of Missouri by civil action in any court of competent jurisdiction, and should the president of said company fail to make out and furnish to the auditor of the state a statement as herein required, said company shall forfeit and pay to the state $10,000 for such failure, which may be recovered in the name of the State of Missouri in any court of competent jurisdiction."
"Provided that if said company shall fail for the period of two years after said roads respectively shall be completed and put in operation to declare a dividend, then the said company shall no longer be exempt from the payment of the said tax, nor from the forfeitures and penalties in this section imposed."
This act of 1852 was accepted by the company, and the rights given by the Act of 1851 were thus surrendered.
The road was completed in April, 1866, and after April, 1868, and in each year since that time -- the company not having yet made any dividend -- the president of the company made returns of its taxable property in the manner required by the twelfth section of the Act of 1852, but not in any other manner.
At the time when the road was completed, $3,614,500 of stock had been subscribed, of which $2,500,000 had been subscribed by the counties and towns along the line of it.
In 1866, the Legislature of Missouri passed an act relating to the collection of revenue generally throughout the state. The mode prescribed for ascertaining the value of property of corporations generally was different from that prescribed by the twelfth section of the Act of 1852 for ascertaining
the value of the property of the Pacific Railroad. But the Act of 1866 did not in terms nor by any plain implication repeal the twelfth section of the Act of 1852. Whether it did so by any kind of implication was a question that came before the Supreme Court of Missouri, A.D. 1873, in Pacific Railroad Company v. Cass County, [Footnote 3] in which case the court decided that the Act of 1866 did not repeal the said twelfth section in any way.
In August, 1871, this decision not then having been made by the said supreme court, the assessors for St. Louis County, acting under the provisions of the Act of 1866, assessed a tax for state, county, school, and city purposes on the property of the Pacific Railroad Company, and seized upon its property, advertising it for sale. Thereupon the present bill was filed, by which various foreign stockholders in the company -- the company itself declining to act, and remaining passive -- sought to enjoin the collection of the tax.
Its positions, of course, were:
1st. That the twelfth section of the Act of 1852, respecting the taxation of the road, was and remained a contract between the State of Missouri and the railroad company; that it specifically provided for the whole subject of the taxation of the road, and that in virtue of it, the general revenue laws of the state were not intended to and did not apply to this particular company.
2d. That the said section accordingly exempted the company from taxation for county, school, and all other purposes except those mentioned in it.
3d. That if this were not all so, thus broadly stated, and if the section were not a contract as to all taxes, and did not, as such contract, furnish the only authority and rule by which this particular company was to be taxed, yet that, until repealed, it was the law governing the subject of taxation for state purposes; that, as was shown by the decision in Pacific Railroad Company v. Cass County, it had never yet been repealed, and therefore that certainly, as
to the taxes for state purposes, the collector was to be enjoined.
The positions of the collector, on the other hand, were:
1st. That after the time limited in the twelfth section -- that is to say, as things turned out, after April, 1868 -- the property of the railroad company became subject to taxation, as any other property in the state, to state, county, municipal, and school taxation, and through any mode which the legislature of the state might see fit to prescribe.
2d. That the provisions of the said twelfth section constituted no contract in favor of the company as against the right of the state (after the time had elapsed during which the company was to be exempt from taxation) to provide by law for the taxation of the property of the company in any manner it should see fit, and for the general purposes for which any other property in the state was subjected to taxation, and finally,
3d. That in point of fact the said twelfth section had been repealed, impliedly, by the general purpose of the Act of 1866, so that even as to taxation for state purposes, it no longer applied.
The court below sustained the defendant in everything excepting as to city taxes (which, for reasons not necessary here to be stated, it deemed illegally laid), decreeing, of course, that the defendant might lawfully collect not only the county and school taxes, as he proposed to do, but also, in the same way, the state taxes. The bill to enjoin him from so doing was accordingly dismissed, and from the decree dismissing it this appeal was taken.
It may be well enough to mention that in a case which was in effect one between these same parties, and lately before this Court, it had been decided that the twelfth section of the Act of 1852 created a contract between the parties exempting the railroad from taxation until it was completed and for two years afterwards if it did not pay a dividend before the expiration of these two years. [Footnote 4]