1. A party who, under proceedings to enforce the statutory lien
of the State of Tennessee, purchases a railroad does not acquire
therewith the immunity from taxation thereon which the railroad
company possessed.
2. Where the case stands on demurrer to his bill, which prays
that the collection of taxes on the property be restrained, and
avers that the sale was under those proceedings, this Court will
not, in the absence of a particular allegation to the contrary,
presume that the sale embraced anything not covered by that
lien.
3.
Morgan v. Louisiana, 93 U. S.
217, cited and approved.
The facts are stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This was a bill in equity filed in the Chancery Court of
Nashville, Tenn., to enjoin the collection of taxes upon that part
of the railroad of the St. Louis and Southwestern Railway Company
which was originally owned by the Edgefield and Kentucky Railroad
Company. The facts are these:
On the 11th of December, 1845, the General Assembly of
Page 103 U. S. 418
Tennessee chartered the Nashville and Chattanooga Railroad
Company for the purpose of building a railroad from Nashville to
Chattanooga. The thirty-eighth section of that charter is as
follows:
"The capital stock of said company shall be forever exempt from
taxation, and the road, with all its fixtures and appurtenances,
including workshops, warehouses, and vehicles of transportation,
shall be exempt from taxation for the period of twenty years from
the completion of the road, and no longer."
On the 1st of January, 1852, the Nashville and Southern Railroad
Company was incorporated to construct another line of road, and was
to
"have all the rights, powers, and privileges, and be subject to
all the liabilities and restrictions, prescribed in the charter of
the Nashville and Chattanooga Railroad Company,"
with a single exception, which is unimportant for any of the
purposes of this case.
On the 13th of February, 1852, the Edgefield and Kentucky
Railroad Company was incorporated to build a road from Nashville to
the Kentucky State line, with the following as the sixth section of
its charter:
"That the company hereby incorporated is invested, for the
purpose of making and using said road, with all the powers, rights,
and privileges, and subject to all the liabilities and
restrictions, that are conferred and imposed on the Nashville and
Chattanooga Railroad Company by an act passed on the 11th of
December, 1845, so far as the same are not inconsistent with the
provisions of this act."
By an act of the general assembly of the state passed Feb. 11,
1852, entitled "An Act to establish a system of internal
improvement in this State," the governor was authorized to issue
under circumstances therein mentioned to certain railroad companies
the bonds of the state for the purpose of aiding in the completion
of their respective roads; and it was further provided that upon
such issue and the completion of the road, the state should
"be invested with a lien, without a deed from the company, upon
the entire road, including the stock, right of way, grading,
bridges, masonry, iron rails, spikes, chairs, and the whole
superstructure and equipments, and all the property
Page 103 U. S. 419
owned by the company as incident to, or necessary for, its
business, and all depots and depot stations, for the payment of all
said bonds issued to said company as provided in this act, and for
the interest accruing on said bonds."
Acts of 1851-52, c. 151, secs. 1, 4, pp. 204-206. On the 8th of
February, 1854, the privileges of this act were extended to the
Edgefield and Kentucky Railroad Company. Acts of 1853-54, c. 131,
sec. 1, p. 205.
Afterwards, on the 15th of December, 1855, the charter of the
Edgefield and Kentucky company was amended, and the following is
sec. 2 of that amendment:
"That the said company shall be entitled to all the rights and
privileges that were conferred upon the Nashville and Southern
Railroad Company, by an act of the General Assembly of the state of
Tennessee, passed Jan. 1, 1852, entitled 'An Act to charter the
Nashville and Southern Railroad Company.'"
The company availed itself of the privileges of the internal
improvement act, and subjected its property to the statutory lien
therein provided for.
Default having been made by many of the railroad companies in
meeting their obligations for the bonds of the state issued to
them, several attempts were made to enforce the liens on some of
the roads without success, and on the 22d of December, 1870, the
legislature passed an act, sections 1 and 10 of which are as
follows:
"SEC. 1. That a bill shall be immediately filed in the chancery
court at Nashville in the name and behalf of the state, to which
all the delinquent companies, the respective stockholders, holders
of the bonds, creditors, and all persons interested in the said
several roads, shall be made parties defendant, and shall be
brought before the court in the mode prescribed by the rules of
practice in chancery established in the state, except as otherwise
herein provided. And said court is hereby invested with exclusive
jurisdiction to hear, adjudicate, and determine all questions of
law and matters of controversy of whatever nature, whether of law
or of fact, that have arisen or that may arise touching the rights
and interest of the state, and also of the stockholders,
bondholders, creditors, and others in said roads; and to make all
such rules, orders, and decrees, interlocutory and final, as may be
deemed necessary in
Page 103 U. S. 420
order to a final and proper adjustment of the rights of all the
parties, preliminary to a sale of the interest of the state in said
road. Also to declare the exact amount of indebtedness of each of
said companies to the state, and likewise to define, as may be
thought proper, what shall be the rights, duties, and liabilities
of a purchaser of the state's interest in said roads, or either of
them, and what shall be the reserved rights of said companies,
stockholders, and others respectively, as against said purchasers
after such sale, under the existing laws of this state."
"SEC. 10. That upon the sale of any of the franchises of either
of the railroad companies by the commissioners under the provisions
of this act, all the rights, privileges, and immunities
appertaining to the franchise so sold under its act of
incorporation and the amendments thereto, and the general
improvement law of the state and acts amendatory thereof, shall be
transferred to and vest in such purchaser, and the purchaser shall
hold said franchise subject to all liens and liabilities in favor
of the state, as now provided by law against the railroad
companies."
The Edgefield and Kentucky company was one of the companies in
default, and it is averred in the present bill that,
"under a bill filed to foreclose the state's statutory lien upon
the road and superstructure, equipments and stock, and the property
owner by the company as incident to or necessary for its business,
&c., . . . the road, its franchises, property, rights,
privileges, immunities, &c., were sold,"
and the St. Louis and Southwestern company by sundry mesne
conveyances was invested with the title. It is now contended that
under these circumstances, the road of the Edgefield and Kentucky
company, in the hands of the St. Louis and Southwestern, is exempt
from taxation until the expiration of twenty years from its
completion. The supreme court of the state dismissed the bill,
holding that the exemption from taxation which was granted to the
Nashville and Chattanooga company was not one of the privileges of
that company which passed to the Edgefield and Kentucky company,
either by its original or amended charter. To reverse that decree,
the case has been brought here by writ of error.
In the view we take of this case, it is unnecessary to determine
the question on which the decision seems to have turned in
Page 103 U. S. 421
the court below, for, as we think, it has not been shown that if
the property in the hands of the original company was exempt from
taxation, that exemption passed to the purchasers at the sale to
foreclose the state's statutory lien under which the complainant
claims. In
Morgan v. Louisiana, 93 U. S.
217, we distinctly held that immunity from taxation was
a personal privilege and not transferable, except with the consent
or under the authority of the legislature which granted the
exemption, or some succeeding legislature, and that such an
exemption does not necessarily attach to or run with the property
after it passes from the owner in whose favor the exemption was
granted. In that case, the property in the hands of the original
company was exempt from taxation. The company mortgaged its
property and franchises, and under that mortgage the property and
franchises were sold, pursuant to the terms of a judicial decree;
but we held that by such a sale only such franchises passed as were
necessary to the operation of the company, and without which its
road and works would be of little value, and that consequently the
property in the hands of the purchasers was subject to
taxation.
In the present case, the lien of the state was put by the
statute only on the property of the company. It did not even in
express terms include the franchises which were necessary to the
operation of the road. Under such circumstances, if there were
nothing more, it would seem to be clear beyond all question that a
sale under the lien would not necessarily carry with it any
immunity from taxation which the property enjoyed in the hands of
the original company.
But it is contended that, as the case stands on demurrer to a
bill which contains the distinct averment that "the road, its
franchises, property, rights, privileges, immunities," &c.,
were sold, it must be assumed as an admitted fact that any immunity
from taxation which the old company had, passed to the purchasers
and their grantees. This averment must be taken in connection with
the further equally distinct statement in the bill that the sale
took place under proceedings instituted in the Chancery Count of
Nashville "to foreclose the state's statutory lien," and as that
lien was confined to the "property owned by the company, or
incident to, or necessary for, its
Page 103 U. S. 422
business," we will not, in the absence of a particular and
positive allegation to the contrary, presume that more was sold
that the lien covered. Mere general words of description are not
sufficient to extent a sale beyond the subject matter of the lien,
as defined by the statute which lies at the foundation of the
entire proceeding.
We are told that a contrary doctrine is established by the case
of
The Knoxville and Ohio Railroad Company v. Hicks,
decided by the Supreme Court of Tennessee at the September Term,
1877, and not yet reported, so far as we are advised, in any of the
volumes of the regular series of the reports of the court. We do
not so understand that case. There it was "distinctly adjudged," by
the Chancery Court of Nashville in the proceedings to enforce the
statutory lien under which the sale was made,
"that not only the property of the old company, but all its
rights, franchises, privileges, and immunities, as defined by the
charter and laws, and the decree in the cause, passed to and vested
in the new company,"
which was the purchaser. Nothing of the kind is found in this
case. It is nowhere stated that the decree of the court was, but
only what was sold; and inasmuch as the jurisdiction of the court
was, by the terms of the act of 1870, expressly confined to an
adjudication of matters of controversy "touching the rights and
interest of the state, and also of stockholders, bondholders,
creditors, and others in said roads," and to defining
"what shall be the rights, duties, and liabilities of a
purchaser of the state's interest in said roads, . . . and what
shall be the reserved rights of said companies, stockholders, and
others respectively, as against such purchasers after such sale,
under the existing laws of the state,"
it would be against all the settled rules of construction to
hold, upon the face of the statute alone, that more was sold than
the lien to be adjudicated upon implied.
We are all of opinion, therefore, without deciding whether the
property in the hands of the Edgefield and Kentucky Company was
exempt, that the decree below dismissing the bill should be
affirmed, and it is
So ordered.