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
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
After stating the facts as above reported, he continued:
The question whether the capital stock of the Nashville and
Decatur Company is entitled to the same exemption as that of the
Nashville and Chattanooga Company depends 1, on whether the grant
to the Tennessee and Alabama Company of "all the rights, powers and
privileges," and to the Central Southern Company of "all the powers
and privileges," of the Nashville and Chattanooga Company, carried
with it to the new company the exemption from taxation provided for
in section 38 of the Nashville and Chattanooga charter, and, if it
did, 2, whether the Nashville and Decatur Company and its
stockholders are entitled to the same exemptions as the original
Tennessee corporations and their stockholders had.
As early as 1850, before either the charter of the Tennessee and
Alabama Company or that of the Central Southern Company was
granted, this court said in
Philadelphia, Wilmington
& Baltimore Railroad Co. v. Maryland, 10 How.
394,
51 U. S. 393,
speaking by Mr. Chief Justice Taney, that a statute which
authorized the union of two railroad companies and secured to the
united company the "property, rights, and privileges which that law
or other laws conferred on them [the separate companies], or either
of them," extended to the united company an exemption from taxation
in the charter of one of the uniting companies, and this although
it was at the same time said that "the taxing power of a state is
never presumed to be relinquished unless the intention to
relinquish is declared in clear and unambiguous terms." This has
been expressly reaffirmed in
Tomlinson v.
Branch, 15 Wall. 460;
Humphrey
v. Pegues, 16 Wall. 244;
Southwestern Railroad
v. Georgia, 92 U. S. 676, and
the correctness of the decision was recognized in
Central
Railroad & Banking Co. v. Georgia, 92 U. S.
665;
Morgan v. Louisiana, 93 U. S.
217;
Railroad Companies v. Gaines, 97 U.
S. 711;
Railroad Companies v. Georgia,
98 U. S. 360;
Railroad Co. v. Hamblen, 102 U. S. 277;
Railroad Co. v. Commissioners, 103 U. S.
1,
103 U. S. 4;
Wilson v. Gaines, 103
U. S. 417;
Louisville & Nashville Railroad
Co.
Page 117 U. S. 146
v. Palmes, 109 U. S. 244,
109 U. S. 253,
and
Chesapeake & Ohio Railroad Co. v. Miller,
114 U. S. 176,
114 U. S.
185.
From this it is clear that under the settled rule of decision in
this Court, the exemption from taxation which was one of the
"rights and privileges" of the Nashville and Chattanooga Company
formed part of the charters of the Tennessee and Alabama Company
and the Central Southern Company unless a different rule is to be
applied in Tennessee because of a supposed limitation on the
popular meaning of the words "rights," "powers," and "privileges"
when used in statutes on account of a peculiar provision of the
constitution of that state. That constitutional provision is as
follows:
"The legislature shall have no power . . . to pass any law
granting to any individual or individuals rights, privileges,
immunities, or exemptions other than such as may be by the same law
extended to any member of the community who may be able to bring
himself within the provisions of such law,
provided always
that the legislature shall have power to grant such charters of
corporations as they may deem expedient for the public good."
Constitution 1834, Art. XI, sec. 7.
In view of this the Supreme Court of Tennessee decided in
effect, at its December term, 1877, in
Wilson v. Gaines, 9
Baxter 546, that as the state in its constitution used in the same
connection all the words "rights," "privileges," "immunities," and
"exemptions," each of these words must be given in statutory
interpretation a meaning so limited as not to include anything
expressed by the others, and that when any one of them is found in
a statute the legislature must be conclusively presumed to have
used it in this restricted sense. To this we are unable to agree.
As has already been seen, the word "privilege," in its ordinary
meaning when used in this connection, includes an exemption from
taxation. This Court so decided a year before the charter of the
Tennessee and Alabama Company was granted, and nearly three years
before that of the Central Southern. In fact, the Supreme Court of
Tennessee does not seem to doubt that such would be its meaning but
for the constitution, for in the opinion it is said:
"However comprehensive a meaning may have been given the word
'privilege' by
Page 117 U. S. 147
the courts of other states or by lexicographers, we are
constrained to use it in the restricted sense and meaning given it
by our laws and the constitution of the state. . . . A legislature
acting under this constitution for its powers, and as defining its
duties, must be conclusively presumed to have used a word or term
of the constitution in the sense and with the meaning given it by
that constitution."
We see nothing in the constitution which gives to the word
"right," or "privilege," or "immunity," or "exemption" any
different meaning than that which it has among the people at large.
There may be, and probably are, some "immunities" and some
"exemptions" which would not be considered as either "rights" or
"privileges" in the popular acceptation of those terms. It was to
reach such immunities and such exemptions, as it seems to us, that
this particular form of expression was used in the constitution,
and not to provide that under no circumstances should the word
"privilege" in a statute of Tennessee by held to include a
privilege of exemption from taxation. Words in a constitution, as
well as words in a statute, are always to be given the meaning they
have in common use unless there are very strong reasons to the
contrary. We find no such reasons in this case, and as an exemption
from taxation is a privilege in the popular sense of that term, we
feel ourselves compelled to decide that both the Tennessee and
Alabama Company and the Central Southern Company were granted such
an exemption by their charters, notwithstanding the contrary
opinion of the Supreme Court of Tennessee, which, although entitled
to great respect, is not binding upon us as authority under the
circumstances of this case.
It only remains to consider whether the Nashville and Decatur
Company is entitled to the same exemption. When two railroad
companies unite or become consolidated under the authority of law,
the presumption is, until the contrary appears, that the united or
consolidated company has all the powers and privileges, and is
subject to all the restrictions and liabilities, of those out of
which it was created.
Tomlinson v.
Branch, 15 Wall. 460;
Branch v.
Charleston, 92 U. S. 682;
County of Scotland v. Thomas, 94 U.
S. 690;
Railroad Co. v.
Maine,
Page 117 U. S. 148
96 U. S. 512;
Green County v. Conness, 109 U. S. 104.
From this it follows that as the capital stock of both the original
Tennessee corporations was exempt from taxation, the capital stock
of the united or consolidated company, formed by the simple
aggregation of that of the two old ones, is also exempt unless it
has been provided to the contrary. Is there, then, anything in the
statute authorizing the union which rebuts this presumption? We
think there is not. The language relied on to show the contrary
intention is this:
"That the said Nashville and Decatur Railroad shall, for its
government, be entitled to all the powers and privileges, and be
subject to all the restrictions and liabilities, conferred and
imposed upon the Nashville and Chattanooga Railroad Company."
This is the exact language of the corresponding provision in the
charter of the Tennessee and Alabama Company, one of the original
companies, save only that the words "for its government" have been
added. As we hold that this was sufficient to exempt the capital
stock of the original companies from taxation, it follows that the
new company is also exempt unless the added words were intended as
a limitation upon the effect of the others.
The rule is imperative that a relinquishment of the taxing power
is never to be presumed.
Vicksburg, Shreveport & Pacific
Railroad Dennis, 116 U. S. 665.
Under this rule, it was held in
Railroad Companies v.
Gaines, 97 U. S. 711,
that the capital stock of the Knoxville and Charleston Railroad
Company was not exempt from taxation, although by its charter that
company was (p.
97 U. S.
702)
"invested, for the purpose of making and using said road, with
all the powers, rights, and privileges, and subject to all the
disabilities and restrictions, that have been conferred and imposed
upon the Nashville and Chattanooga Railroad Company,"
because (p.
97 U. S.
712)
"the grant was not of all the rights and privileges of the
Nashville and Chattanooga Company, but of such as were necessary
for the purpose of making and using the road, or, in other words,
the franchises of the company which do not include immunity from
taxation."
To the same effect is
Railroad Co. v. Commissioners,
103 U. S. 1, where
the Annapolis and Elk Ridge
Page 117 U. S. 149
Railroad Company was "invested with all the rights and powers
necessary for the construction and repair" of its railroad, and for
that purpose was to have and use all the powers and privileges, and
be subject to all the obligations, contained in the enumerated
sections of the Baltimore and Ohio charter. This, we held,
"was not a grant of all the powers and privileges of the
Baltimore and Ohio Company, . . . but only of such as were
necessary to carry into effect the objects for which the new
company was incorporated,"
or, in other words, "such as were necessary to the construction
and repair and use of its railroad," and this did not include the
privilege of exemption from taxation.
In all this class of cases, the question is one of legislative
intent, with a presumption against an intent to grant an exemption
from taxation. Here there is no charter of a new corporation with
power to build a new railroad. No new taxable property is created.
The legislation contemplates nothing more than the making of one
railroad corporation out of the two old ones, each of which has a
completed railroad and the privilege of an exemption of its capital
stock from taxation. If nothing at all had been said about the
powers and privileges of the new corporation, the presumption would
have been that it took all which were possessed by the two original
companies at the time of their union. To rebut this presumption, it
is necessary that a contrary intention should appear. The question
is not as to a grant of new powers, but as to the taking away of
old ones.
Such being the case, we cannot believe that the phrase "for its
government" in the consolidating act was intended as a limitation
on the powers and privileges of the new corporation. The natural
meaning of the word "government" in such a connection is regulation
and control, and we think it was used in that sense here. In
reality, it neither adds to nor takes from the force of the other
words, and simply implies that the new corporation shall have the
same charter rights and privileges, and be subject to the same
charter restrictions and liabilities, as the Nashville and
Chattanooga Company. Such were the charters of the old companies,
and such was intended to be the
Page 117 U. S. 150
charter of the new; no more, no less. As was said in the court
below,
"the government of the corporation embraces every part of the
conduct and business of the company in all its relations to the
state, to the general public, to individuals, to its own
stockholders,"
and consequently the grant of powers and privileges for its
government was in reality the grant of the powers and privileges of
its corporate entity.
The fact that the Tennessee and Alabama Central Company was,
under the authority of the consolidating statute, brought into the
consolidated company does not, in our opinion, alter the case in
any material respect. No new taxable property was in fact brought
into Tennessee in this way. While it added to the amount of the
capital stock of the consolidated company, it was only because of
capital actually invested before the consolidation in the Alabama
railroad, and, taking the whole statute together, it is apparent to
us that the legislature intended to give the new corporation in
Tennessee all the powers and privileges, including exemption from
taxation, which the old corporations were entitled to. In fact we
do not understand it is claimed that the rights of the parties in
respect to the present question are changed because the two
original Tennessee companies, after their union, were consolidated
with the Alabama corporation.
We conclude therefore that the capital stock of the Nashville
and Decatur Company is exempt from taxation in Tennessee, and
consequently, for the reasons stated in the other case, that the
shares cannot be assessed. The judgment of the court below to that
effect is
Affirmed.
