Legislative immunity from taxation is a personal privilege, not
transferable, and not to be extended beyond the immediate grantee
unless otherwise so declared in express terms.
Immunity from taxation does not pass to the purchaser at a sale
of "the property and franchises of a railroad corporation" to
enforce a statutory lien.
Morgan v. Louisiana,
93 U. S. 217, on
this point affirmed.
Although a grant of immunity from taxation by a legislature to a
corporation has sometimes been held to be a privilege which may be
transferred, the later and better opinion is that unless other
provisions remove all doubt of the intention of the legislature to
include the immunity in the term "privileges," it will not be so
construed.
The property of the East Tennessee, Virginia and Georgia
Railroad Company, situated in the State of Tennessee, is not exempt
from taxation under the laws of that state.
The case is stated in the opinion of the Court.
Page 130 U. S. 638
MR. JUSTICE FIELD delivered the opinion of the Court.
This is a suit to enjoin the collection of certain taxes for the
years 1883 and 1884, assessed by the Board of Railroad Tax
Assessors of Tennessee against the property of the complainant, the
East Tennessee, Virginia and Georgia Railroad Company. The property
formerly belonged to the Cincinnati, Cumberland Gap, and Charleston
Railroad Company, and the claim asserted by the bill is that the
property, while held by that company, was exempt from taxation, and
that such exemption has accompanied it in its transfer to the
complainant. That company was incorporated by an act of the
Legislature of Tennessee, passed November 18, 1853. Among other
things, the act provided that whenever the company should have
completed its road from Cumberland Gap to the East Tennessee and
Virginia Railroad, or to the southern boundary line of the state,
it should "have all the rights and privileges" conferred by its
charter for a period of 99 years. Acts Tenn. 1853-1854, c. 301, §
6. It also declared that the company should be vested, except as
otherwise provided by its charter, with "all the rights, powers,
and privileges, and subject to all the restrictions and
liabilities, of the Nashville and Louisville Railroad Company." An
act was passed by the Legislature of Tennessee on the 9th of
February, 1850, to incorporate a company under this last name,
which, among other things, declared
"That the capital stock in the said company, the dividends
thereon, and the roads and fixtures, depots, workshops, warehouses,
and vehicles of transportation belonging to the said company, shall
be forever exempt from taxation in each and every of the said
States of Tennessee and Kentucky, and it shall not be lawful for
either of the said states, or any corporate
Page 130 U. S. 639
or municipal, police or other authority thereof, or of any town,
city, county, or district thereof, to impose any tax on such stock
or dividends, property or estate."
Acts Tenn. 1849-1850, c. 76, § 40.
It does not appear that any organization of this company was
ever perfected. It is stated by counsel that none ever took place,
and it would seem that such was the conclusion of this Court in
Goodlett v. Louisville Railroad, 122 U.
S. 391,
122 U. S.
406.
Assuming, however, that its organization was perfected, its
rights, powers, and privileges were subject to the restrictions
specified in the act, and one of these was that the act should
"become a law whenever the State of Kentucky may enact the same for
the same purpose, with such modifications and amendments" as she
may deem right, not in consistent with its provisions. By this
restriction we understand that the act was not to take effect until
reenacted by Kentucky, with such modifications as she might suggest
not inconsistent with it. It is conceded that Kentucky never passed
any such act as here mentioned. We are of opinion, therefore, that
we may properly omit from consideration the Act of February 9,
1850, to incorporate the Nashville and Louisville Railroad Company,
and the attempt to invest the Cincinnati, Cumberland Gap, and
Charleston Railroad Company with its "rights, powers, and
privileges." If this construction be correct, the Nashville and
Louisville Railroad Company never acquired under that act any
rights, powers, or privileges, those designated in its charter
being subject to restrictions, which were not complied with, and
therefore whatever right the Cincinnati, Cumberland Gap, and
Charleston Company possessed to have its property exempted from
taxation must be found independently of the provision referring to
and granting the exemption contained in the charter of the
Nashville and Louisville Railroad Company. There is no such
exemption from taxation in its own charter. It is, however,
contended that provisions in an act of the legislature of the
state, chartering the Lexington and Knoxville Railroad Company,
passed on the 22d of December, 1853, had the effect of extending
such exemption to
Page 130 U. S. 640
the property of the Cincinnati, Cumberland Gap, and Charleston
Railroad Company, inasmuch as it invests that company with the
"rights, powers, and privileges . . . of the East Tennessee and
Virginia Railroad Company." Statutes of Tenn. 1853-1854, c. 325, §
6. The act incorporating this last company declared that its
capital stock should be forever exempt from taxation and that its
road, "with all its fixtures and appurtenances, including
workshops, warehouses, and vehicles of transportation," should be
exempt from taxation for the period of twenty years from the
completion of its road, and no longer, and that the road should be
commenced within five years after the passage of the act, and be
finished within ten years thereafter; otherwise the charter should
be void. Statutes of Tenn. 1847-1848, c. 120, §§ 30, 31.
The answer avers that the road has never been completed, and no
proof was offered to refute this averment. The burden of proof to
show the completion was upon the complainant, for until then the
exemption claimed could have no existence, even while the property
remained in the possession of the Cincinnati, Cumberland Gap, and
Charleston Railroad Company.
Assuming, however, that we are mistaken in the construction
given as to the effect of the provisions in the charters of the two
companies, the Nashville and Louisville Railroad Company and the
East Tennessee and Virginia Railroad Company, and that the
references to those companies are to be construed as embodying all
"the rights, powers, and privileges" which it was intended the
Nashville and Louisville Railroad Company should possess if the act
creating its charter had been reenacted by Kentucky, and which it
was intended the East Tennessee and Virginia Railroad Company
should possess after the completion of its road, our conclusion
upon the questions involved would not be affected. It is conceded
that the property of the company passed upon sales and conveyances
made under a decree rendered in a suit against the company,
commenced by the State of Tennessee, to parties who have since
conveyed the same to the complainant. That suit was brought to
enforce a statutory lien reserved by the state as
Page 130 U. S. 641
security for the loan of her bonds issued to the company, and
the sale made under the decree, and confirmed, was of the "property
and franchises" of the railroad company.
By this sale and the conveyance which followed, immunity from
taxation did not pass. Such immunity is not in itself transferable.
It has been held, and the doctrine has been so often repeated that
it is no longer an open question, that the legislature of a state
may exempt the property of particular persons or corporations from
taxation either for a limited period or perpetually, but, to
justify the conclusion that such exemption is granted, it must
appear by language so clear and unmistakable as to leave no doubt
of the purpose of the legislature. The power of taxation is one of
the highest attributes of sovereignty, and the suspension of its
exercise as to any persons of property is not a matter to be
presumed or inferred. It must be declared, or it will not be deemed
to exist. If the legislature can lay aside a power devolved upon it
for the good of the whole people of the state, for the benefit of a
private party, it must speak in such unmistakable terms that they
will not admit of any reasonable construction consistent with the
reservation of the power.
The Delaware Railroad
Tax, 18 Wall. 206,
85 U. S.
225.
Yielding to the doctrine that immunity from taxation may be
granted, that point being already adjudged, it must be considered
as a personal privilege not extending beyond the immediate grantee
unless otherwise so declared in express terms. The same
considerations which call for clear and unambiguous language to
justify the conclusion that immunity from taxation has been granted
in any instance must require similar distinctness of expression
before the immunity will be extended to others than the original
grantee. It will not pass merely by a conveyance of the property
and franchises of a railroad company, although such company may
hold its property exempt from taxation. As we said in
Morgan v.
Louisiana, 93 U. S. 217,
93 U. S.
223:
"The franchises of a railroad corporation are rights or
privileges which are essential to the operations of the
corporation, and without which its road and works would be of
little value, such as the franchise to run cars, to
Page 130 U. S. 642
take tolls, to appropriate earth and gravel for the bed of its
road, or water for its engines, and the like. They are positive
rights or privileges without the possession of which the road of
the company could not be successfully worked. Immunity from
taxation is not one of them. The former may be conveyed to a
purchaser of the road as part of the property of the company; the
latter is personal, and incapable of transfer without express
statutory direction."
It is true there are some cases where the term "privileges" has
been held to include immunity from taxation, but that has generally
been where other provisions of the act have given such meaning to
it. The later, and we think, the better opinion is that unless
other provisions remove all doubt of the intention of the
legislature to include the immunity in the term "privileges," it
will not be so construed. It can have its full force by confining
it to other grants to the corporation.
The case of
Railroad Company v. County of Hamblen,
102 U. S. 273,
was, with the exception of one particular, substantially like the
one before us. The claim of exemption founded upon the Act of
December 22, 1853, referring to the charter of the East Tennessee
and Virginia Railroad Company, was not there relied upon. Reliance
was, however, placed upon the act chartering the Nashville and
Louisville Railroad Company as exempting the property of the
Cincinnati, Cumberland Gap, and Charleston Railroad Company from
taxation. The Court held that immunity from taxation did not pass
to the purchaser upon the sale of the property under the decree
rendered in the suit brought by state against the company.
The decree below must therefore be
Reversed, and the cause remanded, with directions to dismiss
the bill, and it is so ordered.