The general rule that a valid grant to a corporation, by a
statute of a state, of the right of exemption from state taxation,
given without reservation of the right of appeal, is a contract
between the state and the corporation protected by the Constitution
of the United States against state legislative impairment is not
qualified by
Henderson Bridge Co. v. Henderson City,
141 U. S. 679, nor
by
St. Paul, Minneapolis &c. Railway v. Todd County,
142 U. S. 282.
The surrender of the power of taxation by a state cannot be left
to inference or conceded in the presence of doubt, and when the
language used admits of reasonable contention, the conclusion is
inevitable in favor of the reservation of the power.
The exemption from taxation conferred upon the Wilmington &
Raleigh Railroad Company by the Act of January 3, 1834,
incorporating it, was not conferred by that act upon the branch
roads which the company was thereby authorized to construct.
Exemption from taxation may or may not be a "privilege" within
the sense in which that word is used in a statute, and in the act
of North Carolina referred to, the word "privileges" does not
include such exemption.
The portion of the Wilmington and Weldon Railroad which lies
between Halifax and Weldon, having been constructed by the Halifax
& Weldon Railroad Company, and not under the charter of the
Wilmington & Raleigh Railroad Company, is not exempt from state
taxation.
The proceedings in
Wilmington Railroad v.
Reid, 13 Wall. 264, and in the same case in the
state courts of North Carolina, do not operate as an estoppel so
far as the road from Halifax to Weldon is concerned, nor as
controlling authority in the premises.
Page 146 U. S. 280
This was an action brought in the superior court of Halifax
county, North Carolina, by the Wilmington and Weldon Railroad
Company to restrain the sheriff of that county from collecting
certain taxes assessed on so much of a branch road of the plaintiff
known as the "Scotland Neck Branch" as lay therein, and on that
part of the plaintiff's road which formerly constituted the Halifax
and Weldon Railroad, and the rolling stock used with said roads.
The plaintiff was incorporated under an Act of the General Assembly
of North Carolina, approved January 3, 1834, entitled "An act to
incorporate the Wilmington and Raleigh Railroad Company." 2
Rev.Stats.N.Car. 1837, 335, 347. By the first section of this act,
commissioners were designated
"for the purpose of receiving subscriptions to an amount not
exceeding eight hundred thousand dollars, in shares of one hundred
dollars each, to constitute a joint capital stock for the purpose
of effecting a communication by a railroad from some point within
the Town of Wilmington, or in the immediate neighborhood of the
said town, to the City of Raleigh or in the immediate neighborhood
of the said city, the route of which road shall be determined on by
the company hereby incorporated."
The first twenty sections of the act relate to the main line
thus described.
The nineteenth section is as follows:
"That it shall and may be lawful for the said president and
directors to determine from time to time what installments shall be
paid on the stock subscribed; to purchase with the funds of the
company, and place on the said railroad constructed by them, all
machines, wagons, vehicles, carriages, and teams of any description
whatsoever which may be deemed necessary and proper for the
purposes of transportation, and all the property purchased by the
said president and directors, and that which may be given to the
company, and the works constructed under the authority of this act,
and all profits accruing on the said works, and the said property
shall be vested in the respective shareholders of the company and
their successors and assigns forever, in proportion to their
respective shares, and the shares shall be deemed personal property
and the property of said company, and the shares
Page 146 U. S. 281
therein shall be exempt from any public charge or tax
whatsoever."
The twenty-first, twenty-second, twenty-third, and twenty-fifth
sections read thus:
"SEC. 21. That the stockholders in general meeting may, if they
think fit, resolve to construct a branch or branches to the main
road, to be connected with the main road at such point or points as
they may determine on, and to lead in such direction, and to such a
point or points, as they may think best; and in order that they may
do so, the said stockholders are fully authorized to cause books to
be opened for subscriptions to the said lateral road or branch of
the main road, and the subscribers for stock shall be subject to
all the rules previously made by the company, and become members of
the company, with this exception only,
viz., that the
stock subscribed by them shall be faithfully and honestly applied
to the construction of that branch of the road for which they
subscribed it; but the subscribers for the main road and the
branches shall constitute but one company, and their rights of
property and estate shall be in common, and not separate,
provided, however, that the whole capital of subscribed
stock shall not exceed one million of dollars."
"SEC. 22. That all the powers, rights, and privileges conferred
by the preceding sections upon the said company in respect to the
main road and the lands through which it may pass are hereby
declared to extend in every respect to the said company, and the
president and directors thereof, in the laying out, in the
construction, and in the use and preservation of said lateral or
branch roads."
"SEC. 23. That it shall and may be lawful for the said company
to construct a branch to the main road as aforesaid, under the
restrictions aforesaid, so soon as the main road has reached the
point at which the branch road is intended to be joined with the
main road; but they shall not under any pretense whatever apply the
funds of the company to the construction of a lateral or branch
road until the main road is completed, except they be subscriptions
specifically made for the branch or lateral road. "
Page 146 U. S. 282
"SEC. 25. That where a branch or lateral road to the main road
is shorter than twenty miles, no other person or company shall be
authorized and empowered to build a railroad from any point near
its termination, so as to intersect with this main road, in order
to injure this company."
Section 24 refers to the right to connect or intersect with
"said railroad or any of its branches," and these five sections,
out of thirty-eight in all, relate to branch roads.
On December 15, 1835, an act of the General Assembly was
approved, entitled
"An act to amend an act passed in the year one thousand eight
hundred and thirty-three entitled 'An act to incorporate the
Wilmington and Raleigh Railroad Company.'"
2 Rev.Stats.N.Car. p. 347. This act authorized the capital stock
of the company to be increased to any sum not exceeding $1,500,000,
and provided
"that the stockholders of said company shall and may be at
liberty to run the main road from some point within or near the
Town of Wilmington to some point in the City of Raleigh, or in the
immediate neighborhood thereof, or from Wilmington, or near it, as
aforesaid, to some point at or near the River Roanoke in this state
at the election of said stockholders, with the view of connecting
with the Petersburg and Norfolk railroads; . . . that the said
company may be at liberty to lay off and construct any lateral
road, under the rules and regulations provided in the aforesaid
act, before or after they have completed the main railroad
aforesaid; . . . that it shall and may be lawful for the said
company to purchase, own, and possess steamboats and other vessels
to ply and sail from the port of Wilmington to Charleston or
elsewhere, and to take and receive for the use of said company,
over and besides the profits allowed in the said original act, such
sums of money or other property for freight, passengers, or other
accommodation on said boats and vessels as they may be able to make
by contracts with their customers, and according to such rates as
they may from time to time establish,"
and enlarged the time for commencing the road to three years
from January 1, 1836.
At the session of 1833 of the General Assembly, an act was
Page 146 U. S. 283
passed entitled "An act to incorporate the Halifax and Weldon
Railroad Company." 2 Rev.Stats.N.Car. 1836, 325, 334. This act
contained no exemption from taxation, and was subject to be
altered, amended, or modified by future legislatures. Under its
provisions, the Halifax and Weldon Railroad Company procured its
right of way and laid out and constructed the roadbed and road from
Weldon to Halifax, a distance of some eight miles, and entirely in
the County of Halifax. The corporation had no rolling stock, but
permitted the Portsmouth Railroad Company, during the year 1836, to
run its cars over its roadbed and track. In 1836, an act was passed
entitled "An act empowering the Halifax and Weldon Railroad Company
to subscribe their stock to the Wilmington and Raleigh Railroad
Company." 2 Rev.Stats.N.Car. 1837, 334, 335. Pursuant to the
provisions of this act, the Halifax and Weldon Railroad Company and
the Wilmington and Raleigh Railroad Company entered into an
agreement, February 14, 1837, which agreement was in all respects
executed and carried into effect by those corporations. The act
authorized the stockholders of the Halifax Company to subscribe its
stock on the books of the Wilmington Company, and sections 2 and 3
were as follows:
"SEC. 2. Upon the subscription of the stock held by the
stockholders in the Halifax and Weldon Railroad Company in the
books of the Wilmington and Raleigh Railroad Company, all the
property, real and personal, owned and held by the Halifax and
Weldon Railroad Company shall vest in and be owned and possessed by
the Wilmington and Raleigh Railroad Company aforesaid, and be owned
and held and possessed by the said company in the same manner that
all the other property, real and personal, which has been acquired
by the said company is owned, held, and possessed, and the road
which may have been built, or partly built, by the Halifax and
Weldon Railroad Company, shall thenceforward be deemed, to all
intents, as well criminal as civil, a part of the Wilmington and
Raleigh road."
"SEC. 3. So soon as the subscription hereby authorized shall
have been made, all the rights and privileges acquired
Page 146 U. S. 284
under the before recited act of assembly, passed in the year one
thousand eight hundred and thirty-three, entitled 'An act to
incorporate the Halifax and Weldon Railroad Company,' shall cease,
and the corporate existence of said company be determined."
The terms of the agreement between the two companies were that
the Wilmington Company should receive the assets of the Halifax
Company, and pay its debts, and the stockholders in the Halifax
Company should be entitled to their respective number of shares of
stock in the Wilmington Company.
The complaint alleged that
"in the year 1840, the plaintiff completed the construction of
its main road from the Town of Wilmington, through the Town of
Halifax, to the Town of Weldon, on the Roanoke River in said state,
and thereby connected its main line with the Portsmouth and Norfolk
Railroad, and has had the same in use or operation ever since."
The defendant denied the averment as made, and said that the
part of the road between Halifax and Weldon was built by the
Halifax Company, under its charter, and acquired by the plaintiff
in 1837, in pursuance of the act of 1836. The plaintiff, in reply,
averred that the Halifax road was only partially completed, and
that the Halifax Company owned no rolling stock or other property
of any description except its roadbed and right of way, and
referred to the agreement of February, 1837. Plaintiff also, for
further reply, set up the proceedings and judgment in an action
commenced by plaintiff in 1869 in the Superior Court of Halifax
County against the sheriff of that county to enjoin the sale of
property for taxes, partly assessed, as alleged, upon a portion of
the roadbed and right of way acquired from the Halifax Company, and
pleaded the same as an estoppel. It appeared that the agreement
between the two companies above referred to was not registered as
required by the act of 1836, but that this was subsequently done
under an act approved February 5, 1875. It further appeared that
after the execution of the agreement of February 14, 1837, the
Halifax Company ceased to exercise any corporate acts or maintain
any corporate existence or organization,
Page 146 U. S. 285
and its roadbed, track, and right of way passed under the
control of the Wilmington Company, and has ever since been under
its control as a part of its main line of road. Another act
amending the charter was approved January 24, 1851, which
authorized the capital stock to be increased to $2,500,000, and the
issue of scrip to the extent of the increase. By the third section
it was provided
"that said scrip shall represent shares in the capital stock of
said company as though the said shares had been originally
subscribed for by the holders thereof, and the said holders of the
scrip thus issued under the provisions of this act shall be members
of the said corporation, with the same privileges, rights, and
immunities, and subject to the same rules and regulations, as the
original stockholders of said company."
By an act approved February 15, 1855, the name of the Wilmington
and Raleigh Railroad Company was changed to the name of the
Wilmington and Weldon Railroad Company. At the session of 1867 of
the General Assembly an act was passed amending the act
incorporating the Wilmington Company, which was duly accepted by
its stockholders, November 13, 1867. This act provided for the
opening of books for subscriptions to any amount deemed necessary,
but not to exceed $25,000 per mile, for the construction of any
branch to the main line, which stock was to be separate and
independent of the stock of the main road, and to be applied
exclusively to the branch road for which it was subscribed.
The case came on in the superior court before Connor, J., who,
from the pleadings, affidavits, and exhibits made and filed
findings in substance as heretofore stated, and further therein
found that during the year 1882, the plaintiff began and completed
a branch road connecting with its main road at a point near the
Town of Halifax, in Halifax County, and running to the Town of
Scotland Neck in that county, which branch was extended to the Town
of Greenville, in Pitt County, during 1890, and in 1891 to the Town
of Kinston, in Lenoir County; being in all a distance of
eighty-five miles; that the branch road ran through the County of
Halifax for twenty-three and one-half miles. That it was not shown
that the said
Page 146 U. S. 286
branch was built pursuant to the provisions of the original
charter or amendments thereto. That the branch road was operated
and managed by the officers of the plaintiff company, and known as
the "Scotland Neck Branch of the Wilmington and Weldon Railroad."
That, in addition to the said Scotland Neck branch, the plaintiff
company owned and operated in the same manner the following other
branch roads in the state: the Clinton and Warsaw branch, 13 miles
in length; the Nashville or Spring Hope branch, 18 miles in length;
the Wilson and Fayetteville branch, 73.6 miles in length; the
Tarboro branch, 17 miles in length; making a total of 206.6 miles,
the main road being 162 miles in length. That the said branch
roads, except the Tarboro branch, had been built within the past
ten years, and that the plaintiff company also owned other
investments in railroads and other properties.
A transcript of the proceedings and judgment roll in the case of
Wilmington and Weldon Railroad Co. v. John H. Reid was
attached to the findings.
The Railroad Commission of North Carolina, pursuant to the
provisions of the Revenue Act of 1891 of that state (Acts 1891, c.
323), assessed for taxation the portion of plaintiff's main road
and rolling stock from Halifax to Weldon, being the portion
acquired from the Halifax Company and also that part of the
Scotland Neck branch in Halifax County, and directed the
Commissioners of Halifax County to place the same upon the tax list
of the county for the year 1891, which was done by the county
commissioners, and taxes were levied by them thereon accordingly.
The tax list was duly placed in the hands of the defendant, the
sheriff of the county, and he demanded payment of the taxes, which
being refused, he threatened to collect the same by distraint.
The superior court was of opinion that the tax upon the roadbed
and rolling stock between Halifax and Weldon was void, and enjoined
the defendant from enforcing its payment, but that the tax levied
upon the Scotland Neck branch was valid, and vacated the
preliminary restraining order against its collection. Both parties
appealed to the supreme court, which held that the superior court
had decided correctly
Page 146 U. S. 287
as to the branch line, but should have also decided the roadbed
and rolling stock between Halifax and Weldon to be taxable, and
therefore, in that respect, reversed the judgment of that court.
Final judgment having been afterwards entered in the superior court
in accordance with the opinion and judgment of the supreme court,
the case was again taken by plaintiff to the supreme court, and the
judgment affirmed, whereupon this writ of error was sued out. The
opinions of the supreme court, by Clark, J., which discuss the
questions involved in all their aspects, will be found reported in
110 N.C. 137.
Page 146 U. S. 293
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the Court.
The jurisdiction of this Court is questioned upon the ground
that the decision of the Supreme Court of North Carolina conceded
the validity of the contract of exemption contained in the act of
1834, but denied that particular property was embraced by its
terms, and that therefore such decision did not involve a federal
question.
In arriving at its conclusions, however, the state court gave
effect to the revenue law of 1891 and held that the contract did
not confer the right of exemption from its operation. If it did,
its obligation was impaired by the subsequent law, and, as the
inquiry whether it did or not was necessarily directly passed upon,
we are of opinion that the writ of error was properly allowed.
New Orleans Water Works v. Louisiana Sugar Co.,
125 U. S. 18,
125 U. S.
38.
We do not regard
Henderson Bridge Co. v. Henderson
City, 141 U. S. 679, and
St. Paul, Minneapolis &c. Railway v. Todd County,
142 U. S. 282,
cited by defendant in error, as qualifying the rule upon this
subject.
In
Henderson Bridge Co. v. Henderson City, it was held
by the Court of Appeals of Kentucky that the City of Henderson,
under a certain city ordinance accepted by the bridge company, had
acquired a contract right to tax that part of the bridge within the
city limits in consideration of rights and privileges granted the
company by the ordinance, and, as this
Page 146 U. S. 294
interpretation justified the municipal taxation in question and
could not be reviewed by us, we declined to maintain
jurisdiction.
In
St. Paul, Minneapolis &c. Railway Co. v. Todd
County, certain lands were considered by the state court as
not within the exemption claimed under the revenue law existing at
its date.
But in the case in hand, the court passed upon the action of the
authorities in virtue of a legislative act approved more than fifty
years after the making of the supposed contract, and explicitly
upheld the law.
We are obliged, then, to consider the legality of this taxation
in respect of the branch road proper and of the road from Halifax
to Weldon.
The inquiry is limited to taxation on corporate property only,
though the original exemption also covered the shares of the
capital stock in the hands of its shareholders. The legislature
recognized the distinction between the one class and the other, and
if it were conceded that all the shares should be treated as
exempt, as contended, in respect of which we are called upon to
express no opinion, yet the entire property of the company might or
might not be exempt in the light of all the provisions of the
charter with its amendments, and the terms of the authority under
which it may have been acquired.
The applicable rule is too well settled to require exposition or
the citation of authority. The taxing power is essential to the
existence of government, and cannot be held to have been
relinquished in any instance unless the deliberate purpose of the
state to that effect clearly appears. The surrender of a power so
vital cannot be left to inference or conceded in the presence of
doubt, and when the language used admits of reasonable contention,
the conclusion is inevitable in favor of the reservation of the
power.
By its charter, the Wilmington and Raleigh Railroad Company,
with a capital stock of $800,000, was empowered to construct,
repair, and maintain a railroad from Wilmington to Raleigh, and by
its nineteenth section it was provided (the punctuation being
corrected) that "the
Page 146 U. S. 295
property of said company and the shares therein shall be exempt
from any public charge or tax whatsoever."
By section 21, branch roads were authorized, the whole capital
of subscribed stock not to exceed $1,000,000, and by section 22 it
was provided
"that all the powers, rights, and privileges conferred by the
preceding sections upon the said company in respect to the main
road, and the lands through which it may pass are hereby declared
to extend in every respect to the said company, and the president
and directors thereof, in the laying out, in the construction, and
in the use and preservation of said lateral or branch road."
So far from its plainly appearing from this language that the
exemption from taxation was thereby extended to branch roads, it
seems to us entirely clear that the words used were words of
limitation, and in terms confined the powers, rights, and
privileges granted to those relating to the laying out, the
construction, the repair, and the operation of the branches.
The powers, rights, and privileges conferred by the preceding
sections upon the company in respect to the main road, and the
lands through which it might pass, embraced the rights and powers
necessary for the laying out, construction, repair, maintenance,
and operation of a railroad, including the power of eminent domain
in the various forms of its exercise -- in short, the positive
rights or privileges, without which the branch roads could not be
constructed or successfully worked, but which did not in themselves
include immunity from taxation, a privilege having no relation to
the laying out, construction, use, or preservation of the road.
In
Railroad Company v. Commissioners, 103 U. S.
1, the Annapolis and Elk Ridge Railroad Company was
"invested with all the rights and powers necessary to 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
the obligations contained in certain enumerated sections of the
charter of the Baltimore and Ohio Railroad Company. Among these
sections was one containing this provision:
"And the shares of the capital stock of the said company shall
be deemed and considered personal estate, and shall be exempt
Page 146 U. S. 296
from the imposition of any tax or burthen by the states
assenting to this law."
In was held that exemption from taxation was not one of the
privileges of the Baltimore and Ohio Company which the new company
was permitted "to have and use," since the powers and privileges
conferred were only such as were necessary to the construction,
repair, and use of the railroad. And
Railroad Companies v.
Gaines, 97 U. S. 697, and
Morgan v. Louisiana, 93 U. S. 217, where
similar rulings were made, were cited and approved.
The language of the section under consideration requires the
same construction, although the section relates to branch roads of
the same company, and not to the roads of different companies. The
facts that the branches may be component parts of an organic whole;
that
"the subscribers for the main road and the branches shall
constitute but one company, and their rights of property and estate
shall be in common, and not separate,"
(ยง 21), do not change the rule, for restrictive words cannot be
wrested from their apparent meaning because used in the same
charter, and with regard to the creating of certain parts of one
system, if those subdivisions as authorized have a separate
physical existence, and constitute in themselves a certain class of
property. If other companies had been chartered in the language
employed in these sections, there could be no question that their
property would be liable to taxation, and no reason is perceived
for treating these branches as differently situated in this
regard.
We cannot accede to the ingenious suggestion of counsel that
section 22 was simply a provision for extending to the branches the
previous provisions of the charter as to eminent domain only. The
powers, rights, and privileges were those pertaining to the use, as
well as the construction, of the branches, and if a necessity
appeared to exist of specifically conferring upon the company the
power of eminent domain in respect of its branch roads, because of
the character of the power, it is difficult to see why exemption
from taxation should not have been mentioned, for the same reason,
if it had been intended to extend that also to the branches. Nor by
a play upon the word "extend" can the section be regarded as an
enlargement
Page 146 U. S. 297
to the exclusion of restriction. To extend the powers, rights,
and privileges of the company existing as to the main road so as to
comprehend the branches may, it is true, be said to have enlarged
their application, but only in the particulars named and as
restricted by the enumeration.
We do not deny that exemption from taxation may be construed as
included in the word "privileges" if there are other provisions
removing all doubt of the intention of the legislature in that
respect,
Picard v. East Tennessee &c. Railroad Co.,
130 U. S. 637,
130 U. S. 642,
but we have none such here.
And in this connection, some further observations may properly
be made. As pointed out by the supreme court, the charter, as
originally granted, was for the construction of a railroad from
Wilmington to Raleigh, a distance of something over one hundred
miles, with a capital stock of $800,000, and branches were
authorized under the sections referred to, interjected into the
body of the act, the capital being, however, limited to $1,000,000.
The act of 1835 authorized a change of terminus "to some point at
or near the River Roanoke," and an increase of the capital stock to
$1,500,000, and the company was also empowered to purchase, own,
and possess steamboats and other vessels, to ply from Wilmington to
Charleston or elsewhere. The act of 1851 permitted an increase of
the capital stock to $2,500,000. These acts contained no exemption
of property from taxation, nor did the act of 1867, which
authorized the company to open books for subscription to build
branch roads to the amount of $25,000 per mile, nor any other
amendatory act availed of by the company.
Under the act of 1835, the road was built to Halifax, one
hundred and fifty-four miles, and by the acquisition of the Halifax
and Weldon Railroad was extended to Weldon, making a distance of
one hundred and sixty-two miles. The findings show over two hundred
miles in branch roads. Doubtless these, or some of them, might be
treated as constituting parts of the main line in fact, but under
the charter, that term is applicable to the line from Wilmington to
Halifax, or to Weldon, a consideration involved in another aspect
of the case.
By section 33 of the act of 1834, the completion of "the
Page 146 U. S. 298
main line from Wilmington to Raleigh within twelve years" was
required, but it is insisted that this limitation had no
application to the branches; that as to the main line, its
construction was a duty, but as to the branches, their construction
was simply licensed, and that under the acts of 1834 and 1835 it
was competent for the company at discretion and at any time to
construct branches from any point on its main road in any direction
and to any point, within the state. None of the branch roads were
either commenced or finished within the twelve years. The Tarboro
branch, it is said, was built in 1860, and the others, according to
the findings, within ten years prior to December, 1891. We find
nothing in the record to indicate that if the legislature intended
to empower this company to tessellate the state with branch roads,
it was designed that they should be exempted from the payment of
taxes. Whatever effect the acceptance of the amendments and the
delay in building the branches may have had, it is quite clear that
their immunity from taxation cannot be successfully asserted under
the circumstances.
It remains to examine the case as respects the road from Halifax
to Weldon.
Under the amendment of 1835, the Wilmington Company was at
liberty to run its main road from Wilmington to Raleigh, or from
Wilmington "to some point at or near the River Roanoke."
The supreme court held that Halifax was the point on the Roanoke
River which, by election of the company, was made the terminus of
the main road as authorized, instead of Raleigh. This followed from
the fact that the company only built its road to Halifax under its
charter, and that Weldon was reached by the acquisition of the road
of the Halifax Company under the act of 1836, passed for that
purpose.
The main road of the Wilmington Company was exempt, but if the
Halifax road, after its transfer, be regarded as a branch or
connecting road, and at all events as in law not a part of the main
road, then it was not within the exemption of the charter, and the
taxation complained of was not illegal. It must be borne in mind
that the Halifax road was constructed
Page 146 U. S. 299
under an act of incorporation which did not withdraw the
property of the Halifax Company from taxation. The legislature
apparently did not consider it necessary to hold out that
inducement to the building of a line between Halifax and Weldon,
and when, for the benefit of these railroad companies, it
authorized the transaction in question, it must be assumed to have
done this as a matter of favor, and not upon the consideration of
benefit to the public by the creation of what had already been
brought into existence without any special release from common
burdens.
The act of 1836 was an act, as its title stated, "empowering the
Halifax and Weldon Railroad Company to subscribe their stock to the
Wilmington and Raleigh Railroad Company." This was to be done upon
such terms as might be stipulated between the two companies, and
the terms agreed on were the payment of the Halifax Company's
debts, the transfer of its assets, and the issue of certificates to
its stockholders of their respective number of shares in the
Wilmington Company. Upon that subscription's being effected, the
act provided that "all the property, real and personal, owned and
held" by the Halifax Company should become vested in and be owned
and possessed by the Wilmington Company, and be
"owned and held and possessed by the said company in the same
manner that all the other property, real and personal, which has
been acquired by the said company, is owned, held, and
possessed,"
and that the road of the Halifax Company "shall thenceforward be
deemed, to all intents, as well criminal as civil, a part of the
Wilmington and Raleigh Railroad." The rights and privileges of the
Halifax Company thereupon ceased, and its corporate existence was
determined. The legal identity of the Wilmington Company remained,
while that of the Halifax Company was destroyed, and although the
transaction was described by the legislature in the act of 1875 as
a consolidation, it amounted rather to a merger or an amalgamation,
and need not be held to have resulted in the new corporation. But
it by no means follows that the transfer of the road of the one
company to the other made it in law such an extension of the main
road of the latter as to bring it within the exemption
Page 146 U. S. 300
from taxation, which, as we have seen, was confined to the main
road alone. The main road built by the Wilmington Company under its
charter terminated at Halifax. The prolongation of the line to
Weldon was the result of acquisition under another and different
act, required to be passed in order to allow this to be done, and
not conferring any exemption. As already indicated, if the
construction of the main road could be presumed to have been
partially induced by the promise of exemption, no such presumption
arose from the mere legislative concession of authority to obtain
an existing road.
The property acquired was indeed to be owned, held, and
possessed by the Wilmington Company in the same manner as its other
property, the real estate as in fee simple and the personalty as
used and enjoyed, but the way in which property is owned and
handled has no necessary relation to an exemption. The branch roads
are owned, held, and possessed in the same manner as the main road,
but the extent of the exemption is limited by the charter, and that
limitation was neither explicitly nor by fair implication removed
by the language of the act of 1836.
Central Railroad &c. Co. v. Georgia, 92 U. S.
665, is much in point. There, the Central Company and
the Macon Company were authorized to unite and consolidate their
stocks and all their rights, privileges, immunities, property, and
franchises under the name and charter of the Central Company, and
thereupon the holders of the shares of the stock of the Macon
Company became entitled to receive a like number of shares of stock
in the Central Company upon surrendering their certificates of
stock in the Macon Company. It was held that the consolidation did
not amount to a surrender of the existing charters of both
companies and the creation of a new company, that the purpose and
effect of the consolidation act were to provide for a merger of the
Macon Company into the Central Company and to vest in the latter
the rights and immunities of the former, but not to enlarge them,
and that, as the Macon Company held its franchises and property
subject to taxation, the Central Company, succeeding to the
ownership, held them alike subject. It was not doubted that
Page 146 U. S. 301
the Macon Company was intended to go out of existence, for, as
said by the Court through Mr. Justice Strong, provision was made
for the surrender of all the shares of its capital stock, and
without stockholders, it could not exist. The Central Company
absorbed the Macon Company, and it ceased to be, just as in the
case at bar the merger was to result and did result in the
determination of the corporate existence of the Halifax
Company.
In
Southwestern Railroad Co. v. Wright, 116 U.
S. 231, the question related to the liability of the
railroad company for taxes on different parts of its road. The
original charter contained an exemption from taxation, and as to
two of the parts acquired or built under subsequent legislation,
there was a reservation of the right to tax. A third division was
constructed under an amendatory act giving authority so to do
"under the rules and restrictions" originally prescribed, but
containing nothing about taxation. As the original charter was not
the source of power to build the division, it was decided that the
exemption therein contained did not extend to the latter. Mr. Chief
Justice Waite, delivering the opinion of the Court, said:
"In building this extension or branch, the company was placed
'under the rules and restrictions' they were subjected to in
building the original road, but that did not necessarily imply an
exemption of this line from taxation to the same extent that the
old road was exempted. That exemption was only for that road, and,
as the amending act does not in terms or by fair implication apply
the exemption to the additional road which was to be built under
it, we must presume that nothing of the kind was intended, and that
the state was left free to tax that road like other property."
We concur with the state court in the conclusions reached, as
sustained by reason and authority.
It appears from the record of the case of
Wilmington and
Weldon Railroad Co. v. John A. Reid that certain taxes were
imposed in 1869 upon the franchise and rolling stock of the
Wilmington Company, and upon certain lots of land situated in the
County of Halifax, forming part of the property of the company and
necessary to be used in the
Page 146 U. S. 302
operation of its business, and that the defendant, Reid, sheriff
of the county, had seized an engine and tender belonging to the
plaintiff in the effort to collect the tax. A demand was made on
the county commissioners to correct the tax list in the particular
of the levy against the franchise and rolling stock, and
subsequently a complaint was filed by the company against the
sheriff, the county commissioners not being made parties, setting
up that neither the lots nor the franchise or rolling stock were
liable to be taxed, because exempt under section 19 of the
company's charter. The facts being admitted, judgment was entered
sustaining the exemption claimed, and the sheriff was enjoined.
The case was then taken to the supreme court of the state, where
it was held that the franchise was liable to taxation, and the
order of the superior court was reversed. 64 N.C. 226. To review
this judgment a writ of error was sued out from this Court, and it
was thereon decided that a statute exempting all the property of a
railroad company from taxation exempts not only the rolling stock
and real estate owned by it and required by the company for the
successful prosecution of its business, but its franchise also, and
the judgment of the supreme court was in turn reversed.
Wilmington Railroad v.
Reid, 13 Wall. 264. These proceedings are relied on
as an estoppel so far as the road from Halifax to Weldon is
concerned, or as controlling authority in the premises. We think
they cannot be so regarded. The causes of action are not identical,
and the points or questions actually litigated are not the same.
The distinction between the road from Halifax to Weldon and the
main road from Wilmington to Halifax was not adverted to, and even
if that question might have been raised, this suit being upon a
different cause of action, the judgment in the former case cannot
operate as determining what might have been, but was not, brought
in issue and passed upon.
Cromwell v. County of Sac,
94 U. S. 351;
Nesbit v. Independent District, 144 U.
S. 610.
It is quite evident that the former action was simply availed of
in order to obtain a decision as to the power to tax the main line,
and that no other point was controverted.
Judgment affirmed.
