A state statute granting to a company incorporated by it "all
the rights and privileges" which had been granted by a previous
statute of the state to another corporation does not confer upon
the new company an exemption from taxation beyond a defined limit
which was conferred upon the other company by the act incorporating
it.
The ruling of the highest court of a state, in a suit to recover
taxes alleged to be due, concerning the effect to be given to a
former judgment of the same court as to the liability of the same
parties to pay similar taxes previously assessed, is not subject to
review by this Court.
The case is stated in the opinion.
MR. JUSTICE PECKHAM delivered the opinion of the Court.
This was a bill filed by the plaintiff below in the Chancery
Court of Tennessee for Shelby County, in October, 1891, to recover
taxes alleged to be due from the corporation plaintiff in error, or
its stockholders, to the City of Memphis for the years 1888 to
1891, inclusive. The complainant's bill alleged that neither the
defendant company nor its shareholders had any immunity from
taxation, and that, if any such immunity existed, it could not
operate to protect both the shareholders and the capital stock.
Judgment was accordingly prayed in the alternative against the
corporation or the stockholders according as the taxes might be
held to have been laid upon one or the other. A demurrer was
interposed to the bill, which was sustained in the court below, but
upon appeal to
Page 161 U. S. 175
the supreme court, that judgment was reversed. 91 Tenn. 566. The
latter court held that the charter of the company contained no
immunity from taxation, and that both its shares of stock and
capital stock were subject to the taxing power of the state and
municipality. The case was thereupon remanded to the court below
for further proceedings. It having been determined by the supreme
court that the complainant, upon the allegations of the bill, was
entitled to a discovery of the names and residences of the
stockholders, a stipulation was entered into between the parties to
avoid the necessity of the discovery, by which it was agreed that
the corporation would assume any liability that might be
established against the stockholders and that a decree might be
entered accordingly, and that the defendant Johnson should be made
a defendant in his capacity of a stockholder and as the
representative of all the others.
By its answer, the defendant company claimed immunity from
taxation both for itself and its shareholders, and also set up a
plea of
res judicata, and alleged various objections to
the validity of the several assessments upon which complainant
claimed taxes due to the state. The case was duly tried, and
judgment for the complainant was rendered by the trial court in
which it was adjudged that, by the charter, neither the defendant
company nor its shares of stock had any immunity from taxation, and
that both were, for the years mentioned in the bill, subject to the
taxing power of the state. The court decided the federal question
made by the defendants below against them, and adjudged that the
state tax laws set up in the record, under which the taxes were
levied, were not violative of the Constitution of the United States
or void, as claimed by the defendants. This judgment was in
substance affirmed by the supreme court, and the defendants below
sued out a writ of error, and the record is now here for
review.
The question first arising is as to the correctness of the
judgment holding that the plaintiffs in error were not entitled to
any immunity from taxation either as to the capital stock or the
shares of stock in the hands of stockholders. The
Page 161 U. S. 176
following are the facts: the Bluff City Insurance Company of
Memphis was duly incorporated by an act of the legislature of
Tennessee, and by section ten of the act of incorporation it was
enacted
"that said company shall pay to the state an annual tax of
one-half of one percent on each share of the capital stock
subscribed, which shall be in lieu of all other taxes."
On the 20th day of March, 1858, the Legislature of Tennessee
incorporated the De Soto Insurance Company, and that charter was
amended on the 30th of March, 1860, and by section eleven of that
act "all the rights, privileges and immunities" of the Bluff City
Insurance Company were granted to the De Soto Insurance Company. On
the 11th day of March, 1867, the legislature incorporated the
Washington Fire & Marine Insurance Company of Memphis,
Tennessee, and by that act "all the rights and privileges"
(omitting the word "immunities") of the De Soto Insurance Company
of Memphis, Tennessee, granted to it in its charter or amendments,
were granted to the Washington Fire & Marine Insurance Company,
above named, and by the act of the legislature approved March 28,
1881, the name of the Washington Fire & Marine Insurance
Company was changed to the Phoenix Fire & Marine Insurance
Company of Memphis, Tennessee, being the plaintiff in error. The
act of incorporation and the amendments thereto were duly accepted
by plaintiff in error and its stockholders, and since that time the
business of fire and marine insurance has been conducted by it in
Memphis under the last corporate name.
It will thus be seen that the Bluff City Insurance Company was
to pay to the state a certain annual tax on each share of capital
stock subscribed, which was declared to be in lieu of all other
taxes, and the question is now presented whether, by virtue of
these various statutes, the plaintiff in error was granted an
immunity from taxation to the same extent as that given to the
Bluff City Insurance Company and to the De Soto Insurance Company.
Is immunity from taxation granted to plaintiff in error under
language which grants "all the rights and privileges" of a company
which has such immunity? In statutes, as is sometimes the case in
legal
Page 161 U. S. 177
documents, more words are occasionally used than are necessary
to convey the meaning of those who passed the statute or executed
the document, and it may happen that this very excess of verbiage
tends to confuse, rather than to enlighten, one as to the meaning
intended. The words, "rights, privileges, and immunities," when
used in a statute of the kind under consideration, are certainly
full and ample for the purpose of granting an exemption from
taxation contained in the first or original statute, and when, in
granting to still another company certain rights, the word
"immunities" is dropped, its absence would seem and ought to have
some special significance. In granting to the Do Soto company "all
the rights, privileges, and immunities" of the Bluff City company,
all words were used which could be regarded as necessary to carry
the exemption from taxation possessed by the Bluff City company,
while in the next following grant -- that of the charter of the
plaintiff in error -- the word "immunities" is omitted. Is there
any meaning to be attached to that omission? And if so, what? We
think some meaning is to be attached to it. The word "immunity"
expresses more clearly and definitely an intention to include
therein an exemption from taxation than does either of the other
words. Exemption from taxation is more accurately described as an
"immunity" than as a "privilege," although it is not to be denied
that the latter word may sometimes and under some circumstances
include such exemption. It must always be borne in mind in
construing language of this nature that the claim for exemption
must be made out wholly beyond doubt, for, as stated by MR. JUSTICE
HARLAN in
Chicago, Burlington & Kansas City Railroad v.
Guffey, 120 U. S. 569:
"It is the settled doctrine of this Court that an immunity from
taxation by a state will not be recognized unless granted in terms
too plain to be mistaken."
See also Wilmington & Weldon Railroad v. Alsbrook,
146 U. S. 279. In
leaving out a word which, if used, would be regarded as specially
and particularly including an exemption from taxation granted to
another company, it seems to us that a very grave doubt is cast
upon the title of plaintiff in error to the exemption claimed, and
in such case the existence
Page 161 U. S. 178
of a well founded doubt is equivalent to a denial of the
claim.
The learned counsel for plaintiff in error have cited many
statutes of the State of Tennessee in which it is said the word
"immunities" is sometimes used where no exemption from taxation was
intended, and he quotes a section from one act (Acts 1866-1867,
Private, section 49 of the act, page 155) which grants "all the
powers, privileges and immunities" of another company that had no
exemption, and in another case there was granted "all the rights,
franchises and privileges" of a railroad company which had an
exemption from taxation. Many other instances of a like nature are
cited. The result of it is to occasion great difficulty in
determining what was really intended by the legislature in these
various acts. The learned counsel for plaintiff in error also state
that about the time these charters in question were granted, the
legislature customarily expressed the purpose to tax corporations
when no exemption was intended. The inference is sought to be drawn
in favor of exemption if the legislature did not affirmatively
grant the right to tax. We cannot assent to any such view, and we
could come to no such conclusion from an examination of the General
Statutes cited by counsel. It is a complete overturning of the
universal rule in regard to taxation. The power and the right to
tax are always presumed, and the exemption is to be clearly
granted. Mere silence is the same as a denial of exemption.
We can see nothing in the "surrounding circumstances" which
counsel claim should influence our examination and conclusion as to
the meaning of these statutes that in any way induces the belief
that an exemption was plainly intended. Our attention has not been
called to circumstances which we should regard as of that nature,
nor is our judicial knowledge of them sufficient in kind or degree
to cause us to conclude that this exemption was intended to be
granted to plaintiff in error. We do not find that at this time
there was, as counsel insist, any settled rule of the courts that
the word "privileges" always embraced exemption from taxation, or
that "rights and privileges" and "privileges and immunities" were
used
Page 161 U. S. 179
indiscriminately and interchangeably, and always included such
exemption. The different words above quoted were undoubtedly used
in different statutes, and sometimes it might be insisted that one
thing was meant and sometimes another, but we cannot find that
there was any well known and definite rule governing the courts of
Tennessee at that time which made the words "privileges" or
"rights," when used in cases of this nature, include beyond any
doubt, and in all cases, an exemption from taxation.
In
Wilson v. Gaines, 9 Bax. 546, it was held by the
supreme court that, as the state, in its constitution (article 11,
section 7, Constitution 1834), sued in the same connection all the
words "rights," "privileges," "immunities," and "exemption," each
of these words was to 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 its
restricted sense. This decision of the Tennessee court tends very
strongly to the idea that the words "immunity" or "exemption" would
have been required to secure the exemption to a company in a case
like this. It is true that this view was not assented to by this
Court as being the correct one,
Tennessee v. Whitworth,
117 U. S. 139,
117 U. S. 146,
and it is simply cited for the purpose of showing what the
Tennessee court did decide in regard to the meaning of its own
constitution in reference to this subject.
That the legislature was, about the time in question, freely
incorporating various companies, and granting them exemption from
taxation with considerable liberality, is not a sufficient reason
to induce this Court to depart from the universal and well
established rulemaking a claim for exemption a matter to be proved
beyond all doubt. The circumstance which we regard as very
significant, and which has already been alluded to, consists in the
omission of the word "immunities" in the grant to plaintiff in
error. That omission we attach great weight to, and the least that
can be said of it is that it involves the question in doubt.
It cannot be denied that the decisions of this Court are
Page 161 U. S. 180
somewhat involved in relation to this question of exemption. It
is difficult in some cases to distinguish the language used in each
so far that the different results arrived at by the court can be
seen to be founded upon a real difference in the meaning of such
language. The question has sometimes arisen upon the consolidation
of different companies, and sometimes upon a sale under a mortgage
foreclosure. Among the former is the case of
Keokuk &
Western Railroad v. Missouri, 152 U.
S. 301, where, under the laws of Missouri (section 4 of
the Act of March 2, 1869), there was a provision that the
consolidated companies should be "subject to all the liabilities
and bound by all the obligations of the companies within this
state," and "be entitled to the same franchises and privileges
under the laws of this state, as if the consolidation had not taken
place." The question was said to admit of doubt whether, under the
name "franchises and privileges," an immunity from taxation passed
to the new company. Various cases are cited in the opinion, which
was delivered by MR. JUSTICE BROWN, showing the grounds taken by
this Court in such cases. In
Chesapeake & Ohio Railway v.
Miller, 114 U. S. 176 (a
foreclosure case), it decided that an immunity from taxation
enjoyed by one railroad company did not pass to the purchaser under
the foreclosure of a mortgage, although the act provided that the
purchaser should forthwith become a corporation, "and should
succeed to all such franchises, rights, and privileges as would
have been had by the original company but for such sale and
conveyance." The case followed that of
Morgan v.
Louisiana, 93 U. S. 217 (also
a foreclosure case), where it was held that the words "franchises,
rights, and privileges" did not necessarily include a grant of
exemption or immunity from taxation.
See also, to same
effect,
Memphis & Little Rock Railroad v. Railroad
Commissioners, 112 U. S. 609. The
case of
Picard v. Tennessee &c. Railroad, 130 U.
S. 637, may also be referred to upon the point that
exemption, although it might be granted, must be considered as a
personal privilege, not extending beyond the immediate grantee,
unless otherwise so declared in express terms, and it was therein
declared that such immunity
Page 161 U. S. 181
would not pass merely by a conveyance of the property and
franchises of a railroad company, although such company might
itself hold property exempt from taxation. In that case, MR.
JUSTICE FIELD, speaking for the Court, said:
"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 an immunity in the term 'franchise,' it will
not be so construed. It can have its full force by confining it to
other grants to the corporation."
This language is referred to by MR. CHIEF JUSTICE FULLER in the
case of
Wilmington & Weldon Railroad v. Alsbrook,
146 U. S. 279,
where, at page
146 U. S. 297,
he says:
"We do not deny that an 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,"
citing the
Picard case.
Looking at the other side, we find the case of
Humphrey
v. Pegues, 16 Wall. 244, where there was a grant to
a railroad company of "all the rights, powers and privileges"
granted by the charter of another company which exempted the
property of such other company from taxation, and it was held that
the property of the first company was thereby also exempted. Mr.
Justice Hunt, in delivering the opinion of the Court, said
that:
"A more important or more comprehensive privilege than a
perpetual immunity from taxation can scarcely be imagined. It
contains the essential idea of a peculiar benefit or advantage or
special exemption from a burden falling upon others."
Again, in
Tennessee v. Whitworth, 117 U.
S. 139, it was held that a right to have shares in its
capital stock exempt from taxation within the state was conferred
upon a railroad corporation by a state statute granting to it "all
the rights, powers, and privileges," or granting it "all the powers
and privileges" conferred upon another corporation named, if the
latter corporation possessed by law such right of exemption. The
question in that case
Page 161 U. S. 182
arose as to the meaning of certain statutes passed by the
Legislature of Tennessee, resulting in the consolidation of certain
railroads therein mentioned. In the course of his opinion, Mr.
Chief Justice Waite cites the case of
Philadelphia, Washington &
Baltimore Railroad v. Maryland, 10 How. 376,
51 U. S. 393,
where Mr. Chief Justice Taney, speaking of a statute which
authorized the union of two railroad companies and secured to the
union company "the property, rights, and privileges which that law
or other laws conferred on them" (the separate companies or either
of them), said that such language extended to the union company the
exemption from taxation contained in the charter of one of the
uniting companies. Mr. Chief Justice Waite, continuing, in his
opinion, said: "As has already been seen, the word
privilege,'
in its ordinary meaning when used in this connection, includes an
exemption from taxation." The decision in this last case should be
confined to the peculiar language used in the various statutes
therein cited, wherein, aside from the word "privilege," it may be
argued that, considering all the language used in those statutes,
the intention of the legislature to exempt the company named from
taxation may fairly well be made out.
The later cases of
Pickard v. Tennessee &c.
Railroad, 130 U. S. 637, and
Wilmington &c. Railroad v. Alsbrook, 146 U.S.,
supra, show that there must be other language than the
mere word "privilege," or other provisions in the statute removing
all doubt as to the intention of the legislature, before the
exemption will be admitted. The case of
Mobile & Ohio
Railroad v. Tennessee, 153 U. S. 486,
adds nothing to the discussion on either side. The particular point
was not in that case, but it seems to be cited by counsel for
plaintiffs in error for the purpose of showing what was the general
condition of the state at the time of the adoption of the
Constitution in 1834, and what was the policy of the state in
regard to internal improvements, which the Constitution declared
ought to be encouraged. The incorporation of an insurance company
would hardly come within the most liberal meaning of the term
"internal improvements."
Page 161 U. S. 183
If this were an original question, we should have no hesitation
in holding that the plaintiff in error did not acquire the
exemption from taxation claimed by it, and we think at the present
time, the weight of authority as well as the better opinion is in
favor of the same conclusion which we should otherwise reach.
Second. Concluding, as we have, that this plaintiff in error
insurance company is not exempt from taxation by the language of
the statutes above mentioned, we come to the consideration of the
second defense interposed by its shareholders. It seems that
sometime in the year 1873, the shareholders, or some of them, were
sued by the City of Memphis to collect from them certain taxes
alleged to be due that city for the year 1872 upon the shares of
stock held by them. By the decision of the Supreme Court of
Tennessee, the city recovered a judgment. A stipulation was then
entered into between the parties to that suit, which is in the
record, by which it appears that the same questions involved in
that suit were fully and fairly presented in the case decided in
favor of the plaintiffs at that term of court, wherein the State of
Tennessee and Shelby County were complainants and Napoleon Hill and
others, stockholders in the Memphis Fire & General Insurance
Company, were defendants, and which action had been carried to the
Supreme Court of the United States by writ of error for its
decision of the questions, and therefore, to save the expense of
argument in the case, it was agreed by counsel for all parties that
the
Memphis City case should abide by the decision of
Tennessee v. Hill, which should be conclusive upon the
parties to the stipulation in all things the same as though
actually rendered in that case. If the decree in the
Hill
case were affirmed, then this decree was to be affirmed, and, if
the other should be reversed, then this was to be reversed. After
the signing of that stipulation, the
Hill case was duly
prosecuted by writ of error, and argued before the Supreme Court of
the United States, where the judgment in favor of complainant was
reversed and the cause remanded to the Supreme Court of Tennessee
with directions to enter its decree therein for the defendant Hill.
This was done, and in accordance
Page 161 U. S. 184
with the stipulation above mentioned, a decree was thereupon
entered in the
Memphis City action reversing the judgment
in favor of plaintiff and adjudging and decreeing that the tax
levied and assessed by the City of Memphis upon the defendant's
share of stock was illegal, and adjudging that the City of Memphis
could not legally assess said shares of stock for taxation in the
hands of the owners thereof, and that such shares were exempt from
any and all municipal taxation, and the city and its officers were
perpetually enjoined from collecting or proceeding to collect such
taxes. This judgment was entered by consent, and pursuant to the
stipulation of the parties entered into at the time the writ of
error was sued out in the
Hill case, and it is now set up
and offered in evidence as an adjudication in favor of the
shareholders of the insurance company, who are admitted to be the
direct successors of the shareholders of the company sued in the
former action, and the decision of the state court, refusing the
benefit of that adjudication to the shareholders, is claimed to
have been error, and to present a federal question for review by
this Court. The judgment is not claimed as an adjudication or
estoppel in favor of the corporation, because the corporation was
not a party to the suit.
We think the decision of the supreme court as to the weight to
be given the judgment is not reviewable by us, because it is not a
federal question. The former judgment determined that, as between
the city and the shareholders, the latter were not subject to pay
the taxes for the years specified. In the action now under
consideration, we have determined that there was no immunity
conferred either upon the corporation or the stockholders by the
statutes cited. On the trial of this action, the former judgment
was offered in evidence by the shareholders, and it was held to
constitute no bar to the maintenance of this action by the
plaintiff, nor did it operate as an estoppel upon their right to
claim taxes for subsequent years. The judgment offered in evidence
was the judgment of a state court, and the refusal to accord to it
all that was claimed for it in the nature of an estoppel by counsel
for plaintiffs in error was, in any event, no more than
Page 161 U. S. 185
a refusal to give to a judgment of one of its own courts that
degree of force as evidence which it was by the general law
entitled to. In no event was it anything other than error committed
by the court below in regard to the general law or rule of
evidence, which has nothing of a federal question connected with
it. It is entirely different from the case of a refusal of a state
court to give the proper effect to a judgment of a court of the
United States. If a state court erroneously refuse to give such
weight and effect to a judgment of one of the courts of the United
States, a federal question arises, which is within the jurisdiction
of this Court to review upon writ of error to the supreme court of
the state.
Crescent City Livestock Co. v. Butchers' Union
Slaughterhouse Co., 120 U. S. 141.
Although no higher sanctity or effect can be claimed for the
judgment of a federal court than is due under the same
circumstances to judgments of state courts in like cases,
Dupasseur v.
Rochereau, 21 Wall. 130,
88 U. S. 135;
Embry v. Palmer, 107 U. S. 3, yet in
the case of a judgment of the former court, the Constitution
provides that full faith and credit shall be given it, and whether
it has or has not been given it by a state court is a federal
question, while, if the state court erroneously decides a question
of law regarding the weight to be given one of its own judgments in
its own courts and among its own citizens, that error is not
subject to review by this Court, because it constitutes no federal
question.
If it were otherwise, every decision of a state court, claimed
to be erroneous, which involved the failure to give what the
defeated party might claim to be the proper weight to one of its
own judgments would present a federal question, and would be
reviewable here. There is no question of contract in the case. It
is wholly one of evidence as to whether or not a prior judgment in
a state court operated as an estoppel against the plaintiff below,
and prevented the state court from granting it the relief to which
it would otherwise be entitled. In granting relief, it was bound to
consider the federal question as to whether there was or was not a
contract of immunity, and that question was open to review here,
and we have
Page 161 U. S. 186
just reviewed it. It is, moreover, quite doubtful whether the
court below committed any error, even if the question were to be
regarded as of a federal nature and open to us for review.
Keokuk & Western Railroad v. Missouri, 152 U.
S. 301,
152 U. S.
314.
It is said that a suit for taxes for one year is no bar to a
suit for taxes for another year; that it is not the same
transaction, and the judgment in a prior action can never operate
as an estoppel other than as to those matters which were in issue
and controverted, and upon the determination of which a finding or
verdict was rendered. It is not necessary in this case, however, to
determine whether there was any one particular fact in issue and
litigated in the first case, and which would be closed from further
controversy, and which, as thus decided, would preclude a recovery
in this case. We hold that the question, in any event, as presented
in this case was not a federal one.
These views render a discussion of any other question in the
case unnecessary, and lead to an affirmance of the judgment
herein.
Affirmed.
MR. JUSTICE WHITE dissented.