North Missouri Railroad Company v. Maguire, 87 U.S. 46 (1873)
U.S. Supreme CourtNorth Missouri Railroad Company v. Maguire, 87 U.S. 20 Wall. 46 46 (1873)
North Missouri Railroad Company v. Maguire
87 U.S. (20 Wall.) 46
1. A contract by a state to give up its power to tax any property within it can be made only by words which show clearly and unequivocally an intention to make such a contract.
2. The act of the Legislature of Missouri of February 16, 1865, to provide for the completion of the North Missouri Railroad does not so show an intention of the state to give up its power to tax the property of the corporation owning that railroad.
3. The ordinance of the 8th of April, 1865, adopted by the people of Missouri, as part of the constitution of the state established on that day, was, as respected the North Missouri Railroad Company, a true exercise of the taxing power of the state, and not a mere change of the order of disbursing the receipts of the earnings of the company as prescribed by the act of legislature above named.
The North Missouri Railroad Company was incorporated by Act of the Legislature of Missouri, March 3, 1851. By an Act of January 7, 1853, its charter was thus amended:
"The capital stock, together with all machines, wagons, cars, engines, or carriages belonging to the company, together with all their works or other property, and all profits which shall arise from the same, shall be vested in the respective shareholders of the company forever, in proportion to their respective shares, and the same shall be deemed personal estate, and shall be exempt from any public charge or tax whatsoever for the period of five years from and after the passage of this act."
Under the provisions of several acts of the state legislature between the date of its incorporation and the year 1857, the state issued its own bonds for the benefit of the road, reserving a mortgage on the road to secure their payment. As between the state and the company, the latter was bound to pay the bonds and interest on them, and it was provided that in case the company made default, the governor should foreclose the mortgage.
About the year 1860, the company did make default in the payment of the interest on the bonds, and had paid no part
of either interest or the principal since. No sale, however, was made of the road, and on the 29th of March, 1863, the legislature passed an act forbidding the governor to make a sale until he should be required by it to do so.
By an Act of February 16, 1865, meant to provide for the completion of the road, the company was authorized to issue $6,000,000 of its mortgage bonds, which should have priority over the mortgage of this state, and this to the extent named and no farther, was by the act made a second lien. The act provided for the appointment of a fund commissioner for the railroad company. It then proceeded:
"SECTION 5. And the said railroad company shall pay over to the said fund commissioner all the gross earnings and daily receipts of said corporation, which shall be kept in deposit in the bank, subject to the daily draft of said fund commissioner as the same may be required by said corporation for actual disbursement in operating said railroad and in carrying on the ordinary business of said corporation, and for the other purposes hereinafter provided, and upon the failure of said company to pay said money to said fund commissioner as herein provided, the said company shall forfeit and pay to the State of Missouri for each and every such neglect or refusal the sum of $10,000."
"SECTION 6. The said commissioner shall pay over to the said corporation from time to time out of the funds coming into his hands as aforesaid the amounts required for purposes of construction and equipment of said railroad, upon vouchers of the chief engineer, and upon the vouchers of the treasurer thereof, he shall pay the amounts required for operating said railroad and carrying on the ordinary business of said corporation, and he shall pay and disburse the funds in the following order of priority, to-wit:"
"First. To the said corporation the amounts required, from day to day, for the actual current expenditures in operating said railroad and carrying on the ordinary business of said corporation, including all sums that may be necessary for keeping said railroad in a good state of repair, and all sums that may be necessary for time to time for such additions to the rolling stock, buildings, and appurtenances of said road, as may be required to enable said corporation to accommodate and transact the business of their said railroad, and "
"Second, the amount of his salary as fund commissioner, in monthly installments, and,"
"Third, the interest upon said mortgage bonds, as the same shall fall due; and,"
"Fourth, the cost of construction and equipment of said railroad as aforesaid; and,"
"Fifth, the accruing dividends on preferred stock, not exceeding six percent per annum thereon, in accordance with the provisions of this act in relation thereto; and,"
"Sixth, the interest due on the outstanding bonds of the State of Missouri heretofore loaned to said corporation; and,"
"Lastly, the surplus remaining shall be applied to the payment of the principal of said first mortgage bonds until the same shall be fully paid off, or, if more of said bonds shall have become due, then to the payment of the principal of the said bonds of the State of Missouri if any still outstanding; and the balance shall be paid to the North Missouri Railroad Company, and the said office of fund commissioner shall then cease and be vacated."
"SECTION 9. The holders of the bonds of the State of Missouri heretofore issued to the North Missouri Railroad Company are hereby authorized to convert the same, with interest accrued thereon, into preferred stock of the North Missouri Railroad Company, and the holders thereof shall be entitled to receive a special dividend thereon, not exceeding the rate of six percent per annum in the manner and in the order of priority above herein provided."
The thirteenth section provided for an acceptance of this act by the stockholders, and enacted that in the event of its being so accepted,
"It shall be and become of full force and binding effect upon the said corporation and the State of Missouri."
The act was accepted in due form by the stockholders.
On the 8th of April, 1865, a convention of the people of Missouri adopted "An ordinance for the payment of state and railroad indebtedness." This ordinance levied on the railroad company an annual tax of ten percent of all its gross receipts for the transportation of freight and passengers, and directed that it should be appropriated by the
general assembly to the payment of the principal and interest now due or hereafter to become due upon the bonds of the state and the bonds guaranteed by the state issued to the company.
The provisions of the ordinance will be seen more fully on pages 87 U. S. 3940, supra, beginning near the bottom of the former page, at the place marked with a *.
Under this ordinance, the Assessor of St. Louis County assessed $68,257 (being ten percent) upon the gross receipts of the company from October 1, 1866, to October 1, 1867, and delivered the same to one Maguire, collector of taxes, who, on the company's refusal to pay the bill, levied upon its engines, cars, &c. The company thereupon sued him in trespass in one of the state courts, where a case was stated for the judgment of the court, and by which it was agreed that if the court should be of opinion that the ordinance referred to was unconstitutional, there should be judgment for the company for costs and nominal damages, and if of the opinion that it was constitutional, judgment for Maguire for costs.
The Supreme Court of Missouri, where the case finally got -- referring among other clauses of the act of 1865, to that which provided for the payment in the first place of the "amounts required from day to day, for the actual current expenditures for carrying on the ordinary business of the corporation" -- within which it considered the payment of taxes to fall -- rendered judgment for Maguire, and the company brought the case here.
One Jessup, who claimed the whole road under a sale, also stood in some way on the record as a plaintiff in error.