1. In 1856, the Legislature of South Carolina incorporated the
Air Line Railroad Company, with power to construct a road between
certain points and to equip, use, and enjoy the same, with all the
rights, privileges, and immunities granted to a certain other
company which had been incorporated in 1845 by an act exempting it
from taxation for the period of thirty-six years, and from the
operation of the provisions of the act of Dec. 17, 1841. The latter
act declares
"that it shall become part of the charter of every corporation
which shall, at the present or any succeeding session of the
General Assembly, receive a grant of a charter, or any renewal,
amendment, or modification thereof (unless the act granting such
charter, renewal, amendment, or modification shall, in express
terms, except it), that every charter of incorporation granted,
renewed, or modified as aforesaid shall at all times remain subject
to amendment, alteration, or repeal Ly the legislative
authority."
The act of 1856 also empowered the company to unite with any
other, and consolidate their management, but contained no clause
excepting, in express terms, the charter from tire operation of the
act of 1841. An amendment, passed in 1868, authorized it to adopt
another corporate name, and it was consolidated with a corporation
of Georgia under the name of the Atlanta and Richmond Air Line
Railway Company. The Constitution of South Carolina of 1888 having
required that the property of corporations then existing or
thereafter created should be subject to taxation, the legislature
imposed a tax on such property. A stockholder of the latter company
alleging that it had acquired immunity from taxation for the same
period as the company chartered in 1845, and that such immunity was
beyond legislative control, brought suit to enjoin the collection
of the tax.
Held 1. that as the act of 1856, granting the
charter, did not expressly exempt it from the provisions of the act
of 1841, they are applicable to it; 2. that the charter must be
read as if it declared that the capital stock of the company and
its real estate should be exempt from taxation for thirty-six
years, unless the legislature should in the mean time withdraw the
exemption; 3. that if an exemption from future legislative control
had been originally acquired by the company, it ceased when the
amendment to the charter was obtained in 1888.
Page 99 U. S. 349
2. The intention of the legislature to exempt the property of
corporations from taxation must be clear beyond a reasonable doubt.
It cannot be inferred from uncertain phrases or ambiguous terms. If
a doubt arise, it must be solved in favor of the state.
3.
Tomlinson v.
Jessup, 15 Wall. 454, referred to and
qualified.
The Richmond and Danville Railroad Company, a stockholder in the
Atlanta and Richmond Air Line Railway Company, filed its bill
against the taxing officers of South Carolina to enjoin them from
levying any state, county, or municipal taxes upon the property of
the last-named company within that state. The court below granted
the prayer of the bill, and the taxing officers brought this
appeal. The remaining facts are stated in the opinion of the
Court.
Page 99 U. S. 351
MR. JUSTICE FIELD delivered the opinion of the Court.
The Richmond and Danville Railroad Company, a corporation
created under the laws of Virginia, is the owner of twenty-two
thousand shares of the capital stock of the Atlanta and Richmond
Air Line Railway Company, a corporation created under the laws of
Georgia and South Carolina, and brings the present suit to enjoin
the collection of taxes assessed upon its road and other real
property in the latter state, alleging that they are exempt from
taxation. Its claim to exemption arises in this wise:
A company known as the Air Line Railroad Company in South
Page 99 U. S. 352
Carolina was incorporated in 1856 by the legislature of that
state and authorized to construct a railroad between certain
designated points and to equip, use, and enjoy the same
"with all the rights, privileges, and immunities granted to the
Greenville and Columbia Railroad Company under the act
incorporating the same and the several acts amendatory
thereof,"
so far as they were applicable. The company was also empowered
to unite with another railroad company and to consolidate their
management, and, by an amendment to its charter, to adopt any other
corporate name which it should deem best. In pursuance of this
authority, it united in 1870 with a company incorporated under the
laws of Georgia known as the Georgia Air Line Railroad Company, and
took the name of the Atlanta and Richmond Air Line Railway
Company.
The Greenville and Columbia Railroad Company was incorporated in
December, 1845, and, by a provision in its charter, the stock of
the company and the real estate it might purchase, connected with
or subservient to its works, were exempted from taxation for the
period of thirty-six years. At the time of its incorporation, there
was a law of the state in force, enacted in 1841, establishing the
principles on which charters of incorporation were thereafter to be
granted, the forty-first section of which provides
"That it shall become part of the charter of every corporation
which shall, at the present or any succeeding session of the
General Assembly, receive a grant of a charter, or any renewal,
amendment, or modification thereof (unless the act granting such
charter, renewal, amendment, or modification shall, in express
terms, except it), that every charter of incorporation granted,
renewed, or modified as aforesaid shall at all times remain subject
to amendment, alteration, or repeal by the legislative
authority."
The act incorporating the Greenville and Columbia Railroad
Company excepted its charter in express terms from the operation of
the act of 1841; but the act incorporating the Air Line Railroad
Company in South Carolina made no such exception with respect to
its charter. It is contended, however, that by the provision
conferring the same rights, privileges, and immunities which the
Greenville and Columbia
Page 99 U. S. 353
Railroad Company possessed, the Air Line Company not only
acquired immunity from taxation for the same period, but that such
immunity was placed beyond legislative repeal. The constitution of
the state, adopted in 1868, having required that the property of
corporations then existing, or thereafter created, should be
subject to taxation, except in certain cases, not applying here,
subsequent legislation, passed in conformity with this requirement,
imposed a tax upon the property of railroad companies, including
that of the Atlanta and Richmond Air Line Railway Company,
notwithstanding the exemption mentioned. The present suit was
thereupon brought to enjoin its enforcement. The court below held
that the property of the company was exempt from taxation for the
period of thirty-six years from the date of its charter, and
enjoined the officers of the state from collecting the tax
assessed. From its decree the present appeal is taken.
By the law of 1841, every charter of a corporation in South
Carolina subsequently granted, amended, or modified was subject to
repeal, amendment, or modification by the legislature, unless
specially excepted from such legislative control in the act
granting the charter, amendment, or modification. Such is evidently
the meaning of the forty-first section of that law, though the
intention is inaptly expressed. This construction is somewhat
different from that placed it in
Tomlinson v. Jessup,
reported in 15th Wallace, and gives the legislature a more extended
control. But it is the construction to which a more careful
examination of the language has led us. By it the legislature said,
subsequent charters should be subject to repeal or amendment,
unless they were in express terms excepted from its control in the
acts granting them; and that existing charters, if subsequently
amended or modified, should stand in the same position. Its
provisions constituted the condition upon which every charter was
afterwards granted, amended, or modified. They formed as much a
part of the new or amended charter as if they had been originally
embraced in it. They did not of course operate as a limitation upon
the power of succeeding legislatures so as to control any repugnant
legislation, but so long as they remained unrepealed, subsequent
legislation, not repugnant in its terms, was to be
Page 99 U. S. 354
construed and enforced in accordance with them.
Railroad
Company v. Maine, 96 U. S. 499.
As the act incorporating the Air Line Company in South Carolina
in 1856 contained no clause excepting its charter from the
provisions of the law of 1841, they must be held applicable to it.
To include in that charter an exemption from legislative control
because such exemption was possessed by the Greenville and Columbia
Company would be to thwart the declared will of the legislature,
that such exemption should not exist, unless the act granting the
charter excepted it in express terms from that law. Its charter
must therefore be read as if it declared that its capital stock and
the real property purchased by it and connected with or subservient
to its words should be exempt from taxation for the period of
thirty-six years, unless the legislative should in the mean time
withdraw the exemption. Its stock and real property were thus
exempted for that period from the general tax levied upon property
of that kind, unless the legislature should specifically direct
otherwise.
If it be assumed, however, that by the act incorporating the Air
Line Company it acquired not only the immunity from taxation which
the Greenville and Columbia Company possessed, but also its
original exemption from future legislative control, this exemption
ceased when the company obtained an amendment to its charter in
September, 1868, before its consolidation with the Georgia Company.
By that amendment, the charter of the company was at once brought
under the control of the legislature by virtue of the act of 1841,
the act granting the amendment containing no clause excepting the
charter from the provisions of that act.
In whichever way the legislation of the state may be viewed, the
same result follows -- that the Legislature of South Carolina was
not inhibited from subjecting the property of the company to
taxation, to restrain the collection of which this suit is
brought.
The power of the legislature of a state to exempt particular
parcels of property of individuals or of corporations from
taxation, not merely during the period of its own existence, but so
as to be beyond the control of the taxing power of succeeding
Page 99 U. S. 355
legislatures, has been asserted in several cases by this court,
although against this doctrine there have been earnest protests by
individual judges. But though this power is recognized, it is
accompanied with the qualification that the intention of the
legislature to grant the immunity must be clear beyond a reasonable
doubt. It cannot be inferred from uncertain phrases or ambiguous
terms. The power of taxation is an attribute of sovereignty, and is
essential to every independent government. Stripped of this power,
it must perish. Whoever, therefore, claims its surrender must show
it in language which will admit of no other reasonable
construction. If a doubt arise as to the intent of the legislature,
it must be solved in favor of the state.
It follows that the decree of the court below must be reversed
and the cause be remanded with directions to dismiss the suit, and
it is
So ordered.
