The provision in the state constitution of Missouri of 1865,
that
"No property, real or personal, shall be exempt from taxation
except such as may be used exclusively for public schools and such
as may belong to the United States, to this state, to counties, or
to municipal corporations within the state"
applies to stock issued for constructing branches of the St.
Joseph and Iowa Railroad in that state under the provisions of the
statute of March 21, 1868, "to aid in the building of branch
railroads in the State of Missouri," and the provision in the
charter of that railroad company, enacted in 1857, that its stock
should be exempt from taxation for state and county purposes does
not apply to the stock issued for branches constructed under the
act of 1868.
Immunity from taxation by the state will not be recognized
unless granted in terms too plain to be mistaken.
Page 120 U. S. 570
This action was instituted in conformity with a local statute of
Missouri to recover certain state and county taxes alleged to be
due upon the property of the plaintiff in error situate in Putnam
County in that state. The federal question is stated in the opinion
of the Court.
MR. JUSTICE HARLAN delivered the opinion of the Court.
The judgment which this writ of error brings up for review
affirms the liability to taxation, in Missouri, for state and
county purposes, of what was formerly known as the Central North
Missouri Branch of the St. Joseph and Iowa Railroad, more recently
named the Linneus Branch of the Burlington and Southwestern Railway
Company, and now owned by the Chicago, Burlington and Kansas City
Railroad Company, a corporation organized under the laws of
Missouri. The latter company claims to have succeeded to all the
rights, privileges, and immunities granted to the St. Joseph and
Iowa Railroad Company in its charter of 1857, among which was an
exemption of its stock from taxation for "state and county"
purposes. As the construction which the Supreme Court of Missouri
places upon certain legislation, enacted after the charter of the
St. Joseph and Iowa Railroad Company was granted, is inconsistent
with the exemption claimed, the controlling question on this writ
of error is whether the local statutes, as interpreted and applied
by that court, impair the obligation of any contract which the
company had with the state and thereby deprive its successor, the
plaintiff in error, of any rights secured by the Constitution of
the United States.
That question mainly depends upon the construction of an act of
the General Assembly of Missouri entitled "An act to aid in the
building of branch railroads in the State of Missouri," approved
March 21, 1868.
Page 120 U. S. 571
That act took effect from its passage, and is as follows:
"SECTION 1. Any railroad company in this state authorized by law
to build branches, and wishing to avail themselves of the
provisions of this act, shall, by its board of directors, pass and
cause to be entered upon its records a resolution setting forth
such desire and designating the name under which such branch shall
be built, its point of intersection with its main line and general
course, a certified copy of which resolution shall be filed with
the secretary of state, after which they shall be governed by the
provisions of this act."
"SEC. 2. Whenever any such railroad company shall undertake the
construction of a branch designated as provided in the first
section of this act, they shall receive donations or subscriptions
to stock to aid its construction in the name of such branch, which
shall be expressed in the certificate of stock issued. The cost and
expenses of constructing and operating such branch shall be kept
separate and distinct from expenses on the main line. They may
borrow money and issue bonds secured by mortgage on such branch
road to aid in its construction, and, in general, may operate,
lease, sell, or consolidate with any connecting road, distinct and
separate from their main line, and in any other way may manage or
dispose of such branch as by law they may be authorized with
reference to their main line, and separate therefrom."
"SEC. 3. Any branch road so constructed shall not be holden for
any debt, lien, or liability of the main line, nor shall the main
line be holden for any debt, lien, or liability of such branch. Any
dividends of profits arising out of the business of such branch
road shall be divided among the stockholders in said branch, and in
all respects the interest of the stockholders in the branch shall
be kept separate and distinct from the interests of the
stockholders in the main line."
"SEC. 4. The holders of stock in an railroad company which was
subscribed in aid of the construction of a branch road according to
the provisions of this act shall have the same rights as other
stockholders in the company in the choice of officers, but in all
matters directly and specially affecting the interests of such
branch road, the stockholders in such branch
Page 120 U. S. 572
shall control, and for such purpose the directors, under their
bylaws, may, or on the petition of parties representing one-tenth
of such stock shall, call a meeting of the stockholders in such
branch, setting forth the object of such meeting, and at any such
meeting such stockholders may instruct the board of directors in
all matters relating especially to their interests, and they shall
be governed by such instructions, if not inconsistent with the laws
of the state and the powers of such company."
Laws Missouri, 1868, p. 90.
The branch road in question was constructed under the provisions
of that statute. That fact distinctly appears from the preamble and
resolutions adopted by the board of directors of the St. Joseph and
Iowa Railroad Company, March 25, 1871 (a certified copy thereof
being filed April 19, 1871, in the office of the Secretary of State
of Missouri), and expressly stating the purpose of the company to
avail itself of the provisions of the act of 1868 in building this
branch road.
The statute, it will be observed, does not exempt from taxation
stock subscribed in aid of the construction of the branch roads for
which it makes provision. But as it applies to railroad companies
"authorized by law to build branches," and as the St. Joseph and
Iowa Railroad Company was authorized by its charter of 1857 to
build such branch roads as it deemed proper,
State v. County
Court of Sullivan County, 51 Mo. 522, 531, it is contended
that the exemption, by the company's original charter, of its stock
from taxation for state and county purposes extends to stock
subscribed in the name and exclusively for the benefit of the
branch road constructed under the act of 1868.
When that statute was passed, the Constitution of Missouri of
1865 declared that
"No property, real or personal, shall be exempt from taxation
except such as may be used exclusively for public schools and such
as may belong to the United States, to this state, to counties, or
to municipal corporations within this state."
Art. 12, ยง 16.
As perhaps every railroad company organized under the laws of
the state prior to the adoption of the Constitution of 1865 had
general authority to construct branch roads, it is
Page 120 U. S. 573
clear that the construction of the act of 1868 for which the
appellant contends cannot be accepted except upon the theory that
the legislature intended to evade the constitutional inhibition
upon exemptions of property from taxation, for it is plain from the
provisions of the act of 1868 that the roads which it authorized to
be built, although called branch roads, are, for all purposes of
separate ownership and management, independent lines, quite as
distinct from the main lines as if constructed and operated by
other and different corporations. Such provisions as are to be
found in that statute are rarely ever found in legislative
enactments. An analysis of them shows that any "branch" road
constructed under it must be designated by the name under which it
is built; donations and subscriptions in aid of it must be received
in that name; the cost of construction and management must be kept
separate and distinct from expenses incurred on the main line;
money may be borrowed and bonds issued secured by mortgage on the
branch only; the branch road may be sold, operated, leased, or
consolidated with any connecting road of another corporation, or
disposed of separately from the main line; it is liable only for
its own debts, and not for those of the main line; profits arising
out of the business of such branch road can be divided only among
its stockholders, and their interests are to be kept distinct from
those of the stockholders of the main line, and the board of
directors of the company owning the main line are required, in all
matters relating especially to the interests of the stockholders of
the branch road, to follow all instructions given by the latter,
without regard to their effect upon the main line. In other words,
the stockholders of a branch road constructed under the act of 1868
constitute, in effect, a separate organization, having no
connection whatever with the stockholders of the main line except
that the main line and the branch road are, for purposes of
convenience, managed by the same board of directors.
It may be conceded for all the purposes of this case that if the
St. Joseph and Iowa Railroad Company, or the company which
succeeded to its rights, privileges, and immunities, had built a
branch road under the charter of 1857, it could, in respect to that
branch, have
Page 120 U. S. 574
stood upon the exemption contained in its charter. Any stock
issued by it and sold to aid in the construction of such a branch
road would in that case have been on the same footing in all
respects as other stock it may have issued, and its main and branch
lines would have been parts of the same system, controlled by the
board of directors as they deemed proper. But the company elected
not to adopt that course, for the reason, perhaps, that it could
not, in that mode, have raised the money necessary to build a
branch road. In the condition in which all the railroads of
Missouri were left by the civil war, it would have been difficult
to raise money to build branch roads if their future was to be
endangered by connection with main lines which needed repairs, and
the corporations owning which were without credit. It was doubtless
for that reason the St. Joseph and Iowa Railroad Company, instead
of constructing a branch road under the charter of 1857, determined
to avail itself of the provisions of the statute of 1868, which
permitted it to construct and maintain what is called a branch
road, but what in fact would be a road having only nominal
connection with the main line of the company. The branch roads to
which the charter of the St. Joseph and Iowa Railroad Company
referred were, in our judgment, such as would be subject to the
same control and management as its main line, and not roads that
were branch roads only in name, but were distinct lines, operated
solely with reference to the interests, and pursuant to the
directions, of those holding stock therein, irrespective of the
necessities of the main line.
To avoid the conclusion that there was a purpose to devise a
plan whereby railroad property should be exempt from taxation,
which the constitution of 1865 intended should be taxed, we must
assume that the legislature intended to invite railroad
corporations having general power under their charters to construct
branch roads, to waive the exercise of such power, and construct
roads under the provisions of the act of 1868 which, although not
granting an immunity from taxation, yet afforded peculiar
protection to those whose money might be used in such construction.
To say the least, it is not clear that the legislature intended
Page 120 U. S. 575
that the exemption from taxation given by such charters as that
granted to the St. Joseph and Iowa Railroad Company should be
extended to branch roads constructed under the act of 1868. As that
statute does not grant immunity from taxation to roads constructed
under its provisions, and as the system established by it is
complete in itself, without reference to other legislative
enactments, the present claim to exemption must be denied, for it
is the settled doctrine of this Court that an immunity from
taxation by the state will not be recognized unless granted in
terms too plain to be mistaken.
Providence
Bank v. Billings, 4 Pet. 514;
Philadelphia, Wilmington &
Baltimore Railroad v. Maryland, 10 How. 376;
Memphis & Little Rock Railroad v. Commissioners,
112 U. S. 609,
112 U. S. 617;
Southwestern Railroad v. Wright, 116 U.
S. 231,
116 U. S. 236;
Vicksburg &c. Railroad v. Dennis, 116 U.
S. 665,
116 U. S.
667.
As our conclusion upon this point accords with that of the state
court and is sufficient to dispose of the whole case, we omit any
consideration of other questions presented in argument.
Judgment affirmed.