An act of assembly of a state passed in 1851 to incorporate a
railroad company chartered a corporation, but did not exempt its
property from taxation. An act passed in 1855 to amend its
charter did exempt it. In 1863, an act was passed
conferring on a company which had been incorporated in 1849 to
build a railroad, but which had never yet found inducements
sufficient to make it build the road, all the rights, powers, and
privileges "granted by the
charter" of the first-named
road.
Held:
1st. That the property of the second road was made, by the Act
of 1863, exempt from taxation.
2d. That the legislature could not repeal the Act of 1863 so as
to subject it to taxation.
On the 16th of December, 1851, the Legislature of South
Carolina, by "an act to incorporate the Northeastern Railroad
Company," chartered the corporation now known by that name. This
act contained no exemption of the company's property from taxation,
and by its terms was to continue in force for fifty years from the
ratification thereof.
On the 19th of December, 1855, the same legislature passed
another act, entitled "An act to
amend the charter of the
Northeastern Railroad Company, and for other purposes." This act
enacted:
"SECTION 1. That the stock of the Northeastern Railroad
Page 83 U. S. 245
Company and the real estate that it now owns, or may hereafter
acquire, which is connected with or subservient to the works,
authorized in the charter of the said company,
shall be, and
the same is hereby, exempted from all taxation during the
continuance of the present charter of the said company."
Prior to the date of either of these acts, that is to say, on
the 19th of December, 1849, the same legislature had, by an act
entitled "An act to charter the Cheraw & Darlington Railroad
Company," incorporated the company of that name. This act, after
authorizing the formation of the company and the raising of the
stock, provided thus:
"SECTION 5. That
for the purpose of organizing and forming
this company . . . all the powers, rights, and privileges
granted by the
charter of the
Wilmington and
Manchester Railroad Company to that company shall be and are
hereby granted to the Cheraw & Darlington Railroad
Company,"
&c.
The powers, rights, and privileges here referred to as granted
by the charter of the Wilmington and Manchester Railroad Company,
whose name is above italicized, to that company, did not include
any exemption of its property from taxation.
The Cheraw & Darlington Railroad Company thus, as above
mentioned, incorporated in 1849, had not up to the 17th of
December, 1863, built its road; and on the day and year last
mentioned the same legislature amended its charter by the passage
of the act which thus enacted:
"SECTION 1. That section 5 of an act entitled 'An act to charter
the Cheraw & Darlington Railroad Company,' ratified the 19th
day of December, A.D. 1849, be amended so as to read as follows,
to-wit:"
"That all the powers, rights, and privileges granted by the
charter of the Northeastern Railroad Company are hereby granted to
the Cheraw & Darlington Railroad Company, and subject to the
conditions therein contained."
Soon after this amendatory act of 1863 was passed, the Cheraw
& Darlington Railroad, which had been lying dormant since 1849,
was built and put in operation.
These different enactments above mentioned being in
Page 83 U. S. 246
force, the state officers of counties in South Carolina where
the Cheraw & Darlington Railroad was situate, acting under the
authority of the legislature of the state, imposed certain taxes on
the stock and property of that company, and were proceeding to
enforce payment of them, when one Pegues, a stockholder in
Mississippi, filed a bill in the court below praying an injunction
to restrain the collection. The court granted the injunction, and
from this, its action, the county officers appealed. The question
was whether (as Pegues, the complainant, contended) the Act of
December 19, 1855, "to amend the charter of the Northeastern
Railroad Company," &c., and exempting its property from
taxation, formed a
part of its charter when, on the 17th
of December, 1863, the privileges granted to
that company
were conferred on the Cheraw & Darlington company; or whether
(as the State of South Carolina contended) the privileges thus
conferred were limited to those granted to the Northeastern company
by its original charter or act of incorporation, passed in 1851, by
which no exemption from taxation was conferred.
Page 83 U. S. 247
MR. JUSTICE HUNT (having quoted the several statutes above
given) delivered the opinion of the Court.
The stockholders of the Cheraw & Darlington Company contend
that the Act of the 19th of December, 1855, entitled "An act to
amend the charter of the Northeastern Railroad Company," &c.,
formed a part of the charter of the Northeastern Company in 1863,
when the privileges conferred upon that company were granted to the
Cheraw & Darlington Company.
The state contends that the privileges thus granted were limited
to those conferred upon the Northeastern by its original charter or
act of incorporation, passed in 1851.
All the "privileges," as well as powers and rights of the prior
company, were granted to the latter. A more important or more
comprehensive privilege than a perpetual immunity from taxation can
scarcely be imagined. It contains
Page 83 U. S. 248
the essential idea of a peculiar benefit or advantage, of a
special exemption from a burden falling upon others.
There is nothing in the terms of the statute of 1863 to indicate
that the legislature intended to limit the privileges conferred
upon the Cheraw Company to those granted to the Northeastern
Company by its original act of incorporation, and to exclude the
important privileges contained in the amending act. The charter of
the Northeastern Company, as it existed in 1863, was based upon the
two acts of the legislature, passed in 1851 and 1855, respectively.
The first act was entitled an "act to incorporate" the Northeastern
Company. The latter act was entitled "an act to amend the charter
of the Northeastern Company." A charter, in the sense here used, is
an instrument or authority from the sovereign power, bestowing
rights or privileges; as it is briefly expressed, it is an act of
incorporation. Such was the obvious understanding of the word by
the legislature of South Carolina. The first act was expressed as
creating the incorporation of the company; the second, using a
synonymous expression, purported to amend its charter. The words
charter and act of incorporation were used convertibly. Whether it
be said that the rights and privileges conferred upon the
Northeastern, as they stood in 1863, existed in its charter or were
derived from its incorporation amounts to the same thing. We have
no doubt that all of them were intended to be granted to the Cheraw
Company by the Act of that year. The charter or incorporation of
1851 had been amended in 1855, and by an act which purported in its
title not to create an original authority, but by amending the
original charter to bestow additional powers upon the company.
After the passage of the amended act, the Northeastern was, in law,
as if it had originally been chartered, with all the rights,
powers, and privileges conferred upon it by the Act of 1855. Such
was the legal effect of the amendment; and such, no doubt, was the
understanding of its effect by the legislature of South Carolina,
when, in 1863, they conferred all its powers and privileges upon
the Cheraw Company. The case shows that from 1849 to 1863 no
sufficient
Page 83 U. S. 249
inducements had been found to procure the building of the Cheraw
road. We are not advised what other powers and privileges were then
and there conferred upon it in addition to the exemption we are
considering. But this exemption was conferred; an exemption that
must have been understood by the least reflecting person as being
of immense value to all concerned in the road. The road was soon
afterwards built, and has since then been and now is in operation.
These facts serve to show -- first, that there was, in this
instance, the consideration that at any time exists for the
granting by the legislature of such privilege to aid the acceptance
of the same and the building of the road; and, secondly, the
intention of the legislature, by omitting a reference to the
original act of incorporation, to grant all the powers and
privileges that had been at any time conferred upon the
Northeastern Company.
Another question is raised, to-wit: that a legislature does not
possess the power to grant to a corporation a perpetual immunity
from taxation. It is said that the power of taxation is among the
highest powers of a sovereign state; that its exercise is a
political necessity, without which the state must cease to exist,
and that it is not competent for one legislature, by binding its
successors, to compass the death of the state. It is too late to
raise this question in this Court. It has been held that the
legislature has the power to bind the state in relinquishing its
power to tax a corporation. [
Footnote 1] It has been held that such a provision in the
charter of an incorporation constitutes a contract which the state
may not subsequently impair. [
Footnote 2] These doctrines have been reiterated and
reaffirmed so recently as the year 1871, in an opinion delivered by
Mr. Justice Davis in the case of
Wilmington Railroad v.
Reid. [
Footnote 3] They
must be considered as settled in this Court.
Judgment affirmed.
[
Footnote 1]
Jefferson Bank v.
Skelly, 1 Black 436.
[
Footnote 2]
Providence Bank v.
Billings, 4 Pet. 514;
Dartmouth
College v. Woodward, 4 Wheat. 518;
The
Binghamton Bridge, 3 Wall. 51.
[
Footnote 3]
80 U. S. 13 Wall.
264.
