Trask v. Maguire, 85 U.S. 391 (1874)
Trask v. Maguire, 85 U.S. 391 (1874)
Trask v. Maguire, 85 U.S. 391 (1874)
391
21 L.Ed. 938
18 Wall. 391
TRASK
v.
MAGUIRE.
October Term, 1873
APPEAL from the Circuit Court for the District of Missouri; in which
court Trask filed a bill against Maguire, collector of State and county taxes
at St. Louis, to restrain him from collecting taxes upon the property of the
St. Louis and Iron Mountain Railroad Company, a corporation organized
in the State of Missouri, July 26th, 1867, and to have the property of the
said company decreed exempt from liability to such taxes.
The case was this:
A general corporation law of Missouri, in force in 1845, thus ordained:1
'The charter of every corporation that shall hereafter be granted by the
legislature shall be subject to alteration, suspension, and repeal, at the
discretion of the legislature.'
This provision of general law being in force, the legislature of Missouri,
on the 3d of March, 1851, passed 'An act to incorporate the St. Louis and
Iron Mountain Railroad Company.' The capital stock of the company was
$6,000,000, and it was enacted that
'The stock of said company shall be exempt from all State and county
taxes.'
On the 17th of February, 1853, it was enacted that the railroad
abovementioned as having been incorporated should be exempted from
the provisions of the general corporation law already quoted. The statute
further enacted:
'All the engines, cars, wagons, machines and other property belonging to
said company, shall be deemed a part of the capital stock of the company,
and shall be vested in the respective shareholders of the company forever,
privileges, and immunities which were had and enjoyed by' the original
corporation 'under the charter and the laws amendatory thereof.'
One month after the passage of the act just quoted, and pending
proceedings thereunder for the sale of the road, another act was passed,
approved March 20th, 1866, entitled, 'An act authorizing the incorporation
of the purchaser or purchasers of any railroad, or of any part, section, or
branch thereof, which has heretofore or may hereafter become forfeited to
and sold by the State.' That act enacted thus:
'SECTION 4. Each corporation provided under this act shall have the
same power, franchises, right, and privileges, and be subject to the same
liabilities and restrictions as the corporation to which it shall become the
successor may have had by its original charter, and the amendments
thereto, into and over the property and franchises forfeited and sold
aforesaid.'
At the sale, which the governor advertised, the State bought the railroad
and its appurtenances in: and the commissioners sold it to three persons,
who afterwards sold it to one Allen. Allen, availing himself of the
privileges of the last above-quoted act, organized himself and certain
other persons, including 'Trask, already named as the complainant below,
into a new corporation having the name of the old one.
Hereupon the defendant, Maguire, a collector, as already said, of State and
county taxes in Missouri, having sought to levy certain State and county
taxes on this new corporation, Trask filed a bill in the court below to
enjoin him, and that court dismissed the bill. Trask now appealed from
that decree.
Messrs. B. R. Curtis and Drydens, for the appellant:
That the property of the original corporation was exempt from taxation is
undeniable. It is nearly or quite as clear that if the purchaser at the sale
which was made had been a private person, or a corporationany
purchaser other than the Statesuch purchaser would have held what he
bought, equally exempt. The lien of the mortgage was 'on the road of the
company, and every part and section thereof, and its appurtenances.' That
by the word appurtenances it was meant at the time that all rights,
franchises, privileges, and immunities should pass under the lien is hardly
questionable. In any but a purely technical sensethe sense in which the
word is used in a deedappurtenances would certainly include them.
They would certainly do so alike in the popular and in the legislative
sense, and these are the only important senses to be considered here; for
stores.
It was the clear intention of the convention to give to the purchaser all that
was enjoyed by the companies in default, and it was just as clearly within
the competency of the convention to give what it thus intended to give,
whether the franchises previously given out had come back to the State or
not. And as all parties, vendor and vendee, here contracted upon the idea
that the one was giving and the other receiving the franchises claimed, it
is no hardship to hold nor is it any stretch of judicial authority to decide
that in law the convention gave what it then intended to give, and had the
power to give.
Mr. R. E. Rombauer, contra .
Mr. Justice FIELD delivered the opinion of the court.
The question presented for our determination in this case is, whether the
property of the present St. Louis and Iron Mountain Railroad Company, a
corporation created under the laws of Missouri, is, by an irrepealable legislative
grant, forever exempted from all State and county taxes. Two corporations
bearing that name have existed in Missouri, the second succeeding the first in
the possession and ownership of its road and property. The first was created by
an act of the legislature of the State, passed in March, 1851; the second was
formed in July, 1867, under an act of the previous year authorizing the
incorporation of the purchaser or purchasers of any railroad, or any part,
section, or branch thereof, which had previously been, or might thereafter be,
forfeited to or sold by the State.
The property of the first corporation was undoubtedly exempt from State and
county taxes. The act of incorporation adopted as part of it a provision of
another act, which declared in terms that the stock of the company should be
thus exempt.4 It is true that at this time a statute was in existence, passed in
1845, which declared that the charter of every corporation subsequently granted
should be subject to alteration, suspension, and repeal at the discretion of the
legislature. But from the operation of this provision the company was expressly
exempted by an act amendatory of its charter, passed in 1853.5 From that time
at least the exemption of its stock from State and county taxation was placed
beyond legislative interference. The amendatory act also declared that all the
engines, cars, wagons, machines, and other property belonging to the company
should be deemed a part of its capital stock, and be vested in its respective
shareholders, according to their respective shares. All the property of the
company was thus placed within the exemption which attached to the original
stock; that designated was to be deemed a part of such stock, as well as that
originally embraced by this term.
3
On the argument some attempt was made, from the use of the term stock in the
original act, and the language of the amendatory act, that the property should
be vested in the respective shareholders according to their respective shares, to
establish the position that the exemption extended only to the separate shares of
the individual stockholders. But the argument does not strike us as possessing
much force. The terms 'stock of the company,' imported the capital stock of
such company, the subscribed fund which the company held, as distinguished
from the separate interests of the individual stockholders. The language of the
amendatory act did not qualify this meaning; that only declared that other
property of the company should also be deemed capital stock, and the
additional provision that it should be vested in the respective shareholders,
according to their respective shares, only meant that they should have the
interest of shareholders in the property, according to their respective shares.
Under the different acts bonds of the State to a large amount were issued to the
company; its acceptance of them in proper form was given to the secretary of
state, and the acceptance was duly recorded, and from the date of such record
the State acquired, for the payment of the principal and interest of the bonds, a
lien upon the road and every part and section thereof and its appurtenances.
6
The company failed to pay the interest on these bonds. It does not appear for
how long a period the company was thus in default, nor is this material. It is
sufficient to say that in 1865 the right of the State, under the provisions of the
acts cited, to interfere and sell the property, had become complete. Before a
sale, however, was made the legislature passed another act for the sale of this
and other railroads by the governor, and the foreclosure of the State lien
thereon. This act, which was approved in February, 1866, among other things
required the governor to advertise for sale the different railroads, with their
appurtenances, rolling stock, and property of every description, and all rights
and franchises thereto belonging; and to sell the same at auction to the highest
bidder, in pursuance of the several acts creating a lien thereon. It also provided
for the appointment of three commissioners to attend the sale of the different
roads as advertised, and to bid in the same for the use and benefit of the State
for an amount not exceeding the respective liens thereon; and in case the roads
were struck off and sold to them, to take possession of and hold the same, with
their appurtenances and property, and again, after due advertisement, inviting
proposals for the purchase of the different roads, their lands, appurtenances,
and franchises, to resell the same. Under this act the St. Louis and Iron
Mountain Railroad was advertised for sale, with its rights and privileges, and at
the sale was bid in by the commissioners for the State. However broad the
terms of the advertisement, the interest sold could not extend beyond the
property upon which the State at the time held a lien, and this was the entire
road of the company and its appurtenances. But as the property was sold to the
State it is unnecessary to determine whether, if the sale had been made to a
third party, the immunity from taxation possessed by the company would have
passed to the purchaser. When the State became the purchaser the immunity
ceased; the property stood in its hands precisely the same as any other
unincumbered property of the State, exempt from taxation, not by virtue of any
previous stipulation with the company, but as all property of the State is thus
exempt. Subsequently the road and its appurtenances, and all the franchises,
which, under the new constitution of Missouri, adopted in 1865, were
transferable by the State, were sold by the commissioners to McKay, Vogel,
and Simmons, who conveyed the same to Thomas Allen, who with others, in
July, 1867, became incorporated under the name of the St. Louis and Iron
Mountain Railroad Company. That company is still in existence, and is one of
the defendants herein. To it Allen transferred all the rights and privileges
acquired by him from his vendors, and all which they acquired from the State.
The act under which the sale was made provided that the purchasers of the road
should have all the rights, franchises, privileges, and immunities which were
enjoyed by the defaulting company under its charter and laws amendatory
thereof, subject to the limitations and conditions therein contained, and not
inconsistent with the act authorizing the sale. The new company thus acquired
all the immunity from taxation which the original company had possessed, if it
were competent for the legislature at the time, under the new constitution, to
confer this privilege. The question, therefore, is, whether the legislature was
competent to grant the immunity claimed, under that constitution, which went
into operation on the 4th of July, 1865, previous to the passage of any of the
acts authorizing the proceedings under which the new company acquired its
rights.
7
The sixteenth section of the eleventh article of that instrument provides 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;'
and the twenty-seventh section of the fourth article declares that 'the General
Assembly shall not pass special laws . . . exempting any property of any named
person or corporation from taxation.'
defaulting company until it shall have first paid the interest due from it, and
that no sale or other disposition of any such railroad or other property, or its
franchises, shall be made without reserving a lien upon the property and
franchises thus sold or disposed of for all sums remaining unpaid.
9
Now, the argument of the appellants is that as the ordinance authorizes the
legislature to provide for the sale of the franchises of a defaulting corporation,
it can transfer under that designation immunity from taxation, if the company
ever possessed such immunity; and that this was the effect of the sale of the St.
Louis and Iron Mountain railroad and its franchises to McKay, Vogel, and
Simmons. And authority for this position is supposed to be found in the
answers given by the judges of the Supreme Court of Missouri, in November,
1865, to certain questions propounded by the governor under a provision of the
constitution authorizing him to take their opinion on important questions of
constitutional law. The questions propounded were substantially these:
10
1st. Whether the provisions of the ordinance operated to suspend the right of
the State to sell the roads named, or either of them, until there was a refusal or
neglect to pay the tax imposed by the ordinance; or whether the State might
order the sale of the railroads or either of them, prior to such refusal or neglect;
11
2d. If the judges were of opinion that a sale of the railroads might be ordered
before such refusal or neglect, whether such sale could be made 'without
reserving a lien upon all the property and franchises thus sold for all sums
remaining unpaid,' or, in other words, whether this clause constituted a
condition of all sales of railroads ordered by the State, or referred only to sales
made under the ordinance for refusal and neglect to pay the tax.
12
3d. If the judges should be of opinion that all sales of railroads by authority of
the State were subject to the restriction mentioned, whether the words 'all sums
remaining unpaid' referred to the sums for which the railroad sold was in
default, or to that portion of the purchase-money not paid in cash at the time of
sale; and,
13
4th. Whether upon a sale of a railroad under a lien of the State the constitution
authorized the State to receive, in payment of the purchase-money, preferred or
other shares of stock issued by a corporation purchasing the road.
14
None of these questions, as will be perceived, call for any opinion as to the
effect of the sale of the franchises of a road, or the meaning of that term. They
call only for an opinion upon the power of the legislature to order a sale of the
roads, the liens to be reserved, the payments to be made, and the right to receive
shares of stock of a purchasing corporation. The answer of the judges stated
that the fifth section of the ordinance related to all sales of railroads, whether in
default for not paying the interest on the bonds of the State or not paying the
tax levied; that when the State had become the purchaser of any railroad sold
under the lien of the State, the General Assembly could provide in what manner
such railroad could again be sold for the payment of the indebtedness which
the State had incurred on account of bonds loaned to it or guaranteed for its
benefit; that it would have had this power without the aid of the ordinance, but
that no sale or other disposition of any such railroad, or other property, could be
made by the State without reserving a lien upon the property sold for all sums
remaining unpaid, and that the purchaser was required to make all payments
therefor in money or in bonds or other obligations of the State; and then adds
that the 'legislature is left unrestricted further as to the time, terms, and
conditions of the sale.' This language is supposed to determine that in the sale
of such property the legislature is not bound by the provisions of the
constitution we have cited.
15
But we do not think the language used justifies any such conclusion, but was
rather intended to indicate that the ordinance imposes no other restrictions than
those designated, and has no reference whatever to the clauses of the
constitution in respect to which no opinion was asked.
16
It seems to us that the plain meaning of the ordinance, when it says that the
General Assembly shall provide by law in what manner the railroad and its
franchises shall be sold, is that they shall be sold in conformity with such law as
the legislature may constitutionally pass, not in conformity with any law which
the legislature could devise if it had unlimited discretion in the matter. It would
conflict with well-settled rules of construction to hold that the language used
authorizes any legislation regardless of the provisions of the constitution. And
there is nothing in the authority conferred to provide for the sale of its
franchises with the road of the defaulting company, which requires immunity
from taxation to be embraced within them. The language evidently refers to
such franchises as are essential to the operation of the road sold, without which
the ownership of the road would be comparatively valueless, such as the
franchise to run cars, to take tolls, and the like.
17
But if we are mistaken in this particular, we are clear that it never was intended
by the ordinance to sanction, by the sale of the franchises of a defaulting
corporation, the renewal of an exemption which had once ceased to exist, and
which the constitution had declared should never thereafter be created. The
inhibition of the constitution applies in all its force against the renewal of an
exemption equally as against its original creation; and this inhibition the
legislature could not disregard in providing for the sale of the property which it
had purchased.
18
JUDGMENT AFFIRMED.
Pickering v. Steples, 5 Sergeant and Rawle, 107; Rouvier's Law Dictionary, title
'Appurtenances.'