Chicago, B. & K.C. R. v. Guffey, 122 U.S. 561 (1887)

U.S. Supreme Court

Chicago, B. & K.C. R. v. Guffey, 122 U.S. 561 (1887) Chicago, Burlington and Kansas City Railroad v. Guffey

Submitted April 4, 1887

Decided May 23, 1887

122 U.S. 561

ERROR TO THE SUPREME COURT

OF THE STATE OF MISSOURI

Syllabus

It being now conceded that the taxes in suit refer not only to the branch referred to in the former opinion of the Court in this case, reported in 120 U. S. 120 U.S. 569, 120 U. S. 575, but to the taxes assessed upon that part of the main line which extends from Unionville in Putnam County to the boundary line between Missouri and Iowa, the Court now decides, on an application for a rehearing:

(1) That it is satisfied with the construction which it has already given to the statute of the Legislature of Missouri of March 21, 1868.

(2) That the statute of that legislature enacted March 24, 1870, as interpreted by the Court, in its application to the main line, does not impair the obligation of any contract which the St. Joseph & Iowa Railroad Company had, by its charter, with the State of Missouri.

The statute of Missouri of March 24, 1870 (Art. 2, c. 37, § 57 Wagner's Statutes of Missouri, 1872) subjecting to taxation railroads acquired by a foreign corporation by lease, also applies to roads acquired by such corporations by purchase.

No question arises in this case under the provision in the charter of the

Page 122 U. S. 562

St. Joseph & Iowa Railroad Company which authorizes it to pledge its property and franchises to secure an indebtedness incurred in the construction of its road.

This was a petition for a rehearing of the case reported at 120 U. S. 120 U.S. 569.

Page 122 U. S. 569

MR. JUSTICE HARLAN delivered the opinion of the Court.

The opinion heretofore delivered in this case is reported in 120 U. S. 120 U.S. 569. We are now asked by the plaintiff in error to grant a rehearing, chiefly upon the ground that this Court assumed that the only question necessary to be determined was as to

"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 property upon which the assessment in question was made is described in the pleadings in such general terms that it is impossible to ascertain how much of it belongs to what is called the Linneus Branch and how much to what is described in the petition for rehearing as the "main line" of the company.

The Supreme Court of Missouri, as appears from its opinion in the record, after referring to the purchase made in 1871 by the Burlington and Southwestern Railway Company, an Iowa corporation, of the main line and the property, rights, privileges, and franchises of the St. Joseph and Iowa Railroad

Page 122 U. S. 570

Company, said:

"Afterwards, and in 1872, the directors of the Burlington Company, acting by the direction of the stockholders of the branch road, then called the 'Linneus Branch,' placed upon the branch road a mortgage to secure certain bonds. The main line had been previously mortgaged. The defendant purchased the branch road through a foreclosure sale had upon the mortgage thereon. The taxes in suit were assessed upon this branch road property."

Again:

"If, as we have seen, the Burlington Company does not acquire the immunity from taxation, it is difficult to see how any branch built by it could take on the exemption."

Assuming from the language of the court below that the only taxes in suit were those assessed upon the branch road property, we restricted our decision to the single question as to the liability to taxation of branch roads established under the Act of March 21, 1868, entitled "An act to aid in the building of branch roads in the State of Missouri," holding that roads constructed under that statute came, so far as taxation was concerned, under the operation of the clause of the Missouri Constitution of 1865 which declares 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 the state, to counties, or to municipal corporations."

It is now claimed -- and we understand the Attorney General of Missouri, in effect, to concede -- that the taxes in question were in fact laid not only upon the Linneus Branch lying in Putnam County, but upon that part of the defendant's main line which extends from Unionville, in the same county, to the boundary line between Missouri and Iowa. We are therefore asked to determine whether or not the last-described part of the defendant's road is not exempt from taxation for state and county purposes. To this request we yield not only because it is now in effect conceded that that question is covered by the pleadings, but because of the suggestion that other cases are pending in the courts of the state which by stipulation of the parties are to abide the determination of the one now before us.

Page 122 U. S. 571

This claim of immunity from taxation, in respect to the road between Unionville and the Iowa line is upon these grounds: 1., that, by the charter of the St. Joseph and Iowa Railroad Company, granted in 1857, it is provided that "the stock of said company shall be exempt from all state and county taxes" *; 2., that such exemption, in law, extends to the property of that corporation, as represented by its stock; 3., that the defendant, a corporation of Missouri and the successor of the Burlington and Southwestern Railway Company, is entitled to the benefit of the exemption granted to the St. Joseph and Iowa Railroad Company by its charter of 1857.

Conceding for this case that the exemption from taxation of the stock of the St. Joseph and Iowa Railroad Company necessarily embraced the property of the corporation, the question still remains whether that immunity passed to the Burlington and Southwestern Railway Company by its purchase in 1871. The determination of that question depends upon the construction and effect to be given to the second section of an Act of the General Assembly of Missouri approved March 24, 1870. That section became § 57 of Art. 2, c. 37, of Wagner's Statutes of Missouri of 1872, and is as follows:

"Any railroad company heretofore incorporated or hereafter organized in pursuance of law may at any time, by means of subscription to the capital stock of any other railroad company or otherwise, aid such company in the construction of its railroad within or without the state for the purpose of forming a connection of the last-mentioned road with the road owned by the company furnishing such aid, or any such railroad company which may have built its road to the boundary line of the state may extend into the adjoining state, and for that purpose may build or buy or lease a railroad

Page 122 U. S. 572

in such adjoining state and operate the same, and may own such real estate and other property in such adjoining state as may be convenient in operating such road, or any railroad company organized in pursuance of the laws of this or any other state or of the United States may lease or purchase all or any part of a railroad, with all its privileges, rights, franchises, real estate, and other property, the whole or a part of which is in this state, and constructed, owned, or leased by any other company, if the lines of the said road or roads of said companies are continuous, or connected at a point either within or without this state, upon such terms as may be agreed upon between said companies respectively; or any railroad company, duly incorporated and existing under the laws of an adjoining state, or of the United States, may extend, construct, maintain, and operate its railroad into and through this state, and for that purpose shall possess and exercise all the rights, powers, and privileges conferred by the general laws of this state upon railroad corporations organized thereunder, and shall be subject to all the duties, liabilities, and provisions of the laws of this state concerning railroad corporations as fully as if incorporated in this state, provided that no such aid shall be furnished, nor any purchase, lease, subletting, or arrangements perfected, until a meeting of the stockholders of said company or companies of this state, party or parties to such agreement, whereby a railroad in this state may be aided, purchased, leased, sublet, or affected by such arrangement shall have been called by the directors thereof at such time and place and in such manner as they shall designate and the holders of a majority of the stock of such company, in person or by proxy, shall have assented thereto, or until the holders of a majority of the stock of such company shall have assented thereto in writing and a certificate thereof, signed by the president and secretary of said company or companies, shall have been filed in the office of the Secretary of State, and provided further that if a railroad company of another state shall lease a railroad, the whole or a part of which is in this state, or make arrangements for operating the same as provided in this act,

Page 122 U. S. 573

or shall extend its railroad into this state, or through this state, such part of said railroad as is within this state shall be subject to taxation, and shall be subject to all regulations and provisions of law governing railroads in this state, and a corporation in this state leasing its road to a corporation of another state shall remain liable as if it operated the road itself, and a corporation of another state, being a lessee of a railroad in this state, shall likewise be held liable for the violation of any of the laws of this state, and may sue and be sued, in all cases and for the same causes, and in the same manner, as a corporation of this state might sue or be sued if operating its own road; but a satisfaction of any claim or judgment by either of said corporations shall discharge the other, and a corporation of another state being the lessee as aforesaid, or extending its railroad as aforesaid, into or through this state, shall establish and maintain an office or offices in this state at some points on the line of the read so leased or constructed and operated at which legal process and notice may be served as upon railroad corporations of this state."

As the proposed lines of the Burlington and Southwestern Railway Company and the St. Joseph and Iowa Railroad Company would, when constructed, make a connected or continuous line from Burlington, Iowa, to St. Joseph, Missouri, the authority of the former corporation, under the act of 1870, to purchase or lease the road of the latter cannot be doubted.

But as we have seen, the act expressly declares that if a railroad corporation of another state leased a railroad the whole or part of which is in Missouri, or makes arrangements for operating the same as provided in that act, such part of that railroad "shall be subject to taxation." Great stress is laid by counsel on the fact that while the act authorizes a foreign corporation to "lease or purchase" a railroad the whole or part of which is in Missouri, the word "purchase" is not used in the proviso relating to taxation. It is therefore argued that while the legislature intended to subject to taxation railroads in Missouri which were leased, after the passage of the act of 1870, to corporations of other states, it did not intend to tax railroads in that

Page 122 U. S. 574

state which were purchased outright by corporations of other states. That construction of the act is inadmissible. If supported by the mere letter of the statute, it is inconsistent with the manifest object which the legislature had in view -- namely to subject to taxation railroad property in Missouri which passes under the control of a corporation of another state, whether by purchase or by lease, or by "arrangements for operating the same, as provided" in the act of 1870. The state had the right to prescribe, as a condition upon which the road, property, franchises, and privileges of the St. Joseph and Iowa Railroad Company might be placed by any of those modes under the control of a railroad corporation of another state, that such property, after being so transferred, should be subject to taxation. Whether such a condition could be imposed upon a corporation having the right, by its charter, before the act of 1870, to make an absolute sale of its road, privileges, and franchises and to pass to the purchaser whatever immunities from taxation it then enjoyed we do not decide. No such question is now presented.

It is, however, claimed -- such, we think, is the effect of the argument in behalf of the company -- that the St. Joseph and Iowa Railroad Company, for the purpose of enabling it "to construct, equip, and operate said road," had the power, by its charter, as amended November 5, 1857,

"to pledge the said road, rolling stock, machinery, depots, and any other property they may possess, together with the franchises of said road, for the liquidation of any indebtedness said railroad company may incur in the construction of said road."

Missouri Stats. 1857, 73, § 3. This power to pledge, it may be insisted, could not legally be affected or modified by the act of 1870, although that act took effect before any mortgage was put upon the main line. In answer to such suggestions it is sufficient to say that the restricted power of the company thus to pledge its property and franchises for the liquidation of indebtedness incurred in the construction of its road did not authorize it to make, in the first instance, an absolute sale of its property, rights, privileges, and franchises, to a corporation of another state. The power to make the absolute deed

Page 122 U. S. 575

of 1871 to the Burlington and Southwestern Railway Company was given by the act of 1870, and does not appear to have existed before that time. In no view of the case, therefore, were the conditions prescribed by that act in violation of any right possessed by the St. Joseph and Iowa Railroad Company under its charter. If that corporation elected to make an absolute sale of its road, with its property, rights, privileges, and franchises, under the authority given by the act of 1870, they passed to its grantee, subject to the condition that its road in Missouri so sold should thereafter be subject to taxation.

Without pursuing the subject further, we are satisfied with the construction we have heretofore given to the act of 1868, and we are also of opinion that the act of 1870, as in this opinion interpreted, does not impair the obligation of any contract which the St. Joseph and Iowa Railroad Company had by its charter with the State of Missouri.

The rehearing is denied and the judgment of affirmance heretofore entered must, upon the grounds stated in this and the original opinion, stand as the judgment of this Court.

* Act of January 22, 1857, incorporating the St. Joseph and Iowa Railroad Company, Missouri Sess.Laws, 1856-57, p. 107, § 3; Act of February 16, 1847, incorporating the Hannibal and St. Joseph Railroad Company, Missouri Acts of 1847, p. 156, § 7; Act 1837, incorporating the Louisiana and Columbia Railroad Company, Missouri Acts of 1837, p. 240, § 24; State ex Rel. St. Joseph & Iowa Railroad v. Sullivan County, 51 Mo. 522; Cooper v. Sullivan County, 65 Mo. 542.