The jurisdiction of this court is questioned upon the ground that the decision of the Supreme Court of North Carolina conceded the validity of the contract of exemption contained in the act of 1834, but denied that particular property was embraced by its terms; and that, therefore, such decision did not involve a Federal question.
In arriving at its conclusions, however, the state court gave effect to the revenue law of 1891, and held that the contract did not confer the right of exemption from its operation. If it did, its obligation was impaired by the subsequent law, and as the inquiry whether it did or not was necessarily directly passed upon, we are of opinion that the writ of error was properly allowed. New Orleans Water Works v. Louisiana Sugar Co., 125 U.S. 18, 38.
We do not regard Henderson Bridge Co. v. Henderson City, 141 U.S. 679, and St. Paul, Minneapolis &c. Railway Co. v. Todd County, 142 U.S. 282, cited by defendant in error, as qualifying the rule upon this subject.
In Henderson Bridge Co. v. Henderson City, it was held by the Court of Appeals of Kentucky that the city of Henderson under a certain city ordinance accepted by the Bridge Company had acquired a contract right to tax that part of the bridge within the city limits in consideration of rights and privileges granted the company by the ordinance, and as this
In St. Paul, Minneapolis &c. Railway Co. v. Todd County, certain lands were considered by the state court as not within the exemption claimed, under the revenue law existing at its date.
But in the case in hand the court passed upon the action of the authorities in virtue of a legislative act approved more than fifty years after the making of the supposed contract, and explicitly upheld the law.
We are obliged, then, to consider the legality of this taxation in respect of the branch road proper and of the road from Halifax to Weldon.
The inquiry is limited to taxation on corporate property only, though the original exemption also covered the shares of the capital stock in the hands of its shareholders. The legislature recognized the distinction between the one class and the other; and if it were conceded that all the shares should be treated as exempt, as contended, in respect of which we are called upon to express no opinion, yet the entire property of the company might or might not be exempt in the light of all the provisions of the charter with its amendments, and the terms of the authority under which it may have been acquired.
The applicable rule is too well settled to require exposition or the citation of authority. The taxing power is essential to the existence of government, and cannot be held to have been relinquished in any instance unless the deliberate purpose of the State to that effect clearly appears. The surrender of a power so vital cannot be left to inference or conceded in the presence of doubt, and when the language used admits of reasonable contention, the conclusion is inevitable in favor of the reservation of the power.
By its charter the Wilmington and Raleigh Railroad Company, with a capital stock of eight hundred thousand dollars, was empowered to construct, repair and maintain a railroad from Wilmington to Raleigh, and by its nineteenth section it was provided (the punctuation being corrected) that "the
By section 21 branch roads were authorized, the whole capital of subscribed stock not to exceed one million of dollars, and by section 22 it was provided "that all the powers, rights and privileges conferred by the preceding sections upon the said company, in respect to the main road, and the lands through which it may pass, are hereby declared to extend in every respect to the said company, and the president and directors thereof, in the laying out, in the construction and in the use and preservation of said lateral or branch road."
So far from it plainly appearing from this language that the exemption from taxation was thereby extended to branch roads, it seems to us entirely clear that the words used were words of limitation, and in terms confined the powers, rights and privileges granted to those relating to the laying out, the construction, the repair and the operation of the branches.
The powers, rights and privileges conferred by the preceding sections upon the company in respect to the main road, and the lands through which it might pass, embraced the rights and powers necessary for the laying out, construction, repair, maintenance and operation of a railroad, including the power of eminent domain in the various forms of its exercise; in short, the positive rights or privileges, without which the branch roads could not be constructed or successfully worked, but which did not in themselves include immunity from taxation, a privilege having no relation to the laying out, construction, use or preservation of the road.
In Railroad Company v. Commissioners, 103 U.S. 1, the Annapolis and Elk Ridge Railroad Company was "invested with all the rights and powers necessary to the construction and repair" of its railroad, and for that purpose was to "have and use all the powers and privileges" and be subject to the obligations contained in certain enumerated sections of the charter of the Baltimore and Ohio Railroad Company. Among these sections was one containing this provision: "And the shares of the capital stock of the said company shall be deemed and considered personal estate, and shall be exempt
The language of the section under consideration requires the same construction, although the section relates to branch roads of the same company and not to the roads of different companies. The fact that the branches may be component parts of an organic whole; that "the subscribers for the main road and the branches shall constitute but one company, and their rights of property and estate shall be in common, and not separate," (§ 21), does not change the rule, for restrictive words cannot be wrested from their apparent meaning because used in the same charter and with regard to the creation of certain parts of one system, if those subdivisions as authorized have a separate physical existence and constitute in themselves a certain class of property. If other companies had been chartered in the language employed in these sections there could be no question that their property would be liable to taxation, and no reason is perceived for treating these branches as differently situated in this regard.
We cannot accede to the ingenious suggestion of counsel that section 22 was simply a provision for extending to the branches the previous provisions of the charter as to eminent domain only. The powers, rights and privileges were those pertaining to the use as well as the construction of the branches. And if a necessity appeared to exist of specifically conferring upon the company the power of eminent domain in respect of its branch roads, because of the character of the power, it is difficult to see why exemption from taxation should not have been mentioned, for the same reason, if it had been intended to extend that also to the branches. Nor by a play upon the word "extend" can the section be regarded as an enlargement
We do not deny that exemption from taxation may be construed as included in the word "privileges," if there are other provisions removing all doubt of the intention of the legislature in that respect, Picard v. East Tennessee &c. Railroad Co., 130 U.S. 637, 642; but we have none such here.
And in this connection, some further observations may properly be made. As pointed out by the Supreme Court, the charter as originally granted was for the construction of a railroad from Wilmington to Raleigh, a distance of something over one hundred miles, with a capital stock of $800,000; and branches were authorized under the sections referred to, interjected into the body of the act, the capital being, however, limited to $1,000,000. The act of 1835 authorized a change of terminus "to some point at or near the river Roanoke," and an increase of the capital stock to $1,500,000, and the company was also empowered to purchase, own and possess steamboats and other vessels to ply from Wilmington to Charleston, or elsewhere. The act of 1851 permitted an increase of the capital stock to $2,500,000. These acts contained no exemption of property from taxation, nor did the act of 1867, which authorized the company to open books for subscription to build branch roads to the amount of $25,000 per mile, nor any other amendatory act availed of by the company.
Under the act of 1835 the road was built to Halifax, one hundred and fifty-four miles, and by the acquisition of the Halifax and Weldon Railroad was extended to Weldon, making a distance of one hundred and sixty-two miles. The findings show over two hundred miles in branch roads. Doubtless these, or some of them, might be treated as constituting parts of the main line in fact, but under the charter that term is applicable to the line from Wilmington to Halifax, or to Weldon, a consideration involved in another aspect of the case.
By section 33 of the act of 1834, the completion of "the
It remains to examine the case as respects the road from Halifax to Weldon.
Under the amendment of 1835 the Wilmington Company was at liberty to run its main road from Wilmington to Raleigh, or from Wilmington "to some point at or near the river Roanoke."
The Supreme Court held that Halifax was the point on the Roanoke River which, by election of the company, was made the terminus of the main road as authorized, instead of Raleigh. This followed from the fact that the company only built its road to Halifax under its charter, and that Weldon was reached by the acquisition of the road of the Halifax Company under the act of 1836, passed for that purpose.
The main road of the Wilmington Company was exempt, but if the Halifax road after its transfer be regarded as a branch or connecting road, and, at all events, as in law not a part of the main road, then it was not within the exemption of the charter, and the taxation complained of was not illegal. It must be borne in mind that the Halifax road was constructed
The act of 1836 was an act, as its title stated, "empowering the Halifax and Weldon Railroad Company to subscribe their stock to the Wilmington and Raleigh Railroad Company." This was to be done upon such terms as might be stipulated between the two companies, and the terms agreed on were the payment of the Halifax Company's debts, the transfer of its assets, and the issue of certificates to its stockholders of their respective number of shares in the Wilmington Company. Upon that subscription being effected, the act provided that "all the property, real and personal, owned and held" by the Halifax Company should become vested in and be owned and possessed by the Wilmington Company, and be "owned and held and possessed by the said company in the same manner that all the other property, real and personal, which has been acquired by the said company, is owned, held and possessed;" and that the road of the Halifax Company shall "thenceforward be deemed, to all intents, as well criminal as civil, a part of the Wilmington and Raleigh Railroad." The rights and privileges of the Halifax Company thereupon ceased, and its corporate existence was determined. The legal identity of the Wilmington Company remained, while that of the Halifax Company was destroyed; and although the transaction was described by the legislature, in the act of 1875, as a consolidation, it amounted rather to a merger or an amalgamation, and need not be held to have resulted in a new corporation. But it by no means follows that the transfer of the road of the one company to the other made it in law such an extension of the main road of the latter as to bring it within the exemption
The property acquired was, indeed, to be owned, held and possessed by the Wilmington Company in the same manner as its other property, the real estate as in fee simple and the personality as used and enjoyed, but the way in which property is owned and handled has no necessary relation to an exemption. The branch roads are owned, held and possessed in the same manner as the main road, but the extent of the exemption is limited by the charter. And that limitation was neither explicitly nor by fair implication removed by the language of the act of 1836.
Central Railroad &c. Co. v. Georgia, 92 U.S. 665, is much in point. There the Central Company and the Macon Company were authorized to unite and consolidate their stocks and all their rights, privileges, immunities, property and franchises, under the name and charter of the Central Company, and thereupon the holders of the shares of the stock of the Macon Company became entitled to receive a like number of shares of stock in the Central Company, upon surrendering their certificates of stock in the Macon Company. It was held that the consolidation did not amount to a surrender of the existing charters of both companies, and the creation of a new company; that the purpose and effect of the consolidation act were to provide for a merger of the Macon Company into the Central Company, and to vest in the latter the rights and immunities of the former, but not to enlarge them; and that as the Macon Company held its franchises and property subject to taxation, the Central Company, succeeding to the ownership, held them alike subject. It was not doubted that
In Southwestern Railroad Co. v. Wright, 116 U.S. 231, 236, the question related to the liability of the railroad company for taxes on different parts of its road. The original charter contained an exemption from taxation, and as to two of the parts acquired or built under subsequent legislation, there was a reservation of the right to tax. A third division was constructed under an amendatory act giving authority so to do, "under the rules and restrictions" originally prescribed, but containing nothing about taxation. As the original charter was not the source of power to build the division, it was decided that the exemption therein contained did not extend to the latter. Mr. Chief Justice Waite, delivering the opinion of the court, said: "In building this extension or branch the company was placed `under the rules and restrictions' they were subjected to in building the original road; but that did not necessarily imply an exemption of this line from taxation to the same extent that the old road was exempted. That exemption was only for that road, and as the amending act does not in terms or by fair implication apply the exemption to the additional road, which was to be built under it, we must presume that nothing of the kind was intended, and that the state was left free to tax that road like other property."
We concur with the state court in the conclusions reached, as sustained by reason and authority.
It appears from the record of the case of Wilmington and Weldon Railroad Company v. John A. Reid, that certain taxes were imposed in 1869 upon the franchise and rolling stock of the Wilmington Company and upon certain lots of land situated in the county of Halifax, forming part of the property of the company and necessary to be used in the
The case was then taken to the Supreme Court of the State, where it was held that the franchise was liable to taxation, and the order of the Superior Court was reversed. 64 N.C. 226. To review this judgment a writ of error was sued out from this court, and it was thereon decided that a statute exempting all the property of a railroad company from taxation exempts not only the rolling stock and real estate owned by it and required by the company for the successful prosecution of its business, but its franchise also, and the judgment of the Supreme Court was in turn reversed. Wilmington Railroad v. Reid, 13 Wall. 264. These proceedings are relied on as an estoppel so far as the road from Halifax to Weldon is concerned, or as controlling authority in the premises. We think they cannot be so regarded. The causes of action are not identical and the points or questions actually litigated are not the same. The distinction between the road from Halifax to Weldon and the main road from Wilmington to Halifax was not adverted to; and even if that question might have been raised, this suit being upon a different cause of action, the judgment in the former case cannot operate as determining what might have been, but was not brought in issue and passed upon. Cromwell v. County of Sac, 94 U.S. 351; Nesbit v. Riverside Independent District, 144 U.S. 610.
It is quite evident that the former action was simply availed of in order to obtain a decision as to the power to tax the main line, and that no other point was controverted.