103 Va. 337 | Va. | 1905
delivered the opinion of the court..
On December 1, 1787, the General Assembly of Virginia granted a charter to the Dismal Swamp Canal Company, which among other things recites, “that for and in consideration of the expenses the said proprietors will be at, not only in cutting the said canal, erecting locks, making causeways and performing other works necessary for this navigation, but in maintaining and keeping the same in repair, the said canal, locks, causeways, and other works, with all their profits, shall be and the same are hereby vested in the said proprietors, their heirs and assigns forever, as tenants in common in proportion to their respective shares, and the same shall be deemed real estate, and be forever exempt from the payment of any tax, imposition, or assessment whatever, and it shall and may be lawful for the said president and directors at all times for ever hereafter to demand and receive at some convenient place near one of the extremities of the canal, for all commodities transported through it or over the causeways, tolls, according to the following table and rates Avhich shall be in Spanish milled dollars, to-wit
In the concluding section of the charter it is provided that the act creating the corporation should be in effect from and after the passage of a like act by the General Assembly of North Carolina, and such an act was passed in the year 1790, and the internal improvement contemplated in the charter was undertaken, completed, and put into operation.
In the year 1867 a deed of trust was executed upon all the property of the company, which was foreclosed in 1880, and conveyance made to certain purchasers who assumed the corporate name of the Dismal Swamp Canal Company. This company in turn executed a deed of trust upon all the property of the canal of every character to certain trustees, which was foreclosed and conveyance made in 1889 to certain purchasers who assumed the
The Lake Drummond Company now owns the canal and all its property and appurtenances, and, on the 29th of February, 1904, the State Corporation Commission issued a summons requiring it to appear and show cause why a fine should not be imposed upon it for failing to make report to the Commission, as provided by section 27 of an act of the General Assembly of Virginia, approved April 16, 1903, of all its real and personal property of every description, and of its receipts for transportation. In obedience to this summons, the company appeared and answered, claiming that all the franchises, rights- and privileges conferred upon the Dismal Swamp Canal Company by the act of 1787, whereby an irrepealable immunity from taxation was granted by the State, have, by virtue of the foreclosures under the several deeds of trust before mentioned, devolved upon and vested in the present Lake Drummond Canal & Water Company.
The State Corporation Commission was of opinion that the answer was insufficient, and imposed a fine upon the defendant for failure to make report as required by law, and from this order the Canal Company appealed.
It would be a fruitless task to inquire into the power of a State legislature to enter into a contract granting a perpetual immunity from taxation so as to bind succeeding legislatures. The power is too thoroughly established by authority to be any longer open to question.
In The State of New Jersey v. Wilson, 7 Cranch. 165, 3 L. Ed. 303, the Supreme Court held, Judge Marshall delivering
The case under consideration possesses all the elements of a contract. The act of 1787 recites, “that for and in consideration of-the expenses the said proprietors will be at, not only in cutting the said canal, erecting locks, making causeways, and performing other works necessary for this navigation, but in maintaining and keeping the same in ■ repair, the said canal, locks, causeways, and other works . .' . shall-be . . . forever exempt from the payment of any tax, imposition or assessment whatever,” • and there can be no doubt that, in the language of the Corporation Commission, there was a contract between the State and the corporation, which could not be violated by the State by any attempt' in the future to repeal the immunity from taxation granted to this corporation! It remains then to consider whether or not this immunity has passed to the present corporation.
In the petition for appeal it is claimed that the charter of the Dismal Swamp Canal Company contains a perpetual exemption from taxation of “all the property, rights and franchises of the company, its successors and assigns,” ánd this exemption accrues to the benefit of the petitioner by force of sections 1233 and 1234 of the Code of Virginia, -bv which it became such successor and assignee by thé name of 'the Lake Drummond Canal and Water Company; and, secondly, that the exemption being a contract with the State of Virginia, and a compact between the State of Virginia and the State- of Horth Carolina, expressly declared by the concurrent acts of said States, the act of assembly of April 16, 1903,- section 27, under which this proceeding
Sections 1233 and 1234 of the Code are as follows:
“Sec. 1233. Sale of company’s property under deed of trust; what it passes; dissolution of company; purchaser, a corporation. — If a sale be made under a deed of trust or mortgage executed by a company on all its works and property, and there be a conveyance pursuant thereto, such sale and conveyance shall pass to the purchaser at the sale, not only the works and property of the company as they were at the time of making the deed of trust or mortgage, but any works which the company may; after that time and before the sale, have constructed, and all other property of which it may be possessed at the time of the sale, other than debts due to it. Upon such conveyance to the purchaser, the said company shall ipso facto be dissolved. And the said purchaser shall forthwith be a corporation, by any name which may be set forth in the said conveyance, or in any writing signed by him and recorded in the court in which the conveyance shall be recorded.
“Sec. 1234. The corporation created by or in consequence of such sale and conveyance shall succeed to all such franchises, rights, and privileges, and perform all such duties as would have been had, or should have been performed, by the first company, but for such sale and conveyance, including the duty of maintaining and operating any branch or lateral road which may have been constructed and operated before the sale, and of transporting freight and passengers therein save only that the corporation so created shall not be entitled to the debts due to the first company, and shall not be liable for any debts of, or claims- against, the said first company which may not be expressly assumed in the contract of purchase, and the whole*343 profits of the business done by such corporation shall belong to the said purchaser and his assigns. His interest in the corporation shall be personal estate, and he or his assigns may create so many shares of stock therein as he or they may think proper, not exceeding together the amount of stock in the first company at the time of the sale, and assign the same in the book to be kept for that purpose. The said shares shall thereupon be on the footing of shares in joint stock companies generally, except only that the first meeting of the stockholders shall be held on such day and at such place as shall be fixed by the said pui*chaser, of which notice shall be published for two successive weeks in a newspaper.”
Without undertaking to trace the history of these sections beyond the Code of 1849, it is enough to say that they have undergone little change since that time. To those sections the Lake Drummond Company must look for its corporate franchises, rights and privileges. By force.of section 1233 the foreclosure of thei deed of trust and conveyance to the purchaser under it by the Dismal Swamp Canal Company, operated ipso facto to dissolve that company, and so with the successive sales, purchases and conveyances under subsequent deeds of trust. By section 1234, the new corporation thus created succeeds to “all such franchises, rights and privileges, and perform all such duties as would have been had, or should have been performed by the first company, but for such sale and conveyance.”
It follows from what has been said that the existing company, by virtue of the conveyance to it, and as a corporation having its origin and existence only under and by force of section 1234, succeeds to only such franchises, rights,.and privileges as pass by force of the language employed in that section, and not by virtue of the assignability of the original contract of exemption from taxation granted to the Dismal Swamp Oanal Company, its successors and assigns.
The ease of an artificial person — of ¿ corporation deriving its existence, its capacities and its- franchises from the State — is wholly different from that of a natural person.' In the Indian land case, all that was enjoyed by-the Indians passed to the purchaser from them. In the absence of objection by the State, its assent in such case being presumed. In the case of a corporation its- capacity to take is to be measured by the expressed will of the State.
What force then is to be given to the words, “franchises, rights, and privileges in-this section ?
There are numerous cases decided by the Supreme Court of the United States upon the subject, and it is a matter bf regret that they appear not to be entirely harmonious. There is, however, a principle upon which they seem to- be agreed. ■
In Tucker v. Ferguson, 22 Wallace, 527, 22 L. Ed. 805, the principle is maintained that the taxing power may be restrained by contract in special cases for the public good, but such a contract “is to be rigidly scrutinized, and never permitted to extend, either in scope or duration, beyond what the terms of the concession clearly require.”
In Chicago, Burlington, &c. R. R. Co. v. State of Missouri, 120 U. S. 569, 30 L. Ed. 732, 7 Sup. Ct. 693, Justice Harlan said: “It is a 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.”
In Pickard v. East Tenn., &c. R. Co., 130 U. S. 637, 32 L. Ed. 1051, 9 Sup. Ct. 640, Justice Eield says: “It has been held, and the doctrine has been so often repeated that it is no longer an open question, that the legislature 'of a State may exempt the property of particular persons or corporations from taxation, either for a limited period or perpetually; but to justify the conclusion that such exemption is granted, it must appeár by language so clear and unmistakable as to leave no doubt of the
Can it be said that section 1234, in clear and unambiguous language justifies the conclusion that the legislature intended that the original immunity from taxation granted to the Dismal Swamp Canal Company, should pass to and vest in the Lake Drummond Canal & Water Company? TJpon this point, as we have said, the authorities are not easy to be reconciled.
In Humphrey v. Pegues, 16 Wall. 244, 21 L. Ed. 326, it appears that the Cheraw & Darlington Railroad Company was chartered by the General Assembly of South Carolina, which provided, that for the purpose of organizing and forming the company, all the powers conferred by the charter of the Wilmington & Manchester Railroad Company on the commissioners therein named, should be vested in the town of Cheraw, and all
In Morgan v. State of Louisiana, 93 U. S. 217, 23 L. Ed. 860, Mr. Justice Eield uses the following language: “Much confusion of thought has arisen in this case and in similar cases from attaching a vague and undefined meaning to the term 'franchises.’ It is often used as synonymous with rights, privileges and immunities, though of a personal and temporary character; so that, if any one of these exists it is loosely termed a 'franchise/ and is supposed to pass upon a transfer of the franchises of the company. But the term must always be considered in connection- with the corporation or property to which it is alleged to appertain. - The franchises of a railroad corporation are rights or privileges which are essential to the operations of the corporation, and without which its road and works would be of little value-; such as the franchise to run cars, to take tolls, to appropriate earth and gravel for the bed of its road, or water for its engines, and the like. They are positive rights or privileges, without the possession of which the road of the company could not be successfully worked. Immunity from taxation is not one of them. The former may be conveyed to the purchaser of the road as part of the property of the company; the latter is personal, and incapable of transfer without express statutory direction.” Railroad Co. v. Hamlin County, 102 U. S. 273, 26 L. Ed. 152; Pickard v. Railroad Co., supra.
In Phoenix Fire & Marine Ins. Co. v. State of Tenn., 161 U. S. 174, 40 L. Ed. 660, 16 Sup. Ct. 471, Mr. Justice Peckham says: “It cannot be denied that the decisions of this court' are somewhat involved in relation to this question of exemption. It is difficult in -some cases to distinguish the language used in each so far that the different results arrived at by the court can be seen to be founded upon a real difference in the meaning of such language. The question has sometimes arisen upon the consolidation of different companies, and sometimes upon a sale under a mortgage foreclosure. Among the former is the case of Keokuk & W. R. Co. v. Missouri, 152 U. S. 301, 38 L. Ed. 450, 14 Sup. Ct. 592, where under the laws of Missouri there was a provision that the consolidated companies should be ‘subject to all the liabilities and bound by all the obligations of the companies within this State,’ and ‘be entitled to the same franchises and privileges under the laws of this State as if the consolidation had not taken place.’ The question was said to admit of doubt whether under the name ‘franchises and privileges’ an immunity from taxation passed to the new company. Various cases are cited in the opinion, which was delivered by Mr. Justice-Brown, -showing the grounds taken by this court in such cases.” The learned judge then discusses the decisions upon this subject, and reaches this conclusion: “If this were an original question, we should have no hesitation in holding that
In the Gulf & Ship Island Ry. Co. v. Hewes, 183 U. S. 66, 46 L. Ed. 86, 22 Sup. Ct. 26, speaking of the construction to be given to language such as is used in section 1234, the court says that the better opinion is that a subrogation’ to the rights and privileges of a former corporation, does not include an immunity from taxation; citing Phoenix Fire & Marine Ins. Co. v. Tenn., supra.
We come now to a case in which the Supreme Court has construed a statute identical with that found in our Code.
The State of West Virginia, by a charter granted to the Covington & Ohio Railroad Company, provided that “no taxation upon the property of the said company shall be imposed by the State until the profits of said company shall amount to ten per cent, on the capital of the company.” Subsequently the legislature of that State passed an act which authorized a consolidation of the Covington & Ohio Railroad Company, when organized under the act of March 1, 1866, with one or more railroad companies, including the West Virginia Central Railway Company, the consolidated company to be known as the Chesapeake & Ohio Railroad Company, and to be vested with “all the rights, privileges, franchises and property which may
“It is earnestly contended on behalf of the plaintiff in error, that by virtue of this language, it is entitled to enjoy the property formerly belonging to the Chesapeake & Ohio Kailroad Company, its predecessor, precisely as though it had been incor-. porated under the charter of that company, and therefore with the exemption from taxation, which was conceded to that company. But broad, general and comprehensive as the language is, we cannot, in reference to the subject matter now in hand, apply it with that force and meaning. The words used are, it will be observed, ‘franchises, rights and privileges/ . . . ‘as would have been had, ... by the first company, but for such sale/ etc. There is no express reference to a grant of any exemption or immunity; nothing is said in relation to the subject of taxation. The words actually used do not necessarily embrace a grant of such an exemption.” Then follows a citation of Morgan v. Louisiana, 93 U. S. 217, 23 L. Ed. 860, which already appears in this opinion.
Continuing, Justice Matthews says: “Here there is no such express statutory direction. Mor is there an equivalent implication by necessary construction. There is nothing in the language itself, nor the context, nor the subject-matter of the legislation, nor the situation and relation of the parties to be affected, which indicates that a grant of an exemption from taxation to a particular railroad corporation, or to a class of such, was in the contemplation of the legislature. The subject-matter of this legislation was not the original construction of railroads, but the
To the same effect is Norfolk & Western Ry. Co. v. Pendleton,
There is another ground upon which the judgment of the Corporation Commission may be sustained.
The first mortgage upon the property of the Dismal Swamp Canal Company was executed in 1867. When it was foreclosed that company ceased to exist, and a new company came into existence, which derived its vitality from section 1234. Upon this point the authorities which we have considered are conclusive.
By the Constitution adopted in 1851, it is provided that taxation shall be equal and uniform throughout the Commonwealth, and all property shall be taxed in proportion to its value, which shall be ascertained in such manner as shall be prescribed by law. This provision, or its equivalent, has been continued in the organic law of this State down to the adoption of the present Constitution. It was beyond the power of the legislature, in the face of this provision, to have granted a perpetual exemption :from taxation to a corporation, either by a special act of incorporation, or by force of a general law. This position seems to be incontrovertible in principle, and is abundantly supported by •authority.
In Keokuk R. Co. v. State of Missouri, 152 U. S. 301, 38 L. Ed. 450, 14 Sup. Ct. 592, it is said: “When the new corporation came into existence, it came precisely as-if it had been •organized under a charter granted at the date of the consolidation, and subject to the constitutional provisions then existing, which required that no property, real or personal, should be ■exempted from taxation, except such as was used exclusively'for public purposes; in other words that the exemption from taxation contained in section 9 of the original charter of the Alexandria & Bloomfield Bailway Company did not pass to the Missouri, Iowa & Nebraska Company. As was said of an Arkansas corporation in St. Louis, I. M. & S. R. Co. v. Berry, 113 U. S.
In Louisville, &c. R. R. Co. v. Palmes, 109 U. S. 244, 27 L. Ed. 922, 3 Sup. Ct. 193, the court said: “But the grant to the Pensacola & Louisville Railroad Company by the Act of 1872, and that to the Pensacola Railroad Company by the Act of 1877, though in form the renewal or transfers of previously existing grants, were in fact the creation of new ones. In Trask v. Maguire, 18 Wall. 391, 21 L. Ed. 938, it was said, speaking of similar provisions in the Constitution of Missouri: ‘The inhibition of the Constitution applies in all its force against the renewal of an exemption equally as against its original creation.’ ” Gulf, &c. Ry. Co. v. Hewes, supra. Maryland v. Northern Cent. Ry. Co., 44 Md. 131; Bloxham v. F. C. & P. R. Co., 35 Fla. 625, 17 South. 902; Shaw v. Covington, 194 U. S. 593, 48 L. Ed. 1131, 24 Sup. Ct. 754.
„ If, therefore, the construction contended for by plaintiff in error be given to section 1234, its effect would be to violate that rule of equality and uniformity of taxation imposed by the Constitution of this State, in force when the several deeds of trust, under which the plaintiff in error claims, were executed and foreclosed. -
"Upon the whole case, we are of opinion that there is no error in the judgment of the Corporation Commission.
Affirmed.