Central of Georgia Railway Co. v. Wright

The provisions in the charters granted in 1845 to the Southwestern and Muscogee Railroads limiting their, tax liabilities to a cbrtain per cent, of net income are to be construed like similar provisions in the earlier charters of the Augusta & Waynesboro (1838) et al. (Cf. s. c., 248 U. S. 525; Wright v. Central of Georgia By. Co., 236 U. S. 674) as extending to a lessee; there being no ground to hold that the policy of the legislature had changed in the interim, although provisions in the earlier charters affording express evidence that it contemplated the income, derived from letting as well as that from using and sharing the railroads are absent from the later charters. P.523. The policy remained the same when express power to lei; was given in 1852. P.524. Merger of the-Muscogee with the Southwestern under an act of 1856 did not affect the tax exemption. Id. The court finds nothing in the later statutes or constitutions of Georgia that attempts to supplant or impair the tax limitations in the charters of the Southwestern and Muscogee Railroads. Id.

ERROR TO THE SUPREME COURT OF THE STATE OF GEORGIA. In this case a rehearing was granted “in so far as the validity of the tax in question is involved in or depends upon the charters of the Southwestern and the Muscogee Railroad and the subsequent relevant legislation.” As to all other questions, leave to file the application for rehearing was denied. 249 U. S. 590. The judicial history of the charter tax exemptions is to be found in the.following cases: Central R. R. & Banking Co. v. Macon (1871), 43 Georgia, 605; Central R. R. & Banking Co. v. State (1874), 54 Georgia, 401; Southwestern R. R. Co. v. State (1874), 54 Georgia, 401; Central R. R. & Banking Co. v. Georgia (1875), 92 U. S. 665; Southwestern R. R. Co. v. Georgia (1875), 92 U. S. 676; Wright v. Southwestern R. R. Co., 64 Georgia, 783; Southwestern R. R. Co. v. Wright (1886), 116 U. S. 231; Central R. R. & Banking Co. v. Wright (1896), 164 U. S. 327; Wright v. Central of Georgia Ry. Co. (1915), 236 U. S. 674; Central of Georgia Ry. Co. v. Wright (1919), 248 U. S. 525. The original charters of the Southwestern and Muscogee Railroads, unlike the charter of the Georgia R. R. & Banking Company, construed by this court in 236 IT. S. 687, and that of the Augusta and Waynesboro (afterwards Augusta and Savannah), construed in the previous decision of this case, 248 U. S. 525, contain no reference to a renting, lease or other disposition of the railroads beyond operation by the grantee corporations. The tax immunity was purely personal. It can not be said of either charter that it “contemplated” or “permitted” any extension of the tax contract to another. They fall, therefore, within the general rule confining the immunity to the immediate grantee in the absence of express words to the contrary, and this distinction was fully recognized in Morris Cana Co. v. Baird, 239 U. S. 132, and Rochester Ry. Co. v. Rochester, 205 U. S.247. The Act of January 22, 1852, Laws 1851-1852, p. 119, authorized the Central R. R. & Banking Company to. lease certain connecting railroads, namely the Augusta and Savannah and the Southwestern, and authorized them to lease to the Central, for a term of years or during their respective charters. This act did not include the Muscogee, which never connected with the Central. The Act of 1856, Laws 1856, p. 187, provided for the consolidation of the Muscogee and the Southwestern companies under the charter of the latter. Neither of these acts referred to taxation or to immunity from taxation. The bare privilege to lease given was not acted on till June, 1869. If the Act of 1852 had attempted to extend the exemption to the lessee, it would be of importance to consider that in the meanwhile the Georgia Code of 1863 had-gone into effect which made sweeping changes in the status of corporations (see Atlantic & Gulf R. R. Co. v. Georgia, 98 U. S. 359), and the Constitution of 1868 had been adopted, making uniform ad valorem taxation the system of the State; and the question would have been whether the Act of 1852, which was a mere offer on the part of the State until acted on, should not be considered as modified by all the subsequent legislation affecting the subject of taxation. That there was no contract till acceptance in 1869, see Southwestern R. R. Co. v. State, 54 Georgia, 402; Buffalo Railroad Co. v. Falconer, 103 U. S. 821. And that all the then body of laws was part of the contract, see Great Northern Ry. Co. v. Minnesota, 216 U. S. 206, and cases cited. But the whole question is removed by noting that the Act of 1852 makes no attempt to extend any immunity to the lessee. And an immunity from taxing power never arises from silence or by implication, but only from express terms that admit of no other reasonable construction. Yazoo & Mississippi Valley R. R. Co. v. Adams, 180 U. S. 1, 22; Phoenix Insurance Co. v. Tennessee, 161 U. S. 174; Bank of Commerce v. Tennessee, 161 U. S. 134, 146; Southwestern R. R. Co. v. Wright, 116 U. S. 231; While the interest remaining in the lessor was still protected by the personal contract against taxation higher than one-half per cent, on its net annual income, to wit, the reserv ed rental on the road; the interest acquired by the lessee remained, under the general law, hable to be taxed as the property of the lessee. It is true that in 1869 there existed no law for the separate taxation of the leasehold interest in property, unless the provisions of the Constitution of 1868 and the Code in requiring all property to be taxed uniformly ad valorem, implied it. But that fact did not fetter the legislature,, or prevent the passage of laws for its taxation. Jetton v. University of the South, 208 U. S. 500. But the present plaintiff was organized in 1895 under the general railroad incorporation law of 1892, Code 1911, § 872 et seq., by those who purchased the property of the Central R. R. & Banking Company, including the lease of the Southwestern Railroad, at foreclosure, and took the new lease, here in controversy, of the Southwestern and Muscogee Railroads, made by the Southwestern Company, in substitution for the old one. By the express terms of its charter it took its existence and its right to run these railroads “subject to Article 4 of the Constitution of the State, and all the laws governing railroad companies at the date hereof or that may hereafter come of force,” etc. That article established uniform ad valorem taxation of all property, and forbade special immunities and exemptions. The laws then in existence separately taxed all “interests less than the fee” to the owners. This new charter is as much a contract as any other, and the agreements in it in favor of the State áre as much tobe enforced and respected as those in favor of the corporation. Having thus agreed to pay taxes according to the constitution and laws, and been allowed existence on that express condition, the corporation would be estopped to assert an exemption if it had acquired one. It would be waived. The' statute under which the charter was granted, being by an elementary principle part of the charter, also in express terms excepted “any exemption from taxation, either State, County or Municipal,” doubly emphasizing the State’s insistence that no corporation formed under it-should exercise any such immunity. Rochester Ry. Co. v. Rochester, 205 U. S. 254, 255; Great Northern Ry. Co. v. Minnesota, 216 U. S. 229. The provision in question is not in the nature of a commuted tax on property. But if it were, the general principle confining the exemption to the grantee would be applicable. Stearns v. Minnesota, 179 U. S. 255; Southwestern R. R. Co. v. Wright, 116 U. S. 231. The right to lease was not an original right of the Southwestern and Muscogee Companies. It seems never to have been given the Muscogee Company, since it was not named or described in the Act of 1852. No extension of the exemption of the lessor to the lessee as to its interest acquired by the lease is to be'implied from the mere permission to lease. Jetton v. University of the South, 208 U. S. 501. Taxing the lessee separately on its interest can not result in double taxation. Confusion of earnings waived the exemption. Railroad . Co. v. Maine, 96 U. S. 499. .