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From the act of 1861, under which Seton | that Seton Hall College was incorporated Hall College was incorporated, it appears under an act of the legislature, and entered that the object of the incorporation is the upon the discharge of its charter obligations advancement of education, and that the cor- without reliance upon any legislative auporation was given the right to have and thority exempting it from taxation upon its possess the authority to confer academic property. When the subsequent legislation and other degrees granted by other colleges was enacted, -nine years after,-extending in the state. The act of 1870, referred to to Seton Hall College the same exemption in the stipulation, extended to Seton Hall as was given to the Drew Theological SemiCollege the privileges which were granted nary, it entered upon no new undertaking, to Drew Theological Seminary, in relation and made no agreement by which it promto the exemption of real and personal prop. ised to do something; nor did it part with erty of the corporation from assessment and anything because of the immunity thus extaxation. The act incorporating the Drew tended to it by the state. Theological Seminary provided that the It is true that this court has held that a property of the corporation, real and per. charter contract, express in its character, sonal, should be exempt from assessment may arise from the acceptance of and action and taxation. In 1875 the Constitution of under the terms of a charter which grants New Jersey was amended so as to provide such exemption. In this connection, much that property should be assessed for taxa. reliance is placed by the plaintiff in error tion under general laws and uniform rules, upon certain rulings of this court; among according to its true value. In 1903, the others, in Home of the Friendless v. Rouse, legislature passed a taxation law (4 N. J. 8 Wall. 430, 19 L. ed. 495. In that case the Comp. Stat. 5079), which provided that all corporation is shown to have entered upon property not therein expressly exempted its duties and expended its money in reshould be subject to taxation, and that all liance upon the grant of the charter, which acts, general and special, inconsistent with declared that the property of the corporaits provisions, were repealed.

tion should be exempt from taxation, and It appears that the lands so assessed are that that grant was made for the purpose of not those upon which the college buildings encouraging such undertaking and enabling are erected, but are used for pasture lands the parties engaged therein more fully and for cows and the dwellings of the help on effectually to accomplish their purpose; and the farm, and that the same are essential | it was, moreover, provided that the secand necessary to the use of the college, tions of the act concerning corporations, and that the college derives no pecuniary which provided that the charter of every profit from the lands in question.

corporation should be subject to alteration, Upon the hearing before the Board of suspension, and repeal at the discretion of Equalization, the president of that body de- the legislature, should not apply to the act livered an opinion, in which it was held creating the Home of the Friendless. This that the act relied upon did not purport court held that the corporation was thus an intention to impose upon the state an expressly withdrawn from the authority of irrepealable contract obligation, but was a the general act of the legislature giving a privilege extended to the corporation by the right to alter, suspend, and repeal, and that, state, and therefore subject to revocation. under such circumstances, the acceptance of This opinion was adopted and afirmed by the charter, and the action under it and in the supreme court of New Jersey, and also reliance upon its terms, constituted an exby the court of errors and appeals.

press contract. This court has the right to determine for So, in Northwestern University v. Illiitself whether there is a contract which has nois, 09 U. S. 309, 25 L. ed. 387, the act of been impaired by subsequent legislation of the legislature declared that the property the state. This principle has often been of the Northwestern University should be recognized and stated in decisions of this forever free from taxation, and this court, court. While this is true, the decision of differing from the supreme court of Illinois the state court, construing its own statutes, in that respect, held that the exemption apis entitled to much consideration and replied, in view of the language used in the spect. Milwaukee Electric R. & Light Co. statute, not only to lots and lands directly 5. Railroad Commission, 238 U. S. 174, 182, used for the purposes of the institution as 59 L. ed. 1254, 1260, P.U.R.1915D, 591, 35 a school, but also to other lots, lands, and Sup. Ct. Rep. 820; New York ex rel. Inter- property, the annual profits of which were borough Rapid Transit Co. v, Sohmer, 237 applied to school purposes, and that the exU. S. 276, 284, 59 L. ed. 051, 954, 35 Sup. empting authority of the legislature was Ct. Rep. 549.

not limited to real estate occupied, or in In this case, the stipulation of facts shows'immediate use, by the university.

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Furthermore, when the alleged contract to conclude that the state court was wrong exempting Seton Hall College from taxation in finding no binding contract here. As we was made, the New Jersey act of 1846 was have said, the college was incorporated unin force, providing that

der no promise of such exemption, and could “The charter of every corporation which not have relied upon it in undertaking the shall hereafter be granted by the legisla- work for which it was organized. After the ture shall be subject to alteration, suspen- privilege of the act in favor of the Drew sion, and repeal in the discretion of the Seminary was extended to it, it made no legislature.”

new promises and assumed no new burdens. It is true that this act of the legislature | It is true it has been kept in operation, and was held by this court, in the case of New has doubtless continued and expanded its Jersey v. Yard, 95 U. S. 104, 24 L. ed. 352, usefulness, but we fail' to discover from not to apply to a case where it appeared, anything in this record that it would not from a subsequent act of the legislature, have done so except in reliance upon the that a contract was made by requiring of tax exemption extended to it by the legisthe benefited company the performance of lature. By the terms of that act, the state certain acts and a formal acceptance within court has held a revocable privilege was exsixty days, otherwise the act to become tended, and no irrepealable contract was wholly inoperative. In that case, the com- entered into. Bearing in mind our own right pany was obligated, in consideration of the of independent examination of questions of tax limitation stated in the act, to com- this character, we are unable to say that mence and do certain work within a year; the conclusion reached is not well founded in consideration whereof the tax was fixed in law and in fact. at the rate of 1 of 1 per cent. This, said It follows that the judgment of the state this court, had been a subject of disagree court must be affirmed. ment, which was adjusted, additional rights were granted, and the tax fixed as to its

(212 U. S. 107) rate and time of commencement, and, in view of these circumstances, it did appear

SWIFT & COMPANY et al., Piffs. in Err.

and Appts., that it was the legislative intention to make such contract in the same manner and on

J. NOBLE HOOVER. the same terms of equal obligation as other contracts are made, and not to pass a stat- BANKRUPTCY Om 448-APPEAL FROM SUute which it could repeal under another act


-BANKRUPTCY CASE. of the legislature. But here there being no such express obligation shown, it is only judging a person not to be a bankrupt are

Proceedings resulting in a decree ad. reasonable to assume that the legislature but" steps in a bankruptcy proceeding. extended the immunity from taxation to They are not controversies arising in those Seton Hall College subject to the right of proceedings, within the meaning of the proalteration and repeal rese ed in the act visions of the Bankrupt Act of July 1, 1898 of 1846.

(30 Stat. at L. 553, chap. 541, Comp. Stat. To all claims of contract exemption from 1913, $$ 9608, 9609), $§ 24, 25, confining

the appellate jurisdiction of the Federal Su. taxation must be applied the well-settled

preme Court over the supreme court of the rule that, as the power to tax is an exer- District of Columbia in bankruptcy proceedcise of the sovereign authority of the state, ings to controversies arising in such proessential to its existence, the fact of its ceedings. surrender in favor of a corporation or an [Ed. Note.-For other cases, see Bankruptcy,

Dec. Dig.

448.) individual must be shown in language which cannot be otherwise reasonably construed,

[No. 101.] and all doubts which arise as to the intent to make such contract are to be resolved Submitted November 14, 1916. Decided De. in favor of the state. Hoge v. Richmond &

cember 4, 1916. D. R. Co. 99 U. S. 348, 354, 25 L. ed. 303, 304; New Orleans City & Lake R. Co. v. New PPEAL from, and IN ERROR to, the

A Orleans, 143 U. S. 192, 195, 36 L. ed. 121, Supreme Court of the District of Co122, 12 Sup. Ct. Rep. 406; Wilmington & lumbia to review a decree adjudging a perW. R. Co. v. Alsbrook, 146 U. S. 279, 294, son not to be a bankrupt. Dismissed for 36 L. ed. 972, 978, 13 Sup. Ct. Rep. 72; want of jurisdiction. Phenix F. & M. Ins. Co. v. Tennessee, 161 The facts are stated in the opinion. U. S. 174, 179, 40 L. ed. 660, 662, 16 Sup. Messrs. Arthur A. Birney, H. Winship Ct. Rep. 471; Yazoo & M. Valley R. Co. v. Wheatley, and Lucas P. Loving for plain. Adams, 180 U. 8. 1, 22, 45 L. ed. 305, 407, tiffs in error and appellants. 21 Sup. Ct. Rep. 240.

Mr. Edward F. Colladay for defendant Applying these principles, we are unable in error and appellee.

Om For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Mr. Justice Day delivered the opinion of cussion now. Such controversies embraco the court:

litigation which arises after the adjudicaThis case is brought here by appeal and tion in bankruptcy, sometimes by interven. allowance of writ of error, from a decree of tion, the parties claiming title to property the supreme court of the District of Co- in the hands of the trustee, or other actions, lumbia, adjudging Hoover not a bankrupt. usually plenary in character, concerning the Counsel for the appellee and defendant in right and title to the bankrupt's estate. error urges that the appeal and writ be Such proceedings as the present one, resultdismissed, but does not argue the questioning in a decree refusing to adjudicate the of the jurisdiction of this court; but, as defendant a bankrupt, are but steps in a such matters are noticed by this court bankruptcy proceeding, and not controverwhether specially urged by counsel or not, sies arising in bankruptcy proceedings withas it concerns our jurisdiction, we proceed in the meaning of the statute. First Nato to consider it. Mansfield, C. & L. M. R. Bank v. Klug, 186 U. S. 202, 46 L. ed. Co. v. Swan, 111 U. S, 379, 28 L. ed. 462, 1127, 22 Sup. Ct. Rep. 899. 4 Sup. Ct. Rep. 510.

The decisions of this court in Tefft, W. The provisions of the Bankruptcy Act & Co. v. Munsuri, 222 U. S. 114, 56 L. ed. for consideration in this connection are: 118, 32 Sup. Ct. Rep. 67, and Munsuri v.

“Section 24. The Supreme Court of the Fricker, 222 U. S. 121, 56 L. ed. 121, 32 United States, the circuit courts of appeals Sup. Ct. Rep. 70, are decisive of this point. of the United States, and the supreme courts In the first of these cases there was an of the territories, in vacation in chambers attempt to prosecute a direct appeal to this and during their respective terms, as now court from the district court of the United or as they may be hereafter held, are hereby States for Porto Rico, where the proceeding invested with appellate jurisdiction of con- was based upon a claim in bankruptcy. It troversies arising in bankruptcy proceed was there held that an order of the bankings from the courts of bankruptcy from ruptcy court of Porto Rico, disallowing the which they have appellate jurisdiction in claim, was not a controversy arising in a other cases.

bankruptcy proceeding within the meaning “The Supreme Court of the United States of the statute. The contention that such shall exercise a like jurisdiction from courts action, based upon a claim filed in a bank. of bankruptey not within any organized ruptcy proceeding, was appealable to this circuit of the United States and from the court, was denied, the court saying: supreme court of the District of Columbia. “But the entire argument rests upon &

misconception of the words 'controversies in "Section 25. That appeals, as in equity bankruptcy proceedings,' as used in the seccases, may be taken in bankruptcy proceed- tion, since it disregards the authoritative ings from the courts of bankruptcy to the construction affixed to those words. Coder circuit court of appeals of the United v. Arts, 213 U. S. 223, 234, 53 L. ed. 772, States, and to the supreme court of the terri- 777, 29 Sup. Ct. Rep. 436, 16 Ann. Cas. tories, in the following cases, to wit: (1) 1008; Hewit v. Berlin Mach. Works, 194 from a judgment adjudging or refusing to U. S. 296, 300, 48 L. ed. 986, 987, 24 Sup. adjudge the defendant a bankrupt; ." Ct. Rep. 690. Those cases expressly decide [30 Stat. at L. 553, chap. 541, Comp. Stat. that controversies in bankruptcy proceed1913, $$ 9608, 9609.]

ings as used in the section do not include The same provision as to the review by mere steps in proceedings in bankruptcy, this court of controversies arising in bank- but embrace controversies which are not of ruptcy proceedings is carried into the Ju- that inherent character, even although they dicial Code, § 262 [36 Stat. at L. 1159, may arise in the course of proceedings in chap. 231, Comp. Stat. 1913, § 1229), in bankruptcy." which provision is made for the review in It is true that in Audubon v. Shufeldt, 181 this court of controversies arising in bank. U. S. 575, 45 L. ed. 1009, 21 Sup. Ct. Rep. ruptcy proceedings in the supreme court of 735, and in Armstrong v. Fernandez, 208 the District of Columbia.

U. S. 324, 52 L. ed. 514, 28 Sup. Ct. Rep. It is apparent from reading these sections 419, this court did review proceedings in of the statute that a direct appeal to this bankruptcy—in one case from the District court from the supreme court of the Dis- of Columbia, and in the other from the district of Columbia is allowed only in con- trict court of the United States for Porto troversies arising in bankruptcy proceed- Rico. Of the Armstrong Case, which was a ings, and not from the steps in a bankruptcy review by appeal of an adjudication of proceeding. Th nature of

ntro bankruptcy, this court, in the Tefft, W. & versies has been frequently considered in Co. Case, supra, said: decisions of this court, and needs little dis- "It is true, as suggested in argument,

that in Armstrong v. Fernandez, supra, , merly operating solely within, the respecjurisdiction was exerted to review the action tive states named, and in measuring such of the court below in a case which was not tax by the entire capital stock of the conBusceptible of being reviewed under the solidated corporation instead of measuring construction of the statute which we have the state, as is done in the case of foreign

it by the amount of capital employed in here applied. But in that case there was no

corporations, violated neither the due procappearance of counsel for the appellee, and ess, commerce, or equal protection of the while a general suggestion was made in laws clauses of the Federal Constitution, the argument of appellant as to the duty of where the Alabama consolidation statute exthe court not to exceed its jurisdiction, no pressly provided that the consolidated corargument concerning the want of jurisdic- poration shall in all respects be subject to tion was made. The case therefore in the laws of the state as a domestic corpora

tion. substance proceeded upon a tacit assump- [Ed. Note.-For other cases. see Commerce, tion of the existence of jurisdiction,-an as. Cent. Dig. $$ 100, 113-119; Dec. Dig. Omby; Consumption which would not be now possible stitutional Law, Cent. Dig: 8 685, 891, 892, 904

906; Dec. Dig. 229(1), 283.] in consequence of the authoritative construction given to § 24 (a) in Coder v. Arts,

[No. 212.) supra. Under these circumstances, the mere implication as to the meaning of the statute, Submitted October 17, 1916. Decided De resulting from the jurisdiction which was

cember 4, 1916. in that case merely assumed to exist, is not controlling, and the Armstrong Case, there

. I SERRORto the Supreme Court of the struction which we here give the statute, which affirmed a judgment of the City Court must be deemed to be qualified and limited." of Birmingham, in that state, sustaining the

It may be true that Congress has failed demurrer to a complaint in an action by to give an appellate review in proceedings a consolidated railway corporation to re in bankruptcy from the supreme court of cover back a tax alleged to have been wrong. the District of Columbia from a decree with fully collected. Affirmed. reference to an adjudication in bankruptcy,

See same case below, 192 Ala. 687, 68 So.

1018. but, as observed in the Tefft, W. & Co. Case, that does not give this court authority to

The facts are stated in the opinion. assume jurisdiction not given to it by law.

Messrs. Forney Johnston and W. F. It follows that the appeal and writ of Evans for plaintiff in error. error must be dismissed for want of juris

Mr. William L. Martin, Attorney Gendiction.

eral of Alabama, and Mr. Lawrence E.

Brown for defendant in error. (242 U. S. 111) KANSAS CITY, MEMPHIS, & BIRMING- Mr. Justice Day delivered the opinion of

HAM RAILROAD COMPANY, Plff. in the court:

The Kansas City, Memphis, & Birming

ham Railroad Company, plaintiff in error JAMES P. STILES.

herein (hereinafter called the railroad comCONSTITUTIONAL LAW m43(2)-STATUTES pany), filed its complaint in the city court -WHO MAY QUESTION VALIDITY. of Birmingham, Alabama, against James P.

1. Railroad corporations which have Stiles, probate judge of Jefferson county, constituted themselves a consolidated corpo: Alabama, whereby it sought to recover sun. ration under Ala. Code 1886, § 1583, may not -constitutional objections excepted-com

dry sums of money, aggregating $2,434.40, plain of the terms under which they volun. paid to Stiles by virtue of the provisions of tarily invoked and received the grant of $ 12 of an act of the Alabama legislature, oncorporate existence from the state.

titled, “An Act to Further Provide for the [Ed. Note.-For other cases, see Constitutional Revenues of the State of Alabama.” By this Law, Cent, Dig. $ 41; Dec. Dig. Om 13(2).]

act it is provided that corporations organCOMMERCE 69 CONSTITUTIONAL LAW

ized under the laws of Alabama shall pay On 229(1), 283—DUE PROCESS OF LAW EQUAL PROTECTION OF THE LAWS-Com- an annual franchise tax as follows: where MERCE-STATE TAXATION OF CONSOLIDAT- the paid-up capital stock does not exceed ED RAILWAY COMPANY.

$50,000, $1 per thousand of such paid-up 2. The state of Alabama, in imposing capital stock; where paid-up capital stock the annual franchise tax exacted from do is more than $50,000, and up to $1,000,000, mestic corporations upon a consolidated railway corporation existing by virtue of $1 per thousand on the first $50,000, and the consolidation under concurrent acts of 50 cents for each thousand of the rethe states of Tennessee, Mississippi, ad mainder; where paid-up capital stock is Alabama, of three independent and distinct more than $1,000,000, and up to $5,000,000, railroad corporations created by, and for- ' $1 dollar per thousand on the first $50,000,

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes



and 50 cents per thousand for the next, in agreements and instruments consolidat$950,000, and 25 cents per thousand for ing said companies, and complying with the the remainder; where he paid-up capital laws of each of said states authorizing the stock exceeds $5,000,000, $1 per thousand on And plaintiff avers that by said the first $50,000, 50 cents per thousand on consolidation the shares of stock of said the next $950,000, 25 cents per thousand several companies were surrendered by the on the next $4,000,000, and 10 cents per holders thereof, and in livu thereof there thousand on the remainder; and that corpo- were issued the shares of stock of said rations organized under the laws of any consolidated company, the plaintiff herein, other state, and doing business within the being the capital stock of plaintiff issued state of Alabama, shall pay annually fran- and outstanding as aforesaid. Plaintiff fur. chise tax as above, based, however, on the ther avers that the capital stock on which actual amount of capital employed in the said franchise tax was estimated and exactstate of Alabama. The act also contains ed as aforesaid was and is the capital stock provisions not relevant to this action and issued and outstanding under the circumnot necessary to be set forth here.

stances aforesaid, although less than one The railroad company is a consolidated | half thereof was issued in lieu of the stock corporation, existing by virtue of the con- of or represents the property or assets or solidation, under concurrent acts of the business of the Alabama corporation which states of Tennessee, Mississippi, and Ala became a constituent of the plaintiff by bama, of three independent and distinct rail. consolidation as aforesaid.” road corporations created by and formerly The entire capital stock of the consolidatoperating solely within the respective states ed railroad company amounted to $5,970,named. As regards this consolidation, 000, and it was upon this entire amount plaintiff avers,

that the company was assessed. By this "that it is a consolidated corporation, action the railroad company seeks to remade up and consisting of the consolidation cover the full amount of the franchise tax of three distinct and separate corporations, exacted upon that basis, and contends that under the following circumstances: A rail. in any event it should have been assessed road corporation organized and existing only upon that part of the capital employed solely under the laws of the state of Ten by it in the state of Alabama. nessee acquired, constructed, owned, and The railroad company averred, if it was operated all of that part of plaintiff's line required to pay the franchise tax in quesand railway situated within the state of tion upon its entire capital, that it would Tennessee; a separate and distinct rail- be paying another and different rate of taxroad corporation, organized and existing ation, or another and different amount of solely under the laws of the state of Missis. franchise tax, from that which is required sippi, acquired, constructed, owned, and of like corporations doing business in Alaoperated all that part of plaintiff's line and bama, contrary to the provision of the 14th railway situated within the state of Missis- Amendment to the Federal Constitution sippi; and a separate and distinct railroad that no state shall deny to any person withcorporation, organized and existing solely in its jurisdiction the equal protection of under the laws of the state of Alabama, ac-its laws; that the enforcement of the act quired, constructed, owned, and operated all by subjecting to its operation the railroad that part of plaintiff's line and railway sit-company's property in other states constiuated within the state of Alabama. Plain- tuted a taking of its property without due tiff avers that said separate railroad cor- process of law; and that said act imposed porations, being desirous of operating said a direct burden upon interstate commerce distinct and separately owned properties as in requiring it to pay, in addition to all a single system, for the conduct of the other fees and taxes provided by law, a tax business of a common carrier in interstate upon its capital stock for the right and commerce, as well as the continuation of privilege of transacting and carrying on its intrastate commerce within said several | interstate business as a common carrier, states, before the period mentioned or in- in violation of clause 3 of $ 8, article I. of volved herein, and by virtue of concurrent the Federal Constitution. or contemporaneous laws or special acts of A demurrer was filed to this complaint, said several states, including the states of which demurrer was sustained. Upon apTennessee and Mississippi, as well as the peal to the supreme court of Alabama, this state of Alabama, consolidated themselves judgment was affirmed (192 Ala. 687, 68 into a corporation known as Kansas City, So. 1018), and a writ of error brings the acMemphis, & Birmingham Railroad Company, tion to this court. the plaintiff herein, and, in pursuance of the The consolidated company was formed, laws of each of said states, duly filed there. I so far as the state of Alabama is concerned,

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