Imágenes de páginas
PDF
EPUB

under an act of the legislature, and entered upon the discharge of its charter obligations without reliance upon any legislative authority exempting it from taxation upon its property. When the subsequent legislation was enacted,-nine years after,-extending to Seton Hall College the same exemption as was given to the Drew Theological Seminary, it entered upon no new undertaking, and made no agreement by which it promised to do something; nor did it part with anything because of the immunity thus extended to it by the state.

From the act of 1861, under which Seton | that Seton Hall College was incorporated Hall College was incorporated, it appears that the object of the incorporation is the advancement of education, and that the corporation was given the right to have and possess the authority to confer academic and other degrees granted by other colleges in the state. The act of 1870, referred to in the stipulation, extended to Seton Hall College the privileges which were granted to Drew Theological Seminary, in relation to the exemption of real and personal property of the corporation from assessment and taxation. The act incorporating the Drew Theological Seminary provided that the property of the corporation, real and personal, should be exempt from assessment and taxation. In 1875 the Constitution of New Jersey was amended so as to provide that property should be assessed for taxation under general laws and uniform rules, according to its true value. In 1903, the legislature passed a taxation law (4 N. J. Comp. Stat. 5079), which provided that all property not therein expressly exempted should be subject to taxation, and that all acts, general and special, inconsistent with its provisions, were repealed.

It appears that the lands so assessed are not those upon which the college buildings are erected, but are used for pasture lands for cows and the dwellings of the help on the farm, and that the same are essential and necessary to the use of the college, and that the college derives no pecuniary profit from the lands in question.

Upon the hearing before the Board of Equalization, the president of that body delivered an opinion, in which it was held that the act relied upon did not purport an intention to impose upon the state an irrepealable contract obligation, but was a privilege extended to the corporation by the state, and therefore subject to revocation. This opinion was adopted and affirmed by the supreme court of New Jersey, and also by the court of errors and appeals.

This court has the right to determine for itself whether there is a contract which has been impaired by subsequent legislation of the state. This principle has often been recognized and stated in decisions of this court. While this is true, the decision of the state court, construing its own statutes, is entitled to much consideration and respect. Milwaukee Electric R. & Light Co. v. Railroad Commission, 238 U. S. 174, 182, 59 L. ed. 1254, 1260, P.U.R.1915D, 591, 35 Sup. Ct. Rep. 820; New York ex rel. Interborough Rapid Transit Co. v. Sohmer, 237 U. S. 276, 284, 59 L. ed. 951, 954, 35 Sup. Ct. Rep. 549.

It is true that this court has held that a charter contract, express in its character, may arise from the acceptance of and action under the terms of a charter which grants such exemption. In this connection, much reliance is placed by the plaintiff in error upon certain rulings of this court; among others, in Home of the Friendless v. Rouse, 8 Wall. 430, 19 L. ed. 495. In that case the corporation is shown to have entered upon its duties and expended its money in reliance upon the grant of the charter, which declared that the property of the corporation should be exempt from taxation, and that that grant was made for the purpose of encouraging such undertaking and enabling the parties engaged therein more fully and effectually to accomplish their purpose; and it was, moreover, provided that the sections of the act concerning corporations, which provided that the charter of every corporation should be subject to alteration, suspension, and repeal at the discretion of the legislature, should not apply to the act creating the Home of the Friendless. This court held that the corporation was thus expressly withdrawn from the authority of the general act of the legislature giving a right to alter, suspend, and repeal, and that, under such circumstances, the acceptance of the charter, and the action under it and in reliance upon its terms, constituted an express contract.

So, in Northwestern University v. Illinois, 99 U. S. 309, 25 L. ed. 387, the act of the legislature declared that the property of the Northwestern University should be forever free from taxation, and this court, differing from the supreme court of Illinois in that respect, held that the exemption applied, in view of the language used in the statute, not only to lots and lands directly used for the purposes of the institution as a school, but also to other lots, lands, and property, the annual profits of which were applied to school purposes, and that the exempting authority of the legislature was not limited to real estate occupied, or in In this case, the stipulation of facts shows immediate use, by the university.

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 it has been kept in operation, and has doubtless continued and expanded its usefulness, but we fail to discover from anything in this record that it would not have done so except in reliance upon the tax exemption extended to it by the legislature. By the terms of that act, the state court has held a revocable privilege was extended, and no irrepealable contract was entered into. Bearing in mind our own right of independent examination of questions of this character, we are unable to say that the conclusion reached is not well founded in law and in fact.

It is true that this act of the legislature was held by this court, in the case of New Jersey v. Yard, 95 U. S. 104, 24 L. ed. 352, not to apply to a case where it appeared, from a subsequent act of the legislature, that a contract was made by requiring of the benefited company the performance of certain acts and a formal acceptance within sixty days, otherwise the act to become wholly inoperative. In that case, the company was obligated, in consideration of the tax limitation stated in the act, to commence and do certain work within a year; in consideration whereof the tax was fixed at the rate of of 1 per cent. This, said this court, had been a subject of disagreement, which was adjusted, additional rights were granted, and the tax fixed as to its rate and time of commencement, and, in view of these circumstances, it did appear that it was the legislative intention to make such contract in the same manner and on the same terms of equal obligation as other contracts are made, and not to pass a statute which it could repeal under another act of the legislature. But here there being no such express obligation shown, it is only reasonable to assume that the legislature extended the immunity from taxation to Seton Hall College subject to the right of alteration and repeal reserved in the act of 1846.

It follows that the judgment of the state court must be affirmed.

(242 U. S. 107) SWIFT & COMPANY et al., Plffs. in Err. and Appts.,

V.

J. NOBLE HOOVER.

BANKRUPTCY 448-APPEAL FROM SU-
PREME COURT OF DISTRICT OF COLUMBIA
-BANKRUPTCY CASE.

Proceedings resulting in a decree adjudging a person not to be a bankrupt are but steps in a bankruptcy proceeding. They are not controversies arising in those proceedings, within the meaning of the provisions of the Bankrupt Act of July 1, 1898 (30 Stat. at L. 553, chap. 541, Comp. Stat. 1913, §§ 9608, 9609), §§ 24, 25, confining the appellate jurisdiction of the Federal Supreme Court over the supreme court of the District of Columbia in bankruptcy proceedings to controversies arising in such proceedings.

[Ed. Note.-For other cases, see Bankruptcy, Dec. Dig. 448.]

[No. 101.]

cember 4, 1916.

To all claims of contract exemption from taxation must be applied the well-settled rule that, as the power to tax is an exercise of the sovereign authority of the state, essential to its existence, the fact of its surrender in favor of a corporation or an individual must be shown in language which cannot be otherwise reasonably construed, and all doubts which arise as to the intent to make such contract are to be resolved Submitted November 14, 1916. Decided Dein favor of the state. Hoge v. Richmond & D. R. Co. 99 U. S. 348, 354, 25 L. ed. 303, 304; New Orleans City & Lake R. Co. v. New Orleans, 143 U. S. 192, 195, 36 L. ed. 121, 122, 12 Sup. Ct. Rep. 406; Wilmington & W. R. Co. v. Alsbrook, 146 U. S. 279, 294, 36 L. ed. 972, 978, 13 Sup. Ct. Rep. 72; Phoenix F. & M. Ins. Co. v. Tennessee, 161 U. S. 174, 179, 40 L. ed. 660, 662, 16 Sup. Ct. Rep. 471; Yazoo & M. Valley R. Co. v. Adams, 180 U. S. 1, 22, 45 L. ed. 395, 407, 21 Sup. Ct. Rep. 240.

Applying these principles, we are unable

PPEAL from, and IN ERROR to, the Supreme Court of the District of Columbia to review a decree adjudging a person not to be a bankrupt. Dismissed for want of jurisdiction.

The facts are stated in the opinion.

Messrs. Arthur A. Birney, H. Winship Wheatley, and Lucas P. Loving for plaintiffs in error and appellants.

Mr. Edward F. Colladay for defendant in error and appellee.

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

[ocr errors]

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

litigation which arises after the adjudication in bankruptcy, sometimes by intervention, the parties claiming title to property in the hands of the trustee, or other actions, usually plenary in character, concerning the right and title to the bankrupt's estate. Such proceedings as the present one, result

This case is brought here by appeal and allowance of writ of error, from a decree of the supreme court of the District of Columbia, adjudging Hoover not a bankrupt. Counsel for the appellee and defendant in error urges that the appeal and writ be dismissed, but does not argue the questioning in a decree refusing to adjudicate the of the jurisdiction of this court; but, as such matters are noticed by this court whether specially urged by counsel or not, as it concerns our jurisdiction, we proceed to consider it. Mansfield, C. & L. M. R. Co. v. Swan, 111 U. S, 379, 28 L. ed. 462, 4 Sup. Ct. Rep. 510.

defendant a bankrupt, are but steps in a bankruptcy proceeding, and not controver sies arising in bankruptcy proceedings within the meaning of the statute. First Nat Bank v. Klug, 186 U. S. 202, 46 L. ed. 1127, 22 Sup. Ct. Rep. 899.

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 which they have appellate jurisdiction in other cases.

"The Supreme Court of the United States shall exercise a like jurisdiction from courts of bankruptcy not within any organized circuit of the United States and from the supreme court of the District of Columbia.

ruptcy court of Porto Rico, disallowing the claim, was not a controversy arising in a bankruptcy proceeding within the meaning of the statute. The contention that such action, based upon a claim filed in a bankruptcy proceeding, was appealable to this court, was denied, the court saying:

"But the entire argument rests upon a misconception of the words 'controversies in bankruptcy proceedings,' as used in the section, since it disregards the authoritative construction affixed to those words. Coder v. Arts, 213 U. S. 223, 234, 53 L. ed. 772, 777, 29 Sup. Ct. Rep. 436, 16 Ann. Cas. 1008; Hewit v. Berlin Mach. Works, 194 U. S. 296, 300, 48 L. ed. 986, 987, 24 Sup. "Ct. Rep. 690. Those cases expressly decide

"Section 25. That appeals, as in equity cases, may be taken in bankruptcy proceedings from the courts of bankruptcy to the circuit court of appeals of the United States, and to the supreme court of the territories, in the following cases, to wit: (1) from a judgment adjudging or refusing to adjudge the defendant a bankrupt;

[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 mere steps in proceedings in bankruptcy, but embrace controversies which are not of that inherent character, even although they may arise in the course of proceedings in bankruptcy."

The same provision as to the review by this court of controversies arising in bankruptcy proceedings is carried into the Judicial Code, § 262 [36 Stat. at L. 1159, chap. 231, Comp. Stat. 1913, § 1229], in 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.

It is apparent from reading these sections of the statute that a direct appeal to this court from the supreme court of the District of Columbia is allowed only in controversies arising in bankruptcy proceedings, and not from the steps in a bankruptcy proceeding. The nature of such controversies has been frequently considered in decisions of this court, and needs little dis

U. S. 324, 52 L. ed. 514, 28 Sup. Ct. Rep. 419, this court did review proceedings in bankruptcy-in one case from the District of Columbia, and in the other from the district court of the United States for Porto Rico. Of the Armstrong Case, which was a review by appeal of an adjudication of bankruptcy, this court, in the Tefft, W. & Co. Case, supra, said:

"It is true, as suggested in argument,

merly operating solely within, the respec tive states named, and in measuring such tax by the entire capital stock of the consolidated corporation instead of measuring it by the amount of capital employed in the state, as is done in the case of foreign corporations, violated neither the due process, commerce, or equal protection of the laws clauses of the Federal Constitution, where the Alabama consolidation statute expressly provided that the consolidated corporation shall in all respects be subject to the laws of the state as à domestic corpora

tion.

[Ed. Note.-For other cases, see Commerce, Cent. Dig. §§ 100, 113-119; Dec. Dig. 69; Constitutional Law, Cent. Dig. §§ 685, 891, 892, 904

[No. 212.]

that in Armstrong v. Fernandez, supra,
jurisdiction was exerted to review the action
of the court below in a case which was not
susceptible of being reviewed under the
construction of the statute which we have
here applied. But in that case there was no
appearance of counsel for the appellee, and
while a general suggestion was made in
the argument of appellant as to the duty of
the court not to exceed its jurisdiction, no
argument concerning the want of jurisdic-
tion was made. The case therefore in
substance proceeded upon a tacit assump-
tion of the existence of jurisdiction,-an as-
sumption which would not be now possible 906; Dec. Dig. 229(1), 283.]
in consequence of the authoritative construc-
tion given to § 24 (a) in Coder v. Arts,
supra. Under these circumstances, the mere
implication as to the meaning of the statute, Submitted October 17, 1916.
resulting from the jurisdiction which was
in that case merely assumed to exist, is not
controlling, and the Armstrong Case, there- I
fore, in so far as it conflicts with the con-
struction which we here give the statute,
must be deemed to be qualified and limited."
It may be true that Congress has failed
to give an appellate review in proceedings
in bankruptcy from the supreme court of
the District of Columbia from a decree with
reference to an adjudication in bankruptcy,
but, as observed in the Tefft, W. & Co. Case,
that does not give this court authority to
assume jurisdiction not given to it by law.
It follows that the appeal and writ of
error must be dismissed for want of juris-
diction.

(242 U. S. 111)

KANSAS CITY, MEMPHIS, & BIRMING-
HAM RAILROAD COMPANY, Plff. in
Err.,

V.

JAMES P. STILES. CONSTITUTIONAL LAW 43(2)-STATUTES -WHO MAY QUESTION VALIDITY.

1. Railroad corporations which have constituted themselves a consolidated corporation under Ala. Code 1886, § 1583, may not -constitutional objections excepted-complain of the terms under which they voluntarily invoked and received the grant of corporate existence from the state.

[Ed. Note. For other cases, see Constitutional Law, Cent. Dig. § 41; Dec. Dig. 143 (2).] COMMERCE 69 CONSTITUTIONAL LAW

229(1), 283-DUE PROCESS OF LAW EQUAL PROTECTION OF THE LAWS-COMMERCE-STATE TAXATION OF CONSOLIDATED RAILWAY COMPANY.

2. The state of Alabama, in imposing

the annual franchise tax exacted from domestic corporations upon a consolidated railway corporation existing by virtue of the consolidation under concurrent acts of the states of Tennessee, Mississippi, and Alabama, of three independent and distinct railroad corporations created by, and for

cember 4, 1916.

Decided De

N ERROR to the Supreme Court of the State of Alabama to review a judgment which affirmed a judgment of the City Court of Birmingham, in that state, sustaining the demurrer to a complaint in an action by a consolidated railway corporation to recover back a tax alleged to have been wrongfully collected. Affirmed.

See same case below, 192 Ala. 687, 68 So. 1018.

The facts are stated in the opinion. Messrs. Forney Johnston and W. F. Evans for plaintiff in error.

Mr. William L. Martin, Attorney General of Alabama, and Mr. Lawrence E Brown for defendant in error.

Mr. Justice Day delivered the opinion of the court:

The Kansas City, Memphis, & Birmingham Railroad Company, plaintiff in error herein (hereinafter called the railroad company), filed its complaint in the city court of Birmingham, Alabama, against James P. Stiles, probate judge of Jefferson county, Alabama, whereby it sought to recover sundry sums of money, aggregating $2,434.40, paid to Stiles by virtue of the provisions of $ 12 of an act of the Alabama legislature, ontitled, "An Act to Further Provide for the Revenues of the State of Alabama." By this act it is provided that corporations organized under the laws of Alabama shall pay an annual franchise tax as follows: where the paid-up capital stock does not exceed $50,000, $1 per thousand of such paid-up capital stock; where paid-up capital stock is more than $50,000, and up to $1,000,000, $1 per thousand on the first $50,000, and 50 cents for each thousand of the remainder; where paid-up capital stock is more than $1,000,000, and up to $5,000,000, $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 same. 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 lieu 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 furchise 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 operating solely within the respective states named. As regards this consolidation, plaintiff avers

The entire capital stock of the consolidated railroad company amounted to $5,976,000, and it was upon this entire amount 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 distinct and separately owned properties as a single system, for the conduct of the business of a common carrier in interstate commerce, as well as the continuation of intrastate commerce within said several states, before the period mentioned or involved herein, and by virtue of concurrent or contemporaneous laws or special acts of said several states, including the states of Tennessee and Mississippi, as well as the state of Alabama, consolidated themselves into a corporation known as Kansas City, Memphis, & Birmingham Railroad Company, the plaintiff herein, and, in pursuance of the laws of each of said states, duly filed there

a direct burden upon interstate commerce in requiring it to pay, in addition to all other fees and taxes provided by law, a tax upon its capital stock for the right and privilege of transacting and carrying on its interstate business as a common carrier, in violation of clause 3 of § 8, article I. of the Federal Constitution.

A demurrer was filed to this complaint, which demurrer was sustained. Upon appeal to the supreme court of Alabama, this judgment was affirmed (192 Ala. 687, 68 So. 1018), and a writ of error brings the action to this court.

The consolidated company was formed, so far as the state of Alabama is concerned,

« AnteriorContinuar »