865: "Nor is the question at issue affected by the fact that some of the constituent elements which entered into the consolidated company were corporations owning and operating property in another state. The power of corporations of other states to become corporations, or to constitute themselves a consolidated corporation under the Ohio statutes, and thus avail of the rights given thereby, is as completely dependent on the will of that state as is the power of its individual citizens to become a corporate body, or the power of corporations of its own creation to consolidate under its laws. Bank of Augusta v. Earle, 13 Pet. 519, 10 L. ed. 274; Lafayette Ins. Co. v. French, 18 How. 404, 15 L. ed. 451; Paul v. Virginia, 8 Wall. 168, 181, 19 L. ed. 357, 360." under § 1583 of the Alabama Code of 1886, 14 Inters. Com. Rep. 664, 14 Sup. Ct. Rep. which provides in substance, as follows: That whenever the lines of any two or more railroads chartered under the laws of that or any other state, which, when completed, may admit the passage of burden or passenger cars over any two or more of such roads continuously without break or interruption, such companies are authorized before or after completion to consolidate themselves into a single corporation, in the manner following: The directors of such corporations may enter into an agreement, prescribing the terms and conditions thereof, mode of carrying into effect, name, number of directors, etc., and such new corporation shall possess all the powers, rights, and franchises conferred upon the two or more corporations, and shall be subject to all the restrictions, and perform all the duties, imposed by such statute. Provision is also made for ratification of such consolidation by the stockholders, after which ratification the agreement is deemed completed, as to each corporation. It is also provided that "every such new corporation so formed shall keep an office in the state of Alabama, and be in all respects subject to the laws of the state of Alabama as a domestic corporation." The corporation is to be deemed consolidated when a copy of the agreement is filed with the secretary of state, and after the election of the first board of directors the property and franchises of each corporation shall be vested in the new corporation, and it shall be subject to the liabilities of its integral parts, as if such debts had been incurred by it. It will be noted that this statute, which is a grant of corporate rights from the state of Alabama to the consolidated company, contains the express provision that such company shall in all respects be subject to the laws of the state of Alabama as a domestic corporation. Applying § 12 of the statute, the Alabama supreme court has held that the railroad company is a corporation organized under the laws of that state, and, as such, subject to the franchise tax imposed by that section of the statute. The Federal questions (which are alone within the jurisdiction of this court) are to be determined upon this construction of the state statute by its highest court. When the companies comprised in this consolidation sought to avail themselves of the laws of Alabama, they were asking a privilege and right which, subject to the limitations of the Federal Constitution, was within the authority of the state. This principle was succinctly stated in Ashley v. Ryan, 153 U. S. 436, 442, 38 L. ed. 773, 777, This doctrine has been affirmed since. Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 703, 40 L. ed. 849, 860, 16 Sup. Ct. Rep. 714, and previous cases in this court therein cited; Interstate Consol. Street R. Co. v. Massachusetts, 207 U. S. 79, 84, 52 L. ed. 111, 114, 28 Sup. Ct. Rep. 26, 12 Ann. Cas. 555. The railroads comprising this consolidation entered upon it with the Alabama statute before them and under its conditions, and, subject to constitutional objections as to its enforcement, they cannot be heard to complain of the terms under which they voluntarily invoked and received the grant of corporate existence from the state of Alabama. The specific objections based upon the Federal Constitution remain to be noticed. It is said that the company is deprived of the equal protection of the laws, this contention being based upon the fact that domestic corporations, operating only within the state, are required to pay the tax upon property within the state, and foreign corporations are taxed only upon the basis of property within the state. To support this contention as to denial of equal protection of the laws, the company relies principally upon the decision of this court in Southern R. Co. v. Greene, 216 U. S. 400, 54 L. ed. 536, 30 Sup. Ct. Rep. 287, 17 Ann. Cas. 1247. In that case, a foreign corporation, complying with the laws of Alabama, entered upon business within the state, paid both license and property taxes imposed by the laws of the state, and when it was attempted to impose upon it another tax for the privilege of doing business in the state, a business in all respects like that done by domestic corporations of a similar character who were not subjected to the additional tax complained of, it contended that it was denied equal protection of the law, and this court so held. So of the objection that the tax imposes a burden upon interstate commerce, the test of validity recognized in previous cases and repeated in Kansas City, Ft. S. & M. R. Co. v. Botkin, supra, is the nature and character of the tax imposed. The state may not regulate interstate commerce or impose burdens upon it; but it is authorized to levy a tax within its authority, measured by capital in part used in the conduct of such commerce, where the circumstances are such as to indicate no purpose or necessary effect in the tax imposed to burden commerce of that character. In the present case, the franchise tax is imposed upon the capital stock of a corporation consolidated under the state law, and engaged in both interstate and intrastate commerce. That case is readily distinguishable from the one now under consideration. Here the state imposes the franchise tax equally upon all of its corporations, consolidated and otherwise. The fact that a wholly intrastate corporation may own no property outside of the state, while the consolidated company does, presents no case of arbitrary classification. In both cases, the franchise tax is based upon a percentage of the capital stock. There is no denial of equal protection of the laws because a state may impose a different rate of taxation upon a foreign corporation for the privilege of doing business within the state than it applies to its own corporations upon the franchise which the state grants in creating them. We find nothing in the amount or characIt is urged that this tax is void because ter of the tax which makes it a burden upon it undertakes to tax property beyond the interstate commerce, and so beyond the aujurisdiction of the state, and imposes a di-thority of the state to impose. It results rect burden upon interstate commerce. Ob- that the judgment of the Supreme Court of jections of this character were so recently Alabama must be affirmed. discussed, and the previous cases in this court considered, in Kansas City, Ft. S. & M. R. Co. v. Botkin, 240 U. S. 227, 60 L. ed. 617, 36 Sup. Ct. Rep. 261, that it would be superfluous to undertake extended discussion of the subject now. In that case, after a full review of the previous decisions in this court, it was held that each case must depend upon its own circumstances, and that while the state could not tax property beyond its borders, it might measure a tax within its authority by capital stock which in part represented property without the taxing power of the state. As to the objection based upon the due process clause of the Constitution, we think that principle controlling here. There is no attempt in this case to levy a property tax; a franchise tax within the authority of the state is in part measured by the capital stock representing property owned in other states. (242 U. S. 60) LOUISVILLE & NASHVILLE RAILROAD COMPANY et al., Appts., V. UNITED STATES OF AMERICA et al. CARRIERS 33 INTERSTATE COMMERCE COMMISSION POWERS COMPELLING SWITCHING SERVICE-USE OF TERMINAL FACILITIES. Two railway carriers who are joint owners of a considerable portion of the terminals in a certain city used by them in common, and who manage them as a whole and deal with them in the same way as they would if their title were joint in every part, may not be compelled by the Interstate Commerce Commission, under the equal facilities requirement of the Act of February 4, 1887 (24 Stat. at L. 380, chap. 104, Comp. Stat. 1913, § 8565), § 3, respecting the interchange of traffic, which is qualified by the proviso that it "shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier en The tax is not of the character condemned in Western U. Teleg. Co. v. Kansas, 216 U. S. 1, 54 L. ed. 355, 30 Sup. Ct. Rep. 190, and kindred cases. In the latter case, a tax of large amount was imposed upon a foreign corporation engaged in interstate commerce, for the privilege of doing local gaged in like business," to discontinue as discriminatory their practice of refusing to business within the state. Under the cir-switch interstate traffic to and from the cumstances therein disclosed and the character of the business involved, this court held that the statute was in substance an attempt to tax the right to do interstate business, and to tax property beyond the confines of the state, and was therefore void. Here, a franchise tax is levied upon a corporation consolidated under the laws of the state by its own acceptance of that law in incorporating under it. tracks of a third carrier entering that city on the same terms which they contemporaneously maintain with respect to similar shipments to and from their own respective tracks in said city, although, instead of each carrier doing its own switching over the terminals used in common, they switch jointly through a single agency for both, each paying substantially as it would if it did its own work alone, since what is done is not reciprocal switching, but the For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes general public by not less than thirty days' filing and posting in the manner prescribed in § 6 of the Act to Regulate Commerce, and thereafter to maintain and apply to the switching of interstate traffic to and from the tracks of the Tennessee Central Rail Argued October 13 and 16, 1916. Decided road Company at said Nashville, rates and A' December 4, 1916. PPEAL from the District Court of the United States for the Middle District of Tennessee to review a decree which, dismissing the petition, denied a preliminary injunction against the enforcement of an order of the Interstate Commerce Commission. Reversed. Injunction to issue without prejudice to further orders by the Com mission. This is an appeal from a decree, made by three judges sitting in the district court, which denied a preliminary injunction against the enforcement of an order of the Interstate Commerce Commission and dismissed the appellants' petition. 227 Fed. 258, id. 273. See 33 Inters. Com. Rep. 76, for the report of the Interstate Commerce Commission. The order complained of required the appellants, the Louisville & Nashville Railroad Company, the Nashville, Chattanooga, & St. Louis Railway, and the Louisville & Nashville Terminal Company to desist and abstain "from maintaining a practice whereby they refuse to switch interstate competitive traffic to and from the tracks of the Tennessee Central Railroad Company at Nashville, Tennessee, on the same terms as interstate noncompetitive traffic, while interchanging both kinds of said traffic on the same terms with each other, as said practice is found by the Commission in its said report to be unjustly discriminatory." It was further ordered: "That the Louisville & Nashville Railroad Company, Nashville, Chattanooga, & St. Louis Railway, and Louisville & Nashville Terminal Company be, and they are hereby, notified and required to establish, on or before May 1, 1915, upon notice to the Interstate Commerce Commission and to the charges which shall not be different than they contemporaneously maintain with respect to similar shipments to and from their respective tracks in said city, as said relation is found by the Commission in its said report to be nondiscriminatory." The appellants contend as matter of law that the relations between them exclude any charge of discrimination that is based only upon a refusal to extend to the Tennessee Central road the advantages that they enjoy. The order is based upon discrimination and is limited by the duration of the interchange between the appellants found to be discriminatory, and the question argued by the appellants is the only question in the Therefore it is necessary to consider relations between the appealing railroads that were left on one side in Louisville & case. N. R. Co. v. United States, 238 U. S. 1, 18, 59 L. ed. 1177, 1183, 35 Sup. Ct. Rep. 696. The Louisville & Nashville traverses Nashville from north to south, the Nash ville & Chattanooga from west to south east, the Tennessee Central from northwest In In 1896 the two roads respectively let to the Terminal Company their several properties in the neighborhood of the original depot grounds of the Nashville & Chattanooga for 999 years, and shortly afterwards the Terminal made what is termed a lease of the same, and subsequently acquired property to the two roads jointly for a like term. It covenanted to construct all necessary passenger and freight buildings, tracks, and terminal facilities, the roads to pay annually as rental 4 per cent of the actual cost, and to keep the properties in repair. The Terminal Company then made a contract with the city for the construction of a Union Station, the two roads guarantying the performance, and the construc For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes tion was completed in 1900; the tracks con- | noncompetitive traffic with the former, but necting with those of the two roads, but not the Louisville & Nashville has refused to with those of the Tennessee Central. The switch competitive traffic and coal except Terminal Company, as part of the improve- at its local rates, and the Nashville & Chatments, purchased large additional proper- tanooga has refused to switch it at all. The ties, the two roads advancing the funds, switching of coal was dealt with by this and the company executing a mortgage for court in Louisville & N. R. Co. v. United $3,000,000 guaranteed by the roads. $2,- States, 238 U. S. 1, 59 L. ed. 1177, 35 Sup. 535,000 of the bonds were issued and the Ct. Rep. 696. But the case now before us proceeds used to repay the roads. is not concerned with the effect of the carriers having thrown the terminals open to many branches of traffic (238 U. S. 18). It arises only upon the question of the discrimination supposed to arise from the appellants' relations to each other, as we have explained,-a question grazed but not hit by the decision in 238 U. S. See p. 19. If the intent of the parties or purpose of the arrangement was material in a case like this, obviously there was none to discriminate against the Tennessee Central road. That road did not enter Nashville when the plan was formed, and the two appellants had a common interest, although competitors, an interest that also was public and in which the city of Nashville shared. By § 3 of the Act to Regulate Commerce as it now stands, the act "shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like busi On August 15, 1900, the two roads, at that time being the only two roads entering Nashville, made the arrangement under which they since have operated. They made an unincorporated organization called the Nashville Terminals which was to maintain and operate the property let to the two roads jointly by the Nashville Terminal Company and also 8.10 miles of main track and 23.80 miles of side track contributed by the Louisville & Nashville, and 12.15 miles of main and 26.37 miles of side track contributed by the Nashville & Chattanooga. The agreement between the roads provided a board of control consisting of a superintendent and the general managers of the two roads, the superintendent having the immediate control and appointing under of ficers, etc. The total expense of maintenance and operation is apportioned monthly between the two roads on the basis of the total number of cars and locomotives han-ness." [24 Stat. at L. 380, chap. 104, Comp. dled for each. There is no switching Stat. 1913, § 8565.] Therefore if either charge to or from locations on tracks of the carrier owned and used this terminal alone, Nashville Terminals within the switching it could not be found to discriminate against limits on freight from or to Nashville over the Tennessee Central by merely refusing either road. The Tennessee Central tracks to switch for it, that is, to move a car to now connect with those of the Nashville & or from a final or starting point from or Chattanooga at Shops Junction, in the west- to a point of interchange. We conceive that ern section of the city, within the switch-what is true of one owner would be equally ing limits, and with those of the Louisville true of two joint owners, and if we are & Nashville at Vine Hill, outside the switching limits, and just outside the city on the south. It should be added that in December, 1902, a further agreement was made purporting to modify the lease to the railroads jointly by excluding from it the property that came from them respectively, and remitting the roads to their several titles as they stood before the lease, subject only to the mortgage, with some other changes that need not be mentioned. This partial change from joint tenancy back to several titles does not affect the substantial equality of the contribution of the two roads, and the joint tenure of the considerable property purchased by the Terminal Company was left unchanged. Another matter that seems immaterial to the case before us is that, since the connection between the Tennessee Central and the appellant roads, the latter have interchanged right the question is narrowed to whether that is not, for all practical purposes, the position in which the appellants stand. They do still hold jointly a considerable portion of the terminals, purchased with their funds. They manage the terminals as a whole, and, in short, deal with them in the same way that they would if their title was joint in every part. Of course they do not own their respective original tracks jointly, and it is matter for appreciation that perhaps defies more precise argument whether the change back to a several tenure of those tracks changed the rights of the parties. We cannot see in this modification of the paper title any change material to the point in hand. Neither road is paid for the use of its tracks, but the severally owned and the jointly held are brought into a single whole by substantially equal contributions and are used by each as occasion requires. The fact principally relied upon to up hold the order of the Commission is that, | interests of the country, deem it a duty to instead of each road doing its own switch- set forth the grounds of my dissent. ing over the terminals used in common, they The Interstate Commerce Commission switch jointly; and it is said that there- found as matter of fact (33 Inters. Com. fore each is doing for the other a service Rep. 76, 84): "Defendants [the two railthat it cannot refuse to a third. We can- road companies, now appellants] unquesnot believe that the rights to their own ter- tionably interchange traffic with each other minals, reserved by the law, are to be de- and without distinction between competifeated by such a distinction. We take it tive and noncompetitive traffic. The cars that a several use by the roads for this pur- of both roads are moved over the individualpose would open no door to a third road.ly owned terminal tracks of the other to If the title were strictly joint throughout and from industries on the other, and both in the two roads, we can see no ground for lines are rendered equally available to inprejudice in the adoption of the more dustries located exclusively on one. The economical method of a single agency for movement, it is true, is not performed imboth, each paying substantially as it would mediately by the road over whose terminal if it did its own work alone. But, as we tracks it is performed, but neither is it perhave indicated, a large part of the terminals formed immediately by the road whose cars is joint property in substance, and the are moved. It is performed by a joint agent whole is held and used as one concern. for both roads, and that being so, we are What is done seems to us not reciprocal of the opinion that the arrangement is esswitching, but the use of a joint terminal sentially the same as a reciprocal switchin the natural and practical way. It is ob- ing arrangement, and accordingly constijected that, upon this view, a way is opened tutes a facility for the interchange of traffic to get beyond the reach of the statute and between, and for receiving, forwarding, and the Commission. But the very meaning of delivering property to and from defendants' a line in the law is that right and wrong respective lines, within the meaning of the touch each other, and that anyone may get second paragraph of § 3 of the act. [Interas close to the line as he can if he keeps state Commerce Act.] . . . We cannot on the right side. And further, the distinc-agree with defendants' contention that they tion seems pretty plain between a bona have merely exchanged trackage rights. fide joint ownership or arrangement so But, even if they have, we think the term nearly approaching joint ownership as this, 'facility,' as used in § 3 of the act, also inand the grant of facilities for the inter- cludes reciprocal trackage rights over terchange of traffic that should be extended to minal tracks, the consequences and advanothers on equal terms. The joint outlay of tages to shippers being identical with those the two roads has produced much more than accruing from reciprocal switching arrangea switching arrangement; it has produced ments." a common and peculiar interest in the station and tracks even when the latter are not jointly owned. In our opinion the order was not warranted by the law; but, in overturning it upon the single point discussed, we do so without prejudice to the Commis-Chattanooga under the Terminals agreesion's making orders to prevent the appellants from discriminating between competitive and noncompetitive goods, so long as they open their doors to the latter, the appellants being entitled to reasonable compensation, taking into account the expense of the terminal that they have built and paid for. Decree reversed. Injunction to issue, without prejudice to further orders by the Interstate Commerce Commission as stated in the opinion. Mr. Justice Pitney, with whom concurred Mr. Justice Day, Mr. Justice Brandeis, and Mr. Justice Clarke, dissenting: I am unable to concur in the opinion of the court, and, in view of the far-reaching effect of the decision upon the commercial The district court, three judges sitting (227 Fed. 258, 269), after careful consideration, reached the following conclusions: "The operation jointly carried on by the Louisville & Nashville and the Nashville & ment is not a mere exchange of trackage rights to and from industries on their respective lines at Nashville, under which each does all of its own switching at Nashville and neither switches for the other. It is, on the contrary, in substance and effect, an arrangement under which the entire switching service for each railroad over the joint and separately owned tracks is performed jointly by both, operating as principals through the Terminals as their joint agent, each railroad, as one of such joint principals, hence performing through such | agency switching service for both itself and the other railroad. . . . And, viewed in its fundamental aspect, and considered with reference to its ultimate effect, we entirely concur in the conclusion of the Commission that such joint switching operation 'is es |