Messrs. Edward Mayes, J. M. Dickinson, and Mayes & Longstreet for appellant.[ Yazoo & M V R Co v. Mayor and Aldermen of City of Vicksburg 209 U.S. 358 (1908) ]
[209 U.S. 358, 360] Messrs. Hannis Taylor and George Anderson for appellees.
Mr. Justice Day delivered the opinion of the court:
The case originated in a bill in equity filed by the Yazoo & Mississippi Valley Railroad Company against athe mayor and aldermen of the city of Vicksburg, to enjoin the collection of certain municipal taxes on the property of the railroad company assessed for the year 1901
The bill was demurred to; the court below sustained the demurrer and rendered a final decree dismissing the bill. The case, involving constitutional questions, was appealed directly to this court.
The allegations of the bill show that on February 22, 1884, the legislature of Mississippi passed an act authorizing the city of Vicksburg to enter into a contract with the Memphis & Vicksburg Railway Company, of which the following is the pertinent section:
Under this authority, on August 11, 1885, a contract was made with the Louisville, New Orleans, & Texas Railway Company, one of whose constituent companies was the Memphis & Vicksburg Railroad Company, named in the act above set forth. The pertinent parts of that contract are as follows:
The railway company, it is averred, complied with the act and now insists upon its exemption from taxation.
The complainant, the Yazoo & Mississippi Valley Railroad Company, consolidated, on October 24, 1892, with the Louisville, New Orleans, & Texas Railway Company, and in this consolidation undertook to acquire for the appellant the exemption from taxation under the contract of August 11, 1885, hereinbefore referred to.
The learned counsel for the appellant concedes that unless this case can be distinguished in principle from Yazoo & M. Valley R. Co. v. Adams, 180 U.S. 1 , 45 L. ed. 395, 21 Sup. Ct. Rep. 240, the decree of the circuit court must be affirmed.
The Adams Case came here on writ of error to review the judgment of the supreme court of Mississippi in the same case. 77 Miss. 194, 60 L.R.A. 33, 24 So. 200, 317, 28 So. 956. The Mississippi court, whose judgment was affirmed in this court, held that a grant of exemption from taxation to a railroad company was void under the Constitution of 1869 of that state, and that the organization of a consolidated company under the Constitution of 1890 cut off an exemption from taxation granted to a constituent company prior to the adoption of that Constitution. This judgment was affirmed, as we have said, in this court which, speaking by Mr. Justice Brown, held that the consolidation of October 24, 1892, created a new corporation, and that while it might be true that the exemption in question would pass to the consolidated company by the terms of the legislation under review, yet, when the constitutional provision of 1890 took effect, the consolidated corporation, organized under that Constitution, was no longer entitled to the exemption. That Constitution contained certain clauses which were then under review, as follows:
This court held that even if the legislature, in the several acts of consolidation, had expressly provided that the new corporation should be exempted from taxation, such laws would be nullified by the provision of the Constitution of 1890, requiring that the property of all private corporations for pecuniary gain shall be taxed in the same way and to the same extent as the property of individuals.
Conceding the force of the decision in the Adams Case, the learned counsel for the railroad company undertakes to differentiate that case from this upon the ground that the legislation of the state of Mississippi ( act of February 22, 1884) authorized a contract to be made with the railroad company for an exemption from taxation upon valuable considerations to be performed by the company, and that the grant in the Adams Case was a mere legislative exemption from taxation; and the counsel insists that the validity of such legislation as is now under consideration has been sustained by the supreme court of Mississippi in a case decided by that court after its decision in Yazoo & M. Valley R. Co. v. Adams, 77 Miss. in the case of Adams v. Tombigbee Mills, 78 Miss. 676, 29 So. 470, in which an act of the legislature granting an exemption to certain factories for the manufacture of cotton or woolen goods, etc., for a period of six years from the completion of the factory, was sustained. But an examination of the opinion in that case convinces us that the Mississippi court had no intention to [209 U.S. 358, 364] depart from its ruling in the case in 77 Miss., for that case is expressly distinguished in the opinion, and, among other things in the course of the opinion, the court say:
And again, on page 693:
We think a reading of the opinion makes it clear that the supreme court of Mississippi differentiated the cases, and did not intend to depart from its ruling in the former case when similar circumstances were brought to its attention.
Apart from the ruling of the Mississippi court, we think it is entirely clear that the effect of organizing the consolidated corporation after the adoption of the Mississippi Constitution of 1890 was to bring the new corporation within the terms and limitations of that Constitution, which prohibited exemption of corporate property from taxation. The exemption to the former constituent company could not inure to the consolidated company without, in effect, ignoring the constitutional provision.
This subject was before this court and fully considered in the recent case of Rochester R. Co. v. Rochester, 205 U.S. 236 , 51 L. ed. 784, 27 Sup. Ct. Rep. 469, wherein it was held that where a corporation was incorporated under a general act creating certain obligations, it could not receive by transfer from another company an exemption inconsistent with its own charter or the Constitution and laws of the state then applicable, and this even though the legislative authority undertook to transfer the exemption by words which clearly included it.
In that case previous decisions of this court are collated [209 U.S. 358, 365] on page 254. The court, speaking by Mr. Justice Moody, said:
The formation of the consolidated company was not imposed upon the complainant; it had the privilege of standing upon such rights as it had by contract or otherwise under the former legislation in force before the adoption of the new Constitution. When it saw fit to enter into the consolidation and form a new corporation in 1892, the Constitution then in force in the state became the law of its corporate being, and the requirement that corporate property should not be exempt from taxation then became binding upon it, as upon all other corporations formed under the new organic law.
We find no error in the judgment of the Circuit Court for the Southern District of Mississipi, and the same is affirmed.