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Walker v. Johnson

ERROR to the Circuit Court of the United States for the Northern District of Illinois.

On the twenty-first day of July, 1869, Edwin I. Sherburne, Edwin Walker, and Charles B. Farwell entered into a written contract with the canal commissioners of the State of Illinois, for the construction of a lock and dam in the Illinois River, near the city of Henry, in which they agreed to commence the work on or before the first day of August, 1869, and complete it by the first day of September, 1871.

Sherburne shortly after assigned his interest in this contract to James K. Lake, and Lake, Farwell, and Walker assigned the same, with the approval of the commissioners, to Willard Johnson, plaintiff below. But while Farwell, Lake, and Walker were the contractors, they made an agreement between themselves, in writing, by which, among other things, Walker was 'to furnish all the stone necessary for the construction of the lock and dam, to be by him delivered on board of canal-boats at Henry, as the same might be required in the progress of the work, to be of the description required for said work;' and the prices that he was to receive for the various kinds of stone so delivered were settled. It is alleged by Johnson, that, after the contract with the commissioners had been assigned to him, Walker agreed with him to furnish the stone for the work in the same manner and on the same terms as in this contract with his former partners. And that, by reason of his failure to do so, he, the plaintiff, was greatly damaged; and for that he brought this action. A verdict and judgment for $6,500 were rendered against defendant Walker, to which he prosecutes the present writ of error.

The errors assigned relate exclusively to exceptions taken to the charge of the judge, and to his refusal to charge as requested by the defendant. They are fully stated in the opinion of the court.

Mr. Melville W. Fuller for the plaintiff in error.

The contract was void under the Statute of Frauds. Browne, Stat. Frauds, sects. 279, 283; Packet Company v. Sickles, 5 Wall. 580; Birch v. The Earl of Liverpool, 9 Barn. & Cress. 392; Dobson and Another v. Espie, 2 H. & N. 81; Baydell v. Drummond, 11 East, 142.

The alleged parol contract to deliver the stone by railroad, instead of by canal-boats as agreed upon in the original contract, was without consideration, and therefore void. Gross v. Nugent, 5 Barn. & Adol. 65; Lattimore v. Hensen, 14 Johns. (N. Y.) 330; Munroe v. Perkins, 9 Pick. (Mass.) 295; Adams v. Nichols, 19 id. 275; Crowley v. Vitley, 7 Ex. 319; Payne v. New. S.C.. Co., 10 id. 291; Thurston v. Ludwig, 6 Ohio St. 1; Hunt v. Barfield, 19 Ala. 117; Gerhard v. Bates, 2 El. & Bl. 486; Swain v. Seamans, 9 Wall. 254.

It was also void, because entered into after breach in the original contract.

Mr. Francis Kernan, contra.

If by the terms of a contract, the subject-matter, and the situation of the parties, it is shown that the contract can, and reasonably may in its execution, be required to be performed within a year, it is not within the Statute of Frauds. Browne, Stat. Frauds, sects. 274, 275, 278 a, 279, 281, 286, and cases cited; White v. Murtland, 71 Ill. 250; Kent v. Kent, 62 N. Y. 564; Morley v. Noblett, 42 Ind. 85; Larimer v. Kelly, 10 Kan. 298; Gault v. Brown, 48 N. H. 183; Peters v. Westboro', 19 Pick. (Mass.) 365; Blake v. Cole, 22 id. 99; Somerley v. Buntin, 118 Mass. 286; Blair v. Walker, 39 Iowa, 410; Greene v. Harris, 9 R. I. 401; Hodges v. Richmond, id. 487; Souch v. Strawbridge, 2 C. B. 811; Plimpton v. Curtis, 15 Wend. (N. Y.) 336; Peter v. Compton, 1 Sm. L. C. 432.

There was no error in the instruction of the court below, that it was competent for the parties to modify the terms of their original contract by agreeing that the stone should be deliered by railroad instead of by canal-boats. Their mutual promises were a sufficient consideration. Law v. Forbes, 18 Ill. 568; Bishop v. Busse, 69 id. 403; Cooke v. Murphy, 70 id. 96; Carrier v. Dilworth, 59 Pa. St. 406; Hill v. Smith, 34 Vt. 535; Monroe v. Perkins, 9 Pick. (Mass.) 298.

MR. JUSTICE MILLER delivered the opinion of the court.

title: Walker v. Johnson


text: Talk:Walker v. Johnson

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/

title: Talk:Walker v. Johnson


text:
Walker v. Johnson/Opinion of the Court

The first error arises upon the proposition of defendant, that the contract, being one not to be performed within a year from the time it was made, and resting only in parol, was void, and could not sustain the action. Evidence was given which tended to show that the agreement between plaintiff and defendant was made early in November, 1869, and renewed or modified in April, 1870. As by the terms of the original contract with the canal commissioners the work was to be completed on or before Sept. 1, 1871, defendant insisted that his contract for delivery of stone had the same time to ran; and his counsel asked the court to instruct the jury that it was void, if it appeared from the Farwell, Lake, and Walker contract that it was not the intention and understanding of the parties that the same should be performed formed within the space of one year from the making of the verbal agreement between plaintiff and defendant.

The court refused this instruction, and told the jury that if it appeared from the contract itself that it was not to be performed, or was not intended to be performed, within a year, it was void; but that if it was a contract which might have been performed within a year, and which the plaintiff, at his option, might have required the defendant to perform within a year, it was not within the statute.

We think the court ruled correctly, both in what it charged and in what it refused.

1. In order to bring a parol contract within the statute, it must appear affirmatively that the contract was not to be performed within the year. We have had occasion to examine this question very recently in the case of McPherson v. Cox (supra, p. 404). We said, in that case, that the statute 'applies only to contracts which, by their terms, are not to be performed within the year, and not to contracts which may not be performed within that time.' The court said, in regard to that case, which was a contract by a lawyer to conduct a suit in court, that there was nothing to show that it could not have been fully performed within a year. So, in this case, the lock and dam were to be completed on or before Sept. 1, 1871. Clearly, the contractor had the right to push his work so as to finish it before November, 1870, which would have been within a year from the date of Walker's contract with plaintiff.

If plaintiff had a right to do his work within that time, he had a right to require of defendant to deliver the stone necessary to enable him to do it. There is no error in the action of the court on this branch of the subject.

2. It will be observed that, by the agreement of Walker with his partners, he was to deliver at Henry in canal-boats. Evidence was given tending to show that, in the spring of 1870, it was agreed between him and plaintiff that he should deliver by railroad; and the court charged the jury that it was competent for the parties to change the contract in that regard, if they chose; and that if the jury found that defendant did so agree, he was bound by such agreement as he made, if any.

The original contract between Johnson and Walker was in parol; and if the parties, for their mutual convenience, or for no good reason at all, choose a delivery by rail, both of them consenting thereto, we think that the change in the mode of delivery became a part of the contract.

3. There was evidence tending to show that, while defendant was performing part of the contract, he received notice from plaintiff that he would take no more stone from him; and also evidence that, shortly after this, the parties had an interview, in which this notice was waived, and Walker agreed to go on with the contract. On this part of the case the court said:--

'If the testimony satisfies you that the defendant did, after the notice of the 12th of May, recognize the contract as still in force, and promise the plaintiff that he would go on and complete the same, the defendant cannot now claim as a defence to this action that said notice released him from the performance of the contract.

'If, on the contrary, you are satisfied that the defendant made no agreement after the notice to stop on the 12th of May, recognizing the contract as still in force, or promising to perform it or continue it in force, then the defence may be considered made out, although the notice to suspend might entitle the defendant to damages; but I do not think it necessary to discuss the question of the defendant's damages.'

The court, however, did, in answer to a suggestion of counsel for defendant, that the latter would have a right to damages for the withdrawal of the contract by plaintiff, proceed to make some remarks on that subject to which defendant excepts, and which he now assigns for error.

We do not see any thing in these remarks to complain of, except that they were irrelevant to any issue in the case. There was no plea or cross-demand under those damages could have been passed upon by the jury. As they in nowise prejudiced defendant in the present action, we are not called on to consider further their soundness as matter of law.

4. The court was asked to instruct the jury 'that verbal admissions, while, if deliberately made and precisely identified, they frequently furnish satisfactory evidence, are to be received with great caution; and the attention of the jury should be directed, in passing upon alleged verbal admissions, to whether the witnesses testifying thereto distinctly understood the party charged in what he said, and whether they have or have or have not, intentionally or unintentionally, failed to express what was actually said.' But the court refused said instruction.

This is the ground of the last assignment of error.

There is nothing in the testimony, as we find it in the bill of exceptions, to which such a charge could apply. There are no admissions, properly so called, of defendant relied on in the case. The testimony in regard to the renewal of the contract after plaintiff's letter to defendant, that he would receive no more stone from him, is not an admission: it is a conversation between plaintiff and defendant, in which the contract is renewed or the abandonment waived. It is expicitly stated by plaintiff that defendant agreed to recommence the delivery of stone and complete the contract. Whatever else this may be, it is no admission. This word, in the sense of the quotation from Greenleaf, asked by counsel as a charge, means an admision by a party of some existing fact or circumstance which tells against him in the trial, and does not relate to the terms in which a substantive verbal contract is made by the parties.

Besides, it is apparent that the attention of the jury was directed by the court to all the matters essential to their understanding the case; and we do not admit that a court is bound to give to the jury, at the instance of counsel, every philosophical remark found in text-books of the law, however wise or true they may be in the abstract, or however high the reputation of the author.

We find no error in the record, and the judgment of the Circuit Court is

Affirmed.

title: Walker v. Johnson/Opinion of the Court


text: Talk:Walker v. Johnson/Opinion of the Court


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Baird v. United States

APPEAL from the Court of Claims.

In March, 1864, the government, requiring an immediate supply of locomotive engines for the use of the armies operating in Tennessee, made an order upon M. W. Baldwin & Co., a firm of locomotive builders at Philadelphia, for fifteen engines, to be delivered as soon as possible, and to the exclusion of all other contracts or interests. The price fixed upon was $18,947.72 for each engine, and the government tax to be paid on delivery. In addition to this, the firm was authorized to charge the government any advance there might be after Nov. 9, 1863, in the cost of labor and materials used in the construction, and any damage resulting from the preference given this order over other contracts.

The order was accepted upon the terms proposed, and the locomotive delivered at intervals of four or five days, between May 3 and June 30, 1864. The fixed price was paid according to agreement; and, Stpt. 14, 1864, Baldwin & Co. presented their claim for the difference in the cost on account of the advance in the price of labor and materials, which was then stated to be $151,588.17. This claim was audited by the government, and allowed for $97,507.75; and the firm was informed of the amount of the allowance, and the principles upon which the adjustment had been made, as early as Jan. 23, 1865. On the 8th of April, a draft was sent for the amount found due, payable to the order of the firm; which was received and collected without objection.

Subsequently, this appellant, as the sole surviving partner of the firm, brought his action in the Court of Claims, upon the contract, to recover the damages which it was alleged the firm had sustained by giving the order preference over other contracts and interests; and at the December Term, 1869, of that court, judgment was rendered against the United States for $23,750.

On the 2d of May, 1870, one day before the expiration of six years from the date of the delivery of the first engine under the order, this action was brought to recover the 'residue of the amount of the advance in labor and materials over the cost of the same on the 9th of November, 1863; which residue is the difference between the $128,276.50 claimed and the government tax thereon ($3,848.29), in all, $132,124.79, and the $93,507.75 paid, making the residue $38,617.04.' The Court of Claims, while finding that the actual advance over and above what had been paid was the amount claimed, gave judgment in favor of the United States; whereupon the claimant appealed to this court.

Mr. John D. McPherson for the appellant.

The Solicitor-General, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Baird v. United States


text: Talk:Baird v. United States

title: Talk:Baird v. United States


text:
Baird v. United States/Opinion of the Court

It is, no doubt, true that the payment by a debtor of a part of his liquidated debt is not a satisfaction of the whole, unless made and accepted upon some new consideration; but it is equally true, that, where the debt is unliquidated and the amount is uncertain, this rule does not apply. In such cases the question is, whether the payment was in fact made and accepted in satisfaction.

It is clear that, in September, 1864, when this account was first presented to the government, the amount due was uncertain, because more was then demanded than is now claimed. The counsel for the appellant say, in their argument, that this reduction has been made in the light of the testimony taken in the suit for indemnity. Under such circumstances, it was the duty of the auditing officers of the government to state the account themselves before making payment. This they did, and reported to the claimant the amount found due, with the principles upon which the adjustment had been made. In effect, this was an offer to pay the balance stated in satisfaction of the claim. The acceptance of the money afterwards, without objection, was equivalent to an acceptance of the payment in satisfaction.

But there is another objection to the recovery which is equally good. It is well settled that, where a party brings an action for a part only of an entire indivisible demand, and recovers judgment, he cannot subsequently maintain an action for another part of the same demand. Warren v. Comings, 6 Cush. (Mass.) 103. Thus, if there are several sums due under one contract, and a suit is brought for a part only, a judgment in that suit will be a bar to another action for the recovery of the residue. Here was a contract by which the government was bound to pay for the engines in accordance with terms agreed upon. The entire price to be paid was not fixed. A part was contingent, and the amount made to depend upon a variety of circumstances. When the former action was commenced in the Court of Claims, the whole was due. Although different elements entered into the account, they all depended upon and were embraced in one contract. The judgment, therefore, for the part then sued upon is a bar to this action for the 'residue.'

Judgment affirmed.


text: Talk:Baird v. United States/Opinion of the Court


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Murray v. Charleston

ERROR to the Supreme Court of the State of South Carolina.

In 1783, the State of South Carolina incorporated the city of Charleston. Among other powers conferred upon it was that of making 'such assessments on the inhabitants of Charleston, or those who hold taxable property within the same, for the safety, convenience, benefit, and advantage of the city, as shall appear to them expedient.'

Under this power, there was an ordinance of the city, ratified March 22, 1870, 'to raise supplies for the fiscal year ending Dec. 31, 1870.' Sect. 1 authorizes and requires the city appraiser to assess a tax of two cents upon the dollar of the value of all real and personal property in the city, for the purpose of meeting the expenses of the city government for the current fiscal year.

Sect. 3 directs that the tax assessed on city stock shall be retained by the city treasurer out of the interest thereon, when the same is due and payable.

A similar ordinance was ratified March 1, 1871, for the fiscal year ending Dec. 31, 1871.

The tax was accordingly assessed. That upon the city stock was retained out of the interest due on it to the holders thereof.

Murray, as a holder, brought suit, Nov. 17, 1871, in the Court of Common Pleas for the county of Charleston against the city council of Charleston, to recover the amount of the tax which the treasurer had retained out of the interest due to him, alleging that the said tax was illegal.

The answer of the council, among other matters, sets forth that the stock was duly assessed, and that it was not expressly exempted from taxation by the ordinance under which it was issued.

The court tried the case without a jury, and found the following facts: 1. That the plaintiff has been, since January, 1870, the holder and owner of $35,262.33 of six per cent stock issued by defendant, the interest thereon payable quarterly. 2. That the plaintiff is not a resident of Charleston, but a resident of Bonn, Germany. 3. That the defendant owed the plaintiff for interest on his said stock the several sums set forth in the fourth paragraph of the complaint, on the several days therein named, and that it paid the same to him, less certain sums retained. 4. That the several sums so retained by the defendant, amounting in all to $440.75, were by the defendant kept as the amount of taxes due from the said plaintiff to the said city, being a tax at the rate of two per cent per annum upon the principal of said stock, said tax being imposed by virtue of the ordinance of the said city council of Charleston, ratified March 22, 1870, entitled 'An ordinance to raise supplies for the fiscal year ending Dec. 31, 1870,' and a similar ordinance, ratified March 1, 1871, to raise supplies for the fiscal year ending Dec. 31, 1871, and that said stock was not specifically exempted from taxation by the ordinance under which it was issued. 5. That the plaintiff, by his agent, protested against the deduction of said tax, and duly entered his protest on each receipt for interest on said stock.

The court announced as conclusions of law: 1. That the city council of Charleston, as a municipal corporation, has a right, under the constitution and laws of the State, to tax the property of the plaintiff invested in stock issued by it, said stock not being specifically exempted by law from taxation, nor being exempt from taxation by the ordinance under which it was issued. 2. That the city council of Charleston had a right to collect the tax imposed on the property of the plaintiff in said stock by retaining the amount of such tax out of payments made to the plaintiff on account of the interest due thereon, and the plaintiff cannot recover the same.

Judgment was accordingly rendered, whereupon Murray appealed to the Supreme Court, and in his notice of appeal set forth the following grounds: 1. That paintiff, being resident in a foreign country, is not liable to the tax levied and retained by the city council. 2. That the laws of the State do not authorize the city council to levy and retain a tax upon its own stock. 3. That the levying and retaining of said tax is a violation of good faith in the contract of loan, and impairs the obligation of said contract, and is, therefore, unconstitutional and void. The Supreme Court affirmed the judgment of the Court of Common Pleas, and held that the stock was taxable property within the city, and that the right of taxing it 'existed at the time of the contract, and so entered into it as to become one of its necessary elements and attributes. The obligation of the contract was not impaired by the imposition of the tax, because it was a property which attached to the contract.'

Murray then sued out this writ of error.

Mr. James Conner for the plaintiff in error.

1. This court has jurisdiction. The plaintiff in error, in seeking to reverse the judgment of the Court of Common Pleas, specifically assigned in his notice of appeal that the tax impaired the obligation of his contract with the city. The constitutionality, therefore, of the ordinances levying the tax, which were passed in the exercise of an alleged authority derived from the State, was thus directly drawn in question and necessarily involved; and neither court could have decided adversely to him without affirming their validity.

2. The stock in question, although it be registered and the certificates transferable only on the books of the city,-a provision for the greater security of the holder,-does not differ in its legal effect from an ordinary money-bond. It is a chose in action, attesting his right to demand a specific sum at stated intervals, and the city's correlative obligation to pay it. Having, in this instance, its situs at a foreign domicile, it is not subject to the taxing power of Charleston, which is confined to persons and property within the limits of the city. Railroad Company v. Jackson, 7 Wall. 262; Tappan v. Merchants' National Bank, 19 id. 490; State Tax on Foreign-Held Bonds, 15 id. 300; The City of Davenport v. The Mississippi & Missouri Railroad Co. et al., 12 Iowa, 539; Hunter v. Board of Supervisors, 33 id. 379; The State v. Ross, 3 Zab. (N. J.) 517; Collins v. Miller, 43 Ga. 336; Johnson v. City Council of Oregon City, 3 Oreg. 13.

3. The ordinances impose a tax upon a subsisting contract, and alter its terms by withholding part of the stipulated interest due thereon. They thus impair its obligation. The city cannot, by the exercise of its taxing power, find a justification in morals or in constitutional law for a breach of its contract. Weston and Others v. City Council of Charleston, 2 Pet. 449; 3 Hamilton, Works, 519; Jelison v. Lee et al., 3 Woodb. & M. 376.

Mr. Philip Phillips, Mr. R. B. Carpenter, and Mr. James B. Campbell, contra.

1. Murray did not, in the Common Pleas, put his right to recover upon the ground that the ordinances levying the tax, and directing that it be retained from the interest due upon his stock, were in violation of the Constitution of the United States, nor did he invoke the protection of that instrument. When the Supreme Court of a State is asked to reverse the judgment of a subordinate court, error in the record must be shown, and no question can be made on any new matter presented in the appellate court; and, to enable a party here to ask a reversal of a judgment of the Supreme Court, it is not sufficient to show that a Federal question was, by an assignment of error, raised for the first time in that court. Fisher's Lessee v. Cockerell, 5 Pet. 248.

2. The act of South Carolina granting the charter was in force prior to the adoption of the Federal Constitution, and neither it nor the ordinances passed pursuant to it are subject to the clause which forbids a State to pass a law impairing the obligation of contracts. No jurisdiction, therefore, exists here. Owings v. Speed et al., 5 Wheat. 420; League v. De Young, 11 How. 185. The failure of the State court to give full effect to a contract does not in itself furnish grounds for review. Knox v. Exchange Bank, 12 Wall. 379.

3. The stock was not exempt from taxation by an ordinance of the city or a law of the State. Neither the decision of the Supreme Court, holding that it was personal property within the city, and that the ordinances imposing the tax were passed in the execution of a power conferred by the charter and justified by its terms, nor the imputed injustice and oppression of the tax, furnish grounds for review here. Providence Bank v. Billings, 4 Pet. 514; Mills v. St. Clair County, 8 How. 569; Satterlee v. Mathewson, 2 Pet. 380; West River Bridge Company v. Dix, 6 How. 507; Veazie Bank v. Fenno, 8 Wall. 533. The taxing power of the several States, except where restrained by the Federal or the State Constitution, extends to every species of property which exists by their authority or is introduced by their permission. McCullogh v. The State of Maryland, 4 Wheat. 316; Weston and Others v. City Council of Charleston, 2 Pet. 449; New Orleans v. Clark, 95 U.S. 644; Lane County v. Oregon, 7 Wall. 71. Exemption from its exercise can never be claimed by mere implication, but only from clear and express declaration; and if such exemption be a mere gratuity, the act granting it may be modified or repealed in like manner as other legislation. Tucker v. Ferguson, 22 Wall. 527; West Wisconsin Railroad Co. v. Board of Supervisors of Trempealeau County, 93 U.S. 595. In this case, there is not even the slightest implication, nor presumption arising from the nature of the contract or otherwise, that the city renounced the right of taxing the stock.

4. Murray insists upon his non-residence. Tangible personal effects and real estate in Charleston are taxed there; and if sound reasons can be given for discriminating in favor of this property, they should be presented to the legislature, as they do not touch the case in its judicial aspects. If a citizen holds certificates of stock which may be taxed, his transfer of them to a non-resident does not create a new obligation, nor exclude the law from operating upon them. The same elements of consideration exist in each case, and the judgment must be the same. In Catlin v. Hull (21 Vt. 152), debts due to non-residents were taxed. The court said that the doctrine as to the situs of personal property did not conflict with the actual jurisdiction over it by the State where it is situated, or with the right to subject it, in common with other property, to share the burden of the government by taxation, and that this had been the settled practice of that State, not only in reference to tangible property, but to that which is incorporeal; and the late Chief Justice Tilghman held that personal property, if invisible (consisting of debts), has a locality in the place where the debtor resides. Story, Contr., sect. 383.

title: Murray v. Charleston


text: Talk:Murray v. Charleston

title: Talk:Murray v. Charleston


text:
Murray v. Charleston/Opinion of the Court

Charleston, in determining that property of this description, created by her authority and situate within her limits, should, without regard to the domicile of the owner, contribute its just share toward the public expenditure, followed a conspicuous example. By sect. 120 of the act of June 30, 1864 (13 Stat. 283), a tax was levied by the United States on the dividends of corporations, without reference to the citizenship of the owner of the stock; and this section was by the act of March 10, 1866, declared to embrace 'non-residents, whether citizens or aliens.' 14 id. 4. By the act of July 13, 1866, a tax was levied upon the 'gains and profits' of any business or trade carried on in the United States by 'persons residing without the United States, not citizens thereof.' Id. 138.

At all events, Murray's claim that his stock was exempt from taxation by reason of his foreign residence, and that extra-territorial effect was given by the judgment below to a State law does not raise a Federal question.

5. The ordinances are not unconstitutional. When the certificates were issued, the council was vested with power to tax the stock. They were, therefore, purchased with notice that they were subject to the exercise of that power, and they were held in subordination to it. The law touching the liability of the res to taxation entered into the contract, and became one of its essential elements. The ordinances do not engraft a new condition upon it, or modify its stipulations. It is said, however, that its obligation is impaired, because, by reason of them, the holder receives a diminished income from it. This is but another form of asserting that a tax cannot be rightfully assessed against the stock; for, if it can, the mode of collecting it is immaterial. Whether, when sued on a contract, the city can claim, by way of set-off, the taxes due to her from the plaintiff; whether she can enforce the collection of them by suit, or by garnishment of moneys due to him, or by a summary sale of the res,-are matters of local jurisprudence, which have no more relation to the alleged Federal question involved, or to the real merits of the controversy, than has the proposition that taxes are not debts within the meaning of the legal-tender enactments. If the ordinances are valid without the provision for deducting the tax from the accrued interest and retaining it, they are valid with it.

The right of the States to tax their own securities has been judicially affirmed. Champaign County Bank v. Smith, 7 Ohio St. 42; People v. Home Insurance Co., 29 Cal. 533. There is no reported case in conflict with these decisions. Not only does this conform to the settled practice of the British government, but the United States has asserted the same right. By sect. 49 of the act of Aug. 5, 1861 (12 Stat. 309), sect. 90 of the act of July, 1862 (id. 473), sect. 116 of the act of June 30, 1864 (13 id. 281), and by sect. 1 of the act of March 3, 1865 (id. 479), the tax on income includes bonds and other securities of the United States.

It is no answer to say that such a tax is not directly laid upon the thing. If it be a breach of contract or of good faith to tax directly, it is equally so to secure the same result by indirect means. That rule is not sound which makes the thing untaxable when it alone is assessed, and taxable when it is included with the rest of the owner's property of every kind.

MR. JUSTICE STRONG delivered the opinion of the court.

The plaintiff, a resident of Bonn, in Germany, was, prior to the first day of January, 1870, and he still is, the holder and owner of $35,262.35 of what is called stock of the city of Charleston. The stock is in reality a debt of the city, the evidence of which is certificates, whereby the city promises to pay to the owners thereof the sums of money therein mentioned, together with six per cent interest, payable quarterly. One-third of the interest due the plaintiff on the first days of April, July, and October, 1870, and January and July, 1871, having been retained by the city, this suit was brought to recover the sums so retained; and the answer to the complaint admitted the retention charged, but attempted to justify it under city ordinances of March 20, 1870, and March 21, 1871. By these ordinances, set out in full in the answer, the city appraiser was directed to assess a tax of two cents upon the dollar of the value of all real and personal property in the city of Charleston, for the purpose of meeting the expenses of the city government; and the third section of each ordinance declared that the taxes assessed on city stock should be retained by the city treasurer out of the interest thereon, when the same is due and payable. On these pleadings the case was submitted to the court for trial without a jury; and the court made a special finding of facts, substantially as set forth in the complaint and averred in the answer, upon which judgment was given for the defendant. This judgment was subsequently affirmed by the Supreme Court, and the record is now before us, brought here by writ of error. It is objected that we have no jurisdiction of the case, because, it is said, no Federal question was raised of record, or decided in the Court of Common Pleas, where the suit was commenced.

The city of Charleston was incorporated in 1783, before the adoption of the Federal Constitution. Among other powers conferred upon the city council was one to 'make such assessments on the inhabitants of Charleston, or those who hold taxable property within the same, for the safety, convenience, benefit, and advantage of the city, as shall appear to them expedient.' It was under this authority, repeated in subsequent legislation, the city ordinances of 1870 and 1871 were made. It may well be doubted whether the acts of the legislature were intended to empower the city to tax for its own benefit the debts it might owe to its creditors, especially to its nonresident creditors. Debts are not property. A non-resident creditor cannot be said to be, in virtue of a debt due to him, a holder of property within the city; and the city council was authorized to make assessments only upon the inhabitants of Charleston, or those holding taxable property within the same. To that extent the Supreme Court of the State has decided the city has power to assess for taxation. That decision we have no authority to review. But neither the charter itself, nor any subsequent acts of legislation, directly or expressly interfered with any debts due by the city, or gave to the city any power over them. They simply gave limited legislative power to the city council. It was not until the ordinances were passed under the supposed authority of the legislative act that their provisions became the law of the State. It was only when the ordinances assessed a tax upon the city debt, and required a part of it to be withheld from the creditors, that it became the law of the State that such a withholding could be made. The validity of the authority given by the State, as well as the validity of the ordinances themselves, was necessarily before the Court of Common Pleas when this case was tried; and no judgment could have been given for the defendants without determining that the ordinances were laws of the State, not impairing the obligation of the contracts made by the city with the plaintiff. And when the case was removed into the Supreme Court of the State, that court understood a Federal question to be before it. One of the grounds of the notice of the appeal was 'that such a tax is a violation of good faith in the contract of loan, impairs the obligation of said contract, and is, therefore, unconstitutional and void.' It is plain, therefore, that both in the Common Pleas and in the Supreme Court of the State a Federal question was presented by the pleadings and was decided,-decided in favor of the State legislation, and against a right the plaintiff claims he has under the Constitution of the United States. The city ordinances were in question on the ground of their repugnancy to the inhibition upon the States to make any law impairing the obligation of contracts; and the decision was in favor of their validity. Nothing else was presented for decision, unless it be the question whether the acts of the State legislature authorized the ordinances; and that was ruled affirmatively. The jurisdiction of this court over the judgments of the highest courts of the States is not to be avoided by the mere absence of express reference to some provision of the Federal Constitution. Wherever rights acknowledged and protected by that instrument are denied or invaded under the shield of State legislation, this court is authorized to interfere. The form and mode in which the Federal question is raised in the State court is of minor importance, if, in fact, it was raised and decided. The act of Congress of 1867 gives jurisdiction to this court over final judgments in the highest courts of a State in suits 'where is drawn in question the validity of a statute of, or an authority exercised under, any State, on the ground of their being repugnant to the Constitution, treaties, or laws of the United States, and the decision is in favor of their validity.' Not a word is said respecting the mode in which it shall be made to appear that such a question was presented for decision. In the present case, it was necessarily involved, without any formal reference to any clause in the Constitution, and it is difficult to see how any such reference could have been made to appear expressly.

In questions relating to our jurisdiction, undue importance is often attributed to the inquiry whether the pleadings in the State court expressly assert a right under the Federal Constitution. The true test is not whether the record exhibits an express statement that a Federal question was presented, but whether such a question was decided, and decided adversely to the Federal right. Everywhere in our decisions it has been held that we may review the judgments of a State court when the determination or judgment of that court could not have been given without deciding upon a right or authority claimed to exist under the Constitution, laws, or treaties of the United States, and deciding against that right. Very little importance has been attached to the inquiry whether the Federal question was formally raised. In Crowell v. Randall (10 Pet. 368), it was laid down, after a review of almost all our previous decisions, 'that it is not necessary the question should appear on the record to have been raised, and the decision made in direct and positive terms, in ipsissimis verbis, but that it is sufficient if it appears by clear and necessary intendment that the question must have been raised, and must have been decided, in order to have induced the judgment.' This case was followed by Armstrong et al. v. The Treasurer of Athens County (16 id. 281), where it was held sufficient to give this court jurisdiction if it appear from the record of the State court that the Federal question was necessarily involved in the decision, and that the court could not have given the judgment or decree which they passed without deciding it. See also Bridge Proprietors v. The Hoboken Company, 1 Wall. 116, and Furman v. Nichol, 8 id. 44.

That involved in the judgment of the Court of Common Pleas and in that of the Supreme Court of the State was a decision that the city ordinances of Charleston were valid, that they did control the contract of the city with the plaintiff, and that they did not impair its obligation, is too plain for argument. The plaintiff complains that the city has not fully performed its contracts according to their terms, that it has paid only four per cent interest instead of six per cent, which it promised to pay, and that it has retained two per cent of the interest for its own use. The city admits all this, but attempts to justify its retention of one-third of what it promised to pay by pleading its own ordinances directing its officer to withhold the two per cent of the interest promised whenever it became due and payable according to the stipulations of the contract, calling the amount detained a tax. Of course, the question is directly presented whether the ordinances are a justification; whether they can and do relieve the debtor from full compliance with the promise; in other words, whether the ordinances are valid and may lawfully be applied to the contract. The court gave judgment for the defendant, which would have been impossible had it not been held that they have the force of law, notwithstanding the Constitution of the United States, and the Supreme Court affirmed the judgment. Our jurisdiction, therefore, is manifest.

We come, then, to the question whether the ordinances decided by the court to be valid did impair the obligation of the city's contract with the plaintiff. The solution of this question depends upon a correct understanding of what that obligation was. By the certificates of stock, or city loan, held by the plaintiff, the city assumed to pay to him the sum mentioned in them, and to pay six per cent interest in quarterly payments. The obligation undertaken, therefore, was both to pay the interest at the rate specified, and to pay it to the plaintiff. Such was the contract, and such was the whole contract. It contained no reservation or restriction of the duty described. But the city ordinances, if they can have any force, change both the form and effect of the undertaking. They are the language of the promisor. In substance, they say to the creditor: 'True, our assumption was to pay to you quarterly a sum of money equal to six per cent per annum on the debt we owe you. Such was our express engagement. But we now lessen our obligation. Instead of paying all the interest to you, we retain a part for ourselves, and substitute the part retained for a part of what we expressly promised you.' Thus applying the ordinances to the contract, it becomes a very different thing from what it was when it was made; and the change is effected by legislation, by ordinances of the city, enacted under the asserted authority of laws passed by the legislature. That by such legislation the obligation of the contract is impaired is manifest enough, unless it can be held there was some implied reservation of a right in the creditor to change its terms, a right reserved when the contract was made,-unless some power was withheld, not expressed or disclosed, but which entered into and limited the express undertaking. But how that can be,-how an express contract can contain an implication, or consist with a reservation directly contrary to the words of the instrument, has never yet been discovered.

It has been strenuously argued on behalf of the defendant that the State of South Carolina and the city council of Charleston possessed the power of taxation when the contracts were made, that by the contracts the city did not surrender this power, that, therefore, the contracts were subject to its possible exercise, and that the city ordinances were only an exertion of it. We are told the power of a State to impose taxes upon subjects within its jurisdiction is unlimited (with some few exceptions), and that it extends to every thing that exists by its authority or is introduced by its permission. Hence it is inferred that the contracts of the city of Charleston were made with reference to this power, and in subordination to it.

All this may be admitted, but it does not meet the case of the defendant. We do not question the existence of a State power to levy taxes as claimed, nor the subordination of contracts to it, so far as it is unrestrained by constitutional limitation. But the power is not without limits, and one of its limitations is found in the clause of the Federal Constitution, that no State shall pass a law impairing the obligation of contracts. A change of the expressed stipulations stipulations of a contract, or a relief of a debtor from strict and literal compliance with its requirements, can no more be effected by an exertion of the taxing power than it can be by the exertion of any other power of a State legislature. The constitutional provision against impairing contract obligations is a limitation upon the taxing power, as well as upon all legislation, whatever form it may assume. Indeed, attempted State taxation is the mode most frequently adopted to affect contracts contrary to the constitutional inhibition. It most frequently calls for the exercise of our supervisory power. It may, then, safely be affirmed that no State, by virtue of its taxing power, can say to a debtor, 'You need not pay to your creditor all of what you have promised to him. You may satisfy your duty to him by retaining a part for yourself, or for some municipality, or for the State treasury.' Much less can a city say, 'We will tax our debt to you, and in virtue of the tax withhold a part for our own use.'

What, then, is meant by the doctrine that contracts are made with reference to the taxing power resident in the State, and in subordination to it? Is it meant that when a person lends money to a State, or to a municipal division of the State having the power of taxation, there is in the contract a tacit reservation of a right in the debtor to raise contributions out of the money promised to be paid before payment? That cannot be, because if it could, the contract (in the language of Alexander Hamilton) would 'involve two contradictory things: an obligation to do, and a right not to do; an obligation to pay a certain sum, and a right to retain it in the shape of a tax. It is against the rules, both of law and of reason, to admit by implication in the construction of a contract a principle which goes in destruction of it.' The truth is, States and cities, when they borrow money and contract to repay it with interest, are not acting as sovereignties. They come down to the level of ordinary individuals. Their contracts have the same meaning as that of similar contracts between private persons. Hence, instead of there being in the undertaking of a State or city to pay, a reservation of a sovereign right to withhold payment, the contract should be regarded as an assurance that such a right will not be exercised. A promise to pay, with a reserved right to deny or change the effect of the promise, is an absurdity.

Is, then, property, which consists in the promise of a State, or of a municipality of a State, beyond the reach of taxation? We do not affirm that it is. A State may undoubtedly tax any of its creditors within its jurisdiction for the debt due to him, and regulate the amount of the tax by the rate of interest the debt bears, if its promise be left unchanged. A tax thus laid impairs no obligation assumed. It leaves the contract untouched. But until payment of the debt or interest has been made, as stipulated, we think no act of State sovereignty can work an exoneration from what has been promised to the creditor; namely, payment to him, without a violation of the Constitution. 'The true rule of every case of property founded on contract with the government is this: It must first be reduced into possession, and then it will become subject, in common with other similar property, to the right of the government to raise contributions upon it. It may be said that the government may fulfil this principle by paying the interest with one hand, and taking back the amount of the tax with the other. But to this the answer is, that, to comply truly with the rule, the tax must be upon all the money of the community, not upon the particular portion of it which is paid to the public creditors, and it ought besides to be so regulated as not to include a lien of the tax upon the fund. The creditor should be no otherwise acted upon than as every other possessor of money; and, consequently, the money he receives from the public can then only be a fit subject of taxation when it is entirely separated' (from the contract), 'and thrown undistinguished into the common mass.' 3 Hamilton, Works, 514 et seq. Thus only can contracts with the State be allowed to have the same meaning as all other similar contracts have.

Such limitations of the power of State taxation we have heretofore recognized. We have held property in one stage of its ownership not to be taxable, and in a succeeding stage to be taxable. Those decisions are not without some analogy to the rule we have mentioned. Thus, in Brown v. Maryland (12 Wheat. 419-441), where it was held that a State tax could not be levied, by the requisition of a license, upon importers of merchandise by the bale or package, or upon other persons selling the goods imported by the bale or package, Mr. Chief Justice Marshall, considering both the prohibition upon States against taxing imports, and their general power to tax persons and property, said: 'Where the importer has so acted upon the thing imported that it has become incorporated and mixed up with the mass of property in the country, it has, perhaps, lost its distinctive character as an import, and has become subject to the taxing power of the State.' Vide also Woodruff v. Parham, 8 Wall. 123; State Tax on Railway Gross Receipts, 15 id. 284. A tax on income derived from contracts, if it does not prevent the receipt of the income, cannot be said to vary or lessen the debtor's obligation imposed by the contracts.

In opposition to the conclusion we have reached we are referred to Champaign County Bank v. Smith (7 Ohio St. 42), and People v. Home Insurance Co. (29 Cal. 533), in which it is said the power of a State to tax its own bonds was sustained. We do not, however, regard those cases as in conflict with the opinion we now hold; and, if they were, they would not control our judgment when we are called upon to determine the meaning and extent of the Federal Constitution. In the former, it appeared that the tax collected was in virtue of an assessment of State bonds belonging to the bank, but deposited with the auditor of State as security for the circulating notes of the company. The tax thus assessed having been carried into the duplicate, the collector seized and appropriated the banknotes and money of the bank, and suit was brought to recover the amount so taken. In sustaining a demurrer to the petition, the court held, it is true, that a State has power to tax its own bonds equally with other property, and that the exercise of such a power involves no violation of a contract. But it was not held that the State could collect the tax by withholding from the creditor and part of what the State had assumed to pay. The tax was laid not upon the debt, but upon the creditor; and it was collected not out of what the State owed, but out of the general property of the bank. Neither by the assessment nor in the collection was there any interference with the contract. In People v. Home Insurance Company, the question was whether bonds of the State of California, belonging to a New York insurance company, but deposited and kept in the State, as required by an act to tax and regulate foreign insurance companies doing business in the State, were assessable for taxation there. It was ruled that they were. This case, no more than the former, meets the question we have before us. It certainly does not hold that a State or a city, by virtue of its taxing power, can convert its undertaking to pay a debt bearing six per cent interest into one bearing only four.

These are the only cases cited to us as directly sustaining the judgment we have now in view. How far short of sustaining it they are must be apparent. And we know of none that are more in point. It seems incredible that there can be any, for, as we said in Railroad Company v. Pennsylvania (15 Wall. 300), 'the law which requires the treasurer of the company (indebted) to retain five per cent of the interest due to the non-resident bondholder is not. . . a legitimate exercise of the taxing power. It is a law which interferes between the company and the bondholder, and, under the pretence of levying a tax, commands the company to withhold a portion of the stipulated interest and pay it over to the State. It is a law which thus impairs the obligation of the contract between the parties. The obligation of a contract depends upon its terms and the means which the law in existence at the time affords for its enforcement. A law which alters the terms of a contract, by imposing new conditions, or dispensing with those expressed, is a law which impairs its obligation; for such a law. . . relieves the parties from the moral duty of performing the original stipulations of the contract, and it prevents their legal enforcement.' This was said, it is true, in a case where the question was, whether a tax thus imposed upon a non-resident holder of bonds issued by a company chartered by the State was warranted by the Constitution. But, so far as it speaks of what constitutes impairing the contract obligation, it is applicable, in its fullest extent, to all legislation affecting contracts, no matter who may be the parties.

We do not care now to enter upon the consideration of the question whether a State can tax a debt due by one of its citizens or municipalities to a non-resident creditor, or whether it has any jurisdiction over such a creditor, or over the credit he owns. Such a discussion is not necessary, and it may be doubtful whether the question is presented to us by this record.

It is enough for the present case that we hold, as we do, that no municipality of a State can, by its own ordinances, under the guise of taxation, relieve itself from performing to the letter all that it has expressly promised to its creditors.

There is no more important provision in the Federal Constitution than the one which prohibits States from passing laws impairing the obligation of contracts, and it is one of the highest duties of this court to take care the prohibition shall neither be evaded nor frittered away. Complete effect must be given to it in all its spirit. The inviolability of contracts, and the duty of performing them, as made, are foundations of all well-ordered society, and to prevent the removal or disturbance of these foundations was one of the great objects for which the Constitution was framed.

The judgment of the Supreme Court of South Carolina will be reversed, and the record remitted with instructions to proceed in accordance with this opinion; and it is

So ordered.

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE HUNT, dissenting.


text: Talk:Murray v. Charleston/Opinion of the Court


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Murray v. Charleston/Dissent Miller

MR. JUSTICE MILLER, with whom concurred MR. JUSTICE HUNT, dissenting.

I am of opinion that the power of taxation found in the charter of the city of Charleston, long before the contract was made which is here sued on, entered, like all other laws, into the contract, and became a part of it. In other words, the contract was made subject to this power of taxation by the city of Charleston, as found in her charter from 1781 to the present time.

The imposition and collection of this tax cannot, therefore, impair the obligation of a contract which was made subject to her right to exercise that power. I therefore dissent.

NOTE.-In Jenkins v. Charleston, error to the Supreme Court of the State of South Carolina, which was argued by Mr. A. G. Magrath and Mr. James Lowndes for the plaintiff in error, and by the same counsel for the defendant in error as was the preceding case, MR. JUSTICE STRONG, in delivering the opinion of the court, remarked: This case is like Murray v. Charleston, and is governed by the decision there made.

The judgment of the Supreme Court of the State will be reversed, and the record remitted with instructions to proceed in accordance with this opinion; and it is

So ordered.

MR. JUSTICE MILLER and MR. JUSTICE HUNT dissented.

title: Murray v. Charleston/Dissent Miller


text: Talk:Murray v. Charleston/Dissent Miller


text:
Railroad Company v. Vance

APPEAL from the Circuit Court of the United States for the Southern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Joseph E. McDonald and Mr. R. P. Ranney for the appellant.

Mr. James K. Edsall, Attorney-General of Illinois, contra.

MR. JUSTICE HARLAN delivered the opinion of the court.

title: Railroad Company v. Vance


text: Talk:Railroad Company v. Vance

title: Talk:Railroad Company v. Vance


text:
Railroad Company v. Vance/Opinion of the Court

Upon the filing of the bill in this case by the Indianapolis and St. Louis Railroad Company, suing as a corporation organized under the laws of Indiana, against sundry county tax-collectors in the State of Illinois, a temporary injunction was granted, restraining the defendants from levying on the property, or taking any steps to collect taxes upon the capital stock, of the complainant, for the years 1873, 1874, and 1875, under or by virtue of any warrants in their hands for that purpose.

The defendants, denying that there had been any assessment upon the capital stock of the complainant, insisted that the taxes in question were due upon assessments, rightfully made by the State board of equalization of Illinois upon the capital stock and franchises of an Illinois corporation, the St. Louis, Alton, and Terre Haute Railroad Company, over and above its tangible property, for so much of its main line and the Alton branch thereof as were leased to, and operated in Illinois by, the Indianapolis and St. Louis Railroad Company, to whom, defendants claimed, the taxes in question were, therefore, properly charged.

The cause, by agreement of parties, was submitted upon the pleadings and exhibits filed; and, upon final hearing, a decree was rendered dissolving the injunction and dismissing the bill.

From that decree this appeal is prosecuted.

The essential facts in the case are these: The Constitution of Illinois requires the General Assembly of that State to provide such revenue as may be needful by levying a tax by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its property,-such valuation to be ascertained by some person or persons to be elected or appointed in such manner as the General Assembly shall direct. Persons or corporations owning or using franchises and privileges are to be taxed in such manner as the General Assembly shall from time to time direct, the tax, however, to be uniform as to the class upon which it operates.

In pursuance of the Constitution, the General Assembly, in the year 1872, passed a general revenue law providing for the assessment of property, and prescribing the mode for the collection of taxes. It contained specific directions for the assessment of the different kinds of property owned by railroad companies, their visible or tangible property to be assessed under the heads of 'railroad track,' 'rolling-stock,' &c. In reference to their capital stock, the statute provided that the 'capital stock of all companies and associations' (other than banking associations organized under the general laws of the State) 'now or hereafter created under the laws of this State shall be so valued by the State board of equalization, as to ascertain and determine respectively the fair cash value of such capital stock, including the franchises, over and above the assessed value of the tangible property of such company or association,'-that value to be ascertained under such rules and principles as the board might deem equitable and just.

The rule adopted by the State board was this: To the market or fair cash value of the shares of capital stock add the market or fair cash value of the debt of the corporation, (excluding that created for current expenses), and from this amount deduct the aggregate amount of the equalized or assessed valuation, as ascertained by the board, of all the tangible property of the corporation; the amount remaining to be taken as the fair cash value of the capital stock, including the franchise, which the board is required to assess against such corporation.

At the annual meetings of the State board held in each of the years 1873, 1874, and 1875, for the purpose of examining the abstracts of property, assessed for taxation in the several counties, as returned to the auditor of State, and for the purpose, also, of equalizing assessments, the question arose as to the mode in which the capital stock of the St. Louis, Alton, and Terre Haute Railroad Company should be assessed for taxation.

The difficulties which attended an intelligent discharge of that duty will be comprehended by a statement of the relations of that corporation to the complainant.

On the 11th of September, 1867, the complainant, by a written contract of lease with the St. Louis, Alton, and Terre Haute Railroad Company, acquired the right and assumed the duty of managing and carrying on, for the term of ninety-nine years, commencing June 1, 1867, the business of the principal or main line of the latter, one hundred and eighty-nine miles in length, extending from Trre Haute, Ind., to East St. Louis, Ill., and also of the Alton branch, four miles in length, subject to certain prescribed terms and conditions.

The tenth article of the lease is as follows:--

'The said party of the first part (the complainant), its successors and assigns, shall and will, at all times during the term aforesaid, pay or cause to be paid any and all taxes, assessments, and imposts of whatever kind which shall or may at any time during such term be charged, levied, assessed, or imposed upon the said main line of said railroad and the said Alton branch thereof, or upon either or any part of either of the said railroads or their appurtenances, or upon any business or transactions done upon them or either of them, or upon any income arising therefrom, or upon any property whatsoever, the use of which during said term is hereby agreed to be furnished to the party of the first part, or which may be charged against or imposed upon the said party of the second part (the St. Louis, Alton, and Terre Haute Railroad Company), its successors or assigns, for or on account of its or their ownership of said railroads, or either or any part of either thereof, or of such property or any part thereof: Provided, however, that nothing in this contract contained shall be so construed as to render the party of the first part in any way liable for the tax specifically upon the income of the holders of the bonds or stocks of the party of the second part.'

Under this lease the complainant took possession of all the property connected with or essential to the business of the principal line and the Alton branch of the lessor.

Some doubt having been expressed as to the validity of the lease under the laws of Illinois, an act of the General Assembly of that State, approved March 11, 1869, directs that the lease 'be and stand confirmed according to the terms' thereof; and the second section provides:--

'The said lessees, their associates, successors, and assigns, shall be a railroad corporation in this State, under the said style of 'The Indianapolis and St. Louis Railroad Company,' and shall possess the same or as large powers as are possessed by said lessor corporation, and such other powers as are usual to railroad corporations. Said Indianapolis and St. Louis Railroad Company may, and are hereby authorized to, extend said line of road from any point on the same between the cities of Pana and Litchfield, on said road, or from either of said points westward to the Mississippi River opposite Louisiana, or any point below, not exceeding fifteen (15) miles, in the State of Missouri, with a branch thereof to the city of Quincy, in the State of Illinois, and the same to connect with the railroad bridge over said river at said city of Quincy.'

At its annual meetings, in 1873, 1874, and 1875, the State board made assessments upon the capital stock and franchises of the various railroad Companies of the State over and above their tangible property respectively. Having ascertained the fair cash taxable value of the capital stock, including the franchise of the St. Louis, Alton, and Terre Haute Railroad Company, without any reference to the lease made by the latter, it fixed the sums of $2,918,184, $1,125,139, and $1,004,416 as the proportion of such valuation which should be distributed for the years 1873, 1874, and 1875, respectively, to the counties on the line of the leased railroads, assigning to each county, in conformity to the rule prescribed by the statute, such proportion of those annual assessments as the length of line in such county bore to the entire length of the leased railroads in the State. The assessments thus distributed to the several counties through which the leased railroads passed were charged to the Indianapolis and St. Louis Railroad Company. The balance of the assessment upon the capital stock and franchise was distributed to the counties upon the lines which the St. Louis, Alton, and Terre Haute Railroad Company operated, and were charged directly against it.

While the officers of State deny that the assessments were upon the capital stock of the Indianapolis and St. Louis Railroad Company, they evidently intend that the warrants based upon those assessments shall be levied upon such of the leased property as by the laws of Illinois can be seized for the payment of taxes against corporations created under the laws of that State.

Whether the assessments made by the State board, and the intended levy by the county collectors of the warrants in their hands, are in accordance with the laws of Illinois, are the fundamental questions in this case.

In support of the negative of these propositions, the counsel for the complainant insist that the Indianapolis and St. Louis Railroad Company is a corporation created by the laws of Indiana, with stock subscribed and held under the authority of that State, and with an organization there and not elsewhere; that neither before nor after the passage of the act of March 11, 1869, did the stockholders or officers of the Indianapolis and St. Louis Railroad Company organize, subscribe for stock, elect officers, or do any other act to become a corporation under its provisions; that no capital stock of the corporation referred to in that act was ever subscribed by the lessee therein referred to, and that the complainant owns no capital stock except that owned by it as a corporation existing under the laws of Indiana; that the act of March 11, 1869, construed in reference to its objects intended to be attained, and the constitutional powers of the General Assembly of Illinois, did not make the Indianapolis and St. Louis Railroad Company a corporation of that State, but amounts only to a license to an Indiana corporation to exert its corporate powers in Illinois, by holding and operating a line of leased railroads within her limits; that the State board had no authority to assess the capital stock and franchise of an Indiana corporation; and that the property managed and controlled by the latter, whether acquired prior to or held under the lease of 1867, could not be seized to pay taxes due upon any assessment of the capital stock of the St. Louis, Alton, and Terre Haute Railroad Company.

These propositions, presenting, it must be conceded, questions of some difficulty, will be noticed in the progress of this opinion.

There can be no doubt that the Illinois revenue statute of 1872 was intended to meet the provisions of the State Constitution, which required such legislation as would subject to taxation, according to its value, every kind of property, whether owned by individuals or corporations. It was not supposed that the constitutional duty imposed upon the General Assembly would be discharged by taxing simply the tangible property of railroad companies. Hence a tax was imposed upon their capital stock, including the franchise, over and above their tangible property. 'Capital stock,' within the meaning of the Illinois statute, does not mean shares of stock, but 'the aggregate capital of the company;' which includes 'the value of the right to use this tangible property in a special manner, for purposes of gain.' We so held in State Railroad Tax Cases (92 U.S. 575), where the provisions of this revenue statute were critically examined. It is to be observed in this connection that the State board of equalization was not authorized to assess the capital stock of companies or associations managing property or engaging in business in Illinois, unless they were created under the laws of that State. Such seems to be the settled construction of that statute by the Supreme Court of Illinois. In Western Union Telegraph Company v. Leib (76 Ill. 172) this language is held: 'We are unable to find any authority in the act for assessing the capital stock of companies or associations doing business in the State, but incorporated under the laws of another State. The care manifested by the legislature, whenever any allusion is made to the assessment of capital stock, to limit it to corporations created by or under the laws of the State, is so clear and positive, that no doubt can exist as to the purpose intended.'

When the lease of 1867 was executed, the capital stock, including the franchise, of the lessor corporation was taxable over and above its tangible property, assessed under the head of railroad track, &c. But, upon the execution of that lease, and its confirmation by the State, that corporation no longer enjoyed the right to use the leased property in a special manner for the purposes of gain. That right for a fixed period, and with the declared consent of the State, passed to the lessee corporation, and became thereafter a part of its aggregate capital, not reached by taxation upon its tangible property operated in Illinois, but assessable only under the head of capital stock and franchise. The taxable value of the capital stock and franchise of the lessor was diminished by the amount which the State board should ascertain to be the value of that right. By the confirmation of the lease, according to its terms,-among which was the obligation of the lessee to pay all taxes, assessments, and imposts, of whatever kind, charged against or imposed upon the lessor for or on account of its ownership of the leased lines,-the State was estopped from collecting, as against the lessor, any taxes assessed upon that right. This, in our opinion, is a fair construction of the lease, and the act of March 11, 1869.

The question whether the State can require any other corporation to respond to the taxation, which, but for the lease and the act of March 11, 1869, would have been assessable against and collectible from the St. Louis, Alton, and Terre Haute Railroad Company, depends for its solution altogether upon the construction to be given to that act.

Upon the theory of complainant's counsel, the State of Illinois cannot make the leased property liable to these assessments upon capital stock and franchise under any form of assessment, since, as they claim, that property is managed and operated by a corporation deriving its existence from, and holding its stock and maintaining its organization under, the laws of Indiana, and not under the laws of Illinois.

In this view we cannot concur. That act was something more than a mere license to an Indiana corporation to exert its corporate powers and enjoy its corporate rights and privileges in another State. Such would undoubtedly have been the case had the act closed with the first section, as it would have done, had the General Assembly intended nothing more than to confer upon the corporation of another State authority to extend its operations by carrying on railroad business in Illinois. We cannot thus restrict the effect of the act, without disregarding wholly the ordinary meaning of the plain words of its second section, which declares that the lessees, their associates, successors, and assigns, shall be a railroad corporation in the State of Illinois. It does more: it gives the style by which that corporation shall be known. Still further, it does not authorize the complainant corporation to exercise, in Illinois, the corporate powers granted by the laws of Indiana; but confers, by affirmative language, upon the corporation, which it declares shall be a railroad corporation in Illinois, 'the same or as large powers as are possessed' by an Illinois corporation, the St. Louis, Alton, and Terre Haute Railroad Company, and, in addition, such other powers as are usual to railroad corporations. The Indianapolis and St. Louis Railroad Company, as lessee of the St. Louis, Alton, and Terre Haute Railroad Company, was thus created, by apt words, a corporation in Illinois. The fact that it bears the same name as that given to the company incorporated by Indiana cannot change the fact that it is a distinct corporation, having a separate existence derived from the legislation of another State. After the passage of the act of March 11, 1869, the property described in the lease of 1867 became, at least for purposes of taxation in Illinois, that of the corporation created by that act as a railroad corporation in that State.

But it may be suggested that the utmost which can be claimed for the act is, that, without creating a new corporation in Illinois, it only made the complainant, as an Indiana corporation, a corporation of the State of Illinois. It was clearly competent for the General Assembly to have done this, as held in Railroad Company v. Harris (12 Wall. 65), where the court said: 'Nor do we see any reason why one State may not make a corporation of another State, as there organized and conducted, a corporation of its own, quo ad any property within its territorial jurisdiction.' But we do not see how this view gives any support to the position of the complainant. For, had the act, after confirming the lease of 1867, declared in terms that the lessee corporation, as organized and conducted in Indiana, should be deemed a corporation of Illinois, we should have felt bound to hold that, as to the property obtained by and operated under the lease within that State, it was, in the sense of the Illinois revenue statute of 1872, a corporation 'created under the laws' of that State, subject to taxation upon its capital stock, including its franchise, so far as such stock and franchise were fairly represented by the leased property.

Railroad Company v. Harris (supra) is relied upon by counsel, as sustaining their construction of the act of 1869; but there is no substantial analogy between that case and this. The Virginia act did not purport to make the Maryland corporation a corporation of Virginia, nor did it contain any language from which could be inferred a purpose to create thereby a new and distinct corporation in Virginia. On the contrary, the Illinois act of 1869 declares, in express terms, that certain parties shall be a railroad corporation in that State, under a designated name, with authority to exercise, not the powers which had been granted by the State of Indiana to another corporation of the same name, created under the laws of that State, but the same powers which were possessed by a corporation theretofore created under the laws of Illinois. We are unable to perceive any conflict between the views expressed in that case and those announced in this opinion.

Some stress is laid upon the fact that there was no formal subscription to the capital stock, or any formal organization of the corporation created by the act of March 11, 1869. Notwithstanding the absence of such subscription and organization, we are of opinion that the State board had the right, for the purposes of taxation, to regard the corporation authorized by that act to exercise the powers of the lessor corporation, as a corporation created under the laws of Illinois.

There is still another objection earnestly urged against this construction of the act of March 11, 1869. It is said that, being a special act, and containing nothing to show that the corporation therein named might not have been organized under the general laws of Illinois, the act cannot be construed as creating a new corporation, without bringing it into conflict with the following clause of the Illinois Constitution of 1848, then in force; viz., 'Corporations not possessing banking powers or privileges may be formed under general laws, but shall not be created by special acts, except for municipal purposes, and in cases where, in the judgment of the General Assembly, the objects of the corporation cannot be attained under general laws.'

The argument is, that a special act creating a corporation is in violation of that constitutional provision, unless it appears affirmatively from the act, or from the recorded proceedings of the General Assembly, that the latter was of opinion that the objects of the corporation could not be attained under the general laws. In the absence of any decision upon this question by the Supreme Court of Illinois, we should give weight to this argument. But this precise point was made in the case of Johnson v. Joliet & Chicago Railroad Co., 23 Ill. 207. In that case, it appears that a special act creating a railroad company, passed in 1855, contained no statement of the inability of the General Assembly to accomplish the objects of the incorporation under the general law. The court said: 'It is too late now to make this objection, since, by the action of the General Assembly under this clause, special acts have been so long the order of the day, and the ruling passion of every legislature which has been convened under the Constitution, until their acts of this description fill a huge and misshapen volume, and important and valuable rights claimed under them. The clause has been wholly disregarded, and it would now produce farspread ruin to declare such acts unconstitutional and void. It is now safer, and more just to all parties, to declare that it must be understood that, in the opinion of the General Assembly, at the time of passing the special act, its objects could not be attained under the general law; and this without any recital by way of preamble.'

That decision furnishes an answer to the objection under consideration.

We come now to the examination of the mode in which the assessments were made. Looking into the proceedings of the State board, so far as they have been laid before us, we meet with some difficulty in understanding the precise theory upon which the assessments of 1873, 1874, and 1875 were made. But for the lease made in 1867, the way of the board would have been free from all embarrassment. The assessment, in that event, would have been upon the capital stock, including the franchise, of the St. Louis, Alton, and Terre Haute Railroad Company, over and above any tangible property it owned and operated. But, as heretofore shown, after the confirmation of the lease, the capital stock and franchise of that corporation were diminished in value to whatever extent their taxable value was represented by the leased lines of railroad. Technically, the assessment under the head of capital stock and franchise should have been upon the capital stock and franchise of the corporation created by the act of March 11, 1869. But that corporation had no defined amount of capital stock separate from that of the Indiana corporation of the same name. The State board, therefore, made an assessment upon the capital stock of the lessor corporation, for that portion of the lines of railroad which passed from its control in virtue of the lease of 1867, and then distributed such assessment among the various counties on the lines of the leased railroads, in the proportion that the extent of track in the respective counties bore to the whole length of the leased lines in the State; the taxes due upon such assessment being charged to and to be collected from the Indianapolis and St. Louis Railroad Company, which, with the consent of the State of Illinois, as expressed in the act of March 11, 1869, was entitled to have, and did have, exclusive control and management of such leased lines.

The mode thus adopted by the State board was, as we think, in substantial conformity to the laws of Illinois, and affords the complainant no just ground of objection.

The complainant sues as a corporation, created by the laws of Indiana, upon the ground that the assessment was upon its capital stock, and that the purpose of the county collectors was to seize its property. But the State officers deny that any assessment was made, or intended to be made, upon its capital stock. Clearly, the county collectors have no right to levy the warrants in their hands upon any property which belongs to the Indiana corporation, as distinguished from the Illinois corporation of the same name. But they have the right, for the reasons heretofore given, to subject to the payment of the taxes in question the property which the corporation, created by the act of 1869, is operating and managing in that State, as lessee of the St. Louis, Alton, and Terre Haute Railroad Company. The assessment made by the State board is, in every just sense, an assessment upon the capital stock and franchise of an Illinois corporation; to wit, the Indianapolis and St. Louis Railroad Company, lessee under and by authority of the act of March 11, 1869, of the St. Louis, Alton, and Terre Haute Railroad Company.

We perceive no error in the decree to the prejudice of the complainant.

Decree affirmed.

MR. JUSTICE FIELD and MR. JUSTICE HUNT did not hear the argument in this case, nor participate in the decision.


text: Talk:Railroad Company v. Vance/Opinion of the Court


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The Lady Pike (96 U.S. 461)

APPEAL from the Circuit Court of the United States for the Eastern District of Wisconsin.

This is an appeal from the decree of the court below in the execution of the mandate of this court in The Lady Pike (21 Wall. 1), where the former decree was reversed, and the cause remanded for further proceedings in conformity with the opinion.

The facts are stated and the assignment of errors set out in the opinion of the court.

Mr. James H. Davidson, for the appellants, cited the following authorities in support of the respective assignments of error:--

First assignment: Lane v. Townsend, 1 Ware, 289; The Ship Empire and Cargo, 1 Ben. 19; The Union, 4 Blatchf. 90; The White Squall, id. 103; Carroll et al. v. The Steamboat T. P. Leathers, Newb. Adm. 432; Gaines v. Travis, 1 Abb. Adm. 297. Second assignment: The White Squall, supra. Third assignment: Whitwell et al. v. Burnside, 1 Metc. (Mass.) 39; Morgan v. Morgan, 4 Gill & J. (Md.) 395; McCluskey v. Cromwell, 11 N. Y. 593; Sawyer v. Oakman, 11 Blatchf. 65; Miller v. Stewart, 9 Wheat. 681; Smith v. United States, 2 Wall. 219; Leggett et al. v. Humphreys, 21 How. 66; United States v. Boyd et al., 15 Pet. 187; United States v. Boecker, 21 Wall. 652; Smith v. Huesman, Cent. Law Jour., Dec. 7, 1877, No. 23, p. 492; The Ann Caroline, 2 Wall. 538; The Harriet, 1 Rob. Adm. 183; Myres et al. v. Parker, 6 Ohio St. 501. Fourth assignment: Carpentier v. Minturn, 65 Barb. (N. Y.) 293, and authorities there cited; Allen v. Malcolm, 12 Abb. (N. Y.) Pr. 335; Mahaney v. Penman, 4 Duer (N.Y.), 603; Shields v. Thomas, 18 How. 253; Watson v. The Cabot Bank, 5 Sandf. (N. Y.) 423; Murray v. Vanderbilt, 39 Barb. (N. Y.) 148. Fifth assignment: McGovney v. The State of Ohio, 20 Ohio, 83; Grant v. Naylor, 4 Cranch, 224.

The court declined to hear counsel for the appellees.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

title: The Lady Pike (96 U.S. 461)


text: Talk:The Lady Pike (96 U.S. 461)

title: Talk:The Lady Pike (96 U.S. 461)


text:
The Lady Pike (96 U.S. 461)/Opinion of the Court

Second appeals will lie in certain cases, where it is alleged that the mandate of the appellate court had not been properly executed; but the appeal in such a case will bring up nothing for re-examination except the proceedings subsequent to the mandate. Needful explanations may be derived from the original record; but the re-examination cannot extend to any thing that was decided in the antecedent appeal. Sibbald v. United States, 12 Pet. 488; Santa Maria, 10 Wheat. 431; Roberts v. Cooper, 20 How. 466.

Wheat to a large amount had been delivered by the shipper to the steamer named in the record, to be transported from the port of shipment down the river to the port of destination. Pursuant to usage, the wheat was stored in a barge connected with the steamer; and the barge, with two others similarly laden, was taken in tow by the steamer, which furnished the motive-power for the whole craft. Prior to the commencement of the voyage, the owner of the wheat insured the same; and during the trip down the river the barge containing the wheat collided with a bridge-pier in the river and was sunk, and the barge with her cargo became a total loss.

Contest arising as to who was responsible, the insurance companies paid the loss, and filed a libel against the steamer and the barge containing the wheat, upon the ground that the loss was occasioned by the fault of those in charge of the motive-power. Service was made by attaching the steamer; and certain other proceedings took place not necessary now to be noticed, except to say that an appearance was entered, and that the steamer was discharged upon a stipulation for value. Proofs were taken; and the District Court, after hearing the parties, entered a decree dismissing the libel. Hearing was again had in the Circuit Court on appeal, and the Circuit Court entered a decree affirming the decree of the District Court. Prompt appeal was then taken by the libellants to this court, where the decree of the Circuit Court was reversed with costs, and the case remanded with directions to enter a decree for the libellants, and for further proceedings to be had therein, in conformity with the opinion of this court. The Lady Pike, 21 Wall. 1.

Due record of the mandate having been made, and execution for the costs of this court having been issued, the Circuit Court sent the cause to a master, to ascertain and report the amount the libellants were entitled to recover. Without unnecessary delay, the master made his report, which was subsequently duly confirmed; and the Circuit Court entered a final decree, in pursuance of the mandate of this court, that the libellants do have and recover of the claimants, Ephraim G. Pearce and William Knight, and William F. Davidson and Peyton S. Davidson, their stipulators, the sum of $13,190.40, the amount reported by the master, with costs of suit. Whereupon Christopher G. Pearce, William Knight, William F. Davidson, and Peyton S. Davidson appealed to this court, which is the second appeal in the case now under consideration; and they assign for error the following causes, in substance and effect: 1. That the Circuit Court erred in not entering a final decree against Henry Lourey, as owner of the steamer, and his stipulator in the stipulation which he as claimant filed for the value of the steamer. 2. That the Circuit Court erred in entering the final decree against the parties therein named as exhibited in the record. 3. That the Circuit Court erred in entering the decree against the parties named in the decree, because their stipulation only bound them to abide and answer the decree of the District Court. 4. That the Circuit Court erred in not entering a final decree against the claimants of the barge. 5. That the Circuit Court erred in entering a final decree against Ephraim G. Pearce.

Two of the errors assigned, to wit, the first and the second, may conveniently be considered together, as they involve very largely the same considerations.

Notices in due form to all persons claiming to own the steamer were regularly posted by the marshal at the same time that he attached the steamer under the monition of the District Court; and the record of that court shows that Henry Lourey appeared in the same court as claimant, and gave a stipulation with surety in the sum of $10,000, conditioned that the claimant should abide and answer the decree of the court where the stipulation was given. Counsel subsequently appeared, and on his motion the time was extended to file an answer.

Delay ensued; and on the 2d of February following, Christopher G. Pearce, William W. Hanley, and William Knight, owners of the steamer, &c., intervened for their interest, and filed their answer and claim. Their claim was limited to the steamer; but the Western Union Railroad Company intervened at the same time as owners of the barge, and joined in the same answer and claim.

Six days later, it was ordered by the court, on motion of the proctor for the claimants, that the stipulation filed at that time, in the sum of $16,000, be substituted for and be in lieu of the stipulation previously filed, and that the one previously filed be returned to the surety on the same.

Suffice it to say, without copying the instrument, that Ephraim G. Pearce and William Knight are therein described as the claimants of the steamer; and William F. Davidson and Peyton S. Davidson bind themselves, their heirs, executors, and administrators, in the sum of $16,000, unto the libellants, that they shall abide and answer the decree of the said court in the aforesaid cause.

Substituted as the instrument was for the prior one, which was given as a stipulation for value, it unquestionably became the operative, and the only operative, stipulation for value. Both parties concede that the prior stipulation was a stipulation for value, and that it was all the security the libellants had for compensation in case they prevailed in the suit. Power to change one stipulation for another, where the parties consent, is clearly vested in the District Court in such a case; and, inasmuch as the substitution was made in this case on motion of the proctor of the claimants, it surely does not lie with them to interpose any such objection, certainly not at this stage of the litigation.

Nor is it necessary to inquire whether the libellants might or might not have objected at the time, as it is clear that no such objection would be of any avail in an appellate court if not made in the court of original jurisdiction. Through their proctor, the present claimants moved that the stipulation in question be substituted for the one previously filed; and the court made the order in pursuance of the motion of their proctor, and it was in accordance with the same motion that the prior stipulation was surrendered to the surety who gave it; and, if the theory of the claimants must prevail, the libellants are without any security whatever, as the vessel was discharged from attachment when the first stipulation for value was filed.

Viewed in the light of these suggestions, it is clear that the first and second assignments of error must be overruled.

2. Nor is there any greater merit in the third assignment of error, which assumes that the stipulation became inoperative when the case was appealed to the Circuit Court. Instead of that, the rule is universal that an appeal from the District Court to the Circuit Court carries up the whole fund, which in this case consisted only of the stipulation for value and the appeal bond, as the record does not show that any stipulation for costs was given in the District Court. Where the appeal is from the Circuit Court to this court, the fund remains in the custody of the Circuit Court; but the mandate of the Supreme Court is sent down, and there operates upon the fund sent up from the District Court, just the same as if the execution had been issued there without any appeal to this court, which is sufficient to show that the third assignment of error cannot be sustained.

3. Service was not made upon the barge, and, of course, there could not be any final decree against her owners, which is all that need be said in response to the fourth assignment of error.

4. Other defences failing, it is insisted that the court erred in entering a decree against Ephraim G. Pearce, which it is understood means that the decree should have been against the appellant, Christopher G. Pearce, and not against the person who signed the stipulation. During the argument, it seemed to be conceded that there is no such person as Ephraim G. Pearce; that it is merely a mistake as to the Christian name, made by the attorney who affixed the appellant's name to the stipulation; and, if so, it is quite too late for the party to interpose that objection on a second appeal in this court, in a case where no excuse is shown for not having taken steps to have the correction made in the court where his attorney made it. Nothing of the kind was suggested when the cause was here before, and nothing appears to warrant the conclusion that the attention of the District or Circuit Court was called to it before the first appeal.

Decree affirmed.


text: Talk:The Lady Pike (96 U.S. 461)/Opinion of the Court