Ford v. Delta & Pine Land Co.

delivered the opinion of the court.

¥e premise by saying that this case involves over 200 different tracts of land in nine separate counties, and amounting to 112,160 acres; that the titles to these various tracts as claimed

It is insisted that the lands, while held by the railroad company were, by virtue of certain clauses in its charter, exempt from the levee assessments, and we understood counsel, in their argument at the bar, to state that this question stands in the forefront of the case, and that upon its decision in favor of the complainants their fights depend. The lands were, in the years 1871 and 1872, conveyed by their former owners to the railroad company in payment of stock subscriptions. The company, originally known as the Memphis, Holly Springs and Mobile Eailroad Company, was chartered by an act of the legislature of the State, of date November 23, 1859. Laws Miss. 1859, c. 14, p. 51. Sections 19 and 21 of that act are as follows:

“ Seo. 19. That the capital stock, and all the property and effects of said company shall be exempt from taxation until said road is completed: Provided, said road is commenced within'two years and-completed within ten years from and after the passage of this act. .

“ Sec. 21. That said road shall. be commenced in three years and completed'in twelve years after the passage of this act.”' •

The civil war interfering with the construction of the road, on February 20, 1867, Laws Miss. 1867, c. 464, p. 635, an act was passed reviving the corporation. Section 2 reads: “ That said company shall have sixteen years' in which to construct the said road, and shall commence the same in three years from and after the passage of this act.” Section 3 provides:' “That it shall and may be lawful for the said corporators to

It is abundantly established by the decisions of this as of other courts that exemptions from taxation are to be strictly construed, and that no claim of exemption can be sustained unless within the express letter or the necessary, scope of the exempting clause. Vicksburg &c. Railroad v. Dennis, 116 U. S. 665 , 668; Chicago &c. Railroad v. Guffey, 120 U. S. 569 ; Yazoo &c. Railroad v. Thomas, 132 U. S. 174 ; Yazoo &c. Railroad v. Delta Commissioners, 132 U. S. 190 ; N. O. & Lake Railroad v. New Orleans, 143 U. S. 192 ; Schurz v. Cook, 148 U. S. 397 , 409; Keokuk &c. Railroad v. Missouri, 152 U. S. 301 , 306 ; Winona &c. Land Company v. Minnesota, 159 U. S. 526 .

Indeed, there has been strong judicial dissent from the doctrine of the power of the state legislature to create a permanent

It has been frequently decided that a general exemption of the property of a corporation from taxation is to be construed as referring only to the property held for the transaction of the business of the company. Ramsey County v. Chicago, Milwaukee &c. Railway, 33 Minnesota, 537; Todd County v. St. Paul, Minneapolis &c. Railway, 38 Minnesota, 163; Illinois Central Railroad v. Irvin, 72 Illinois, 452; In re Swigert, 119 Illinois, 83; State v. Mansfield Commissioners, 23 N. J. Law, 510 ; State v. Newark, 25 N. J. Law, 315 ; Vermont Central Railroad v. Burlington, 28 Vermont, 193; Railroad Company v. Berks County, 6 Penn. St. 70 ; Worcester v. Western Railroad, 4 Met. 564 ; Tucker v. Ferguson, 22 Wall. 527 ; Bank v. Tennessee, 104 U. S. 493 , 497. In this latter case, after referring to several of the authorities just cited,- it was said: “ The doctrine declared in them, that the exémption in cases like the one in the charter before us extends only to the property necessary for the business of the company, is founded in the wisest reasons of public policy. It would lead to infinite mischief if a corporation, simply by investing its funds in property not required for the purpose of its creation, could extend its immunity from taxation, and thus escape the common burden of government.”

■ The rule in Mississippi is the same. McCulloch v. Stone, 64 Mississippi, 378- In that case a railroad company, as here, was authorized to take subscriptions to its capital stock, payable in land. The charter also provided “ that all taxes to which said company shall be-subject for the period of thirty yéars are hereby appropriated and set apart, and shall be applied to the payment of the debts and liabilities which the said company may have incurred in the construction of said road or for money borrowed, . . . and it shall be the duty of the tax collector in every county, in each and every year, to give to said company" a receipt in full for the amount of said taxes upon receiving from .the company an affidavit made by the president or cashier of said company that the amount of said taxes have actually been paid and applied by said company during the

“The business of a railroad company, the property and instrumentalities ordinarily owned and employed by them, it must be assumed, are well known to the legislative department, and it must also be assumed that the language employed was used in reference to such business and property, unless a contrary intention is shown. ‘All taxes to which said company shall be subject’ must, therefore, we think, be construed to include only the taxes due upon the property of the company necessary to the construction, equipment, maintenance and operation of its road. Many of the authorities upon the question here involved are collected in Cooley on Taxation, 146 to 153. From them we can deduce no principle of construction which would include in the exemption granted an exemption of the outlying lands owned by the company. The lands involved in this suit have no sort of connection with the business of the company; they are owned by it only as the same character of lands would be owned by a private individual, and for the same' purposes; they were bought, not to enable the company to perform any duty it owes to the public, but that it might by dealing in them make a profit as a buyer and seller; in this character we find nothing in the words or spirit of the exemption clause giving immunity from taxation.” Within the scope of these decisions it is, to say the least, not clear that the general language in section 19 is to be construed as referring to property other than that necessary for the business of the railroad company.

But passing that, it is clear that even if the exemption is properly construed as applying not only to the property necessary for the business of the railroad company but also to all other property which by the terms of its charter it was at liberty to acquire, it does not extend to property which, not necessary for its business, it acquired under the authority of a

Again, it is insisted that section 19 of theactof 1859, which was not changed in any subsequent statute, made the exemption conditional upon the fact that the road was commenced within two years and completed within ten years; that, as a matter of fact, this condition was not complied with, and hence, that the exemption failed entirely. • The argument is that all tax levies and sales of these lands were only conditionally invalid, and that, the condition failing, the tax sales became operative and the title passed. On the other hand, it is said that this condition was a condition subsequent; that' during the time prescribed ,in the condition the lands were exempt from taxation, even though after that time proceedings might be instituted under special warrant of the legislature for the assessment and collection of taxes thereon, and hence, that all proceedings instituted and carried through during the pendency of such time of exemption were absolutely void. We do not .deem it necessary to decide this

But, further and chiefly, the only exemption was from taxation, and it is a general-rule of construction that a clause exempting from taxation does not release' the property so •exempted from liability for assessments for local improvements. Sheehan Jr. v. The Good Samaritan Hospital, 50 Missouri, 155; Buffalo City Cemetery v. Buffalo, 46 N. Y. 506 ; Paterson v. Society for establishing Useful Manufactures, 24 N. J. Law, 385 ; State v. Newark, 35 N. J. Law, 157 . This question was considered in this court in Illinois Central Railroad v. Decatur, 147 U. S. 190 . The exemption in that case was “ from all taxes under the laws of this State,” (Illinois) and it was held that that clause did not relieve the property from the burden of special assessments imposed to pay the cost of local improvements. The question was discussed at some length and the various authorities reviewed in the opinion then delivered.

That is also the settled law of the State of Mississippi. Daily v. Swope, 47 Mississippi, 367; Vasser v. George, Id. 713; Macon v. Patty, 57 Mississippi, 378. In the first two of these cases it was held, not only that special- assessments for local improvements did not come within the constitutional limitations as to taxation, but also that the construction and repair of levees were to be regarded as local improvements for which the property specially benefited might be assessed. We quote from Vasser v. George, page 721:

“We are content to refer to our views on this subject, just delivered in Daily v. Swope. In that case we reached the conclusion that local assessments for local improvements were not embraced in the twentieth section of the twelfth article [said section reading ‘taxation shall be equal and uniform throughout the State. All property shall be taxed in proportion to its value, to be ascertained as directed by law,’] but were referable to the general power of taxation, which was supreme, unless restrained by the Constitution of the United States, or of the State. The limitation upon the power in that section only applies and governs taxes levied for the

That such is now the settled law in Mississippi is not denied by counsel for complainants, but it is insisted that these decisions were subsequent to the vesting of title to those lands in the railroad company; that at that time the rule of decision in the State was different, and that the rights of the railroad company were created and vested under the rule as then announced, and also that no subsequent change in decision could disturb the rights created in reliance upon the previous rule. In support of this they refer to Southern Railroad Company v. Jackson, 38 Mississippi, 334, but that case does not sustain their contention. In it the railroad company claimed under a statute, providing “ that the stock, fixtures and property of said company shall be exempt from taxation,” but the taxes which were held included within the exemption were the general taxes of the city for corporate purposes. There was no special assessment for local improvements on property benefited thereby, but simply the ordinary taxes levied for corporate purposes, including, it is true, among them matters of public improvement. Such taxes come strictly within the provisions in respect to taxation.

These special assessments for levee improvements culminated in sales and deeds under express authority of the statutes of the State, and by them a perfect title was transferred, which finally passed to the defendant. No defects are pointed out by the complainants in these proceedings — at least, none which go so far as to vitiate those proceedings if the property was subject to such assessments. This conclusion disposes of the principal question in this case.

We may, however, go further and consider some other matters in reference to these assessments. On March 16,1872, the legislature passed an act to facilitate the construction of the railroad, Laws Miss. 1872, c. 75, p. 313, section 3 of which reads:

“ That all lands which have heretofore been purchased by or forfeited to the State of Mississippi, for taxes due and unpaid thereon, and which have been sold to said Selma, Marion and Memphis Railroad Company by the original owners of the

Under the authority of this statute the auditor conveyed these lands to the company by deeds which recited that the lands had been “ sold to the State of Mississippi for taxes due the said State,” and that the company had paid into the state treasury two cents per acre “ in full of all state and county taxes due thereon to the present date.” No reference was made in these deeds to the levee taxes; no recital of any payment of them, or of any adjustments with the levee commissioners. Complainants contend that the deeds, are themselves evidence of a prior payment and discharge of the levee taxes, on the theory that such payment was a statutory prerequisite to the conveyance by the auditor. Nofire v. United States, 164 U. S. 657 . "We do not so understand- the force of the statute. The transactions with the auditor and with the levee board were independent of each- other. The auditor sold and

It is true that the punctuation of the statute gives plausibility to a different construction, but it is well settled that punctuation is not decisive. A colon after the word “act” in the first proviso would have made the meaning more apparent. A proviso is not always a condition, much less a condition precedent. As, for instance, the last two provisos in this section. There is no evidence in the record of the payment of the levee taxes by the railroad company, or any one for it, or for the complainants. On the other hand, it does affirmatively appear that the title held by the levee board to these lands has passed to the defendant. In order to a clear understanding of this, reference must be had to the legislation of the State in respect to levee construction and repair.

The levee system was inaugurated prior to the civil war, and some work was done thereon and some debts contracted thereby * On February 13,1867, Laws-Miss. 1867, p. 237, an act was ‘passed creating a board of commissioners, consisting of three persons, for the liquidation of all outstanding liabilities incurred for levee purposes, providing for the issue of bonds in satisfaction of such liabilities, and an annual assessment of five cents an acre on certain lands and three cents per acre on certain other lands supposed to be benefited lay the cori- . struction of the levees; and directing that the fund thereby created, whether in- money or land, should be devoted to the payment of such bonds. All the lands in controversy were sold uüder the authority of this statute for delinquent levee taxes, and purchased by the levee board, and were so held at the time of the conveyances to the railroad company. Thereafter and in 1877 Josiah Green, the holder of $85,000 of the

The examination we have thus made of the tax questions in this case renders unnecessary any inquiry into the validity

The decree of the Circuit Court was right, and it is

Affirmed.