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Pearsall v. Great Northern R. Co. 161 U.
S. 667, 40 L. ed. 845, 16 Sup. Ct. Rep. 705;
Louisville & N. R. Co. v. Kentucky, 161 U.
S. 695, 40 L. ed. 857, 16 Sup. Ct. Rep. 714;
Keokuk & W. R. Co. v. Missouri, 152 U. S.
312, 38 L. ed. 455, 14 Sup. Ct. Rep. 592;
2 Morawetz, Priv. Corp. §§ 945, 948.

A consolidation of stock universally means
the formation of a new corporation.

Green's Brice, Ultra Vires, p. 538, note;

Atlantic & G. R. Co. v. Georgia, 98 U. S.

360, 25 L. ed. 186; Clearwater v. Meredith,

1 Wall. 25, sub nom. Ferguson v. Meredith,

17 L. ed. 604; Ridgway Twp. v. Griswold, 1

McCrary, 151; Fed. Cas. No. 11,819; At-

lanta &C. Air-Line R. Co. v. State, 63 Ga.

486; St. Louis, 1. M. & S. R. Co. v. Berry,

113 U. S. 466, 28 L. ed. 1055, 5 Sup. Ct.

Rep. 529; Keokuk & W. R. Co. v. Missouri,

152 U. S. 308, 38 L. ed. 454, 14 Sup. Ct. Rep.

592.

longer disputable. As the United States Su-
preme Court put it half a century afterwards:
"It has been so often decided by this court
that a charter of incorporation granted by a
state creates a contract between the state and
the corporators which the state cannot violate
that it would be a work of supererogation to
repeat the reasons on which the argument is
founded." Wilmington & W. R. Co. v. Reid, 13
Wall. 264, 20 L. ed. 568.

And it is now equally established that a

state may make a valid contract with a cor-

poration for its exemption, complete or partial,

from taxation, for a limited time, or perpet-

ually, and that when it does so explicitly and

upon consideration in a corporate charter the

provision for tax immunity is as sacred from

violation, and as binding, as any other part of

the grant. New Jersey v. Wilson, 7 Cranch, 164,

3 L. ed. 303; Gordon v. Appeal Tax Court, 3

How. 133, 11 L. ed. 529; Achison v. Huddleson,

12 How. 293, 13 L. ed. 993; Piqua Branch Bank

v. Knoop, 16 How. 369, 14 L. ed. 977; Dodge v.

Woolsey, 18 How. 331, 15 L. ed. 401; Mechan-

ics' & T. Bank v. Debolt, 18 How. 380, 15 L. ed.

458; Mechanics' & T. Bank v. Thomas, 18 How.

384, 15 L. ed. 460; Jefferson Branch Bank v.

Skelly, 1 Black, 436, 17 L. ed. 173; Franklin

Branch Bank v. Ohio, 1 Black, 474, 17 L. ed.

180; McGhee v. Mathis, 4 Wall. 143, 18 L. ed.

314; Von Hoffman v. Quincy, 4 Wall. 535, sub

nom. United States ex rel. Von Hoffman v.

Quincy, 18 L. ed. 403; Home of the Friendless

v. Rouse, 8 Wall. 430, 19 L. ed. 495: Washing-

ton University v. Rouse, 8 Wall. 439, 19 L. ed.

498; Wilmington & W. R. Co. v. Reid, 13 Wall.

264, 20 L. ed. 568: Tomlinson v. Branch, 15

Wall. 460, 21 L. ed. 189; Humphrey v. Pegues,

16 Wall. 244, 21 L. ed. 326.

Field, J., writing for the court in The Del-

aware Railroad Tax Case, set forth the doc-
trine of the United States Supreme Court in
relation to the above-stated principles, as fol-
lows: That the charter of a private corpora-
tion is a contract between the state and the
corporators, and within the provision of the
Constitution prohibiting legislation impairing
the obligation of contracts, has been the settled
law of this court since the decision in the Dart-
mouth College Case. Nor does it make any dif-
ference that the uses of the corporation are
public if the corporation itself be private. The
contract is equally protected from legislative
interference, whether the public be interested
in the exercise of its franchise, or the charter
be granted for the sole benefit of its corporators.
This doctrine is not controverted by anyone

Power to consolidate "the stock, prop-
erty, and franchises" only passes the ordi-
nary right to exist as a corporation, have
stock, and run the railroad.

Phoenix F. & M. Ins. Co. v. Tennessee, 161
U. S. 176, 40 L. ed. 661, 16 Sup. Ct. Rep.
471: Covington & L. Turnp. Road Co. v.
Sandford, 164 U. S. 586, 41 L. ed. 562, 17
Sup. Ct. Rep. 198; Norfolk & W. R. Co. v.
Pendleton, 156 U. S. 672, 39 L. ed. 575, 15

Sup. Ct. Rep. 413; Picard v. East Tennes-

see, V. & G. R. Co. 130 U. S. 640, 32 L. ed.

1052, 9 Sup. Ct. Rep. 640; Louisville, & N.

R. Co. v. Palmes, 109 U. S. 251, 27 L. ed.

924, 3 Sup. Ct. Rep. 193; Home Ins. & T.

Co. v. Tennessee use of Memphis, 161 U. S.

198, 40 L. ed. 669, 16 Sup. Ct. Rep. 476;

Atlanta & R. Air-Line R. Co. v. State, 63

Ga. 484; Keokuk & W. R. Co. v. Missouri,

152 U. S. 304, 38 L. ed. 451, 14 Sup. Ct.

Rep. 592.

It is the established law; and the question in
all cases when it becomes necessary to apply it
is whether the particular legislative interfer-
ence does in fact impair the obligation of the
contract; for it is not every kind of legislative
interference with the powers, action, and prop-
erty of the corporation which will have that
result. It has also been repeatedly held by
this court that the legislature of a state may
exempt particular parcels of property, or the
property of particular persons or corporations,

from taxation either for a specified period or

perpetually, or may limit the amount or rate of

taxation to which such property shall be sub-

jected. And when such immunity is conferred,

or such limit is prescribed by the charter of a

corporation, it becomes a part of the contract,

and is equally inviolate with its other stipula-

tions. Delaware Railroad Tax, 18 Wall. 206,

sub nom. Minot v. Philadelphia, W. & B. R. Co.

18 Wall. 206, 21 L. ed. 888.

The same doctrine was again asserted in

Hoge v. Richmond & D. R. Co. 99 U. S. 348, 25

L. ed. 303.

It is unnecessary further to enlarge upon

these points.

In construing and interpreting contracts of

this class, the courts are guided by a set of

principles that have now become fundamental.

The rules are especially inflexible with respect

of contracts for exemption from, or limited tax-

ation of, corporations. These, in brief, are,

chiefly, that taxation is the rule, and exemption

the exception; the power of taxation is an es-

sential attribute of sovereignty, necessary and

vital to the very existence of government; the

whole community is interested in its mainte-

nance unimpaired; it is presumed never to have

been surrendered; and the intention to surren-

der it must be expressed in language so clear

and free from ambiguity as to admit of no rea-
sonable doubt. An exemption never arises by
implication; it is always restricted to its low-
est possible terms; a doubt is fatal to its ex-
istence. Every doubt must be resolved in favor
of the government and against the claimant of
tax immunity. Every contract of exemption
from taxation must be construed strictissimi
juris.

Over and over again, in almost every possible
form of expression, these cardinal canons of con-
struction of contracts for corporate tax exemp-
tion have been stated and applied by the courts.
Providence Bank v. Billings, 4 Pet. 514, 7 L.
ed. 929; Charles River Bridge v. Warren Bridge,
11 Pet. 420, 9 L. ed. 773; Philadelphia & W. R.
Co. v. Maryland, 10 How. 376, 13 L. ed. 461:

If there are inconsistent provisions in the charters of the two companies, the consolidated company gets only that which is common to both, or else the power of the consolidated company would be enlarged.

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Memphis, 161 U. S. 193, 40 L. ed. 667, 16
Sup. Ct. Rep. 466.

If a railroad company is exempted from taxation, and is afterwards authorized to buy or build branch lines, this will not exempt them from taxation.

State v. Maine C. R. Co. 66 Me. 488. The power to consolidate is the grant of Wilmington & W. R. Co. v. Alsbrook, 146 a corporate franchise," and as the consoli-. S. 279, 36 L. ed. 972, 13 Sup. Ct. Rep. dation did not take place till after Novem-72: Louisville & N. R. Co. v. Kentucky, 161 ber 1. 1890, any claim of exemption would U. S. 686, 40 L. ed. 854, 16 Sup. Ct. Rep. 714; Chesapeake & O. R. Co. v. Miller, 114 U. S. 176, 29 L. ed. 121, 5 Sup. Ct. Rep. 813; Keokuk & W. R. Co. v. Missouri, 152 U. S. 311, 38 L. ed. 455, 14 Sup. Ct. Rep. 592.

be cut off.

If the railroad fails to comply with the law allowing it to claim an exemption, it is but just that it should be considered as waived for that year.

N. Mfg. Co. v. Com. 69 Pa. 137; Union Pass. R. Co. v. Philadelphia, 83 Pa. 429; State v. Bank of Smyrna, 2 Houst. (Del.) 99, 73 Am. Dec. 699; Alexandria Canal R. & Bridge Co. v. District of Columbia, 1 Mackey, 217; Gordon v. Baltimore, 5 Gill, 231; Buchanan v. Talbot County, 47 Md. 286 Frederick County v. Sisters of Charity, 48 Md. 34 Richmond v. Richmond & D. R. Co. 21 Gratt. 604; Com. v. Chesapeake & O. R. Co. 27 Gratt. 344; Probasco v. Moundsville, 11 W. Va. 501; Kentucky C. R. Co. v. Bourbon County, 82 Ky. 497; German Bank v. Louisville, 22 Ky. L. Rep. 9, 56 S. W. 504; Knoxville & O. R. Co. v. Harris, 99 Tenn. 684, 53 L. R. A. 921, 43 S. W. 115; State v. Simmons, 70 Miss. 485, 12 So. 477; Athens City Waterworks Co. v. Athens, 74 Ga. 413 Stein v. Mobile, 17 Ala. 234: Mobile & S. H. R. Co. v. Kennerly, 74 Ala. 566; Dauphin & L. Streets R. Co. v. Kennerly, 74 Ala. 583; St. Louis, I. M. & S. R. Co. v. Berry, 41 Ark. 309; Atlantic & P. R. Co. v. Lesueur (Ariz.) 1 L. R. A. 244, 2 Inters. Com. Rep. 189, 19 Pac. 157 People ex rel. Huck v. Western Seaman's Friend Soc. 87 Ill. 246; Presbyterian Theological Seminary v. People ex rel. Johnson, 101 Ill. 579; Re Swigert, 119 Ill. 83, 59 Am. Rep. 789, 6 N. E. 469, 123 III. 267, 14 N. E. 32; Montgomery v. Wyman, 130 Ill. 17, 22 N. E. 845; People ex rel. Swigert v. Illinois C. R. Co. (Ill.) 6 West. Rep. 725; People ex rel. Breymeyer v. Watseka Camp Meeting Asso. 160 Ill. 576, 43 N. E. 716; Bloomington Cemetery Asso. v. People ex rel. Baldridge, 170 Ill. 377, 48 N. I. 905; St. Peter's Church v. Scott County, 12 Minn. 395, Gil. 280; Chicago, M. & St. P. R. Co. v. Pfaender, 23 Minn. 217; Hennepin County v. Bell, 43 Minn. 344, 45 N. W. 615; Bellinger v. White, 5 Neb. 401; Young Men's Christian Asso. v. Douglas County, 60 Neb. 642, 52 L. R. A. 123, 83 N. W. 924; Watson v. Cowles, 61 Neb. 216, 85 N. W. 35; State er rel. Crumpacker v. Chicago, B. & K. C. R. Co. 89 Mo. 523, 14 S. W. 522; Salisbury v. Lane (Idaho) 63 Pac. 383.

2 Morawetz, Priv. Corp. § 945, p. 903; Ashley v. Ryan, 153 U. S. 436, 38 L. ed. 773, 4 Inters. Com. Rep. 664, 14 Sup. Ct. Rep. 865: Pearsall v. Great Northern R. Co. 161 U. S. 667, 40 L. ed. 845, 16 Sup. Ct. Rep. 705: Keokuk & W. R. Co. v. Missouri, 152 C. S. 308, 38 L. ed. 454, 14 Sup. Ct. Rep. 592; 1 Morawetz, Priv. Corp. § 288; Plant- Cooley, Taxn. p. 749, note; Freedom v. ers' F. & M. Ins. Co. v. Tennessee use of Waldo County, 66 Me. 175; Fairfield v. Ohio Life Ins. & T. Co. v. Debolt, 16 How. 416, | Co., Prosecutors, v. Parker, 32 N. J. L. 426; 14 L. ed. 997: Jefferson Branch Bank v. Skelly, Crawford v. Burrell Twp. 53 Pa. 219; Jones & 1 Black, 436, 17 L. ed. 173; Gilman v. Sheboygan, 2 Black, 510, 17 L. ed. 305; Binghamton Bridge, 3 Wall. 51, sub nom. Chenango Bridge Co. v. Binghamton Bridge Co. 18 L. ed. 137; Wilmington & W. R. Co. v. Reid, 13 Wall. 264, 20 L. ed. 568; Raleigh & G. R. Co. v. Reid, 13 Wall. 269, 20 L. ed. 570; Delaware Railroad Tax, 18 Wall. 206, sub nom. Minot v. Philadelphia, W. & B. R. Co. 21 L. ed. 888; North Mis souri R. Co. v. Maguire, 20 Wall. 46, 22 L. ed. 287: Erie R. Co. v. Pennsylvania, 21 Wall. 492, 22 L. ed. 595: Bailey v. Maguire, 22 Wall. 215, 22 L. ed. 850; Tucker v. Ferguson, 22 Wall. 527, 22 L. ed. 805; Hoge v. Richmond & D. R. Co. 99 U. S. 348, 25 L. ed. 303; Annapolis & E. R. R. Co. v. Anne Arundel County, 103 U. S. 1, 26 L. ed. 359; Bank of Commerce v. Tennessee, 104 U. S. 493, 26 L. ed. 810; Wiggins Ferry Co. v. East St. Louis, 107 U. S. 365, 27 L. ed. 419. 2 Sup. Ct. Rep. 257: Memphis Gaslight Co. v. Shelby County Taxing Dist. 109 U. S. 398, 27 L. ed. 976, 3 Sup. Ct. Rep. 205; Memphis & L. R. R. Co. v. Raiiroad Comrs. 112 U. S. 609, sub nom. Memphis & L. R. R. Co. v Berry, 28 L. ed. 837, 5 Sup. Ct. Rep. 299; Southwestern R. Co. v. Wright, 116 U. S. 231, 29 L. ed. 627, 6 Sup. Ct. Rep. 375; Vicksburg, S. & P. R. Co. v. Dennis, 116 U. S. 665, 29 L. ed. 770, 6 Sup. Ct. Rep. 625 Tennessee v. Whitworth, 117 U. S. 129, 29 L. ed. 830, 6 Sup. Ct. Rep. 645; Chicago, B. & K. C. R. Co. v. Guffey, 120 U. S. 569, sub nom. Chicago, B. & K. C. R. Co. v. Missouri er rel. Guffey, 30 L. ed. 732, 7 Sup. Ct. Rep. 693: Yazoo & M. Valley R. Co. v. Thomas, 132 U. S. 174, 33 L. ed. 302, 10 Sup. Ct. Rep. 68; New Orleans City & Lake R. Co. v. New Or leans. 143 U. S. 192, 36 L. ed. 121, 12 Sup. Ct. Rep. 406; Wilmington & W. R. Co. v. Alsbrook, 146 U. S. 279, 36 L. ed. 972, 13 Sup. Ct. Rep. 72: New York er rel. Schurz v. Cook, 148 U. S. 397, 37 L. ed. 498, 13 Sup. Ct. Rep. 645; Keokuk & W. R. Co. v. Missouri, 152 U. S. 301, 38 L. ed. 450, 14 Sup. Ct. Rep. 592; Phoenix F. & M. Ins. Co. v. Tennessee, 161 U. S. 174, 40 L. ed. 660, 16 Sup. Ct. Rep. 471; Ford v. Delta & P. Land Co. 164 U. S. 662, 41 L. ed. 590, 17 Sup. Ct. Rep. 230; Yazoo & M. Valley R. Co. v. Adams, 180 U. S. 26, 45 L. ed. 408, 21 Sup. Ct. Rep. 282, Affirming the principal case; People er rel. Manhattan F. Ins. Co. v. New York Tax & A. Comrs. 76 N. Y. 64; People ex rel. Westchester F. Ins. Co. v. Davenport, 91 N. Y. 574; People ex rel. Twenty-third Street R. Co. v. New York Tax Comrs. 95 N. Y. 554; People ex rel. Woodhaven Gaslight Co. v. Deehan, 153 N. Y. 528, 47 N. E. 787; State, Trenton Water Power

Indeed, in one case the court, after laying down the principle of strict construction, said: "It is a waste of time to cite authorities upon this point; it is too well settled to need examination." Weston v. Shawano County, 44 Wis. 242.

Lest the reader should gather from this general and formidable array of authorities a too partial impression of the universality and unbending rigor of the application of the juststated principles, attention will be called, before passing to another topic, to some utter

County Comrs. 66 Me. 387; Winslow v. Ken- | 49 Ohio St. 176, 15 L. R. A. 145, 30 N. E. nebec County, 37 Me. 561; Young v. Parker, 279; Louisville & N. R. Co. v. Kentucky, 161 33 N. J. L. 192; Burroughs, Taxn. pp. 240, 241.

By not fixing its domicil in Vicksburg, as required by law, the railroad company forfeited its charter and all claims to exemption.

State ex rel. Atty. Gen. v. Milwaukee, L. S. & W. R. Co. 45 Wis. 579; Simmons v. Norfolk & B. S. Co. 113 N. C. 147, 22 L. R. A. 677, 18 S. E. 117.

The consolidation was unauthorized. A gigantic trust or combination was formed between the Illinois Central Railroad Company and its competitor, the Louisville, New Orleans, & Texas Railroad Company, by which all competition whatever in the entire western half of the state was suppressed. State ex rel. Watson v. Standard Oil Co. ances of the United States Supreme Court, and of certain of the state courts in cases in point.

All contracts, says the former tribunal, are to be construed to accomplish the intention of the parties; and in determining their different provisions a liberal and fair construction will be given to the words, either singly or in connection with the subject-matter. It is not the duty of the court by legal subtilty to overthrow a contract, but rather to uphold it and give it effect; and no strained or artificial rule of construction is to be applied to any part of it. If there is no ambiguity, and the meaning of the parties can be ascertained, effect is to be given to the instrument used whether it is a legislative grant or not. In the case of the Charles River Bridge the rules of construction known to the English common law were adopted and applied in the interpretation of legislative grants, and the principle was recognized that charters are to be construed most favorably to the state, and that in grants by the public nothing passes by implication. This court has repeatedly since asserted the same doctrine. The principle is this: That all rights which are asserted against the state must be clearly defined, and not raised by inference or presumption; and if the charter is silent about a power it does not exist. If on a fair reading of the instrument reasonable doubts arise as to the proper interpretation to be given to it those doubts are to be solved in favor of the state; and where it is susceptible of two meanings, the one restricting and the other extending the powers of the corporation, that construction is to be adopted which works the least harm to the state. But if there is no ambiguity in the charter, and the powers conferred are plainly marked, and their limits can be readily ascertained, then it is the duty of the court to sustain and uphold it, and to carry out the true meaning and intention of the parties to it. Any other rule of construction would defeat all legislative grants, and overthrow all other contracts. Binghamton Bridge, 3 Wall. 51, sub nom. Chenango Bridge Co. V. Binghamton Bridge Co. 18 L. ed. 137.

While the Maryland court of appeals, in passing upon the claim of a corporation that an exemption from taxation given in its charter extended to local, as well as state, taxes, said: The intention of the legislature is the all-controlling principle by which the construction of its enactment is to be governed, and nothing is more conclusively established, as well by the decisions of the Supreme Court of the United States as by those of Maryland and of other

U. S. 688, 40 L. ed. 854, 16 Sup. Ct. Rep. 714: Pearsall v. Great Northern R. Co. 161 U. S. 672, 40 L. ed. 847, 16 Sup. Ct. Rep. 705; Mobile & O. R. Co. v. Nicholas, 98 Ala. 123, 12 So. 723.

It is against public policy and ultra vires, without any statute or Constitution.

Louisville & N. R. Co. v. Kentucky, 161 U. S. 688, 40 L. ed. 854, 16 Sup. Ct. Rep. 714.

Mr. J. A. P. Campbell, also for plaintiff:

The powers conferred on the respective companies by §§ 16 and 25 of the respective charters did not survive their exercise in the formation of the Louisville, New Orleans, & Texas Railroad Company, but were thereby exhausted; and the new company formed by | judicial tribunals, than that the right of taxation is never presumed to be surrendered by the sovereign power, and that such surrender is never made, unless it be the result of express terms, or necessary inference. The effort made to restrict the immunity now under consideration to state taxes only, cannot be sustained. The terms used in the grant are so broad, unambiguous, and universal, and the reasons for making them so accordant therewith, that their full and natural import must be given to them. The exemption covers county and city, as well as state, taxes. There are no words used by the legislature qualifying or limiting the extent of the immunity conferred. Baltimore v. Baltimore & O. R. Co. 6 Gill, 288, 48 Am. Dec. 531.

The doctrines of this case were approved long afterwards by the same court when its membership had completely changed. State v. Baltimore & O. R. Co. 48 Md. 49.

Still stronger expressions, amounting in fact to a repudiation of the rule of strict construction in toto, have come from the courts of Wisconsin and New York concerning laws imposing specific taxes in commutation of all others. (See VI. a, 2, infra.) Milwaukee & St. P. R. Co. v. Crawford County, 29 Wis. 116; Binghamton Trust Co. v. Binghamton, 72 App. Div. 341, 76 N. Y. Supp. 517.

b. In the United States Supreme Court.

There is, in cases where it is alleged that a state law impairs the obligation of a contract, a governing principle that forms an exception to the general rule observed by the Supreme Court of the United States in reviewing the decisions of the state courts. That principle is that the court will and must decide for itself whether or not there is a contract as alleged, and, if so, whether or not it has been impaired by the challenged legislation, wholly regardless

That

of the conclusions of the state courts. exception was early recognized, and has since been consistently observed.

The rule observed by this court, said McLean J., on one occasion, to follow the construction of the statute of the state by its supreme court, is strongly urged. This is done when we are required to administer the laws of the state. The established construction of a statute of the state is received as a part of the statute. But we are called upon in the case before us, not to carry into effect a law of the state, but to test the validity of such a law by the Constitution of the Union. We are exercising an appellate jurisdiction. The decision of the supreme court

1898.

ADAMS V. Yazoo & M. V. R. Co.

the exercise of these powers did not possess them. The new company, made by consolidation, succeeded to all their respective rights and powers, as to the road acquired from each. Consolidation did not invest the company with the rights and powers of each charter of the constituents, as to the other road.

If the Louisville, New Orleans, & Texas Railroad Company had any power to further consolidate or unite with any other, it arose from 16 of the charter of the Memphis & Vicksburg, one constituent, and that applied only to the road it contributed in the consolidation, and did not extend to all the road of the Louisville, New Orleans, & Texas Railroad Company.

Philadelphia, W. & B. R. Co. v. Maryland, 10 How. 376, 13 L. ed. 461; Tomlinson v. Branch, 15 Wall. 460, 21 L. ed. 189.

of the state is before us for revision, and if its
construction of the contract in question im-
pairs its obligation we are required to reverse
To follow the construction of a
its judgment.
state court in such a case would be to surrender
one of the most important provisions of the
Constitution. Piqua Branch of State Bank v.
Knoop, 16 How. 369, 14 L. ed. 977.

And Chief Justice Taney, speaking to the
same proposition, about the same time, said:
But this rule of interpretation is confined to or-
dinary acts of legislation, and does not extend
to the contracts of the state although they
For it
should be made in the form of a law.
would be impossible for this court to exercise
any appellate power in a case of this kind un-
less it was at liberty to interpret for itself the
instrument relied on as the contract between
the parties. It must necessarily decide whether
the words used are words of contract, and what
is their true meaning, before it can determine
whether the obligation the instrument created
has or has not been impaired by the law com-
And in forming its judgment on
plained of.
this subject it can make no difference whether
the instrument claimed to be a contract is in
the form of a law passed by the legislature or
of a contract or agreement by one of its agents
Ohio
acting under the authority of the state.
Life Ins. & T. Co. v. Debolt, 16 How: 416, 14
L. ed. 997.

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And Wayne, J., followed a little later with a This court, said he, has refuller exposition. peatedly said, whenever an occasion has been presented for its expression, that its rule of interpretation has invariably been that the constructions given by the courts of the states to to state constitutions state legislation and have been conclusive upon this court with a single exception, and that is when it has been called upon to interpret the contracts of states, "though they have been made in the forms of law," or by the instrumentality of a state's authorized functionaries in conformity with state legislation. It has never been denied, nor is it now, that the Supreme Court of the United States has an appellate power to revise the judgment of the supreme court of a state whenever such a court shall adjudge that not to be a contract which has been alleged in the forms of legal proceedings by a litigant to be one, within the meaning of that clause of the Constitution which inhibits the states from passing any Of law impairing the obligation of contracts. what use would the appellate power be to the litigant who feels himself aggrieved by some particular state legislation, if this court could not decide, independently of all adjudication by

It did not act under this power, manifestly. It was by virtue of the ample power conferred by the charter of the Yazoo & Mississippi Valley Railroad Company that the consolidation of the Louisville, New Orleans, & Texas Railroad Company was authorized and effected; and the consequence of such consolidation must be determined by the Its provision is that charter authorizing it. the consolidated company shall have and enjoy all the property, rights, privileges, powers, liberties, immunities, and franchises herein granted, etc.; thus carefully providing that the charter of the Yazoo & Mississippi Valley Railroad Company should be the measure of the enjoyment of power by the consolidated company.

The Louisville, New Orleans, & Texas
Railroad Company had an immunity from
taxation, and might have retained it by con-
the supreme court of a state, whether or not
the phraseology of the instrument in controversy
was expressive of a contract and within the
protection of the Constitution of the United
States, and that its obligation should be en-
It was never
forced notwithstanding a contrary conclusion
by the supreme court of a state?
intended, and cannot be sustained by any course
of reasoning, that this court should or could,
with fidelity to the Constitution of the United
of the su-
follow the construction
States,

preme court of a state in such a matter when
it entertained a different opinion; and in form-
ing its judgment in such a case it makes no dif-
ference in the obligation of this court in revers-
ing the judgment of the supreme court of a
state upon such a contract, whether it be one
claimed to be such under the form of state leg-
islation, or has been made by a covenant or
agreement by the agents of a state by its au-
Jefferson Branch Bank v. Skelly, 1
thority.
Black, 136, 17 L. ed. 173.

Later Miller, J., dealt with the same point,
thus: It is said, however, that it is not the
validity of the act of 1860 which is complained
of by plaintiffs, but the construction placed
If this con-
upon that act by the state court.
on which the de-
struction is one which violates the plaintiffs'
contract, and is the one
fendants are acting, it is clear that the plain-
tiffs have no relief except in this court, and
that this court will not be discharging its duty
to see that no state legislature shall pass a law
Proprietors
impairing the obligation of a contract unless it
takes jurisdiction of such cases.
of Bridges v. Hoboken Land & Improv. Co. 1
Wall. 116, 17 L. ed. 571.

This court has always jealously asserted the right, declared the same judge again, when the question before it was the impairing of the obligation of a contract by state legislation, to ascertain for itself whether there was a contract to be impaired. If it were not so, the constitutional provision could always be evaded by the state courts giving such construction to the contract, or such decisions concerning its validity, as to render the power of this court Delmas v. Merchants' of no avail in upholding it against unconstitutional state legislation. Mut. Ins. Co. 14 Wall. 661, 20 L. ed. 757. The rule was recognized, and an elaborate explanation made as to why it did not operate in that particular case, in Kennebec & P. R. Co. v. Portland & K. R. Co. 14 Wall. 25, 20 L. ed. 851. Justice Miller once more calls attention to Whether that conthis principle by saying: tract is such as to be impaired by these later laws is one of the questions of which this court

tinuing to exist. It merged its existence in the Yazoo & Mississippi Valley Railroad Company, was devoured by it,-and in surrendering its existence and organization and name, and ail it had, to the Yazoo & Mississippi Valley Railroad Company, it surrendered all that pertained to it.

If a new company was formed, exemption was gone; and, if the Yazoo & Mississippi Valley Railroad Company was enlarged and extended by the absorption of the other, the charter of the Yazoo & Mississippi Valley Railroad Company became the law of the being of the organization, for so it is declared. The charter was drawn for a purpose, and the provision that consolidation was not to give exemption from taxes was intended to capture the legislature, and doubtless had that effect. Being the work of the promot ers, it must be taken most strongly against the corporation.

always has jurisdiction. Northwestern University v. Illinois ex rel. Miller, 99 U. S. 309, 25 L. ed. 387.

And Waite, Ch. J., restates and approves this exceptional rule in Wright v. Nagle, 101 U. S. 791, 25 L. ed. 921.

The attempt of the consolidating companies to avoid the effect of consolidation by their agreement can have no effect. They had the right to agree on terms, but could not vary the legal consequence of what they did, by any declaration or agreement. The law determines that.

The power to consolidate is a corporate franchise, and where it was not exercised so as to effect organization before the adoption of the Constitution, its subsequent exercise was subject to the provision for the taxation of all the property of private corporations for pecuniary gain, in view of which there cannot be an exemption of the property of such corporation, except when like exemption is extended to individuals.

1 Thomp. Corp. § 365; Memphis & L. R. Co. v. Railroad Comrs. 112 U. S. 609, sub nom. Memphis & L. R. R. Co. v. Berry, 28 L. ed. 837, 5 Sup. Ct. Rep. 299; St. Louis, I. | arising under the clause of the Constitution which forbids a state to pass any law impairing the obligations of contracts, in which if the state court gives effect to a subsequent law which is impugned as impairing the obligations of a contract, this court has power, in order to determine whether any contract has been impaired, to decide for itself what the true construction of the contract is. Huntington v. Attrill, 146 U. S. 657, 36 L. ed. 1123, 13 Sup. Ct. Rep. 224.

The principle is now accepted as of course. "So that it is necessary to inquire as to the

Still later, Matthews, J., thus expressed it: The question we have to consider and decide is whether, in the judgment under review, the supreme court of Florida gave effect to a law of the state, which, in violation of the Constitution of the United States, impairs the obligation of a contract. In reaching a conclusion on that point, we decide for ourselves, independent-existence and effect of the alleged contract. ly of the decision of the state court, whether there is a contract, and whether its obligation is impaired; and, if the decision of the question as to the existence of the alleged contract requires a construction of the state Constitution and laws, we are not necessarily governed by the previous decisions of the state courts upon the same or similar points, except where they have been so firmly established as to constitute a rule of property. Such has been the uniform and well-settled doctrine of this court. Louisville & N. R. Co. v. Palmes, 109 U. S. 244, 27 L. ed. 922, 3 Sup. Ct. Rep. 193.

And IIarian, J., thus states the rule Whether an alleged contract arises from state legislation, or by agreement with the agents of a state, by its authority, or by stipulations between individuals exclusively, we are obliged, upon our own judgment, and independently of the adjudication of the state court, to decide whether there exists a contract within the protection of the Constitution of the United States. Louisville Gas. Co. v. Citizens' Gaslight Co. 115 U. S. 683, 29 L. ed. 510, 6 Sup. Ct. Rep. 265.

Gray, J., refers to it in this wise: In determining whether the statute of a state impairs the obligation of a contract, this court, doubtless, must decide for itself the existence and effect of the original contract, although in the form of a statute, as well as whether its obligation has been impaired. Vicksburg, S. & P. R. Co. v. Dennis, 116 U. S. 665, 29 L. ed. 770, 6 Sup. Ct. Rep. 625.

The rule was recognized and approved, but held not to apply, in New Orleans Waterworks Co. v. Louisiana Sugar Ref. Co. 125 U. S. 18, 31 L. ed. 607, 8 Sup. Ct. Rep. 741.

In a case involving the full faith and credit clause of the Federal Constitution, anent the question whether, by a judgment sued upon in a state where it was not rendered, the nature of the cause of action had changed, the court said: The case in this regard is analogous to one

And that question must be determined by this court upon its own judgment, independently of any adjudication by the state court." Bryan v. Kentucky Annual Conference M. E. Church, South, Bd. of Edu. 151 U. S. 639, 38 L. ed. 297, 14 Sup. Ct. Rep. 465.

It is well settled that the decision of a state court holding that, as a matter of construction, a particular charter or charter provision does not constitute a contract, is not binding upon this court. The question of the existence or nonexistence of a contract in cases like the present is one which this court will determine for itself. Mobile & O. R. Co. v. Tennessee, 153 U. S. 486, 38 L. ed. 793. 14 Sup. Ct. Rep. 968.

In reversing State ex rel. Marr v. Stearns, 72 Minn. 200, 75 N. W. 210, the Supreme Court of the United States again declared that the general rule of that court was to adopt as conclusive the construction of a state constitution made by the highest court of the state, but to this rule there was one exception which had been constantly recognized, and that was, when a question of contract arises the competency of a state, through legislation, to make the alleged contract, and the meaning and validity of such contract, are matters which the United States Supreme Court, in discharging its duties under the Federal Constitution, must determine for itself; and, while in doing so it would lean to the interpretation of the state court, such leaning cannot relieve it from the duty of independently answering the question of contract or no contract. Stearns v. Minnesota ex rel. Marr, 179 U. S. 223, 45 L. ed. 162, 21 Sup. Ct. Rep. 73.

And in dismissing one of the writs of error sued out by the railroad company in the principal case, the court once more declared that there is no doubt of the general proposition that where a contract is alleged to have been impaired by subsequent legislation it would put its own construction upon the contract, though

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