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BAILEY v. MAGWIRE

October 1, 1874

BAILEY
v.
MAGWIRE, COLLECTOR.



APPEAL from the Circuit Court for the Eastern District of Missouri.

Bailey and others, foreign stockholders, in the Pacific Railroad Company, a corporation existing and organized under different special acts of the State of Missouri, filed a bill in the court below against a certain Magwire, collector of State, county, school, and city taxes for the county and city of St. Louis, Missouri, to enjoin his collection of such taxes assessed for the year 1869, on the said railroad company under the general tax law of the State; the ground of the application being that by acts of the Missouri legislature governing the said railroad company, and which acts, as the company asserted, made a contract with it, the company––

1st. Was not liable for any county, school, or city taxes at all.

2d. Was not liable for State taxes under the act in virtue of which they had been assessed, but was liable for them only under another act; a special act relating to itself, and prescribing a manner for assessment, &c., different from the manner which had here been followed.

The case was thus:

The charter of the Pacific Railroad Company was granted in 1849, and counties, cities, and towns along its line were authorized to subscribe to it; but it contained no provision exempting its property from taxation.*fn1

By an act of 1851, amendatory of the charter,*fn2 it was enacted that the capital stock, together with all their works and other property, and all profits which should arise from the same should be vested in the respective shareholders of the company forever, in proportion to their respective shares, and that the same should be deemed personal estate and be exempt from all public charge or tax whatsoever, for the term of five years from the passage of the act. This exemption, of course, would have expired in 1856.

At the time of the passage of this act, as before and since, there existed in Missouri, under its public statutes, a general scheme of taxation of all property in the State; this scheme embracing all property of corporations over and above their capital stock, as well as the property of citizens in the counties where it was situated.

In this state of things, the exemption given by the act of 1851 not having yet expired, the legislature of Missouri, on the 25th of December, 1852, passed another act amendatory of the charter. This act lent its credit to the company by issuing to it State bonds to the amount of $1,000,000, to be used after the expenditure of a like sum raised from other sources; and it gave to the company a large body of lands which Congress had given to the State.

By a twelfth section it made the following enactment as to taxation:

'SECTION 12. The said Pacific Railroad shall be exempt from taxation until the same shall be completed, opened, and in operation, and shall declare a dividend, when the road-bed, buildings, machinery, engines, cars, and other property of such completed road, at the actual cash value thereof, shall be subject to taxation at the rate assessed by the State on other real and personal property of like value.

'And for the purpose of ascertaining the value of the same, it shall be the duty of the president of said company, on the first day of February in each year, after such road is completed, opened, and put in operation, and declares a dividend, to furnish to the auditor of the State a statement under his oath, of the actual value of the road-bed, buildings, machinery, engines, cars, and other property appertaining to such completed road; and from said statement, the auditor shall charge said company with the amount appearing to be due to the State, according to the statement furnished by the president of the company.

'And in case said company shall fail to pay into the State treasury, within thirty days after the first day of December in each year, the amount charged against said company as aforesaid, said company shall forfeit and pay to the State of Missouri, in addition to the sum with which said company may stand charged by the auditor, ten per cent. per month, after the expiration of said thirty days, on the amount charged to said company; which sum charged against said company, together with the ten per cent. per month hereinbefore specified, may be recovered in the name of the State of Missouri, by civil action, in any court of competent jurisdiction; and should the president of said company fail to make out and furnish to the auditor of the State a statement as herein required, said company shall forfeit and pay to the State $10,000 for such failure, which may be recovered in the name of the State of Missouri, in any court of competent jurisdiction.

'Provided, That if said company shall fail for the period of two years after said roads respectively shall be completed and put in operation to declare a dividend, then the said company shall no longer be exempt from the payment of the said tax, nor from the forfeitures and penalties in this section imposed.'

This act of 1852 was accepted by the company, and the rights given by the act of 1851 were thus surrendered.

The road was completed in April, 1866; and after April, 1868, and in each year since that time–the company not having yet made any dividend–the president of the company made returns of its taxable property in the manner required by the twelfth section of the act of 1852; but not in any other manner.

At the time when the road was completed $3,614,500 of stock had been subscribed; of which $2,500,000 had been subscribed by the counties and towns along the line of it.

In 1866 the legislature of Missouri passed an act relating to the collection of revenue generally throughout the State. The mode prescribed for ascertaining the value of property of corporations generally, was different from that prescribed by the twelfth section of the act of 1852, for ascertaining the value of the property of the Pacific Railroad. But the act of 1866 did not in terms nor by any plain implication repeal the twelfth section of the act of 1852. Whether it did so by any kind of implication was a question that came before the Supreme Court of Missouri, A.D. 1873, in The Pacific Railroad Company v. Cass County,*fn3 in which case the court decided that the act of 1866 did not repeal the said twelfth section in any way.

In August, 1871, this decision not then having been made by the said Supreme Court, the assessors for St. Louis County, acting under the provisions of the act of 1866, assessed a tax for State, county, school, and city purposes on the property of the Pacific Railroad Company, and seized upon its property, advertising it for sale. Thereupon the present bill was filed; by which various foreign stockholders in the ...


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