Gulf & Ship Island Railroad Company v. Hewes (183 U.S. 66)

This was a bill in equity filed in the court of chancery of Harrison county, Mississippi, by the railroad company, against the tax collector of that county, to enjoin the collection of certain property and privilege taxes assessed against the railroad company for the fiscal year 1896.

The bill averred in substance the incorporation of thr railroad company by an act of the legislature of the state of Mississippi, approved February 23, 1882, the 18th section of which act declared 'that said company, its stock, its railroads and appurtenances, and all its property in this state, necessary or incident to the full exercise of all powers herein granted, shall be exempt from taxation for a term of twenty years from the passage of this act;' that immediately thereafter the corporation entered upon the construction of its road, and at the time of the filing of the bill had about 75 miles in operation; that, notwithstanding this charter exemption, the state railroad commission has returned its property for taxation, and that defendant has demanded, not only a privilege tax, but a property tax levied for state and county purposes, and threatens seizure of its property. Wherefore an injunction was prayed.

To this bill defendant interposed a demurrer for want of equity, and because the exemption was a mere bounty, repealable at the pleasure of the legislature, and void of any element of contract. The demurrer was sustained, and leave granted the plaintiff to amend its bill. Thereupon it filed an amendment alleging that the exemption in the charter constituted a contract between the plaintiff and the state, that the railroad was constructed upon the faith of such contract, and that it was not within the power of the state to repeal the exemption; and invoking in that connection the contract clause of the Constitution. Defendant again demurred. The demurrer was sustained, and an appeal granted to the supreme court of the state, which affirmed the decree of the court below. Whereupon plaintiff sued out a writ of error from this court, which defendant moved to dismiss.

Messrs. E. J. Bowen and Edward Mayes for plaintiffs in error.

Messrs. R. C. Beckett and Frank A. Critz for defendant in error.

Mr. Justice Brown delivered the opinion of the court: