Morgan v. Louisiana

ERROR to the Supreme Court of the State of Louisiana.

This was an action by the State of Louisiana against Morgan, to recover certain taxes.

The facts are stated in the opinion of the court.

The judgment below was in favor of the plaintiff. The defendant thereupon sued out this writ of error.

Submitted on printed arguments by Mr. Henry J. Leovy for the plaintiff in error.

1. The legislature of Louisiana had power to exempt the property from taxation; and the grant made in this case was a contract which was inviolable. New Jersey v. Wilson, 7 Cranch, 164; Jefferson Bank v. Shelly, 1 Black, 536; Home of the Friendless v. Rouse, 8 Wall. 430; Wilmington Railroad v. Reid, 13 id. 264, 269; Humphrey v. Pegues, 16 id. 244; 18 id. 392; 20 id. 36; 21 id. 492; Lacey's Dig. Railway Decisions, p. 853; 31 Ill. 484; 17 id. 291.

2. Exemption from taxation is a franchise that may be mortgaged and sold, especially in Louisiana. La. Stat. 1853, 1854, 1856; Civil Code, arts. 2449, 3183; New Jersey v. Wilson, 7 Cranch, 165; Jefferson Bank v. Shelly, 1 Black, 536; Home of the Friendless v. Rouse, 8 Wall. 430; Trask v. Maguire, 18 id. 392; Pacific Railroad v. Maguire, 20 id. 36; Humphrey v. Pegues, 16 id. 244; 13 id. 269; Wilmington Railroad v. Reid, 13 id. 264; Bardstown & Louisville R. R. Co. v. Metcalfe, 4 Ky. (Met.) 199; Allen v. ''Mont. R. R. Co.'', 11 Ala. 437; Pollard v. Maddox, 28 id. 321; 30 Vt. 182; 70 Penn. 355; St. Paul Co. v. Parker, 14 Minn. 297; Lacey's Dig. Railway Decisions, 753; Union Bank Case, 6 Humph. 515; Enfield v. Hart, 17 Conn. 40.

Plaintiff in error is the owner by purchase at public sale of all the property formerly owned by the railroad company, including all its franchises; and his title to the same has in no manner been forfeited.

3. The exemption from taxation of the capital stock of the company is without limitation; but that part invested in works, fixtures, workshops, &c., is exempt till ten years after completion of the road, &c. Sect. 2, Act 1853. It is admitted that the capital stock is exempt for ever. The 'capital stock' is the capital of the company, whether remaining in money or invested in the necessary real estate, rails, and track, in grading, and in laying rails. Trask v. Maguire, 18 Wall. 391; Wilmington Railroad v. Reid, 13 id. 264; Pacific Railroad v. Maguire, 20 id. 42.

The tax claimed in this case is for $400,000, real estate (part of the road), $300,000, capital, and $19,000, ferry-boats; in all, $719,000. All this is clearly part of the capital stock exempted from taxation.

Mr. J. Q. A. Fellows for the defendant in error.

As the first grand division of eighty miles of road, purchased by the plaintiff in error at the marshal's sale in May, 1869, had been completed for more than ten years prior to that time, it was not exempt from taxation, and his purchase of the remaining property of the railroad company at the sheriff's sale in March, 1870, did not, and could not, include the franchises of the company.

Only by virtue of an express authorization of the legislature can the franchises of a corporation be divested. This was not the case at the sheriff's sale, made in the execution of an ordinary judgment on an ordinary debt against the railroad company. 1 Redf. Railw. c. 7, p. 117 (ed. 1873); 2 id. c. 7, pp. 484, 501 (ed. 1873); Lacey's Dig. Railway Decisions, p. 292, Nos. 4, 7, 21, 25; Plymouth Railroad v. Colwell, 39 Penn. St. 337; State v. Rives, 5 Ired. 297; Benedict v. Heineberg, 43 Vt. 231; State v. Mexican Gulf Railroad Co., 3 Rob. (La.) 513.

The plaintiff in error could buy at the sheriff's sale only the tangible property of the railroad company, and not any of its franchises. He therefore did not acquire the right of exemption from taxation of the property purchased previously at the marshal's sale; even if such exemption be a franchise, and not a strictly personal right or immunity, which is neither transferable by the railroad company, nor subject to seizure and sale under execution.

The plaintiff in error can therefore claim only by virtue of his purchase at the marshal's sale, under the laws as they existed at the time of his purchase.

MR. JUSTICE FIELD delivered the opinion of the court.