Railroad Company v. County of Hamblen

ERROR to the Supreme Court of the State of Tennessee.

This was an action brought by the East Tennessee, Virginia, and Georgia Railroad Company, against the County of Hamblen, Tennessee. The question at issue was as to the liability of the company to pay taxes on the assessed value of that portion of its road which lies in that county.

The Cincinnati, Cumberland Gap, and Charleston Railroad Company was chartered by an act of the General Assembly of Tennessee, approved Nov. 18, 1853, the eight section of which provides, 'That said company shall be, and they are hereby, vested with all the rights, powers, and privileges, and subject to all the restrictions and liabilities, of the Nashville and Louisville Railroad Company, except where otherwise provided for in this charter.'

A charter was granted to the latter company Feb. 9, 1840. the fortieth section of which provides,--

'That the capital stock in said company, the dividends thereon, and the roads and fixtures, depots, workshops, warehouses, and vehicles of transportation belonging to the company, shall be for ever exempt from the taxation in each and every of the said States of Tennessee and Kentucky, and it shall not be lawful for either of the said States, or any corporation or municipal police, or other authority thereof, or of any town, city, county, or district thereof, to impose any tax on such stock or dividends, property or estate: Provided, the stock or dividends, when the said dividends shall exceed the legal interest of the State, may be subject to taxation by the State in common with and at the same rate as money at interest or interest thereon, and when the State shall impose a tax on the dividends declared. in favor of the stockholders of the company, the tax shall extend only to such proportion of the said dividends and capital stock as the part of the road in that State shall bear to the whole road, from the profits of which the said dividends have arisen, which tax, when imposed, shall be retained by the company out of the dividends and paid to the State; but no tax shall be imposed so as to reduce the part of the dividends to be received by the stockholders below the legal interest of the State.'

The company first named borrowed from the State her coupon bonds. To secure their payment, the General Improvement Act of 1852, and the acts amendatory thereof, which authorized the loan, retained a lien therefor upon the property, real and personal, stock, and franchises of the company. The latter failing to pay the interest, a law was passed conferring upon the Chancery Court of Nashville jurisdiction of all questions arising upon loans made under those acts to the various railroad companies. The State filed her bill July 21, 1871, in that court to enforce her lien, and secure the payment of the bonds so advanced to the company. A decree was passed for the sale of the property, which is set out in the opinion of this court. McGhee, the purchaser under the decree, conveyed the property to the East Tennessee, Virginia, and Georgia Railroad Company.

The Circuit Court for the county of Hamblen held that the company was subject to the tax, and entered judgment accordingly, upon the affirmance of which by the Supreme Court the case was removed here.

Mr. George Brown for the plaintiff in error.

Mr. William Y. C. Humes, contra.

Mr. CHIEF JUSTICE WAITE delivered the opinion of the court.