Treat v. Grand Canyon Railway Company/Opinion of the Court

by Oliver Wendell Holmes, Jr.

United States Supreme Court

222 U.S. 448

Treat  v.  Grand Canyon Railway Company

 Argued: December 8 and 11, 1911. --- Decided: January 9, 1912

This is a bill brought by the railway company, the appellee, to restrain the collection of taxes from which it says that it is exempt. The facts in brief are these: A predecessor of the appellee, the Santa Fe & Grand Canyon Railroad Company, between August, 1899, and October, 1900, built over 56 miles of the road concerned. In July, 1901, this road was sold on foreclosure sale to purchasers who organized the appellee and in August conveyed the road to it. The new company finished the road to the edge of the Grand Canyon and laid out stations and hotel grounds at the end. In 1906 the territorial board undertook to levy the tax complained of. The supreme court held that the appellee was exempt. 12 Ariz. 69, 95 Pac. 187. 12 Ariz. 117, 100 Pac. 438.

The railroad company was organized under act No. 3, February 8, 1897, of the territory, which authorized such corporations to be formed for the purpose of buying the property of railroads sold on foreclosure, and to buy and exercise 'all the rights, privileges, franchises, immunities, and powers' of their predecessors. By § 7 such corporations were to have all rights, immunities, etc., then or thereafter given to any railroad organized under the general laws; but by § 8 it was provided that the act should not be construed 'to give to any corporation created under it, any exemption from taxation created by any existing or future exemption laws of the territory of Arizona.' The question does not stand on this act alone, however, and the cases discussed in Rochester R. Co. v. Rochester, 205 U.S. 236, 51 L. ed. 784, 27 Sup. Ct. Rep. 469, for, by a later statute of March 16, 1899, No. 68, 'for the purpose of inducing and encouraging the construction of railroads,' it was provided that the 'property used or necessary in the construction and operation of railroads,' of road thereafter constructed, 'whether owned or operated by a person or persons, association or railway corporation, his, their, or its successors or assigns,' should be exempt from all manner of taxation for ten years from the date of the act. The supreme court held that this exemption was in rem, so to speak, went with the land, and extended to the assigns of the first road.

No doubt a strong argument can be made and was made for a different view, based on the passage before and on the date of the act of 1897 of statutes like that of 1899. But the considerations that prevailed also are agent and so obvious as not to need statement. Moreover, the question is not whether the later statute constituted a contract (Damon v. Hawaii, 194 U.S. 154, 160, 48 L. ed. 916, 917, 24 Sup. Ct. Rep. 617; Wisconsin & M. R. Co. v. Powers, 191 U.S. 379, 48 L. ed. 229, 24 Sup. Ct. Rep. 107). The courts of the territory have given to the railroad the rights that it claims, as against the territory authorities seeking to levy the tax. The only question is whether any sufficient reason appears for not following the construction given to a local statute by the territorial court, when that construction is inherently reasonable, is at least the first to strike the mind, and is one that protects private rights. It is enought to answer that, on the principle followed so far as may be by this court, there is no such manifest error as to warrant us in reversing the decision below. Fox v. Haarstick, 156 U.S. 674, 679, 39 L. ed. 576, 578, 15 Sup. Ct. Rep. 457; English v. Arizona, 214 U.S. 359, 361, 363, 53 L. ed. 1030, 1033, 29 Sup. Ct. Rep. 658.

Judgment affirmed.

Notes