Jurisdictional Statement — Redwine v. Georgia Railroad & Banking Co.

INDEX

Sussecr Inpex

Page

Statement as to jurisdiction ; 1

Statutory provisions sustaining jurisdiction. 2

Statutes of Georgia, the validity of which is

involved ._.... 9

Date of judgment and of application for appeal 3

Statement showing jurisdiction _. 3

Authorities believed to sustain jurisd. tion. . 6

Authorities showing that the questions are sub-

stantial _.. 7

Appendix-—Opinion of the District Covri. 16

Tasie or Cases Cirtep

Armstrong v. Jones, 34 Ga. 309... . 12

Atlantic Coast Line v. Phillips, 332 U. S. 168 Mas 13

Atlantic & Gulf Railroad Co. v. State, 55 Ga. 321 14

Bacon v. Texas, 163 U.S. 207. li

Bank of Kentucky v. Kentucky, 207 U. S$. 258. 8

Cathcart v. Robinson, 5 Pet. 264. 12

Cleveland v. U.S., 323 U.S. 329................ 6

Commissioner v. Sunnen, 333 U.S. 591... 7

Coombs v. Getz, 285 U.S. 434........ Cease s

Fletcher v. Peck,6 Cranch. 87. __... 14

Georgia v. Georgia Railroad & Banking Co., 54 Ga.

205 csoukuee sau 4,8, 10,14

Georgia Railroad & Banking Co. v. Wright, 124 Ga.

Me tccceuteret 7

Georgia Railroad & Banking Co. v. Wright, 132 F.

BES cs ohn caee ee oes 5, 8

Georgia Railroad & Banking Co. v. . Redwine, 342 U.S.

BU o's wd dsnap denials vai aban cues 6

Goldsmith v. Rome Railroad Co., 62 Ga. 473. . vs 14

Green v. Biddle, 8 Wheat.1................. dita tore 14

Home of the Friendless v. Rome, 75 U.S. 480........ 11

Houligan v. Saussy, 206 Ga.1................... 5

Indiana ex rel. Anderson v. Brand, 303 U.S. 95 __.. 8

Livingston County v. Darlington, 101 U.S.409. _.... 8

Long Island Water Supply v. City of erm 166

NE Sa oie Fee rns ev hg eae 4 aie da owe

ii INDEX

Montgomery v. Board of Education wis Richmond

County, 74 Ga, 41 ; 11

Moore v. State, 150 Ga. 679... 11

Padelford, Fay & Co. v. Savannah, 14 Ga. 438 x

Pennsylvania College cases, 80 U.S. 553 11

Precisions Instrument Mfg. Co. vy. Automotive Main-

tenance Machinery Co., 324 U.S. 806 12

Public Service Commission v. Havemeyer, 296 U.S.

506 mniedn’s vrF 12

Query v. U.S., 316 U.S. 486 6

Smith v. Georgia Granite Corporation, 186 Ga. 634 12

Southwestern & Central Railroad Co. v. Collins, 40

Ga. 583 11

State v. Morgan, 28 La. 490 11

State Bank v. Knoop, 16 How. 369 14

Sterling v. Constantin, 287 U.S. 378 6

Stone v. Farmers Bank of Kentucky, 174 U.S. 409 s

Stratton vy. St. L. S.W. Railroad Co., 282 US.

10 6

Tait vy. Western Maryland Railroad Co., 289 U.S.

620 / 7

Thompson vy. Atlantic Coast Line R. Co., 200 Ga.

856 12

Trustees of Dartmouth College v. Woodward, 4

Wheat. 664 11

Washington University v. Rouse, 8 Wall. 439 14

Wilmington & S.R. Co. vy. Alsbrook, 146 U.S. 279 14

Wright v. Georgia Railroad & Banking Co., 216 U.S.

420 5,7,14

Wright v. Louisville & Nashville Railroad, 236 U.S.

687 14

Starures anv Ornen AuTHORITIRS

Constitutions:

Constitution of the United States:

Article I, Section X 3

Amendment XIV 3

Constitution of Georgia of 1789:

Article I, Sections 16, 17 9

Qe

Constitution of Georgia of 1798:

Article I, Sections XXII, XXIII, XXIV

Constitution of Georgia of 1945;

Article 1, Section IL], Paragraph III (Code

of Section 2-303)

Statutes;

United States Statutes :

28 U.S.C. 1253

28 U.S.C. 2281

28 U.S.C. 2284

Georgia Statutes:

Watkins Digest (Ga. Laws) p. 557

Prince’s Digest, 1820 (Ga. Laws) p. 515

Prince's Digest, 1837 (Ga. Laws) p. 306

Ga. Laws 1833, p. 256

Ga, Laws 1835, p. 180

Ga. Laws 1835, p. 217

Ga. Laws 1837, p. 212

Ga. Laws 1858, p. 66

Ga. Laws 1859, p. 314

Ga. Laws 1868, p. 147

Ga. Laws 1874, p. 107

Ga, Laws 1902, p. 37

Ga. Laws 1937-38 Ex. Sess. p. 77

Ga. Laws 1943, p. 204

Short Titles:

Rescinding Act

Yazoo Act

Georgia Code Annotated, Chapters 92-26

92-27

92-28

92-61

Georgia Code Annotated, Section 22-1205

Miscellaneous:

173 A.L.R. 31, Paragraph 5

te

=~

SUPREME COURT OF THE UNITED STATES

OCTOBER TERI, 1952

No. 516

CHARLES D. REDWINE, Stare Reverve Commissioner,

MAYOR awpv COUNCIL OF THE CITY OF ATHENS,

CITY OF UNION POINT, axon FULTON COUNTY,

Appellants,

vs.

GEORGIA RAILROAD & BANKING COMPANY

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF GEORGIA

STATEMENT AS TO JURISDICTION

Statement as to the Jurisdiction of the United States

Supreme Court

Charles D. Redwine, State Revenue Commissioner, the

Mayor and Council of the City of Athens, the City of Union

Point, and Fulton County, Appellants, in compliance with

2

Rule 12 of the Rules of the Supreme Court of the United

States, submit herewith their statement disclosing the basis

upon which it is contended that the Supreme Court of the

United States has jurisdiction upon appeal to review the

judgment in question.

(a) Statutory Provision Believed to Sustain Jurisdiction

The statutory provision believed to sustain jurisdiction

is the Act of June 28, 1948, c. 646, 62 Stat. 926, 28 U.S.C.

1253,

The judgment appealed from permanently enjoined the

enforcement and operation of the Georgia ad valorem tax

statutes against the plaintiff railroad by enjoining the

defendant Charles D. Redwine, State Revenue Commis-

sioner, from enforcing and executing such statutes against

it on the grounds that said statutes, as applied to the plain-

tiff, violated Section 10 of Article I of the Constitution of

the United States. The action was required by the Act

of June 25, 1948, c. 646, 62 Stat. 968, 28 U.S.C. 2281 to be

heard and determined by three judges, was in fact so heard

and determined, and the Supreme Court of the United

States took jurisdiction of the appeal by the plaintiff from

the judgment dismissing the action.

(b) The Statutes of Georgia, the Validity of Which Is

Involved

(1) Article I, Section IL], paragraph III of the 1945 Con-

stitution of Georgia which provides:

‘*All exemptions from taxation heretofore granted

in corporate charters are declared to be henceforth

null and void.’’

(2) Chapters 92-61, 92-26, 92-27 and 92-28 of the Georgia

Code of 1933, and the Act approved January 18, 1938 (Ga.

3

L. Ex. Sess. 1937-38, pp. 77 et seq.) as amended by the Act

approved February 17, 1943 (Ga. L. 1943, pp. 204 et seq.)

Those statutes provide the method and machinery for as-

sessing, levying and collecting State, County, Municipal

and school district ad valorem taxes against railroads

owning property in the State.

The complaint alleged that the application of the quoted

provision of the Georgia Constitution and of the cited

statutes to the plaintiff so as to subjeci its charter lines to

ad valorem taxes would violate Section 10 of Article I

of the Constitution of the United States and the due proc-

ess of law provision of the 14th Amendment to that Con-

stitution. The opinion of the Court approved, and the

final judgment sustained the former of these Constitutional

objections, and granted a permanent injunction against the

State Revenue Commissioner

(c) Date of Judgment and of Application for Appeal

Judgment was entered September 23, 1952, and filed

September 27, 1952. The petition for appeal was presented

and allowed November 21st, 1952.

(d) Statement Showing Jurisdiction

The plaintiff was chartered by an Act of the General

Assembly of Georgia approved December 21, 1833 (Ga. L.

1833, pp. 256 et seq.) which provided for the construction

of a ‘‘Union Railroad’’ between Augusta, Georgia, and

some point in the interior of the State to be agreed upon by

the stockholders; and thereafter for the construction of

three branches from the terminus of the Union Railroad

to the cities of Athens, Eatonton and Madison, Georgia

respectively. Section 15 of that Act provided:

‘‘The stock of said company and its branches shall

be exempt from taxation for and during the term of

4

seven years from and after the completion of said

railroads or any one of them; and after that shall be

subject to a tax not exceeding one-half per cent per

annum on the net proceeds of their investment.’’

The plaintiff constructed the Union Railroad and two of

the branches. It did not construct the branch to Eatonton.

The portion of the plaintiff's road from Madison to At-

lanta was authorized by an Act approved December 25,

1837 (Ga. L. 1837, p. 212) which provided that the plaintiff

should have all the powers and privileges, rights and im-

munities in the construction of the branch as were con-

tained in the charter.

By an Act approved October 5, 1868 (Ga. L. 1868, p. 147)

the General Assembly authorized the plaintiff to increase

its capital in the amount not exceeding two million dollars

for the purpose of extending its road from Athens north to

Clayton. The plaintiff accepted the provisions of the 1868

Act and issued $44,000.00 worth of additional stock under

it, but did not build any part of the Athens-Clayton Road.

In 1874 the General Assembly levied an ad valorem tax

on railroads (Ga. L. 1874, p. 107). An effort by the Comp-

troller General of Georgia to enforce the Act against plain-

tiff was resisted by it and in States v. Georgia Railroad &

Banking Company, 54 Ga. 423, the Georgia Supreme Court,

although expressing disagreement with the rule, held that it

was bound by the decision of the United States Supreme

Court in the Dartmouth College case and in the subsequent

cases which followed that decision. It also held that the

stock issued under the amendment granted to authorize

the Clayton branch was not protected by the charter tax

limitation.

By an Act approved December 17, 1902 (Ga. L. 1902,

pp. ) the General Assembly provided for a tax on

franchises and shortly thereafter the Comptroller General

Pe

Se Oe a ee ee

r

5

of Georgia threatened to collect the ad valorem and fran-

chise taxes from the plaintiff. It petitioned the Circuit

Court of the United States for the Northern District of

Georgia for an injunction against the Comptroller Gen-

eral. The injunction was granted except as to the addi-

tional stock issued under the Act of 1868 authorizing the

Clayton branch, which was not in issue. Georgia Railroad

é Banking Company v. Wright, 132 F. 912. Upon appeal

to the United States Supreme Court, the judgment was

modified to authorize taxation of the Washington branch

railroad but was affirmed as to the remainder of plaintiff's

line. Wright v. Georgia Railroad & Banking Company,

216 U. S. 420. Wilkes and Taliaferro Counties intervened

in that action.

At the General Election held August 7, 1945, the people

of Georgia ratified the Constitution of 1945 which provided

in Article I, Section II], Paragraph III as follows:

‘All exemptions from taxation heretofore granted

in corporate charters are declared to be henceforth

null and void.”’

The defendant, State Revenue Commissioner threatened

to collect ad valorem taxes from the plaintiff for state,

county, municipal and school district purposes at the full

rate for each taxing entity for 1939, and all subsequent

years.

The plaintiff brought this action in the District Court

to enjoin the defendant and to have the threatened acts

adjudged a violation of the decree of the court in the earlier

case (Georgia Railroad & Banking Company v. Wright,

132 F. 912) and a contempt of that decree, and alleged that

the Georgia statutes providing for ad valorem taxation of

railroads, and the quoted provision from the Constitution

of 1945, if applied to the plaintiff, would impair the obliga-

6

tion of its contract with the State, and would deprive it

of its property without due process of law, in violation

of the Federal Constitution. The action was defended by

the State Revenue Commissioner upon the grounds, among

others, that the prior cases were not res judicata; that the

Constitution of 1798 prohibited the Genera! Assembly from

alienating its taxing power by statute; that the violation

of its charter obligations by the plaintiff authorized the

withdrawal of the charter tax limitation by the State; and

that the charter tax limitation did not apply to that branch

of the road from Madison to Atlanta.

A three Judge District Court was convened under Sec-

tions 2281 and 2284 of the Judicial Code. The Supreme

Court of the United States took jurisdiction of the appeal

by the plaintiff from the judgment of that court dismissing

the complaint and reversed that judgment, remanding the

case to the lower court for a decision on the merits. Georgia

Railroad & Banking Company v. Redwine, 342 U. S. 299.

Interventions by the Mayor and Council of the City of

Athens, The City of Union Point, and Fulton County were

allowed. The present appeal is from the lower court’s

judgment sustaining the plaintiff’s amended motion for

summary judgment and granting A permanent injunction

against defendant.

(e) Authorities Believed to Sustain Jurisdiction

28 U. S. C. 1253

28 U. S. C. 2281

28 U.S. C. 2284

Query v. U. S., 316 U. 8. 486

Cleveland v. U. S. 323 U. 8. 329

Sterling v. Constanin, 287 U. S. 378

Stratton v. St. L. S. W. Railroad Co, 282 U. 8. 10

7

28 U. S. C. 2281 requires an action to restrain a State

officer from assessing and collecting a tax on the ground

that the statutes and provisions of the State Constitution

are contrary to the United States Constitution to be heard

and determined by a three Judge District Court.

28 U. S. C. 2284 requires that an order granting a final

judgment in such an action be entered by three Judges.

28 U. S. C. 1253 provides for a direct appeal to the Su-

preme Court from an Order granting a permanent injunc-

tion in such actions.

(f) Authorities Showing That the Questions Are Substan-

tial

The prior decrees relied on by the plaintiff and by the

District Court as binding ‘‘at least as to all questions put

in issue’’ are not res judicata because separate tax claims

for different years constitute distinct causes of action.

Georgia Railroad & Banking Company v. Wright, 124

Ga, 596

Wright v. Georgia Railroad € Banking Company, 216

U. 8. 420

Commissioner v. Sunnen, 333 U. 8. 591

Tait v. Western Maryland Railroad Co. 289 U.S. 620

Even where collateral estoppel is otherwise applicable

as to matters actually presented and determined in the ear-

lier litigation, a change in the law removes the estoppel.

Commissioner v. Sunnen, 333 U.S. 591

The Georgia law was changed in 1945 by the adoption

of a new Constitution which withdrew all charter tax ex-

emptions: (Art. I, See. III, Par. III):

‘‘All exemptions from taxation heretofore granted

in corporate charters are declared to be henceforth null

and void.’’

8

Under no cireumstances are the Appellant municipalities

and county who have intervened in this action, but who

were neither party nor privy to the former litigation, bound

by a theory of res judicata or of collateral estoppel.

Bank of Kentucky v. Kentucky, 207 U. S. 258

Stone v. Farmers Bank of Kentucky, 174 U. S. 409

Livingston County v. Darlington, 101 U. S. 409

Neither are the prior state court decisions controlling

on the District Court as precedents. Where a question

of the violation of the contract clause of the United States

Constitution is involved, the Federal Court must decide for

itself whether a contract was made, what are its terms

and conditions, and whether the State has, by later legis-

lation, impaired its obligation, even though this involves an

appraisal of the statute and decision law of the State.

Coombs v. Getz, 285 U.S. 434

Indiana ex rel Anderson v. Brand, 303 U.S. 95

The issue that the Georgia Constitution of 1798 pro-

hibited the General Assembly from irrevocably relinquish-

ing the States power of taxation was not made by the

pleadings in State v. Georgia Railroad & Banking Com-

pany, 54 Ga. 423. Neither was the authority of the Gen-

eral Assembly in this respect denied by the defendant in

Georgia Railroad & Banking Company v. Wright, 132 F. 912,

modified and affirmed, 216 U. S. 420. The records in those

cases are a part of the record in this one.

The State Constitution is to be construed in the sense in

which it was understood by the makers of it at the time

when they made it.

Padelford, Fay & Co. v. Savannah, 14 Ga. 438

Houlihan v. Saussy, 206 Ga. 1

While the Georgia Constitution of 1789 was in effect the

legislature by the Yazoo Act of January 7, 1795, sold for a

9

mere pittance thirty-five million acres of Georgia’s west-

ern empire to private land owners. Watkins Digest (of

Georgia laws) 557. It provided that the proprietors of

the western territory could choose when the territory should

be divided into counties and that until it was so divided

the settlers of that territory should not be represented and

the territory was not to be subject to taxation. The aroused

people of Georgia, speaking through the General Assembly

of 1796, passed the Rescinding Act. Prince’s Digest, 1820

(of Georgia laws) 515. Section 5(3) of the Rescinding Act

declared that the Legislature was not vested ‘‘with the

power to transfer the sovereignty of the State * * * which

it has done by opening the door for sale to foreign powers

and a relinquishment of the powers of taxation * * *”’.

Section 6 of the Rescinding Act stated:

«* * * but the relinquishment of the right of taxa-

tion * * * is also repugnant to the whole letter and

spirit of the Constitution, it operating as a dereliction

of jurisdictional rights, and a virtual dismemberment

of the State.”’

As the Rescinding Act had asserted that the Yazoo Act

thus violated Sections 16 and 17 of Article I of the Con-

stitution of 1789, the readoption of these provisions as

Sections XXII and XXIII of Article I of the Constitution

of 1798 stregthened by additional language from the Re-

scinding Act which expressly set forth that the territorial

and jurisdictional rights held by the free citizens of Georgia

in sovereignty were inalienable but by the consent of the

free citizens, was an expression by the framers of the Con-

stitution of 1798, and by the people, that the General As-

sembly could not validly bargain away the texing power

without the consent of the people.

The emphasis given by the District Court to the fact

that the question was not raised in the former proceed-

ings ‘‘participated in by those close to the event’’ pales

10

to insignificance when it is remembered that not antil 1874

(Ga. L. 1874, p. 107) seventy-six years after the adoption

of the 1798 Constitution, did the General Assembly by a

general law, seek to impose an ad valorem tax upon rail-

roads, thus making the issue for State v. Georgia Railroad

€ Banking Co., 54 Ga. 423. Prior thereto taxes had been

imposed by special act, such as by the second clause of

Section 15 of plaintiff’s charter. That was a taxing provi-

sion; not an exempting provision.

Even if Section 15 of the plaintiff’s charter is held to

be a contractual tax limitation within the authority of the

General Assembly, that body also had the authority to with-

draw it because the plaintiff failed to perform the obli-

gations imposed upon it by the amended charter.

Section I of the charter (Ga. L. 1833, pp. 256 et seq.)

requires the plaintiff to construct a Union Railroad and

three branch railroads beginning at the point agreed upon

by the stock-holders as the terminus of the Union Road and

running to Athens, Eatonton and Madison respectively.

The title of the charter resolves any ambiguity which might

exist in Section I as to whether the construction of the three

branches was obligatory or discretionary with the plain-

tiff. It provided:

‘*An Act to incorporate the Georgia Rail Road Com-

pany with powers to construct a Rail or Turnpike

Road from the City of Augusta, with branches extend-

ing to the towns of Eatonton, Madison, in Morgan

County, and Athens, to be carried beyond those places,

at the discretion of said company, * * * *’(Emphasis

added)

There has been no subsequent Act of the General As-

sembly expressly repealing the charter obligations of the

plaintiff to construct the Eatonton branch. No subsequent

Act has been held to repeal that obligation by implication.

No repeal by implication could have been effected without

an irreconcilable conflict between the two Acts,

11

Montgomery v. Board of Education of Richmond

County, 74 Ga. 41

Moore v. State, 150 Ga. 679

The statutes cited by the plaintiff for that purpose (Ga.

L. 1835, p. 180; Ga. L. 1837, p. 212; Ga. L. 1858, p. 66; Ga.

L. 1859 p. 314) are all consistent with a continued obliga-

tion on the plaintiff to construct a branch from Union Point,

the terminus of the Union Railroad, to Eatonton.

By an Act approved October 5, 1868 (Ga. L. 1868, p.

147) the General Assembly granted the plaintiff power to

extend its road from or near the City of Athens to the town

of Clayton and to increase its capital in an amount not to

exceed two million dollars for that purpose. Plaintiff ac-

cepted this amendment to its charter and issued $44,000.00

worth of stock thereunder (transcript of record on former

appeal, p. 139) but has admitted in this record that no

railroad was ever built by it north from Athens, Georgia.

The plaintiff, upon acceptance of its charter, became

solemnly bound to perform the conditions and obligations

set out therein.

Southwestern and Central Railroad Co. v. Collins, 40

Ga., 583, 624

Trustees of Dartmouth College v. Woodward, 4 Wheat,

664, 671, 672

Pennsylvania College cases, 80 U. 8. 553

Home of the Friendless v. Rome, 75 U. 8. 430, 439

Long Island Water Supply v. City of Brooklyn, 166

U. 8. 685

The right to the tax limitation was forfeited by a breach

of the essential conditions upon which it was granted.

Ga. Code of 1933, See. 22-1205

Racon v. Texas, 163 U. S. 207

State v. Morgan, 28 La. 490

12

It is only where the forfeiture is for misuses or honuse

of its franchises that a judgment must be obtained in.

direct proceeding against the corporation.

(ia, Code of 1933, See, 22-1205

Otherwise, the withdrawal of the privilege may be by

legislative authority or any other procedure that is not re

pugnant to established Principles of justice.

Public Service ( ‘Ommission ¥. Havemeyer, 296 U.S. jue

The statement from Thompson ¥, Atlantic Coast Lane R.

Co., 200 Ga. 856, relied on by the District Court, was ex

cathedra, being Wholly unnecessary to the decision and in

flagrant violation of that Court's own practice which makes

it the duty of judges to decline deciding on the constitution.

ality of an Act when it is not necessary to do se.

Armstrong v. Jones, 34 Gia. 09

Smuth v. Georgia Granite ( ‘orporation, 186 Ga. 634

It was also indifferently considered by the Georgia Su.

preme Court in that it assumed a valid contract by the

State within the power of the General Assembly to make

and which had net been breached by the plaintiff: and it

failed to recognize that the people, through Constitutional

mandate, can accomplish the same result which the Gen-

eral Assembly also may have had the power to achieve, but

can accomplish it more effectively by eliminating the possi.

bility of a conflict with the State Constitution.

Even if the tax limitation had not been withdrawn, the

District Court, as a court of equity, should net lend its aid

to the plaintiff seeking relief under a contract which it

has violated.

Cathcart vy. Robinson, 5 Pet. 264

Precisions Instrument Mia. Co. ¥. Automotive Mainte-.

nance Machinery Company, 324 U. S&. 906

The alleged charter tax limitation did not include that

portion of the plaintiff's road from Madison to Atlanta.

The construction of that branch was authorized by the Act

approved December 25, 1837 (Ga. {.. 1837, p. 212) whieh

also provided :

“* © * and for that purpose the said Georgia Rail-

road and Banking Company shal! have all the powers,

privileges, rights and immunities « the construction

of said branch from Madison as aforesaid, to the said

State Rail Road as are contained in the several Acts

heretofore passed, and now of force, constituting the

charter of the Georgia Railroad and Banking Com-

pany, as fully as if the said continuation had been

originally a part of the Georgia Rail Road and said

actx shall ertend to and regulate the construction of

eaid extended road, hereby authorized to. be const ructed,

in the same manner, and to the same extent, and for

the same purposes and uses, as the same have been

used and applied to the Georgia Railroad and its branch

from the City of Augusta to the said town of Madison.’

(Emphasis added).

A Legislature is not to be presumed to have relinquished

its power of taxation beyond the narrowest rational reading

of an exemption.

Atlantic Coast Line ¥. Phillips, 332 U.S. 168.

The charter contained immunities specifically appleable

to the construction of the road, such as the immunity from

suspension of the progress of the work by injunction or

otherwise, contained in Section 15 of the charter of the

Central Railroad & Canal Company (Ga. L. 18, p. 217)

which, by the Act approved 1836 was substituted for See-

tion Il of the Georgia Railroad charter.

Prince's Digest, Laws of Georgia to 1837, p. 306.

The words of limitation contained in the Act of 1837 em-

braced only the privileges, rights and immunities witheut

14

which the branch road could not be constructed but did not

include immunity from taxation—which had no relation to

the construction of the road.

Wilmington & S. R. Co., v. Alsbrook, 146 U. S. 279.

The limitations of the 1837 Act were not plead nor ad-

verted to by the Comptroller General or intervenors in

State v. Georgia Railroad & Banking Co., 54 Ga. 423; Wright

v. Georgia Railroad & Banking Co., 216 U. 8. 420; or Wright

v. L. &N. Railroad, 236 U. 8. 687.

Thed octrine that the taxing power of a State, which is

as much an attribute of sovereignty as the police power

and that of eminent domain, may be made the subject of a

contract by one legislature so as to bind all future legisla-

tures, and thus may be bartered away, should be re-examined

and repudiated.

State v. Georgia Railroad & Banking Company, 54 Ga.

4d

Atlantic & Gulf Railroad Company v. State, 55 Ga.

321.

Goldsmith v. Rome Railroad Company, 62 Ga. 473.

Fletcher v. Peck, 6 Cranch 87.

Green v. Biddle, 8 Wheat 1.

State Bank v. Knoop, 16 How. 369.

Dissent of Justices Miller, Field and Chief Justice Chase

in Washington University v. Rouse, 8 Wall. 439.

See, also, cases collected at 173 A. L. R. 31, Par. 5.

Here, as in all cases involving construction of the im-

pairment of contracts clause of the Constitution, the Fed-

eral question incident to the decision of this case includes

determination of whether or not the charter constitutes a

contract and, as we insist, the construction and interpreta-

tion of such contract as may be found to have been made.

It is therefore a Federal question to determine whether

the exemption of appellee under its charter extends to ex-

15

emption from State taxation only, or whether that con-

tract also grants exemption from County, municipality and

school taxes. In Central Railroad and Banking Company

v. Wright, 164 U. S. 327, this Court held that the charter

exemption was obviously i tended only as a limitation on

State taxation.

Respectfully submitted,

Evoene Cook,

Attorney General;

M. H. Biacksnear, Jr.,

Deputy Assistant Attorney General;

Lamar W. Sizemore,

Assistant Attorney General,

Attorneys for Appellant, Charles D.

Redwine, State Revenue Commissioner

201 State Capitol

Atlanta, Georgia.

James Barrow,

Attorney for Appellant

Mayor and Council of the City of

Athens, Athens, Georgia.

Jos. G. Favst,

Attorney for Appellant,

City of Union Point,

Union Point, Georgia.

| Haroip SHeats,

| County Attorney

Fulton County

SranpisH THOMPSON,

Assistant County

Attorney, Fulton County,

Attorneys for Appellant Fulton County

Hurt Building,

Atlanta, Georgia.

Filed November 21, 1952.

16

APPENDIX

IN THE UNITED STATES DISTRICT COURT, NORTH-

ERN DISTRICT OF GEORGIA, NEWNAN DIVISION

No. 185

Crvit Action

Georora Rattroap & Bankinea Co,

v.

Cuartes D. Repwive, State Revenue Commissioner

Opinion

Before Russet, Circuit Judge, and Hooper and Sion,

District Judges,

By tHe Court:

The present proceeding is another chapter in the his-

tory of the efforts of the Georgia Railroad and Banking

Company to maintain its rights to the partie! exemption

from taxation provided by Section 15 of the Act of 1833

incorporating that railroad. Georgia Laws of 1833, p. 264.

The facts of the present proceeding were outlined in a

former ruling appearing in 85 F. Supp. 749.

Upon such former hearing of this case, it appeared that

the field of dispute had been rather thoroughly explored

and tested in past adjudications, which are there referred

to, and whereby the validity of the exemption had been

established. However, upon consideration of a point not

theretofore urged, it was held that the suit was in effect

one to compel specific performance of a contract by the

State of Georgia and could not be maintained. The ore

from what then appeared to be a new vein of legal truth '

1 Georgia Railroad ¢ Banking Co. v. Redwine, 85 F. Supp. 749.

17

upon assay in the final and controlling laboratory test,

Georgia Railroad & Banking Co. v. Redwine, 342 U. 8. 299,

was found to be worthless. The cause was remanded for

determination upon the merits. The plaintiff, by amend-

ment, has alleged and, by answers to his request for ad-

mission, has established that the expense of counsel fees

and court costs of the former litigation* were paid from

the Georgia State Treasury by warrants drawn by the

Governor, and approved by the Comptroller General. The

plaintiff therefore contends that the prior deerees are res

adjudicata as to the State of Georgia, the present defend-

ant State Revenue Commissioner, and the counties and

municipalities on behalf of which the defendant is threaten-

ing to collect taxes from the plaintiff. Plaintiff has re-

newed its motion for summary judgment, as amended. Ful-

ton County and the municipalities of Athews and Union

Point have moved to be allowed to intervene. A hearing

has been had, and the contentions of the plaintiff and de-

fendant fully presented, as well as argument on behalf

of parties at interest, not parties to the record, The movers

for intervention were also heard, subject to final deter-

mination by the Court of their right to intervene.

The points and counter-points of the parties have been

fully and ably presented by arguments and briefs which

disclose thoughtful consideration of the issues and careful

research and presentation of the authorities bearing upon

the three principal questions presented. These are: first,

whether the judicial pronouncements in earlier litigations,

especially that of the Supreme Court of Georgia in State

of Georgia v. Georgia R. & B. Co., 54 Ga, 428 (1875),

and by the Supreme Court of the United States in Wright

v. Georgia R. & B. Co., 216 U. 8. 420, are res adjudi-

2 Georgia Railroad & Banking Co. v. Wright, 132 Fed. 912; Wright v.

Georgia Railroad & Banking Co., 216 U. 8. 420.

18

cata in the present proceeding; second, whether, if such

decrees be not res adjudicata, they are nevertheless bind-

ing as authority; and, third, whether in any event the pro-

vision of the charter of the plaintiff granting a partial ex-

emption from taxation is unconstitutional and void because

contrary to the provisions of Articles 22, 23 and 24 of the

Constitution of Georgia of 1798, in effect at the time of the

passage of the Act of 1833, supra.

In the view which we have of this case, we find it un-

necessary to pursue to any determinative conclusion the

question of whether the ruling of the Supreme Court of

Georgia in 54 Ga, 423, supra, constitutes res adjudicata

in the technical sense. Likewise, we do not find material

or necessary a precise determination of whether the de-

cision of the Supreme Court of the United States in 216

U. 8. 420, supra, should be given the effect of res adjudicata,

or of estoppel. For, in either event, our judgment is con-

trollingly influenced by the decision in Georgia Railroad

& Banking Co. v. Redwine, supra, that the proceeding is

one which can be maintained as against the State Officer,

and thus conclusively affect the State. ‘Ve must conclude

that, at least as to all questions put in issue in the former

litigation, the decree there entered is binding upon the

present defendant, for it is conceded that he stands as

successor in office to William A. Wright, Comptroller Gen-

eral, the defendant in the original suit, the defense of

which the State assumed, and the expenses of which it paid.

Genter v. Atlantic Coast Line R. Co., 200 U.S. 273; Warren

vy. Suttles, 190 Ga. 311; Coleman v. Pields, 142 Ga. 205.

Even if this conclusion should be unsound, we nevertheless

reach the same result when the question is considered as

ruled and controlled by the decisions in State of Georgia

vy. Georgia R. & B. Co., supra, and Wright v. Georgia R.

é B. Co., supra, along with other decisions, which are per- .

19

suasive authorities. There can be no doubt that the Courts

of Georgia and the Supreme Court of the United States have

uniformly upheld the validity of the exemption in question

as against all attacks, except those presently presented,

to which we will hereinafter refer. This question was pre-

cisely ruled in the two cases to which we have just referred.

In State of Georgia v. Georgia R. & B. Co., 54 Ga. 423, supra,

the headnote is as follows:

‘By the original charter of the Georgia Railroad and

Banking Company it was, in terms, provided that ‘the

stock of said company and its branches, shall be exempt

from taxation for seven years from the completion

of said railroads, or any one of them, and after that,

shall be subject to a tax of not exceeding one-half of

one per cent per annum on the net proceeds of their

investments :’

“Held, that under the settled rules ‘of construetion,

it was competent for the legislature to grant this exemp-

tion, and forming, as it does, a portion of the contract

of incorporation, any repeal of it by the legislature,

without the consent of the corporation, is in violation

of article 1, section 10, paragraph 1 of the constitution

of the United States prohibiting any state from passing

any law impairing the obligation of contracts.”

In Wright v. Georgia R. & B. Co., 216 U.S. 420, supra, in

dealing with the precise charter provisions now under con-

sideration, the headnote states:

‘An act of a state legislature attempting to tax the

whole or any part of the capital or franchise of a cor-

poration, whose charter contains an express limitation

and method of taxation such as in this case, by any

method other than that specified therein, impairs the

obligation of the charter and is unconstitutional under

the contract clause of the Federal Constitution.”

The Supreme Court of Georgia, in Thompson v. Atlantic

Coast Line R. Co., 200 Ga. 856, held that any attempt to re-

20

voke such an exemption by a constitutional provision (Ar-

ticle 1, Section 3, paragraph 3, Constitution of Georgia of

1945) was likewise ‘‘void and of no effect.’’ Other de-

cisions ruling to the same effect are set forth below,*® and

this recitation attempts no complete citation of all cases

considering, or assuming, the validity of such exemption.

We must, therefore, consider the question as definitely

settled and controlled by prior authority. Of course, if

the former decision in this proceeding (216 U. S. 420) does

not preclude re-litigation of the issue we should consider

and pass upon the attacks upon the validity of the exemp-

tion now asserted as defense to the plaintiff’s complaint

to determine if they require a different result and an over-

turning of all the former decisions. We have so considered

them and find them without merit. We find in the pro-

visions of Artifles 22, 23 and 24 of the Constitution of

Georgia of 1798, no prohibition against the granting of

exemption from taxation which was provided by the charter

of the plaintiff. Our conclusion is fortified by the fact that

in none of the former proceedings participated in by those

close to the event, familiar with, and, indeed, living under,

the Georgia Constitution of 1798, did any of the learned and

able lawyers who so vigorously resisted the validity of the

perpetual exemption set forth in the charter of the plain-

tiff, nor the Courts in deciding such cases, consider these

paragraphs of the Constitution to relate to, or forbid, the

grant of exemption from taxation. Indeed, it is conceded

by all parties that similar exemptions were provided in the

charters of some thirty railroads in the early period of

3 Goldsmith v. Georgia R. R. Co., 62 Ga. 485; Wright v. Central of Ga.

Rwy. Co., 236 U. S. 674; Wright v. L. & N. R. R. Co., 236 U. S. 687;

Western & Atlantic R. R. Co. v. State of Georgia, 54 Ga. 428; Central

R. R. & B. Co., v. Georgia, 54 Ga. 401; Central R. R. & B. Co. v. Ga., 92

U. S. 665; Rome R. R. Co. v. Mayor & Council, 14 Ga. 275; City Council

of Augusta v. Ga. R. R. & B. Co., 26 Ga. 651; Ordinary of Bibb Co. v.

Central R. R. & B. Co., 40 Ga. 647.

21

railroad construction. Upon our consideration of the lan-

guage of these paragraphs of the Constitution of 1798 in

the light of contemporary history and especially the then

recent infamous experience of the Yazoo fraud, it is clear

why no reliance was placed upon this ground of attack. It

would have been then, as it is now, without merit.

We have also considered the remaining objections of the

defendant which are contended to nullify the exemption

claimed by the plaintiff, but do not find them to have auch

effect. It is well established that the adoption of the 14th

Amendment to the Constitution of the United States did

not destroy the validity of the exemption. See cases col-

lected in 173 A. L. R. 15, 25. Neither did the failure of the

plaintiff to build braviches additionally authorized by its

charter, one north of Athens towards the Tennessee line,

and the other from Madison to Eatonton, render the ex-

emption unavailable to it as to the other lines actually

built. We think the question of whether that portion of

the railroad from Madison to Atlanta is covered by the ex-

emption is controlled, adversely to the contentions of the

defendant, by the language of the Act authorizing such

construction (Georgia Laws of 1937, p. 212, section 1), and

the decisions in State of Georgia v. Georgia R. & B. Co.,

supra; Wright v. Georgia R. & B. Co., supra, and is also

indicated by the decision in Wright v. L. & N. R. Co., 236

U. S. 687.

While, under the statutory scheme with reference to the

assessment and collection of ad valorem taxes upon rail-

roads, an injunction restraining the State Revenue Com-

missioner from assessing and attempting to collect such

taxes will effectively bar the rights of the counties and

municipalities involved to receive such taxes, since such

an injunction would prevent action at its beginning, we,

nevertheless, see no objection to permitting the County of

22

Fulton and the municipalities of Athens and Union Point

to intervene and assert their claims in this proceeding.

That portion of the intervention of the City of Union Point

which seeks affirmative relief presents a matter beyond the

scope of this litigation, and is hereby stricken and dis-

missed, without prejudice. For reasons already indicated,

the grounds of attack upon the exemption from taxation

asserted are not successfully maintained by these inter-

venors. However, as we did above in dealing with the de-

fendant’s contentions, we may state that even if our con-

clusion that the counties and municipalities affected are

bound by the former adjudications should be erroneous

the same result is required by our finding that the grounds

of attack urged as new matter, and therefore not concluded

by the former litigations, do not authorize a different rul-

ing.

We conclude that the reasoning and binding effect of

former adjudications substantially control our ruling in

the present proceeding and that no cause is here shown

which authorizes the Court to overrule and upset them. It

follows, therefore, that the plaintiff is entitled to the re-

lief sought to secure the rights established by the former

decree of this Court as modified and affirmed by the de-

cision of the Supreme Court of the United States. A

proper decree so providing may be presénted after notice.

This August 11th, 1952.

(S.) Rosert L. Russet,

United States Circuit Judge.

(S.) Frank A. Hooper,

United States District Judge.

(S.) Boyp Stoan,

United States District Judge.

Filed in Clerk’s Office, Aug. 11, 1952.

(5870)

on

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1952

No. 516

CHARLES D. REDWINE, Srare Revenve ComMIssioner,

MAYOR AND COUNCIL OF THE CITY OF ATHENS,

CITY OF UNION POINT, ayn FULTON COUNTY,

Appellants,

vs.

GEORGIA RAILROAD & BANKING COMPANY

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF GEORGIA

MOTION TO AFFIRM

Rosert B. Troutman,

Furman Smita,

Counsel for Appellee.

SpaLpine, Srstey, TrouTMan

& Keey,

Of Counsel.

INDEX

Sussect Inpex

Ta I rs eae en ego hare oe

TasLe or Cases CrTep

Central of Georgia Railway v. Wright, 248 U.S. 525,

SP CL oho. <n ocd daa oka tare eon

Central Railroad & Banking Co. v. Georgia, 92 U.S.

Ne oak ho et cians Ok 4s 6 eteckas eae aaa acl

Central Railroad & Banking Co. v. State, 54 Ga. 401. .

City Council of Augusta v. Augusta-Aiken Ry. & Elec.

IEEE ores GOs ee sb ala shes eekaen ees

City Council of Augusta v. Georgia Railroad ¢ Bank-

ss nas od tre nck ou a oie w aVo a

Coleman v. Fields, 142 Ga. 205....................

Deposit Bank v. Frankfort, 191 U.S.499............

Gardner v. Georgia Railroad Co., 117 Ga. 222.

Georgia v. Georgia Railroad & "Banking Co., 54 Ga.

Oe nh oo os a Ake wns ae cn ee aes ee

Goldsmith v. Augusta & Savannah Railroad Co., 62

Gs ccs pee cema sas wet eetae aba,

Goldsmith v. . Central Railroad Co., 62 Ga. 509.

Goldsmith v. Georgia Railroad Co., 62 Ga. 485...

Gunter v. Atlantic Coast Line, 200 U.S. 273... .

Maddox v. Lithonia Banking Co.,166Ga.616..__

New Orleans v. Citizens Bank, 167 & ae

Ordinary of Bibb County v. Central Railroad & Bank-

ES SEC EE re pee

Rome Railroad Co. v. City of Rome, 14Ga.275

Souffront v. Campagnie des Sucreries, 217 U.S. 475.

Southwestern Railroad v. Wright, 68 Ga. 311, 116

I os Lore Pit awh agre oeeeo wos

Warren v. Suttles, 190 Ga. 311....................

Western & Atlantic Railroad v. State, 54 Ga. 428... .

Wright v. Georgia Railroad é Banking Co., 216 U.S.

|e SERIE SEEN SOS, ARRAN RGM REAP E NUT,

Wright v. Louisville € Nashville Railroad Co., 236

8 Spree ree ery sre ok age

Wright v. Southwestern Railroad, 64 Ga.783........

—d771

on we wo Ww bdo Ww & w ww wo

tow Ww

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1952

No. 516

CHARLES D. REDWINE, Strate Revenve CoMMISSIONER,

Appellant,

vs.

GEORGIA RAILROAD & BANKING COMPANY,

Appellee

MOTION TO AFFIRM PURSUANT TO RULE 12

Pursua‘:t to Rule 12, appellee, Georgia Railroad & Bank-

ing Company, moves the Court to affirm the judgment of

the District Court on the grounds that questions raised by

appellanis are so unsubstantial as not to need further

argument.

The exact issue in this case—that is, the validity and

effect of the contract of exemption—has already been de-

cided by this Court in an action between appellee and the

predecessor in office of appellant Redwine, the defendant

below. Wright v. Georgia Railroad é Banking Co., 216

U.S. 420.

The same issue has also been decided by this Court in an

action between the lessees of appellee and the predecessor

in office of said defendant. Wright v. Louisville € Nash-

ville Railroad, 236 U. S. 687.

2

The same issue has also been decided by the Supreme

Court of Georgia in an action between appellee and the

State of Georgia. State of Georgia v. Georgia Railroad &

Banking Co., 54 Ga. 423.

Said defendant is bound by those decisions as res judi-

cata. In such case, the cause of action—the thing at issue—

is the validity and effect of the contract of exemption and

not the various reasons urged against the contract. There-

fore, a judgment enjoining a tax on the grounds of a con-

tract of exemption is res judicata not only as against the

taxes then assessed but against all future taxes, and not

only as against the arguments made against the contract

of exemption but as against all arguments that could have

been made against the contract of exemption. Gunter v.

Atlantic Coast Line, 200 U. 8. 273; Deposit Bank v. Frank-

fort, 191 U. 8. 499; New Orleans v. Citizens Bank, 167 U. 8.

371.

Seid defendant is bound by the prior judgment of this

Court because he is the successor in office of the official there

enjoined. (Judgment below, par. 4.) Gunter v. Atlantic

Coast Line, 200 U. 8S. 273; New Orleans v. Citizens Bank,

167 U.S. 371; Maddox v. Lithonia Banking Co., 166 Ga. 616;

Warren v. Suttles, 190 Ga. 311, 315.

Moreover, the State of Georgia and all subordinate of-

ficials of the State are bound by the prior judgment because

the State, through its duly authorized officers, to protect its

interest therein, openly assumed the defense of the prior

action. (Judgment below, par. 3.) The State thereby

became bound by the judgment as fully as if it had inter-

vened and become a party. Gunter v. Atlantic Coast Line,

200 U. S. 273; Sowffront v. Campagnie des Sucreries, 217

U. S. 475, 487.

Said defendant is also bound by the prior judgment of the

Supreme Court of Georgia. State of Georgia v. Georgia

3

Railroad ¢ Banking Co., 54 Ga. 423. In that case the State

of Georgia was the party plaintiff. The Courts of Georgia

have held that a judgment in an action to enjoin a tax is

binding on all other and subsequent officials of the State and

in regard to future years where there has been no change

in the facts. Coleman v. Fields, 142 Ga. 205; Warren v.

Suttles, 190 Ga. 311, 315. The statement to the contrary

in Wright v. Georgia Railroad & Banking Co., 216 U.S. 420,

was made before the controlling Georgia decisions, cited

above, were decided.

Even if the prior judgments were not res judicata, no

reason appears why the former decisions of this Court

involving the charter of appellee should be reviewed and

overruled. The mere fact that appellants now bring for-

ward arguments which able counsel for the State in prior

litigation did not consider worth urging, is no reason to

review the prior decisions of this Court. All of such argu-

ments were apparent on the face of the record in the earlier

litigation.

This and similar charter provisions granted by the Legis-

lature of Georgia have been upheld by at least twenty deci-

sions of this Court and of the Supreme Court of Georgia."

1 Rome Railroad Ce. v. City of Rome, 14 Ga. 275; City Council of

Augusta v. Georgia Railroad ¢ Banking Co., 26 Ga. 651; Ordinary of Bibb

County v. Central Railroad & Banking Co., 40 Ga. 646; State of Georgia

v. Georgia Railroad & Banking Co., 54 Ga. 423; Western & Atlantic Rail-

road v. State, 54 Ga. 428; Central Railroad 4 Banking Co. v. State, 54

Ga. 401; Central Railroad & Banking Co. v. Georgia, 92 U. 8S. 665; Gold-

smith v. Rome Railroad Co., 62 Ga. 473; Goldsmith v. Georgia Railroad

Co., 62 Ga. 485; Goldsmith v. Augusta & Savannah Railroad Co., 62 Ga.

468; Goldsmith v. Central Railroad Co., 62 Ga. 509; Wright v. South-

western Railroad, 64 Ga. 783; Southwestern Railroad v. Wright, 68 Ga.

311; Southwestern Railroad v. Wright, 116 U. S. 231; State of Georgia

v. Southwestern Railroad, 70 Ga. 11; Wright v. Georgia Railroad & Bank-

ing Co., 216 U. 8. 420; Wright v. Louisville & Nashville Railroad, 236

U. 8S. 687; Wright v. Central of Georgia Railway, 236 U. 8S. 674; Central

of Georgia Railway v. Wright, 248 U. S. 525, on rehearing 250 U. S. 519;

Gardner v. Georgia Railroad Co., 117 Ga. 222; City Council of Augusta

v. Augusta-Aiken Ry. & Elec. Corp., 150 Ga. 529.

4

Appellants ask that those decisions and the hundreds of

other decisions upholding charter contracts, including the

Dartmouth College case, be reviewed and overruled (As-

signment of Error No. 2). Appellee respectfully suggests

that a case dependent upon overruling the Dartmouth Col-

lege case and the hundreds of cases following is so insub-

stantial as not to need further argument. This is especially

true since the Dartmouth College case has become deeply

imbedded in the law of the land and property rights have

been acquired in reliance thereon. Indeed, this very Rail-

road has been leased for a long term of years and the pres-

ent stockholders of this Railroad acquired their stock in

reliance on the repeated decisions of this Court and of the

Supreme Court of Georgia upholding and enforcing this

very charter provision.

Wuererorr, appellee shows that the questions presented

by the appeal have been settled and questions raised by this

appeal are too insubstantial to need further argument and

the judgment should be affirmed without further argument.

Respectfully submitted,

losert B. Troutman,

Furman Smita,

Counsel for Appellee.

Spatpinea, Srstey, TrourMan

& Kewuey,

434 Trust Company of Georgia Building,

Atlanta, Georgia,

Of Counsel for Appellee.

(5771)