Wilmington & Weldon Railroad v. Alsbrook

MERRIMON, C. J., dissenting. The temporary restraining order, with the order to show cause, was made by Brown, J., at Weldon, N.C. and was returnable before Bryan, J., of the Second Judicial District, on 29 December, 1891, at New Bern, N.C. By consent of the parties the motion was heard by Connor, J., of Third Judicial District, as above set forth.

From the complaint, answer, reply, affidavits and exhibits the judge found the following facts:

By an act of the General Assembly of North Carolina, ratified (139) 3 January, 1834, entitled "An act to incorporate the Wilmington and Raleigh Railroad Company," the plaintiff was incorporated and duly organized by complying with the provisions of the said act, 2 Rev. State., 335-347.

That the said corporation, by virtue of said act and amendments made thereto, to wit, an act ratified 15 December, 1835, entitled "An act to amend an act passed in the year 1833, entitled ``An act to incorporate the Wilmington and Raleigh Railroad Company,' " 2 Rev. Stat., 348, duly began, and during 1840 completed a railroad from the town of Wilmington to the town of Weldon on the Roanoke River, connecting with the Petersburg and Norfolk Railroad.

That at the session of 1833 of the General Assembly of North Carolina an act was passed and duly ratified, entitled "An act to incorporate the Halifax and Weldon Railroad Company." 2 Rev. Stat., 325-334.

That pursuant to the provisions of said charter, the said Halifax and Weldon Railroad Company procured its right of way, laid out and constructed the road bed and road from the town of Weldon to the town of Halifax, a distance of about 10 miles and entirely in the county of Halifax. That the said corporation had no rolling stock, but permitted the Portsmouth Railroad Company during the year 1836 to run its cars over the roadbed and track.

That at the session of 1836 of the General Assembly of said State an act was passed and duly ratified, entitled "An act empowering the Halifax and Weldon Railroad Company to subscribe their stock to the Wilmington and Raleigh Railroad Company." 2 Rev. Stat., 334-335.

That pursuant to the provisions of the said act, the said Halifax and Weldon Railroad Company, and the said Wilmington and (140) Raleigh Railroad Company, on 14 February, 1837, entered into an agreement, a copy of which is hereunto attached and marked Exhibit "E."

That the provisions of said agreement were in all respects executed and carried into effect by the said corporations.

That by an oversight, the said agreement was not registered as by the provisions of the fourth section of said act was required. That at the session of 1874 and 1875 of the General Assembly of said State an act was passed and duly ratified, entitled "An act to allow the Wilmington and Weldon Railroad Company to execute the provisions of the fourth section of chapter 42 of the acts of the General Assembly, passed at its session of 1836," etc.

That pursuant to the provisions of the said act, R. R. Bridgers, president of said Wilmington and Raleigh (now Weldon) Railroad Company, executed and caused to be recorded in the office of register of deeds in and for Halifax County, and in the office of the Secretary of State in said State, a paper-writing hereto attached and marked Exhibit "F."

That after the execution of the aforesaid agreement of 14 February, 1837, the said Halifax and Weldon Railroad Company ceased to exercise any corporate acts or maintain any corporate existence or organization, and its roadbed, track and right of way passed to and under the control of the Wilmington and Raleigh Railroad Company, and has ever since been under the said control and management as a part and portion of its main line of road. That at the session of 1867 of the General Assembly of said State an act was passed and duly ratified, entitled "An act to amend an act passed in 1833, entitled ``An act to incorporate the Wilmington and Raleigh Railroad Company.'" The provisions of the said amendatory act were, at a regular annual meeting of the stockholders of the said Wilmington and Weldon Railroad Company, held in the city of Wilmington, N.C. 13 November, 1867, adopted as an amendment to the charter of said company. (141)

That during the year 1882 the plaintiff began and completed a branch road connecting with its main road at a point near the town of Halifax in Halifax County, and running to the town of Scotland Neck in said county. That during the year 1890 the said branch road was extended from the said town of Scotland Neck to the town of Greenville, in Pitt County, and during the year 1891 said branch road was extended to the town of Kinston, in Lenoir County, being in all a distance of 85 miles.

That said branch road runs through the county of Halifax, a distance of 23 1/2 miles. Whether this branch road was constructed pursuant to the provisions of section 21 of the original charter of the plaintiff company, or pursuant to provisions of the amendatory act of 1867, or either of them, does not appear. The plaintiff averring that said branch was built pursuant to the authority vested in it by its said charter in full compliance with the provisions and requirements thereof, the defendant denying this averment, in the absence of any proof by the plaintiff, the court, for the purpose of this hearing, finds as a fact that it is not shown that the said branch was built pursuant to the provision or amendments thereto. The said branch is operated and managed by the officers of the plaintiff company, and known as the Scotland Neck Branch of the Wilmington and Weldon Railroad.

In addition to the said Scotland Neck branch, the plaintiff company owns and operates, in the same manner, the following other branch roads in the State: The Clinton and Warsaw branch, 13 miles in length; the Nashville or Spring Hope branch, 18 miles in length; the Wilson and Fayetteville branch, 73.6 miles in length; the Tarboro branch, 17 miles in length, making a total of 206.6 miles, the main road being 162 miles in length. The said branch roads, except the Tarboro (142) branch, have been built within the past ten years.

The plaintiff company also owns other investments in railroads and other properties, fully set forth in the affidavit of defendant B. I. Alsbrook.

The Railroad Commission for said State, pursuant to the provisions of the Revenue Act, ch. 323, Laws 1891, assessed the portion of the plaintiff's main road and rolling stock from Halifax to Weldon, being the portion thereof acquired from the Halifax and Weldon Railroad as hereinbefore set forth, for taxation at $161,709, and directed the commissioners of Halifax County to place the same upon the tax list of said county for the year 1891.

That said county commissioners, pursuant thereto, levied an ad valorem tax of ........ upon said railroad and rolling stock.

That said Railroad Commissioners, pursuant to the Revenue Act aforesaid, assessed that portion of the Scotland Neck branch lying in the said county for taxation at $147,911.72, and directed the said county commissioners as aforesaid to place the same upon the said tax list for said county for the year 1891 as aforesaid. The said county commissioners, pursuant thereto, levied an ad valorem tax of $..... upon said branch road and rolling stock. All of which will more fully appear by reference to the records attached to plaintiff's reply herein.

That said tax list was duly placed in the hands of the defendant, sheriff of said county, and he has demanded of the plaintiff payment of said taxes; the same being refused, he threatens to collect the same by distraint.

That the commissioners or officers whose duty it then was to make out the tax list and assess for taxation property in Arcadia, Dalmatia, and Rapids townships in Halifax County during 1869, placed upon the said tax list for said townships for said year the roadbed and rolling stock of plaintiff for the distance for which it passes through the (143) said townships in said county and assessed the same for taxation.

That said tax list was placed in the hands of John A. Reid, the then sheriff of said county, for collection. That the portion of the plaintiff's roadbed and rolling stock, assessed for taxation by the Railroad Commissioners as hereinbefore set forth, is part of the said roadbed and rolling stock assessed for the year 1869, the same assessment of 1869 including all of that portion between Halifax and Weldon acquired from the Halifax and Weldon Railroad Company, as hereinbefore set forth.

That at Spring Term, 1870, of the Superior Court of Halifax County, the plaintiff instituted an action against the said John A. Reid, sheriff as aforesaid, for the purpose of enjoining and restraining the collection of said tax assessed against its said property as aforesaid.

That said action was tried and finally determined at the January Term, 1873, of the Supreme Court of said State favorable to said plaintiff, all of which will more fully appear by reference to the transcript and judgment roll in said action entitled The Wilmington and Weldon Railroad v. John A.Reid.

The said record is set up by the plaintiff as an estoppel against the present defendant.

The court was of opinion that so much of the tax set forth in the complaint, or as is assessed against that portion of the plaintiff's roadbed and rolling stock lying and being between the towns of Halifax and Weldon, and called in said assessment the "Halifax and Weldon Railroad," is unconstitutional and void — the said property being exempt from any public charge or tax whatsoever by virtue of the several acts of the General Assembly hereinbefore set forth. It is thereupon adjudged that the defendant be and is hereby enjoined and restrained from proceeding to enforce the payment of said tax until the final hearing of this cause and the further order of the court herein.

That the tax assessed and levied as aforesaid against the (144) plaintiff upon the Scotland Neck branch is valid. That such branch road is not exempt from taxation under the provisions of the charter of said plaintiff company.

That it is thereupon adjudged that the restraining order heretofore made in this cause in respect to the said tax and the collection thereof be and the same is dissolved and vacated.

That the motion for an injunction in respect thereto be and the same is denied.

That the plaintiff and defendant each pay one-half of the cost incurred by this motion and the proceedings thereunder.

From so much of the foregoing judgment as refers to the Halifax and Weldon Railroad and enjoins the collection of the tax thereon, the defendant appealed to the Supreme Court.

From so much of the said judgment as refers to the Scotland Neck branch and refuses the motion for an injunction restraining the collection of taxes thereon, the plaintiff appealed to the Supreme Court. PLAINTIFF'S APPEAL The question presented by this appeal is the right of the State to tax the branch railroad from Halifax to Kinston, which was constructed by the plaintiff corporation in 1882, and in the succeeding years.

In R. R. v. Reid, 13 Wall., 264, it was held that the charter of the plaintiff, which was granted in 1833, exempted all its property from tax-action. The correctness of that decision and its finality, at least in the aspect in which it was then presented to the Court, are not called (145) in question by this litigation. The defendant, for the purposes of this case, concedes that it protects from taxation under State authority all the property of the main line of said road and such property as may be necessary for its successful operation; but it contends that this branch railroad, extending from Halifax to Kinston, 85 miles, is no part of the property necessary for the operation of the plaintiff company; that it was not contemplated by the charter of 1833, nor within the exemption conferred thereby, nor within the purview of the decision of the United States Supreme Court in R. R. v. Reid, supra. The Legislature and the Railroad Commissioners being of that opinion, the latter, under legislative authority, have assessed said branch railroad for taxation. Under proper proceedings the sum assessed on so much of said branch railroad as lies within the county of Halifax has been placed on the tax list for said county. The plaintiff obtained a restraining order against the collection of the tax, which the court below dissolved, and from the latter order the plaintiff appeals to this Court.

The right of taxation is the highest prerogative of sovereignty. Its exercise is necessary to the very life and existence of the State. Its possession marks — regardless of the nominal form of government — the real nature of the government, whether republican, monarchical, or aristocratic. It is the power of the purse to which the power of the sword is a mere sequence. It seems anomalous, therefore, that such a power should be capable of alienation in perpetuity by the Legislature in a free state, and that any portion of it could be irrevocably bargained away for any consideration to a corporation or any one else. More especially in a case like the present, where the contract is claimed to have been made by a Legislature elected for a term of one year, and the alienation of the taxing power is asserted to be perpetual, and that for countless ages, (146) indeed till the final catastrophe of all things, succeeding generations are to guard and protect at their own expense the property of the corporation without receiving from it any of the contributions which all others are called upon to make for the maintenance and support of a civil government. A contract of such a nature, if it were possible between private individuals, would be relieved against in any court of equity. The grant of a perpetual exemption from taxation has indeed been held invalid by courts of the highest respectability. Brewsterv. Hough, 10 N. H., 138; Mott v. R. R., 30 Pa. St., 9; Bank v.Debolt, 1 Ohio St. 591; Knoup v. Bank, ibid., 603; Parker v. Redfield,10 Conn. 490; and there are others. In Mott v. R. R., supra, the learned Chief Justice says that a sale "to one class of citizens of an exemption from all taxes forever, thus throwing all the public burdens upon others for all time to come, is such a plain, palpable, and open violation of the rights and liberties of the people, and such a clear case of transcending the just limits of legislative power, that the Judiciary is bound to pronounce such an act null and void." In Brewster v.Hough, supra, Parker, C. J., holds the same views and points out the material difference between the right of the Legislature to grant land, or corporate powers, or money, and the right to grant away the essential attributes of sovereignty. The latter, he adds, cannot be subject-matter of a contract. To the same effect are the dissenting opinions ofCatron, J., Bank v. Knoup, 16 How., 369, and other judges of the United States Supreme Court, in that and in other cases; and especially the notable dissenting opinions of Chase, C. J., and Miller and Field,JJ., in Washington v. Rouse, 8 Wall., 441. In that case the three judges named (by common consent the ablest men then on that bench) say through the distinguished judge who has so lately passed from among us, full of years and of honors: "We do not believe that any legislative body, sitting under a State Constitution of the usual character, has a right to sell, to give, or to bargain away (147) forever the taxing power of the State. . . . If the Legislature can exempt, in perpetuity, one piece of land, it can exempt all land. It can as well exempt persons as corporations." They go on to say that rich men and rich corporations, with the appliances they are known to use, may obtain perpetual exemption "from taxation and cast the burden of government and the payment of debts on those who are too poor or too honest to buy such immunity"; and they say further, "With as full respect for the authority of former decisions as belongs, from teaching and habit, to judges trained in the common-law system of jurisprudence, we think that there may be questions touching the powers of legislative bodies which can never be finally closed by the decisions of the court, and that the one we have here considered is of this character. We are strengthened in this view of the subject by the fact that a series of dissents from this doctrine by some of our predecessors shows that it has never received the full assent of this Court, and referring to those dissents for more elaborate defense of our views, we content ourselves with thus renewing the protest against a doctrine which we think must be finally abandoned.

This Court, with equal deference to the same authority, is constrained to say, in construing the Constitution of this State in force when the plaintiff's charter was granted, that it did not confer upon the Legislature the power to enact any law which was beyond repeal by its successors, nor as agents of the State was the power confided to them to alienate the sovereign right of taxation irrevocably by bargain or grant. The construction of a State Constitution by its highest court is admitted, by Taney, C. J., in Ohio v. Debolt, 16 How., 431, to be binding on the Federal Judiciary, and he places the decision of that case, which sustains the exemption from taxation, on the ground that the decisions of the Supreme Court of Ohio on that subject had been conflicting, (148) and choice had to be made between them. But there have been no conflicting decisions on this point in this State. It may be noted that the Dartmouth College case merely affirmed that a contract by a charter was binding on the State, but did not hold that alienation of the taxing power was subject to contract. The question, however, is not now necessarily before us. This taxation does not concern the "main line," and the defendant concedes, as he must, that the Supreme Court of the United States has decided that such grants of exemption from taxation, though perpetual, are valid if made for an equivalent, and if the contract of exemption is clear beyond a reasonable doubt. The unanimous view of the Court is significantly expressed by Mr. Justice Field in Delaware Tax case, 18 Wall., 206: "If the point were not already adjudged, it would admit of grave consideration whether the Legislature of a State can surrender this power and make its action in this respect binding upon its successors, any more than it can surrender its police power or its right of eminent domain. But the point being adjudged, the surrender when claimed must be shown by clear, unambiguous language which will admit of no reasonable construction consistent with the reservation of the power. If a doubt arise as to the intent of the Legislature, that doubt must be resolved in favor of the State." The same high court has delivered repeated utterances of the same purport.

"The exercise of the taxing power is vital to the functions of government. Except where specially restrained, the States possesses it to the fullest extent. Prima facie it extends to all property, corporeal and incorporeal, and to every business by which livelihood or profit is sought to be made within their jurisdiction. When exemption is claimed, it must be shown indubitably to exist. At the outset every presumption is against it. A well-founded doubt is fatal to the claim.

It is only when the terms of the concession are too explicit to (149) admit fairly of any other construction that the proposition can be supported." Farrington v. Tennessee, 95 U.S. 779.

"Neither the right of taxation nor any other power of sovereignty which the communities have an interest in preserving undiminished will be held by the Court to be surrendered, unless the intention to surrender is manifested by words too plain to be mistaken." Ins. Co. v. Debolt, 16 How., 416.

Exemptions from taxation are regarded as in derogation of sovereign authority and of common right, and therefore not to be extended beyond the exact and express requirements of the language used, construed strictissimijuris. R. R. v. Thomas, 132 U.S. 185.

In the leading case of Bank v. Billings, 4 Peters, 514, Chief JusticeMarshall says: "That the taxing power is of vital importance, that it is essential to the existence of government, are truths which it cannot be necessary to reaffirm. As the whole community is interested in retaining it undiminished, that community has a right to insist that its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon it does not appear. We must look for the exemption in the language of the instrument, and if we do not find it there, it would be going very far to insert it by construction."

In R. R. v. Dennis, 116 U.S. 668, Mr. Justice Gray says: "The rule has been strictly upheld and constantly reaffirmed in every variety of expression. It has been said that neither the right of taxation nor any other power of sovereignty will be held by this Court to have been surrendered, unless such surrender is expressed in terms too plain to be mistaken; that exemption from taxation should never be assumed, unless the language used is too clear to admit of doubt; that nothing can be taken against the State by presumption or inference; the surrender, when claimed, must be shown by clear, unambiguous language which will admit of no reasonable construction consistent with the reservation of the power; if a doubt arise as to the intent of (150) the Legislature, that doubt must be solved in favor of the State; that a State cannot, by ambiguous language, be deprived of this highest attribute of sovereignty; that any contract of exemption is to be rigidly scrutinized and never permitted to extend, either in scope or duration, beyond what the terms of the concession clearly require; and that such exemptions are regarded as in derogation of common right, and therefore not to be extended beyond the exact and express requirements of the grants, construed strictissimi juris."

In the Delaware Railroad Tax Case, 18 Wall., 206, Mr. Justice Field said: "Before any such exemption or limitation can be admitted, the intent of the Legislature to confer the immunity or prescribe the limitation must be clear beyond a reasonable doubt. All public grants are strictly construed; nothing can be taken against the State by presumption or inference. The established rule of construction in such cases is that rights, privilege, and immunities not expressly granted are reserved. There is no safety to the public interest in any other rule; and with special force does the principle upon which the rule rests apply when the right, privilege, or immunity claimed calls for any abridgment of the powers of sovereignty, or any restraint upon their exercise. The power of taxation is an attribute of sovereignty, and is essential to every independent government. As this Court has said, the whole community is interested in retaining it undiminished, and has a right to insist that its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon it does not appear. Bank v. Billings, 4 Pet., 561."

The plaintiff claims that its exemption is not only unlimited as to duration, but as to subject-matter, and that by its charter it has the right to build anywhere, at any time, branch roads whenever it shall be its pleasure so to do, and that such branch roads, wherever (151) constructed within the limits of this State, shall be forever exempted from payment of State, county, or city, or any other tax, and that such exemption extends to all rolling stock, shops, buildings, and other property which it shall use in connection with such branch railroads, whenever or wherever constructed, or to be hereafter constructed. Its claim is that the grant made by the State in the act of 1833 is unlimited as to time, and only limited as to extent by the area of the State, both as regards exemption from taxation and in the grant of the right of eminent domain. Already the branch roads built and operated are near 250 miles, while the main line as chartered from Wilmington to a "point on Roanoke River" is only 154 miles, and other branch extensions are in progress or in contemplation.

At present over 400 miles of railway and the property used therewith, worth probably ten or twelve millions, are claimed to be exempt, and this is small in comparison with what may come. Indeed, the plaintiff contends that it has the right, should it see fit, to parallel every taxpaying railroad in the State, now or hereafter to be built, with its nontaxable branches. This is far removed from the 100 miles of railway from Wilmington to Raleigh and its modest capital of $800,000 as contemplated in the charter. A claim so vast and comprehensive challenges attention and compels scrutiny.

We do not think that the claim thus put forward is plain "beyond a reasonable doubt," nor upon any fair, reasonable construction of the terms of its charter.

The charter, as originally granted, was for the construction of a railroad from Wilmington to Raleigh, a distance somewhat over 100 miles, with a capital stock of $800,000. An act passed in 1835 authorized a change of terminus to "some point on the Roanoke River," and an increase of the capital stock to $1,500,000, and the road was accordingly built to Halifax, 154 miles, and thence by acquisition (152) of the Halifax and Weldon Railroad it was extended to Weldon, a distance of 162 miles from Wilmington. It also authorized the company, as a part of its business, to own and operate steamboat lines and other vessels to Charleston "or elsewhere," and makes other important changes. This amendatory act contains no exemption from taxation. The question whether the radical change in the location, direction, and length of the proposed railroad was not, in effect, a new charter, and its acceptance a release from the exemption from taxation contained in the "original charter" (as it is termed in the amendatory act), is a question which was not presented in R. R. v. Reid, quoted above, and it is not necessary that we now consider it. Indeed, we think that a different inference might be drawn from it than that in R. R. v. Commissioners, 88 N.C. 519, but the learned judge who wrote that opinion based it on the ground that when R. R.v. Reid, 13 Wall., 264, was decided, "it was not suggested" that this radical alteration did not revoke the exemption. It might seem, perhaps, more just to say that the point, not having been presented, was "res nonjudicata." That case (R. R. v. Reid) was decided in this Court, Pearson, C.J., delivering the opinion, on the ground that the exemption was not broad enough to cover the franchise, and the reversal in the United States Supreme Court was directed to that view of the case alone, this other not having been raised.

It is very certain that, by many adjudications, so radical a change of route would have released subscriptions made to the original company, and it would hardly seem reasonable that the Legislature meant to confer upon the corporation the right to a perpetual exemption from taxation of any number of lines by sea as well as by land, or to sanction an exemption for the large addition to the capital stock and to the length of the road without an express exemption from taxation (153) of such addition. Scovill v. Thayer, 105 U.S. 148; Morawitz, secs. 434, 447, 452. And if there was, in effect (by the act of 1835), a new corporation, the exemption from taxation ceased, since it is not expressly conferred. Morgan v. Louisiana, 93 U.S. 217; R. R. v. Miller,114 U.S. 176.

We do not, however, deem it essential to discuss this further, as the question before us may be determined upon the words of the original charter. In that act (1833) the first twenty sections are taken up with provisions for the main line from Wilmington to Raleigh. The 21st section gives authority to open books of subscription to construct branch roads, such subscription not to exceed $200,000, and to be applied exclusively to the construction of such branch roads.

Sections 22 and 23 are as follows:

"22. Be it further enacted, that all the powers, rights and privileges conferred by the preceding sections upon the said company, in respect to the main road and the land through which it may pass, are hereby declared to extend in every respect to the said company and the president and directors thereof in the laying out, in the construction, and in the use and preservation of said lateral or branch roads.

"23. Be it further enacted, that it shall and may be lawful for the said company to construct a branch to the main road as aforesaid, under the restrictions aforesaid, as soon as the main road has reached the point at which the branch road is intended to be joined with the main road; but they shall not, under any pretense whatever, apply the funds of the company to the construction of a lateral or branch road until the main road is completed, except they be subscriptions specifically made for the branch or lateral road."

The remainder of the charter, in effect, applies to the main line. Sections 21, 22, and 23, which have reference to the branch roads, seemingly having been interpolated, by way of amendment probably, (154) into the charter as originally drafted.

We do not think section 22 extends to the branch roads the exemption from taxation which is conferred upon the main line from Wilmington to Raleigh, which is granted by section 19, for several reasons:

1. The object of the bounty of the Legislature was to secure the building of a railroad from the capital of the State at Raleigh to its principal seaport at Wilmington. To secure that, the exemption conferred by section 19 is, so far as the language goes, clear and unrestricted; but the language in reference to the exemption of the branch roads is not unrestricted. Had it said "the powers, privileges and rights" conferred on the company "in respect to the main road and the lands through which it may pass" were extended to the branch roads, and stopped there, it would still be a question whether more was intended to be granted than the right to the exercise of the privilege of eminent domain; but the meaning is placed beyond doubt by the superadded words, "in the laying out, in the construction, and in the use and preservation of said lateral or branch road." These are words of limitation. They restrict the extension of the privileges of the main line to those specified purposes, and none of them by any construction can embrace and cover an exemption from taxation.

But, indeed, the point is a thrice adjudicated one. In R. R. v.Comrs., 103 U.S. 1, the plaintiff company had conferred on it "all the powers and privileges necessary for its construction and repair," as were conferred by certain sections (named) of the charter of the B. and O. Railroad Company. One of the sections named conferred upon the B. and O. Railroad Company exemption from taxation. The Court holds that this exemption was "undoubtedly a privilege, but not necessary either to the construction, repair, or operation of a railroad," and hence the plaintiff company could not claim exemption from taxation. Where a railroad company was by its charter invested "for the purpose of making and using said road with all the (155) powers, rights and privileges, and subject to all the disabilities and restrictions" of another company which was perpetually exempt from taxation, it was held that a grant of immunity from taxation did not pass.R. R. v. Gaines, 97 U.S. 697. And to the same purport is Morgan v.Louisiana, 93 U.S. 217. So, in the present case, the privileges and rights of the main line are extended to the branch roads "in the laying out, in the construction, and in the use and preservation" of said lateral lines. These words do not embrace exemption from taxation. The provisions in regard to the branch roads are to be found in sections 21, 22, 23, and any references in other portions of the act (which is taken up with provisions as to the road proper) to exemption from taxation apply to the main road, and cannot control the manifest limitation as to the branch roads contained in this section.

2. It may be noted in passing that the branch roads, exceeding now by much the main line in length (being near 250 miles as against 154 in the line from Wilmington to Halifax), far exceed the $200,000 of branch roads contemplated by the act of 1833; and they do not appear to have been constructed, as there provided, by opening books of subscription specially for such branch roads. If this had been done, it is manifest that the 250 miles of branch roads were not constructed by means of the $200,000 subscription authorized for that purpose. Had the State intended to exempt the branch roads, it is apparent, from the limitation in section 21 of the capital stock for the purpose to $200,000, that it was not intended to authorize an unlimited number of miles of branch roads, and the consequent exemption of an unlimited quantity of capital from bearing its due share of maintaining the burdens of civil government.

3. An act passed in 1867 authorized the plaintiff to open books for subscriptions to build branch roads to the amount of $25,000 (156) per mile.

This might be deemed an extension of the right to build branch lines, but this act contains no exemption from taxation of the branch lines or of the additional capital thereby authorized, and they would not be exempted if built thereunder. R. R. v. Wright, 116 U.S. 231; R. R. v.Guffey, 120 U.S. 569. The plaintiff does not contend that its branch lines have been constructed under the authority of that act.

4. The act of 1833, section 33, provides: "If the company shall not have completed the main road from Wilmington to Raleigh in twelve years thereafter, then the company shall forfeit so much of the rights and privileges hereby created as confer upon the said company the power of extending the said road above the point at which it shall be then constructed; but they shall not forfeit their property and privileges in any manner as to so much of the road as they have completed." None of the branch roads were either begun or finished within said twelve years. One of 16 miles in length was built in 1860, and the other since the adoption of the Constitution of 1868, which forbids the grant of exemption from taxation by requiring that taxation shall be uniform and ad valorem. If the branches were an integral part of the main line, their construction was not authorized after the lapse of twelve years. If they do not fall under that limitation, it is questionable whether the right to build them was not lost under the general act by "nonuser" for two years after the completion of the main line. Laws 1836, ch. 10; The Code, 688, 694. The branch roads of the plaintiff are not exempt from taxation, but it is not clear that their construction has been under warrant of law. If it be conceded that the construction of branch roads was authorized after such lapse of time, they could, in contemplation of the charter, be only such as are short feeders to the main line. The branch road from Halifax (157) to Kinston, whose taxation is here immediately in controversy, is 85 miles in length, nearly parallel to the main line and connecting with five other railroads, and is certainly not such a branch; nor is the Wilson branch, some 150 miles in length, about as long as the main line (with 125 miles in this State), and which is to be used hereafter practically as the main line of the plaintiff's traffic. The failure of the State to collect taxes cannot be taken as an abandonment of its right. No such presumption exists against the sovereign. R. R. v. Dennis,116 U.S. 665.

The decision in R. R. v. Reid, supra, is not, as claimed, an estoppel in this case, because it could only be such as to the matter there in controversy, to wit, the taxes levied for that year (1869), the collection of which is enjoined; and, besides, the action is not between the same parties. The decision named has not the force of a precedent, because the scope of that decision did not embrace the branch roads, all of which, except one short line, have been built since, and that one branch was not in the county the tax of which was enjoined. It is also not a precedent even as to the main line, upon any material point which was not then raised or passed upon by the court.

The act of 1833 must be limited by the Constitution of the State then in force, which contained a provision forbidding "monopolies and perpetuities." The construction placed by State courts upon the Constitution and laws of a State are held binding by the Federal courts. Whether this provision has reference solely to the prohibition of restrictions upon alienation, or whether viewed in the light of the history of its adoption and judged by the context, it is meant, as has been suggested, to prohibit the grant by the Legislature of perpetual and exclusive privileges, is a matter which is not now before us, and which cannot be brought before us in this collateral manner. (158) It can be raised only by a direct proceeding by the Attorney-General, if so advised, in the nature of a quo warranto to test the validity of the charter on that ground. We forbear any expression of opinion, as the matter is not before us.

Affirmed.

DEFENDANT'S APPEAL.