Wilmington Company v. Alsbrook
Statement by Mr. Chief Justice FULLER: This was an action brought in the superior court of Halifax county, N. C., by the Wilmington & Weldon Railroad Company, to restrain the sheriff of that county from collecting certain taxes assessed on so much of a branch road of the plaintiff known as the 'Scotland Neck Branch' as lay therein, and on that part of the plaintiff's road which formerly constituted the Halifax & Weldon Railroad, and the rolling stock used with said roads. The plaintiff was incorporated under an act of the general assembly of North Carolina, approved January 3, 1834, entitled 'An act to incorporate the Wilmington and Raleigh Railroad Company.' 2 Rev. St. N. C. 1837, pp. 335, 347. By the first section of this act commissioners were designated 'for the purpose of receiving subscriptions to an amount not exceeding eight hundred thousand dollars, in shares of one hundred dollars each, to constitute a joint capital stock, for the purpose of effecting a communication by a railroad, from some point within the town of Wilmington, or in the immediate neighborhood of the said town, to the city of Raleigh, or in the immediate neighborhood of the said city, the route of which road shall be determined on by the company hereby incorporated.' The first 20 sections of the act relate to the main line thus described.

The nineteenth section is as follows:

'That it shall and may be lawful for the said president and directors to determine from time to time what installments shall be paid on the stock subscribed; to purchase with the funds of the company, and place on the said railroad constructed by them, all machines, wagons, vehicles, carriages, and teams of any description whatsoever, which may be deemed necessary and proper for the purposes of transportation; and all the property purchased by the said president and directors, and that which may be given to the company, and the works constructed under the authority of this act, and all profits accruing on the said works, and the said property shall be vested in the respective shareholders of the company, and their successors and assigns forever, in proportion to their respective shares; and the shares shall be deemed personal property, and the property of said company; and the shares therein shall be exempt from any public charge or tax whatsoever.'

The 21st, 22d, 23d, and 25th sections read thus:

'Sec. 21. That the stockholders, in general meeting, may, if they think fit, resolve to construct a branch or branches to the main road, to be connected with the main road at such point or points as they may determine on, and to lead in such direction, and to such a point or points, as they may think best; and, in order that they may do so, the said stockholders are fully authorized to cause books to be opened for subscriptions to the said lateral road or branch of the main road; and the subscribers for stock shall be subject to all the rules previously made by the company, and become members of the company, with this exception only, viz., that the stock subscribed by them shall be faithfully and honestly applied to the construction of that branch of the road for which they subscribed it; but the subscribers for the main road and the branches shall constitute but one company, and their rights of property and estate shall be in common, and not separate: provided, however, that the whole capital of subscribed stock shall not exceed one million of dollars.

'Sec. 22. That all the powers, rights, and privileges conferred by the preceding sections upon the said company, in respect to the main road, and the lands 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.

'Sec. 23. 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, so 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.' 'Sec. 25. That, where a branch or lateral road to the main road is shorter than twenty miles, no other person or company shall be authorized and empowered to build a railroad from any point near its termination, so as to intersect with this main road, in order to injure this company.'

Section 24 refers to the right to connect or intersect with 'said railroad or any of its branches,' and these 5 sections, out of 38 in all, relate to branch roads.

On December 15, 1835, an act of the general assembly was approved, entitled 'An act to amend an act passed in the year one thousand eight hundred and thirty-three, entitled 'An act to incorporate the Wilmington and Raleigh Railroad Company." 2 Rev. St. N. C. pp. 347, 348. This act authorized the capital stock of the company to be increased to any sum not exceeding $1,500,000, and provided 'that the stockholders of said company shall and may be at liberty to run the main road from some point within or near the town of Wilmington to some point in the city of Raleigh, or in the immediate neighborhood thereof, or from Wilmington, or near it, as aforesaid, to some point at or near the River Roanoke, in this state, at the election of said stockholders, with the view of connecting with the Petersburg and Norfolk railroads;' 'that the said company may be at liberty to lay off and construct any lateral road, under the rules and regulations provided in the aforesaid act, before or after they have completed the main railroad aforesaid;' 'that it shall and may be lawful for the said company to purchase, own, and possess steamboats, and other vessels, to ply and sail from the port of Wilmington to Charleston or elsewhere, and to take and receive for the use of said company, over and besides the profits allowed in the said original act, such sums of money or other property for freight, passengers, or other accommodation on said boats and vessels as they may be able to make by contracts with their customers, and according to such rates as they may from time to time establish;' and enlarged the time for commencing the road to three years from January 1, 1836.

At the session of 1833 of the general assembly an act was passed entitled 'An act to incorporate the Halifax and Weldon Railroad Company.' 2 Rev. St. N. C. pp. 325, 334. This act contained no exemption from taxation, and was subject to be altered, amended, or modified by future legislatures. Under its provisions, the Halifax & Weldon Railroad Company procured its right of way, and laid out and constructed the roadbed and road from Weldon to Halifax, a distance of some eight miles, and entirely in the county of Halifax. The corporation had no rolling stock, but permitted the Portsmouth Railroad Company, during the year 1836, to run its cars over its roadbed and track. In 1836 an act was passed entitled 'An act empowering the Halifax & Weldon Railroad Company to subscribe their stock to the Wilmington & Raleigh Railroad Company.' 2 Rev. St. N. C. pp. 334, 335. Pursuant to the provisions of this act, the Halifax & Weldon Railroad Company and the Wilmington & Raleigh Railroad Company entered into an agreement, February 14, 1837, which agreement was in all respects executed and carried into effect by those corporations. The act authorized the stockholders of the Halifax Company to subscribe its stock on the books of the Wilmington Company, and sections 2 and 3 were as follows:

'Sec. 2. Upon the subscription of the stock held by the stockholders in the Halifax and Weldon Railroad Company in the books of the Wilmington and Raleigh Railroad Company, all the property, real and personal, owned and held by the Halifax and Weldon Railroad Company shall vest in and be owned and possessed by the Wilmington and Raleigh Railroad Company aforesaid, and be owned and held and possessed by the said company in the same manner that all the other property, real and personal, which has been acquired by the said company is owned, held, and possessed; and the road which may have been built, or partly built, by the Halifax and Weldon Railroad Company, shall thenceforward be deemed, to all intents, as well criminal as civil, a part of the Wilmington and Raleigh road.

'Sec. 3. So soon as the subscription hereby authorized shall have been made, all the rights and privileges acquired under the before recited act of assembly, passed in the year one thousand eight hundred and thirty-three, entitled 'An act to incorporate the Halifax and Weldon Railroad Company,' shall cease, and the corporate existence of said company be determined.'

The terms of the agreement between the two companies were that the Wilmington Company should receive the assets of the Halifax Company, and pay its debts, and the stockholders in the Halifax Company should be entitled to their respective number of shares of stock in the Wilmington Company.

The complaint alleged that 'in the year 1840 the plaintiff completed the construction of its main road from the town of Wilmington, through the town of Halifax, to the town of Weldon, on the Roanoke river, in said state, and thereby connected its main line with the Portsmouth & Norfolk Railroad, and has had the same in use or operation ever since.' The defendant denied the averment as made, and said that the part of the road between Halifax and Weldon was built by the Halifax Company, under its charter, and acquired by the plaintiff in 1837, in pursuance of the act of 1836. The plaintiff, in reply, averred that the Halifax road was only partially completed, and that the Halifax Company owned no rolling stock or other property of any description except its roadbed and right of way, and referred to the agreement of February, 1837. Plaintiff also, for further reply, set up the proceedings and judgment in an action commenced by plaintiff in 1869 in the superior court of Halifax county against the sheriff of that county, to enjoin the sale of property for taxes, partly assessed, as alleged, upon a portion of the roadbed and right of way acquired from the Halifax Company, and pleaded the same as an estoppel. It appeared that the agreement between the two companies above referred to was not registered, as required by the act of 1836, but that this was subsequently done under an act approved February 5, 1875. It further appeared that after the execution of the agreement of February 14, 1837, the Halifax Company ceased to exercise any corporate acts, or maintain any corporate existence or organization, and its roadbed, track, and right of way passed under the control of the Wilmington Company, and has ever since been under its control, as a part of its main line of road. Another act amending the charter was approved January 24, 1851, which authorized the capital stock to be increased to $2,500,000, and the issue of scrip to the extent of the increase. By the third section it was provided 'that said scrip shall represent shares in the capital stock of said company as though the said shares had been originally subscribed for by the holders thereof; and the said holders of the scrip thus issued under the provisions of this act shall be members of the said corporation, with the same privileges, rights, and immunities, and subject to the same rules and regulations, as the original stockholders of said company.' By an act approved February 15, 1855, the name of the Wilmington & Raleigh Railroad Company was changed to the name of the Wilmington & Weldon Railroad Company. At the session of 1867 of the general assembly an act was passed amending the act incorporating the Wilmington Company, which was duly accepted by its stockholders, November 13, 1867. This act provided for the opening of books for subscriptions, to any amount deemed necessary, but not to exceed $25,000 per mile, for the construction of any branch to the main line, which stock was to be separate and independent of the stock of the main road, and to be applied exclusively to the branch road for which it was subscribed.

The case came on in the superior court before Connor, J., who, from the pleadings, affidavits, and exhibits, made and filed findings, in substance as heretofore stated, and further therein found 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 that county, which branch was extended to the town of Greenville, in Pitt county, during 1890, and in 1891 to the town of Kinston, in Lenoir county; being in all a distance of 85 miles; that the branch road ran through the county of Halifax for 23 1/2 miles. That it was not shown that the said branch was built pursuant to the provisions of the original charter or amendments thereto. That the branch road was operated and managed by the officers of the plaintiff company, and known as the 'Scotland Neck Branch of the Wilmington & Weldon Railroad.' That, in addition to the said Scotland Neck branch, the plaintiff company owned and operated in the same manner the following other branch roads in the state: The Clinton & Warsaw branch, 13 miles in length; the Nashville or Spring Hope branch, 18 miles in lenth; the Wilson & 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. That the said branch roads, except the Tarboro branch, had been built within the past 10 years; and that the plaintiff company also owned other investments in railroads and other properties.

A transcript of the proceedings and judgment roll in the case of Wilmington & Weldon Railroad Company v. John H. Reid was attached to the findings.

The railroad commission of North Carolina, pursuant to the provisions of the revenue act of 1891 of that state, (Acts 1891, c. 323,) assessed for taxation the portion of plaintiff's main road and rolling stock from Halifax to Weldon, being the portion acquired from the Halifax Company, and also that part of the Scotland Neck branch in Halifax county, and directed the commissioners of Halifax county to place the same upon the tax list of the county for the year 1891, which was done by the county commissioners, and taxes were levied by them thereon accordingly. The tax list was duly placed in the hands of the defendant, the sheriff of the county, and he demanded payment of the taxes, which being refused, he threatened to collect the same by distraint.

The superior court was of opinion that the tax upon the roadbed and rolling stock between Halifax and Weldon was void, and enjoined the defendant from enforcing its payment; but that the tax levied upon the Scotland Neck branch was valid, and vacated the preliminary restraining order against its collection. Both parties appealed to the supreme court, which held that the superior court had decided correctly as to the branch line, but should have also decided the roadbed and rolling stock between Halifax and Weldon to be taxable, and therefore, in that respect, reversed the judgment of that court. Final judgment having been afterwards entered in the superior court in accordance with the opinion and judgment of the supreme court, the case was again taken by plaintiff to the supreme court, and the judgment affirmed, whereupon this writ of error was sued out. The opinions of the supreme court, by Clark, J., which discuss the questions involved in all their aspects, will be found reported in 110 N. C. 137, 14 S. E. Rep. 652.

S. F. Phillips, Thos. N. Hill, F. D. McKenney, and Wm. H. Day, for plaintiff in error.

[Argument of Counsel from pages 287-292 intentionally omitted]

R. O. Burton and Theo. F. Davidson, for defendant in error.

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court. 

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