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Company. The sole ground upon which the court based its decision and decree dissolving the injunction was that, by the proceedings in the bankruptcy court, and the sale made by its order, Handy, the purchaser, did not acquire the right of way and the privileges and franchises granted to the bankrupt corporation by the city of New Orleans, but that the same, upon the adjudi. cation in bankruptcy, reverted to the city.

The present writ of error taken by the railroad company brings up for review so much of the decree of the state supreme court as dissolved the injunction restraining the sale of the right of way and franchises of the plaintiff.

Robert Mott and E. M. Johnson, for plaintiff in error. C. W. Hornor and W. S. Benedict, for defendant in error.

Woods, J. The defendant denies the jurisdiction of the court upon this appeal. We think the jurisdiction is clear. It is based on section 709 of the Revised Statutes, which provides that “a final judgment or decree in any suit in the highest court of a state in which a decision in the suit could be had * * * where any title, right, privilege or immunity is claimed under the constitution or any

statute of * * the United States, and the decision is against the title, right, privilege, or immunity specially set up or claimed under such constitution

or statute, re-examined and reversed or affirmed in the supreme court of the United States upon a writ of error. The plaintiff, by its petition in this case, filed in the Fifth district court of the parish of Orleans, based its demand to the* relief prayed for, upon its title to the right of way, privileges, and franchises derived under the provisions of the bankrupt law of the United States, by which such right of way, privileges, and franchises were surrendered in bankruptcy, and sold and purchased under the orders and decrees of the bankrupt court. The decision of the supreme court of Louisiana was against the title thus specially claimed. The case, therefore, falls precisely into the class of suits described by the statute in which a writ of error lies to the highest court of a state.

The very question here presented was decided by this court in the recent case of Factors' Ins. Co. v. Murphy, in 111 U. S. 738, S. C. 4 SUP. Cr. REP. 679, where it was held that this court had jurisdiction in error over the judg. ment of the supreme court of Louisiana in a suit between citizens of that state for the foreclosure of a mortgage, in which the only controversy related to the effect to be given a sale of property under an order of the bankruptcy court directing the mortgaged property of the bankrupt to be sold free of incumbrances. The case is in point and decisive of the jurisdiction of this court on the present appeal. We therefore proceed to consider the merits of the case. They are involved in the one question, whether the right of way and franchises granted by the city of New Orleans to the first Canal Street, City Park & Lake Railroad Company passed by the sale thereof made in pursuance of the decree of the bankruptcy court? The jurisdiction of the bankruptcy court to adjudicate a railroad company bankrupt and to administer its property, under the bankrupt act, has been sustained by several circuit courts of the United States. Adams v. Boston, H. & E. R. Co. 1 Holmes, 30; Sweatt v. Boston, H. & E. R. Co.5 N. B. R. 234; Alabama &C.R. Co. v. Jones, 5 N. B. R. 97; Winter v. Iowa, etc., Ry. Co. 2 Dill. 487. No circuit court before which the question has been brought has denied the jurisdiction. As they were the courts of last resort upon this question, and valuable rights may depend upon their judgments upon this point, we think the question should be considered as settled by the authorities cited, and are unwilling at this late day to re-examine it, especially as we have no jurisdiction to do so, except in a collateral proceeding like the present.

The plaintiff contends that the right of way, with the franchise to build and use a railroad thereon for profit, was surrendered by the bankrupt cor

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poration as a part of its property, and was sold to Handy at the bankruptcy sale, and was subsequently acquired by it by means of the claim of title above set forth. It is not contended in this case that Handy acquired the franchise to be a corporation or any other franchise except those just mentioned by virtue of his purchase at the bankruptcy sale. On the other hand, it is contended by the defendant that the right of way and the franchise to build and use a railroad thereon reverted to the city of New Orleans when the railroad company was adjudicated bankrupt, and that all that was surrendered in bankruptcy by the railroad company, and sold at the bankruptcy sale or the mortgage sale, was the railroad without right of way or other franchise.

The contention of the defendant, if sustained, would entirely destroy the value of the property as a railroad; for it is plain that a large part, if not all the line, of the railroad is laid upon the streets and public grounds of the city. If, therefore, the franchise of the right to occupy the streets and public grounds with the railroad track did not pass to the purchaser at the bankruptcy sale, then all that he took by his purchase was a lot of ties and iron rails, which he could be compelled at any time, by the order of the city authorities, to remove. If the law be as contended by the defendant in error, a judicial sale of the railroad and its franchises would be the destruction of both.

The ground upon which this view of the defendant is based is that the franchises of a railroad corporation are inalienable in Louisiana. In passing upon this question it is necessary to bear in mind the distinction between the different classes of railroad franchises. This was stated by Mr. Justice Curtis in the case of Hall v. Sullivan R. Co. 21 Law Rep. 138, where he said: “The franchise to be a corporation is therefore not a subject of sale and transfer unless the law by some positive provision made it so and pointed out the modes in which such sale and transfer may be effected. But the franchise to build, own, and manage a railroad and to take tolls thereon are not necessarily corporate rights. They are capable of existing in and being enjoyed by natural persons, and there is nothing in their nature inconsistent with their being assignable.” The same subject was considered by this court in the case of Morgan v. Louisiana, 93 U. S. 217, where it was held that exemption from taxation was a right personal to the railroad corporation to which it was granted, and did not pass upon a sale of its property and franchises. Mr. Justice FIELD, who delivered the opinion of the court, distinguished such an immunity from taxation from those rights, privileges, and immunities which, accurately speaking, are the franchises of a railroad company, He said: “The franchises of a railroad corporation are rights or privileges which are essential to the operations of the corporation, and without which its works and road would be of little value.

They are positive rights and privileges, without the possession of which the road of the company could not be successfully worked. Immunity from taxation is not one of these. The former may be conveyed to the purchaser of the road as part of the property of the company; the latter is personal and incapable of transfer without express statutory direction.

We are of opinion that those franchises which in the case just cited are described as necessary to the use and enjoyment of the property of a railroad company are assignable in Louisiana, and that there is no warrant in the jurisprudence of that state for holding the contrary. That the quality of being transferable attaches to such franchises of a railroad as are essential to its use and enjoyment by the company is conclusively shown by section 2396 of the Revised Statutes of Louisiana, (act 1856, p. 205,) which was in force when the first Canal Street, City Park & Lake Railroad Company was organized, and has been in force ever since. *That section provides as follows: "In addition to the powers conferred by law upon railroad companies, any railroad company established under the laws of this state may borrow, from time to time, such sum of money as may be required for the construction or repairs of any

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railroad, and for this purpose may issue bonds, or their obligations secured by mortgage, upon the franchises and all the property of said companies.” The authority to mortgage the franchises of a railroad company necessarily implies the power to bring the franchises so mortgaged to sale, and to transfer them with the corporeal property of the company to the purchaser. It could not be held that when a mortgage on a railroad and its franchises was authorized by law, that the attempt of the mortgagor to enforce the mortgage would destroy the main value of the property by the destruction of its franchises. Since the passage of the act of 1856, the supreme court of Louisiana has recognized the validity of the transfer to individuals of those rights and franchises of a railroad company without which the road could not be successfully used.

In the case of Chaffee v. Ludeling, 27 La. Ann. 607, it was declared that the defendants, by their purchase at sheriff's sale of the property of the Vicksburg, Shreveport & Texas Railroad Company, a Louisiana corporation, acquired “the privileges and franchise of the corporation and its powers to operate the railroad. The sheriff's sale made thein the owners of the road, its right of way, its property, its franchise, but did not and could not make them a corporation. * This sale conveyed to them the rights and property of that company; it made them joint owners thereof.” There is, therefore, nothing in the nature of a corporate franchise under the law of Louisiana which forbids its transfer with the other property of the corporation. And such must be the conclusion whenever a railroad company is authorized by law to mortgage its tangible property and franchises. When there has been a judicial sale of railroad property under a mortgage authorized by law, covering its franchises, it is now well settled that the franchises necessary to the use and enjoyment of the railroad passed to the purchasers. This was assumed to be the law by the opinion of this court pronounced by Mr. Justice MATTHEWs in the case of Memphis R. Co. v. Commissioners, 112 U. S. 609, S. C. ante, 299, when it was said: “The franchise of being a corporation need not be implied as necessary to secure to the mortgage bondholders or the purchasers at a foreclosure sale the substantial rights intended to be secured. They acquire the ownership of the railroad and the property incident to it and the franchise of maintaining and operating it as such.” See, also, Hall v. Sulliran R. Co. 21 Law Rep. 138; Galveston R. R. v. Cowdrey, 11 Wall. 459. It follows that if the franchises of a railroad corporation essential to the use of its road, and other tangible property, can by law be mortgaged to secure its debts, the surrender of its property, upon the bankruptcy of the company, carries the franchises, and they may be sold and passed to the purchaser at the bankruptcy sale.

The plaintiff, therefore, by virtue of the bankruptcy sale, and the subsequent mortgage sale and the several mesne conveyances mentioned, acquired with the tangible property of the original Canal Street, City Park & Lake Railroad Company the franchise granted by the city of New Orleans to lay its track over the streets and public grounds designated in the ordinance of August 6, 1873, and the amendatory ordinance of March 24, 1874. This right of way so vested could not be affected by the ordinance of the city of New Orleans to grant a similar right of way over the same streets and route to the second Canal Street, City Park & Lake Railroad Coinpany, and the acceptance of the grant by the latter railroad company; for, as it was not in the power of the city to repeal the grant to the first company by an ordinance passed expressly for that purpose, it could not do so by any indirect or roundabout method.

The defendants are seeking to sell, upon execution, the right-of way which

The sale in this case was made by virtue of a writ of seizure and sale, issued upon a mortgage executed by the railroad company upon its property and franchises to secure its bonds. See Jackson v. Ludeling, 99 U. S. 513.

the city of New Orleans, by its ordinance No. 4,523, dated May 21, 1878, attempted to grant to the second Canal Street, City Park & Lake Railroad Company, and which had already been granted to the first company of that name. In substance and in effect the right of way seized by the sheriff at the instance of Delamore is the right of way owned by and in possession of the plaintiff, and forms a part of its property, giving value, and necessary, to the use and enjoyment of the residue. The property thus seized in execution is claimed by the plaintiff, who is a third person, not a party to the judgment on which the execution is issued. This is the case provided for by articles 395, 396, 397, and 399 of the Code of Practice, and it is under these articles that the present suit is brought and justified. We think the injunction granted by the Fifth district court restraining the sale of the right of way and franchises of the plaintiff should not have been dissolved.

So much of the decree of the supreme court of Louisiana as was appealed from in this case is therefore reversed, and the cause is remanded to that court, with instructions to render a decree enjoining and restraining the de fendants from advertising or selling or offering for sale, upon the execution described in the bill, the right of way and franchises granted by the city of New Orleans to the Canal Street, City Park & Lake Railroad Company by ordinance No. 4,523, administration series, dated May 21, 1878.

(114 U. 8. 611)

STURGES 0. CARTER, Treasurer, etc.

(May 4, 1885.) . TAXATION-LAW OF 0110-INCREASE OF TAXES_SUBPENA TO PARTY-Notice.

A party having been subpænaed to appear before the auditor to give information of all property within his knowledge that had not been returned for taxation, and while in attendance before such auditor, being informed by the latter of his purpose to increase the amount of the property returned by such party for taxation, there was a substantial compliance thereby with the statute of Ohio, which requires the auditor to notify the tax-payer, before making the entry of such increase on

the tax list and duplicate, of his intention to do so. 2. SAME-NOTICE-REQUIREMENT OF STATUTE.

The statute does not require any notice in writing, except the compulsory process

of subpæna, to be served upon the person called to attend and testify. 3. SAME-RETROACTIVE LAWS.

A law is not retroactive in a legal sense that seeks to collect taxes that, but for

concealment by tax-payers, should have been paid in previous years. 4. SAME--WESTERN UNION TELEGRAPH STOCK.

Certificates of stock of the Western Union Telegraph Company held by a party in Ohio are taxable in that state. In Error to the Circuit Court of the United States for the Northern District of Ohio.

This was an action brought by John A. Lee, as treasurer of Richland county, in the state of Ohio, against Stephen B. Sturges to recover taxes levied for the years 1874, 1875, 1876, and 1877, upon shares of stock of the value of $100,000 in*the Western Union Telegraph Company, and certain credits and investments owned by Sturges, who, during those years, was a citizen of Ohio, residing in the city of Mansfield, in said county. The amount of the taxes sued for was $10,776.83, with the penalty thereon of 10 per cent., amounting to $1,077.68, making a total of $11,854.50. The controversy in this case relates only to the taxes on the stock of the telegraph company. Before the trial the term of office of Lee, the original plaintiff, expired, and Merchant Carter, his successor in office, was substituted as plaintiff in his stead. The parties waived a trial by jury, and submitted the case to the court upon the issues of fact as well as of law. The court made a special finding of facts, from which it appeared as follows:

For 10 years before the commencement of this suit the defendant was a cit

izen of said county; for the years 1874, 1875, 1876, and 1877 he made returns in accordance with law, purporting to contain full and accurate lists of all his personal property subject to taxation; the returns were received and acted upon as being correct until the twenty-third of June, 1878, when the county auditor caused defendant to be subpænaed to appear instanter before him at his office, to give information, pursuant to the statute in that case provided, of all property within his knowledge which had not been duly returned for taxation. The defendant accordingly appeared and submitted to an examination. While undergoing examination the auditor exhibited to him a list of judgments and mortgages in his favor not included in his tax returns, and then and there told him that, under the advice of the auditor of state, he felt it to be his duty to make a supplemental assessment against him for the four year's named, of all the property which he owned during that period, which was subject to taxation in said county, and not included in his returns; called defendant's attention to the statute under which he proposed to proceed; and requested such explanation as he might deem it proper to make. Defendant thereupon made such explanations as he chose to offer. This was the only notice given by the auditor to the defendant of his intention to assess him on all personal property owned by him during said period, and not included in his tax returns. The auditor then proceeded to assess the defendant on $100,000 of stuck in the Western Union Telegraph Company for each of the years 1874, 1875, 1876, and 1877, and entered the same on a supplemental tax duplicate, and certified the same to the county treasurer for collection.

The defendant owned the telegraph stock so assessed during the four years aforesaid, and the same had not been included in his returns for taxation, nor had he been theretofore charged with or paid any tax on the same. The Western Union Telegraph Company was organized under the laws of New York; it had a paid-up capital of $t1,000,000; most of its property was situated outside of Ohio; it owns 4,950 miles of telegraph wires, with the chemicals and office furniture used in connection therewith, in Ohio, all which for 10 years past it had regularly returned for taxation, and paid thereon from $10,000 to $15,000 per annum of tax to the state of Ohio.

From the findings of fact the court decluced the following, among other conclusions of law: “The auditors said supplemental assessment was authorized, and is regular and valid, and under the statutes of Ohio, as construed by the courts of the state, the defendant is liable in this action for the amounts assessed on his Western Union Telegraph stock, and judgment will therefore be rendered against him for the tax so assessed thereon, with the damages prescribed by statute, and interest and costs." The court thereupon rendered judgment against Sturges for $10,727.65, “the sum so as aforesaid found to be due,” and thereupon Sturges sued out the present writ of error to reverse that judgment.

C. H. Scribner, H. G. Riddle, H. E. Davis, and Jas. E. Padgett, for plaintiff in error. John W. Jenner, for defendant in error.

Woods, J. The first contention of the plaintiff in error is that the court erred in holding that the notice give to him by the auditor of Richland county Wils sufficient, under the statutes of Ohio, to authorize the assessment of additional taxes, and in admitting evidence of what was said by. the auditor to the plaintiff in error when the latter was under examination.

*Section 2782 of the Revised Statutes of Ohio, originally section 34 of the act of April 5, 1859, (Swan & C. St. p. 1452,) provides, in substance that if the county auditor shall have reason to believe that any person has given to the assessor a false statement of his personal property, moneys or credits, investinents in bonds, stocks, joint-stock companies, or otherwise, which are by law subject to taxation, or that the assessor has made an erroneous return of any such property, he shall proceed, at any time before the final settlement with the county treasurer, to charge such person on the duplicate

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