U.S. Supreme Court Treat v. Grand Canyon Ry. Co., 222 U.S. 448 (1912)
Treat v. Grand Canyon Railway Company
Argued December 8, 11, 1911
Decided January 9, 1912
222 U.S. 448
APPEAL FROM THE SUPREME COURT
OF THE TERRITORY OF ARIZONA
Where it is inherently legal and protects private rights, the construction given a local statute by the supreme court of a territory will be followed by this Court unless there is such manifest error as to warrant reversal. In this case, this Court follows the construction, given to a territorial statute of Arizona by the supreme court of that territory, that an exemption from taxation of certain railroad property went with the land, and extended to assigns of the first road.
12 Ariz. 69, 117 affirmed.
The facts are stated in the opinion.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill brought by the railway company, the appellee, to restrain the collection of taxes from which it says that it is exempt. The facts in brief are these: a predecessor of the appellee, the Santa Fe & Grand Canyon Railroad Company, between August, 1899, and October, 1900, built over 56 miles of the road concerned. In July, 1901, this road was sold on foreclosure sale to purchasers
who organized the appellee, and in August conveyed the road to it. The new company finished the road to the edge of the Grand Canyon and laid out stations and hotel grounds at the end. In 1906, the Territorial Board undertook to levy the tax complained of. The supreme court held that the appellee was exempt. 12 Ariz. 69; 12 Ariz. 117.
The railroad company was organized under Act No. 3, February 8, 1897, of the territory, which authorized such corporations to be formed for the purpose of buying the property of railroads sold on foreclosure, and to buy and exercise "all the rights, privileges, franchises, immunities, and powers" of their predecessors. By § 7, such corporations were to have all rights, immunities, etc., then or thereafter given to any railroad organized under the general laws, but by § 8 it was provided that the act should not be construed "to give to any corporation created under it, any exemption from taxation created by any existing or future exemption laws of the territory of Arizona." The question does not stand on this act alone, however, and the cases discussed in Rochester Railway Co. v. Rochester, 205 U. S. 236 , for, by a later statute of March 16, 1899, No. 68, "for the purpose of inducing and encouraging the construction of railroads," it was provided that the "property used or necessary in the construction and operation of railroads," of road thereafter constructed, "whether owned or operated by a person or persons, association or railway corporation, his, their, or its successors or assigns," should be exempt from all manner of taxation for ten years from the date of the act. The supreme court held that this exemption was in rem, so to speak, went with the land, and extended to the assigns of the first road.
No doubt a strong argument can be made and was made for a different view based on the passage before and on the date of the Act of 1897 of statutes like that of 1899.
But the considerations that prevailed also are agent, and so obvious as not to need statement. Moreover, the question is not whether the later statute constituted a contract, Damon v. Hawaii, 194 U. S. 154 , 194 U. S. 160 ; Wisconsin & Michigan Ry. Co. v. Powers, 191 U. S. 379 . The courts of the territory have given to the railroad the rights that it claims, as against the territory authorities seeking to levy the tax. The only question is whether any sufficient reason appears for not following the construction given to a local statute by the territorial court, when that construction is inherently reasonable, is at least the first to strike the mind, and is one that protects private rights. It is enough to answer that, on the principle followed so far as may be by this Court, there is no such manifest error as to warrant us in reversing the decision below. Fox v. Haarstick, 156 U. S. 674 , 156 U. S. 679 ; English v. Arizona, 214 U. S. 359 , 214 U. S. 361 .