Santa Clara County v. Southern Pacific Railroad Co.

Last updated

Santa Clara County v. Southern Pacific Railroad
Seal of the United States Supreme Court.svg
Supreme Court of the United States
Argued January 26–29, 1886
Decided May 10, 1886
Full case nameSanta Clara County v. Southern Pacific Railroad Company
Citations118 U.S. 394 ( more )
6 S. Ct. 1132; 30 L. Ed. 118; 1886 U.S. LEXIS 1942
Case history
PriorError to the Circuit Court of the United States for the District of California
Holding
The railroad corporations are "persons" within the intended meaning of the Fourteenth Amendment to the U.S. Constitution (per headnote only).
Court membership
Chief Justice
Morrison Waite
Associate Justices
Samuel F. Miller  · Stephen J. Field
Joseph P. Bradley  · John M. Harlan
William B. Woods  · Stanley Matthews
Horace Gray  · Samuel Blatchford
Case opinion
MajorityHarlan, joined unanimously
Laws applied
14 Stat. 292, §§ 1, 2, 3, 11, 18 (an Act of 1866 giving special privileges to the Atlantic and Pacific Railway Corporation)

Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886), is a corporate law case of the United States Supreme Court concerning taxation of railroad properties. The case is most notable for a headnote stating that the Equal Protection Clause of the Fourteenth Amendment grants constitutional protections to corporations.

Contents

The case arose when several railroads refused to follow a California state law that gave less favorable tax treatment to some assets owned by corporations as compared to assets owned by individuals. The Court's opinions in earlier cases such as Dartmouth College v. Woodward had recognized that corporations were entitled to some of the protections of the Constitution. Associate Justice John Marshall Harlan's majority opinion held for the railroads, but his opinion did not address the Equal Protection Clause. However, a headnote written by the Reporter of Decisions and approved by Chief Justice Morrison Waite stated that the Supreme Court justices unanimously believed that the Equal Protection Clause did grant constitutional protections to corporations. The headnote marked the first occasion on which the Supreme Court indicated that the Equal Protection Clause granted constitutional protections to corporations as well as to natural persons.

Facts

At the California Constitutional Convention of 1878–79, the state legislature drew up a new constitution that denied railroads "the right to deduct the amount of their debts [i.e., mortgages] from the taxable value of their property, a right which was given to individuals." [1] Southern Pacific Railroad Company refused to pay taxes under these new changes. The taxpaying railroads challenged this law, based on a conflicting federal statute of 1866 which gave them privileges inconsistent with state taxation (14 Stat. 292, §§ 1, 2, 3, 11, 18).

San Mateo County, along with neighboring counties, filed suit against the railroads to recoup the massive losses in tax revenue stemming from Southern Pacific's refusal to pay. After hearing arguments in San Mateo County v. Southern Pacific Railroad Company, the California Supreme Court sided with the county.

The Supreme Court of the United States issued an opinion consolidating three separate cases: Santa Clara County v. Southern Pacific Railroad Company, California v. Central Pacific Railroad Company, and California v. Southern Pacific Railroad Company.

Headnote

Bancroft Davis, the Reporter of Decisions and former president of Newburgh and New York Railway Bancroft Davis.png
Bancroft Davis, the Reporter of Decisions and former president of Newburgh and New York Railway

The headnote, which is "not the work of the Court, but is simply the work of the Reporter, giving his understanding of the decision, prepared for the convenience of the profession", [2] was written by the Reporter of Decisions, former president of the Newburgh and New York Railway Company J.C. Bancroft Davis. He said the following:

One of the points made and discussed at length in the brief of counsel for defendants in error was that 'corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.' Before argument, Mr. Chief Justice Waite said: The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does. [3]

So the headnote was a reporting by the Reporter of Decisions of the Chief Justice's interpretation of the Justices' opinions. But the issue of applicability of "Equal Protection to any persons" to the railroads was not addressed in the decision of the Court in the case.

Before publication in United States Reports, Davis wrote a letter to Chief Justice Morrison Waite, dated May 26, 1886, to make sure his headnote was correct:

Dear Chief Justice,

I have a memorandum in the California Cases Santa Clara County v. Southern Pacific &c As follows. In opening the Court stated that it did not wish to hear argument on the question whether the Fourteenth Amendment applies to such corporations as are parties in these suits. All the Judges were of the opinion that it does. [4]

Waite replied:

I think your mem. in the California Railroad Tax cases expresses with sufficient accuracy what was said before the argument began. I leave it with you to determine whether anything need be said about it in the report inasmuch as we avoided meeting the constitutional question in the decision. [4]

C. Peter Magrath, who discovered the exchange while researching Morrison R. Waite: The Triumph of Character, writes "In other words, to the Reporter fell the decision which enshrined the declaration in the United States Reports...had Davis left it out, Santa Clara County v. Southern Pac. R. Co. would have been lost to history among thousands of uninteresting tax cases." [5] At the same time, the correspondence makes clear that the headnote does reflect the Court's thinking, at least before hearing any arguments to the contrary.

Author Jack Beatty wrote about the lingering questions as to how the reporter's note reflected a quotation that was absent from the opinion itself.

Why did the chief justice issue his dictum? Why did he leave it up to Davis to include it in the headnotes? After Waite told him that the Court 'avoided' the issue of corporate personhood, why did Davis include it? Why, indeed, did he begin his headnote with it? The opinion made plain that the Court did not decide the corporate personality issue and the subsidiary equal protection issue. [6]

Defense argument

While the decision of the Court did not rest on the Fourteenth Amendment, an argument on this ground had been delivered by the defense:

That the provisions of the Constitution and laws of California in respect to the assessment for taxation of the property of railway corporations operating railroads in more than one county, are in violation of the Fourteenth Amendment of the Constitution insofar as they require the assessment of their property at its full money value without making deduction, as in the case of railroads operated in one county and of other corporations and of natural persons, for the value of the mortgages covering the property assessed, thus imposing upon the defendant unequal burdens, and to that extent denying to it the equal protection of the laws.

Judgment

A unanimous decision, written by Justice Harlan, ruled on the matter of fences, holding that the state of California illegally included the fences running beside the tracks in its assessment of the total value of the railroad's property. As a result, the county could not collect taxes from Southern Pacific that it was not allowed to collect in the first place. [7] This meant that the more significant question of the Equal Protection Clause was never actually addressed.

The special grounds of defense by each of the defendants were:

  1. That its road is a part of a continuous postal and military route, constructed and maintained under the authority of the United States by means in part obtained from the general government; that the company having, with the consent of the state, become subject to the requirements, conditions, and provisions of the acts of Congress, it thereby ceased to be merely a state corporation and became one of the agencies or instrumentalities employed by the general government to execute its constitutional powers, and that the franchise to operate a postal and military route, for the transportation of troops, munitions of war, public stores, and the mails, being derived from the United States, cannot without their consent be subjected to state taxation.
  2. That the provisions of the Constitution and laws of California in respect to the assessment for taxation of the property of railway corporations operating railroads in more than one county, are in violation of the Fourteenth Amendment of the Constitution insofar as they require the assessment of their property at its full money value without making deduction, as in the case of railroads operated in one county and of other corporations and of natural persons, for the value of the mortgages covering the property assessed, thus imposing upon the defendant unequal burdens, and to that extent denying to it the equal protection of the laws.
  3. That what is known as § 3664 of the Political Code of California, under the authority of which, in part, the assessment was made, was not constitutionally enacted by the legislature, and had not the force of law.
  4. That no void assessment appears in fact to have been made by the state board.
  5. That no interest is recoverable in this action until after judgment.
  6. That the assessment upon which the action is based is void because it included property which the State Board of Equalization had no jurisdiction under any circumstances to assess, and that as such illegal part was so blended with the balance that it cannot be separated, the entire assessment must be treated as a nullity.

The record contains elaborate opinions stating the grounds upon which judgments were ordered for the defendants. Mr. Justice Field overruled the first of the special defenses above named, but sustained the second. The circuit judge in addition held that § 3664 of the Political Code had not been passed in the mode required by the state constitution, and consequently was no part of the law of California. These opinions are reported as the Santa Clara Railroad Tax Case, 18 F. 385.

The propositions embodied in the conclusions reached in the circuit court were discussed with marked ability by counsel who appeared in this Court for the respective parties. Their importance cannot well be over-estimated, for they not only involve a construction of the recent amendments to the national Constitution in their application to the constitution and the legislation of a state, but upon their determination, if it were necessary to consider them, would depend the system of taxation devised by that state for raising revenue from certain corporations for the support of her government. These questions belong to a class which this Court should not decide unless their determination is essential to the disposal of the case in which they arise. Whether the present cases require a decision of them depends upon the soundness of another proposition upon which the court below, in view of its conclusions upon other issues, did not deem it necessary to pass. We allude to the claim of the defendant in each case that the entire assessment is a nullity upon the ground that the State Board of Equalization included therein property which it was without jurisdiction to assess for taxation.

The argument in behalf of the defendant is that the state board knowingly and designedly included in its assessment of "the franchise, roadway, roadbed, rails, and rolling stock" of each company, the value of the fences erected upon the line between its roadway and the land of coterminous proprietors; that the fences did not constitute a part of such roadway, and therefore could only be assessed for taxation by the proper officer of the several counties in which they were situated, and that an entire assessment which includes property not assessable by the state board against the party assessed, is void, and therefore insufficient to support an action, at least when -- and such is claimed to be the case here -- it does not appear with reasonable certainty from the face of the assessment or otherwise what part of the aggregate valuation represents the property so illegally included therein.

If these positions are tenable, there will be no occasion to consider the grave questions of constitutional law upon which the case was determined below, for in that event the judgment can be affirmed upon the ground that the assessment cannot properly be the basis of a judgment against the defendant.

Significance

Thus the Supreme Court's actual decision never hinged on the equal protection claims. Nevertheless, the case has been allowed to have clear constitutional consequences, as it has been subsequently cited as affirming the protection of corporations under the Fourteenth Amendment. At the very least, this is an unusual exception to the normal understanding of the workings of the Court's rule of stare decisis – the reliance on precedent. It is an instance in which a statement which is neither part of the ruling of the Court, nor part of the opinion of a majority or dissenting minority of the Court has been cited as precedent in subsequent decisions of the Court.

In his dissent in the 1938 case of Connecticut General Life Insurance Company v. Johnson , Justice Hugo Black wrote

in 1886, this Court in the case of Santa Clara County v. Southern Pacific Railroad, decided for the first time that the word 'person' in the amendment did in some instances include corporations. [...] The history of the amendment proves that the people were told that its purpose was to protect weak and helpless human beings and were not told that it was intended to remove corporations in any fashion from the control of state governments. [...] The language of the amendment itself does not support the theory that it was passed for the benefit of corporations. [8]

Justice William O. Douglas wrote in 1949,

the Santa Clara case becomes one of the most momentous of all our decisions. [...] Corporations were now armed with constitutional prerogatives. [9]

See also

Notes

  1. ↑ Swisher, Carl Brent (1969), "Motivation and Political Technique", The California Constitutional Convention 1878–1879, New York: Da Capo, p. 78.
  2. ↑ United States v. Detroit Timber & Lumber Co. , 200 U.S. 321, 322 (1906), (Syllabus).
  3. ↑ According to the official court Syllabus in the United States Reports, Santa Clara County v. Southern Pacific Railroad Company 118 U.S. 394, 396 (1886).
  4. 1 2 Beatty, Jack (2007), Age of Betrayal: The Triumph of Money in America, 1865–1900, New York: Alfred A. Knopf, p. 172, ISBN   978-1-4000-4028-5, OCLC   71812875 .
  5. ↑ Magrath, C. Peter (1963), Morrison R. Waite: The Triumph of Character, New York: Macmillan, p. 117, OCLC   283678 .
  6. ↑ Beatty 2007 , p. 173.
  7. ↑ 118 US Reports 412-17.
  8. ↑ Connecticut General Life Insurance Company v. Johnson 303 U.S. 77, 87 (1938), (Black, J. dissenting).
  9. ↑ Douglas, William O. (1949), "Stare Decisis", Columbia Law Review , 49 (6): 735–758, doi:10.2307/1119147, JSTOR   1119147 .

Related Research Articles

<span class="mw-page-title-main">Fourteenth Amendment to the United States Constitution</span> 1868 amendment addressing citizenship rights and civil and political liberties

The Fourteenth Amendment to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments. Usually considered one of the most consequential amendments, it addresses citizenship rights and equal protection under the law and was proposed in response to issues related to formerly enslaved Americans following the American Civil War. The amendment was bitterly contested, particularly by the states of the defeated Confederacy, which were forced to ratify it in order to regain representation in Congress. The amendment, particularly its first section, is one of the most litigated parts of the Constitution, forming the basis for landmark Supreme Court decisions such as Brown v. Board of Education (1954) regarding racial segregation, Loving v. Virginia (1967) regarding interracial marriage, Roe v. Wade (1973) regarding abortion, Bush v. Gore (2000) regarding the 2000 presidential election, Obergefell v. Hodges (2015) regarding same-sex marriage, and Students for Fair Admissions v. Harvard (2023) regarding race-based college admissions. The amendment limits the actions of all state and local officials, and also those acting on behalf of such officials.

Corporate personhood or juridical personality is the legal notion that a juridical person such as a corporation, separately from its associated human beings, has at least some of the legal rights and responsibilities enjoyed by natural persons. In most countries, a corporation has the same rights as a natural person to hold property, enter into contracts, and to sue or be sued.

Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916), was a landmark United States Supreme Court case in which the Court upheld the validity of a tax statute called the Revenue Act of 1913, also known as the Tariff Act, Ch. 16, 38 Stat. 166, enacted pursuant to Article I, section 8, clause 1 of, and the Sixteenth Amendment to, the United States Constitution, allowing a federal income tax. The Sixteenth Amendment had been ratified earlier in 1913. The Revenue Act of 1913 imposed income taxes that were not apportioned among the states according to each state's population.

Separate but equal was a legal doctrine in United States constitutional law, according to which racial segregation did not necessarily violate the Fourteenth Amendment to the United States Constitution, which nominally guaranteed "equal protection" under the law to all people. Under the doctrine, as long as the facilities provided to each race were equal, state and local governments could require that services, facilities, public accommodations, housing, medical care, education, employment, and transportation be segregated by race, which was already the case throughout the states of the former Confederacy. The phrase was derived from a Louisiana law of 1890, although the law actually used the phrase "equal but separate".

<span class="mw-page-title-main">Morrison Waite</span> Chief justice of the United States from 1874 to 1888

Morrison Remick "Mott" Waite was an American attorney, jurist, and politician from Ohio who served as the seventh chief justice of the United States from 1874 until his death in 1888. During his tenure, the Waite Court took a narrow interpretation of federal authority related to laws and amendments that were enacted during the Reconstruction Era to expand the rights of freedmen and protect them from attacks by white supremacy groups such as the Ku Klux Klan.

United States v. Cruikshank, 92 U.S. 542 (1876), was a landmark decision of the United States Supreme Court ruling that the U.S. Bill of Rights did not limit the power of private actors or state governments despite the adoption of the Fourteenth Amendment. It reversed the federal criminal convictions for the civil rights violations committed in aid of anti-Reconstruction murders. Decided during the Reconstruction Era, the case represented a major defeat for federal efforts to protect the civil rights of African Americans.

A Due Process Clause is found in both the Fifth and Fourteenth Amendments to the United States Constitution, which prohibit the deprivation of "life, liberty, or property" by the federal and state governments, respectively, without due process of law.

The Equal Protection Clause is part of the first section of the Fourteenth Amendment to the United States Constitution. The clause, which took effect in 1868, provides "nor shall any State ... deny to any person within its jurisdiction the equal protection of the laws." It mandates that individuals in similar situations be treated equally by the law.

<span class="mw-page-title-main">Bancroft Davis</span> American politician (1822–1907)

John Chandler Bancroft Davis, commonly known as Bancroft Davis, was an attorney, diplomat, judge of the Court of Claims, and Reporter of Decisions of the Supreme Court of the United States.

Strauder v. West Virginia, 100 U.S. 303 (1880), was a landmark decision of the Supreme Court of the United States about racial discrimination and United States constitutional criminal procedure. Strauder was the first instance where the Supreme Court reversed a state court decision denying a defendant's motion to remove his criminal trial to federal court pursuant to Section 3 of the Civil Rights Act of 1866.

Hylton v. United States, 3 U.S. 171 (1796), is an early United States Supreme Court case in which the Court held that a yearly tax on carriages did not violate the Article I, Section 2, Clause 3 and Article I, Section 9, Clause 4 requirements for the apportioning of direct taxes. The Court concluded that the carriage tax was not a direct tax, which would require apportionment among the states. The Court noted that a tax on land was an example of a direct tax that was contemplated by the Constitution.

<i>San Antonio Independent School District v. Rodriguez</i> 1973 United States Supreme Court case

San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973), was a case in which the Supreme Court of the United States held that San Antonio Independent School District's financing system, which was based on local property taxes, was not a violation of the Fourteenth Amendment's equal protection clause.

Livermore V. Waite is an 1894 California Supreme Court ruling that limits the power of the legislature in making amendments to the California Constitution by ruling that the power to change to the constitution cannot be delegated to any individual, as the sovereign power rests with the people.

Tax protesters in the United States advance a number of constitutional arguments asserting that the imposition, assessment and collection of the federal income tax violates the United States Constitution. These kinds of arguments, though related to, are distinguished from statutory and administrative arguments, which presuppose the constitutionality of the income tax, as well as from general conspiracy arguments, which are based upon the proposition that the three branches of the federal government are involved together in a deliberate, on-going campaign of deception for the purpose of defrauding individuals or entities of their wealth or profits. Although constitutional challenges to U.S. tax laws are frequently directed towards the validity and effect of the Sixteenth Amendment, assertions that the income tax violates various other provisions of the Constitution have been made as well.

Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978), was a landmark case in the area of federal Indian law involving issues of great importance to the meaning of tribal sovereignty in the contemporary United States. The Supreme Court sustained a law passed by the governing body of the Santa Clara Pueblo that explicitly discriminated on the basis of sex. In so doing, the Court advanced a theory of tribal sovereignty that weighed the interests of tribes sufficient to justify a law that, had it been passed by a state legislature or Congress, would have almost certainly been struck down as a violation of equal protection.

<span class="mw-page-title-main">Waite Court</span> Period of the US Supreme Court from 1874 to 1888

The Waite Court refers to the Supreme Court of the United States from 1874 to 1888, when Morrison Waite served as the seventh Chief Justice of the United States. Waite succeeded Salmon P. Chase as Chief Justice after the latter's death. Waite served as Chief Justice until his death, at which point Melville Fuller was nominated and confirmed as Waite's successor.

A campaign finance reform amendment refers to any proposed amendment to the United States Constitution to authorize greater restrictions on spending related to political speech, and to overturn Supreme Court rulings which have narrowed such laws under the First Amendment. Several amendments have been filed since Citizens United v. Federal Election Commission and the Occupy movement.


Johnson v. Louisiana, 406 U. S. 356 (1972), was a court case in the U.S. Supreme Court involving the Due Process Clause and Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The U.S. Supreme Court ruled that the Louisiana law that allowed less-than unanimous jury verdicts to convict persons charged with a felony, does not violate the Due Process clause. This case was argued on a similar basis as Apodaca v. Oregon.

References

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.