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(109 U. S. 398) MEMPHIS GAS-LIGHT Co. v. TAXING DISTRICT OF SHELBY Co., TENN.
(November 26, 1883.)
TAXATION_CORPORATE FRANCHISE-OBLIGATION OF CONTRACT.
The franchise of a corporation, like other property, is subject to the right of tax
ation inherent in the state; and the contract implied in a charter which does not by its language exempt the corporation holding it from the imposition of taxes, is not violated by a general statute under which a tax is assessed against the corporation for a license granted it by the charter.
In Error to the Supreme Court of the State of Tennessee.
Henry Craft, George Gantt, and Josiah Patterson, for plaintiff in error.
J. B. Heiskell, for defendant in error. * MILLER, J. This is a writ of error to the supreme court of Ten. nessee. The question presented is whether the statute of the state under which the defendant assessed a license tax of $250 against plaintiff in error is void, because it violates the contract found in the charter of the company. This charter was enacted November 20, 1851, and, after giving the name of the new corporation and the names of the corporators, it refers for the rights, privileges, powers, and restrictions of the company to the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, and twelfth sections of an act incorporating the Nashville Gas-light Company, passed November 21, 1849, and declares that those sections, not inconsistent with the first section of this act, shall apply to the Memphis Gaslight Company as fully and completely as though the same were fully set forth and incorporated. For any contract of exemption from taxation we must therefore look to the provisions of those sections in the charter of the Nashville Company. These sections contain the usual powers necessary for the successful conduct of the business of the company, its organization, its shares of stock, mode of payment, laying pipes in the street, and the like, and after a careful examination of them we are unable to see anything whatever which expresses a contract for any limitation of the power of the legislature to tax the company or its property. Such was the opinion of the supreme court of Tennessee, delivered on rendering the judgment to which this writ of error is taken. And though this court is bound for itself to inquire in every such case as this whether there existed a contract which might be impaired, on which subject the court has very recently, at the present term, collated the authorities in the case of Louisville & N. R. Co. v. Palmes, ante, 193, we are una- ble-to discover any reason for dissenting from the opinion of the supreme court of Tennessee on that point.
The section of the charter on which plaintiff's counsel mainly rely as showing a contract is the fifth section, which reads as follows:
“Sec. 5. The said company shall have the privilege of erecting, establishing, and constructing gas-works, and manufacturing and vending gas in the city of Nashville, by means of public works, for a term of fifty years from and after the date of this act. A reasonable price per thousand feet for gas shall be charged in the case of private individuals, to be regulated by the prices in other south-western cities; and for public lights, such sum as may be agreed upon by the company and the public authorities of Nashville: provided, said company shall never charge more than one cent for every cubic foot of gas used, as may be indicated by the gas-meter, or computed by the ordinary rules in such cases; nor shall they ever charge the corporation of the city of Nashville more per cubic foot than they shall be getting at the same time from the majority of the inhabitants of the city using such gas.”
The argument of counsel is that if no express contract against taxation can be found here it must be implied, because to permit the state to tax this company by a license tax for the privilege granted by its charter is to destroy that privilege. But the answer is that the company took their charter subject to the same right of taxation in the state that applies to all other privileges and to all other property. If they wished or intended to have an exemption of any kind from taxation, or felt that it was necessary to the profitable working of their business, they should have required a provision to that effect in their charter. The constitution of the United States does not profess in all cases to protect property from unjust or oppressive taxation by the states. That is left to the state constitutions and state laws.
In the case of the Erie R. Co. v. Pennsylvania, 21 Wall. 492, it was said:
“ This court has in the most emphatic terms and on every occasion declared that the language in which the surrender (of the right of taxation) is made must be clear and unmistakable. The covenant or enactment must distinctly express that there shall be no other or further taxation. A state cannot strip herself of this most essential power by doubtful words. It cannot by ambiguous language be deprived of this highest attribute of sovereignty. The principle has been distinctly laid down in each of the cases referred to. It has never been departed from."
See, also, Providence Bank v. Billings, 4 Pet. 514; Herrick v. Randolph, 13 Vt. 531; North Missouri R. Co. v. Maguire, 20 Wall. 40; Delaware R. R. Tax, 18 Wall. 206.
There is in this case no language which attempts to exempt plaintiff from taxation, nor is there even the most remote implication of such exemption.
The judgment of the supreme court of Tennessee is affirmed.
(109 U. S. 278)
GRACE and others v. AMERICAN CENT. Ins. Co. OF ST. Louis.
(November 19, 1883.)
FIRE INSURANCE-POLICY-NOTICE TO TERMINATE-PAROL EVIDENCE OF CUS-
A fire insurance policy contained this clause: "This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the policy has been in force. The insurance may also be terminated at any time at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term of the policy. It is a part of this contract that any person other than the assured, who may have procured the insurance to be taken by this company, shall be deemed to be the agent of the assured named in this policy, and not of this company, under any circumstances whatever, or in any transactions relating to this insurance." Held, that this clause imports nothing more than that the person obtaining the insurance was to be deemed the agent of the insured in matters immediately connected with the procurement of the policy; that where his employment did not extend beyond the procurement of the insurance, his agency ceased upon the execution of the policy, and subsequent notice to him of its termination by the company was not notice to the insured. ch notice to
Parol evidence of usage or custom among insurance men to give
the person procuring the insurance was inadmissible to vary the terms of the
The doctrine reaffirmed that when jurisdiction of the circuit court depends upon the citizenship of the parties, such citizenship, or the facts which in legal intendment constitute it, must be distinctly and positively averred in the pleadings, or appear affirmatively and with equal distinctness in other parts of the record. An averment that parties reside, or that a firm does business, in a particular state, or that a firm is "of" that state, is not sufficient to show citizenship in such state.
Where the record does not show a case within the jurisdiction of a circuit court, this court will take notice of that fact, although no question as to jurisdiction had been raised by the parties.
In Error to the Circuit Court of the United States for the Eastern District of New York.
Winchester Britton, for plaintiffs in error.
Geo. W. Parsons, for defendants in error.
HARLAN, J. This is an action upon a policy of fire insurance issued September 26, 1877, by the American Central Insurance Company of St. Louis to the firm of William R. Grace & Co. The circumstances under which it was issued are these: A clerk of William R. Grace & Co., charged with the duty of effecting insurance against loss by fire upon their property, employed one W. R. Moyes, a broker in the city of New York, to obtain insurance, in a specified amount, for his principals. Moyes instructed one Anthony, an insurance broker and agent in Brooklyn, who had on previous occasions obtained policies for Grace & Co., to procure the required amount of insurance. Anthony obtained the policy in suit from the general agents in New York city of the defendant company, mailed or deliv
ered it to Moyes, and by the latter it was delivered to Grace & Co. not later than the day succeeding its date. On the morning of October 6th one Carrol, for the insurance company, verbally notified An. thony that the company refused to carry the risk and required the policy to be returned. There is some conflict in the testimony as to what occurred between Carrol and Anthony on this occasion. But, in the view which the court takes of this case, it may be conceded that Anthony gave Carrol to understand that the policy would be returned to the company or its agents. The property insured was destroyed by fire on the night of October 6, 1877, or early on the morning of the 7th. Prior to the fire neither the insured, nor their clerk by whose instructions the policy was obtained, had any knowledge or notice of the conversation between Carrol and Anthony, or of the fact that the company had elected not to carry the risk. At the trial it was admitted that the contract between the parties was fully executed upon the delivery of the policy to the insured.
The eighth clause of the policy is in these words : “This insurance may be terminated at any time at the request of the assured, in which case the company shall retain only the customary short rates for the time the policy has been in force. The insurance may also be terminated at any time at the option of the company, on giving notice to that effect and refunding a ratable proportion of the premium for the unexpired term of the policy. It is a part of this contract that any person other than the assured, who may have procured the insurance to be taken by this company, shall be deemed to be the agent of the assured named in this policy, and not of this company, under any circumstances whatever, or in any transaction relating to this insurance."
The court refused, although so requested by plaintiffs, to rule that Anthony was not, within the meaning of the policy, their agent for the purpose of receiving notice of its termination; but charged the jury, in substance, that Anthony was, for such purpose, to be deemed the agent of the insured. Exception was taken in proper form by plaintiffs, as well to the refusal to give their instruction, as to that given by the court to the jury. A verdict was returned for the com. pany, and judgment thereon was entered.
The charge, in connection with the opinion delivered by the learned judge who presided at the trial, indicates that, in his judgment, the words in the eighth clause-"It is a part of this contract that any person, other than the assured, who may have procured the insurance to be taken by this company, shall be deemed to be the agent of the assured named in this policy”—were intended to be qualified by the words “in any transaction relating to this insurance. Upon this ground it was ruled that notice of the termination of the policy was properly given to Anthony, who personally procured the insurance. We do not concur in this interpretation of the contract. The words in their natural and ordinary signification import nothing more than that the person obtaining the insurance was to be deemed the agent of the insured in all matters immediately connected with the procurement of the policy. Representations by that person in procuring the policy, were to be regarded as made by him in the capacity of agent of the insured. His knowledge or information, pending negotiations for insurance, touching the subject matter of the contract, was to be deemed the knowledge or information of the insured. When the contract was consummated by the delivery of the policy he ceased to be the agent of the insured, if his employment was solely to procure the insurance. What the company meant by the clause in question, so far as it relates to the agency, for the one party or the other, of the person procuring the insurance, was, to exclude the possibility of such person being regarded as its agent, “under any circumstances whatever, or in any transaction relating to this insurance.” This, we think, is not only the proper interpretation of the contract, but the only one at all consistent with the intention of the parties as gathered from the words used. There is, in our opinion, no room for a different interpretation. If the construction were doubtful then the case would be one for the application of the familiar rule that the words of an instrument are to be taken most strongly against the party employing them, and therefore, in cases like this, most favorably to the insured. The words are those of the company, not of the assured. If their meaning be obscure it is the fault of the company. If its purpose was to make notice, to the person procuring the insurance, of the termination of the policy, equivalent to notice to the insured, a form of expression should have been adopted which would clearly convey that idea, and thus prevent either party from being caught or misled.
As the uncontradicted evidence was that Anthony's agency or employment extended only to the procurement of the insurance, the jury should have been instructed that his agency ceased when the policy was executed, and that notice to him, subsequently, of its termination was ineffectual to work a rescission of the contract.
At the trial below evidence was offered by the company, and was permitted, over the objection of plaintiffs, to go to the jury, to the effect that, when this contract was made, there existed in the cities of New York and Brooklyn an established, well-known general custom in fire insurance business, which authorized an insurance com os pany, entitled upon notice to terminate its policy, to give such notice to the broker by or through whom the insurance was procured. This evidence was inadmissible, because it contradicted the manifest intention of the parties as indicated by the policy. The objection to its introduction should have been sustained. The contract, as we have seen, did not authorize the company to cancel it upon notice merely to the party procuring the insurance,-his agency, according to the evidence, not extending beyond the consummation of the contract. The contract, by necessary implication, required notice to be given to the insured, or to some one who was his agent to receive