
97 U.S. 697 (____)
RAILROAD COMPANIES
v.
GAINES.
Supreme Court of United States.

*703 Mr. W.Y.C. Humes for the plaintiff in error.
Mr. J.B. Heiskell, contra.
*707 MR. CHIEF JUSTICE WAITE, after stating the case, delivered the opinion of the court.
The claims of the several corporations will be considered separately, and in the order they are presented by the record.

I. THE MEMPHIS AND CHARLESTON RAILROAD COMPANY.
1. As to the extent of the exemption contained in the original charter.
Under this branch of the case the company claims that the exemption of the capital stock from taxation is equivalent to an exemption of the property purchased with or represented by the capital, and there are undoubtedly many cases to be found in this and other courts where it has been held that an exemption of the capital stock of a corporation from taxation was equivalent to an exemption of the property into which the capital had been converted. But in all these cases we think it will be found that the question turned upon the effect to be given the term "capital," or "capital stock," as used in the particular charter under consideration, and that when the property has been exempted by reason of the exemption of the capital, it has been because, taking the whole charter together, it was apparent that the legislature so intended. Thus the capital stock of a bank usually consists of money paid in to be used in banking, and an exemption of such capital stock from taxation must almost necessarily mean an exemption of the securities into which the money has been converted in the regular course of a banking business. And in general, an exemption of capital stock, without more, may, with great propriety, be considered, under ordinary circumstances, as exempting that which, in the legitimate operations of the corporation, comes to represent the capital.
But in this case, while the capital stock is for ever exempt, the "road, with all its fixtures and appurtenances, including workshops, warehouses, and vehicles of transportation," is *708 exempt for only twenty years after the completion of the road. Clearly, under such circumstances, it could not have been understood that the enumerated property was to represent the capital for the purposes of taxation. Exemptions are never to be presumed. On the contrary, the presumptions are always against them. The exemption of the property for twenty years only is equivalent to an express power to tax after that time.
It is said, however, that both provisions of the statute can stand,  that which exempts the capital and that which taxes the tangible property,  if the part of the property which represents the capital is exempted, and that which represents the bonded debt is taxed; but we certainly have no clear manifestation of any such intention by the legislature. It is as distinctly stated that the road and all its fixtures, &c., are to be taxed as that the capital is to be exempt. While the company had power to borrow money on mortgage, it is very clear from the provisions of the charter it was expected the road might be completed with capital alone. Sect. 17, in which the power to mortgage is given, is as follows: "The said company may at any time increase its capital stock to a sum sufficient to complete the road and stock it with every thing necessary to give it full operation and effect, either by opening books for new stock, or by selling such new stock, or by borrowing money on the credit of the company and on mortgage of its charter and works; and the manner in which the same shall be done, in either case, shall be prescribed by the stockholders at a general meeting... ." Under these circumstances, it cannot for a moment be doubted that if the legislature had supposed a different rule of taxation was to be applied if the road was built with borrowed money, from what should be if it was built from stock, some mention would have been made of it, and some means provided for determining what was exempt as representing stock, and what taxable as representing debt. Then again, suppose the debt paid off, either by the issue of new stock or the earnings of the road, would the property then be exempt as capital, or taxable because originally built with borrowed money?
Without pursuing this subject further, it is sufficient to say *709 that we are clearly of the opinion that the road, with all its fixtures, &c., was taxable under the original charter after March 28, 1877, and that, whatever else was exempted as capital stock, this was not.
2. As to the effect of the acceptance of the eleventh section of the act of 1875, and the payment of taxes thereunder for the years 1875 and 1876.
The claim on the part of the company is, that by the acceptance of this section as an amendment to its charter, a valid contract was entered into between the State and the corporation, regulating the taxation of the company until the year 1885. It is said that the release by the company of the perpetual exemption of its capital stock, and of the exemption of its property until 1877, which were granted by the original charter, was a sufficient consideration for an agreement, on the part of the State, not to tax the company otherwise than according to the accepted eleventh section for ten years, and that a law which provides for taxation in a different manner impairs the obligation of that contract.
The decision of the Supreme Court of the State declaring this section to be invalid, so far as it relates to companies not claiming to be exempt from taxation under their charters, because it does not conform to the constitutional requirement of uniformity, is binding upon us as a construction of a State statute by the highest court of the State. While we are not bound by the decision in the present case, that the section is also invalid as to this company after the expiration of the time to which the exemption of its property was limited by its charter (Jefferson Branch Bank v. Skelly, 1 Black, 436; Bridge Proprietors v. Hoboken Company, 1 Wall. 116), the decision ought not to be overruled, unless it is clearly wrong. The delicate power which we have, under the Constitution of the United States, over the judgments of the State courts, ought always to be used with the greatest caution. There should be no reversal of such judgments, unless the error is manifest.
The Constitution of Tennessee adopted in 1870 requires that all property shall be taxed. After that Constitution went into effect, no valid contract could be made with a corporation for an exemption from taxation. So the courts of Tennessee have *710 held, and in so doing have established a rule of decision for us. The property of this company was only exempt by its charter until March 28, 1877. The Constitution did not and could not interfere with this exemption so long as it lasted. This the Supreme Court of the State decided. To that extent the claim of the company was sustained.
If nothing had been done until the charter exemption expired, it is clear that, under the construction which the courts of the State have given the Constitution, no contract for the taxation of the company according to the provisions of the eleventh section of the act of 1875 could have been sustained. The only question, therefore, which remains, is, whether in 1875 the legislature could contract for the surrender of the remaining charter exemptions by binding the State not to tax the company for ten years in any other manner than that provided for in sect. 11.
The Constitution has subjected all property in the State to the burden of uniform taxation according to its value. So the courts of the State have decided. The legislature has no power to contract for relief from this burden. It could not do it for a money consideration, and if not for that, clearly not for any other. This is one of the disabilities under which the people of the State have placed their government. But for it taxes might have been commuted or they might have been withheld.
There is no doubt of the power of the legislature to contract with the company for a surrender of its charter exemptions in a way that did not involve a release from the constitutional mode of taxation after the charter exemption had expired. Such a release is, however, as we think, prohibited by the Constitution, as construed by the highest judicial authority in the State.
This disposes of the case so far as the Memphis and Charleston company is concerned. It is not contended that the act of 1875, as amended in 1877, transcends the power of taxation allowed by the charter after the exemption of the road and its appurtenances has expired, unless they are protected by the exemption of the capital stock. The Supreme Court of the State enjoined all taxation prior to March 28, 1877, and decreed *711 that the money paid under the provisions of the eleventh section of the act of 1875 should be allowed as a credit upon the taxes of 1877 and 1878, and the excess, if any, refunded with interest. This, as we think, is all the company can require.

II. THE MOBILE AND OHIO RAILROAD COMPANY.
As to this company, the court decided that it was exempt from taxation under its charter until April 22, 1886, and enjoined the assessment and collection of taxes under the laws of 1875 and 1877 until that date. The further provision of the charter in respect to taxation so as to reduce dividends below eight per cent was not passed upon below, and was not involved in the decision as made. For this reason it cannot be considered by us.

III. THE KNOXVILLE AND CHARLESTON RAILROAD COMPANY.
The court below decided that this company did not by its charter become entitled to the privilege of exemption from taxation, which was granted to the Nashville and Chattanooga Company. If this be so, then the judgment was clearly right, and no other question need be considered.
The Knoxville and Charleston Company, for the purpose of making and using its road, was invested with all the powers, rights, and privileges of the Nashville and Chattanooga Company.
In Humphrey v. Pegues (16 Wall. 244), we held that the grant to one company of "all the powers, rights, and privileges" of another, carried with it an exemption from taxation; but in Morgan v. Louisiana (93 U.S. 217), that such an exemption did not pass by sale of the franchises of a railroad company. In the last case, Mr. Justice Field, speaking for the court, said, "The franchises of a railroad corporation are rights or privileges which are essential to the operations of the corporation, and without which its road and works would be of little value; such as the franchise to run cars, to take tolls, to appropriate earth and gravel for the bed of its road, or water for its engines, and the like. They are positive rights and privileges, without *712 the possession of which the road of the company could not be successfully worked. Immunity from taxation is not one of them."
This seems to us conclusive of the present case. The grant here was not of all the rights and privileges of the Nashville and Chattanooga Company, but of such as were necessary for the purpose of making and using the road, or, in other words, the franchises of the company which do not include immunity from taxation.
On the whole, we find no error in the record.
Judgment affirmed.
