Santa Clara County v. Southern Pacific Railroad Co.

Santa Clara County v. Southern Pacific Railroad

Argued January 26–29, 1886
Decided May 10, 1886
Full case name Santa Clara County v. Southern Pacific Railroad Company
Citations

118 U.S. 394 (more)

6 S. Ct. 1132, 30 L. Ed. 118
Prior history Error 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 · T. Stanley Matthews
Horace Gray · Samuel Blatchford
Case opinions
Majority Harlan, joined by unanimous
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 US 394 (1886) is a United States corporate law case of the United States Supreme Court on taxation of railroad properties. A headnote issued by the Court Reporter claimed to state the sense of the Court regarding the equal protection clause of the Fourteenth Amendment as it applies to corporations, without the Court having actually made a decision or issued a written opinion on that issue. This was the first time that the Supreme Court was reported to hold that the Fourteenth Amendment's equal protection clause granted constitutional protections to corporations as well as to natural persons, although numerous other cases, since Dartmouth College v. Woodward in 1819, had recognized that corporations were entitled to some of the protections of the Constitution.

In the opinion, the Court consolidated three separate cases:

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.

Headnote

Bancroft Davis, the Court Reporter and former president of Newburgh and New York Railway

The headnote, which is "not the work of the Court, but are simply the work of the Reporter, giving his understanding of the decision, prepared for the convenience of the profession",[2] was written by the court reporter, 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 Court Reporter 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.

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 taken to affirm the protection of corporations under the Fourteenth Amendment. At the very least, this is a wrinkle in the normal understanding of the workings of the Court's tradition of stare decisis – the reliance on precedence. 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 taken as precedent for 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.

References

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