CONSTITUTIONAL LAW-TAX EXEMPTION CONTRACT

Authors

Grétel Schinnerer, University of Michigan Law School

Abstract

A charter granted in 1863 by the State of Georgia to the Atlantic Coast Line Railroad Company provided as follows: "The stock of said company shall be subject to a tax not exceeding ½ per cent per annum on the net proceeds of its investments." In 1931, the Georgia legislature levied a tax of 5½ per cent on corporate net income. The railroad brought an action seeking to have an assignment under this tax declared invalid, on the theory that the tax as applied to the plaintiff railroad violated the contract clause of the federal Constitution. The Georgia Supreme Court concluded that the tax exemption of the 1863 charter did not apply. On appeal, held, affirmed. The Supreme Court agreed with the state court's opinion that in view of the fact that the income tax had not been a part of the state system of taxation at the time of the charter, it could not have been within the legislative intent. Atlantic Coast Line Railroad Co. v. Phillips, (U.S. 1947) 67 S.Ct. 1584.

Recommended Citation

Grétel Schinnerer, CONSTITUTIONAL LAW-TAX EXEMPTION CONTRACT, 46 Mich. L. Rev. 673 (1948).
Available at: https://repository.law.umich.edu/mlr/vol46/iss5/8