Robertson v. Southern Paper Co.

Cook, P. J., delivered the opinion of the court. The revenue agent commenced this proceeding before the board of mayor and aldermen of the. city of Moss Point. The revenue agent gave notice to the tax collector of the municipality to assess certain property belonging to the Southern Paper Company, appellee in this appeal, which it was alleged had escaped taxation. The notice and proceedings were all in .accordance with the statute applicable to such proceedings. After notice the tax assessor returned his assessment. The revenue agent propounded certain inter124 rogátories to 'the paper company, a nonresident corporation, which interrogatories were not answered.' The revenue agent then made a motion for judgment against the paper company, which motion was overruled. Upon motion of appellee, the interrogatories were stricken out, and the proceedings were dismissed, and the revenue agent appealed to the circuit court of Jackson county, which court sustained the contention of the paper company, and the revenue agent prosecuted an appeal to this court. "Without going into the details of the trial in the circuit court, suffice it to say that the paper company filed a special plea, to which the revenue agent interposed a demurrer, which was overruled, and, the revenue agent declining to plead further, the assessment proceedings were dismissed, and this appeal followed. The special plea in bar filed by appellee contains the defense of appellee, which defense was sustained by the court. The plea in substance is about as follows: That appellee, a corporation, was chartered under the laws of the state of New York, in October, 1911, and was authorized by its charter to engage in the manufacture of paper, or pulp, from wood at any place in the United States that its directors might select. That during the month of .March, 1912, ap-pellee concluded to engage in paper manufacturing in Jackson county, Miss., and to construct a mill for that purpose near Moss Point in said county. That in April, 1912, a contract was made with the Lackawana Bridge Company for plant construction and machinery installation at a location near Moss Point. That excavation for buildings and machinery was begun in May, 1912, on the Southeast quarter of section 20, township 7 south, range 5 west, which land the International Process Company had theretofore agreed to convey to appellee. That work on the plant continued from May, 1912, to July, 1913, when it was finished and [125] operations began. That during the month, of May, 1912, appellee entered into negotiations with the mayor and board of aldermen of Moss Point looking to the extension of the municipal limits so as to include ap-pellee’s plant then in course of construction. That an oral agreement was made between appellee and the municipal authorities whereby the municipality agreed to extend its limits and take in appellee’s plant, and that, in consideration of the grant to appellee of exemption from municipal taxation for a period of ten years, appellee would not object to the extension of the city limits, but would complete the establishment and construction of its plant. That in pursuance of said agreement the municipality by ordinance passed on the 5th day of June, 1912, extended the city limits so as to take in the appellee’s plant; a copy of the ordinance being exhibited to the plea. The plea further set up that on the 8th day of August, 1912, the mayor and board of aldermen in pursuance of the agreement theretofore made with appellee enacted Ordinance No. 136, a copy of which was exhibited to the plea, and appearing in the record, by which the plant and all property of appellee used in the manufacture of paper was exempted from taxation for a period of 10 years. The preamble of the ordinance recited the following: “ Whereas, the Southern Paper Company has in course of construction an establishment in the city of Moss Point, Mississippi, as its limits were extended by ordinance duly passed on the 24th day of June, 1912, a plant for the manufacture of pulp and paper from wood and wood fiber. “And, whereas, it was agreed between the mayor and board of aldermen of the city of Moss Point and the officers of the Southern Paper Company at the time that said annexation ordinance was being considered, that the plant and property of the Southern Paper Company would be granted an exemption from municipal taxation for a period of ten years beginning [126] with, the first day of February, A. D. 1913, and ending with the fiscal year 1922. On condition that the Southern Paper Company consent to such annexation ordinance. ’ ’ The exemption from taxation claimed in this case we are advised is based upon chapter 115, Laws 1912. The law exempts this company, if the law itself is a valid exercise of' legislative power, whereby the legislature undertakes to confer upon municipalities the power to exempt corporations from taxation, which had been established before the ordinance granting the exemption was adopted. The legislature can, of course, confer upon towns and cities, by general laws, the power, to encourage the establishment of manufactories within the corporate limits. This power is not only conferred upon the legislature, but the legislature is admonished, to do this very thing. The question then is: Does the exemption claimed here square with section 192 of the Constitution? In other words, do the facts show that the manufactory in question had not been established before the enactment of the ordinance which grants the exemption?- As we understand the facts, the corporation had definitely decided to locate or establish its plant near the city of Moss Point, and to this end it had purchased a site, and contracted with a builder to construct the plant, and the construction was entered upon. It was at this juncture that the officers of the city and the corporation entered into negotiations whereby the corporate limits were to be extended so as to take in the manufacturing plant, upon the understanding that an ordinance would be passed exempting the manu-factory from the payment of municipal taxation. There is no doubt that the contract was made in good faith', or that the ordinance was passed in obedience to a sense of honor. [127] Why greater powers were conferred upon the legislature to exempt such corporations from the payment of state and county taxation may be difficult to answer, hut that this was done is nevertheless true. This court, in Adams, Revenue Agent, v. Cotton-Mills, 92 Miss. 743, 46 So. 401, passed' upon this question; but we do not believe that this case upholds the contention of appellee, for the obvious reason that there the law with which the court was dealing was a statute exempting factories from state and county taxes. The suit was for unpaid state and county taxes. Section 182 of the Constitution controlled in that case, while section 192 controls the present case. The case which we think is decisive of the instant case is Wirt Adams v. Lamb-Fish Lumber Co., 103 Miss. 491, 60 So. 645. In the Lamb-Fish Case the precise question presented in the instant ease was directly involved, and the court declined to follow the contention made by the Southern Paper Company in the present case. After reaching the conclusion that the facts of this case placed the factory in- the established class, it necessarily follows that the contract and ordinance was void. It will be noted that section 182 expressly provides that the power to tax corporations shall never be surrendered or abridged by any contract or grant to which the state or any political subdivision thereof may be a party. The factory had been located or established when the board of aldermen entered into the contract to pass the ordinance extending the corporate limits, which was agreed to by the corporation, in consideration of the promise of the city officers that they would pass the exemption ordinance. So by agreement the established plant was taken in, and the contract to pass the exemption ordinance was subsequently executed by the passage of the ordinance. [128] The contract and ordinance were ultra vires. It is one thing to secure the location or establishment of manufactories, and quite another thing to exempt a factory already established. We think the court also erred in striking from the files the interrogatories propounded by the revenue agent. Reversed and remanded.