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New Orleans v. Houston

Supreme Court of the United States

Argued November 17, 18, 1886. ; December 6, 1886, Decided

No Number in Original

Opinion

 [*266]   [**198]   [***411]  MR. JUSTICE MATTHEWS delivered the opinion of the court.

On the 27th of January, 1881, the Louisiana State Lottery Company, alleging itself to be a corporation under the laws of the State of Louisiana, filed its bill in chancery against the City of New Orleans and the tax assessors for the Parish of Orleans, the object and prayer of which were to obtain a perpetual injunction restraining the defendants from  [**199]  the assessment and collection of certain taxes about to be enforced against the complainant by the seizure and sale of its property. On final hearing there was a decree in conformity with the prayer of the bill, from which the defendants below prosecute the present appeal.

The allegations of the bill are in substance, that by an act of the Legislature of the State of Louisiana, passed in 1868, being Act No. 25 of that year, the Louisiana State Lottery Company was [****3]  established and organized as a corporation: -- that, among other immunities and franchises granted by said act, it was provided in article 5 that the company "shall pay the State of Louisiana the sum of forty thousand dollars per annum, which sum shall be payable quarterly in advance, from and after the 1st day of January, 1869, to the State Auditor, who shall deposit the same in the treasury of the State, and which shall be credited to the educational fund; and said corporation shall be exempt from all other taxes and licenses of any kind whatever from the State, parish, or municipal authorities": -- that in the year 1871 legal proceedings were instituted by the City of New Orleans against the said company, in the Superior District Court for the Parish of Orleans, for the purpose of enforcing on behalf of said city certain taxes alleged to have been assessed against it, notwithstanding said exemption contained in its charter, the City of New Orleans claiming therein that said exemption was void: -- that such proceedings were had thereon that on final hearing in the Supreme Court of Louisiana a judgment was rendered in favor of the lottery company, declaring said exemption to be valid [****4]  and the said  [*267]  taxes illegal: -- that the said company claims that the provision in its said charter exempting it from taxes as aforesaid beyond the sum of $40,000, payable annually, is a contract between the State of Louisiana and itself, and has been expressly confirmed and recognized as such by the present Constitution of the State of Louisiana, adopted in 1879, in article 167, all the provisions of which, it is alleged in the bill, the complainants have complied with.

The bill further alleges that, notwithstanding the provisions of the said charter, and in defiance of the judgment of the Supreme Court of Louisiana, and contrary to the Constitution of the State, the defendants "are about to levy and assess a tax upon the capital stock and other property of your orator, and the other defendants hereinbefore named have threatened and are about to take proceedings, against your orator for the collection of said illegal tax, which is illegal because prohibited by the Constitution of the United States as violative of the said contract between your orator and the State of Louisiana"; that the said officers of the State pretended to justify their action under the provisions [****5]  of Act No. 77 of the Legislature of Louisiana of 1880, which the complainant avers to be null and void and of no effect, so far as it may be construed to authorize the proceedings of the defendants. The bill alleges that the complainant has always promptly paid the amount called for by its charter to the State Treasurer, and in advance, and owes nothing to the State on that account; and accordingly prays for an injunction to restrain the defendants from further attempts to enforce the collection of the tax complained of.

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119 U.S. 265 *; 7 S. Ct. 198 **; 30 L. Ed. 411 ***; 1886 U.S. LEXIS 1986 ****

NEW ORLEANS v. HOUSTON.

Prior History:  [****1]  APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF LOUISIANA.

The case is stated in the opinion of the court.

CORE TERMS

Lottery, charter, exemption, taxes, capital stock, shareholders, provisions, lottery ticket, licenses, taxation, orator, monopoly, shares, void, per annum, decree, rights, annual sum, stockholders, proceedings, abrogated, repealed, selling, levied, null, act of the legislature, state power, restrained, municipal, dollars

Business & Corporate Law, Corporate Governance, Shareholders, General Overview