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Constitutional Law-Tax Exemption Contract, Grétel Schinnerer

Michigan Law Review

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 …