The appellants insist that the circuit court had no jurisdiction of this suit, because all the parties are citizens of Tennessee. We think, however, that jurisdiction existed, because the case is one arising under the Constitution of the United States, the complainant insisting that under such Constitution the law of the state of Tennessee, passed in 1903, is invalid, because it impairs the obligations of a contract protected by that instrument. Illinois C. R. Co. v. Adams, 180 U.S. 28, 35, 45 L. ed. 410, 412, 21 Sup. Ct. Rep. 251. We therefore pass to the merits of the controversy.
As the complainant maintains that the exemption clause in the 10th section of its charter is broader than that contained in the 2d section of the act of 1903, we may at once refer to the charter exemption, and if the contention of complainant is not justified by that exemption, it is unnecessary to consider that which is given by the act of 1903. It is by the charter exemption that we are to judge that matter.
Upon the question of the proper construction of the exemption clause in the charter, the case of the University of the South v. Skidmore, 87 Tenn. 155, 9 S. W. 892, is cited, and it is urged that within that case no tax can be assessed against the lessees of this property within the 1,000 acres. While in such a case as this we form our own judgment as to the existence and construction of the alleged contract, and are not concluded by the construction which the state court has placed on the statute that forms such contract, yet we give to that construction the most respectful consideration, and it will, in general, be followed, unless it seems to be plainly erroneous.
Looking at the Skidmore Case, we find that it does not uphold the contention maintained by the complainant. In that case the university filed a bill against Skidmore, trustee of Franklin county, to enjoin him from assessing for taxation against the university the property belonging to it within the 1,000 acres. In answer to the bill the state contended that the 1,000 acres would be exempt from taxation so long only as they were substantially owned by the university, but that, when it gave a lease of the kind described in the case before us, it ceased, during the term of the lease, to be the real and substantial owner of the land so leased, which, by the lease, was taken out of the exemption granted by the statute, and was, from that time, taxable against the university. The supreme court, however, held that the assessment made was void because the property, the land owned by the university, was exempt from taxation so long as it belonged to that corporation, and the making of the leases did not permit the property to be taxed against the university.
This is a different proposition from the one asserted by the complainant, and is not authority for its contention that the assessment cannot be made against the lessee in his own name for his particular interest in the land while the university continues to own the fee.
It is plain that the state court has not construed the statute of 1858 as a contract that the interest of the lessee in the land granted to him for a term of years by the university cannot be assessed or taxed against him because of the exemption in question.
Counsel for appellee, placing the Skidmore Case aside for the moment, assert that, when this exemption was granted, leasehold interests were only assessable against the owner of the fee as part of the whole estate; and it was therefore a part of the estate exempted from taxation by the charter. We think this is not a correct construction of the contract of exemption.