187 U.S. 258 (1902), 43, Northern Central Railway Company v. Maryland

Docket Nº:No. 43
Citation:187 U.S. 258, 23 S.Ct. 62, 47 L.Ed. 167
Party Name:Northern Central Railway Company v. Maryland
Case Date:December 01, 1902
Court:United States Supreme Court

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187 U.S. 258 (1902)

23 S.Ct. 62, 47 L.Ed. 167

Northern Central Railway Company



No. 43

United States Supreme Court

December 1, 1902

Argued October 16, 1902




1. When a Maryland corporation, chartered in 1827, and possessing certain immunities from taxation, which under the then constitution might have been irrepealable, becomes merged with other corporations in an entirely new corporation possessing new rights and franchises created after the adoption of the constitution of 1850, under which the legislature has power to alter and repeal charters of, and laws creating, corporations, the right of exemption, if it ever passed to the new corporation, is subject to the right of repeal, and hence is not protected from repeal by the contract clause of the federal Constitution.

2. An act of the legislature compromising litigation between the state and such new corporation arising from the claim of the latter that it was exempt from taxation under the immunities at one time possessed by one of its constituent corporations, and fixing a rate of taxation to be paid annually thereafter by the new corporation, cannot be regarded as a legislative contract granting an irrepealable right forbidden by the then existing constitution of the state. If, therefore, the legislature subsequently passes another act fixing a higher rate of taxation, and the highest court of the state decides that such act repeals the former act and subjects the corporation to the higher rate of taxation, the later act is not bad as impairing the obligation of contracts within the purview of the Constitution of the United States as the compromise, when made, was subject to the right to repeal, reserved by the constitution of the state at that time.

The Baltimore & Susquehanna Railroad Company was chartered by an act of the Legislature of Maryland in 1827, with authority to construct a railroad from the City of Baltimore to the Susquehanna River. The charter contained a provision declaring that the

shares of the capital stock of the company should be deemed and considered personal estate, and should be exempt from the imposition of any tax or burden.

It was conceded by both parties in the discussion at bar that the effect of this provision, as interpreted by the settled adjudications of the State of Maryland, was to forever exempt the company and

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its property from taxation. [23 S.Ct. 63] It was also conceded that at the time this act was passed there was no provision in the Constitution of the State of Maryland restricting the legislative power to exempt, and that no reservation of the power to repeal, alter, or amend was found in the Constitution of the state, or expressed or implied in the charter in question. In 1854, an act was passed by the Maryland Legislature, designated as chapter 250 of the laws of that year. The title of this act was as follows:

An Act to Authorize the Consolidation of the Baltimore and Susquehanna Railroad Company with the York and Maryland Line Railroad Company, the York and Cumberland Railroad Company and the Susquehanna Railroad Company, by the Name of the Northern Central Railway Company.

The companies referred to in this title other than the Baltimore & Susquehanna Railroad were corporations owing their existence to charters granted by the Legislature of Pennsylvania, and which were operating railroads in that state connecting with the Baltimore & Susquehanna. The effect of the consolidation was to create one corporation owning and operating one line of railroad from and across the State of Maryland into and across the State of Pennsylvania. The act of 1854 authorizing the consolidation, the title of which has just been stated, by its first section empowered the stockholders of the Baltimore & Susquehanna Railroad, upon their acceptance of the act,

to unite and to consolidate their company or corporation with the York & Maryland Line Railroad, the York & Cumberland Railroad Company and the Susquehanna Railroad Company of the State of Pennsylvania, so as to form and constitute one company or corporation, to be called the Northern Central Railway Company, on such terms and conditions, and conformably to such agreements and regulations, as the said several companies shall respectively determine and adopt, subject, nevertheless, to the following general provisions: first, that all existing contracts, engagements, and liabilities of the said Baltimore & Susquehanna Railroad Company shall continue to bind said company and its property as fully as before the consolidation herein above authorized, or that the said existing contracts, engagements, and liabilities shall be duly adopted and

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assumed by the consolidated company except as herein expressly altered or rescinded; second, that all laws heretofore made in reference to the said Baltimore & Susquehanna Railroad Company and not repealed or modified by the legislature of Maryland, and all ordinances relating to said company heretofore made and not repealed by the mayor and said council of Maryland, shall be binding and operative upon the said consolidated company, so far as its property or its operations may be within the jurisdiction of the State of Maryland or the City of Baltimore respectively, and so far as the laws or ordinances may be applicable to and consistent with the new organization of the said consolidated company; third, that the consolidated company shall have power from time to time to establish its capital stock at an amount not exceeding eight millions of dollars, the same to be represented by such number of shares, and the said consolidated company shall have power to issue their bonds convertible into stock on such terms as the company may prescribe, and to secure the same by one or more mortgages for any such amounts as they may find necessary for paying off any existing debt of the company.

After providing for a board of directors and officers of the new or consolidated company, the act proceeded to say:

That the company shall make and use a common seal, and possess all the corporate powers and privileges, and be subject to all the duties and obligations not inconsistent with this act, and its general intent, which are expressed in the charter heretofore granted to the said Baltimore & Susquehanna Railroad Company, and its supplements: Provided, that this clause shall not be construed to deprive the parties to the said consolidated company of the right or authority to make such provisions and regulations, notwithstanding said original charter and its supplements, as may be necessary to create and establish said consolidated company, and bring its organization into agreement and consistency with the terms and conditions of the charter of the several companies of which the said consolidated company...

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