Maryland Tube & Iron Works v. West End Imp. Co.

• Decision Date: 10 February 1898
• Citation: 39 A. 620,87 Md. 207
• Parties: MARYLAND TUBE & IRON WORKS OF HAGERSTOWN v. WEST END IMP. CO. OF HAGERSTOWN, WASHINGTON COUNTY.
• Court: Maryland Court of Appeals

39 A. 620

87 Md. 207

MARYLAND TUBE & IRON WORKS OF HAGERSTOWN v. WEST END IMP. CO. OF HAGERSTOWN, WASHINGTON COUNTY.

Court of Appeals of Maryland

February 10, 1898

Appeal from circuit court, Washington county.

Bill by the Maryland Tube & Iron Works of Hagerstown against the West End Improvement Company of Hagerstown, Washington County. Decree for defendant, and plaintiff appeals. Affirmed.

Argued before MCSHERRY, C.J., and BRYAN, PAGE, BOYD, and PEARCE, JJ.

Hy. Kyd Douglas and F. W. Mish, for appellant. Alex. Armstrong Norman B. Scott, Jr., and S. B. Loose, for appellee.

PEARCE J.

The bill was filed in this case September 19, 1892, by the appellant against the appellee, for the specific performance of an agreement to convey land, made in writing between the appellee on the one part and O. C. Knipe and others on the other part, who subsequently assigned all their interest in said agreement to the appellant, with the consent, as it alleges, of the appellee. The appellee answered the bill admitting the execution of the agreement, but alleging various defenses to the bill, among which is a denial of the existence of the appellant as duly incorporated under the laws of Maryland, and a denial of its right to maintain this suit by reason of its failure to comply with the provisions of chapter 536 of the Acts of 1890. The general replication was filed, and a mass of testimony was taken, and the bill was dismissed by the court below (Judge Stake) on the ground that the appellant had no legal existence as a corporation and was, therefore, not entitled to maintain the suit. Under the agreed statement of facts upon which this appeal was brought into this court, the sole question for review is the right of the appellant to maintain this suit without having first paid the tax of one-eighth of 1 per cent. on the capital stock of the company in the manner provided by Act 1890, c. 536. The statement of facts admits that both the appellant and the appellee are incorporated in Washington county under the laws of Maryland, and that the agreement sought to be enforced is correctly set forth in the record. It also admits that at the time the bill was filed the appellant had not paid, and had not been notified to pay, the first installment of bonus as per chapter 536, Acts 1890, but that it did on the 18th of May, 1893, pay the same to the comptroller of the state. The record does not show the date when this statement of facts was made or filed, but the reference therein to the opinion of the court dismissing the bill which was filed June 1, 1897, shows it was made and filed after that date. This is only important to show that the admission of appellant's due incorporation can only be regarded as an admission of incorporation at that date June, 1897.

It will thus be seen the question before the court is a narrow one. In the answer, the agreed statement of facts, and in the opinion of the court below, as well as in the argument in this court, the case was regarded as depending wholly upon the construction of chapter 536, Acts 1890, and, if this were the fact, there would be less difficulty in reaching a satisfactory conclusion. But the act of 1894 (chapter 114) deals with the same precise subject-matter, and if it can be said it does not repeal the act of 1890, it yet materially changes the law applicable to cases arising under the act of 1890, and we are required to consider and construe the act of 1894. It will be seen that the titles of these acts are in precisely the same words, except that the act of 1890 is, "An act to add a [one] new section to article eighty-one of the Code, *** to be designated as section eighty-eight A," while the act of 1894 is, "An act to add six new sections to article eighty-one of the Code, *** to be designated as sections eighty-eight," F, G, H, I, J; and that the word "corporation" is used in the title of the latter act where the word "company" is used in the title of the former. The act of 1894 specifically provides that no corporation incorporated prior to the date of the passage of that act shall in any manner, by that act, be relieved or released from the payment of any bonus due under the act of 1890; and this proviso, taken in connection with the repealing clause in section 2 of that act, clearly indicates the legislative purpose to repeal the future operation of the act of 1890, while saving all remedies and results by reason of the nonpayment of any bonus by any corporation incorporated prior to the passage of that act. It should be noted here that chapter 244, Acts 1890, adds five new sections to article 81 of the Code, to come in after section 88, and to be designated as sections 88 A, B, C, D, and E. These sections deal only with taxes on the assessed value of the shares of capital stock of corporations, and not with the bonus tax. Then came chapter 536, Acts 1890, which added one new section to article 81 of the Code, to come in after section 88, and to be designated 88A, so that under these two acts there were two sections each designated 88A. It is thus made evident that the draftsman of chapter 114, Acts 1894, with these two acts of 1890 before him, and intending to avoid the existing confusion arising from the designating of two sections as 88A, designed to repeal Act 1890, c. 536, and to substitute section 88A of that act for section 88A of the Act 1890, c. 536, leaving sections 88A--E, c. 244, Acts 1890, to stand in their regular order of precedence. Montel v. Coal Co., 39 Md. 171, 174. The appellant was incorporated prior to May 18, 1893, since it paid the first installment of bonus tax on that date, but it appears from examination of the act of 1894 that the proceeding prescribed therein for the recovery of the bonus tax upon corporations, and the provisions setting forth the result of nonpayment, are applicable as well to corporations created before as after the passage of that act, and that, if there is anything to be found in that act not contained in the act of 1890 which would sustain the appellant's right to maintain this suit, it is entitled to the benefit thereof. Comparing chapter 244, Acts 1890, with chapter 114, Acts 1894, it is evident that the draftsman of the act of 1894, overlooking the true theory and design of the act of 1890 (chapter 536), or deliberately intending to alter its true theory and design, substantially provided the same remedy and procedure for the recovery of the bonus tax as was, by chapter 244 of 1890, provided for the recovery of the tax upon the assessed value of capital stock; and it is now urged by the appellant, since the oral argument, that, as the act of 1894 subjects the corporation to suit by the state for the recovery of this bonus tax, it necessarily follows that the corporation has a legal existence for all purposes, and therefore full capacity to sue. But with this contention, however plausible and forcible the argument at first blush, we are not able, after full and careful consideration, to agree; and we are of opinion that, if the appellant would be held incapable of maintaining this suit under the act of 1890, it must be so held under the act of 1894. To hold otherwise, and to hold, as the appellant urges, that this act recognizes a corporation which has not paid the bonus tax when due as an existing, moving, active corporation for all purposes, would be to strike with absolute nullity the plain and imperative language of section 88F, which declares that no such corporation shall have or exercise any corporate powers until such bonus has been paid. It is settled law that charters or statutes conferring franchises on a corporation are to be construed in favor of the public, rather than the corporation; and to gratify this rule where the charter, as here, is under a certificate, the general law is to be read into the certificate. Every word, phrase, or sentence doubtful or ambiguous is to be interpreted in favor of the state. Thompson, in his work on Corporations (section 5660), says: "The rule is simple. That which the company may do by its charter it may do. Beyond that its acts are illegal."

In Roland Park Co. v. State, 80 Md. 448, 31 A. 298 Acts 1890, c. 536, and Act 1894, c. 114, were considered on another point, and it was said: "What we have to do is to discover the legislative intention, and to give it, when ascertained in accordance with established rules, full and complete effect; *** and this intent may be gathered, not merely from the language of the enactment, but also from the causes or necessity which prompted its passage. A result which may flow from one construction or another of a statute is always a potent fact, and is sometimes in and of itself conclusive as to the correct solution of the question as to its meaning." One result which might follow the establishment of appellant's contention would be that corporations defaulting under this act might not only continue in the full exercise of the prohibited powers for two years after such default, but might, before the expiration of that period, dispose of all their property, and leave the state a barren judgment for this bonus. Such a result could not have been within the legislative contemplation, and ought not to be permitted if it can be avoided by any sound construction of the whole act. It is a cardinal rule of construction that, where one part of a statute is susceptible of two constructions, and the language of another part is clear and definite, and is consistent with one of such constructions and opposed to the other, that construction which will, under all clauses of the statute, be harmonious, must be adopted. Magruder v. Carroll, 4 Md. 348, 349; Alexander v. Worthington, 5 Md. 472. Sections 88F and 88H must be construed together, and by so doing section 88F...