New York Cent. R. Co. v. Stevenson

• Citation: 277 Ill. 474,115 N.E. 633
• Decision Date: 06 April 1917
• Docket Number: No. 11148.,11148.
• Parties: NEW YORK CENT. R. CO. v. STEVENSON.
• Court: Illinois Supreme Court

277 Ill. 474

115 N.E. 633

NEW YORK CENT. R. CO.

v.STEVENSON.

No. 11148.

Supreme Court of Illinois.

Feb. 21, 1917.

Rehearing Denied April 6, 1917.

Appeal from Circuit Court, Sangamon County; James A. Creighton, Judge.

Suit by New York Central Railroad Company against Lewis G. Stevenson. Decree for complainant on overruling defendant's demurrer to the bill, and defendant appeals. Affirmed.

P. J. Lucey, Atty. Gen., and Thomas E. Dempcy, Asst. Atty. Gen., for appellant.

Edward T. Glennon, Robert J. Cary, and Bertrand Walker, all of Chicago (George B. Gillespie, of Springfield, of counsel), for appellee.

FARMER, J.

The New York Central Railroad Company came into being as a corporation through a consolidation agreement entered into April 29, 1914, between eleven different railroad companies, two of which were corporations organized under the laws of Illinois. Said two Illinois corporations, the Lake Shore & Michigan Southern Railway Company and the Chicago, Indiana & Southern Railroad Company, in May, 1914, presented their joint petition to the State Public Utilities Commission of Illinois asking leave to consolidate with the other nine railroad corporations. On the 22d day of December, 1914, the commission entered an order approving the proposed consolidation and granting the prayer of the petition. The petitioning companies thereupon paid into the state treasury, pursuant to the requirements of section 31 of the Public Utilities Act (Hurd's Rev. St. 1915-16, c. 111a) and the order of the commission, $249,590.46; the same being an amount equal to 10 cents for every $100 of the capital stock of the proposed consolidated corporation, which the commission, pursuant to the prayer of the petition, authorized to be issued upon the completion of the organization of the new corporation. On the day this order was made by the utilities commission, said two Illinois corporations presented to the Secretary of State, for filing and recording in his office, the articles of consolidation and for the organization of the new corporation. They tendered the Secretary of State a filing fee of one dollar. The Secretary of State refused to accept, file, and record the papers until he was paid the fee provided for by sections 10a and 10b of chapter 53 of Hurd's Statutes of 1916. The capital stock specified in the articles of the proposed corporation was $300,000,000, and the fee to be paid, if the above statute applied, was $300,045. The said petitioning companies protested against being required to pay said sum on the ground that the statute relied on by the Secretary of State did not apply in this instance and that the payment of said sum was not required by law. The Secretary of State persisted in his refusal to receive, file, and record the articles unless the sum demanded was paid, whereupon the said sum of $300,045 was paid under a stipulation, by the terms of which the Secretary of State agreed to hold said sum until the second Wednesday of January, 1915, on which date, unless enjoined by a court of competent jurisdiction, he would pay it into the state treasury. In the event of being enjoined, he agreed to hold said sum subject to the final determination and order in the case. Upon the payment of said sum to the Secretary of State, he received, filed, and recorded the articles effecting the incorporation of the New York Central Railroad Company, and it thereupon filed the bill in this case to enjoin the Secretary of State from paying said fee into the state treasury and to require him to account for and pay the same over to complainant. The Secretary of State demurred to the bill. The demurrer was overruled, and, defendant not further answering, a decree was entered in accordance with the prayer of the bill, and defendant appealed.

The contention of appellee as set forth in its bill is that the payment demanded by the Secretary of State was under the provisions of sections 10a, 10b, and 10c of ‘An act regarding fees for the incorporation and the increase of capital stock of companies and corporations in this state,’ in force July 1, 1895, as amended (Hurd's Stat. p. 1325); whereas, it is claimed that so far as said provisions of said statute might be deemed applicable to the filing and recording of the agreement of consolidation described in the bill, by which appellee came into existence as a corporation, they have been repealed by ‘An act to provide for the regulation of public utilities,’ in force January 1, 1914.

The capital stock of appellee was $300,000,000; the articles reserved from the present issue something over $50,000,000. The present issue of $249,590,460 was for the purpose of retiring the stock of the constituent companies. That was the amount the utilities commission was asked to consent to the issuance of, and payment made for such consent was based upon the issuance of that amount of stock.

The question presented is whether the provisions of sections 10a, 10b, and 10c of chapter 53, referred to for convenience as the Incorporation Fee Act, were superseded or repealed, by implication, by section 31 of the Public Utilities Act. The appellee contends that the payment required by section 31 of the Public Utilities Act is payable into the state treasury as taxes levied for state purposes, and that as applied in a procedure consolidating public utility corporations it is a tax exacted in the process of granting a franchise to do business as a body corporate and in its nature and application is identical with the tax collectible under the Incorporation Fee Act; that the collection of both is double taxation, which is contrary to the public policy of the state. Appellant insists the two exactions of the two taxes or payments are for entirely distinct and different objects; that the tax under the Incorporation Fee Act is upon the individual incorporarators and is said by them before the corporation comes into existence, while the tax required by section 31 of the Public Utilities Act is a tax upon the corporation after its creation.

Section 10a of the Incorporation Fee Act requires the payment to the Secretary of State of $50, and in addition thereto $1 for each $1,000 of capital stock over $5,000. The payment made to the Secretary of State by appellee is admitted to be the correct amount if appellant was entitled to collect it before filing the papers for incorporation. Section 31 of the Public Utilities Act is as follows:

‘The commission shall charge every public utility receiving permission under this act for the issue of stocks, stock certificates, bonds, notes and other evidences of indebtedness an amount equal to ten (10) cents for every $100 of such securities authorized by the commission, and the same shall be paid into the state treasury before any such securities shall be issued.’

Before the petitioning corporations presented incorporation papers to the Secretary of State for filing, they secured permission of the State Utilities Commission to issue 2,495,904.60 shares, which was the amount required to retire the stock of the constituent companies, the remaining 504,095.40 shares to be issued when authorized by the board of directors, ‘with the approval of such governmental bodies as shall have authority in the premises.’ Upon such consent being obtained, said petitioning companies paid into the state treasury the tax required by said section 31, $249,590.46.

In our view the decision of the case depends upon what the intention of the Legislature was in the passage of the Public Utilities Act, especially section 31. Prior to the passage of the Public Utilities Act, the state reserved no visitorial and regulatory powers over corporations created by it. The act gives the commission supervision of the issuance of stocks, stock certificates, notes, bonds, and other evidences of indebtedness of public utility corporations. Subject to the provisions of the act and the order of the commission, a public whether a corporation, company, association, joint-stock company or association, firm, partnership, or individual, may issue stock, stock certificates, etc., for the purposes mentioned in the act. The commission is given authority to grant permission for the issue of stocks, etc., in the amount applied for, or a lesser amount, or not at all, and may attach to the exercise of the permission such conditions as it may deem reasonable and necessary. Unless the consent of the commission is obtained, no public utility may merge or consolidate with another public utility. The capitalization formed by the consolidation of two or...