State v. Consolidated Gas, Elec. Light & Power Co. of Baltimore
| Decision Date | 16 November 1906 |
| Parties | STATE v. CONSOLIDATED GAS, ELECTRIC LIGHT & POWER CO. OF BALTIMORE. |
| Court | Maryland Court of Appeals |
Appeal from Superior Court of Baltimore City; John J. Dobler, Judge.
Action by the State against the Consolidated Gas, Electric Light & Power Company of Baltimore. From a judgment in favor of defendant, plaintiff appeals. Reversed, and new trial awarded.
Argued before McSHERRY, C.J., and BRISCOE, BOYD, PEARCE, SCHMUCKER and JONES, JJ.
William S. Bryan, Jr., Atty. Gen., for appellant.
Edgar H. Gans, for appellee.
The state of Maryland sued the appellee to recover a balance alleged to be due by it for the bonus tax of one-eighth of one per cent. on its capital stock, under section 98 of article 81 of the Code. The appellee is a corporation formed by the consolidation of the Consolidated Gas Company of Baltimore city, and the Consolidated Gas, Electric Light & Power Company. The certificate of consolidation, executed by those companies, and the plan of consolidation, issued by the Continental Trust Company, were filed as exhibits, and made part of the declaration. A demurrer to the nar. was sustained by the court below, and judgment entered for the defendant. From that judgment this appeal was taken.
By article 4, § 1, of the certificate of consolidation it is provided that $9,585,484 thereof shall be common stock and $12,316,774 thereof shall be preferred stock, divided into two classes--the first class having $700,000 of prior lien preferred stock and the second having $11,616,774 of preferred stock. In the certificate, the appellee is spoken of as the "Consolidated Company," the Consolidated Gas Company as the "Gas Company," and the other as the "Power Company," and we will use those abbreviations in this opinion. The certificate of consolidation provided, in detail, as to how the stock of the two constituent companies should be taken up, or paid for and article 7 has this provision: "When the stock of the gas company, amounting approximately to sixty-one percent. of the moral issue thereof, shall have been exchanged in the manner herein provided for the appropriate amounts of preferred and common stock of the consolidated company, such preferred and common stock of the consolidated company shall be canceled by the power company." We do not find the amounts of the capital stock of the constituent companies mentioned in the certificate, but in the plan of consolidation they are stated, and that of the gas company is said to be The distribution of new securities of the consolidated company proposed to be issued is therein given with the following statement: "The 61 per cent. (approximately) of new securities which are exchanged for the gas company stock owned by the power company amounting to $5,256,720 of new preferred and $3,285,450 of new common will be canceled, upon the receipt thereof by the power company." A statement is then made of the capitalization of the consolidated company after such cancellation--making a total of $13,360,088 of stock.
The precise question to be determined is whether the bonus tax must be paid on the $21,902,258, or merely on the $13,360,088, being the balance after deducting the canceled stock. The statute requires every corporation incorporated under any general or special law of this state (except cemetery companies and others named) to "pay to the State Treasurer for the use of the state a bonus of one-eight of one per centum upon the amount of capital stock which said company is authorized to have ***, and no company as aforesaid which shall be incorporated after the 21st day of March, 1894, shall have or exercise any corporate powers until said bonus has been paid to the State Treasurer." It is conceded by the appellee that the consolidated company is a new corporation, and hence was liable for the bonus tax--the only point in controversy being the amount for which it was so liable. The statute authorizing the consolidation of corporations (sections 45, etc., of article 23 of Code Pub. Gen. Laws) in terms provides that they "may by such union form one new corporation," and there seems to be no doubt about it under that and other language used in this section. See, also, State v. B. & L. R. R. Co., 77 Md. 489, 26 A. 865; People v. Rice, 57 Hun, 486, 11 N.Y.S. 249 (affirmed in 128 N.Y. 591, 28 N.E. 251); 10 Cyc 302. Section 45 provides that such union or consolidation shall be made upon such terms and conditions as shall be agreed upon by the said corporations; "and the said new consolidated corporation shall have such name and such capital stock as shall be agreed upon," etc. A certificate of the said union and of the particulars thereof is required to be executed by the corporations, "and the acknowledged and recorded as other certificates of incorporation are in this article directed to be acknowledged and recorded." When this certificate was executed and recorded, what did it show the capital stock to be? Article 4, § 1, in terms says, "The total authorized capital stock of the corporation shall be $21,902,258, which shall be divided into 219,022.58 shares of the par value of $100 each, and it then goes on to say how much "of such total authorized capital stock" shall be common stock, and how much preferred. It cannot be doubted that the authorized capital of this corporation was that mentioned in article 4, unless there is some qualification of that elsewhere in the certificate. When a corporation is formed under section 50, etc., of article 23, it is required to state in its certificate of incorporation, amongst other things, the amount of capital stock, the number of shares and the amount of each share, and the amount so named is the basis for the bonus tax. If such a corporation should state in its certificate that the capital stock should be $100,000,...
To continue reading
Request your trial