State v. Maine Cent. R. Co.

• Decision Date: 25 January 1877
• Citation: 66 Me. 488
• Parties: STATE v. MAINE CENTRAL RAILROAD COMPANY. 1876.
• Court: Maine Supreme Court

66 Me. 488

STATE v. MAINE CENTRAL RAILROAD COMPANY.

1876.

Supreme Judicial Court of Maine.

January 25, 1877

ON AGREED STATEMENT OF FACTS sufficiently appearing in the opinion.

DEBT to recover a state tax.

Plea nil debet, with a brief statement that the statute, by authority of which the tax was assessed, is in conflict with the provision of their charter and of the constitution of this state and of the United States in this, that it impairs the obligation of the contract in their charter.

L A. Emery, attorney general, with whom was R. P Tapley, for the state.

J. H. Drummond & J. O. Winship, for the railroad.

I. The Maine Central Railroad Company was originally formed by the consolidation of the Androscoggin & Kennebec, and the Penobscot & Kennebec Railroad Companies.

The charters of these two companies are identical in all matters affecting this case.

By the act of 1831, c. 503, acts of incorporation are liable to be amended, altered or repealed, at the pleasure of the legislature, " unless there shall have been inserted in such act of incorporation an express limitation or provision to the contrary."

In these charters there is inserted the express provision that they shall not be " revoked, annulled, altered, limited or restrained, without the consent of the corporation."

This clause prevents the legislature from taking away anything granted by these charters. State v. Noyes, 47 Me. 189.

Both these charters provide that the corporations shall not be subject to any other tax than the one provided therein; and the tax sued for is different from that.

This exemption was a contract which the legislature had no power to repeal. 2 Curt. 498. 15 Curt. 338. 21 Curt. 190, 230. 18 How. 331, 384. 1 Black. 436. 4 Wall. 143, 535. 8 Wall. 430, 439. 13 Wall. 264, 269. 15 Wall. 454, 460.16 Wall. 244. 18 Wall. 206. 20 Wall. 36. 21 Wall. 492. 22 Wall. 215.

II. These two charters, therefore, contained valid exemption from taxation, and when the two companies were consolidated, this immunity passed to the consolidated company.

The act of consolidation 1856, c. 651, § 4, provides in express terms, that the " new corporation shall have all the powers, privileges and immunities possessed by each of the corporations" consolidated. Separate, they each possessed the same immunity from taxation; consolidated, they possess the same immunity that each had, by the express terms of the act.

III. The consolidation under the act of 1873, was to be made and was made according to the terms of the act of 1856, giving the consolidated company, the same immunities which each separate company already had.

It is manifest that each portion of the consolidated railroad must be operated under the provisions of its original charter; and the rights, powers and immunities of the consolidated company, for a given portion of the railroad must be found in the charter under which that portion was constructed. By the act of consolidation all these pass to the defendants.

This is the express decision of the supreme court of the United States in Tomlinson v. Branch, 15 Wall. 460; the Delaware Railroad Tax case, 18 Wall. 406; Humphrey v. Pegues, 16 Wall. 244; Branch v. Charleston, 2 Otto 677; Central Railroad and Banking Co. v. Georgia, 2 Otto 665.

In these cases, it is held that if a company with an immunity from taxation consolidates with one without such immunity, the consolidated company has the immunity as to the road of the former, and not as to the road of the latter.

The last case also decides that an act authorizing such a consolidation, passed after the enactment of a law like our statute of 1833, does not subject the consolidated company to that law. The case last cited is directly in point, in favor of the defendants, upon every question thus far raised in this case.

But it is said that the charters of the two companies require certain duties to be performed in relation to the tax by certain officers of the company, and that those duties cannot be performed by the officers of the consolidated company, and therefore, the whole clause falls. But the act of the consolidation requires the officers of the consolidated company to perform all the acts required from either of the two companies; and one familiar with railroads knows that the tolls are based upon the miles traveled, and that it is as easy to make returns of the earnings of each portion of the consolidated road, as it was of each road when operated separately from the other.

APPLETON C. J.

This is an action of debt to recover of the defendant corporation a tax duly assessed upon its " corporate franchise" in accordance with the provisions of c. 258, of the laws of 1874, and c. 115, of the laws of 1876.

The defendant corporation is composed of what were originally five several railroad corporations. It is the result of two consolidations.

The Androscoggin & Kennebec Railroad Company was incorporated March 28, 1845, and was afterwards organized, and constructed its railroad from Waterville to Danville.

The Penobscot & Kennebec Railroad Company was incorporated April 7, 1845, was afterwards organized, and constructed its railroad from Bangor to Waterville, where it connected with the Androscoggin & Kennebec Railroad.

In accordance with the provisions of " an act to authorize the consolidation of certain railroad corporations," approved April 1, 1856, and amended March 17, 1862, by the repeal of the ninth section thereof, the Androscoggin & Kennebec, and the Penobscot & Kennebec railroad companies were consolidated into one corporation under the name of the Maine Central Railroad Company. This new corporation was organized on October 28, 1862, and it has ever since owned and operated the railroads of the two corporations of which it was composed.

The Kennebec & Portland Railroad Company was incorporated April 1, 1836; it was afterwards organized, and constructed a railroad from Augusta to Portland; by a legislative authority it issued its bonds secured by a mortgage of its railroad and franchise; in 1859, proceedings were commenced under R. S. 1857, c. 51, and on May 18, 1862, the foreclosure of its mortgage was perfected, and on May 20, 1862, a new corporation was formed by the holders of the bonds secured by said mortgage, under the law of 1857, under the name of the Portland & Kennebec Railroad Company, which owned and operated the railroad constructed by the Kennebec & Portland Railroad Company, until it was consolidated with the Maine Central Railroad Company.

The Somerset & Kennebec Railroad Company was chartered August 10, 1848, was organized, and constructed a railroad from Skowhegan to Augusta.

The Androscoggin Railroad Company was incorporated August 10, 1848, and was duly organized, and constructed a railroad from Farmington to Leeds Junction. By legislative authority it issued its bonds secured by a mortgage of its railroad and franchise. This mortgage was foreclosed under R. S. 1857, c. 51, on May 11, 1865; and the holders of its bonds secured by mortgage formed a corporation by the name of The Leeds & Farmington Railroad Company, which owned and operated said railroad.

On February 26, 1873, " an act for the consolidation of certain railroads" was passed by the legislature, by virtue of which the Portland and Kennebec Railroad Company, the Somerset & Kennebec Railroad Company and the Leeds & Farmington Railroad Company were consolidated with the Maine Central Railroad Company into one corporation; thus forming a new corporation, which retained the name of the Maine Central Railroad Company.

Since November 16, 1874, the Maine Central Railroad Company, under the last statutory consolidation, has owned and operated the railroads consolidated with it as well as the railroads before that time owned by itself and acquired by the previous consolidation to which we have referred.

The tax in controversy is assessed upon the new corporation as organized under the last act of consolidation.

The validity of the tax is denied. In defense it is urged that some or all of the corporations, by whose union under a new organization, the defendant corporation exists, were by their several charters made liable only to a special and conditional taxation, and that the state had restricted its general right of taxation to the limited taxation authorized in said charters, that these several charters constitute contracts with the state, and that the act under which the tax in controversy is assessed, is in violation of those contracts, by impairing their obligation, and is therefore, in contravention of the constitution of the United States, art. 1, § 10, which prohibits any state from passing any " law impairing the obligation of contracts."

The charters of the Penobscot & Kennebec Railroad Company and of the Androscoggin & Kennebec Railroad Company, each contained the following sections:

" Sec. 14. Said corporation shall keep, in a book for that purpose a regular account of all their disbursements, expenditures and receipts; and the books of said corporation shall be open at all times to the inspection of the governor and council, and of any committee duly authorized by the legislature; and at the expiration of every year, the treasurer of said corporation shall make an exhibit, under oath, to the legislature, of the net profits derived from the income of said railroad.

Sec 15. All real estate purchased by said corporation for the use of the same, under the fifth section of this act, shall be taxable to said corporation by the several towns, cities and plantations in which said lands may lie, in the same manner as lands owned by private persons, and shall in the valuation list be estimated the same as other real estate, of the same quality,...