246 Mass. 242 | Mass. | 1923
This is a petition under G. L. c. 63, § 77, for the recovery of a franchise tax collected for the year 1920. The validity of the tax depends upon the correct answer to the question, whether the petitioner is taxable osa" domestic business corporation ” within the meaning of those words in St. 1919, c. 355, § 1. It there is provided that" The term 1 domestic business corporation ’ shall mean every corporation organized under or subject to the provisions of” St.
1. Succinctly stated, the main point to be decided is whether the petitioner is a corporation organized for the purpose of carrying on the business of a canal company.
The purpose for which a corporation is organized must be ascertained from its charter. The petitioner was incorporated by a special act. St. 1845, c. 163. Its title is simply “ An Act to incorporate the Essex Company.” It consists of eleven sections. By § 1 certain persons “ are hereby made a corporation ... for the purpose of constructing a dam across Merrimack River, and constructing one or more locks and canals in connection with said dam, to remove obstructions in said river by falls and rapids . . . and to create a water power to use, or sell, or lease to other persons or corporations, to use for manufacturing and mechanical purposes.” The corporation was authorized by § 2 to hold real estate not exceeding a specified value “ exclusive of the expenditure for the dam and canals.” By § 3 it was empowered “ to construct and maintain a dam across said river . . . and all such canals and locks as may be necessary for the purposes aforesaid; and, for the purpose of making said dam, and constructing the main canal for navigation,
It appears from this analysis that, of the eleven sections of the act, three relate exclusively to canals and locks, one to canals and locks and to fishways, four to the dam and to canals and locks, one to fishways, one to the height of water to be raised by the dam, and one to the time when the act shall take effect. In printed space much more of the act of incorporation is devoted to canals and locks than to any other single subject, and more than to all other subjects combined. Manifestly the dam was useful, although by the agreed facts not essential, in its physical aspects to the use and operation of the canal as well as to the development and distribution of water power.
In a sense the act of incorporation recognizes the Merrimack River as a public highway, because by § 3 the “ corporation shall not obstruct the passage of rafts, masts, or floats of timber down said river earlier than the first day of June, in building said dam, nor keep the same obstructed for a longer time than five months before the opening of said canal for the passage thereof.” The canal is thus a substitute for the river for the uses of the general public for these purposes. Public duties in this respect indubitably are imposed on the corporation. Reference has already been made to other provisions of the act of incorporation, which impose upon the corporation performance of public duties respecting the navigation of the river in the sense of its uses for travel up and down the stream in boats and other craft for trade, business, convenience or pleasure. Brosnan v. Gage, 240 Mass. 113, 117, 118, and cases there collected. Whether it is navigable below the dam in the common law
The long specification of tolls to be charged for the use-of the canal, the detailed provisions as to the construction of locks and the careful regulation respecting access to and egress from the canal are proof that at the time of the passage of the special act of incorporation the canal with its necessary accessories was regarded as highly important both by the incorporators and by the General Court. The erection and maintenance of the canal by the corporation was made imperative by §§ 6 and 7. It was not merely a part of a general franchise to be exercised or not at the option of the corporation.
The provision in § 1, to the effect that the corporation “ shall have all the powers and privileges, and be subject to all the duties, and liabilities, and restrictions, set forth ” in Rev. Sts. cc. 38 and 44, the business corporation laws of that time, is not enough to stamp the corporation solely as a business and not as a canal corporation. There was not then and has not been since a general law by name governing canal as distinguished from other corporations. Naturally reference was made to existing statutory provisions of a general nature governing corporations. The prefatory phrase in § 9, to the effect -that, “ For the purpose of reimbursing said corporation in part for the cost and expense ” incident to the maintenance and operation of the locks and canals, the corporation may charge the specified tolls, does not show that the canal and locks were merely an incident of the main corporate purpose of the defendant.
Inspection of the act alone, apart from the subsequent history of the corporation, well might lead to the conclusion that more emphasis was placed upon the construction and operation of the canal than upon the creation of a water power for use or for sale or lease to others. As matter of construction of the act of incorporation, it cannot be held that the development of power was the dominant purpose
The case at bar also is distinguishable from other instances of corporations with one paramount purpose compulsorily or voluntarily assuming other incidental and subsidiary functions partaking of a different nature without affecting their chief and inherent character. See, for example, G. L. c. 164, § 83; c. 165, § 2.
The history of the corporation and its present activites as set forth in the agreed statement of facts show beyond peradventure that the canal has become a comparatively insignificant part of the business of the defendant. Tolls have never been charged on goods or boats or anything passing through its canal. The maintenance of the canal as a means of travel and navigation is a burden and not an advantage to the petitioner. Judged by a survey today of the corporate energies of the petitioner, it would be regarded as a business and not as a canal corporation.
The obligation to maintain the canal, however, still rests on the corporation. The right to exercise all charter privileges with respect to being a canal corporation is unimpaired. That was granted absolutely by the Legislature by the act of incorporation. Its continuance was not made subject to any condition or limitation as to use or profit or receipt of tolls. Nonuser does not operate as a surrender or forfeiture of the charter. Heard v. Talbot, 7 Gray, 113, 119. Attorney General v. Massachusetts Pipe Line Gas Co. 179 Mass. 15,19. Such nonuser may be the basis of proceedings by the Attorney General to have the charter declared forfeited. Attorney General v. Adonai Shomo Corp. 167 Mass. 424. Attorney General v. Methuen, 236 Mass. 564, 580, 581. This is very different from treating charter rights as nonexistent in any other way.
The result follows in the opinion of a majority of the court
This conclusion, although supported by the remark in Essex Co. v. Lawrence, 214 Mass. 79, 87, to the effect that the petitioner was a canal corporation “ in some aspects of its charter duties,” has been reached independently of that decision.
All the factors set forth in the record are not sufficient to overcome the provisions in the charter of the petitioner which stamp it as a canal corporation as well as a business corporation.
It may be that this result works a hardship upon the petitioner in view of present conditions respecting the use and value of its franchise to be a canal corporation. But that cannot be regarded as a significant matter by courts in the construction of tax laws, which must be interpreted according to their words and not according to their spirit. City National Bank v. Charles Baker Co. 180 Mass. 40.
2. The petitioner cannot rightly be taxed solely as a domestic business corporation for a further reason.
The “ right to take or condemn land within the Commonwealth,” which is one of the expressed characteristics of corporations excluded from the provisions of St. 1919, c. 355, § 1, is conferred upon Essex Company by the words of § 3 of its charter both with relation to the dam and to the main canal for navigation. Whether at this moment the corporation, in view of the constructions already made, could put forth that power need not be decided. When the purposes of the charter have been accomplished, that power doubtless has been exhausted. Brigham v. Agricultural Branch Railroad, 1 Allen, 316. But the power cannot be thought thereby to be extinguished. If and when a further exercise of the power becomes necessary to repair misfortune or disaster, or to make replacements arising from injuries wrought by vis major or other cause, the corporation possesses the right to rehabilitate itself and to put itself in a position to continue all its corporate functions. Indeed, it appears that the corporation has never had occasion yet to avail itself of this power.
Petition dismissed.
