Nichols v. New Haven & Northampton Co.

42 Conn. 103 | Conn. | 1875

Lead Opinion

Park, C. J.

The first question presented by this record requires a consideration of the nature and character of the tax in controversy. Is it a tax imposed upon the property of the defendants, in5 contradistinction to a tax imposed upon the defendants themselves as a body politic ?

If the tax is of this character, then another question arises, which is, are the defendants entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ?

These are the two leading questions in the case, and we will consider them in their order.

First, then, is the tax in question a tax upon property ? We think it is, although the cases of Coite v. The Society for Savings, 32 Conn., 173, and Coite v. The Connecticut Mutual Life Ins. Co., 36 Conn., 512, seem to countenance the contrary doctrine.

The court went, we think, to the verge of the law in those cases, in holding that the tax then in controversy was a tax upon the corporations themselves and not upon their property. The cases were, however, well considered, and are recent ones, and we do.not feel disposed to disturb them. But we do not incline to go further in the same direction, as we should have to do, should we hold that the tax now in controversy is likewise a corporate tax.

The principal argument in support of the conclusions of the court in those cases was, that the statutes on which the cases were based, took no notice of the real value of the assets of the corporations. In Coite v. The Society for Savings, the court says :—“ It [the statute] takes no notice of the manner in which this sum [the amount of the deposits] may be invested, or whether it is invested at all; and it never inquires into the profits, or losses, or conditions, or prospects, of the bank. If its assets double in value, it pays no more; if they decrease one-half, it pays no less. If they consist partly of forged notes not collectible, no allowance is made. Why then should a deduction be claimed when a like part is invested in notes not taxable merely?” The same argument was used in the other case referred to.

Chief Justice Denio uses the same reasoning in giving the opinion of the Court of Appeals of the State of New York in the case of the The Bank of the Commonwealth v. The Commissioners of Taxes, 23 N. York, 220, in order to show that the tax in that case was a tax upon the corporation itself, and not upon its property. He says:—“It would seem plain enough that it is entirely immaterial what the assets of the bank then are. If the amount of the original nominal capital is alone to be taken into account, it would be officious and improper, or at least useless, for the assessors to make any examination or inquiry into the actual assets. If it could be shown that the discounted paper held by the bank, or the currency notes in its drawer, were forgeries, the assessors would not z’egard that circumstance; because the assets do zzot ezzter izzto the question, and az’e not znade a part of the data by which the taxable valuation is to be ascertained. Azid for the same z’eason, when it was showzi on behalf of the bank that its securities were not in their zzature taxable, this circumstance became utterly immatez’ial, since neither the character nor amount of such secuzities have anything to do with the question which the taxing officers' were to determine.” But the statute ozi which the present case is based, is materially diffez’ezzt in this respect. It takes notice of the real value of the assets of the corporatiozzs within its purview, in detezmining the aznount of tax they shall pay; for it makes the “ market value of the stock ” the criterion izi ascertaining the amount. The stock of a corporation represents its property, azzd the stock is valuable just in proportion to the amount of such propez’ty. The market value of the stock of a corporation, therefore, is the maz’ket value of all the property of the coz’poration in which the stock has beezi izzvested. If a coz-poz’atiozz has zzot property enough to represent its- entire stock, the stock is depreciated in value; it is below par. If the corporation has more property than enough to represent its entire stock, the stock is at a premium in the market; it is.above its par value. Hence a tax imposed upon the market value of the stock of a corporation, must be a tax imposed upon the market value of the property of the corporatkm which represents the stock. Judge Nelson, in the Bank Tax Case, 2 Wallace, 200, says:—“It is not easy to separate the property in which the capital is invested from the capital itself. It requires some refinement to separate the two thus intimately blended together. The capital is not .an ideal, fictitious, arbitrary sum of money set down in the articles of association, but, in the theory and practical operation of the system, is composed of substantial property, which gives value and solidity to the stock of the institution. It is the foundation of its credit in the business community. The legislature well knew the peculiar system under which these institutions were incorporated, and the working of it; and when providing for a tax upon their capital at a valuation, they could not but have intended a tax upon the property in which the capital had been invested.” This language of Judge Nelson was used in a case where the legislature of the State of New York had passed a law rendering all banks and other moneyed corporations liable to taxation on a valuation equal to the amount of their capital paid in or secured to be paid in and their surplus earnings, and the question was, as here, whether the tax was imposed upon the institutions themselves, or upon their property. The case was not as strong as the case at bar in favor of a property taxation; for the capital was not taken, as it is here, at its market value, but at its nominal value. The case of the Bank of Commerce v. New York City, 2 Black, 620, is precisely analogous to the present case. In 1857 the State of New York directed that the capital stock of banks should be assessed and taxed “ at their actual value.” The question arose whether the law imposed the tax upon the corporations themselves or upon their property, and Judge Nelson in an elaborate opinion held that the tax was a property tax.

It is true that the same court in The Delaware Bailroad Tax Case, 18 Wallace, 206, held the contrary doctrine. This case cannot be reconciled with the two well considered ones we have cited. It is a singular fact that the court, in giving its opinion in this case, makes no reference to those cases, although they had been very recently decided. No reason is given for the opinion. The opinion consists merely, so far as relates to the question we are considering, in a naked declaration that “ the tax is neither imposed upon the shares of the individual stockholders, nor upon the property of the corporation, but is a tax upon the corporation itself, measured by a percentage upon the cash value of a certain proportional part of the shares of its capital stock.” We think the two cases we have cited are by far the better authority.

Again, it is evident from the statute that it seeks to ascertain the value of the property that railroad corporations possess, and to tax that value. Hence it takes, in the first place, the market value of the stock of the corporations, and then adds to that value their funded and floating debts ; for the sum total of the market value of the stock and of the funded and floating debts of a corporation is equal in amount to the total value of the property that the corporation possesses. This is clear. If a corporation has only property enough to pay its debts, its stock has no real value, and ought not to have any market value. If a corporation has more property than enough to pay its debts, the stock has some value; and that value depends upon the excess of property above wliat is required to pay the debts; for, the debts of a corporation must be paid, and before we can come to the value of the stock; property enough to pay these obligations must be set aside, and the value of the stock will of course depend upon the value of what remains. Hence we see, if the stock of a corporation is at its par value, it must hdtve property of some kind, consisting in its railroad, rolling stock, franchise, privileges, immunities, or some other equivalent, equal in value to the amount of its stock. If the corporation is in debt, and the stock still remains at its par value, it must have additional property of some kind, equal in value to the amount of the debts, or else the stock would be at a discount. Hence the statute taxes the market value of the stock of a corporation and the amount of its funded and floating debts; for it must be taxed, like individuals, on all the property it possesses, whether it is in debt or not.

The statute then goes on to say that the valuation thus obtained shall be regarded as fixing the measure of value, of railroads, and of the rights, franchises, and property of such corporations, for purposes of taxation, and that the tax shall be in lieu of all other taxes on railroad property and franchises. And then, as if to put at rest the question whether the tax imposed by it is a tax upon railroad corporations themselves or upon their property, the statute declares that, “ when any tax hereby imposed upon the property and franchise of any railroad company becomes due, &c.” This language of the statute declares the tax to be a tax upon railroad property and franchises. °What further doubt then can there be upon the subject ? The tax is upon every thing that belongs to railroad corporations which is valuable; and everything is included in the phrase “ railroad property and franchises.” This shows that the phrases “ railroad property and franchise of a corporation,” and “ the market value of its stock, together with its funded and floating debts,” are used in the statute as synonymous terms. They mean the same thing. The property is taxed, and the franchise is taxed. State v. The Norwich & Worcester R. R. Co., 30 Conn., 290. This case seems to take it for granted that the tax is a tax upon the property of corporations. The case is a strong one, inferentially, as to the view we have taken of the question.

We are satisfied that the tax is a tax upon the property of the defendants.

But suppose that it were not so, but is to be regarded as a corporate tax irrespective of the defendants’ property, still, are the defendants liable to pay the tax in controversy provided they are entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ? Or, in other words, assuming the tax to be upon the corpus of the defendants, would the Farmington Canal Company be liable to pay the sum in dispute, if they were now in existence operating their canal under their original charter, and the statute had included canal corporations within its provisions, as well as railroad corporations ? This question has been ably discussed by the learned- counsel who have argued the, case.

Manifestly this question depends upon the solution of another ; which is, did the immunity of the Farmington Canal Company include its body politic, as well as the property of the company ? For, obviously, if the immunity extended to the body corporate of the company upon which the tax is assumed to be imposed, then nothing is gained to the State by making the claim that the tax is a corporate tax. The question then is, did the immunity extend to the corporation itself ?

Suppose this question had arisen under a similar statute, as soon as the stock of tlie Farmington Canal Company had been taken and the capital paid in under the.promise of the State that the stock of the company and its income up to six per cent, upon its capital should be forever free from taxation. What would be thought of the integrity of the State in saying to the stockholders in effect, “ True it is that we promised that the stock and net income of the company up to six per cent, upon its capital should never be taxed, in order that the stock of the company might be taken; but we did not promise that the company itself should not be taxed in respect to its stock to the same extent as the stock would have been taxed if no promise had been made ? The State can no more be guilty of fraud in making contracts, and justify itself, than can individuals; and how could it escape from the imputation of bad faith, should it seek to tax the company under such circumstances ? A promise made to the stockholders of a company, enures to the benefit of the company; for the stockholders, in fact, are the company. All its property of every,name and nature belongs to them; and a tax, therefore, in any form upon the company, is a tax, in reality, upon t]ie stockholders of the company. The State knew this when the promise was made. It knew that, if the public were told that the promised exemption from taxation related only to one form of taxation, but under another form the corporation would be taxed, and that too to the same extent as it would otherwise have been taxed if no promise had been made, the stock of the company would never be taken. It knew, therefore, what construction the stockholders must have put upon the promise—that it was a promise of exemption from taxation in every form whatsoever, so far as the stock, and franchise, and property, and the company itself, were concerned. Such being the manifest import of the promise, every consideration of justice and honesty requires that it should have such construction. For, although the promise does not expressly include a tax upon the body politic, still, unless it is included, the State itself cannot show how the stockholders of the company could ever be benefited in the slightest degree by the exemption. The charter of the company protends to hold out inducements to persons to subscribe for the stock. It says, “ Whereas said canal, if completed, would be of great public utility; therefore, for the purpose of inducing persons to sub'cribe to the stock of said company, be it resolved, &c.” There can be no escape from the conclusion that this language was intended for deception, unless the body politic of the company was intended to be included, and was included, in the promised exemption from taxation.

It is true that all exemptions from taxation are to be construed strictly in favor of the State, and against the grantee; but this principle has never been carried so far as to require courts to be governed by the strict letter of the grant, ignoring its manifest import, or so far as to justify bad faith in the making of such contracts.

It might be claimed with truth that the value of the franchise of a corporation enters into and forms a part of the value of the stock of the corporation. The franchise is valuable in proportion to the yearly net income which the corporation receives and is likely to receive in carrying on its business. The stock of the corporation derives its value, to a great extent, from the franchise and income together; and in some cases, these sources of value double and treble its nominal value. Hence the value of the stock of a corporation embraces the value of its franchise; and consequently, if the stock is exempt from taxation, so must the franchise likewise bo exempt. Wilmington Railroad Company v. Reid, 13 Wallace, 264.

Wo entertain no doubt, therefore, that the immunity of the Farmington Canal Company extended to every form of taxation that could be imposed upon the company.

We come now to the last question presented by the record; which is, Are the defendants entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ?

In the year 1836 the Farmington Company and the Hampshire & Hampden Canal Company having failed and become bankrupt, a new company was chartered by the General Assembly, called the New Haven & Northampton Company. The capital stock of the new company was fixed by the charter at the sum of tliree hundred thousand dollars, which was the amount of stock of the old Farmington Canal Company. The charter of the new company provided that the creditors of the two bankrupt corporations might transfer their claims against those corporations to the new company, and take stock therein to the amount of their claims, not exceeding the sum of one hundred and sixty-five thousand dollars; and the new company was required to take these claims in payment of the stock thus taken. The balance of the capital stock, to wit, one hundred and thirty-five thousand dollars, was required to be paid in cash.

The seventh section of the charter was as follows:—r“ The company hereby created may receive from the Hampshire & Hampden Canal Company, and from the President, Directors and Company of the Farmington Canal, a conveyance of all the franchises, rights, powers, privileges and immunities of said companies, and thenceforth hold, exercise and enjoy the same within the respective limits of those companies, in as full and ample a manner, to all intents and purposes, as the same have been heretofore held, exercised and enjoyed by the said corporations respectively, for the purposes and with the limitations herein contained.” The now corporation was organized according to the terms of the charter. And the first question in this part of the case is, did the seventh section of the charter transfer to, or create in, the new corporation, the exemption from taxation which the old company had previously enjoyed ? It should be observed that the same necessity existed at this time for exempting the stock and income of the new company from taxation as existed originally. The people of the state had not yet received the great public benefit from the canal which had been expected, and which induced the legislature to grant the original exemption. The old companies had not only expended their capital in constructing the canal, but had likewise expended one hundred and sixty-five thousand dollars belonging, to their creditors, and had become bankrupt by so doing. The capital of the new corporation called for one hundred and thirty-five thousand dollars in cash; and those who should take- this stock would have to take it with the rest of the capital already expended in the project, whether it had been judiciously expended or not. The enterprise was still new in the state and in the country, and there was very little encouragement, as the matter presented itself to the minds of moneyed men, to go further in the work. More than half the capital of the new company was to come from the old company equitably entitled to the exemption; and justice to the old stockholders, and to the people of the state in general, seemed to require that the project should not die, and all the money that had been expended in the undertaking be lost. The old companies had failed, and the new company was to take their place; was to step into their shoes, so to speak, and go on with the undertaking. It was all the same to the State whether the work was to be performed by one company or the other; and they were entitled, if performing it, to the same favor. By granting this the State would create no new immunity, but would be merely continuing one already created. It would seem that every consideration that induced the grant originally, existed now with increased weight, and required a continuance of the exemption. If the seventh section is read in the light of these circumstances, can any one doubt that the legislature intended by it to continue the exemption in the new. company, in order to do justice to the creditors whose money had been-expended in the enterprise, and to induce persons to subscribe to the cash capital of the .corporation; so that the people of the state might enjoy the great public benefit expected from the canal. The language used certainly so imports. The new corporation was to “ have all the immunities of the old corporations in as full and ample a manner to all intents and purposes as the same had been held and enjoyed, &c.” This language can have no other meaning. It is susceptible of no other construction. The immunity of the old company extended to its entire stock of throe hundred thousand dollars, and to its franchise. The immunity of the new company, therefore, was equally extensive. It embraced the entire capital and franchise. It seems to us there is no escape from this conclusion.

But, it -is said that the immunity from taxation of the old corporation, was confined to its stockholders, and was not granted to the corporation itself; and that therefore the corporation transferred no immunity to the new corporation, for it had none to convey. This is making a distinction between the stockholders of a corporation and the corporation itself, when the language of the grant is, “ the stock and income of the corporation shall be forever exempt,” &c. Stockholders are not mentioned in the grant. The grant is directly to the body politic, for the benefit of its stockholders. At any rate, the legislature supposed that the old corporation had some immunity to convey, and intended that it should bo conveyed; or else, again, they were guilty of fraud in holding out the deception; for it cannot be doubted that by it they obtained the organization of the new corporation, which they so much desired for the public good.

But, if anything more is needed upon this point, the question is put at rest by the eleventh section of the new charter. This section, after specifying various things which the new corporation should do, proceeds as follows:—“And said company hereby incorporated, and the stockholders therein, may thenceforth- exorcise all the powers, and enjoy all the privileges and immunities conferred upon said old companies respectively, and the stockholders therein.” Here, all the immunities conferred upon the stockholders of the old companies, as well as upon the companies themselves, are expressly granted to the new corporation. If, therefore, the conveyance from the old corporations did not transfer the immunity from taxation to the new corporation, this section makes an original express grant to the new corporation, of immunity from taxation to the same extent to which it had been granted to the old corporations and their stockholders. That exemption extended to the entire stock and income of those corporations; so this exemption must have extended to the entire stock and income of the new corporation.

If further confirmation is needed upon this point, the case still further furnishes it, in the fact that, in the year 1846, the legislature authorized the defendants to increase their capital stock from three hundred thousand to twelve hundred thousand dollars, and expressly made the additional capital subject to taxation. Was there any necessity for doing this, if the existing capital was, at the time, so subject? Can: another instance be found in our legislation where this lias; been done ? It has been common, and still is, for legislatures ; to authorize corporations to increase their capital stock; but when this has been done, where is the instance in which the legislature has taken the precaution to say that the increased, capital shall be subject to taxation, when the existing capital, was so subject? The instance cannot be found. The additional capital always takes its character from the existing-capital. If the existing capital is subject to taxation, so would the additional capital be subject. If the existing capital is exempt from taxation, the additional capital would likewise be exempt, unless the legislature should make it, as here, subject to taxation. State v. Norwich & Worcester R. R. Co., 30 Conn., 290. The inference deduced from this act of the legislature is almost as conclusive that the existing capital of the company was not subject to taxation, as an express declaration to that effect would have been.

We are satisfied that the defendants had an\ immunity from taxation, co-extensive with that of the Farmington Canal. Company.

In passing from this question we- cannot help observing,, that it seems remarkable that the organization, of the new/ corporation, could have been procured under its charter, even with the immunity from taxation which we suppose to have been given by it, for it appears by the tenth section of the charter that the new company was required to run all the hazard of loss without any corresponding prospect of gain. By that section tlie old companies could at any time re-possess themselves of the franchise and all the rights and property of the new company, by simply paying their debts transferred to the new company, and further paying them for all the time and money expended by the company upon the canal. So at that time it appeared that if the enterprise should turn out disastrously the new company must bear the loss, but that if profit should be made the old companies stood by to reap the benefit. Under such circumstances, was it strange ■•that the State should have continued the grant which had ¡already been made ?

But it is said that the legislature reserved to itself the •right to alter, amend, or repeal the charter of the corporation, and that it exercised this right when it passed the statute on which this suit is brought, by repealing the clauses of the charter conferring the right of exemption from taxation. The repeal is claimed on the ground that the statute •and the charter are repugnant to each other, so far as the exemption is -concerned, the statute therefore repealing this provision of the charter by necessary implication. But the statute in another section contains a provision that the stock of corporations which had been exempted from taxation, •should continue so to be. We think there is nothing in this claim. State v. Norwich & Worcester R. R. Co., 80 Conn., 290.

i The next question grows out of the following facts. It ■appears that the General Assembly in 1846 authorized the defendants, “ to add to their capital stock by increasing the •nominal or par value of the present shares from twenty-five ■to one hundred dollars,” and to construct a railroad along the line of their canal. The resolution authorizing them so •to do provided as follows:—“The capital stock hereby created .■shall be assessed at its just value in money, and taxed at the same rate as personal estate.” The State claims that this change in the corporation converted the canal company into a railroad corporation, which conversion extinguished the canal company, and with it the exemption from taxation.

We do not so regard it. There was no change in the corporation itself. What was done consisted merely in authorizing a change from one mode of transportation to another. Certainly such a change could not affect the chartered rights of the corporation, especially when the legislature authorized it to be done without any intimation that the change wrould have any such effect. But it is claimed that the resolution subjects the entire capital to taxation, when increased according to its provisions. The taxable stock, however, is expressly limited to “ the capital stock hereby created.” If the addition to the capital stock had been made by adding shares to the number then existing, it would be manifest, that the taxable stock would be confined to the shares thus added. And can the mere mode of adding to the capital stock make any difference ? “ Stock hereby created”—is .the language. What was the stock then created by the act ? Certainly not the old stock. That was as old as the corporation itself. We are unable to see any force in this claim.

Nor do we see anything substantial in other claims of the the State, which we have not particularly considered.

A majority of the court are satisfied that the plea of the defendants is sufficient. And we so advise the Superior Court.

In this opinion Foster and Pardee, Js., concurred.

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Concurrence Opinion

Phelps, J.

I am not able to concur in the conclusion at which a majority of the court have arrived. A brief review of the faets of the case will be necessary to a clear presentation of my views.

In 1822 the General Assembly passed a resolve incorporating the Farmington Canal Company with a capital of three hundred thousand dollars, and the ordinary privileges of such a corporation, with no reservation of the-right of amendment, alteration, or repeal. The stock of the company was made exempt from taxation for the period of twenty-one years from and after the time the canal should be completed and in use. Under this charter the friends of the enterprise were unable to procure subscriptions to the stock, and for the expressed purpose of inducing persons to subscribe, the General Assembly the following year passed an additional resolution forever exempting, under a proviso unimportant to the present case, “ the stock and income of the corporation.” The corporation in proper form and within the time prescribed assented to this resolution, and it thereby by legal adoption became a part of its original act of incorporation. Under its charter thus enlarged the stock of the corporation was filled, and the canal constructed and operated until 1836, when the company became insolvent. By a resolution of the General Assembly passed that year a new corporation was created under the name of the New Haven & Northampton Company, with a capital of three hundred thousand dollars, to be made up of new cash subscriptions for one hundred and thirty-five thousand dollars, and the remainder by subscriptions to the amount of their respective claims by the creditors of the Farmington Canal Company, and of the Hampshire & Hampden Canal Company of Massachusetts. The corporation thus organized was successor to the Farmington Canal Company, and by a provision of its charter was authorized to, and did subsequently receive from the former a conveyance of all its franchises, rights, powers, privileges, and immunities, and was thereafter entitled to hold, exercise, and enjoy the same, in as full and ample a manner to all intents and purposes as the same had theretofore been held, exercised, and .enjoyed by the Farmington Canal Company for the purposes and with the limitations in said charter contained. The purposes for which the new corporation was organized were those ordinarily connected with and incidental to the operation of the canal, and a material limitation in its charter was the reserved right of amendment, alteration and repeal.

By another provision in its charter the corporation and stockholders were thenceforth authorized to exercise all the powers and enjoy all the privileges and immunities conferred upon the former corporation and its stockholders.

The longer operation of the canal having become impracticable, the General Assembly in 1846, by a resolution amendatory of its charter, gave thé New Haven & Northampton Company authority to construct a railroad along or near the line of its canal, with all the rights and powers necessary and ordinarily granted for the purpose, with a reservation in the usual form of the right of amendment, alteration and repeal. Under its charter so amended and accepted by the defendant its present railroad was constructed and has since been and is now being successfully operated.

This action is brought by the State in the name of its treasurer to recover from the defendant, as a tax for the year 1871, a sum equal to one per cent, of the market value of the capital stock of the defendant, and of its funded and floating debt, less the amount of its cash actually in hand. The defendant does not contest its liability except with respect to three hun_ dred thousand dollars of its capital stock which it claims is free from taxation under the resolution of 1823 forever exempting the stock and income of the Farmington Canal Company, and - the question whether that privilege survives and has passed to the defendant is presented for our determination.

In the absence of clear and explicit language declaratory of the intention of the legislature, there is no presumption in favor of a perpetual privilege to a corporation conferring upon it immunity from taxation with which the public and corporations generally are burdened; but when it is clearly granted to a corporation holding a close charter it is irrevocable, because it is to that extent an unqualified renunciation by the State of its sovereignty over the subject matter. It is also perpetual while it remains unsurrendered, and free from judgment of forfeiture, and while the subject in which it inheres continues to exist.

The language of the resolve of 1823 is peculiar in that it expresses the object of the exemption to be an inducement to individuals to take an interest in a public work by becoming subscribers to the stock of a corporation created and organizecl to carry it on, and thereby furnishing the means to complete and put it in operation. It proceeds upon the assumption that without such inducement the enterprise must fail. The stockholders are the persons solicited, and when we consider the object sought, and the method employed, there can be, I think, no reasonable doubt of the intention of the legislature to confer the benefit of the exemption exclusively on those through whose instrumentality the desired public improvement was to be secured. The consideration for the privilege moved entirely from the stockholders, and I think “ the stock and income of the corporation ” in the sense used, means only the property and interest of the purchasers of the shares, the persons who paid their money in consideration of the exemption and without the aid of whom the corporation would have been powerless, and its charter inoperative and valueless. If the Farmington Canal Company had so continued to exist as that the rights and interest of its shareholders had been preserved, there could be no doubt of the validity of their claim to the immunity; but in 1836 that corporation had become insolvent, and a new one under a sepárate and open charter and by a different name was created to succeed to it. It is true the new corporation was authorized and did receive a conveyance of all the franchises, rights, powers, privileges, and immunities, of the old, but under the construction which I have given to the resolution of 1823 the exemption claimed was not given to the Farmington Canal Company in such a manner as to make it transmissible by the corporation after the rights of the stockholders had become extinguished. The stock of the Farmington Canal Company was entirely absorbed, and those in whose interest and for whose benefit the exemption was given were no longer interested in the stock or income of the corporation. Only its creditors became interested as stockholders in the New Haven & Northampton Company. As such creditors they had no interest in the exemption, and the new corporation could receive none through them by virtue of their becoming stockholders in it to the amount represented by their claims against the former insolvent corporation. The extinction of the stock carried with it the extinction of the privilege. In other words, the subject in which the privilege inhered became extinct, and the privilege itself thereby became also extinct.

It is claimed tbat, under tlio clause in the charter of the New Haven & Northampton Company conferring on “the company thereby incorporated and upon the stockholders therein the right to exercise all the powers and enjoy all the privileges and immunities conferred upon the Farmington Canal Company and its stockholders,” this immunity passed to the defendant. If 1 am correct in what I have already said it disposes of this claim so far as the corporation is concerned. I may very properly add that by the terms of its charter the defendant’s right to receive a conveyance of all the privileges and immunities of the old company was subject to the limitations therein contained, and we have seen that a very important limitation expressed was the right of alteration and repeal; and it seems to mo clear that by the section of the statutes on which this suit is brought, the General Assembly so modified the defendant’s charter as to withdraw from it the exemption claimed, if indeed it had in fact ever been conveyed to it.

If the new corporation ever had possessed the immunity it must have acquired it only by grant from tlie old. There was no contract between the State and the new corporation except tbat contained in its charter. That limits the nature of the enjoyment of all its powers and rights to a license during the pleasure of the General Assembly. The General Assembly revoked the license when it passed the act on which this suit is brought, and if the immunity in question previously existed I think it was taken from the defendant by tbat exercise by the sovereign power of the reserved right of alteration and repeal. If this reasoning is valid it applies with equal pertinence to both the corporation and its stockholders, and concludes them both.

Again, all that makes the defendant a railroad corporation is contained in the resolution amendatory of its charter passed in 1846, which was duly and formally accepted by it. This acceptance was presumably with full knowledge of and, with reference to tlie statute of 1845, by the terms of which the acceptance by any corporation of any amendment or alteration of its charter operates to make the original charter and all resolutions amending or altering the same, subject to amendment, alteration and repeal at the pleasure of the General Assembly. Under special circumstances this statute might operate to prevent a corporation from accepting valuable amendments to a close charter by compelling it to put at hazard some particular privilege perpetually secured to it, but we are not aware that its constitutionality could be questioned on the ground that it impaired the validity of existing contracts under which some special privilege had become legally vested, because by the acceptance of the amendment the right to the continuance of the privilege would be deemed to have been surrendered or intentionally waived. In this case the contract between the State and the stockholders in the Farmington Canal Company had terminated by reason of the extinguishment of the interest of the latter, and therefore its validity could not have been impaired by any legislation by which, subsequently to 1836, the defendant was subjected to taxation. The tax in question which is imposed on every railroad corporation in the state is authorized by a statute passed after that time, and which must, I think, be regarded- as so amending the charter of the defendant as to deprive it of any special immunity from taxation which it had previously enjoyed.

And 1 can not see that this result is avoided by a proper interpretation of the saving clause in the statutes relating to taxation, by which the stock and property of all incorporated companies and communities, which by the terms of their charters or otherwise are expressly exempted from taxation-, are relieved from the burden of it. In my judgment the defendant is not so exempt, and if in terms it appeared to be, the statutory provision just referred to, and the one on which this action is brought, are pari materiá, and will stand together unless inconsistent with each other or with the intention of the legislature. 1 discover no such inconsistency. It is obvious that the intention of the framers of the law was to impose this tax on railroad corporations either as a property or a franchise tax, and to leave the saving referred to, to stand subject to such intention, and to such other as is contained in similar provisions with reference to other classes of corporations.

I concur fully with the views expressed by the majority of the court with regard to the claim made in behalf of the plaintiff, that the tax sought to be collected is imposed on the franchise of the defendant, and therefore payable even though the exemption claimed by the defendant was legally transmitted to it. I think it clearly a tax on the property and not on the franchise of the corporation. The cases decided by this court in which the tax was held to be imposed only on the franchise, were brought on statutes which in one essential particular differ in their phraseology from that on which this action is instituted. In neither of them, nor in those reported in Massachusetts, was the market value of the property of the corporation made, as it is in this case, the basis of taxation ; and the fact that it was not, is prominent among the reasons assigned for holding that the respective taxes were laid upon the franchise and not upon the property of the several corporations. To decide this to be such a tax would require of us to take an important step in advance of the former determinations of this court, and abolish or disregard the important distinction to which I have referred.

In my opinion judgment should be rendered for the plaintiff.

In this opinion Carpenter, J., concurred.