46 Mich. 224 | Mich. | 1881
The controversy in this case concerns the proper basis for estimating the tax to be annually assessed by the State authorities against the Lake Shore & Michigan Southern Railroad Company in respect to that portion of its road in the State of Michigan. Its determination involves the construction of various statutes, but especially the General Railroad Law as originally passed and subsequently revised, and the application to this company of the provisions of that law respecting taxation.
The Michigan Southern Railroad Company was originally organized under a special charter. Laws of 1846, p. 170. The company purchased of the State an uncompleted railroad, and by its charter it was provided that “ The said company shall pay to the State an annual tax of one-half of one per cent, upon the capital stock paid in, including the five hundred thousand dollars of purchase money paid, or to be paid to the State, until the first day of February, 1851, and thereafter an annual tax of three-fourths of one per cent, upon its capital stock paid in, including the five hundred thousand dollars of purchase money aforesaid, and also upon all loans made to said company, for the purpose of constructing said railroad, or purchasing, constructing, chartering or hiring of steamboats authorized by this act to be held by said company, which tax shall be paid in the last week in Januaiy in each year to the State treasurer, and the property and effects of said company, whether real, personal or mixed, shall, in consideration thereof, be exempt from all and every other tax, charge and exaction by virtue of any laws of this State now or hereafter to be in force, except penalties by this act imposed.” Sec. 31.
The consolidation authorized by this act immediately took place, and the consolidated company appears to have been treated and considered as a new corporation from that time on. The same Legislature which passed this act of consolidation also passed a general law under which companies formed to construct railroads were authorized to incorporate themselves. By one of the sections of this law “ every corporation formed ” under its provisions was required to pay to the State an annual tax of one per cent, on the capital stock paid in. Comp. Laws 1857, p. 652.
The General Railroad Law was amended in 1869, by an
Among other provisions of the General Railroad Law of 1855 was one that “ Any railroad company in this State, forming a continuous or connected line with any other railroad company, may consolidate with such other company either in or out of this State, into a single corporation; Provided, That no such companies having parallel lines, or lines diverging and converging, but being conterminous, shall be permitted to consolidate themselves.” The act pointed out the method in which the consolidation should be effected,, and provided that when the proceedings were completed and the consolidation agreement duly filed in the office of the Secretary of State the consolidating 'corporations “ shall be merged in the new corporation provided for in such agreement, to be "known by the corporate name therein mentioned.” Laws 1855, pp. 171, 175.
After the passage of the amendatory act of 1869, and within the same year, the Michigan Southern & Northern Indiana Railroad Company entered into consolidation agreements with certain Ohio, Pennsylvania and New York corporations, whereby it was intended to form a continuous line from Ohicago to Buffalo in the State of New York, with various branches or side lines which need not be particularly mentioned. It is assumed in this case that there were statutes in the several States above named purporting to authorize such consolidation agreements, and they were carried into practical effect, and the consolidation agreements duly filed with the Secretary of State at Lansing as
In 1871 the laws providing for the incorporation of railroad companies were revised, and the basis of taxation was essentially changed. 'Every company was thereby required to make to the Auditor General, an annual report which, among other things, should show the gross receipts of the company for the preceding year, and it was further required to pay to the State Treasurer an annual tax computed as follows: Upon the gross receipts to the amount of $3000 or less per mile of road regularly operated, one and one-half per cent; upon the gross receipts in excess of $3000 and less than $6000 per mile, two per cent.; and upon the gross income in excess of $6000 per mile three per cent. Laws of 1871, p. 354. No tax has ever been assessed against the Lake Shore & Michigan Southern Railroad under this law, or under the law next mentioned.
In 1873 the General Railroad Law of 1871 was revised and the basis of taxation again changed. The railroad companies “ formed under the provisions ” of the revising act were required to pay an annual tax upon all gross receipts not exceeding $4000 per mile of road actually and regularly operated, two per cent.; and upon gross receipts in excess of $4000 per mile, three per cent. But it was provided that “ when a railroad lies partly within and partly without this State, there shall be paid such portion of the tax herein imposed as the length of the operated road lying within this State bears to the whole length of the operated portion thereof.” Laws 1873, p. 532.
It is now urged on behalf of the relator that ever since the consolidation of the several companies heretofore mentioned into the Lake Shore & Michigan Southern Railroad Company, the consolidated company has been liable to taxation under the several railroad laws, and that the State authorities have erred in assessing taxes as provided by the
The capital stock paid in of the Lake Shore & Michigan Southern Eailroad Company is reported at $50,000,000, and the State tax upon the company, had it been assessed according to the terms of the General Eailroad Law as it stood up to 1869, would have been $500,000 annually. This is about nine times the amount now claimed as annually assessable against the company under the General Eailroad Law as it now stands, and it is not pretended that it could be held to be in any sense a just tax, or a tax proportionate to what is charged against other subjects of taxation within the State. This disproportion is so great that it seems plain the Legislature never intended this enormous burden should be imposed, and it suggests the inference, if it does not require it, that the Legislature supposed the case of this company was specially provided for otherwise. It cannot be that the Legislature meant to tax other companies a certain per cent-age on a capital stock represented wholly by property within the State, and then to tax this company the same percentage on a capital stock represented by property by far the larger portion of which was in other States; especially when such property is permanent in its nature, and cannot by_ any implication of law or legal intendment be held or deemed to be property which is subject to or protected by the laws of this State. Indeed, if the intent of the General Eailroad Law had been to bring this whole property within its provisions concerning taxation, it would be subject to the objection that the State was attempting by this law to reach out and subject to its sovereign power of taxation property situated in other States, liable and justly liable to taxation there, and thereby in some degree to shift the burdens of its own
Like consequences would have attended the taxation of the railroad company under the act of 1871. That act required the levy of taxes on a basis measured by the gross earnings of all the roads; and it made no provision whereby the gross earnings of any road whose line was partly in other states might be apportioned for the purpose of this taxation. All the gross earnings of this railroad company, therefore, accumulated by the use of its lines in New York, Pennsylvania, Ohio, Indiana and Illinois, must have b.een taxed within and for the benefit of the State of Michigan; and the tax would not only have been illegal, because not levied by any rule of equality as between this company and other railroad companies, and unjust from its oppressive disproportion to other railroad taxes, but it would have been clearly in excess of State power for the reason above assigned. No State can have any authority to take advantage of the fact that a portion of a railway is within its limits to draw within its taxing power all the road or all its business. As well might it take advantage of the temporazy presence of a nonresident within its limits to compel him to pay taxes on his hoznestead in another State, or on his business not carried
But the General Railroad Law as revised in 1873 does contain provisions whereby the tax may be apportioned when the road is partly, within and partly without the State; and the objection that the State is attempting to tax property not subject to its jurisdiction will not be available against this law if we find its intent to be to bring the Lake Shore & Michigan Southern Railroad Company within its provisions. Whether the apportionment it provides for is a fair one, is questioned by counsel; but it was meant to be fair, and for the purposes of the validity of the law that was probably sufficient. The vital question is whether it was intended that it should apply to this company. Upon that question the fact that the provisions in the General Railroad Law as it before stood from time to time could not be applied, may have some bearing, since there is nothing in the wording of the act of 1873, any more than in the law at any time before, which is indicative of a clear intent that this company should come under its provisions. It is nevertheless possible that the Legislature may, at all times since the consolidation of the Lake Shore line, have intended to tax this company under the general law, and that the previous defects in the law were in mind when the act of 1873 was passed, and were intended to be cured thereby. To that act we may therefore now direct our attention.
The taxing provisions of the act of 1873 are expressly by its terms made applicable to “ every company formed under the provisions” thereof. The argument on behalf of the relator is that when the consolidation of 1869 took place the Michigan Southern & Northern Indiana Railroad Company and the other companies in .Ohio, Pennsylvania and New York with which it consolidated ceased to exist, and that the new company which succeeded to their corporate powers came into existence as a corporation in this State by virtue of the authority to consolidate, which was given by the Gen
Had all the consolidated companies been corporations of this State, possessing like powers, privileges and immunities, and had they proceeded to consolidate under the act of 1873, there would have been little or no difficulty in saying that they thereby ceased to exist, and were consolidated into one corporation “ formed under the provisions ” of that act. A State at its pleasure may authorize two or more existing corporations to associate together and organize themselves into a new corporation, with the same full power that it exercises when it incorporates individuals. Bishop v. Brainerd 28 Conn. 289 : Clearwater v. Meredith 1 Wall. 25; State v. Maine Central R. R. Co. 66 Me. 488; s. c. in error 96 U. S. 499. There is no difficulty here, for each incorporation is effected by an exercise of the will of the same sovereign authority.
But how can it be said that the Lake Shore & Michigan Southern Railroad Company, owning and operating a line of railway in six States, and exercising within them corporate powers emanating from them all, is a corporation “ formed under” the General Railroad Law of Michigan ? Why under the law of Michigan any more than under that of Ohio or that of any other State ? And what authority can the laws of Michigan have to authorize the company to operate a railroad in New York, or how can they punish a corporate misfeasance in Pennsylvania, or compel the performance of a corporate duty in Illinois ? And if in any restricted sense it be said that the consolidated company is a corporation formed under our laws because their assent was given to its formation; then what are its powers, duties, liabilities and immunities? May the corporation exercise within this
A corporation is the creature of the sovereign will. "When one sovereignty creates it, it can operate within the limits of another only by the express permission of the latter, or by implied permission springing from principles of comity. If such permission were given by express law, it would not. make the corporation any less a foreign corporation than before; it would still be- the corporation of the State whose sovereign will had created it; and if two States should incorporate the same persons for the same purpose, with identical powers, there would in contemplation of law be two corporations deriving their authority from different sources. This would be altogether a different thing from one State granting the charter and the other giving permission for the exercise of the franchises within its limits.
Tile authority to consolidate the Lake Shore lines, as has been said above, was claimed under the laws of several States, and not under the laws of Michigan alone. Concede that the consolidation has resulted in one great corporation into which it has merged the others, and the fact remains, that this is no more effected under the laws of Michigan than under the laws of any other assenting State. The consolidated company is not, therefore, a corporation formed under the laws of Michigan. The laws of Michigan were powerless to confer upon the new corporation all the powers and charge it with all the duties of the several old corporations : the State might consent to the consolidation, and this is all it assumed to do.
"Whether by the concurrent action of all the States through or into which the Lake Shore line extends the Lake Shore & Michigan Southern Nailroad Company can be said to have become a corporation in the full sense, or whether it is to> be regarded as merely a corporation de facto, or whether the consolidation is to be considered a business union of several different railroad companies under one common name
Many questions discussed on the argument are rendered immaterial by the conclusion we have reached.
The writ applied for must be denied.