State v. Morristown Fire Ass'n

| N.J. | Nov 15, 1851

The Chief Justice

delivered the opinion of the court.

The only question presented for consideration is, whether the assessment was authorized by law.

The decision of this question depends entirely upon the true meaning of the phrase “ capital stock,” as used in the proviso of the first section of the supplemental act. The language of the proviso is, “ that the capital stock of said corporation shall at no time exceed the sum of four thousand dollars.” This phraseology admits obviously of two interpretations. It may have been designed either as a limitation of the amount authorized to be raised, or as a restriction of the value of the properly to be held at any one time by the association.

The phrase “ capital stock,” as employed in acts of incorporation, is never, that I am aware, used to indicate the value of the property of the company. It is very generally, if not universally, used to designate the amount of capital to be contributed by the stockholders for purposes of the corporation. The .amount thus contributed constitutes the “ capital stock ” of the company. The value of the stock may be greatly increased by surplus profits or be diminished by losses, but the amount of the capital stock remains the same.

The funds of the company may fluctuate. Its capital stock remains invariable, save by legislative enactment. This distinction between the value of the property of incorporated companies and their capital stock is perfectly familiar. An instance of the legislative adoption of the terms, in accordance with popular usage, will be found in the supplement to the act concerning taxes, passed the 14th of March, 1851. The fifth section of that act exempts from taxation so much of the property of incorporated companies, represented by the capital stock thereof, as, by virtue of the act, is taxed in the hands of stockholders.

It is clear that the term “capital stock” was used, in the original charter of this association, to limit the sum to be raised by tax, and that the corporators so understood it. By their petition to the legislature, as set forth in the preamble of the supplement, they represent that they have raised the sum of two thousand dollars, the amount of the capital stock limited by their act of incorporation ; and they pray for the passage of an act authorizing the association to assess and raise by tax a further sum. By “ capital stock,” they obviously understood the sum authorized to be raised by tax, not the value of the property to be held by the company. By well settled rules of construction, the like interpretation should be given to tbe same phraseology in all acts ¡pertaining to tbe same subject matter.

If the clause under consideration be construed as a mere restriction of the amount of property to be owned by the association, there is no limitation whatever in the charter of the amount which may be raised by taxation. Whenever and so often as the amount of property owned by the corporation may be reduced below the value of four thousand dollars, new assessments may be made to an indefinite extent. Such a result cannot be supposed to have been within the contemplation, either of the legislature or of the members of the corporation. If the case admitted of doubt, this consideration alone should be decisive of the question. So broad a grant of corporate powers should never be, raised, except in clear accordance with the manifest intent of the legislature. If, as was suggested upon the argument, the ¡power would be beneficially exercised, the remedy is with the legislature.

The assessment, is illegal, and must be set aside.