Ashley v. Ryan - 153 U.S. 436 (1894)
U.S. Supreme Court
Ashley v. Ryan, 153 U.S. 436 (1894)
Ashley v. Ryan
Argued and submitted April 26, 1891
Decided May 11, 1894
153 U.S. 436
If several railroad corporations, each existing under the laws of separate states, consolidate into one corporation, a statute of one of the states imposing a charge upon the new consolidated company of a percentage on its entire authorized stock as the fee to the state for the filing of the articles of consolidation in the office of the secretary of the state, without which filing it could not possess the powers, immunities, and privileges which appertain to a corporation in that state, is not a tax on interstate commerce or the right to carry on the same, or the instruments thereof, and its enforcement involves no attempt on the part of the state to extend its taxing power beyond its territorial limits.
A state, in permitting a foreign corporation to become one of the constituent elements of a consolidated corporation organized under its laws, may impose such conditions as it deems proper, and the acceptance of the franchise implies a submission to the conditions without which the franchise could not have been obtained.
The Wabash, St. Louis and Pacific Railroad Company, which owned and operated lines running through the States of Ohio, Indiana, Illinois, Missouri, and Michigan, having defaulted in the payment of interest on its bonds, foreclosure proceedings were commenced in the federal courts for the sale of its property. Subsequently a committee was entrusted with the duty of buying in the property. After purchase by the committee, the property in the several states was transferred to companies incorporated in those states. The following were the companies thus organized, and to whom the necessary transfers were, respectively, made:
In Ohio: The Toledo and Western; capital stock, $700,000.
In Michigan: The Detroit and State Line Wabash; capital stock, $300,000.
In Indiana: The Wabash Eastern, of Indiana; capital stock, $9,000,000.
In Illinois: The Wabash Eastern, of Illinois; capital stock, $12,000,000.
In Missouri: The Wabash Western; capital stock, $30,000,000.
Thereafter, these several companies were consolidated into one. Section 148a of the Revised Statutes of Ohio contains, among other provisions, the following:
"The Secretary of State shall hereafter charge and collect the following fees for official services:"
"1. For filing the articles of incorporation of any corporation whose capital stock is ten thousand dollars or under, ten dollars; of a corporation whose capital stock is over ten thousand dollars, one-tenth of one percent upon the authorized capital stock of such corporation."
"2. For filing a certificate of increase of the capital stock of any corporation having a capital stock where the amount of the increase is ten thousand dollars or under, ten dollars; where the amount of increase is over ten thousand dollars, one-tenth of one percent upon the proposed amount of increased capital."
"3. For filing articles of agreements of consolidation of corporations having a capital stock, the following fees shall be collected by the Secretary of State: said articles of agreements of consolidation shall be treated as the articles of incorporation of the new consolidated corporations created by such articles or agreements of consolidation, and the fees for filing such articles or agreements of consolidation shall be the same in each case as is hereinbefore set forth for the filing of articles of incorporation of a corporation having the same amount of capital stock as is provided for by the articles or agreements of consolidation for the new consolidated corporation, created by any such articles or agreement of consolidation, and in fixing the amount of such fees, no credit shall be allowed for fees previously paid by any of the constituent corporations, parties to such consolidation, but the same shall be determined solely by the amount of capital stock of the new corporation created by such articles or agreements of consolidation."
By another provision of the Revised Statutes of Ohio, the
fees to be collected under the foregoing law were required to be paid by the Secretary of State into the Treasury.
The plaintiffs in error presented their articles of consolidation, for filing, to the Secretary of State, and tendered $700, that being one-tenth of one percent on the capital stock of the Toledo and Western Railroad, the only Ohio corporation which had entered into the consolidation. The secretary refused to file the proffered articles for that amount, and demanded $52,000, or one-tenth of one percent of the par value of the entire stock of the consolidated corporation. This amount was paid under protest, and suit was at once brought to recover all the excess paid over and above the $700 originally tendered, upon the ground that such excess had been collected without warrant of law; that it constituted a tax for the general purposes of revenue, and therefore its exaction was contrary to the Constitution and laws of the State of Ohio; and, moreover, that its enforcement would violate the Constitution of the United States, because it would be an attempt on the part of the State of Ohio to lay a burden on interstate commerce, or the instruments of such commerce, and to give an extraterritorial force to its taxing power.
Pending the controversy, an injunction issued restraining the Secretary of State from covering into the state treasury the sum which had been paid him under protest. The cause was ultimately taken to the Supreme Court of the State of Ohio, and by that court the judgment which maintained the validity of the charge was affirmed. The plaintiffs in error thereupon brought the cause here for review.