Maryland v. Baltimore & Ohio Railroad Company
44 U.S. 534 (1845)

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U.S. Supreme Court

Maryland v. Baltimore & Ohio Railroad Company, 44 U.S. 3 How. 534 534 (1845)

Maryland v. Baltimore & Ohio Railroad Company

44 U.S. (3 How.) 534

Syllabus

The State of Maryland, in 1886, passed a law directing a subscription of $3,000,000 to be made to the capital stock of the Baltimore & Ohio Railroad Company, with the following proviso,

"That if the said company shall not locate the said road in the manner provided for in this act, then and in that case they shall forfeit $1,000,000 to the State of Maryland for the use of Washington County."

In March, 1841, the state passed another act repealing so much of the prior act as made it the duty of the company to construct the road by the route therein prescribed, remitting and releasing the penalty, and directing the discontinuance of any suit brought to recover the same.

The proviso was a measure of state policy which it had a right to change if the policy was afterwards discovered to be erroneous, and neither the commissioners nor the county nor any one of its citizens acquired any separate or private interest under it which could be maintained in a court of justice.

Page 44 U. S. 535

It was a penalty inflicted upon the company as a punishment for disobeying the law, and the assent of the company to it as a supplemental charter is not sufficient to deprive it of the character of a penalty.

A clause of forfeiture in a law is to be construed differently from a similar clause in an engagement between individuals. A legislature can impose it as a punishment, but individuals can only make it a matter of contract.

Being a penalty imposed by law, the legislature had a right to remit it.

The facts were these:

On 4 June, 1836, Laws of Maryland, 1835, chap. 395, the Legislature of Maryland passed an act entitled "An act for the promotion of internal improvement," by which subscriptions were directed to be made, on certain terms, to the capital stock of the Chesapeake & Ohio Canal Company and Baltimore & Ohio Railroad Company, to the amount of $3,000,000 to each company. The conduct of the canal company having no bearing upon the question involved in the present suit, it is not necessary to notice any further the parts of the law which related to it.

A part of the 5th section of the act was as follows:

"And the said treasurer shall not make any payment aforesaid for subscription to the stock of the Baltimore & Ohio Railroad Company until after a majority of the directors appointed therein on behalf of this state shall have certified to the treasurer in writing, supported by the oath or affirmation of a majority of said directors, that they sincerely believe in their certificate and statement that, with the subscription by this act authorized to be made to said company's stock, and with the subscription which the City of Baltimore may have made by virtue of an act, passed at December session of the year eighteen hundred and thirty-five of this assembly, or that independently of any subscription by any other public authority than the City of Baltimore, as aforesaid, and of the Cities of Pittsburgh and Wheeling, and exclusive of any loan secured to it, exclusive of all future profits and debts due by the company on interest, the said railroad company in their opinion have funds sufficient to complete the said railroad from the Ohio River, by way of and through Cumberland, Hagerstown, and Boonsborough to its present track near to Harper's Ferry, and it is hereby declared to be and made the duty of the said company to, and they shall so locate and construct the said road as to pass through each of said places, which certificate of said directors shall be accompanied by an estimate or estimates of one or more skillful and competent engineers, made out after a particular and minute survey of the route of said road by him or them and verified by his or their affidavit, showing that the whole cost of said work will not be greater than the amount of funds the said directors shall certify to have been received by said

Page 44 U. S. 536

company, and applicable to the construction of the said road, provided that if the said Baltimore & Ohio Railroad Company shall not locate the said road in the manner provided for in this act, then and in that case they shall forfeit one million of dollars to the State of Maryland for the use of Washington County."

This act was accepted by the railroad company in a general meeting of stockholders, and information thereof communicated to the governor on 26 July, 1836.

On 24 September, 1836, the treasurer made his subscription of $3,000,000 to the capital stock of the company.

On 1 October, 1838, a majority of directors on behalf of the state gave the certificate and statement required by the act.

The railroad company having finally located, and being in the act of constructing their road without the limits of Washington County, within which Hagerstown and Boonsborough are situated, a suit was brought in Frederick County, Maryland, in February, 1841, in the name of the State of Maryland for the use of Washington County against the railroad company in an action of debt to recover $1,000,000.

In March, 1841, the Legislature of Maryland passed an act in which they say

"That so much of the 5th section of the act of 1835 as makes it the duty of the Baltimore & Ohio Railroad Company to construct the said road so as to pass through Hagerstown and Boonsborough be and the same is hereby repealed, and that the forfeiture of one million of dollars reserved to the State of Maryland as a penalty in case the said Baltimore & Ohio Railroad Company shall not locate the said road in the manner provided for in that act, be and the same is hereby remitted and released and any suit instituted to recover the same sum of one million of dollars or any part thereof be and the same is hereby declared to be discontinued and of no effect."

In October, 1841, the defendant pleaded the general issue and set forth the above act.

In February, 1842, the case came on for trial upon the following agreed statement of facts:

"It is admitted in this case that the Commissioners of Washington County, the parties at whose instance this action was instituted for the use of Washington County, were at the time of institution of this suit and still are a body corporate, duly elected and organized under and by virtue of the Act of Assembly of Maryland of 1829, chap. 21, and its supplementary acts. It is also admitted that the defendants are and were at the institution of this suit a body corporate duly existing under and by virtue of the Act of Assembly of Maryland of 1826, chap. 123, and its supplementary acts. It is also admitted that this suit is brought at the instance of said Commissioners of Washington County to recover, for the use of said county, the $1,000,000 which they allege to be forfeited to the said

Page 44 U. S. 537

state for the use of said county under the provisions of the 5th section of the Act of 1835, chap. 395, and it is admitted that the said defendants have not and had not at the institution of this suit constructed or located their road from the Ohio River, by way of and through Hagerstown and Boonsborough, to the track of said road at Harper's Ferry, as the same existed at the time of the passage of the said Act of 1835, chap. 395, but, on the contrary, had at the institution of this suit finally located, and are, were then, and are now constructing their said road by a different route, and without the limits of Washington County, within which the said Hagerstown and Boonsborough are situated. It is admitted that the said Baltimore & Ohio Railroad Company, in general meeting of the said corporation, did accept, assent, and agree to the several provisions of the said Act of 1835, chap. 395, and did duly communicate their said approval, assent, and agreement, under their corporate seal and the signature of their president, to the governor of this state, in the manner and within the time prescribed by the said act, which approval, assent, and agreement, together with the report of the engineer of the said railroad company, which was required by the said act to accompany the same, were as follows, viz.:"

The statement then set out all these documents in extenso. The engineer framed his estimates for a road to Pittsburgh which would cost $6,681,468. That part of it passing through Washington County is thus described.

"The route departs from the Baltimore & Ohio Railroad at the mouth of the Little Catoctin, ascends that stream to the eastern base of the Blue Ridge or South Mountain, and thence continues to ascend along its slope to a depression in its crest, called 'Crampton's Gap,' thence passing through the mountain by a tunnel of 1,500 feet in length, it descends into 'Pleasant Valley,' lying between the South mountain and the Elk Mountain, and proceeds along the western base of the former to and through the Town of Boonsborough, thence to a point near the Village of Funkstown, and thence across the Antietam Creek, above the Turnpike Bridge, to the Borough of Hagerstown; thence through the streets of that town and over Salesbury Ridge to and across the Conocochegue Creek, about two miles north of Williamsport, thence"

&c.

"It is also admitted that after this suit was instituted for the purpose of recovering the said forfeiture of million of dollars, the Legislature of Maryland, on 10 March, 1841, passed the Act of December session 1840, chap. 260, repealing the said 5th section of the said Act of 1835, chap. 395, as far as relates to the said forfeiture of a million of dollars, and releasing the said defendants from the said forfeiture and every part thereof and directing any suit instituted to recover the same to be discontinued, and to

Page 44 U. S. 538

have no effect. It is also admitted that the said repealing Act of 1840, chap. 260, was passed upon the following memorial of the said defendants to the legislature and that at the time of passing the same there was then before the legislature a countermemorial upon the said subject from the said Commissioners of Washington County, which memorial and countermemorial, it is agreed, were as follows, to-wit:"

"[These documents are too long to be inserted.]"

"It is further admitted and agreed that the several acts of assembly herein particularly referred to, as well as any other acts or resolutions of the General Assembly of Maryland, that either party may deem applicable in the argument of this case, either in the county court, or Court of Appeals or Supreme Court of the United States, should the case be hereafter carried by either party to said courts or either of them, shall be read from the printed statute books and have the same effect and operation in the case as if duly authenticated copies thereof were made a part of these statements."

"It is further agreed that all errors of pleading and of form in any part of the proceedings of either party in this case are waived, it being the object and understanding of the parties that the matters of right in controversy between them shall be fairly and fully presented to all or either of the said courts in which the same may be pending, and that either of the said parties shall have his pleading and proceedings considered as being as perfect as they could be made to give him the benefit of the case here stated. It is admitted that this suit was the only suit ever brought by the said commissioners or at their instance to recover the said forfeiture of a million of dollars, and was pending when the said Act of 1835, chap. 395, was passed. Upon this statement it is further agreed that if the court shall be of opinion that this action could not be maintained if the said repealing act of 1840, chap. 260, had not been passed, or that the operation and effect of that repealing act is to release the said forfeiture of $1,000,000, and to discontinue and put an end to this suit, then judgment to be entered for the defendants, otherwise such judgment is to be entered for the plaintiffs as the court may think right and proper. It is further agreed that the county court shall enter judgment pro forma for the defendants. The plaintiff to have the same right to take up the case by appeal or writ of error, to the Court of Appeals, or ultimately to the Supreme Court of the United States, as if the judgment in the county court had been rendered upon demurrer, or upon a bill of exceptions taken in due and legal form upon the facts hereinbefore agreed upon."

Upon this statement of facts, the Court of Frederick County gave judgment for the defendant, and the case being carried to the Court of Appeals, the judgment below was affirmed.

The writ of error was brought to review this judgment.

Page 44 U. S. 548

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