Although the obligations of a legislative contract granting
immunity from the exercise of governmental authority are protected
by the federal Constitution from impairment by the state, the
contract itself is not property which, as such, can be transferred
by the owner to another, but is personal to him with whom it is
made, and incapable of assignment, unless by the same or a
subsequent law the state authorizes or directs such transfer, and
so held as to a contract of exemption with a street railway company
from assessments for paving between its tracks.
The rule that every doubt is resolved in favor of the
continuance of governmental power, and that clear and unmistakable
evidence of the intent to part therewith is required, which applies
to determining whether a legislative contract of exemption from
such power was granted, also applies to determining whether its
transfer to another was authorized or directed. A legislative
authority to transfer the estate, property, rights, privileges,
Page 205 U. S. 237
and franchises of a corporation to another corporation does not
authorize the transfer of a legislative contract of immunity from
assessment.
Where a corporation incorporates under a general act which
creates certain obligations and regulations, it cannot receive by
transfer from another corporation an exemption which is
inconsistent with its own charter or with the constitution or laws
of the state then applicable, even though under legislative
authority the exemption is transferred by words which clearly
include it.
Although two corporations may be so united by one of them
holding the stock and franchises of the other that the latter may
continue to exist and also to hold an exemption under legislative
contract, that is not the case where its stock is exchanged for
that of the former and by operation of law it is left without
stock, officers, property or franchises, but, under such
circumstances, it is dissolved by operation of the law which brings
this condition into existence.
182 N.Y. 116 affirmed.
The defendant in error brought an action against the plaintiff
in error, a street surface railroad corporation, hereinafter called
the Rochester Railroad, to recover $18,274.02, the expense of
making new pavements of two streets within the space between the
tracks, the rails of the tracks, and two feet in width outside the
tracks of the railroad. The action was brought under section 98 of
chapter 39 of the General Laws of New York, which was enacted in
1890, and is as follows:
"Every street surface railroad corporation, so long as it shall
continue to use any of its tracks in any street, avenue, or public
place, in any city or village, shall have and keep in permanent
repair that portion of such street, avenue, or public place between
its tracks, the rails of its tracks, and two feet in width outside
of its tracks, under the supervision of the proper local
authorities, and whenever required by them to do so, and in such
manner as they may prescribe. In case of the neglect of any such
corporation to make pavements or repairs after the expiration of
thirty days' notice to do so, the local authorities may make the
same at the expense of such corporation."
The Rochester Railroad was incorporated on February 25, 1890,
under a law of New York enacted May 6, 1884. Laws of New York,
1884. That law authorized the
Page 205 U. S. 238
formation of street surface railroad corporations and provided
that they should "have all the powers and privileges granted, and
be subject to all the liabilities imposed, by this act." Among the
liabilities was that imposed by section 9 of the act, which is as
follows:
"Every such corporation incorporated under, or constructing,
extending, or operating a railroad constructed or extended under,
the provisions of this act, within the incorporated cities and
villages of this state, shall also, whenever and as required, and
under the supervision of the proper local authorities, have and
keep in permanent repair the portion of every street and avenue
between its tracks, the rails of its tracks, and a space of two
feet in width outside and adjoining the outside rails of its track
or tracks, so long as it shall continue to use such tracks, so
constructed, under the provisions of this act. In case of the
neglect of such corporations to make such pavement or repairs, the
local authorities may make the same at the expense of such
corporation after the expiration of thirty days' notice to do
so."
Section 18 of the act provides that
"all acts and parts of acts, whether general or special,
inconsistent with this act, are hereby repealed, but nothing in
this act shall . . . interfere with or repeal or invalidate any
rights heretofore acquired under the laws of this state by any
horse railroad company, or affect or repeal any right of any
existing street surface railroad company to construct, extend,
operate, and maintain its road in accordance with the terms and
provisions of its charter and the acts amendatory thereof."
The Rochester Railroad Company was incorporated for the purpose
of acquiring the property of the Rochester City and Brighton
Railroad Company, hereinafter called the Brighton Railroad. The
Brighton Railroad was incorporated March 5, 1868, under a general
law of the State of New York. Laws of 1850. That law contained no
provision respecting the repairs of streets, and, differences
having arisen between the Brighton Railroad and the city as to the
extent of the
Page 205 U. S. 239
burden of such repairs properly to be borne by the railroad,
they joined in an application to the legislature for the enactment
of a law which should regulate that and other subjects. Such a law
was enacted February 27, 1869, and its fifth section was as
follows:
"Said company shall put, keep, and maintain the surface of the
streets inside the rails of its tracks in good and thorough repair,
under the direction of the Committee on Streets and Bridges of the
Common Council of said City of Rochester; but, whenever any of said
streets are, by ordinance or otherwise, permanently improved, said
company shall not be required to make any part or portion of such
improvement, or bear any part of the expense thereof, but it shall
make its rails in such street or streets conform to the grade
thereof."
On the twenty-fifth day of February, 1890, the Brighton Railroad
duly executed and delivered a lease of its property, franchises,
rights, and privileges, for the unexpired term of its charter, to
the Rochester Railroad, which accepted the lease and took
possession of the property. Subsequently, in the same year, the
Rochester Railroad acquired the entire capital stock of the
Brighton Railroad. The acquisition of stock was in pursuance of the
authority contained in chapter 254 of the Laws of New York of 1867,
which, as amended by chapter 503 of the Laws of 1879, is as
follows:
"Any railroad corporation created by the laws of this state, or
its successors, being the lessee of the road of any other railroad
corporation may take a surrender or transfer of the capital stock
of the stockholders, or any of them, in the corporation whose road
is held under lease, and issue in exchange therefor the like
additional amount of its own capital stock at par, or on such other
terms and conditions as may be agreed upon between the two
corporations, and whenever the greater part of the capital stock of
any such corporation shall have been so surrendered or transferred,
the directors of the corporation taking such surrender or transfer
shall thereafter, on a resolution electing so to do, to be
entered
Page 205 U. S. 240
on their minutes, become
ex officio the directors of
the corporation whose road is so held under lease, and shall manage
and conduct the affairs thereof as provided by law, and whenever
the whole of the said capital stock shall have been so surrendered
or transferred, and a certificate thereof filed in the office of
the secretary of state, under the common seal of the corporation to
whom such surrender or transfer shall have been made, the estate,
property, rights, privileges, and franchises or the said
corporation whose stock shall have been so surrendered or
transferred shall thereupon vest in and be held and enjoyed by the
said corporation to whom such surrender or transfer shall have been
made as fully and entirely, and without change or diminution, as
the same were before held and enjoyed, and be managed and
controlled by the board of directors of the said corporation to
whom such surrender or transfer of the said stock shall have been
made, and in the corporate name of such corporation. The rights of
any stockholder not so surrendering or transferring his stock shall
not be in any way affected hereby, nor shall existing liabilities
or the rights of creditors of the corporation, where stock shall
have been so surrendered or transferred, be in any way affected or
impaired by this act."
Subsequently the Rochester Railroad duly obtained permission to
convert the road into an electric trolley road, expended large sums
of money in doing so, and, in the acquisition of the stock of the
Brighton Railroad and the conversion of its road into an electric
road, relied upon the provisions of the act of 1869 as a contract
exempting it, with respect to the streets covered by the tracks of
the Brighton Railroad, from other street repairs than those therein
described. The city acquiesced in this view until October, 1898,
when, upon the suit of an owner of adjoining property, the Court of
Appeals held that, under section 9 of the act of 1884 and section
98 of chapter 39 of the General Laws, which were regarded as
substantially the same, the Rochester Railroad was bound to bear
the expense of a new pavement on
Page 205 U. S. 241
the location acquired from the Brighton Railroad.
Conway v.
Rochester, 157 N.Y. 33. Subsequently, the city repaved two
streets which were within the location acquired and operated by the
Brighton Railroad prior to the passage of the act of 1884, and, in
obedience to the decision in the
Conway case, assessed
against the Rochester Railroad its share of the expense of
pavement, and brought this action to recover the amount of the
assessment. It was set up in defense of the action that, by the act
of 1869, the State of New York had entered into an inviolable
contract with the Brighton Railroad, exempting it from the expense
of pavement, that the contract had passed with the property of the
Brighton Railroad to the Rochester Railroad, and that the
assessment was in violation of the Constitution of the United
States. The contentions of the Rochester Railroad were denied by
the Court of Appeals of New York, 182 N.Y. 116, which held, first,
that the statute mentioned did not constitute a contract between
the state and the railroad company, and, second, that, if it did,
the exemption granted by the statute was personal to the Brighton
Railroad, and did not pass to the Rochester Railroad. The case was
remanded to the supreme court and a judgment entered pursuant to
the remittitur from the Court of Appeals, and by writ of error that
judgment is brought here for review.
Page 205 U. S. 245
MR. JUSTICE MOODY, after making the foregoing statement,
delivered the opinion of the Court.
By the judgment of the highest court of the State of New York,
the City of Rochester was allowed to recover from the Rochester
Railroad, a street surface railroad corporation, the cost of laying
new pavements on the parts of two streets which lay between the
tracks, the rails of the tracks, and two feet outside of the tracks
of the railroad. This recovery was had under a statute of New York
which required such railroads to keep that part of the street over
which their tracks ran in permanent repair. The requirement of
permanent repair includes the duty of laying new pavements.
Conway v. Rochester, 157 N.Y. 33.
The Rochester Railroad, not denying its liability in ordinary
cases to bear the expense of paving, asserts that, with respect to
the two streets in question, it was exempted from that burden by
contract with the State of New York, made with its predecessor in
title, the Brighton Railroad, and transferred to it with the title
to the property of that railroad. The contract relied upon is found
in a law enacted in 1869, for the benefit of the Brighton Railroad,
which relieved that road from the burden of pavement of any part of
the streets in which its tracks were situated. The Rochester
Railroad claims that the law of New York, so far as that law
imposes upon it the cost of the pavement of the streets in
question, was in violation of that provision of the Constitution of
the United States which forbids a state to pass any law impairing
the obligation of contracts.
The Brighton Railroad was incorporated in 1862, under the
general law of 1850, which contained no provision with respect to
the railroad's share of street repairs. Until the enactment of the
law of 1884, under which the Rochester Railroad was subsequently
incorporated, there was no general law regulating the apportionment
between street railroads and municipalities of the expense of such
repairs, and the
Page 205 U. S. 246
question was determined in individual cases either by agreement
or a special law. Differences having arisen between the Brighton
Railroad and the City of Rochester as to the share of the expense
of street repair which ought to be borne by the railroad, they
joined in a request for legislation which would settle this and
other disagreements. In response to that request, the law of 1869
was enacted. The fifth section of the law, after providing that the
railroad should put and keep the surface and street inside of the
rails of its tracks in repair, enacts that:
"Whenever any of said streets are, by ordinance or otherwise,
permanently improved, said company shall not be required to make
any part or portion of such improvement, or bear any part of the
expense thereof."
This law, obviously, as held by the Court of Appeals, exempted
the railroad from the expense of new pavements, which is the
expense sought to be recovered in this action. This was the effect
conceded to the statute by the city for the whole time during which
the railroad property was owned and operated by the Brighton
Railroad, and even after it parted with the property, and until the
decision in
Conway v. Rochester, 157 N.Y. 33, in 1898.
Whether this statute was a contract between the State of New York
and the Brighton Railroad, inviolable by the federal Constitution,
and if so, whether its benefits have been waived or it has been
lawfully modified or repealed by virtue of the powers reserved by
the Constitution or laws of New York, are questions which have been
much argued at the bar. We do not deem it necessary in this case to
decide those questions, and therefore put out of view many facts
found in the record which were deemed by both parties to be
relevant to them. We assume, for the purpose of our decision, that
there was a contract exempting the Brighton Railroad from the
expense of street pavements, and that the contract could not
constitutionally be impaired by the State of New York, and that its
benefits have not been waived.
It becomes therefore necessary to inquire whether the
Page 205 U. S. 247
contract has been transferred with the property of the Brighton
Railroad to the Rochester Railroad, the plaintiff in error.
The Rochester Railroad was incorporated for the purpose of
acquiring the property of the Brighton Railroad, which was
accomplished by a lease of the property, franchises, rights, and
privileges of the Brighton Railroad, followed by the purchase of
its capital stock. This was done under the authority of a statute
which provided that a railroad corporation, being the lessee of the
property of another railroad corporation, might acquire the whole
of the capital stock of the latter, and in such a case its "estate,
property, rights, privileges, and franchises should vest in and be
held and enjoyed by" the purchasing corporation. It is contended
that the effect of the transfer under this law is to vest in the
Rochester Railroad the exemption from the expense of street
pavement which the Brighton Railroad enjoyed through the contract
with the State of New York. This contention presents the question
to be decided.
This Court has frequently had occasion to decide whether an
immunity from the exercise of governmental power which has been
granted by contract to one has, by legislative authority, been
vested in or transferred to another, and in the decisions certain
general principles, which control in the determination of the case
at bar, have been established. Although the obligations of such a
contract are protected by the federal Constitution from impairment
by the state, the contract itself is not property which, as such,
can be transferred by the owner to another, because, being personal
to him with whom it was made, it is incapable of assignment. The
person with whom the contract is made by the state may continue to
enjoy its benefits unmolested as long as he chooses, but there his
rights end, and he cannot, by any form of conveyance, transmit the
contract or its benefits to a successor.
Morgan v.
Louisiana, 93 U. S. 217;
Wilson v. Gaines, 103 U. S. 417;
Louisville & Nashville R. Co. v. Palmes, 109 U.
S. 244;
Picard v. Tennessee &c.,
130 U. S. 637;
St.
Page 205 U. S. 248
Louis &c. Co. v. Gill, 156 U.
S. 649;
Norfolk & Western Railroad v.
Pendleton, 156 U. S. 667. But
the state, by virtue of the same power which created the original
contract of exemption, may, either by the same law or by subsequent
laws, authorize or direct the transfer of the exemption to a
successor in title. In that case, the exemption is taken not by
reason of the inherent right of the original holder to assign it,
but by the action of the state in authorizing or directing its
transfer. As in determining whether a contract of exemption from a
governmental power was granted, so in determining whether its
transfer to another was authorized or directed, every doubt is
resolved in favor of the continuance of the governmental power, and
clear and unmistakable evidence of the intent to part with it is
required.
Keeping these fundamental principles steadily in mind, we
proceed to inquire whether the State of New York has authorized or
directed the transfer from the Brighton Railroad to the Rochester
Railroad of the contract of exemption. A legislative authorization
of the transfer of "the property and franchises,"
Morgan v.
Louisiana, ub. sup., Picard v. Tennessee &c., ubi supra,
of "the property,"
Wilson v. Gaines, ubi supra, Louisville
& Nashville R., ubi supra, of "the charter and works,"
Memphis &c. Railroad v. Commissioners, 112 U.
S. 609, or of "the rights of franchise and property,"
Norfolk & Western Railroad Co. v. Pendleton, ubi
supra, is not sufficient to include an exemption from the
taxing or other power of the state, and it cannot be contended that
the word "estate" has any larger meaning. It is, however, argued
that the word "privileges" is sufficiently broad to embrace within
its meaning such an exemption, and that, when it is added to the
other words, the legislative intent to transfer the exemption is
clearly manifested, and that the words of the law under
consideration, "the estate, property, rights, privileges, and
franchises," indicate the purpose to vest in the purchasing
corporation every asset of the selling corporation which is of
conceivable value. There is authority
Page 205 U. S. 249
sustaining this position which cannot be set aside without
examination.
In the case of
Humphrey v.
Pegues, 16 Wall. 244, it appeared that the charter
of the Northeastern Railroad Company, granted by the State of South
Carolina, originally contained no exemption from taxation, but
that, by amendment to the charter some years later, the real estate
and stock of the company were exempted from all taxation during the
continuance of its charter. Subsequently the legislature granted
the charter of the Cheraw & Darlington Railroad Company, and
provided that
"all the powers, rights, and privileges granted by the charter
of the Northeastern Railroad Company are hereby granted to the
Cheraw & Darlington Railroad Company."
The State of South Carolina attempted to tax the stock and
property of the Cheraw & Darlington Railroad Company, and the
validity of that taxation was the question in the case. The Court
held that the powers, rights, and privileges granted to the Cheraw
& Darlington Railroad Company were those contained in the
amendment of the charter, as well as those contained in the
original charter, and said, by Mr. Justice Hunt:
"All the 'privileges,' as well as powers and rights, of the
prior company, were granted to the latter. A more important or more
comprehensive privilege than a perpetual immunity from taxation can
scarcely be imagined. It contains the essential idea of a peculiar
benefit or advantage, of a special exemption from a burden falling
upon others."
Upon this reasoning, it was held that the stock and real estate
of the Cheraw & Darlington Railroad Company were exempt from
taxation.
See Gunter v. Atlantic Coast Line, 200 U.
S. 273.
In
Chesapeake & Ohio Railroad v. Virginia,
94 U. S. 718, it
was said that an act conferring upon a railroad corporation "the
benefits of the charter" of another corporation which had an
immunity from taxation, and "the rights, privileges, franchises,
and property" of another corporation, which, when formed, would
have the "rights, privileges, and franchises
Page 205 U. S. 250
and property" of the corporation holding the immunity, was
sufficient to transfer the immunity from taxation. But this
expression of opinion was unnecessary to the decision of the case,
which merely decided that, where a railroad corporation acquired
the property of another railroad corporation to which was attached
an immunity from taxation, that immunity did not extend beyond the
property thus acquired. In
Southwestern Railroad Company v.
Georgia, 92 U. S. 665, where
a statute allowed the Muscogee Railroad to unite with the
Southwestern Railroad into one company under the charter of the
latter and it was provided that "all the rights, privileges, and
property [of the Muscogee Railroad Company] shall be part and
parcel of the Southwestern Railroad," it was held that the immunity
from taxation enjoyed by the Muscogee Railroad passed with its
property to the Southwestern Railroad.
In
Tennessee v. Whitworth, 117 U.
S. 139, it was held that a statute conferring upon a
railroad corporation "all the rights, powers, and privileges" of
another railroad corporation, and "all the powers and privileges"
of a third railroad corporation, included the immunities from
taxation enjoyed respectively by the latter corporations, the
ground of the decision being that an exemption from taxation is, in
the common acceptation of the term, a privilege.
If the authority of these four cases, supported by some
dicta which need not be cited, remained unimpaired, it
would justify the opinion that a legislative transfer of the
"privileges" of corporation includes an exemption from the taxing
or other governmental power granted by a contract with the state.
But other and later cases have essentially modified the rule which
may be deduced from them.
In the case of the
Chesapeake & Ohio Railroad Company v.
Miller, 114 U. S. 176, it
was held that the foreclosure of a mortgage on railroad property
under the provisions of a statute which authorized the purchaser
under a foreclosure sale to become a corporation, and provided that
it should
Page 205 U. S. 251
succeed to all such "franchises, rights, and privileges" as were
possessed by the mortgagor company, did not vest in the purchasing
corporation an immunity from taxation.
In
Picard v. East Tennessee, Virginia & Georgia Railroad
Company, 130 U. S. 637, Mr.
Justice Field, in delivering the opinion of the Court, said:
"The later, and, we think, the better, opinion is that, unless
other provisions remove all doubt of the intention of the
legislature to include the immunity in the term 'privileges,' it
will not be so construed. It can have its full force by confining
it to other grants to the corporation."
In
Wilmington & Weldon Railroad Company v.
Alsbrook, 146 U. S. 279, MR.
CHIEF JUSTICE FULLER, in delivering the opinion of the Court, said,
on page
146 U. S.
297:
"We do not deny that exemption from taxation may be construed as
included in the word 'privileges' if there are other provisions
removing all doubt of the intention of the legislature in that
respect."
In
Keokuk & Western R. Co. v. Missouri,
152 U. S. 301, Mr.
Justice Brown, in delivering the opinion of the Court, said:
"Whether, under the name 'franchises and privileges,' an
immunity from taxation would pass to the new company may admit of
some doubt in view of the decisions of this Court, which, upon this
point, are not easy to be reconciled."
These conflicting views were before the Court in
Phenix Fire
& Marine Insurance Company v. Tennessee, 161 U.
S. 174. The plaintiff in error in that case claimed to
have an immunity from taxation by virtue of a provision in its
charter granting it "all the rights and privileges" of the De Soto
Insurance Company, which had an immunity from taxation by virtue of
a provision in its charter granting it "all the rights, privileges,
and immunities" of the Bluff City Insurance Company, whose charter
contained an expressed immunity from taxation. MR. JUSTICE PECKHAM,
in delivering the opinion of the Court, stated the question for
decision in these words:
"Is immunity from taxation granted to plaintiff in error under
language which grants 'all the rights and privileges'
Page 205 U. S. 252
of a company which has such immunity?"
Much significance was given to the fact that the word
"immunity," which clearly includes an exemption, was used in the
charter of the De Soto company, and not used in the charter of the
plaintiff in error, granted seven years later. But the decision was
not rested on this circumstance, although the omission was thought
to cast a grave doubt upon the plaintiff's claim. The opinion
reviews all the cases, cites the foregoing quotations from the
opinions of Mr. Justice Brown, Mr. Justice Field, and of THE CHIEF
JUSTICE, and, after saying:
"There must be other language than the mere word 'privilege,' or
other provisions in the statute removing all doubt as to the
intention of the legislature before the exemption will be
admitted,"
concludes that:
"If this were an original question, we should have no hesitation
in holding that the plaintiff in error did not acquire the
exemption from taxation claimed by it, and we think at the present
time the weight of authority, as well as the better opinion, is in
favor of the same conclusion which we should otherwise reach."
In
Gulf & Ship Island Railroad Company v. Hewes,
183 U. S. 66, Mr.
Justice Brown, in delivering the opinion of the Court, said, citing
this case as authority: "The better opinion is that a subrogation
to the
rights and privileges' of a former corporation does not
include an immunity from taxation."
We think it is now the rule, notwithstanding earlier decisions
and dicta to the contrary, that a statute authorizing or directing
the grant or transfer of the "privileges" of a corporation which
enjoys immunity from taxation or regulation should not be
interpreted as including that immunity. We therefore conclude that
the words "the estate, property, rights, privileges, and
franchises" did not embrace within their meaning the immunity from
the burden of paving enjoyed by the Brighton Railroad Company. Nor
is there anything in this, or any other statute, which tends to
show that the legislature used the words with any larger meaning
than they would have standing alone. The meaning is not
Page 205 U. S. 253
enlarged, as faintly suggested, by the expression in the statute
that they are to be held by the successor "fully and entirely, and
without change and diminution" -- words of unnecessary emphasis,
without which all included in "estate, property, rights,
privileges, and franchises" would pass, and with which nothing more
could pass. On the contrary, it appears, as clearly as it did in
the
Phenix Fire Insurance Company case, that the
legislature intended to use the words "rights, franchises, and
privileges" in the restricted sense. The law under which this
transfer was made was enacted in 1867 and amended in 1879. In 1869,
an act was passed authorizing the merger and consolidation of
railroad corporations, c. 917, Laws of 1869, which provided that,
upon the consolidation, "all and singular the rights, privileges,
exemptions, and franchises should be transferred to the new
corporation." In 1876, an act was passed, c. 446, Laws of 1876,
which authorized the purchasers of the rights, privileges, and
franchises of railroad corporations (except street railroad
corporations) under a foreclosure sale to become a corporation, and
thereupon have "all the franchises, rights, powers, privileges, and
immunities" of the corporation whose property was sold. The
omission in the statute under consideration of the words
"exemptions" or "immunities," either of which would be apt to
transfer the immunity claimed, is significant, in view of the fact
that each of these words was employed by the legislature about the
same time in other statutes dealing with the transfer of corporate
property, and raises a doubt of the intention of the legislature,
which, in cases of the interpretation of a statute claimed to
divest the state of a governmental power, is equivalent to a
denial.
The conclusion that the exemption of the Brighton Railroad did
not accompany the transfer of its property to the Rochester
Railroad is reached by another and entirely independent course of
reasoning, based upon a consideration of the law under which the
Rochester Railroad was incorporated. That was the general
incorporation law of 1884. Every corporation
Page 205 U. S. 254
incorporated under it was made "subject to all the liabilities
imposed by the act" (§ 1), and directed to keep the street surface
about and between its tracks "in permanent repair" (§ 9), which, as
held by the state court, includes the duty of laying such pavement
as is in controversy here. We follow the construction by that court
of § 9 so far as it holds that that section applies to all tracks,
whether constructed under this law or any other law, owned and
operated by a corporation incorporated under it. Whether the
section applies, or constitutionally can apply, to a corporation
not deriving its powers from the act of 1884 in respect of tracks
not constructed under its provisions it is not necessary for us to
consider. There may have been a saving of the rights of such
corporations under § 18. That question would be presented if the
Brighton Railroad, instead of a successor in title, were claiming
an exemption. Here, a corporation deriving its right to exist under
the act of 1884 is asserting an exemption from a duty imposed upon
it by the law which created it. The authorities are numerous and
conclusive that no corporation can receive, by transfer from
another, an exemption from taxation or governmental regulation
which is inconsistent with its own charter or with the Constitution
or laws of the state then applicable, and this is true even though,
under legislative authority, the exemption is transferred by words
which clearly include it.
Trask v.
Maguire, 18 Wall. 391;
Shields v. Ohio,
95 U. S. 319;
Maine Central R. Co. v. Maine, 96 U. S.
499;
Railroad Co. v. Georgia, 98 U. S.
359;
Louisville & Nashville R. Co. v.
Palmes, 109 U. S. 244;
Memphis &c. R. Co. v. Commissioners, 112 U.
S. 609;
St. Louis &c. R. Co. v. Berry,
113 U. S. 465;
Keokuk &c. R. Co. v. Missouri, 152 U.
S. 301;
Norfolk & Western R. Co. v.
Pendleton, 156 U. S. 667;
Yazoo &c. R. Co. v. Adams, 180 U. S.
1;
Grand Rapids &c. R. Co. v. Osborn,
193 U. S. 17;
San Antonio Traction Co. v. Altgelt, 200 U.
S. 304.
The principle governing these decisions, so plain that it needs
no reasoning to support it, is that those who seek and
Page 205 U. S. 255
obtain the benefit of a charter of incorporation must take the
benefit under the conditions and with the burdens prescribed by the
laws then in force, whether written in the Constitution, in general
laws, or in the charter itself. The Rochester Railroad, therefore,
having accepted its charter under a law which imposed upon it the
duty of laying pavements, is bound to perform that duty even in
respect of tracks which, while owned by a predecessor in title,
would have been exempt.
The foregoing considerations would be conclusive of the case
were it not that the plaintiff in error takes another position
which, if tenable, would avoid the result reached by either course
of reasoning. It is insisted that this is not a case of transfer of
an exemption; that the rules governing transfer are not applicable
here; that the Brighton Railroad has not ceased to exist as a
corporation; that it has been merely joined by merger with the
Rochester Railroad, which controls it by stock holdings and
operates it by virtue of its franchises, and that therefore the
Rochester Railroad may claim and enjoy the exemption of the
Brighton Railroad in its behalf in respect of its property. In
support of this view, counsel cite
Tomlinson
v. Branch, 15 Wall. 460;
Central Railroad v.
Georgia, 92 U. S. 665;
Tennessee v. Whitworth, ubi supra. These cases hold that,
where corporations are united in such manner that one continues to
exist as a corporation, owning and operating its property, by
virtue of its own charter, the corporation thus continuing to exist
still holds its immunities and exemptions in respect of the
property to which they apply. But the cases have no application
here. It may well be that a proceeding for condemnation of property
begun by the Brighton Railroad would not abate by reason of its
consolidation with the Rochester Railroad, as held in 43 State
Reporter 651,
aff'd, 133 N.Y. 690. An examination,
however, of the statute under which the union of the two
corporations was made and the transactions by which the union was
accomplished shows that the Brighton
Page 205 U. S. 256
Railroad has ceased to exist as a corporation. The Rochester
Railroad first took a lease of the Brighton Railroad, apparently
for the purpose of bringing itself within the provisions of the act
of 1879. Then all the stock of the latter corporation was acquired
by exchange of shares of stock of the former corporation. Then a
certificate of the transfer of stock was filed with the Secretary
of State. Thereupon, by operation of the law, the "estate,
property, rights, privileges, and franchises" of the Brighton
Railroad vested in the Rochester Railroad, to be thereafter
controlled by the Rochester Railroad in its own corporate name. The
law does not expressly dissolve the selling corporation, but it
leaves it without stock, officers, property, or franchises. A
corporation without shareholders, without officers to manage its
business, without property with which to do business, and without
the right lawfully to do business is dissolved by the operation of
the law which brings this condition into existence.
Maine
Central Railroad v. Maine, ub. sup.; Keokuk &c. Railroad v.
Missouri, ub. sup.; Yazoo &c. Railroad, ubi supra.
The judgment of the Supreme Court of New York is therefore
Affirmed.
MR. JUSTICE WHITE concurs in the result.
