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
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
The question brought before the Court by this writ of error
depends upon the construction and effect of an act of the General
Assembly of Maryland, passed at December session, 1835, entitled
"An act for the promotion of internal improvement."
The original charter of the Baltimore & Ohio Railroad
Company authorized it to construct a railroad from Baltimore to
some suitable point on the Ohio River without prescribing any
particular route over which the road was to pass, leaving the whole
line to the judgment and discretion of the company. But by the act
above mentioned, the state proposed to subscribe $3,000,000 to its
capital stock provided the company assented to the provisions of
that law, and, among other provisions, this act of assembly
required the road to pass through Cumberland, Hagerstown, and
Boonsborough and provided also that if the road was not located in
the manner therein
Page 44 U. S. 549
pointed out, the company "should forfeit $1,000,000 to the state
for the use of Washington County."
The Towns of Cumberland, Hagerstown, and Boonsborough are all
situated in Maryland; the first in Alleghany County and the two
latter in Washington.
This law was assented to by the company and became obligatory
upon it, and the sum proposed was subscribed by the state, but for
reasons which it is not necessary here to mention the company did
not locate the road through Hagerstown or Boonsborough, nor pass
through any part of Washington on its way from Harper's Ferry to
Cumberland, to which point the road has been made, and this suit
was thereupon brought at the instance of the Commissioners of
Washington County, in the name of the state for the use of the
county, to recover the $1,000,000 above mentioned. After the suit
had been instituted, the state, at December session, 1840, passed a
law repealing so much of the act of 1835 as required the company to
locate the road through Hagerstown and Boonsborough and remitting
the forfeiture of the $1,000,000, and directing any suit instituted
to recover it to be discontinued.
The Commissioners of Washington County, however, at whose
instance the action was brought, insisted that the money was due to
the county by contract, and that it was not in the power of the
state to release it, and upon that ground continued to prosecute
the suit, and the court of appeals of the state having decided
against the claim, the case is brought here by writ of error.
Undoubtedly if the money was due to Washington County by
contract, the act of 1840, which altogether takes away the remedy,
would be inoperative and void. But even if the provisions upon this
subject in the act of 1835 could be regarded as a contract with the
railroad company, it would be difficult to maintain that the county
was a party to the agreement or that it acquired any private or
separate interest under it distinct from that of the state. It was
certainly at that time the policy of the state to require the road
to pass through the places mentioned in the law, and if it failed
to do so to appropriate the forfeiture to the use of the county.
But it cannot be presumed that in making this appropriation the
legislature was governed merely by a desire to advance the interest
of a single county, without any reference to the interests of the
rest of the state. On the contrary, the whole scope of the law
shows that it was legislating for state purposes, making large
appropriations for improvements in different places, and if the
policy which at that time induced it to prescribe a particular
course for the road and in case it was not followed to exact from
the company $1,000,000 and devote it to the use of Washington
County was afterwards discovered to be a mistaken one, and likely
to prove highly injurious to the rest of the state, it had
unquestionably the power to change its policy and allow the company
to pursue a different course, and to
Page 44 U. S. 550
release it from its obligations both as to the direction of the
road and the payment of the money. For in doing this it was dealing
altogether with matters of public concern and interfered with no
private right, for neither the commissioners nor the county nor any
one of its citizens had acquired any separate or private interests
which could be maintained in a court of justice.
As relates to the commissioners, they are not named in the law,
nor were they in any shape parties to the contract supposed to have
been made, nor is the money declared to be for their use. They are
a corporate body, it is true, and the members who compose it are
chosen by the people of the county. But like similar corporations
in every other county in the state, it is created for the purposes
of government, and clothed with certain defined and limited powers
to enable it to perform those public duties which, according to the
laws and usages of the state, are always entrusted to local county
tribunals. Formerly they were appointed in all of the counties
annually by the executive department of the government, and were
then denominated the levy court of the county, and in some of the
counties they are still constituted in that manner, the legislature
commonly retaining the old mode of appointment or directing an
election by the people, as the citizens of any particular county
may prefer. But however chosen, their powers and duties depend upon
the will of the legislature, and are modified and changed and the
manner of their appointment regulated at the pleasure of the state.
And if this money had been received from the railroad company, the
commissioners, in their corporate capacity, would not have been
entitled to it, and could neither have received nor disbursed it,
nor have directed the uses to which it should be applied, unless
the state had seen fit to enlarge their powers and commit the money
to their care. If it was applied to the use of the county, it did
not by any means follow that it was to pass through their hands,
and the mode of application would have depended altogether upon the
will of the state. This corporation therefore certainly had no
private corporate interest in the money, and indeed the suit is not
entered for their use, but for the use of the county. The claim for
the county is equally untenable with that of the commissioners. The
several counties are nothing more than certain portions of
territory into which the state is divided for the more convenient
exercise of the powers of government. They form together one
political body in which the sovereignty resides. And in passing the
law of 1835, the people of Washington County did not and could not
act as a community having separate and distinct interests of their
own, but as a portion of the sovereignty, their delegates to the
general assembly acting in conjunction with the delegates from
every other part of the state, and legislating for public and state
purposes, and the validity of the law did not depend upon their
assent to its provisions, as it would have been equally obligatory
upon them if
Page 44 U. S. 551
every one of their delegates had voted against it, provided it
was passed by a constitutional majority of the general assembly.
And whether the money was due by contract or otherwise, it must, if
received and applied to the use of the county, have yet been
received and applied by the state to public purposes in the county.
For the county has no separate and corporate organization by which
it could receive the money or designate agents to receive it or
give an acquittance to the railroad company or determine upon the
uses to which it should be appropriated. We have already seen that
the corporation of commissioners of the county had no such power,
and certainly no citizen of the county had any private and
individual property in it. It must have rested with the state so to
dispose of it as to promote the general interest of the whole
community by the advantages it bestowed upon this particular
portion of it.
Indeed, if this money is to be considered as due either to the
commissioners or to the county by contract with the railroad
company, so that it may be recovered in this suit in opposition to
the will and policy of the state, it would follow necessarily that
it might have been released by the party entitled, even if the
state had desired to enforce it. And if the state had adhered to
the policy of the act in question, and supposed it to be for the
public interest to insist that the road should pass along the line
prescribed in that law, or the company be compelled to pay the
million of dollars according to the construction now contended for,
the commissioners or the county might have counteracted the wishes
of the state and, by releasing the company from the obligation to
pay this money, allowed them to locate the road upon any other
line. And if the construction of the plaintiff in error be right,
the Legislature of Maryland, in a case where the whole people of
the state had become so deeply concerned by the large amount
subscribed to the capital stock of the road that its success or
failure must seriously affect the interests of every part of the
state, and where the improvement was regarded as of the highest
importance to its general commercial prosperity, it deliberately
deprived itself of the power of exercising any future control over
it and left it to a single county or county corporation to decide
upon the course of the road, and either to insist on the line
prescribed by the legislature or to release the company from the
obligation to pursue it, without regard to the wishes or interest
of the rest of the state. Whether the million of dollars was
reserved by contract or inflicted as a penalty, such a construction
of the law cannot be maintained.
But we think it very clear that this was a penalty, to be
inflicted if the railroad company did not follow the line pointed
out in the law. It is true that the act of 1835, which changed in
some important particulars the obligations imposed by the original
charter, would not have been binding on the company without its
consent, and the 1st section therefore contains a provision
requiring the
Page 44 U. S. 552
consent of the company in order to give it validity. And when
the company assented to the proposed alterations in their charter,
and agreed to accept the law, it undoubtedly became a contract
between it and the state; but it was a contract in no other sense
than every charter, whether original or supplementary, is a
contract, where rights of private property are acquired under it.
Yet although this supplementary charter was a contract in this
sense of the term, it does not by any means follow that the
legislature might not, in the charter, impose duties and
obligations upon the company and inflict penalties and forfeitures
as a punishment for its disobedience which might be enforced
against it in the form of criminal proceedings and as the
punishment of an offense against the law. Such penal provisions are
to be found in many charters, and we are not aware of any case in
which they have been held to be mere matters of contract. And in
the case before the Court, the language of the law requiring the
company to locate the road so as to pass through the places therein
mentioned is certainly not the language of contract, but is
evidently mandatory and in the exercise of legislative power, and
it is made the duty of the company, in case they assent to the
provisions of that law, to pass through Cumberland, Hagerstown, and
Boonsborough, and if they fail to do so, the fine of $1,000,000 is
imposed as a punishment for the offense. And a provision, as in
this case, that the party shall forfeit a particular sum, in case
he does not perform an act required by law, has always, in the
construction of statutes, been regarded not as a contract with the
delinquent party, but as the punishment for an offense.
Undoubtedly, in the case of individuals, the word "forfeit" is
construed to be the language of contract, because contract is the
only mode in which one person can become liable to pay a penalty to
another for a breach of duty or the failure to perform an
obligation. In legislative proceedings, however, the construction
is otherwise, and a forfeiture is always to be regarded as a
punishment inflicted for a violation of some duty enjoined upon the
party by law, and such very clearly is the meaning of the word in
the act in question.
In this aspect of the case and upon this construction of the act
of assembly, we do not understand that the right of the state to
release it is disputed. Certainly the power to do so is too well
settled to admit of controversy. The repeal of the law imposing the
penalty is of itself a remission.
5 U. S. 1 Cranch
104;
9 U. S. 5 Cranch
281;
10 U. S. 6 Cranch
203,
10 U. S. 329. And
in the case of
United States v.
Morris, 10 Wheat. 287, this Court held that
Congress had clearly the power to authorize the Secretary of the
Treasury to remit any penalty or forfeiture incurred by the breach
of the revenue laws, either before or after judgment, and if
remitted before the money was actually paid, it embraced the shares
given by law in such cases to the officers of the customs, as well
as the share of the United States. The right to remit a penalty
like this stands upon the same principles.
Page 44 U. S. 553
We are therefore of opinion that the law of 1840 hereinbefore
mentioned did not impair the obligation of a contract, and that the
judgment of the Court of Appeals of Maryland must be
Affirmed.
