The charter of a bank, granted by the Legislature of Tennessee,
provides that the bank "shall pay to the state an annual tax of
one-half of one percent on each share of the capital stock
subscribed, which shall be in lieu of all other taxes."
1. That this provision is a contract between the state and the
hank, limiting the amount of tax on each share of the stock.
2. That a subsequent revenue law of the state, imposing an
additional tax on the shares in the hands of stockholders, impairs
the obligation of that contract, and is void.
The Union and Planters' Bank of Memphis is a banking
corporation, doing business at Memphis, Shelby County, Tennessee,
organized under a charter granted by the General Assembly of that
state March 20, 1858, and amended Feb. 12, 1869, the tenth section
of which provides that
"Said company shall pay
Page 95 U. S. 680
to the state an annual tax of one-half of one percent on each
share of the capital stock subscribed, which shall be in lieu of
all other taxes."
Sec. 1 of an act of the General Assembly of 1869-70, c. 81,
"All shares of stock in any bank, institution, or company now or
hereafter incorporated by or in pursuance of any law of this state
or any other state . . . shall be valued and assessed and subject
The bank paid the said tax of one-half of one percent for the
Farrington was throughout that year the owner of one hundred and
fifty shares of the stock of the bank, upon which the state and the
County of Shelby, severally claiming the right under that act to do
so, assessed against him for that year, taxes at the same rate that
they were assessed and levied upon other taxable property. He
resisted the payment of them upon the ground that by sec. 10 of the
charter, the bank, its franchises and capital stock, and also the
shares of stock of the individual stockholder, were subject to no
taxation other than the specific sum nominated in the charter, and
that the act in question impaired the obligation of the contract
stipulating to accept that sum in lieu of all other taxes and was
therefore in violation of Sec. 10, Art. I, of the Constitution of
the United States.
A suit was brought to test the validity of the assessment in the
Second Chancery Court of Shelby County; and it was agreed that in
the event of a decision adverse to Farrington, judgment should be
rendered against him for $60 and $180, the amount of the taxes
assessed by the state and county respectively, with interest from
the first day of January, 1873. If the decision should be in his
favor, then the judgment should be that said taxes were illegally
assessed; that said shares of stock were exempt from all other
taxation except the aforesaid one-half of one percent to the state,
as provided in the tenth section of the bank's charter, and further
that the collection of said taxes be enjoined, and such other
appropriate decree rendered as the court might deem proper, in
order to protect him and his assigns from taxation on said stock.
Each party reserved the right of appeal. The court rendered a
decree enjoining the collection of the taxes, which was reversed
Page 95 U. S. 681
the supreme court of the state on the ground that the said
shares of stock were not the property or thing exempted, but other
and different, and so were not within the protection of the charter
and of the Constitution of the United States, and it was adjudged
that Farrington should pay to the state and the county respectively
the said sums of money assessed upon his shares of stock.
Farrington thereupon sued out this writ of error.
MR. JUSTICE SWAYNE delivered the opinion of the Court.
This case lies within narrow limits. The question to be decided
arises under the Constitution of the United States. The ground of
the discussion has been well trodden by our predecessors. Little is
left for us but to apply the work of other minds. The facts are
agreed by the parties, and may be briefly stated.
The Union and Planters' Bank of Memphis was duly organized under
a charter granted by the Legislature of Tennessee by two acts
bearing date respectively on the 20th of March, 1858, and the 12th
of February, 1869. Since its organization, it has been doing a
regular banking business. Its capital stock subscribed and paid in
amounts to $675,000, divided into six thousand seven hundred and
fifty shares of $100 each. Farrington, the plaintiff in error, was,
throughout the year 1872, the owner of one hundred and fifty
shares, of the value of $15,000.
The tenth section of the charter of the bank declares
"That the said company shall pay to the state an annual tax of
one-half of one percent on each share of the capital stock
subscribed, which shall be in lieu of all other taxes."
The State of Tennessee and the County of Shelby claiming the
right, under the revenue laws of the state, to tax the stock of the
plaintiff in error, assessed and taxed it for the year 1872. It was
assessed at its par value. The tax imposed by the state was forty
cents on the $100, making the state tax $60. The
Page 95 U. S. 682
county tax was $1.20 on the $100, making the county tax
The plaintiff in error denies the right of the state and county
to impose these taxes. He claims that the tenth section of the
charter was a contract between the state and the bank, that any
other tax than that therein specified is expressly forbidden, and
that the revenue laws imposing the taxes in question impair the
obligation of the contract. The supreme court of the state adjudged
the taxes to be valid. The case was thereupon removed to this Court
by the plaintiff in error for review.
A compact lies at the foundation of all national life. Contracts
mark the progress of communities in civilization and prosperity.
They guard as far as is possible against the fluctuations of human
affairs. They seek to give stability to the present and certainty
to the future. They gauge the confidence of man in the truthfulness
and integrity of his fellow man. They are the springs of business,
trade, and commerce. Without them, society could not go on.
Spotless faith in their fulfillment honors alike communities and
individuals. Where this is wanting in the body politic, the process
of descent has begun and a lower plane will be speedily reached. To
the extent to which the defect exists among individuals, there is
decay and degeneracy. As are the integral parts, so is the
aggregated mass. Under a monarchy or an aristocracy, order may be
upheld and rights enforced by the strong arm of power. But a
republican government can have no foundation other than the virtue
of its citizens. When that is largely impaired, all is in peril. It
is needless to lift the veil and contemplate the future of such a
people. Trist v.
21 Wall. 441; 1 Montesquieu's Spirit of Laws
25. History but repeats itself. The trite old aphorism that
"honesty is the best policy" is true alike of individuals and
communities. It is vital to the highest welfare.
The Constitution of the United States wisely protects this
interest, public and private, from invasion by state laws. It
declares that "No state shall. . . pass any . . . law impairing the
obligation of contracts." Art. I, Sec. 10. This limitation no
member of the Union can overpass. It is one of
Page 95 U. S. 683
the most important functions of this tribunal to apply and
enforce it upon all proper occasions.
This controversy has been conducted in a spirit of moderation
and fairness eminently creditable to both parties. The state is
obviously seeking only what she deems to be right. The judges of
her own highest court, whence the case came here, were divided in
Contracts are executed or executory. A contract is executed
where everything that was to be done is done and nothing remains to
be done. A grant actually made is within this category. Such a
contract requires no consideration to support it. A gift
consummated is as valid in law as anything else. Dartmouth
College v. Woodward,
4 Wheat. 518. An executory
contract is one where it is stipulated by the agreement of minds,
upon a sufficient consideration, that something is to be done or
not to be done by one or both the parties. Only a slight
consideration is necessary. Pillans v. Van Mierop,
1663; Forth v. Stanton,
1 Saund. 210, note 2, and the
cases there cited.
The constitutional prohibition applies alike to both executory
and executed contracts, by whomsoever made. The amount of the
impairment of the obligation is immaterial. If there be any, it is
sufficient to bring into activity the constitutional provision and
the judicial power of this Court to redress the wrong.
Von Hoffman v. City of
4 Wall. 535.
The doctrine of the sacredness of vested rights has its root
deep in the common law of England, whence so much of our own has
been transplanted. Kent, then chief justice, said: it is a
principle of that law
"as old as the law itself that a statute even of its omnipotent
Parliament is not to have a retrospective effect. Nova
constitutio futuris formam imponere debet et non preteritis.
Bracton, lib. 228; 2 Inst. 292."
Dash v. Van Kleeck,
7 Johns. (N.Y.) 477. See also
Society v. Wheeler,
2 Gall. 105, and Broom's Legal Maxims
It was settled at an early period that it was the prerogative of
the King to create corporations, but he could not grant the same
identical powers to a second corporation while the prior one
subsisted, and unless the power was reserved, he could not alter,
amend, or annul a charter without the consent of the corporate
Page 95 U. S. 684
body to which it belonged. To the extent of such assent,
amendments were effectual, and no further. Dartmouth College v.
Woodward, supra; The King v. Passmore,
3 T.R. 199, and the
In the worst times of English history, no attempt was made by
the Crown to do either of these things in invitum.
Near the close of the reign of Charles the Second, the charters
of many cities were wrested from them. The case of the City of
London was the most memorable. It was done under the forms of law,
by means of a corrupt judiciary. After the Revolution of 1688 and
the accession of William and Mary to the throne, the charter of the
metropolis was restored and immunity was given to it by an act of
Parliament against such assaults in future. 3 Bl.Com. 264; 2
Campbell's Lives of the Chief Justices 41.
It is the theory of the British Constitution that Parliament is
omnipotent. It can pass bills of attainder and acts of
confiscation. Gibbon's Autobiography 14. It can also create and
destroy corporations. But these things involve the exercise not of
its ordinary but of an extraordinary power, not unlike that of the
Roman emperors, sometimes applied in molding and administering the
civil law in special cases.
In The King v. Passmore, supra,
Justice Buller said
"considered the grant of incorporation to be a compact between
the crown and a certain number of the subjects, the latter of whom
undertake, in consideration of the privileges which are bestowed,
to exert themselves to"
carry out the objects of the grant.
The question whether there is in such cases a contract within
the meaning of the contract clause of the Constitution of the
United States came for the first time before this Court in the
Dartmouth College Case.
A college charter was granted by
the King before the American Revolution. The State of New
Hampshire, by several acts of her legislature of the 27th of June
and of the 18th and 26th of December, 1816, attempted materially to
change the original charter and modify the government of the
institution which had grown up under it. The college resisted. The
case was brought here for final decision. It was argued at the bar
with consummate ability. The judgments
Page 95 U. S. 685
of the Justices of this Court who delivered opinions were
characterized by a wealth of learning and force of reasoning rarely
equaled. Perhaps the genius of Marshall never shone forth in
greater power and luster.
It was said, among other things, that the ingredients of a
contract are parties, consent, consideration, and obligation. The
case presented all these. The parties were the King and the donees
of the powers and privileges conferred. Consent was shown by what
they did. The consideration was the investment of moneys for the
purposes of the foundation, the public benefits expected to accrue,
and an implied undertaking of the corporation faithfully to fulfill
the duties with which it was charged. The obligation was to do the
latter, under the penalty of forfeiture in case of "nonuser,
misuser, or abuser." On the part of the King, there was an implied
obligation that the life of the compact should be subject to no
other contingency. The question decided in that case has since been
considered as finally settled in the jurisprudence of the entire
country. Murmurs of doubt and dissatisfaction are occasionally
heard, but there has been no reargument here, and none has been
asked for. The same doctrine has been often reaffirmed in later
cases. The last one is New Jersey v. Yard,
decided at this
p. 95 U. S. 104
none of them has there been a dissent upon this point.
In cases involving federal questions affecting a state, the
state cannot be regarded as standing alone. It belongs to a union
consisting of itself and all its sister states. The Constitution of
that union, and
"the laws made in pursuance thereof, are the supreme law of the
land, . . . anything in the Constitution or laws of any state to
the contrary notwithstanding,"
and that law is as much a part of the law of every state as its
own local laws and Constitution. Farmers' & Mechanics' Bank
v. Deering, 91 U. S. 29
Yet every state has a sphere of action where the authority of
the national government may not intrude. Within that domain, the
state is as if the union were not. Such are the checks and balances
in our complicated but wise system of state and national
This case turns upon the construction to be given to the
Page 95 U. S. 686
tenth section of the charter of the bank. Our attention has been
called to nothing else.
The exercise of the taxing power is vital to the functions of
government. Except where specially restrained, the states possess
it to the fullest extent. Prima facie
it extends to all
property, corporeal and incorporeal, and to every business by which
livelihood or profit is sought to be made within their
jurisdiction. When exemption is claimed, it must be shown
indubitably to exist. At the outset, every presumption is against
it. A well founded doubt is fatal to the claim. It is only when the
terms of the concession are too explicit to admit fairly of any
other construction that the proposition can be supported. West
Wisconsin Railway Co. v. Board of Supervisors, 93 U. S.
; Tucker v.
22 Wall. 527.
Can the exemption here in question, examined by the light of
these rules, be held valid?
Upon looking into the section, several things clearly
1. The tax specified is upon each share of the capital stock,
and not upon the capital stock itself.
2. It is upon each share subscribed. Nothing is said about what
is paid in upon it. That is immaterial. The fact of subscription is
the test, and that alone is sufficient.
3. This tax is declared to be "in lieu of all other taxes." Such
was the contract of the parties.
The capital stock and the shares of the capital stock are
distinct things. The capital stock is the money paid or authorized
or required to be paid in as the basis of the business of the bank,
and the means of conducting its operations. It represents whatever
it may be invested in. If a large surplus be accumulated and laid
by, that does not become a part of it. The amount authorized cannot
be increased without proper legal authority. If there be losses
which impair it, there can be no formal reduction without the like
sanction. No power to increase or diminish it belongs inherently to
the corporation. It is a trust fund, held by the corporation as a
trustee. It is subject to taxation like other property. If the bank
fail, equity may lay hold of it, administer it, pay the debts, and
give the residuum, if there be any, to the stockholders. If the
corporation be dissolved by judgment of law, equity may interpose
and perform the same functions. Wood v. Dummer,
Page 95 U. S. 687
3 Mas. 308; Curran v.
15 How. 304; Gordon v.
Appeal Tax Court,
3 How. 133; People v.
4 Wall. 244; Van
Allen v. Assessors,
3 Wall. 573; Queen v.
9 Ad. & E.N.S. 806; Bank Tax
2 Wall. 200.
The shares of the capital stock are usually represented by
certificates. Every holder is a cestui que trust
extent of his ownership. The shares are held and may be bought and
sold and taxed like other property. Each share represents an
aliquot part of the capital stock. But the holder cannot touch a
dollar of the principal. He is entitled only to share in the
dividends and profits. Upon the dissolution of the institution,
each shareholder is entitled to a proportionate share of the
residuum after satisfying all liabilities. The liens of all
creditors are prior to his. The corporation, though holding and
owning the capital stock, cannot vote upon it. It is the right and
duty of the shareholders to vote. They in this way give continuity
to the life of the corporation, and may thus control and direct its
management and operations. The capital stock and the shares may
both be taxed, and it is not double taxation. The bank may be
required to pay the tax out of its corporate funds, or be
authorized to deduct the amount paid for each stockholder out of
his dividends. Angell & A. on Corp., secs. 556, 557; Union
Bank v. State,
9 Yerg. (Tenn.) 490; Van Allen v. The
Assessors, supra; 71 U. S.
4 Wall. 459; Queen v. Arnaud, supra; 76 U.
9 Wall. 353; State v.
3 Zab. (N.J.) 484; M'Culloch
4 Wheat. 316.
There are other objects in this connection liable to taxation.
It may be well to advert to some of them.
1. The franchise to be a corporation and exercise its powers in
the prosecution of its business. Burroughs on Taxation, sec. 85;
6 Wall. 632; Wilmington
Railroad v. Reid,
13 Wall. 264.
2. Accumulated earnings. State v. Utter,
34 N.J.L. 493;
St. Louis Mutual Insurance Co. v. Charles,
47 Mo. 462.
3. Profits and dividends. Attorney-General v. Bank,
Jones (N.C.) Eq. 287.
4. Real estate belonging to the corporation and necessary
Page 95 U. S. 688
for its business. Wilmington Railroad v. Reid, supra; Bank
of Cape Fear v. Edwards,
5 Ired. (N.C.) L. 516.
5. Banks and bankers are taxed by the United States: 1. On their
deposits. 2. On the capital employed in their business. 3. On their
circulation. 4. On the notes of every person or state bank used and
paid out for circulation. Rev.Stat. 673 et seq.
The states are permitted in addition to tax the shares of the
national banks. Id.
This enumeration shows the searching and comprehensive taxation
to which such institutions are subjected, where there is no
protection by previous compact.
Unrestrained power to tax is power to destroy. M'Culloch v.
When this charter was granted, the state might have been silent
as to taxation. In that case, the power would have been unfettered.
Providence Bank v.
4 Pet. 514. It might have reserved the
power as to some things and yielded it as to others. It had the
power to make its own terms or to refuse the charter. It chose to
stipulate for a specified tax on the shares, and declared and bound
itself that this tax should be "in lieu of all other taxes."
There is no question before us as to the tax imposed on the
shares by the charter. But the state has by her revenue law imposed
another and an additional tax on these same shares. This is one of
those "other taxes" which it had stipulated to forego. The identity
of the thing doubly taxed is not affected by the fact that in one
case the tax is to be paid vicariously by the bank, and in the
other by the owner of the share himself. The thing thus taxed is
still the same, and the second tax is expressly forbidden by the
contract of the parties. After the most careful consideration, we
can come to no other conclusion. Such, we think, must have been the
understanding and intent of the parties when the charter was
granted and the bank organized. Any other view would ignore the
covenant that the tax specified should be "in lieu of all other
taxes." It would blot those terms from the context and construe it
as if they were not a part of it.
There is no reservation or discrimination as to any "other
Page 95 U. S. 689
tax." All are alike included. Such is the natural effect of the
language used. The most subtle casuistry to the contrary is
unavailing. Under such a contract between individuals, a doubt
could not have existed. It may as well be said the power is
reserved to tax anything else, as further to tax the shares. We
cannot so hold without interpolating into the clause a term which
it does not contain. This we may not do. Our duty is to enforce the
contract as we find it, and not to make a new one. If it was
intended to make the exception claimed from the universality of the
exemption as expressed, it would have been easy to say so, and it
is fairly to be presumed this would have been done. In the absence
of this expression, we can find no evidence of such an intent. Our
view is fully sustained by the leading authorities upon the
subject. We will refer to a few of them.
3 Wall. 51, it was declared by the act of
the legislature authorizing the bridge to be built that it should
not be lawful to build any other bridge within two miles above or
below the one so authorized. This Court held the inhibition to be a
covenant, and upheld and enforced the restriction against the
authority conferred by a later act of the legislature authorizing a
bridge to be so built.
In Wilmington Railroad v. Reid, supra,
declared that "the property of said company and the shares therein
shall be exempt from any public charge or tax whatsoever." The
legislature passed laws taxing the entire franchise and rolling
stock, and certain lots of land necessary to the business of the
company. This Court held the exemption to be a contract, and
adjudged the laws to be void.
Union Bank v. State,
9 Yerg. (Tenn.) 490, is a case
marked by eminent judicial ability and careful thought. There it
"that, in consideration of the privileges granted by this
charter, the bank agrees to pay to the state annually the one-half
of one percent on the amount of the capital stock paid in by
stockholders other than the state."
It was held that a further tax on the capital stock was void,
but that the state might tax the shares in the hands of
In the case before us, the charter tax is upon the shares.
Page 95 U. S. 690
The tax complained of is a further tax on those shares. Without
the phrase, "in lieu of all other taxes," the parallelism is
complete. A further tax could no more be imposed upon the shares in
one case than upon the capital stock in the other. The same
negative considerations apply to both.
In Bank of Cape Fear v. Edwards, supra,
"That a tax of twenty-five cents on each share of stock owned by
individuals in said bank shall be annually paid into the treasury
of the state by the president or cashier of the said bank on or
before the first day of October in each year, and the said bank
shall not be liable to any further tax."
It was held that the bank was liable to no other tax, state or
county, and that the banking house and the lot upon which it stood
was within the exemption.
Gordon v. Appeal Tax Court
seems to us conclusive of
the case in hand. The Legislature of Maryland continued the
charters of certain banks on condition that they would make a road
and pay a school tax, and it was provided that upon any of the
banks' complying, the faith of the state was pledged not to impose
any further tax or burden upon them during the continuance of their
charters under the act.
It was held by this Court that this was a contract, and that it
exempted the stockholders from a tax levied upon them as
individuals, according to the amount of their stock.
Comment here is unnecessary. The points of analogy are too
obvious and cogent to require remark. See also State Bank of Ohio v.
16 How. 369; Dodge v.
18 How. 331; and Home of
the Friendless v. Rouse,
8 Wall. 430.
The decree of the Supreme Court of Tennessee will be reversed,
and the case remanded with directions to enter a decree in favor of
the plaintiff in error, and it is
NOTE -- In Dunscomb v. Tennessee, Wicks v. Same, Neely v.
error to the Supreme Court of the State of Tennessee,
which were argued by the same counsel as was the preceding case,
and in Hill v. Tennessee,
which was argued by Mr. D. E.
Myers for the plaintiff in error, and by Mr. J. B. Heiskell,
Attorney General of Tennessee, and Mr. S. P. Walker, for the
defendant in error, MR. JUSTICE SWAYNE, in delivering the opinion
of the Court, remarked:
"These cases are all disposed of by the opinion in
Farrington v. Tennessee, supra,
p. 95 U. S.
. The questions are substantially the same as in that
case, and the results must be the same. The decrees of the Supreme
Court of Tennessee are reversed, and the cases will be remanded
with directions to enter decrees in favor of the respective
plaintiffs in error. "
Page 95 U. S. 691
MR. JUSTICE STRONG, with whom concurred MR. JUSTICE CLIFFORD and
MR. JUSTICE FIELD, dissenting.
I cannot concur in the judgments entered in these cases. If
there be any doctrine founded in justice and necessary to the
safety and continued existence of a state, it is that all
presumptions are against the legislative intent to relinquish the
power of taxation over any species of property. In Providence
Bank v. Billings,
4 Pet. 514, Chief Justice
Marshall, speaking for the Court, said:
"As the whole community is interested in retaining it
undiminished, that community has a right to insist that its
abandonment ought into to be presumed in a case in which the
deliberate purpose of the state to abandon does not appear."
In Ohio Life Insurance &
Trust Co. v. Debolt,
16 How. 416, Chief Justice
Taney, speaking of legislative acts incorporating companies,
"The rule of construction in cases of this kind has been well
settled by this Court. The grant of privileges and exemptions to a
corporation are [is] strictly construed against the corporation and
in favor of the public. Nothing passes but what is granted in clear
and explicit terms. And neither the right of taxation nor any other
power of sovereignty which the community have an interest in
possessing undiminished will be held by this Court to be
surrendered unless the intention to surrender is manifested by
words too plain to be mistaken."
This doctrine we have many times reiterated and applied. And I
do not understand that it is now denied. But I think a majority of
my brethren, in the judgments now given, have failed to apply it to
the construction of the acts of the Tennessee Legislature under
consideration in these cases.
One other thing, it appears to me, should be regarded as settled
beyond doubt. It is that a tax upon a corporation proportioned to
the capital stock, or to the number of shares of its capital stock
is a different thing from a tax upon the individual shareholders of
stock in the corporation. The capital stock, and the shares of that
stock in the hands of stockholders, are different properties, and
consequently distinct subjects for taxation. An exemption of the
one is not of itself an exemption of the other, nor is the taxation
of the one a tax upon the other in such a sense as to interfere
with any exemption the latter
Page 95 U. S. 692
may have from taxation. In The Delaware Railroad
18 Wall. 206, a clause in a charter providing
that a company should, in addition to other taxes, pay to the
treasurer of the state, for its use, one-fourth of one percent upon
the actual cash value of every share of its capital stock, was held
to be not a tax upon the shares of the individual stockholders, but
a tax on the corporation, determined by a rule which, though
arbitrary, was yet approximately just. So, in Van Allen
3 Wall. 573, this Court said a tax on
shares of stock is not a tax on the capital of a bank, and that the
shares are a distinct, independent interest or property held by the
stockholder, and, like any other property that may belong to him,
subject to taxation.
If now these two acknowledged doctrines are allowed to have
their just effect upon the decision of these cases, I cannot see
how the stockholders in the several corporations whose charters we
are requested to construe can claim an exemption from taxation upon
their individual shares of stock. The exemption clause in the
charters of two of the companies is:
"Said institution shall pay to the state an annual tax of
one-half of one percent on each share of capital stock subscribed,
which shall be in lieu of all other taxes."
The exemption clause in two other of the charters is in
substantially the same words, except that the word "company" is
substituted for the word "institution." The clause in the fifth
charter reads thus:
"That there shall be levied a state tax of one-half of one
percent upon the amount of capital stock actually paid in, to be
collected in the same way and at the same time as other taxes are
by law collected, which shall be in lieu of all other taxes and
I agree with the majority of the Court that there is no
substantial difference in the extent of the exemption offered in
these several charters, though there is some difference in their
phraseology. But I think that the benefit of the exemption is in
each case for the corporation. It was not intended for the
individual stockholder. The legislature were dealing with the
proposed corporations. The corporate power granted and the
immunities allowed were to the corporations, and the contract found
in the charter was with the artificial being created,
Page 95 U. S. 693
rather than with the natural persons who might have an interest
in them. The language of the acts is, the "institution" shall pay,
or the "company" shall pay, an annual tax, which shall be in lieu
of all other taxes. It was therefore the institutions or
corporations the legislature had in view, alike in imposing the tax
and granting the immunity, and not the natural persons who might
happen to own shares of stock in the corporations. It is true that
in several of the charters the corporations are required to pay a
tax on each share of capital stock subscribed, and in one upon the
amount of capital stock paid in. Hence it has been argued the
legislature had shares in view; and from this the further inference
is sought to be drawn that the purpose was to tax alike the
corporations and the stockholders, and to exempt both from all
other taxation. Such a construction is, however, directly in
conflict with the ruling in The Delaware Railroad Tax,
and with the expressed declaration that the company or
institution shall pay the tax to the state, which was to be in lieu
of other taxation. Besides, the reference to each share of capital
stock subscribed is easily accounted for without holding that the
shareholder, as well as the companies, were intended to be
exempted. The amount of capital stock authorized for each company
was fixed by its charter and divided into shares. It was quite
possible that the whole stock authorized might not be subscribed.
In view of this, the companies were required to pay a tax not upon
their entire authorized capital, but to the extent of the shares
subscribed. If such was the intent of the legislature, reference to
the shares was necessary, and it raises no implication that the tax
imposed was designed to be for the individual interest of the
shareholders in the corporations, and that the exemption from
further taxation was granted to them.
After all, the true question in these cases is whether a
contract in express terms between the state and a corporation, to
exempt its property and franchises from taxation, shall by
construction extend to and exempt the property of individual
stockholders -- property which, for the purposes of taxation, is
entirely different from that of the corporation. I think there is
no ground for such a construction -- none for any such implication.
If, however, I am mistaken, it is certainly true
Page 95 U. S. 694
that such a construction is not necessary. The words of the
charter granting the exemption are fully satisfied by confining
their operation to the corporations themselves, and I do not feel
at liberty to give them a broader significance in view of the
settled rule I have noticed that a state's right of taxation will
not be held to have been surrendered unless the intention to
surrender is manifested in words too plain to be mistaken. Had the
legislature intended to extend the exemption beyond the companies
themselves, it would have been easy to place the intent beyond
doubt by simply saying the tax should be in lieu of all other
taxation of the company or its stockholders. But nothing like this,
or equivalent to it, is found in the charter.
I find nothing in Gordon v. Appeal Tax
3 How. 133, so much relied upon by the
plaintiffs in error, necessarily inconsistent with what I have
said. That case has not been well understood. The circumstances
were peculiar, and the decision rendered should be considered with
reference to the peculiar facts which appeared in it. What was in
fact decided we had occasion to observe in People v.
4 Wall. 244, where Mr. Justice
Nelson directed attention to the circumstances that more or less
controlled the judgment.
For these reasons, which I have not time to elaborate, I think
the judgments of the Supreme Court of Tennessee should be