Case Name: State of Maryland vs. The Baltimore and Ohio Railroad Company
Court: Court of Appeals of Maryland
Jurisdiction: Maryland
Decision Date: 1878-02-21
Citations: 48 Md. 49
Docket Number: 
Parties: State of Maryland vs. The Baltimore and Ohio Railroad Company.
Judges: 
Reporter: Maryland Reports
Volume: 48
Pages: 49–101

Head Matter:
State of Maryland vs. The Baltimore and Ohio Railroad Company.
Act of 1826, eh. 123, incorporating the Baltimore and Ohio Railroad Company — Sec. 18, Exempting the road, t&c., from Taxation — Such Exemption a Contract within the protection of the Constitution of the United States and beyond the power of a subsequent Legislature to repeal — Exemption of the Franchises from Taxation — Exemption of Gross Receipts derived from the exercise of such Franchises — Act of 1872, ch. 234, imposing a State tax upon the Gross receipts of Railroad Companies, &c__Gross receipts of the Balto. & Ohio R. R. Co. which are exempt from Taxation — Buildings and worlcs necessary to the operation of the Railroad within the meaning of its Charter — Elevators, wharves, &e., necessary for the business of the Railroad as a Common Carrier— Railroad not authorized by its Charter to carry on the general business of a Warehouseman — Act of 1830, ch. 117— Gross receipts which are liable to the Tax imposed by the Act of 1872, ch. 234 — Structures owned and used by the Railroad Company which are Taxable according to Valuation as other Real property — Sow far Sotéis owned and used by the Railroad Company are necessary to its business and therefore witMn its Charter — Sotéis the Gross receipts of which are exempt from Taxation^-Sotels which are Taxable according to Valuation as other Real property — Act of 1836, ch. 276, authorizing■ the Baltimore and Ohio Railroad to subscribe towards the Construction of any Lateral or connecting road — Gross receipts derived from the interest acquired in such Lateral or connecting road, liable to the Tax imposed by the Act of 1872 — Gross receipts from the Metropolitan Railroad, subject to the Tax imposed by the Act of 1872— Rule for approximating to the receipts of the Metropolitan Railroad., where they have been mingled with those derived from the Main Stem — Receipts or dividends derived from the interest acquired by the Railroad Company in Steamship or Steamboat lines by virtue of the Franchise conferred by the Act of 1868, ch. 471, sec. 218, Liable to the Tax imposed, by the Act of 1872 — Interest received by the Balto. & Ohio Railroad Company on the Bonds of other Railroad Companies, Liable to the Tax imposed by the Act of 1872; If such Bonds are 'held outside of the Franchises of the Railroad, Company, they are liable to be Taxed according to their market value — Receipts of the Railroad Company which are liable to the Tax imposed by the Act of 1872.
Section 18, of the Act of 1826 ch. 123, incorporating the Baltimore and Ohio Railroad Company, provides “that the said road or roads with all their works, improvements and profits, and all the machinery of transportation used on said road, are hereby vested in the said company, incorporated by this Act, and their successors forever; and the shares of the capital stock of the said company shall be deemed and considered personal estate, and shall he exempt from the imposition of any tax or burthen.” Neither the Act of incorporation nor the Constitution of the State then in force, contained any provision reserving to the Legislature the right to repeal or amend the charter of the company. Held :
1st. That the exemption from taxation granted in the charter of the company, was a contract between the State and the corporators, within the protection of the Constitution of the United States, and therefore beyond the power of a subsequent Legislature to repeal or in any manner impair.
2nd. That under the foregoing section of the Act incorporating the Baltimore and Ohio Railroad Company, the property and franchises of the company were exempt from taxation;-and the franchises being exempt, the gross receipts derived from the exercise of such franchises were also exempt.
The Act of 1872, ch. 234, imposed a State tax of one-half of one per cent, upon the gross receipts of ail railroad companies worked by steam, incorporated by or under the authority of the State and doing business therein. In an action by the State to recover from the Baltimore and Ohio Railroad Company the tax levied under this Act, on the gross receipts of the company from the 1st of April, 1872, to 31st of December, 1873, it was Held :
1st. That the gross receipts of the entire road of the defendant from Baltimore to the Ohio river, and the gross receipts derived from the lateral roads built by the defendant, and from all buildings and works necessary and expedient to the operation of its road, were exempt from the imposition of any tax or burthen ; and this too whether said road or roads and buildings and works were constructed with money derived from the subscription to its capital stock, or from sales of its shares of stock, or from money borrowed and secured by mortgage, or from the undistributed profits of the company, or from all these sources combined.
2nd. That the buildings and works necessary and expedient to the operation of the road within the meaning of the defendant’s charter, were such buildings and works as were reasonably convenient and appropriate to the maintenance and operation of the road.
3rd. That the elevators, wharves, piers and docks owned by the defendant were necessary for its business as a common carrier for the purposes of receiving and storing grain and freight shipped over its road after the same had reached the place of destination, and previous to its. delivery to the consignee or owner; but as such common carrier it had no right to own and use these structures for the storage of grain and freight after the owner or consignee had had a reasonable time to remove the same.
4th. That the Act of 1826, ch. 123, did not authorize the defendant to carry on the general and ordinary business of a warehouseman; and if the Act of 1830, ch. 117, or any subsequent Act, did authorize the defendant to receive and charge for the storage of grain and other freight generally, the gross receipts derived from the exercise of this special privilege or franchise, were liable to the tax imposed by the Act of 1872, ch. 234.
5th. That if no such power had been conferred, and these structures were owned and used by the defendant for the purpose of carrying on a business, separate and distinct from its business and obligations as a carrier, then such structures were taxable according to valuation as other real property.
6th. That while the defendant was not authorized by its charter to build and conduct hotels for the accommodation of the public generally, hotels or buildings for the accommodation of passengers over its road, were necessary to its business, and therefore within its charter.
7th. That the Cumberland and Viaduct hotels being mainly designed, and at present used, for the accommodation of passengers over the defendant’s road, and also for ticket and telegraph offices, and waiting rooms for passengers, the gross receipts derived from these hotels were exempt from taxation.
8th. That the Oakland and Deer Park hotels used primarily as places of summer resort, were not in any sense necessary to the operation of the road, though they might attract travel over it; but the receipts from these hotels were not liable to the tax imposed by the Act of 1872, ch. 234, as they were not derived from the exercise of any franchise granted by the State, but the hotels were taxable according to valuation as other real property.
The authority given to the Baltimore and Ohio Railroad Company by the Act of 1836, ch. 276, to subscribe towards the construction of any lateral or connecting road, and to acquire an interest therein, not exceeding two-fifths of the estimated cost of constructing such road, is a distinct privilege or franchise granted to the company, and the gross receipts derived from the interest thus acquired in such lateral or connecting road, are liable to the tax levied by the Act of 1872.
The Metropolitan Railroad having been built, not under the provision in the original charter which authorized the Baltimore and Ohio Railroad Company to construct lateral roads, but under the Act of 1865, ch. 70, which did not exempt the projected road or its franchises from taxation, the gross receipts of the Metropolitan road are subject to the tax imposed by the Act of 1872; but no separate account .having been kept of such receipts, they having been mingled with those derived from the Main stem of the Baltimore and Ohio Railroad, the only rule by which to approximate to the receipts of the former is to make them bear the same proportion to the entire gross receipts derived from the Main stem in the State, as the number of miles of the Metropolitan road bears to the entire length of the Baltimore and Ohio Railroad.
No power is conferred upon the Baltimore and Ohio Railroad Company by its charter to acquire or hold any interest in steamship or steamboat lines. Such power is granted by the Act of 1868, ch. 471, sec. 218, and being a separate and distinct franchise, the receipts or dividends derived from the interest acquired in such steamship or steamboat lines by virtue of the special franchise thus conferred, are liable to the gross receipt tax.
No power is conferred on the Baltimore and Ohio Railroad Company by its charter, to acquire the bonds of other railroad companies, and if they have been acquired under any subsequent grant from the Legislature, the interest received on such bonds is liable to the tax imposed by the Act of 1872. If, however, such bonds are held outside of the franchises of the railroad company, they are liable to taxation according to their market value, as other bonds.
The gross receipts derived from all properties and investments held and owned by the Baltimore and Ohio Railroad Company under franchises granted subsequent to its charter, and upon which no exemption from taxation was engrafted, hre liable to the tax imposed by the Act of 1872. But only such gross receipts as are earned in the State.
Appeal from the Superior Court of Baltimore City.
This was au action of debt brought on the 9th of September, 1876, by the appellant to recover from the appellee, the State tax of one-half of one per cent, levied under the Act of 1872, ch. 234, on the gross receipts of the defendant from all sources, (except from its Washington Branch,) from the 1st of April, 1872, to the 31st December, 1873, inclusive. The Act of 1872, ch. 234, was repealed and re-enacted with amendments by the Act of 1874, ch. 408, which provided that said repeal should not affect or impair any right vested or acquired, and existing at the time of said repeal under said Act. The case was tried before the Court without the intervention of a jury.
First Exception. — The plaintiff applied to. the Court for an order requiring the defendant to make answer, verified by oath or affirmation, to certain interrogatories in the nature of a bill of discovery, to the end, that discovery might be made as to the nature, character and value of certain property of the company, and the amount of gross receipts derived from all sources from the 1st day of April, 1872, to the 31st day of December, 1873, except those received from the Company’s Washington Branch Road. The Court (Dobbin, J.) passed the order as prayed for. The defendant in so far as it deemed the interrogatories pertinent to the issue to be tried, answered them; but to such of them, or such parts of them as it deemed not pertinent to the issue, it excepted on that ground and declined to answer. The third and fourth of the interrogatories so excepted to, and to which reference is made in the opinion of this Court, were as follows:
3. Of what mortgage bonds, bonds, stocks and debts due to it was the said Baltimore and Ohio Railroad Com pany the owner between the 31st day of April, 1872, and December 31st, 1872, inclusive of said last mentioned day, and in the year ending December 31st, 1873; answer separately as to these different periods of time, and in your answer as to the property so owned at said different periods of time, state the amount and par value of each class of said mortgage bonds, bonds, stocks, and the aggregate of said debts so owned, including in your answer any stock of the Baltimore and Ohio Railroad Company which ma.y form a part of the stocks so owned, whether the same be the stock of the Main Stem, or of the Washington Branch of the said road, and specifying the purpose for which such stock was so owned?
4. Upon which of said mortgage bonds, bonds and stocks so owned, was interest or dividends paid to the Baltimore and Ohio Railroad Company, and to what amounts between said 1st day of April, 1872, and said 31st day of December, 1872, inclusive of said last mentioned day, and on what part of said debt was interest paid to said Company in said period of time, and to what amount, and on which of said mortgage bonds, bonds and stocks so owned, was interest or dividends paid to the Baltimore and Ohio Railroad Company, and to what amount in the year ending December 31st, 1873, and on what part of said debt was interest paid to said Company in said last mentioned period of time, and to what amount?
The Court sustained the defendant’s exceptions, and to this ruling the plaintiff excepted.
Second Exception. — A large amount of evidence, chiefly documentary, was introduced by the plaintiff. Among the documentary evidence so introduced were the following Maryland Acts of Assembly: 1826, ch. 123, 1827, ch. 104, 1827, ch. 209, 1835, ch. 245, 1835, ch. 395, 1836, ch. 82, 1836, ch. 276, 1845, ch. 313, 1854, ch. 34, 1865, ch. 70, 1866, ch. 154, 1866, ch. 157, 1868, ch. 119, 1868, ch. 471, and 1870, ch. 362. The Acts of Congress of March 2, 1831, ch. 85, and July 25, 1866, ch. 251, were also introduced. The following Acts of the General Assembly of Virginia were also introduced: Act of March 8th, 1827, Act of March 11th, 1837, Act of March 28th, 1837, Act of April 2nd, 1838, Act of March 19th, 1839, Act of March 6th, 1847) and further, sections 58 and 59 of ch. 35 of the Code of Virginia of 1860, (2nd Ed.) and section 67 of ch. 29 of the Code of West Virginia of 1868. The plaintiff also offered in evidence the twenty-sixth, thirty-second, thirty-third, forty-sixth, forty-seventh and forty-eighth annual reports of the defendant, and copies of the following mortgages: From the defendant to William G. Harrison, dated 29th April, 1853; from the defendant to the Mayor and City Council of Baltimore, dated the 16th of February, 1854; from the defendant to John W. Garrett and others, trustees, dated 1st of March, 1870, and one from the said defendant to John W. Garrett and others, trustees, dated 20th of May, 1872. It was admitted that the indebtedness of the defendant intended to he created under and secured by the said respective mortgages, had been created and secured as provided for by said respective mortgages; and that the money received by the said defendant from or upon the evidences of debt secured by or under said respective mortgages, had been used and applied by the said defendant to the purposes expressed in said mortgages. Evidence was also introduced by the defendant. After the evidence was in, the plaintiff offered ten prayers — not deemed necessary to he set out — which the Court refused; and the plaintiff thereupon excepted. Verdict was given for the defendant and judgment was entered thereon. The plaintiff appealed.
The cause was argued before Bartol, O. J., Bowie, Stewart, Brent, Grason, Miller, Alvey and Robinson, .J.
John H. Handy and Charles J. M. Gioinn, Attorney General, for the appellant.
The Court of Appeals in Mayor, etc. vs. B. & O. R. R. Co., 6 Gill, 295, 296, laid down the general rule, that'the exemption of the shares of stock of a corporation from taxation, exempted its property also from taxation.
The expression of this general rule was not necessary to the decision of the particular case ; the rule, therefore, ought not to control the judgment of this Court, when the principle of that rule is involved in the determination of a new case. Dugan vs. Hollins, 13 Md., 162 ; Cohens vs. Virginia, 6 Wheat., 399-401; Woodruff vs. Parham, 8 Wallace, 137-139; Carroll vs. Lessee of Carroll, 16 Howard, 287.
Shares of stock in a corporation, in the hands of individual owners, and the franchises and property of such corporation, in its ownership, are not different forms of the same property. They are different properties, which are wholly distinct in their nature. Dartmouth College vs. Woodward, 4 Wheat., 700, 701; Gordon vs. Appeal Tax Court, 3 Howard, 150; Van Allen vs. Assessors, 3 Wallace, 584; Delaware Railroad Tax Case, 18 Wallace, 229 ; Farrington vs. Tennessee, 95 U. S., 686, 687, 691; Cesena Sulphur Co. vs. Nicholson, L. P. ,1 Exc. Div., 451.
The exemption of the shares of stock of a. corporation from taxation does not, of itself, exempt the property of such corporation from taxation ; nor does the exemption of the property of a corporation from taxation, of itself, exempt the shares of stock of such corporation from taxation. Farrington vs. Tennessee, 95 U. S., 686, 687, 691.
It does not clearly appear from the charter of the appellee that the Legislature intended to do more than exempt its shares of stock from taxation. The franchises and property of the corporation, not being exempted from taxation in clear and unambiguous terms, ought, there fore, to be held to remain within the taxing power of the State. Mayor, etc. vs. B. & O. R. R. Co., 6 Gill, 292 ; Providence Bank vs. Billings, 4 Pet., 561; Phila. & Wilm. R. R. Co. vs. Md., 10 Howard, 393; Soc. of Savings vs. Coite, 6 Wall., 606 ; North Missouri R. R. vs. Maguire, 20 Wall., 61; Erie R. R. Co. vs. Penn., 21 Wall., 498; Cooley on Taxation, 54.
The Act of 1872, ch. 234, imposed a tax upon the franchises of railroad companies, measured by their gross receipts. State Tax on Railway Gross Receipts, 15 Wall., 294; State vs. P. W. & B. R. R. Co., 45 Md., 379. As the franchises of the appellee are not clearly exempted from taxation by its charter, its gross receipts remain within the taxing power of the State.
If the Court should adhere to the rule laid down in Mayor, etc. vs. B. & O. R. R. Co., 6 Gill, 295, 296, the exemption- of the property of the appellee from taxation, because of the exemption of its shares of stock from taxation, extends only to the property owned by the appellee on March 6, 1859, the date limited by the Yirginia Act of March 6, 1847, for the completion of the railroad of the appellee to the Ohio River. The immunity was intended to extend only to the work, which the Company contracted to complete before the day named. It was not intended to extend to additions subsequently made by the appellee to the work thus completed.
The exemption of the property of the appellee from taxation, even if the rule laid down in 6 Gill, 295, 296, he adhered to, cannot certainly extend to franchises or property not held or acquired for the purpose of completing the railroad of the appellee from Baltimore to the Ohio River.
It. does not extend to the special stock issued hy the appellee for the construction of its Washington Branch Railroad, under the Acts of 1830, ch. 158, and 1832, ch. 175. This special stock is exempted temporarily only from taxation under the Acts of 1872, ch. 284, and 1874, ch. 408.
The immunity does not extend to any stock, or bonds, which the appellee acquired in the exercise of the power given to it, by the Acts of 1836, ch. 276, or 1870, ch. 476, to aid in the construction, by other companies, of railroads lateral to, or in continuation of its limited line. Such stocks and bonds have their situs in this State, because the appellee is a Maryland corporation only, Railroad vs. Harris, 12 Wall., 81, and are taxable in this State, because the appellee, their owner, is such Maryland corporation. Van Allen vs. Assessors, 3 Wall., 584; 1 Redfield Am. Railway Cases, Supp. 503, 504 ; State vs. Branin, 3 Zab., 507 ; State vs. Bentley, 3 Zab., 341; Newark City Bank vs. Assessors, 30 N. J., 20 ; Cooley on Taxation, 15, 16, 274; State Tax on Foreign Held Bonds, 15 Wall., 319.
The exemption does not extend to the Metropolitan Branch Railroad, constructed under the Act of 1866, ch. 154. It does not extend to the Rolling Mill at Cumberland, acquired under the Act of 1868, ch. 119. Inhabitants of Worcester vs. Western R. R. Co., 4 Metc., 568, 569; nor to any interest in steamships, acquired under the Act of 1868, ch. 471, sec. 218. Colman vs. Eastern Counties Railway, 4 Eng. Railway and Canal Cases, 390-393.
The exemption does not extend to the preferred stock, created by the appellee under the Act of 1868, ch. 471, sec. 219; nor to the hotels at Cumberland, Oakland and Deer Park; Milwaukee and St. Paul R. R. Co. vs. Supervisors, 29 Wisc., 120-125 ; nor to the elevators of the appellee.
These elevators are not warehouses, in the sense in which that word is used in the 14th section of the Act of 1826, ch. 123. They are not intended for the receipt and delivery to a consignee of specific grain, shipped to him, but for the general storage of grain, intended to be sold by certificates of quantity and quality. Their management is a business separate from the business of a common carrier.
The piers and wharves of the appellee could not have been acquired by condemnation under its original charter ; and not being within the descriptions of property authorized to be acquired under that charter, are subject to taxation. State vs. Parker, 33 N. J. Law, 316.
Warehouses, belonging to the appellee, not exclusively used for the storage of goods arriving by, or intended for, shipment on its railroad, are subject to taxation by this State. State vs. Newark, 1 Dutcher, N. J , 315.
Eo building, or machinery, owned by the appellee, which is not necessary to the exercise by the appellee of franchises granted by its original charter, is exempted from taxation. Railroad vs. Berks County, 6 Penn., 71; Milwaukee, etc. R. R. Co. vs. Milwaukee, 34 Wis., 285 ; Lances' Appeal, 55 Penn., 25, 26; N. Y. & H. R. R. R. Co. vs. Kip, 46 N. Y., 552.
As the appellee is a Maryland corporation only, all the money received into its Maryland Treasury, wherever earned, is incorporated in the general mass of its receipts, as a Maryland corporation, and is taxable in this State. 15 Wall., 294, 296.
John K. Cowen and I. Nevett Steele, for the appellee.
First. — The Acts of 1812, ch. 234, and 1814, ch. 408, taxed only such receipts as were derived from the transportation of freight and passengers within the State of Marylcmd.
These Acts are in pari materia. Comparing the two Acts, they are identical with the addition of section 151 to the last, which was added to enable the Comptroller, where a road extended beyond the borders of Maryland, to approximate to the gross receipts within the State, when he was not furnished with a statement of them by the company’s officers.
The phraseology of the first Act is, of itself,'sufficient to show that the Legislature meant the gross receipts within the State only. The title of the Act indicates it, — and the first section purports to levy the tax upon the gross receipts of railroad companies worked by steam, incorporated by, or under the authority of the State, and doing business therein.
To subject the gross receipts to taxation, the company must not only he a railroad in the State, hut it must be doing business in it.
Had it not been intended to limit the gross receipts to be taxed, to the earnings from the business done in the State, there would have been no reason for section 157, in the Act of 1874, to introduce which, it was necessary to conform to the requirements of section 29, Article 3, of the Constitution, in regard to the mode of enacting laws.
Apart from these considerations however, the Acts of 1872, and 1874, have received a judicial construction from this Court in the case of The State vs. The Philadelphia, Wilmington and Baltimore Railroad Company, 45 Md., 451. The road between Philadelphia and Baltimore was composed of separate links originally, now consolidated; one of which was between Baltimore and the Susquehanna River, and did not enjoy the exemption from taxation that is claimed here under the 18th section of the appellee’s charter.
“The only remaining point then to he considered,” say the Court in delivering its opinion, “is the apportionment of the gross receipts liable to taxation under the Act of 1872 and 1874; and in regard to this, we are of opinion that upon the pleadings and admitted facts in this case, the State is entitled to recover a sum equivalent to that part of the gross receipts, which may he in the same proportion to the whole amount of gross receipts of the defendant on its entire-.road from Baltimore to Philadelphia, that the number of miles of the Baltimore aad Port Deposit Company bears to t-lie whole number of miles of the Philadelphia, Wilmington and Baltimore Company, of which it forms a part. It is true the gross receipts on one part of the road may be greater than on another, hut perfect equality in the assessment and apportionment of taxes is unattainable, and the rule we have adopted seems fair and reasonable.”
The appellant claims the tax of one-half of one per cent, upon the income of bonds or stocks held by the appellee. The only income from this source is derived from bonds of the Ohio and Mississippi Railroad Company and the South Carolina Railroad Company, and from the stock of the North German Lloyd Steamship Company.
This income is not taxed by the Act of 1872, if we are right in our view, that the Act applies only to earnings of the company as a railroad, by the exercise of its franchise. Such, we understand to he its construction as adopted hy this Court in the case in 45 Md., 451. If it should be held to extend to these items of income, it would violate the Bill of Rights, by adopting one mode of tax.ing bonds and stocks when held by railroad companies, while another mode of taxing the same securities was adopted when they were in the hands of individual holders. The State vs. C. & P. R. R. Co., 40 Md, 51; Tyson vs. The State, 28 Md., 577.
These items of income, if the Court holds that the Act of 1872 applies to them, are covered hy the exemption of the 18th section of the charter.
It is contended for the State that certain “ means in the aggregate,” constituted the earning power of the appellee, and that if a “particular means, forming part of ‘this’ aggregate was subject to taxation, its proportion of earnings might be subject to taxation,” &c. “This theory of the case underlies the whole argument” on the part of the State. Theseterms, “means in the aggregate,” are used as representing “the total value of the franchises, capital stock and property of the appellee.”
The obvious general reply to this view is, that the franchises, capital stock and property of the appellee are all exempt from taxation under its charter, as settled by well considered and repeated decisions of this Court. The legislative construction of the language of the charter, was to the same effect as far back as 1881, and that language upon examination of it now is not reasonably susceptible of any other construction. Upon the faith of these legislative and judicial declarations of the meaning of the charter, thousands of shares of the stock have been purchased. The doctrine is now firmly settled that a change of judicial decisions in the State Courts, as to the meaning of State statutes and State Constitutions cannot be permitted to impair the obligation of contracts.
Stockholders have invested their money, and this appellee has expended its means upon the faith of the former decisions of this Court, as to the extent and validity of the charter exemption — therefore, by the well settled doctrine, these decisions must now stand as the settled law. Ohio Ins. & Trust Co. vs. De Bolt, 16 Howard, 416, 428, 429; Gelpcke vs. Dubuque, 1 Wall., 175-206; Havemyer vs. lowa City, 3 Wall., 294, 302-3 ; Olcott vs. Supervisors, 16 Wall., 678-690.
Second. — The exemption from taxation under the 18th section of the charter of the appellee, extends to and covers all the property of the appellee.
The shares of its stock embrace and represent its franchises and all its property, and the shareholders are the beneficial owners of the whole in the language of this Court, in the case of the Insurance Company vs. The State, 23 Md., 311. “The position," say the Court, “ that the corporation as an entity, and not the shareholders, is the owner of its capital stock, seems to us more ingenious than sound, at least so far as it affects the question before us." ■The Tax Cases in 12 G. & J., 117, decide that the stock of a corporation is the representative of its whole property.
The case of Gordon’s Ex’r vs. Mayor, &c. of Balt., 5 Gill, 236, decided that “the stock of a hank is the representative of its whole property ; and when a tax has been laid on the stock in the hands of shareholders, the real and personal estate of the company became exempt from taxation.” See Mayor, &c. of Baltimore vs. Balt. & Ohio R. R. Co., 6 Gill, 295-296; Phila., Wilm. & Baltimore R. R. Co. vs. Bayless, 2 Gill, 355; Gordon vs. The Appeal Tax Court, 3 How., 147; Lionberger vs. Rouse, 9 Wall., 477 ; Wilmington R. R. Co. vs. Reid, 13 Wall., 264.
In a late case in Connecticut the doctrine is distinctly affirmed, that the “exemption of the stock and income” of a corporation from taxation, is an exemption of the property and franchises of the company, as well as an exemption of the shares of stock in the hands of the individual holders. Nichols vs. New Haven and Northhampton Co., 42 Conn., 123 and 125; New Haven vs. City Bank, 31 Conn., 106; see also — State vs. Hood, 15 Richardson, (Law,) 177, 188, 189, 191 ; State vs. City Council of Charleston, 5 Richardson, (Law,) 561 ; Atlantic and Gulf R. R. Co. vs. Allen, 15 Florida, 660 ; Bank vs. City Council, 3 Richd., (Law,) 342, 344; Rome R. R. Co. vs. The Mayor and City Council of Rome, 14 Geo., 275 ; The State Bank vs. Brackenridge, 7 Blackford, 395, 397 ; The State vs. Berry, et al.. 2 Harrison, (N. J.,) 80; Bank Tax Cases, 2 Wall., 200, 208, 209; Bank of Commerce vs. New York City, 2 Black, 620 ; City of Richmond vs. Richmond & D. R. R. Co., 21 Gratt., 604 ; State, Cape May & M. R. R. Co. vs. Collector, 38 N. J., 270.
Third. — The exemption from taxation and the franchises claimed by the appellee continue unimpaired up to the present time.
The appellant contended in his brief that “ when the railroad of the appellee was completed to the Ohio River, according to the plan indicated in the Act of 1826, ch. 123, and the time for completing said road prescribed by law had expired, its right of eminent domain and all its powers of condemnation ceased,” and, again, “when the railroad was completed to the Ohio River in 1859, its powers of condemnation were exhausted.”
And in support of this doctrine, besides the authorities cited by it, the appellant relied upon the Act of 1836, ch. 82, authorizing the re-location of its line between Baltimore and the Monocacy River, and the Act of 1866, ch. 154, authorizing a change in the location of portions of its line, in order to obviate difficulties arising from existing locations ; and the inference drawn by the appellant, was that only such capital stock as existed in 1859 was exempted from taxation ; and that no property could upon any proper theory be considered as exempted from taxation, except the property which was obtained with the proceeds of the stock existing in 1859.
When the Acts of 1836, ch. 82, and 1866, ch. 154, were passed, the road had already been constructed and so far as regarded the particular section of the road whose location was changed, the power of condemnation it was thought might be held to have been exhausted. So it was supposed to have been, when the local canals were made on the Potomac; but yet this Court held that the power of condemnation on the long intervals between them, still continued in force.
Even if it were admitted, then, that having once exercised the right to condemn a route and build a road on it at a particular place, the power to condemn an improved location, depended upon an additional grant, still, this would not affect the general right of condemnation for all matters connected with the use of the road, such as increasing its water stations, warehouses and appurtenances generally.
As to the power of condemnation after a road is completed and in operation, see Chicago, B. & Q. R. R. vs. Wilson, 17 Illinois, 133; Toledo, Wabash and Western R. R. Co. vs. Daniels, 16 Ohio State, 390-398; P. W. & B. R. R. Co. vs. Williams, 54 Penn., 107.
As to continuance of chartered powers, see Hamilton vs. R. R. Co., 1 Md. Ch. Dec., 107; Taggart vs. Western Md. R. R. Co., 24 Md., 563.
Fourth. — The exemption of the 18th section embraces whatever is employed in, or is made subservient to, the proper business for which the company was formed.
Under this head, fall the objections of the appellant to the immunity from taxation claimed for the warehouses, wharves, piers, hotels and elevators ; and in arguing the point, it must not be understood that the appellee abandons the ground that any misuse of authority here, can only he taken advantage of by a judicial inquiry expressly directed to the point. Mackall vs. Chesapeake and Ohio Canal Co., 94 U S. Rep., 308.
In the case of the Mayor, &c. of Balto. vs. The B. & O. R. R. Co., 21 Md., 91, the Court say:
“It must be borne in mind, that we are not dealing with an ordinary private corporation, created only for the pecuniary benefit of its stockholders. The powers granted to the appellee are of the most extensive and comprehensive kind, involving in their exercise great public interests, to promote which was the chief object of its charter. Looking to the great and important objects which the Legislature designed to accomplish by the charter of the Baltimore and Ohio E. E. Go., the Court of Appeals, in 6 Gill, 297, has declared the rules by which the charter ought to be construed.”
“ After stating that the Legislature regarded the completion of the work as ‘ a great State object,” the Court say, “ In expounding, therefore, those provisions of the charter of the company, by which its expressed privileges and exemptions are imparted, liberal rules of interpretation for its benefit ought to be adopted to effectuate the benevolent designs of the Legislature, and not such rules of con ■struction and limitation as should be applied to the charters of companies incorporated for the peculiar benefit of their stockholders.”
It is in the interest of the public, then, as well as for the benefit of the stockholders, that the question of the completion of the road is to be considered. The interest of the public is to have the most perfect work which the knowledge and skill of the day can furnish — in other words, a complete work. And while any part of the company's road, with its equipment and appliances falls short of this, to that extent is the public justified in saying that the condition upon which the charter was granted has not been complied with.
In 1859, there was but one track to the Ohio — with an inferior rail and with meagre appliances as we know now, whatever the President and Directors may have been justified in saying then, when it may be alleged they knew no better; but it will not be pretended that the public which has the interest described by the Court of Appeals, would not rightfully complain were the road in all its appliances no better noto than it was then. See Canal Company vs. Railroad Company, 4 G. & J., 1; Bruce vs. Pres’t, &c. of Delaware and Hudson Canal, 19 Barb., 311; Selden vs. Delaware and Hudson, 29 N. Y., 634.
The constructions referred to by the State are those which are justified by the current of authorities in this regard, as a part of the work authorized by the charter. N. Y. and Harlem R. R. Co. vs. Kip, 46 N. Y., 546; Inhab. of Worcester vs. R. R. Co., 4 Metcalf, 568; Madison Plank Road Co. vs. Waterton, 5 Wisconsin, 172; Lyde vs. Eastern Bengal R. R. Co., 36 Bevan, 10-16; State vs. Hancock, 35 New Jersey, 537; State of South Carolina vs. Hood, 15 Richardson, 177.
In the case of Osborn vs. New York and New Haven R. R. Co., 40 Conn., 498, the Court ruled as to the necessity of wharves or docks to carry on the business of a railroad company. State, Morris & Essex R. R. Co. vs. Haight, 35 N. J., 40 ; S. Wales Ry. Co. vs. Redmonds, 10 C. B. N. S., 683, 685, 687.
In tlie case of New Haven vs. City Bank, 31 Conn., 106, a building erected for corporate purposes was sub-let, in part, for other objects, which it was held, did not deprive it of its exemption from taxation as the property of the bank. Warden, &c. vs. S. Eastern R. R. Co., 9 Hare, 489; Hamilton vs. R. R. Co., 1 Md., 553 ; State vs Betts, 4 Zabriskie, 559.
The fact that a warehouse is occasionally used for the deposit of goods that have not been transported over the line, or are not intended for shipment, does not at all change the character of the property.
The doctrine is maintained by the authorities, that a corporation may employ its corporate property, when it would otherwise be lying idle and profitless, for such purposes as are not alien to its primary business. Green’s Brice’s Ultra Vires, 67-71 and 74, and notes; Forrest vs. Man., Shef. & Lin. Rly. Co., 30 Beav., 40; Simpson vs. Directors of Westminster Palace Hotel Co., 8 Ho. Lds. Cas., 712 ; In re Horsey vs. London and Colonial Co., 37 Law Jour., 392 ; Brown and others vs. Winnisimmet Co., 11 Allen, 326 ; French vs. Inhab. of Quincy, 3 Allen, 9; State vs. Betts, 4 Zab., 555; New Haven vs. City Bank, 31 Conn., 106.
This same principle will apply to those hotels which are essential for the needs of the road — but which are used incidentally to entertain guests who may not have been travellers over the road.
The fourteenth section of the appellee’s charter, provides in so many words for the erection of warehouses and other works that might be necessary or useful in the construction or repair of said road.
What is an elevator, but a grain warehouse, with the modern improvements required by the demands of trade at the City of Baltimore?
What is a pier or wharf, hut a place for the deposit of goods at navigable water?
What was the main purpose of the State in chartering this railroad? It is a matter of history that its design was to bring the Western trade to the port of Baltimore, not simply to supply a local demand, but for the purposes of transhipment as ocean commerce. Can it be that this Company can build a warehouse or freight depot at a country town, but is not permitted by its charter to erect a pier or construct a wharf on navigable wrater, in order that the products brought from the West and from local points along its line, may be conveniently deposited for the purpose of shipment by vessel; these piers and wharves are but depots on navigable water — and can it be said this company may erect depots along its line inland, but that it has no right to erect a depot, or pier, or wharf on navigable water, when the main purpose of the founders of the enterprise was to bring the rich products of the West to tide-water at Baltimore?
Among the first Ordinances of the City of Baltimore, (Resolution No. 69, April 16th, 1828,) was one granting lands to the company on navigable water, for the purposes of docks and wharves. The language of the charter authorizes the company not only to construct works that are “necessary” for the purposes of the road, but also such as may be “useful” or “expedient.”
The proof is that these works are not only “ useful ” and “expedient” for the purposes of the road, but that they are absolutely essential for its operations.
Fifth. — The exemption embraces not only what was represented by the original subscription, or was acquired up to any given period afterwards, but by proceeds of mortgages, and the issue of preferred stock, and the use of undistributed profits.
It must be borne in mind that the charter fixes no limit to the capital of the company. That it is authorized to increase the capital stock by the ■ addition of as many shares as the president and directors may deem necessary, for which they may, at their option, cause subscriptions to be received in the manner prescribed by them — or may sell the same for the benefit of the work, for any sum not under the par value. Act of 1826, ch. 123, sec. 13.
That it is authorized to borrow money and to issue certificates, or other evidences of debt, and to pledge the property of the company for the payment of the same and its interest. Ib.
All these powers were conferred to enable the appellee to carry out “the purposes of this Act.”
Then, what were the purposes? The construction, equipment and working of a complete road — complete, looking to the exigencies of a public demand, which ever exacting, required a continual exercise of the franchises granted by the charter, facilitating the most convenient use of the road, and so complying with the conditions, which alone justified the granting of the franchises of the appellee.
We have endeavored to show that this was the scope of the decision in the case of the canal and the railroad, and that until this was accomplished, the appellee was authorized to issue stock from time to time, to borrow money and to pay interest, on loans.
If we are right in the view we have taken, then neither the 28th February, 1844, nor the 1st October, 1859, limited the right of the appellee to create stock — to borrow money, or to execute mortgages — and the argument of the appellant to the contrary fails.
As to freedom from taxation of subsequent issues, see State vs. Norwich R. R. Co., 30 Conn., 290.
So far as there is any question as to the exemption from taxation of property created by using the undistributed profits of the appellee — that would seem to have been settled by the case of the State vs. B. & O. R. R. Co., 6 Gill, 368, where it was held that the appellee might as well borrow from -its stockholders, by retaining their dividends and using them in construction,.giving them certificates of indebtedness, as it could from a stranger; that even if at the time this was done, a purpose to make a stock dividend was not declared, it was sufficient if such was understood to be the policy of the company; and in the case of People vs. The Commissioner of Taxes, 4 Otto, 416, the Supreme Court say “that the reserve fund, reserved from the profits, (or undistributed profits) is as much a part of the property of the bank, and goes to fix the value of the shares equally, as if it were not called by that name, hut remained as a part of the specie, hills discounted, or .other funds of the bank undistinguishable from the general mass.”
This being so, the State has no more right to subject to taxation the undistributed profits of the appellee, or the property created by the.use of them, than it has to tax the shares of the company expressly exempted by the 18th section of the charter.

Opinion:
Robinson, J.,
delivered the opinion of the Court.
Section 18 of the Act of 1826, incorporating the Baltimore and Ohio Bailroad Company provides :
"That the said road or roads, with all their works, improvements and profits, and all the machinery of transportation used on said road, are hereby vested in the said company, incorporated by this Act and their successors forever; and the shares of the capital stock of the said company shall be deemed and considered personal estate, and shall he exempt from the imposition of any tax or burthen."
There is no provision either in the Act of incorporation or in the Constitution then in force in this State, reserving the right to repeal or amend the charter of the appellee, and the exemption from taxation therein granted, is a con tract between the State and the corporators, within the protection of the Constitution of the United States, and therefore beyond the power of a subsequent Legislature to repeal or in any manner impair. State vs. Northern Central Railway Co., 44 Md., 162; Miller vs. State, 15 Wallace, 488.
This suit is brought to recover of the appellee a tax imposed by the Act of 1872, ch. 234, on the gross receipts of all railroads incorporated by, and doing business in, this State ; and it is claimed that, under the above section, the property and franchises of the company are exempt from the imposition of any tax or burthen. •
This section has been the subject of judicial construction, and it is necessary therefore in the first place, to understand precisely what has been decided. In the Mayor and City Council of Baltimore vs. The Balt, and Ohio R. R. Co., 6 Gill, 292, the power to tax the real and,personal property, and the capital stock of the company, and its shares of stock in the hands of shareholders, was the question and the sole question, before the Court, and after full argument, all the Judges were of opinion that no such power existed, and that the 18th sec. of the appellee's charter exempted the property and capital stock, and shares of stock, from taxation.
This decision was made in a case in which the Baltimore and Ohio Railroad Company was a party, and upon the very section of its charter, now under consideration. From that time to the present, a period of thirty years, it has been the accepted law of this State; and upon the faith of it millions of dollars, have been invested in the property of this company. Every consideration therefore of public policy, and of private right, demands that the decision of the Court upon the question thus submitted to its adjudication, shall be deemed final and conclusive.
In delivering the opinion of the Court in that case, Judge Dorsey, however, said, that the exemption of the shares of stock of the company, exempted also its franchises, because the franchises constituted and formed part of the market value of such shares.
The right to construct a railroad and to charge tolls for the transportation of freight and passengers is a franchise granted by the State, and a tax upon the tolls thus received is therefore a tax on the franchise itself. It would follow therefore, that if the franchises of the appellee are exempt from taxation, the gross receipts derived from the exercise of such franchises are also exempt. It is insisted, however, that the question in regard to the exemption of the appellee's franchises, was not before the Court in 6 Gill; and that whatever deference is due to the opinion of so distinguished a Judge, it ought not to control our judgment in a subsequent suit, where the very point is presented for decision.
Conceding this, the question then is, whether the franchises of the appellee are by the 18th sec. of its charter exempted from taxation? This section, it is true, does not in so many words exempt the franchises of the company, but provides. that its shares of stock shall he exempt from the imposition of any tax or burden. And it is contended that the shares of stock, and the property and franchises' of a railroad company are separate and distinct properties, with separate and distinct ownerships, and that the exemption of the one, does not therefore exempt the other. The question, however, is not.whether shares of stock abstractly considered, embrace and represent the property and franchises of the appellee. Strictly speaking it may he true, that a shareholder is not the legal owner of any portion of the property of the company, and his shares of stock are evidences only of his right to participate in the business and government of the corporation, and to a proportional share of the profits earned by the company. We are not dealing, however, with abstract definitions, hut with an Act incorporating a railroad com pany, and endeavoring to ascertain how far, and to what extent, the Legislature meant to exempt the corporation from taxation. We are not hound therefore by the literal meaning of the words of the statute, but must look to the connection in which they are used, the subject-matter to which they are applied, and the motives and objects which actuated the Legislature in conferring this privilege on the appellee.
It is a sound rule of construction we admit, that the power of taxation is never presumed to be relinquished, unless the intent to relinquish is clearly expressed. In view however of the fact that the construction of this road " was considered by the people of the State and by the Legislature as a great State object, tending to develop the wealth and to promote the prosperity of the whole State and particularly of the City of Baltimore," this Court has said, "that liberal rules of interpretation ought to govern in the construction of the privileges and exemptions conferred on the company, and not such rules of restriction and limitation as are applicable to the charters of companies incorporated for the peculiar benefit of shareholders." We must bear in mind that the appellee was incorporated in 1826, and was in fact, the first railroad ever chartered in this country for the transportation of freight and passengers. It was to extend from Baltimore to the Ohio River, a distance of 379 miles, involving necessarily in its construction an enormous sum of money, and was therefore justly considered not only as a gigantic, but in a pecuniary sense a hazardous enterprise. Under these circumstances, the Legislature was willing to confer on it "every privilege and immunity which could reasonably be required and which would tend to the completion of the road." Such then being the motives of the Legislature, let us. look to the clause in the appellee's charter under which this exemption is claimed. And here we find it provides that " the said road or roads with all their works, improvements and profits, and all the machinery of transportation shall be vested in the said company incorporated by this Act," "and the shares of the capital stock of the said company shall be exempt from the imposition of any tax or burthen." The section thus declares in the first place that all the property and profits of the company shall be vested in the corporation, and secondly, that the shares of stock shall be exempted from taxation. As used in this connection, we understand the Legislature to mean that the shares of stock, representing the property and profits of the company, shall be exempt from the imposition of any tax .or burthen. The Legislature beyond all question, intended to confer a substantial benefit on the company, and thereby to induce capitalists and others, to invest their means in the construction of a road, which every one deemed of so much importance to the State. Amd to say they meant to exempt the shares only, and to reserve the right to tax the property and franchises, is a construction that would render the privilege thus granted of no practical benefit to the appellee. So considering the question as one of first impression, we are of opinion that the 18th section exempts the property and franchises of the company from taxation. If the franchises are exempt, it would necessarily follow, that the gross receipts derived from the exercise of its franchises, are also exempt.
But conceding this construction, we are pressed with the argument that inasmuch as the appellee was required to complete its road to the Ohio river in the year 1859, and having completed one track by that time, the entire rood is to be considered as completed and equipped at that time, within the meaning of its charter, and that the immunity from taxation thus granted to the appellee is to be limited to the exercise of its franchises necessary to operate this one track, and to the property owned by the company at that time. Now the object of this provision was to enable the State to institute proceedings for the forfeiture of the charter, provided the road was not constructed within the time thus prescribed. But it was a provision the State could waive at pleasure, and until forfeiture, the franchises remained unimpaired. >
There is nothing either in the spirit or letter of the charter to justify the narrow construction contended for by the State, namely that by the completion of one track this road is to be considered fully completed and equipped within the meaning of the Act of 1826. On the contrary the appellee was authorized to construct a road not exceeding sixty-six feet in width, with as many tracks as might be deemed necessary; to build lateral roads in any direction, and to erect warehouses and other works necessary and expedient for the completion and operation of the road. To this end, full power was conferred on the President and Directors to increase the capital stock to any amount they might deem necessary ; to issue certificates of indebtedness, and to pledge the property of the road for the payment of the same, and also to use the undistributed profits of the Company.
Now it may be true that neither the Legislature nor the most sanguine promoters of this enterprise realized the great success which this road has achieved. But it is clear they did look forward to it as one of the great routes to and from the West to the seaboard, not merely with one track and with the machinery necessary to operate it, but with as many tracks as could be constructed within the sixty-six feet bed of the road, fully equipped in every respect with machinery and works of every kind necessary to meet the demands not only of the then existing, but what was deemed of much greater importance, the ever increasing trade of that section.
The construction then of such additional tracks and the purchase of machinery, and the erection of buildings and work's incident to and necessary to the business of the road, required the continual exercise of the franchises thus granted to the company.
We are of opinion therefore, that the gross receipts of the appellee's entire road from Baltimore to the Ohio River, and the gross receipts derived from the lateral roads built by the appellee, and from all buildings and works necessary and expedient to the operation of its road are exempt from the imposition of any tax or burthen. And this too, whether said road or roads, and buildings, and works were constructed with money derived from the subscription to its capital stock, or from sales of its shares of stock, or from money borrowed, and secured by mortgage, or from the undistributed profits of the company, or from all these sources combined.
And this brings us to the question, what are the buildings and works necessary and expedient to the operation of the road within the meaning of the appellee's charter? And here we are met with the argument that "necessary" means buildings and works indispensable to the road. This, however, is not a mere dictionary question, but one involving the construction of a power granted to a railroad company to enable it to accomplish the objects for which it was chartered. And as used in this connection, it is clear the Legislature meant such buildings and works as were reasonably convenient and appropriate to the maintenance and operation of the road. Construed in this sense, the question is whether "necessary" buildings embraces the elevatora, wharves, piers and docks owned by the appellee? Now one of the main objects in chartering this company was to bring the Western trade to the port of Baltimore, not merely to supply a local demand, but for the purposes of transhipment as ocean commerce. These buildings and structures are therefore necessary for the business of the appellee as a common carrier, for the purposes of receiving and storing grain and freight shipped over its road after the same have reached the place of destination, and previous to delivery to the consignee or owner. But the rights of the appellee in this respect are such as pertain to its functions as a common carrier; and as such, it has no right to own and use these structures for the storage of grain and freight after the owner or consignee has had a reasonable time to remove the same. The Act of 1826 does not certainly authorize the appellee to carry on the general and ordinary business of a warehouseman, and however closely such business may be connected with that of a carrier, it is in no sense necessary to the exercise of the rights and privileges granted to the appellee as a railroad company. If the Act of 1880, ch. 117, or any subsequent Act, does authorize the appellee to carry on such business, that is to receive and charge for the storage of grain and other freight generally, then it is clear that the gross receipts derived from the exercise of this special privilege or franchise are liable to the tax imposed by the Act of 1872. On the other hand if no such power has been conferred, and these structures are owned and used by the appellee for the purpose of carrying on a business separate and distinct from its business and obligations as a carrier, then such structures are taxable according to valuation as other real property.
It is hardly necessary to say that the original charter does not authorize the appellee to build and conduct hotels in the usual and ordinary manner in which hotels are kept, that is for the accommodation of the public generally. But we are not dealing with the charter of a mere local railroad, but one authorizing the construction of a road from Baltimore to the Ohio River, designed and now used as one of the great through routes to the West. Hotels then, or buildings for the accommodation of passengers over the road, are, we think, necessary to its business and therefore within its charter. The record shows that the Cumberland and Viaduct Hotels were mainly designed and are now used for this purpose ; and in addition thereto for ticket and telegraph offices, and waiting rooms for passengers. The gross receipts derived from these hotels are therefore exempt from taxation. The Oakland and Deer Park Hotels however, appear to have been built and are now used primarily as places of summer resort, and although as such they may attract travel over the road, they'are not in any sense necessary to its operation. But the receipts from these hotels are not liable to the tax imposed by the Act of 1872, because they are not derived from the exercise of any franchise granted by the State, and they must be taxed according to valuation as other real property.
We come now to the receipts derived by the appellee from properties held and owned, not in pursuance of any power conferred by its original charter, but under subsequent grants from the Legislature, and upon which no exemption was engrafted. The Act of 1836, ch. 276, authorized the appellee to subscribe towards the construction of any lateral or connecting road, and to acquire an interest therein not exceeding two-fifths of the estimated cost of constructing such road. This is a distinct privilege or franchise granted to the company, and the gross receipts derived from the interest thus acquired in such lateral or connecting road, are iiable to the tax levied by the Act of 1872.
The gross receipts of the Metropolitan Road are also, we think, liable to this tax. The original charter it is true, authorized the appellee to build lateral roads, and this power is not limited to the construction of roads leading to lime-kilns, factories and distilleries, as was urged in argument by the Attorney General, but authorizes the appellee to build such roads for the transportation of freight and passengers. The Metropolitan Road was not built, however, under this provision in the original charter, but under the Act of 1865, ch. 70, which authorized the appellee to con struct a road between Knoxville and the Monocacy Junction to the boundary of the District of Columbia; and for the purpose as the Act expressly declares, for providing a more direct communication from the West and North-West with the City of Washington. At this latter place it forms a junction with the Washington Branch, thus making a route distinct from, and independent of, the main line of the appellee. In no just sense can this road be considered as a lateral road within the meaning of the original charter. The Act of 1865, does not exempt the projected road or its franchises from taxation. No separate account however has been kept of the receipts derived from this road, but it appears they were commingled with the receipts of the Main stem. Under such circumstances the only rule by which we can approximate to such receipts, is to say that they shall bear the same proportion to the entire gross receipts derived from the Main stem in the State, as the number of miles of the Metropolitan Road bears to the entire length of the appellee's road.
It is equally clear, the Act of 1826 confers no power on the appellee, to acquire or hold any interest in Steamship or Steamboat lines. This power is granted by the Act of 1868, ch. 471, sec. 218, and being a separate and distinct franchise, the receipts or dividends derived from the interest acquired in such Steamship or Steamboat lines, by virtue of the special franchise thus conferred, are liable to the-gross receipt, tax.
It does not satisfactorily appear from the record, how, or in what manner the appellee acquired the bonds of the South Carolina and the Ohio and Mississippi Railroad Companies. The charter certainly confers no such power, and if they were acquired under any subsequent grant from the Legislature, then the interest received on such bonds would be liable to tbe tax imposed by the Act of 18Y2. On the other hand if they were held outside of the appellee's franchises, then such bonds would be liable to taxation as other bonds, that is, according to their market' value.
Without extending this opinion by a review of the several properties owned hy the appellee, it is sufficient to say that the gross receipts derived from all: properties and investments held and owned under franchises granted, subsequent to the Act of 1826, incorporating the Baltimore and Ohio Railroad Company, and upon which no exemption from taxation was engrafted, are liable to the tax levied by the Act of 1872.
And this brings us to the question, whether this Act imposes a tax on the entire gross receipts of the appellee, or only on such as are earned by the road within the State. And in determining this question, we must bear in mind that this tax is levied on railroad companies in consideration of special rights and privileges granted to such companies ; these privileges, however, confer no power to maintain and operate a road beyond the limits of the State, and in the absence of language showing a contrary intention, it would he hut fair to presume the Legislature meant to tax such receipts only, as are earned by the franchises thus granted. Now the Act of 1872, merely imposes a tax on all railroads incorporated and doing business in the State, and if the question rested solely upon the construction of this Act, it would be questionable, to say the least, whether the Legislature intended to tax receipts earned by the exercise of franchises granted by other States. But when this Act is construed in connection with the Act of 1874, ch. 408, it is clear, we think, that the tax is imposed only on such gross receipts as are earned in the State.
Such are the conclusions we have reached in this case. Upon an examination of the several prayers offered by the State, we find that none of them present propositions of law in accordance with the views we have expressed, and there was no error therefore in rejecting them. It is plain, however, that the State was entitled to recover in this suit, and even were we obliged to affirm the judgment below, we should have remanded the case for a new trial under sec. 16, Art. 5, of the Code.
(Decided 21st February, 1878.)
The Court erred, however, in sustaining the defendant's exceptions to the plaintiff's third and fourth interrogatories. The Act of 1872 imposes a tax not only on the gross receipts derived from freight and passengers, but on the receipts derived from all other sources, provided such receipts were derived from properties and investments owned by the appellee under franchises granted by the State, and upon which no exemption from taxation was granted.
Judgment reversed, and new trial aioarded.