Court Opinion

ID: 7894778
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:49.974041+00
Date Added: 2024-06-11T16:32:02.276351
License: Public Domain

Bowie, J.,
filed the following dissenting opinion :
With profound respect for the great learning and ability of the Bench which decided the earlier tax cases in this State, upon which all the subsequent decisions depend, I am unable to concur in the doctrine supposed to he established by them, viz., that the shares of stock in a joint stock corporation, represent all the franchises and property, real and personal, which the corporation acquires and holds, and consequently the exemption of the shares is an exemption of the franchises and property of the corporation.
According to the best modern authorities, “A share of stock is a right to partake, according to the amount of the party’s subscription, of the surplus profits obtained from the use and disposal of the capital stock of the company to those purposes for which the company is constituted.” Angell &. Ames on Corp., sec. 557, (8th Edition.)
“The land, buildings ,etc., of canal, turnpike and railroad companies are the mere instruments whereby the joint stock of the company is made to produce that profit; and, moreover, belong exclusively- to the corporate body, which is altogether a separate person from the individual members.” Ibid., sec. 557; Bligh vs. Brent, 3 Young & C. Exch., 268, 294; Rex vs. The Hull Dock Company, 1 Term Rep., 219.
In the case last referred to, it was held, “that lands purchased by the company and converted into a dock, were ratable to the poor, although the Act of Parliament declared the shares should be personal estate'; the rate was upon the property in the hands of the company, and not on the share of the individual proprietor.”
“The capital stock of a corporation, is not necessarily, the limit of its property.” Barry vs. Merch. Ex. Co., 1 Sand. Ch., 280; South Bay Meadow Co. vs. Gray, 30 Maine Rep., 547.
“The sound doctrine’ in equity is, that the capital or property, and debts due to corporations constitute a trust *93fund, pledged to the payment of the dues of creditors and stockholders.” 1 Angell & Ames, sec. 779 a; Curran vs. The State of Ark., 15 How., 312; 2 Kent Com., 307, n. a; Hightower vs. Thornton, 8 Georgia, 493; Bacon vs. Robertson, 18 How., 480.
It appears from these authorities, which -might be multiplied indefinitely, that the property of the corporation and the shares of stock of a joint stock corporation are not only not vested in the same persons, but are essentially different things, which cannot represent each other, more than a part can cover the whole.
Figuratively speaking, a part may be put for the whole, but legally, the greater is never included in the less. In the absence of express language, susceptible of no other interpretation, we cannot impfite to the Legislature any such purpose.
“That the taxing power is of vital importance — that it is essential to the existence of government, are truths which it cannot be necessary to re-affirm. They are acknowledged and asserted by all. It would seem that the relinquishment of such a power is never to be assumed. We will not say, that a State may not relinquish it; that a consideration sufficiently valuable to induce a partial release of it may not exist; but as the whole community is interested in retaining it undiminished, that community has a right to insist, that its abandonment ought not to be presumed in a case in which the deliberate purpose of the State to abandon it, does not appear.” Marshall, C. J., 4 Peters, 561; adopted by the Court of Appeals in Gordon’s Ex’r vs. Mayor & City Council of Balto., 5 Gill, 231.
All persons, (natural or legal,) holding property in this State, are bound to contribute their proportions of public taxes for the support of the Government, according to their actual worth in real or personal property, and duties, or taxes, may properly and justly be imposed, or laid, with a political view, for the good government and benefit of the community. Art. 15, Dec. of Rights.
*94This clause of the Declaration of Rights, whilst it expressly asserts equality should he the general rule in imposing taxes, explicitly asserts that other taxes may he laid with a political view for the good government and benefit of the commonwealth, and impliedly prohibits exemption.
There is no clause in the Declaration of Rights, prohibiting double taxation in express terms, and notwithstanding the general rule indicated by the 15th clause above cited, which has formed a part of that Declaration, since the organization of the State, it has been the constant practice of the Legislature, to lay taxes on its citizens, not only according to their actual worth in real and personal property, but on their business, or vocation; thus banks, merchants, auctioneers, corporations, hotels, theatres, lawyers and physicians, have been specially taxed; and not only the learned professions, which have a species of monopoly, hut the oystermen and laborer.
The transportation of passengers and freight by railroad corporations is a great franchise, immunity, or privilege, conferred by the State on the company, by virtue of its sovereign power, and founded in a great measure upon the exercise of the right of eminent domain, which may he called the “ ultima ratio ” of the civil power. '
When the B. & O. R. R. Company was incorporated with a perpetual charter, designed to unite the City of Baltimore with the Ohio and the great West, the General Assembly, after investing the company, as a corporation, with the most liberal powers, declared by its 18th section,
‘ ‘ that the road or roads ivith all their works, improvements and profits, and the machinery are vested in the said company, and their successors forever, and the shares of the capital stock of said company shall he deemed and considered personal estate and shall he exempt from the imposition of any tax or burden by the States assenting to this law.”
The company claim exemption under this section from all taxation by the State, the City of Baltimore, or the *95Counties through which the road runs, on the ground, that the shares of the capital stock are declared personal estate, and exempt from imposition of any tax or burden.
And this interpretation it is said, is fixed beyond all question by the decision of this Court in 6 Gill, 288, which held “that the specific property of a company was as much an ingredient in the shares of stock, and component part of their value, as is any portion of the corporate property of the company, so that if the one be exempt from taxation under express legislation, so also is the other.”
It has been urged with great force that the interpretation given the 18th section, of the charter of the B. & O. R. R. Co., by the Court in 6 Gill, is sustained by the language of the charter granted by this State to the Potowmac Company in 1784, and the Ches. & O. C. Company in 1824.
There could not be a stronger illustration of the proposition, that exemption when intended to be given by the Legislature, is granted in clear and emphatic terms, than the examples furnished in the 9th clauses of those several charters.
These corporations were the creations of two States, erected by distinct charters in each, by inter-State legislation. They were designed to establish a great highway, between the Eastern and Western waters. There was no monopoly of the right of transportation, they were free to all who paid the tolls.
But the B. & O. R. R. Company sustains no such relation to other States, it is exclusively a Maryland corporation, with the franchises of building and working a railroad through the territory of such States as. intervene between Baltimore and the Ohio.
At the meeting of the citizens of Baltimore held on the 19th Eeby., 1827, preliminary to applying to the Legislature of Maryland for a charter, it was resolved, that the assent of the Legislatures of Pennsylvania and Virginia to *96the said Act shall he obtained as speedily as possible, hut shall be necessary, only so far as in constructing the said road, it shall he found necessary to pass through their respective States.
They wanted no corporate power from the assenting States, further than a right of way through the same.
To guard against any assumption of authority over the corporation or its stock, the 18th section of the charter, after declaring “ it shall not be lawful for any other company or any person or persons whatsoever to travel upon or use any of the roads of the company, etc., without license or permission of the president and directors of said company, and that the said road or roads with all their works, improvements and profits, and all the machinery 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 he deemed and considered personal estate, and shall be exempt from the imposition of any tax or burthen by the States assenting to this law.”
The plain unvarnished meaning and office of the section cited, was to assert the absolute control of the company over the road for travel and transportation; the absolute proprietorship of the corporation in its visible and tangible property, real and personal, and their profits, forever; and the legal status of the shares of stock to he personal estate, (which notwithstanding the general rule is subject to the “ lex clomi” of the owner,) shall be exempt from tax by the States of Pennsylvania and Virginia.
There was no attempt to exempt the road, works and improvements, etc., as such from taxation by the assenting States, (and it is understood they have been continuously taxed in Western Virginia,) hut notwithstanding the obvious distinction drawn in the law, between the road, works, etc., and the shares of stock, it is gravely contended that the real tangible indivisible property of the corpora*97tion, capable at-all times of being estimated at its proper situs, is represented by an incorporeal, intangible, contingent interest, incapable of any certain value and distributed wherever its owners may reside, and converted into personalty — the exemption of which from taxation by the States assenting to the laiu, is an exemption by the State enacting the law, of all power of taxation over the corpus or body of the appellee’s real and personal estate.
The^exemption of the shares of the capital stock by the assenting States, is. the exclusion of exemption as to the road, works, etc., by the enacting State, as “ expressio unius, est exclusio alterius.”
In my judgment, the Legislature of Maryland never entertained the legal fiction, that the shares of capital stock, represented the lands, houses, road, machinery, etc.; that a part was equal to the whole — there was no judicial authority for such a position at that period, as far as I have investigated. The case of the Hull Dock Company above cited, established the contrary, viz., although the shares were made personal estate by the charter, the property in the hands of the company was liable to tax as realty.
The doctrine that the stock of a corporation, represents its whole property, originates in this State, in the decision known as the Tax Cases, decided in 12 G. & J., 117, in which no opinion was delivered by the Court, and the propositions supposed to be sustained by the Court, are deduced by the Reporter from the arguments of the counsel, whose resj)ective cases were affirmed, or rejected.
The most sanguine lawyer must acknowledge that this is a very unsatisfactory basis for building a theory upon, which is to control the legislation of the State forever.
The doctrine was repeated in the case of Gordon vs. The Mayor & City Council of Balto., 5 Gill, 231, and no authority cited, except 12 G. & J., and thus sounded, the refrain was taken up and repeated in the case of The *98Mayor, &c. of Balt. vs. The B. & O. R. R. Co., 6 Gill, and others since determined on its authority.
No chain can he stronger than each of its several links, and if the first is unsound,the whole series is so.
Although many cases are to be found in other States, in which language may be employed, corresponding with that used by the Court in 6 Gill, yet many of those were cases of banking corporations, or others, in which the capital stock, valued at par, might, without any violation of principle, be said to represent all the property of the corporations, but the weight of authority in the United States and in England, as collected and cited in the appellant’s briefs is otherwise.
I am painfully conscious of the responsibility which a Judge incurs in departing from former decisions of a Court of final resort.
The rule “stare decisis,” is one of the most sacred in the law. It is not a wise administration of justice to oppose a current of authorities, where they are to be found. Authorities established are so many laws, and receding from them, unsettles property, etc.
“The Judges now (as their predecessors have always done,) bow down to the rule (of stare decisis,) ‘pro salute populi ’ — which is .the supreme law of every community. ” What the safety of the commonwealth demands, is a momentous problem.
Whether it is better to joersist in error, than to review and correct it, is the position those are placed in who believe the former decision wrong. The author on Legal Judgment says, “it may often be difficult to draw the line, at which it must be considered that a doctrine is settled, or a point closed, and therefore to be adhered to ; or to say when it is not too late to review such doctrine or point. There may be a time when it is not too late to make that review. My own personal experience tells me, says Graham Brun, that nothing is more common, than *99that a legal notion, though founded on judicial decisions, may prevail for a series of years in Westminster Hall as being of decided cases, which have been decided to be wrong, and when so discovered, has been corrected by subsequent determinations.” * * * *
‘' The case of Moses vs. Macferlan, was considered for law between thirty and forty years, till the Court, reconsidering the grounds of that decision, overruled it altogether and came back to the true principle in the case of Harriot vs. Hampton, where Lord Kenyon and the rest of the Court individually, refused to recognize the law of the former case, although very solemnly determined after mature consideration and an elaborate judgment.” Ram on Legal Judgment, 128, 129, 130.
This is not, strictly speaking " res judicata,” but “res integra.” In 6 Gill, the doctrine of exemption as apjdied to the appellee in this case, was first announced in a suit between the Mayor and C. C. of Balto., and the appellee. The direct question there, was whether the City bad the power to tax.
It was held, the stock being exempted from State taxation, “afortiori” the City, which was but a municipality of the State, had no power to tax.
The State was no party to that suit, and was not bound by it, and no occasion has arisen since requiring the doctrine to be reviewed. It is in fact" res integra” as to the State. The parent case 12 G. & J., 117, from which the doctrine sprung, was prolific of various propositions, some of which are denied by those who insist on 6 Gill as authority.
The 7th section of the Act of 1821, ch. 131, required the banks to pay a certain bonus for the extension of their charters, and the 11th declared that upon any of them accepting and complying with the terms of the Act, the faith of the State was thereby pledged not to impose any further tax or burden upon them, etc.
*100These sections were held to exempt the banks from further tax or charge by the State, for their franchise or banking privileges, but not to exempt the property belonging to such banks, or the shares of stock held therein by individuals; drawing a broad distinction between the franchise, and the property and shares, declaring the exemption of the”one is not the exemption of the other.
From the proposition declared in that case, that “the property of the bank being represented by the shares of stock therein, both cannot be taxed, and therefore when the tax is imposed on the stock in the hands of shareholders, the property of the bank, real or personal, cannot be taxed,” Dorsey, J., is represented as dissenting.
Yet, this proposition is the gist of the whole opinion of the Court delivered by him in 6 Gill.
The 11th section of the Act of 1821, ch. 131, declared “ that upon any of the aforesaid banks accepting and complying with the terms and conditions of this Act, the faith of the State is hereby pledged not to impose any further tax or burden upon them, during the continuance of their charter under this Act.”
The banks contended that this clause restrained not only the Legislature from imposing additional taxes upon the banks, but also the city from assessing them.
This construction of the clause was repudiated by the Court, which held that the exemption could not be allowed, unless the Court -was satisfied “that an intention to liberate the bank from city as well as State taxation, is clearly and indisputably expressed.”
This proposition they held was established by adjudications both in England and the United States, which were cited at considerable length, and with these for their guide they declared, that although the Act exempted the banks from State taxation, it did not exempt them from city taxation, “that the exemption claimed by the appellant cannot be' sustained unless the Court is satisfied that *101an intention to liberate the bank from city, as well as State taxation is clearly and indisputably expressed * * “if the object of the contract had been as is maintained by the counsel for the appellant, to exempt the banks from all taxation whether imposed by the State or city, it is impossible to believe that the parties would not have employed more comprehensive terms, and have used language better calculated to accomplish their purpose.”
Apply this principle of construction to the 18th section of the charter of the appellee, and what is the necessary conclusion ?
Are the States assenting to the law, and the State enacting the law the same? Are they not as distinct as the City and the State governments? Is the intention to liberate the visible property of the corporation from taxation clearly and indisputably expressed ? Does it appear beyond all doubt and ambiguity, that the State of Maryland meant under this vague implication to divest itself forever, of one of the vital powers of sovereignty?
In the language of the Court in 5 Gill, 239, paraphrazed, “on this point my opinion is adverse to the claim asserted by the appellee.”