author: Chief Justice Agnew

text:
    Insurance Company of North America versus The Commonwealth.
    By the Act of March 20th 1877, imposing a tax upon the entire amount of premiums received by insurance companies, ” it was intended to tax all the business of such companies as evidenced by the entire premiums received by them from all sources, whether within or without the state ; and such act is not repugnant to the provisions of the constitution of the United States, prohibiting any interference with inter-state commerce.
    May 20th 1878.
    Before Agnbw, C. J., Mercur, Gordon, Paxson, Woodward and Trunkey, JJ. Sharswood, J., absent.
    Error to the Court of Common Pleas of Dauphin county: Of May Term 1878, No. 159.
    Debt by the Commonwealth of Pennsylvania against the Insurance Company,of North America, to recover a balance of taxes on premiums of insurance received by the defendant company.
    The facts were these: The defendants entered an appeal from a settlement of the account of the Insurance Company of North America with the Commonwealth, made by the auditor-general, in the month of August 1877, charging the company with a tax of eight-tenths of one per cent, (per Act of March 20th 1877,) on the sum of $681,629.57, being the gross amount of premiums received by the company in other states than the state of Pennsylvania, from the date of the passage of that act to June 30th 1877, a period of less than four months; the said tax amounting to $5485.04.
    The account charged against the company was . . $6746.65
    The company was credited with payment of the tax on all premiums received in the state of Pennsylvania 1301.61
    Leaving a balance unpaid, ás per settlement . . $5485.04
    The 6th section of the Act of 1877, under which the settlement was made by the auditor-general, is as follows :
    “ That hereafter it shall be the duty of the president, secretary, or other proper officer of each and every insurance company or association, incorporated by or under any law of the Commonwealth, except companies doing business upon the purely mutual plan, without any capital stock or accumulated reserve, and purely mutual ■ beneficial associations whose fund for the benefit of members, their families or heirs, is made up entirely of the weekly or monthly contributions of their members, and the accumulated interest thereon, to make report in writing to the auditor-general, semi-annually, upon the 1st day of July and January in each year, setting forth the entire amount of premiums received by such company or association during the preceding six months, whether the said premiums were received in money, or in the form of notes, credits, or any other substitute for money; and every such company or association shall pay into the state treasury, at the dates aforesaid, a tax of eight-tenths of one per centum upon the gross amount of said premiums : Provided, That said report shall be made under oath or affirmation, and that it shall be the duty of the accounting officers of the Commonwealth to add ten per centum to the account of any company or association whose officers shall neglect or refuse, for a period of thirty days, to-make the said report or to pay into the state treasury the tax imposed by this section.”
    The declaration was in debt to recover the above balance.
    The defendants pleaded, first, the general issue ; and afterwards, by consent, on the trial of the cause, two additional special pleas were filed, setting forth that the defendants were -a corporation created by the state of Pennsylvania, authorized to effect insurance against fire and the perils of the seas, and that $5230.05, part of the sum claimed, was a tax of eight-tenths of one per cent, assessed by the auditor-general on $653,757.22, received as gross premiums on contracts of insurance effected and entered into by the defendants in the several other states and territories of the United States of America, between the time specified in the several amounts therein mentioned. And that the said company so received and collected the said premiums, at agencies established in such other states and territories, by virtue of licenses and permissions granted to the defendants by the lawful authorities thereof, to transact therein said business of insurance under the laws of such other states and territories. And that no part of the said sum was received for business transacted or premiums taken within the state of Pennsylvania, nor for insurances on property or effects within the state of Pennsylvania. And that in all such other states and territories the defendants were obliged to and did pay taxes imposed by the laws of such other states and territories while transacting their business.
    The second special plea was a similar averment as to the remainder of the sum claimed for premiums received outside of Pennsylvania, in the British provinces of New Brunswick, Newfoundland and Canada, amounting to $214.98.
    The plaintiff demurred to the two special pleas, and on the trial of the issue raised by the general issue on the 11th of March 1878, admitted the truth of the facts set forth in these two special pleas, and the learned judge who tried the cause directed the jury to find in favor of the Commonwealth for the sum of $5989.54, reserving the following points for the opinion of the court:—
    If the court shall be of opinion that the defendants are not liable for the tax laid by the legislature of Pennsylvania on premiums of insurance received by the defendants in other states of the United States, and within the limits of the state of Pennsylvania, upon contracts of insurance made by the defendants in places without the limits of Pennsylvania and with citizens' of other states, then the verdict shall be set aside, and judgment shall be entered for the defendants.
    If the court shall be of opinion that the defendants are liable for taxes assessed upon such premiums, then judgment shall be entered for the plaintiffs upon the verdict.
    Afterward, April 11th 1878, the court below, Pearson, P. J., gave judgment in favor of the Commonwealth on the points reserved and the demurrer to the special pleas, which were argued at the same time, delivering the following opinion:—
    “The points reserved, in effect, present two questions: 1. Does the sixth section of the act of March 20th 1877, impose a tax on the gross receipts of the defendant corporation, for business done without as well as transacted within the state of Pennsylvania, on which it received money, notes, credits, or any other substitute for money ? And, 2. Can the tax on business done out of the state be lawfully imposed by our legislature ?
    “ The language of the statute in the present case, imposing the tax, is quite as strong and almost identical with that found in the act of the 23d of March 1866, imposing a tax on the gross receipts of railroads, which was construed by the Supreme Court of the United States, in the Reading Railroad case, 15 Wall. 284, to extend to all receipts, as well on business done within as that without the limits of the state of Pennsylvania.
    “When the same words, substantially, are used in the Act of Assembly they should receive the same construction; especially when applied to a corporation doing business of a kind where it is more objectionable than that transacted by this company.
    “The Insurance Company of North America owes its whole existence to the laws of Pennsylvania. It received a perpetual charter from this state in the year 1794, under which it continued to transact its business within this Commonwealth until the 27th day of February 1854, when it was authorized by statute to extend it to any of the states of the Union, or without its limits, giving its contracts the same validity as if made in this state. It is by virtue of the authority contained in that law that the contracts were made on which the present tax is imposed. We cannot doubt but that it was the intention of the legislature, in enacting this statute, to tax all of the receipts of this company, whether arising from contracts made and business transacted without as well as within the state. The design was to impose it on all of the receipts from its business, wherever done.
    “2. Is there anything in the constitution of this state or of the United States which prevents the imposition of the tax on business done or money due in another state ? It certainly is not a tax on commerce between the states. It is said in the argument that insurance is as necessary to commerce as bills of lading, decided to be protected in 24 How. 169. In that case it was not merely the bill of lading that was exempted, but the gold dust or bullion which it represented. An insurance, although common, is not necessary to commerce. Many strong merchants or wealthy firms never insure. But this very point is decided in Paul v. Virginia, 8 Wall. 168 : ‘A policy of insurance is not a transaction of commerce, it is a mere contract.’
    “ This tax is much less objectionable than that imposed on the gross receipts of railroads. In many cases they were not incorporated by the laws of Pennsylvania, but were the creation of other states, and barely permitted to pass through this; yet a tax of $76,788 was imposed on the New York and Erie Railway, which only ran about forty-five miles through Pennsylvania, and that was sustained in Erie Railway, 21 Wall. 492.
    “•The Supreme Court of the United States decided that a tax could not be imposed on goods by the ton carried through Pennsylvania to or .from other states, in the Reading Railroad Company case, 15 Wall. 232, which met my entire approbation; yet held the same company liable to a tax on the gross receipts of freight in the case of the same road: Ibid. 284.
    “We are unable to see the difference between taxing the freight and the money paid for its transportation; each has the same effect on the commerce between the states, and each state through which the road passes might impose a tax on the gross receipts ad libitum, until the commerce would be wholly excluded, as fully as if imposed on the article carried by the barrel, the bushel, or the ton. The law on both points is too firmly settled to be shaken: 18 Wall. 206; 21 Id. 492. The individual opinion of one lawyer or judge is of no consequence whatever.
    “It is urged that the business done or obligations held out of the state cannot be taxed. This is not done by a natural but by an artificial person, over which the state has entire control. It is only when the premium is received, or the same secured tb the corporation in the form declared in the act, that the tax is. imposed. Then, in contemplation of law, it comes to the corporation in this state. It is within its power, and considered to be in its treasury.
    “It may be considered that money at interest, whether secured by note or mortgage, cannot be taxed as such. The state must have jurisdiction of the person or property, and money at interest is not considered as property, except in the state where the owner resides. See reasoning of the court in the Foreign Bond case, 15 Wall. 300, and the principles there laid down.
    “The same doctrine has been reiterated in many other cases and in different states. A mortgage must be taxed where the owner lives, not where the mortgaged land lies: 19 Md. 13. Yet the state of Pennsylvania has, for nearly forty years, taxed her citizens for money at interest due in other states, and the right has never been questioned. In the language of Chief Justice Marshall, it has jurisdiction of the person. In the present case, the state has full jurisdiction over this corporation, and can tax the money due it wheresoever situated.
    “ We are of the opinion that the law is in favor of the state on the points reserved, and therefore direct judgment to be entered on the verdict in favor of the Commonwealth.”
    The defendants took this writ, and alleged that: 1. The court below erred in entering judgment for the plaintiffs below on the demurrer to the special pleas filed.
    2. In entering judgment for the plaintiffs below on the points reserved.
    3. In deciding that the defendants below were liable to pay a tax to the Commonwealth of Pennsylvania, under the provisions of the Act of 20th March 1877, on the gross amount of premiums received for all insurances effected in the states and territories of the United States, at agencies established therein, by virtue of licenses and permission granted by the governments thereof to the said defendants to transact their said business therein.
    4. Because the true intent and meaning of the said act was to impose a tax on the gross premiums of insurance collected and received in Pennsylvania for insurance effected within the said state, and not on gross premiums received and effected without the State of Pennsylvania.
    5. Because a tax on gross premiums received by the defendants, for contracts of insurance effected outside of the state of Pennsylvania, with citizens of other states and foreign countries, is a tax on the transactions or business of the company with citizens of other states and foreign countries, is within the prohibition of the constitution of the United States, contained in art. 1, sect. 8, giving to Congress the power to regulate commerce with foreign nations and among the several states and with the Indian tribes.

      Morton P. Henry and Richard O. McMurtrie, for plaintiffs in error.
    By the Act of 1870, the state did not intend to impose a tax on insurance made outside the limits of the state. In the case of railways, the tax has only been imposed on the proportion of gross receipts receivable in Pennsylvania: Reading Railroad Co. v. Pennsylvania, 15 Wall. 284; Erie Railroad Co. v. Pennsylvania, 21 Id. 492; and it is a cardinal rule of construing statutes that a received construction is assumed to be the meaning in • subsequent statutes in pari materia and using the same language. As the business of this company is neither protected nor carried on by permission of Pennsylvania, outside the limits of that state, such business is not therefore the subject of its taxation in Pennsylvania, nor intended to be made the subject of such a tax by the words of this act. When it transacts business in other states, it owes its authority and receives its protection from the local governments, and in return is bound to them for the taxes: Bank of Augusta v. Earle, 13 Peters 519; Lafayette Ins. Co. v. French, 18 How. 405; Paul v. Virginia, 8 Wall. 168; Ducat v. Chicago, 10 Id. 410; Baltimore and Ohio Railroad v. Harris, 12 Id. 65.
    Trading corporations, such as the Insurance Company of North America, are merely aggregations of capital for commercial purposes. They are not to be confounded with corporations exercising a governmental power in private hands, such as canal and railroad companies. Insurance companies, like banks, iron companies, shoe and watchmaking companies, in no sense exercise a governmental franchise. They are partnerships with limited liability, having perpetual succession, and the right to act by a common head, and under a common seal. The property of such a corporation cannot be followed for the purposes of taxation outside the state of Pennsylvia, if that of an individual cannot: Railroad Co. v. Harris, 12 Wall. 81; Green v. Van Buskirk, 7 Id. 150.
    The fiction that personal property follows the law of the situs of the owner, always yields when it is necessary for the purposes of justice that the situs of the thing should be examined: Hoyt v. Commissioners of Taxes, 23 N. T. 228.
    The taxation here imposed is an interference with or a regulation of inter-state commerce and is within the prohibition of the Constitution of the United States.
    We have seen that a trading corporation is an aggregation of capital of citizens of the state, and as such an inhabitant of the state. Such .a corporation is treated as a citizen of the state of its creation under the “judiciary act,” giving jurisdiction to the courts of the United States in suits between citizens of different states: Ohio and Mississippi Railroad v. Wheeler, 1 Black 285; Marshall v. The Balt. & O. Railroad, 16 How. 314; Covington Drawbridge Co. v. Shepherd, 20 Id. 227. Pennsylvania cannot create that artificial citizenship outside its own borders. A Pennsylvania corporation admitted to transact business elsewhere is treated as an artificial inhabitant of Pennsylvania, allowed to come into another state with the privileges granted by the state of its creation on terms. If Pennsylvania can lawfully tax such transactions of its corporations, with citizens of other states, it can levy a tax on all transactions of its citizens, natural or artificial, entered into beyond its jurisdiction. Pennsylvania may forbid its corporations to transact its business outside its own borders; it cannot by any permission, express or implied, obtain a control over the transactions of citizens of other states with one of its corporations elsewhere on the plea that it permitted it to act outside of the state: Doyle v. Continental Ins. Co., 4 Otto 535; Insurance Co. v. Morse, 20 Wall. 445. Where the line of state taxation begins and ends as an interference with commerce is difficult to define.' It is one of practical application governed by the subject on which it is laid, and not by the manner of its impost: State Tax on Railway Gross Receipts, 15 Wall. 296; Welton v. Missouri, 1 Otto 281; Brown v. Maryland, 12 Wheat. 419; Inman Steamship Co. v. Tinker, 4 Otto 238; Almy v. California, 24 How. 169.

      Lyman L. Gilbert, Deputy Attorney-General, and George Lear, Attorney-General, for the Commonwealth.
    The subjects of taxation are persons, property and business. This is a tax on property. It cannot be taxed in any state except the situs of the owner, although the business from which it is derived may be the subject of taxation in another state. The property of a corporation, or that of a natural person, is taxable only where it exists or he resides; but a corporation, which is the creature of the law of the state which creates it, has no power to transact business beyond the limits of the state, except by permission, and upon such terms and conditions as any other state may impose upon it. And these terms and conditions take the form of licenses to transact business in other states than that of its creation, and constitute a tax on business. But the tax in this.case is a tax on the corporation for property received and owned by it, without regard to the place from which it is derived, and the tax on the business from which this property is accumulated is not double taxation, for the tax on the property in this state is not on the same subject of taxation as the tax on the business of the corporation in another state by which the property is made.
    When the law contains the words the “ entire amount of premiums received,” as in this case, without limitation as to the place from whence derived, how can there be a question raised, or a doubt entertained, that the state of Pennsylvania, by this enactment, intended “to impose a tax on the gross receipts from the business of insurance transacted by the insurance company without the limits of Pennsylvania?”
    The expression of “gross receipts from the business of insurance transacted” without the state, confounds two subjects of taxation in a form Avhieh may lead to confusion. The gross receipts constitute the property which is taxed, which is a proper subject of taxation, while the business of insurance transacted without the limits of the state is another subject of taxation, and can be taxed only in the state where it is transacted. The tax in this case is imposed on the former, and not on the latter, subject of taxation. The forraer is in this state, while the latter is transacted beyond its limits.
    In the case of McKeen v. The County of Northampton, 13 Wright 519, it was held that the capital stock, owned by a citizen of Pennsylvania, in a manufacturing corporation located in another state, is taxable for state and county, purposes.
    That case was decided in reference to property in the form of stock in a corporation of another state, owned by a citizen of Pennsylvania, and the decision was based upon the ground that “being a citizen of this state, it is clear that he is subject, personally, to its power to tax, and that all his property, accompanying his person, or falling legitimately within the territorial jurisdiction of the state, is equally within this authority. The interest which an owner of shares has in the stock of a corporation is personal. Whithersoever he goes it accompanies him, and when he dies his domicile governs its succession.”
    If this be the rule with regard to a natural person, the same doctrine a fortiori would apply to a corporation. The latter can have no domicile except in the state where it is created, and the power which created it has the power of taxation of its property in the state where it exists, from whatever state derived.
    The decision in the Reading Railroad Co. v. Pennsylvania, 15 Wall. 284, was in favor of the state, and sustained the tax on gross receipts derived from freight exported to points without the state. The practice in the auditor-general’s office was not to tax only the proportion of gross receipts receivable in Pennsylvania, but tO' tax the proportion of the gross receipts which the road in Pennsylvania bore to the whole road: Erie Railroad Co. v. Pennsylvania, supra.

    The issuing of a, policy of insurance is not a transaction of commerce within the meaning of the provision in the constitution that Congress shall, have the exclusive power “to regulate commerce with foreign nations and among the several states,” even though the parties, be domiciled in different states, but is a simple contract of indemnity against loss: Paul v. Virginia, 8 Wall. 168. But suppose that case be overruled or disregarded, and it be held that insurance is a transaction of commerce, there is still another decision of the same court standing in the way of the position of the plaintiff in error. The carrying of freight from one state to another is a transaction of commerce, and a law imposing a tax upon it is unconstitutional: Reading Railroad Co. v. Pennsylvania, 15 Wall. 232. But there the prohibition of the constitution stops. While the state cannot impose a tax on a company for carrying freight, which is called a tax on tonnage, and a regulation of commerce if it be o.n freight carried from one state to another, a law imposing a tax on the gross receipts derived from freight carried in the same manner is constitutional and valid.
    June 3d 1878.
   Chief Justice Agnew

delivered the opinion of the court,

The question in this case is not doubtful, and were it so it would be our duty to resolve the doubt in favor of the state, lest she be deprived of redress in a higher court. The doctrine of states rights in a sense which robs the federal government of just rights, should not be invoked; but states rights as found in the constitution, forbidding the enumeration of federal rights to deny others retained by the people, and declaring that the powers not delegated by the constitution, nor prohibited by it to the states are reserved to them respectively, or to the people, are justly the object of careful protection by both state and federal courts. The states are the pillars of the Union. Their fall, if dragged down by federal power, must involve both in ruin. It is therefore important that the boundaries of power be sacredly preserved. Yet these lines of demarcation are often faint and evanescent in some cases, but not so we think in this case.

The question here is whether the state can impose upon insurance companies, the creation of her own hands, a tax on all their business, as evidenced by the entire premiums brought into their treasury from all sources. That this is the scope and intent of the law, we hold.

Is this an interference with any grant of federal power, on the ground that a part of their receipts is drawn from sources outside of the state ? We think not. That it is not a tax in the sense of “ imposts or duties laid upon imports or exports” is plain. It is not laid on any property or article of commerce, which can be imported or exported; but is simply a tax on money or its representative — on the results or avails of business — that which belongs to the corporation itself, and not the property of others. It is not a tax on property in another state, but on money which is in the treasury of a corporation within this state.

It is said it transgresses the power of Congress to “ regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” It is not a tax on anything coming in or going out of the state, or upon the means of transportation. It is not laid on any instrument of commerce, either representing or affecting commerce, as a bill of lading accompanying goods transported. It does not affect travellers coming in or going out, or property situate out of the state, in that it touches no interest outside of the state, except in that remote and incidental manner in which state taxation may affect all property entering into the commerce of the state, and which has been frequently held by the Supreme Court of the United States to be no regulation of commerce conflicting with the federal power. It is evident in the outset the case is not governed by the principles settled in such cases as Brown v. Maryland, 12 Wheat. 418 ; Hays v. Steamship Co., 17 How. 596; Steamship Co. v. Port-wardens, 6 Wall. 31; Passenger Cases, 7 How. 283 ; Crandall v. Nevada, 6 Wall. 36 ; Almy v. California, 24 How. 169; Tonnage Tax Cases, 15 Wall. 232; State Tax on Foreign Bonds, Id. 300. All these cases proceed on the ground that the constitutionality of a state tax law must be determined, not upon the form or agency collecting the tax, but by the subject on which the burden is laid: Tonnage Tax Cases, 15 Wall. 272; Mumm v. Illinois, 4 Otto 135. As said in Doyle v. Continental Ins. Co., 4 Otto 341, “ In all eases where the legislation of a state has been declared void, such legislation has been based upon an act or a fact which was itself illegal.” But the subject of this tax, as we have said, has no relation to any article of inter-state commerce, even in a remote and indirect way. The subject — money derived from the receipts of premiums — is not susceptible of regulation by any federal law. In discussing this point we may first consider the person or party taxed — a corporation created by state law, located in the state and amenable only to its laws. It is not a citizen in the sense of the rights of persons secured by the constitution, except for the purpose of federal jurisdiction: Ins. Co. v. French, 18 How. 404; Paul v. Virginia, 8 Wall. 178; Ducat v. Chicago, 10 Wall. 415; Liverpool Ins. Co. v. Mass., Id. 573 ; Railroad Co. v. Harris, 12 Id. 81. Nor can it exercise its powers outside of the state, except by the consent of the state into which it comes: Bank of Augusta v. Earle, 13 Pet. 519; Paul v. Virginia, 8 Wall. 180, 181; Ducat v. Chicago, 10 Id. 410; Ins. Co. v. Morse, 20 Id. 456; Doyle v. Ins. Co., 4 Otto 540. But it derives its faculties from our law; and its power to go out of this state, in pursuit of business permitted elsewhere, it obtains from this state alone. This faculty of action or power to go elsewhere is a home franchise, and is not conferred by the law of another state, by whose permission it exercises the franchise within it. It is this franchise — the power to make money by its business at home and abroad — w'hich this state assumes to control as of right, and the burthen imposed is the price it must pay for the faculty and powers conferred. By the exercise of this franchise it collects the fruits of its business, no matter where it is performed. The money which finds its way into its treasury is the product of these powers conferred by this state. In view of the corporate being thus conferred, the powers thus derived, and the products of business thus gathered, the state necessarily possesses the power to tax the products of its corporate business, for none of them possess in the slightest degree an outside character or interest.

This brings us to consider more specially the subject of the tax. As already stated a tax on gross premiums of insurance is a tax upon the receipts of money, or its representative in notes and bills, and not on property, or any article of commerce; it touches only a fund in the treasury of the company. As was said in the Gross Receipts cases, 15 Wall. 294, “the tax is laid on the gross receipts of the company; and upon a fund which has become the property of the company, mingled with its other property, and possibly expended in improvements, or put out at interest.” See also, Erie Railroad Co. v. Pennsylvania, 21 Wall. 497. This tax is not measured by the subjects of insurance, for be the rates high or low, they do not govern, but the money only after it has passed into the hands of the company. The difference between this tax and that in the Gross Receipt cases is marked. There the receipts were the results of transportation, more nearly approximating a regulation of commerce, and the dissent of the three judges was put upon this ground. But here the tax is on the mere results of business, involving only local transactions, and partaking of no relation to inter-state commerce.

A contract of insurance is merely a guaranty against a loss of property by fire or marine disaster. When on chattels on land or sea, it is a protection merely given to the property, for which a price is paid. This price, or premium, is but a consideration, and the right to receive it rests on the faculty imparted by the state in its charter. Why shall not the state law tax the product of this faculty ? It is no burden on those living outside more than those within the state. The tax on a franchise is admitted to be lawful: Tonnage Tax Cases, 15 Wall. 277 ; Tax on Gross Receipts, Id. 294; Saving Society v. Coite, 6 Wall. 606; Osborn v. Bank United States, 9 Wheat. 859; Brown v. Maryland, 12 Id. 444; Erie Railway v. Pennsylvania, 21 Wall. 497. So the greater the scope of the business of an insurance company the less must be the charge, and hence the spread of its risks into other states cheapens the price.

That a policy is a mere contract of indemnity against loss of property, and not an instrument of commerce, is held in several cases: Paul v. Virginia, 8 Wall. 183; Ducat v. Chicago, 10 Id. 410; Liverpool Ins. Co. v. Mass., Id. 573. In the first case, Justice Field uses this language: “ Issuing a policy of insurance is not a transaction of commerce. The policies are simple contracts of indemnity against loss by fire, entered into between the corporations and the assured for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market, as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one state to another, and then put up for sale. They are like other personal contracts between parties which are completed by their signature and the transfer of the consideration. Such contracts are not inter-state transactions, though the parties may be domiciled in different states. The policies do not take effect — are not executed contracts — until delivered by the agent in Virginia. They are then local transactions and are governed by the local law.”

This clearly indicates the nature of the subject. Among the decided cases, we find many much nearer to the border line than this, yet where the legislation of the state has been upheld. Thus a tax on brokers who dealt entirely in the purchase and sale of foreign bills of exchange: Nathan v. Louisiana, 8 How. 73. So a tax on deposits in a savings bank invested largely in bonds of the United States, exempt from taxation : Society for Savings v. Coite, 6 Wall. 594; Provident Institution v. Mass., Id. 612. A tax on shares of stock in a railroad running through several states, in proportion to the length of the road in the state: Delaware Railroad Tax, 18 Wall. 206, 229; and on its income, Id. 231. And a tax on warehouses used as the means of inter-state commerce: Mumm v. Illinois, 4 Otto 114. Also, a tax on the person for shares of stock in corporations in other states: McKeen v. Northampton County, 13 Wright 519, recognised in State Tax on Foreign Bonds, 15 Wall. 325.

Without further elaboration, we are of opinion the tax in this case on the entire premiums of the company is not illegal, or contrary to any provision in the Constitution of the United States.

Judgment affirmed.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Johnson versus Crow et al.

    1. A legislative grant to a private person, of a privilege to use a public right for his private gain, will not be deemed exclusive, unless the intent of the legislature is perfectly clear, and nothing less than a plain contract between the-state and an individual, for an adequate consideration, can prevent the repeal of such a privilege.
    2. Where by an Act of Assembly certain privileges are conferred upon an individual for a valuable consideration, and by a subsequent act said privileges are made exclusive without any new consideration, this second act cannot be sustained by reason of the consideration in the original grant and may be repealed.
    3. By an Act of Assembly, A. was given the right to maintain a ferry and receive the tolls, in consideration that he would attend to the ferry, keep proper boats, &e. A subsequent act, without any new consideration, gave him the exclusive right to maintain a ferry within the limits named in the former act. A third act conferred upon B. the right to maintain a ferry within the same limits. Held, that this latter act was constitutional.
    May 21st 1878.
    Before Agnew, C. J., Mercur, Gordon, Paxson, Woodward and Trunkey, JJ. Sharswood, J., absent.
    Appeal from the Court of Common Pleas of Dauphin county: Of May Term 1878, No. 187. In Equity.
    Appeal of Joseph Johnson from the decree of the court overruling exceptions to and confirming the report of the master, in proceedings commenced by Johnson to restrain Isaac Crow and others from maintaining a ferry over the Susquehanna river at Millersburg, Pennsylvania.
    Johnson claimed the exclusive privilege of a ferry across the river at Millersburg, and for one mile above and below his residence. He owned or had the right of landing passengers on the east side' of the river. Crow and others claimed the land, with the exclusive right to the landing on the west bank. Johnson claimed through David Kreamer, who established a ferry at said point some fifty years theretofore, which had been kept up with reasonable regularity from that time and which right descended or was transferred to his sons, who after obtaining a legislative sanction, sold their interest to Johnson in 1875. On the 1st day of March 1866, an act was passed (Pamph. L. 358), giving Joseph Kreamer, his heirs and assigns, the privilege of making landings, at his own expense, on the east side of the Susquehanna river, at the borough of Millersburg, and on the lands of Isaac and Jacob Crow and William Patton, on the west side, and of having a ferry between those points. He was required to keep the landings and ferry in good order and repair, for the transportation of passengers and travellers, teams, &c., of all descriptions, and at all times, with good boats, hands, &c., and was permitted to take the same tolls heretofore charged; and a method was pointed out for paying the owners of the lands entered on, to be taken on the west side, for the damages which they may sustain, to be assessed in the same manner provided for opening private roads.
    On the 15th day of April 1867 (Pamph. L. 1308), a supplement to this act Avas passed, giving to Joseph Kreamer, his heirs and assigns, the exclusive right and privilege of a ferry, for one mile above and one mile beloAV his house, and all persons Avere prohibited from using the river, for the purpose of a ferry, under the penalty of one hundred dollars.
    On the 12th day of April 1872, an act was passed, giving to Isaac CroAV, his heirs and assigns, the right to establish a ferry across the Susquehanna river, from his land, on the Avest side, to Millersburg, on the east side, requiring him to keep up landings, boats, &c., in almost the same language as that required of Kreamer, in every particular, except as to the mode of obtaining the land and assessing the damages therefor.
    Under the provisions of this act Crow and others established and maintained a ferry, and this bill in equity was filed by Johnson to restrain them from such use.
    The master, to whom the bill and ansAver were referred, reported:
    1. That the act of March 21st 1866, constituted the contract betAveen the state and the grantee of the ferry franchise, and as the grant made by that act is not exclusive, the legislature had a right to pass the act of 1872, conferring the same privilege upon the defendants.
    2. That the act of April 15th 1867, is not a contract within the meaning of the federal constitution, there being, as already found, no neAV consideration for its passage, but simply a gratuitous enlargement of the privilege given by the former act, and therefore a subsequent legislature may take it away, or allow it to be shared by others.
    3. That the act of 1872, giving to Isaac Crow the privilege of maintaining a ferry within the limits prescribed by the acts in favor of Joseph Kreamer, does not impair any contract, and is not unconstitutional and void, and defendants are therefore fully protected by it, and cannot be restrained from maintaining their ferry.
    The court, Pearson, P. J., overruled the exceptions filed to this report, confirmed the same and dismissed the bill in an opinion, inter alia, saying :—
    “The sole right to a ferry probably cannot be gained by presumption in this state. The right is in the Commonwealth, against which a presumption will not run, according to the maxim nullum tempus, &c. There is no presumption of an exclusive grant from length of time: 8 Watts 434. The ownership of femes over the great rivers of the state is exclusively in the Commonwealth. * * * After the numerous decisions which have been made by the courts of this country, both state and national, that a grant to a corporation or an individual, in consideration of something expected or agreed to be done' by the grantee, becomes a contract, binding on the parties, it is no longer an open question. It matters not how impolitic the grant, or how small the consideration, it is binding on the public when made by the legislature; the adequacy of the consideration or policy of the grant must be judged of by that tribunal. If there is nothing to be done or suffered by the grantee, if it is a mere gratuitous gift by the grantor, it may be revoked at pleasure. It is not a contract. Had the exclusive right to the ferry for one mile above and below the house of Kreamer been invested in the original grant, it would have been binding, as he is required, by the statute, to make landings, keep up boats and craft, suitable ferrymen, &c., to carry passengers and teams at all times.
    “ The doctrine is clearly laid down in the Binghampton Bridge Case, 3 Wall. 51, that such exclusive privilege in,the charter is binding where it can be presumed that the bridge was built, or stock taken to construct the same in consequence of said exclusive privilege. This principle is recognised in other cases, both in the national and state courts: 16 Wall. 244. See 10 Barb. S. C. 223; 10 Minn. 23; 14 Georgia 336. The same principle applies to an exemption from taxation: 15 Wall. 458-9; Id. 430. Although the grant of a ferry would, without express words, preclude the state from granting another over the same spot, yet it is not thereby prohibited from authorizing another in the immediate vicinity, although it materially interfered with the business of the first: 15 Pick. 452; 11 Pet. 420; 3 Ind. 21; 13 Ill. 428; 7 N. H. 59. The grant of power to build a bridge is necessarily exclusive over the same site: Id., 61, 66; 17 Conn. 40. We may well doubt the soundness of the last-cited case, as the new bridge was for the exclusive passage of railroad cars, and could not interfere with the travel over the other bridge.
    “ The state, however, cannot relinquish any of her powers conferred for the public good without an equivalent, and if it grants a privilege only, it may be revoked at any time. To make it a contract there must be an equivalent: Cooley’s Con. Lim. 280, 281, 282. It cannot give up the right of eminent domain: Id. 281, 282, 283, 343; Greenl. n. to 2 Cruise, p. 67; 14 Ill. 321. Nor confer an exclusive privilege without what the legislature considered an equivalent in value to the citizens. The supplemental act of April 15th 1867, which grants to Joseph Kreamer the exclusive right and privilege of a ferry for one mile above and below his house, where his ferry at that time existed, may be of immense injury not only to the people of Millersburg, a flourishing town, but to the whole travelling public which may desire to pass that way. It grants a monopoly in perpetuity for two miles of river frontage, if the supplement can be construed to be a contract. When that whole country comes to be densely peopled the inconvenience may be felt as great as the bridge to the people of Binghamton, with its exclusive privilege along the river. These thoughtless grants of the legislature, made when the country is comparatively new, become intolerable in a future day. Yet, if a contract, we must sustain it. There is nothing whatever contracted or ordered to be done by the supplement in consideration of the privilege. It is a mere gift, which may be reclaimed and revoked by the legislature at any time. It is urged, however, that Kreamer had expended several hundred dollars on the ferry after this supplement was passed, and before the grant to the Crows by the Act of 1872. Everything which could be required for a ferry, either for public convenience or private benefit, was enjoined by the Act of 1866. It is not shown that this work was in addition, and if it was, it was merely voluntary, outside of the requirements of the law. If a man does merely what he was required by his contract to do, in consequence of some new promise, it furnishes no new consideration. If A. promises B. that if he will immediately pay him the one-half of the sum then due on his bond he will forgive him the residue, it furnishes no bar to the recovery of the whole. Kreamer has failed to show that he expended a dollar in consequence of this supplement beyond and above what he was bound to do before its enactment, consequently there is no consideration for this additional privilege. It could be revoked or disregarded by the legislature at any time. Was it revoked? That depends on the proper construction of the Act of April 12th 1872, Pamph. L. 1130. This statute does not, in terms, repeal the Act of 1867, but it is entirely inconsistent with its provisions. It substantially revokes the supplement on which the claim is founded, by entirely disregarding it, and conferring the same privilege on another. The rights granted by it are in effect conferred on the Crows, who owned the land on the west side of the river, and who claimed the privilege of landing their boats at any place along the Millersburg front, not actually occupied by Kreamer or his grantee. This grant is an implied repeal of that given to Kreamer by the supplement. Implied repeals are not to be favored, but when a later law is entirely inconsistent with an earlier one, the latter is at an end, according to the legal maxim, leges posteriores priores contrarias abrogarít. The legislature could not by a repeal affect the rights of Kreamer, under the Act of 1866, it was a contract; the Act of 1867 conferred a mere gift, which could be revoked, and was by the grant to the Crows.”
    This appeal was taken by complainant, who assigned for error the dismissal of his bill.

      J. W. Simonton and A. J. Herr, for appellant.
    A grant of a ferry franchise, if exclusive in terms, is a contract on the part of the legislature making the grant, if accepted and acted upon, the obligation of which cannot be impaired by a subsequent grant to another person which would interfere with the original grant: Charles River Bridge v. Warren Bridge, 11 Pet. 420. The Acts of 1866 and 1867 are to be construed together, and are, as a whole, to be taken as the grant and contract in this case, the obligation of which it was not in the power of the legislature to impair by the Act of 1872, because of the clause in the Constitution of the United States prohibiting the passage of any law impairing the obligation of contracts: The Binghampton Bridge, 3 Wall. 51; Cooley’s Const. Law 281, and cases there cited; The Easton Bank v. Commonwealth, 10 Barr 442; Humphreys v. Peques, 16 Wall. 244; Tomlinson v. Jessup, 15 Id. 454; Home of the Friendless v. Rouse, 8 Id. 430; Washington University v. Rouse, 8 Id. 439; Dartmouth College v. Woodward, 4 Wheat. 699. The legislature having granted to the appellant the right to the use of the river, within certain defined bounds, for a ferry, cannot grant, and have not title to grant, any right or use of the same river for the same purpose within the same defined limits. Not on the ground that there is any implied contract that the first grantee of the franchise shall have exclusive right within such limits as might affect the amount of tolls which he might receive, but on the principle that all the right and title which was in the state passed by the first grant: Fletcher v. Peek, 6 Cranch 87.

      Hugene Snyder and W. A. Sponsler, for appellees.
    The legislature could not grant to Kreamer the right to land on another man’s property. Such a grant would be the taking of private property for private use: Chambers v. Furry, 1 Yeates 170; Cooper et al. v. Smith, 9 S. & R. 32; Chess v. Manown, 3 Watts 219; Conway v. Taylor’s Executors, 1 Black 629. Two or more ferries may be granted between certain points on the same waters; Gates v. Anderson, 13 Ills. 413; Bush v. Peru Bridge Co., 3 Ind. 21; Fay et al., Petitioners, 15 Pick. 243; Fanning v. Gregoire, 16 How. 524; Charles River Bridge v. Warren Bridge, 11 Pet. 420; Turnpike Co. v. State, 3 Wall. 216; East Hartford v. Hartford Bridge Co., 16 How. 524.
    Grants of exclusive privileges by the state are not favored, and can only be sustained on good considerations. The exclusive grant in the Act of 1867 was a mere gratuity, and had no consideration to support it. It was not a contract, therefore, and within the protection of the 10th section of the 1st article of the Constitution of the United States: Dartmouth College v. Woodward, supra; Rector of Christ Church v. Philadelphia, 24 How. 302; Tricker v. Ferguson, 22 Wall. 524; West Wisconsin Railroad v. Supervisors of Trempeleau County, 3 Otto 595; Providence Bank v. Billings, 4 Pet. 561; Easton Bank v. Commonwealth, supra.

    May 27th 1878,
   The judgment of the Supreme Court was entered

Per Curiam.

The opinion of the learned judge of the Common Pleas sufficiently vindicates his conclusion. The great rivers of the Commonwealth are held as the common property of all the citizens of the state for public use. No presumption will arise that the legislature intends to part with any portion of the public domain, unless upon the most clear and express terms. A privilege to a private person to use the public right for his private gain, will not be deemed exclusive unless the intent of the legislature is perfectly clear. All these great rights are held in trust for the general good, and the representatives of the people must be deemed to be not guilty of a breach of this trust, or a dereliction of duty. Hence nothing less than a plain contract between the state and the individual for an adequate consideration can bind the hands of the state and prevent the repeal of a mere privilege. Conceding for the occasion merely that the Act of 21st March 1866, contained a contract for a perpetual privilege granted to Joseph Kreamer to keep a ferry, over the Susquehanna at Millersburg, it contained no grant of an exclusive privilege. The privilege, therefore, was subject to the undoubted right to grant similar privileges to others. Therefore, when by the Act of April 15th 1867, the legislature made the right of Joseph Kreamer exclusive, it conferred a new right, which it protected by a penalty upon others infringing it; but required no new duty, and no compensation to the state. The mere fact that the title of the act was, A supplement to an act, &c,” does not import a consideration. It was not an enlargement of powers under the former act to give it further effect, and to be. taken as a part of the former grant, but it was an enlargement by way of a new and greater grant. No consideration appearing for the new contract, and the state desiring to protect Kreamer merely by a penalty, it would be contrary to the rule of presumptions as to duties and powers of the legislature to suppose a binding contract under the Act of 1867. The Act of 1872, conferring a ferry right on Isaac Crow, was therefore no unconstitutional interference with the rights of Joseph Kreamer.

Judgment affirmed.


author: Pejr Curiam.

text:
    Southern Pennsylvania Iron and Railroad Co. versus Stevens’s Exr’s.
    1. The court submitted to the jury first: what was the purpose of a charter of a corporation, and second: whether that purpose had been changed by a supplement to the original act, with a view to perpetrate a fraud on a subscriber to the stock. Held, that this was not error.
    2. By the supplement to an. act incorporating an iron and railroad company the name of the company was changed, authority was given to purchase and cancel the original stock and the main purpose of the new company was to be that of a general transportation company. Held, that it was a fair question for the jury, whether a combination to change the fundamental purpose of the original act by the supplement and divert the stock of an original subscriber to this new end, was not a fraud upon him, and if they so found an action for the amount of this original subscription could not be sustained.
    May 21st 1878.
    Before Agnew, C. J., Mercur, Gordon, Paxson, Woodward and Trunkey, JJ. Sharswood, J., absent.
    Error to the Court of Common Pleas of Lebanon county: Of May Term 1877, No. 175.
    Assumpsit by the Southern Pennsylvania Iron and Railroad Company against Oliver J. Dickey and others, executors of Thaddeus Stevens, deceased, to recover the sum of $28,500 with interest, the balance due on a subscription of Mr. Stevens to the capital stock of the Caledonian Iron, Land and Railroad Company, the name of which was subsequently changed to that of the company plaintiff.
    The suit was originally brought in the Common Pleas of Lancaster county, but the venue was afterwards changed to Lebanon county.
    At the trial it appealed that Thaddeus Stevens was the owner of a large tract of land in Franklin county, Pennsylvania, which was known as the Caledonian Iron Works. Stevens united with Daniel T. Ahl and others, and procured the passage of the Act of March 22d 1867, Pamph. L. 542, to incorporate the Caledonian Iron, Land and Railroad Company whereby the company was authorized to purchase and hold lands, manufacture iron, lumber and fire-brick, and to mine coal, ore, fire-clay and other minerals, and to construct and operate a railroad to connect its lands and works with other railroads. Among the subscriptions to the stock was one of Mr. Stevens for 300 shares. On the 3d of June 1867 the governor issued his letters patent, but no organization of the company took place prior to Mr. Stevens’s death. After his death in 1868, Ahl arranged with one Jones to construct a railroad to an estate owned by Ahl called Mount Pleasant, for which purpose Jones was to furnish the means. They obtained control of the charter of the Caledonia Company and then obtained the passage of two acts as supplements thereto, viz: the acts of February 20th 1869, Pamph. L. 230, and April 30th 1869, Pamph.- L. 879 and 1439, whereby the name of the company was changed to the Southern Iron and Railroad Co. Among the powers thereby conferred was authority to purchase and cancel the original stock of the company, and it was also given the powers of a general transportation company. The railroad was then built to the Mount Pleasant estate, but it was of no use whatever to the Caledonian Iron Works, as it is thirty miles distant therefrom.
    In their general charge, the court, Pearson, P. J., inter alia, said:
    “You have heard this case fully and elaborately argued on numerous questions of law, and the court is urged to decide it as such, yet in our opinion there are a few important questions of fact to be determined by the jury, which will be submitted for your consideration. 1st. What was the original object, scheme and design of the law under which this company was incorporated, and to which Mr. Stevens subscribed his money ? And 2d. Has that object been entirely perverted and changed by the supplemental law under which this corporation was formed and carried on, and was the change effected with the view or attempted to be used for the purpose of perpetrating a fraud on the estate of Mr. 'Stevens ?
    “What was the object and design of the Act of the 22d of March 1867, under which this company was incorporated? It is entitled an act to incorporate the * Caledonian Iron, Land and Railroad Company.’ Originally the title of an Act of Assemby was looked upon as an unimportant part, though occasionally called into aid in its construction. It is now of the very essence of the statute, the amendment to the constitution in 1874, requiring the subject of the bill to be clearly expressed in the title. It is made an essential part of the act. The location is again expressed in the body of the first section, and the business to be carried on is mainly described in the 6th sect.; among other things to make lumber, manufacture iron, &c., and to mine ore, coal and fire-clay, limestone, &c. The 6th sect, gives- power to construct railroads in connection with the works, as we would understand it, to enable it to reach to and connect with other railroads. The proceeding on this subject is to be under the Act of 1849. Before any organization of the company had taken place by the election of officers, or other acts done, after 'the enactment of several supplements, not important to be considered, one was passed on the 30th April 1869, changing the style aod title of the ‘Caledonian Iron, Land and Railroad Company’ to the ‘Southern Pennsylvania Iron and Railroad Company,’ to exist under that name as effectually as if it had been given under its original character of incorporation, and such^ehange was not to affect the rights of the corporation or individuals, but all subscriptions to the capital stock of the Caledonian Iron, Land and Railroad Company may be recovered as other debts are by law recoverable in the new name thus given to the corporation. It also gives to this new company all the rights, powers and privileges of a general transportation company, with power to construct and operate a telegraph along the line of the railroad. It is conceded that when this corporation was formed, and Mr. Stevens subscribed to its stocks he was the owner of the Caledonian Iron Works, with about 20,000 acres of land in their immediate vicinity. It may also be fairly inferred that the main object of the corporation was manufacturing iron and lumber, and the mining and sale of minerals; the railroad was to be mainly used for the transportation of these articles from Caledonia. Stevens was the principal subscriber to the stock, and probably paid all that ever was paid to procure the charter and the taxes due to the state thereon, some $1500, and so far as we can collect from the evidence not a dollar was ever paid by any other person, either under the original charter, or any of its supplements, for stock in this company, down to the present day. From the form of the original charter, the contemplated location of its works, the character and nature thereof, and those principally and almost solely engaged in getting it up, the jury must judge where it was expected its mining and manufacturing would be done and its railroad made. It is now conceded that under the supplement of April 30th 1869, the whole business of manufacturing and making railroads has been transferred to the opposite side of the mountain from Caledonia, a distance of over fifteen miles, and the railroad runs in the opposite direction from the property of Mr. Stevens, and from the course taken is of no use whatever to him or his property, and is attempted, so far as made, to be converted into a general transportation company.
    “ Had no new statute been enacted, it is more than probable the estate of Mr. Stevens would have been bound by his subscription, but nothing was done, no meeting after the 12th of June 1867. Stevens died on the 12th of August 1868, and no one looked after the corporation until February 1869, although no company was formed until after the death of Mr. Stevens, yet he would not have been relieved, as his representatives could have obliged the corporation to adhere to the original object of the charter (make a railroad from Caledonian Iron Works), but under the new statute the whole location was changed. The main fact submitted to the jury is this, from all of the evidence was the new law, with its supplements, got up for the purpose of forming a new company. That is partly a question of law for the court and partly of fact for the jury. The variance between the law and its supplements is not so decisive as to enable the court to declare as matter of law that it is fatal, but the jury must judge from all the facts proved whether this was to be got up as a new company or a continuation of the old one? * * *
    “Was it to be a new company ? If it was, Stevens was not a member of it. He could say, I did not enter this new organization. If the original object was entirely changed, even by legislation, his estate could not be held, more especially if all of this was done without any notice to his representatives. Thus far no company had been organized, therefore the first subscribers could scarcely be bound as corporators though they might be by their subscriptions if the object of the corporation was not changed. Was the object in obtaining the new law and organizing under it fraudulent, done for a fraudulent purpose ? We are not prepared to say that merely changing the name by the supplement would be such an alteration as would release original subscribers. Yet the jury can judge how far this tends to show a perversion from the original purpose. Giving permission to erect a telegraph line along the original road would not be such change. Altering that originally intended as a railroad to carry the products of the defendants’ mines and manufactures into a general transportation company might to a great extent pervert the object of the road, as those companies frequently extend their business throughout the United States, by connecting various companies by different lines, but the main matter for this jury to decide is whether the supplemental laws were intended as a fraud on the original subscribers by changing the whole object of the charter to which they lent their names by transferring the road to another and different place, going to other land for manufacturing and mining from that intended by the subscribers, and by the original law, and was this done by fraud and conspiracy to promote the interest of others, and subvert that of Stevens, who we may suppose from his expenditures and subscriptions intended and expected to promote his own interest. Was it intended as a fraud on him or his estate ? for so far as we can see all of the other stockholders are released. Debts are said to now exist, and it is claimed that this stock should be collected for the use of creditors. Not one of these debts were contracted during the lifetime of Mr. Stevens, or under the original law to which he gave his subscription. They are all contracted under the supplemental law and by those who got it up. He was never a member of this organization provided the jury are satisfied from all the facts that this is in reality and effect a new charter for a new road, in a different place from the road to which he subscribed. The legislature can enable subscriptions to be recovered where there exists mere informalities in the method of subscribing, but it transcends legislative power to make new contracts for men to which they never gave their assent.
    “Many points of law have been raised, but those stated are the only facts to be submitted to the jury ; all of the others are unmixed questions of law. If the jury is of opinion after carefully considering all of the facts that the charter to which Mr. Stevens lent his subscription has been so far perverted and changed by the supplemental laws as not to bind him to the contract, on the principles we have stated, they will find a verdict in favor of the defendants. If they believe that there was not such a perversion of the original law, and that under all of the evidence he ought to be held, their verdict will be in favor of the plaintiff.”
    The verdict was for the defendants, and the plaintiffs took this writ, assigning for error, among others, the submission to the jury of the two questions as above stated.

      Qharles Henry Jones, A. JR. JBoughter, Wayne McKeagh and Thomas JE. Franklin, for plaintiff in error.
    The subscription was an unconditional one to the purposes described in the charter, and a change such as here made did not release from liability therefor: Turnpike Co. v. Phillips, 2 Barr 184; Irwin v. Turnpike Co., Id. 466 ; Clark v. Monongahela Navigation Co., 10 Watts 364 ; Gray v. Monongahela Navigation Co., 2 W. & S. 156; Everhart v. Phila. & West Chester Railroad Co., 4 Casey 339 ; Plank-road Co. v. Arndt, 7 Id. 317. Misconduct, however illegal or fraudulent, on the part of other stockholdei's or of officers of the company, or even the attempted exercise of illegal authority over the coloration by the legislature itself, will not avail as a defence to an action for subscription before organization: Bedford Railroad Co. v. Bowser, 12 Wright 29; Nippenose Manufacturing Co. v. Standon, 18 P. F. Smith 256; Anderson v. N. & R. Railway Co., 12 Ind. 376. The motives of those who were instrumental in procuring the supplements were irrelevant to the question of liability upon the subscription: Cochran v. Arnold, 8 P. F. Smith 399 ; Garrett v. Dillsburg, &c., Railroad Co., 28 Id. 465.

      Josiah Funk, George M. Kline and Jeremiah 8. Black, for defendants in error.
    The purpose of the original charter was limited, and this was vitally and fundamentally changed by the supplements, and Mr. Stevens was thereby relieved from liability on his subscription: Lauman v. The Lebanon Valley Railroad Co., 6 Casey 42; Angell and Ames on Corp., pl. 531; McCully v. Pitts, and Connellsville Railroad Co., 8 Casey 25; County of Crawford v. Pittsburgh & Erie Railroad Co. et al., Id. 141; Mercer County v. Pittsburgh & Erie Railroad Co., 3 Id. 403 ; Everhart v. Phila. & West Chester Railroad Co., 4 Id. 352; Indiana and Evansburg Turnpike Co. v. Philips, 2 Barr 184; Plankroad Company v. Arndt, 7 Casey 317; Middlesex Turnpike v. Locke, 8 Mass. 268; Same v. Swan, 10 Id. 389. The submission to the jury of the questions of the object and design of the supplements was proper. There was an ambiguity arising from extrinsic evidence, as to what was the intention of the original incorporators, and the jury was the proper tribunal to decide the question: Beatty v. Lycoming County Ins. Co., 2 P. F. Smith 456; Eby’s Appeal, 20 Id. 314.
    May 27th 1878,
   The judgment of the court was entered

Pejr Curiam.

The charter of the Caledonian Iron, Land and Railroad Company, passed on the 22d of March 1867, to enable the stockholders to purchase and hold lands to a large extent, and manufacture iron, lumber and fire-bricks, and to mine coal, ore, fire-clay and other minerals, was intended for a private purpose. It had nothing public in its character, the railroad being ancillary to the business, and local, and not intended for general transportation. The 2d section of the supplement of April 10th 1867 distinctly recognises the true character of the principal purpose, in authorizing the company, after organization, to proceed to purchase any lands for the business specified in the act of incorporation, increasing the quantity to 20,000 acres, and to take possession and proceed to carry out the purposes of the corporation. The title of the Act of 22d March 1867 corresponds to this purpose. It was to the stock of this land, manufacturing and mining company, Mr. Stevens subscribed, evidently intending to use his own large landed estates, called the “ Caledonian Iron Works,” which gave its name to the corporation, and was then operated by Mr. Ahl and himself in partnership, after Stevens, Ahl being one of the largest subscribers. No organization took place under this charter, and Mr. Stevens died. After his death Ahl and Jones clasped hands and projected the scheme of a railroad for general transportation, in order to interest the public and specially to benefit themselves, the former to sell his Mount Pleasant lands, and the latter to obtain a construction contract, payable in bonds, at enormous prices, from which he hoped, by inflation, to realize a fortune. Hence the Acts of 20th February 1869 and April 30th 1869. These together formed the basis of the new scheme. The contracts and transactions of Ahl, and Jones, who was the factotum of the new company, plainly exhibit their designs, while the 5th section of the Act of 20th May 1869, drawn by a skilful hand, shows that the writer thought it would be necessary to purchase the original stock in order to enable them to execute the new powers acquired for the main purpose of a railroad for general transportation. The authority was, not simply to cancel the original stock, but to purchase and then sell or cancel it. Had this intent been fulfilled as to Mr. Stevens’s stock, and Ahl had procured this with the other shares, to carry out his agreement with Jones, there would have been no fraud on Mr. Stevens’s rights. The large sum to be refunded to the estate was too powerful an attraction, and therefore this suit.

Now with all these facte before the jury, it was a fair question •whether the combination between Ahl and Jones to changejffie fundamental purpose of the original act by the new act procured by them, and divert the stock of Mr. Stevens to this new end, was not a fraud upon his estate. There was sufficient evidence to be submitted to a jury, and the verdict is therefore conclusive. This'puts an end to the action without reference to other grounds, and the other questions in the case are therefore immaterial. The other errors alleged are unsubstantial, and even if sustained ought not to reverse the judgment.

Judgment affirmed.


author: Mr. Justice Mercur

text:
    Koppenhaffer’s Appeal.
    R. by his will, gave to H. a specific legacy of §2300, but declared that “ if she should die without heirs or children, then the half of all she had or will got out of my estate must be paid back to my other seven children, share and share alike.” After making several subsequent devises and bequests he directed a sale of his real and personal property and the payment of the legacies and the residue to be divided in equal shares among all his children. In making distribution of the residue the court below required II. to give security for the payment of her whole share thereof. Held, reversing the court below, that the contingent qualification did not extend to the whole estate bequeathed to II., but to the one-half only, and that the one-half of her share of said residue should be paid to her absolutely, and the other half on her giving security that the same will be paid over to her brothers and sisters on her death without children.
    May 22d 1878.
    Before Agnew, C. J., Mercur, Gordon, Paxson, Woodward and Trunkey, JJ. Sharswood, J., absent.
    Appeal from the Orphans’ Court of Dauphin county: Of May Term 1878, No. 79.
    This was an appeal by Hannah Koppenhaifer from the decree of the court below directing the executors of George Romberger, deceased, to pay over to the said Hannah Koppenhaifer the money awarded by the auditor as her distributive share upon the said Hannah giving security that the same will be paid over to her brothers and sisters on her death without child or children. The will of George Romberger is dated the 13th day of April 1871, and a codicil thereto October 15th 1872. He died January 5th 1873, leaving surviving him a widow, Mary Romberger, and eight children, of whom the appellant is one, being a daughter of the said testator. February 5th 1874, the will was admitted to probate, and letters testamentary were granted to David Romberger and John B. Stroup, executors named in the will. The testator, after providing for his widow, continues his will (the orthography being corrected) as follows: “And she [meaning his widow] shall have one thousand dollars out of my personal property yet, and my son Jonas shall have twenty-eight hundred, and my daughter Hannah shall have twenty-three hundred, and my daughter Mary shall have twenty-five hundred, because she worked so much longer, and my daughter Leah she shall have twenty-two hundred, and my daughter Sarah she shall have twenty-four hundred, she worked longer — but it is my will if my daughter Hannah should die without heirs or children and then the half of all she had or will get out of my estate must be paid back to my other seven children in share and share alike.”
    In a subsequent clause of the will the testator directs as follows :—
    “And after the decease of my beloved wife one year, and then the three boys must commence to pay out to my other children, but the boys shall have their share to each one just as much as one of the others of all that money that they have to pay out for their land all, and my executor hereinafter mentioned shall at first pay my honest debts and funeral expenses, and then they shall sell my tract of land that I bought of John Messner, sell at public sale, and fifteen acres within a couple of rods of that mountain land that I bought of John N. Speck, and the highest bidder to be the buyer, and then put that money to my personal property and divide it as it is stated above in my will, and as soon as my executors have sold the personal property and that tract of land, and then they may commence to pay out to them that my will says. * * *
    “And if that personal property and that Messner tract and that piece of mountain land does not reach for all that my will says, and then the boys have to pay some out of that .what they have to' pay on their land after the decease of my beloved wife, and if it should be a surplus and then they shall take five hundred dollars and put it in the bank for the use of our church, and if it is more surplus, then divide it in equal shares among all my children, that is more than five hundred dollars that our church shall have the five hundred first if there is a surplus, and the rest divided among all my children.”
    The auditor to make distribution reported that the testator left the following children or legatees, all of whom he provided for in his will, viz.: Jonas Romberger, John G. Romberger, George K. Romberger, Hannah, intermarried with Edward Koppenhaffer, Mary, intermarried with Daniel Knoll, Baltzer H. Romberger, and Sarah, intermarried with John H. Urich, and Leah, intermarried with Isaac Moyer.
    That the widow, Mary Romberger, died on the 15th day of March 1873, a few months after the testator. That John G. Romberger was her administrator. He also reported the sum of $19,149.16 for distribution, and in distributing the same says:—
    “The legacies are distributed as the will directs, without any allowance of interest on the same, the executors having settled with the legatees soon after the death of the decedent, and within the year usually allowed for the payment of legacies.”

      After deducting the several legacies, altogether amounting to the sum of $13,200, the auditor reports a balance or surplus of $5889.16, which he designates and refers to as the surplus mentioned in the will, and distributed the same accordingly, first setting apart to the St. Paul’s Lutheran Church the sum of $500, with its interest, and dividing the balance among all the children of the testator, being the sum of $661.48 to each child.
    There were no exceptions filed to the report of the auditor, and his report was confirmed absolutely March 20th 1876.
    Subsequently, on motiofi of the counsel for the executors, the court ordered $661.48, the distributive share of said Hannah, to be paid into court, “it being surmised by said executors that the said Plannah is not entitled to the same without giving security therefor, with leave to said Hannah to move to take the same out of court on proper notice to be directed by the court.” Then, on behalf of said Hannah, the court granted a rule on her brothers and sisters to show cause why the money in court should not be paid to her as her absolute legacy without giving security.
    This rule, the court, Pearson, P. J., afterwards discharged, and made the following decree:—
    “It is ordered that the money in court be paid to Hannah Koppenhaffer, on her giving security that the same will be paid over to her brothers and sisters on her death without child or children, she to receive the interest during her lifetime for her own use.”
    From this decree this appeal was taken.

      George W. Zeigler and L. H. Kase, for appellant.
    No paper-book nor oral argument for appellees.
    October 7th 1878.
   Mr. Justice Mercur

delivered the opinion of the court,

The money, in regard to which this contention arises, was decreed to the appellant as her share of the residuary estate of George Romberger, under his last will and testament. The only question is, whether she shall be required to give security for its payment over to her brothers and sisters on her death without child or children ?'

The will of Romberger, to which we are asked to give construction, was written by himself. His imperfect knowledge of the' English language, and his ignorance of orthography, have united in producing an instrument not entirely clear in its provisions. Putting the clauses, relating to the appellant, into intelligent language, we understand him to give to her a specific legacy of $2300, but to declare that “if she should die without heirs or children, then the half of all she had or will get out of my estate, must be paid back to my other seven children, share and share alike.” After making several subsequent devises and bequests, he directed a sale to be made of his lands and personal property, and the payment of the legacies; and the residue of his estate to be divided in equal shares among all his children.

No question is now made as to the specific legacy. That appears to have been settled in some manner satisfactory to all parties. The case is therefore restricted to deciding under what conditions she takes a share of the residuary estate.

Although the language of the will is “heirs or children,” yet it is very clear the testator did not use the word “heirs” in its general legal sense, for all of her seven brothers and sisters to whom he directed the money to be paid, were her lawful heirs. He used it as synonymous with children. She wras childless. Her remaining in that condition, was the thought in his mind. It dictated his language. He was giving her personal estate. Pie intended to qualify its distribution in the contingency of her dying without leaving a child or children. No rule of law prevents effect being given to his clear intention.

It is evident that he had in his mind not only her specific legacy, but all the estate she might take under his will. Although the qualifying clause followed soon after the giving of the specific legacy, which he may have thought she “had” gotten, yet when he added “or will get out of my estate,” he would appear to have had in view the residuary clause which he added. To now exclude the residuary share .would prevent the will from covering “all she had or will get” out of his estate. It would defeat the main purpose of the will. Such a construction would be contrary to its letter and its spirit. To include the residuary estate is within the whole scheme of the will: Middleswarth v. Blackmore et al., 24 P. F. Smith 414; Schott’s Estate, 28 Id. 40. This contingent qualification did not extend to the whole estate bequeathed to the appellant, but to the one-half only. The learned judge erred in requiring security to be given for the payment of the whole sum, and for that reason the decree must be reversed.

Decree. — This cause came on for hearing on the appeal of Hannah Koppenhaffer, from the decree of the Orphans’ Court of Dauphin county, and was argued by counsel, and thereupon, on consideration thereof, it is adjudged and decreed that the decree of the said Orphans’ Court in the premises be reversed and set aside. It is further ordered and decreed, that one-half of the money in court be paid to said Hannah unconditionally, and that the other half thereof be paid to her on her giving security that the same will be paid over to her seven brothers and sisters, on her death without child or children, she to receive the interest thereon during her lifetime for her own use. It is further ordered that the appellant and the appellees shall each pa.y one-half of the costs of this appeal.


text:
    Gallagher’s Appeal.
    II. devised certain land to his sister, and after providing for his widow, left his residuary estate to his nephews and nieces. The widow refused to take under the will and elected instead to take her interest under the intestate law. Held, that the sister was entitled to have the assets marshalled, and a sum set apart sufficient to relieve the land devised to her from it's burden of the widow’s interest.
    May 22d 1878.
    Before Agnew, C. J., Mercur, Gordon, Paxson, Woodward and Trunkey, JJ. Sharswood, J., absent.
    Appeal from the Orphans’ Court of Juniata county: Of May Term 1878, No. 115.
    Appeal of Joseph Gallagher and others, residuary legatees under thp will of Robert C. Gallagher, deceased.
    /Robert C. Gallagher died in 1872, leaving a will, wherein he made certain provisions for his widow, Jane Gallagher, devised certain real estate to his sister, Sophia Oswald, and bequeathed all the residue of his estate, excepting certain specific legacies, to his nephews and nieces, in proportions named therein. There was no issue of Robert C. and Jane Gallagher, and the widow refused to accept the provisions of the will and claimed the one-half of the real estate for life, under the intestate law. The value of the widow’s interest in the land devised to Sophia Oswald was $1000, or $60 per annum, and in the distribution of the estate she^claimed that a fund sufficient to raise $60 should be set apart retained, so that she might enjoy the property devised to her free frpm any encumbrance, as she contended the testator intended she should.
    The court, Junkin, P. J., made a decree that the assets should be marshalled, and that an amount sufficient to make her whole should be taken from the residuary legatees and devisees, and in an opinion said:
    “ It is certain that testator intended that his sister should enjoy in fee the real estate devised to her, and it is equally certain that she was among the first objects of the testator’s bounty ; and that she is restricted in the enjoyment of her devise is apparent.
    “ The case is novel, in this, that the encumbrance did not exist in the testator’s lifetime, nor was it created by him. It springs out of a right which he could not control, is a mere encumbrance, leaving the fee simple in the devisee. It is not a debt created by the testator, nor a lien which his personal estate is bound to discharge. It is an estate in the land itself, and can such a charge be removed? In principle, how does a dower charge differ from a mortgage, or any other charge which defeats the enjoyment of the lands devised, or subjects the devisee to the expense of removing it ? Such a charge (mortgage or judgment), where it is the debt of the testator, would be paid out of the residuary estate at the expense of the residuary legatees, unless the testator has directed otherwise.-? But this rule does not apply as between devisees (all devises are specific), and specific legatees, as see O’Neal v. Mead, 1 P. Wms. 694; Tipping v. Tipping, 1 Id. 730; Long v. Short, 1 Id. 403; Hoff’s Appeal, 12 Harris 200, 206. This last case is authority for the proposition that a lien on devised land will be discharged out of the residuary fund; so is Long v. Short, 1 P. Wms. 403. [_But should this principle fail in its application to this estate, there remains the general rule, as laid down in Sandoe’s Appeal, 15 P. F. Smith 314, to wit: 1. Where a widow elects not to take under a will, her substituted devises and bequests are a trust in her, for the benefit of the disappointed claimants, to the amount of their interest therein : 2. A court of equity will sequester the benefit intended for the wife to secure compensation to those whom her election disappoints. Then add the general rule, that specific legatees and devisees shall be first satisfied, and any deficiency or loss must fall upon the residuary legatees, and we think this question is decided. Sophia Oswald, as a devisee of the half lot and house, is deprived of one-half the benefits of the devise while the widow lives, and the rule requires that she be made whole, at the expense of the residuary legatees, and we must marshal the assets to effect that result. ,._
    From the foregoing decree this appeal was taken7?

      Edmund S. Doty and Jeremiah Lyons, for appellants.
    The devise to Sophia Oswald was specific. It was not encumbered by any debt of the devisor. Jane Gallagher, the widow, had an estate in the land devised, which vested the instant that her husband, the testator, died, and the devisee took the land subject thereto. The interest of the widow is not payable out of the personal estate of the decedent in relief of the devisee: Hoff’s Appeal, 12 Harris 200. The statutory interest of the widow is not like dower at common law ; it is an estate in the land: Gourley v. Kinley, 16 P. F. Smith 270. It is not a lien on the land: Schall’s Appeal, 4 Wright 170.
    No paper-book nor oral argument contra.

    June 3d 1878,
   The judgment of the Supreme Court was entered

Per Curiam.

We discover no substantial error in this case. TEe decree is, therefore, affirmed and appeal dismissed, and the costs ordered to be paid by the appellants."”^