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This corporation refused to pay, and the | mitted to do any business in the state. Secstate, through its district attorney and at- tion 30 of the act of 1901 provided that, torney general, commenced this suit for the upon payment of all taxes, etc., due under purpose of forfeiting its right to remain in the law, the secretary of state was to isthat state unless and until it paid the sue a certificate acknowledging the fact, for money under the statute of 1902. which the corporation was to pay a stated fee; and until the certificate was received from the secretary of state by the corporation it should not exercise any corporate powers or do any business in the state, as provided for by the act of 1897.
Messrs. Thomas Thacher, Charles W. Waterman, Joel F. Vaile, and William W. Field for plaintiff in error.
Mr. N. C. Miller for defendant in error.
Mr. Justice Peckham, after making the foregoing statement, delivered the opinion
of the court:
It is conceded that the corporation has paid all its indebtedness for taxes or otherwise to the state of Colorado, except the amount demanded under the above-mentioned law of 1902, and that it has obeyed all the laws of the state with that exception. It is urged, however, upon the part of the corporation, that, by its admission into the state, with its right to do business therein by the payment of the amount of money required for such purpose under the then-existing law, a contract between the state and itself was thereby made that it should be permitted to remain therein during the term of life which the state by law allowed to corporations created by it (which was twenty years), without being again subjected to further exactions of money for what it had once paid for, viz., the right to remain and transact business in that state. Undoubt edly, if the corporation violated the laws of the state properly applicable to it, or if otherwise it gave just cause for its expulsion, it could not insist upon such a con
tract as a defense.
It is also conceded on behalf of the corporation that it is not entitled to any exemption from taxes which the state of Colorado can properly impose upon persons or corporations within her borders.
The result of these statutes was that the
foreign corporation, upon filing the proper
the corporation applied for leave to enter
subjecting a foreign corporation to all the
subjected to any greater liabilities than are imposed upon such domestic corporation. The power to impose different liabilities was with the state at the outset. It could make them greater or less than in case of a do
Having obtained permission to enter the state and do business as above mentioned, the question, aside from that of the extent of the term, is whether any contract between the state and the corporation arose under these laws and the facts above men-mestic corporation, or it could make them
In 1899, when this (foreign) corporation applied for a permit to enter and do business in the state, the laws of Colorado only granted such application on the payment of a certain fee named in the statute of 1897, which was payable upon filing its certificate of incorporation in the office of the secretary of state of Colorado, and until that payment was made and the certificate filed no such corporation was permitted to have or exercise any corporate powers, nor was it per
the same. Having the general power to do as it pleased, when it enacted that the foreign corporation, upon coming in the state, should be subjected to all the liabilities of domestic corporations, it amounted to the same thing as if the statute had said the foreign corporations should be subjected to the same liabilities. In other words the liabilities, restrictions, and duties imposed upon domestic corporations constitute the measure and limit of the liabilities, restrictions, and duties which might thereafter
be imposed upon the corporation thus admitted to do business in the state. It was not a mere license to come in the state and do business therein upon payment of a sum named, liable to be revoked or the sum increased at the pleasure of the state, without further limitation. It was a clear contract that the liabilities, etc., should be the same as the domestic corporation, and the same treatment in that regard should be measured out to both. If it were desired to increase the liabilities of the foreign, it could only be done by increasing those of the domestic, corporation at the same time
and to the same extent.
Such being the contract, how long was it to last? Only until the state chose to alter it? Or was it to last for some definite time, capable of being ascertained from the terms of the statutes as they then existed? It seems to us that the only limitation imposed is the term for which the corporation would have the right to continue in the state as a corporation. One of the restrictions as to domestic corporations is that which limits their corporate life to twenty years, unless extended as provided by law. The same restriction applies to the foreign corporation. Iron Silver Min. Co. v. Cowie, 31 Colo. 450, 72 Pac. 1067. Counsel for the state concedes that the corporation was admitted for a period of twenty years, but subject to the power of the state to tax. During that time, therefore, the contract lasts. This is the only legitimate, and we think it is the necessary, implication arising from the statute.
This is not an exemption from taxation, it is simply a limitation of the power to tax beyond the rate of taxation imposed upon a domestic corporation. Instead of such a limitation the act of 1902, already referred to, imposes a tax or fee upon or exacts from the foreign corporation double the amount which is imposed upon or exacted from the domestic one. The latter is granted the right to continue to do business upon the annual payment of 2 cents upon each $1,000 of its capital stock, while the former must pay 4 cents for the same right. This cannot be done while the right to remain exists. It is a violation of the obligation of an existing valid contract. Home of the Friendless v. Rouse, 8 Wall. 430, 19
L. ed. 495.
Nor is this a case where the power given by the state Constitution to the general assembly to alter, amend, or annul a charter is applicable. The act does not alter It simthe charter or annul or amend it. It simply increases the taxation which, up to the time of its enactment, had been imposed on all foreign corporations doing business in the state.
A discussion as to the name or nature of the tax imposed by the act of 1902, or the former acts, is wholly unimportant with reference to the view we take of this case. After the payment of the money and the receipt of the permit to enter and do business in the state the corporation could not, as we have said, be thereafter further taxed than was the domestic one. The tax on the latter under that act is the same in substance and effect as that upon the foreign corporation, but it is for only one half thereof in amount. The domestic must pay "an annual state corporation license tax," while the foreign corporation must pay "a state license tax" annually. The means of enforcing payment are not different, and such means are stated in § 66 of the act of
Whatever be the name or nature of the
tax, it must be measured in amount by the same rate as is provided for the domestic institution, and, if the latter is not taxed in that way, neither can the state thus tax the foreign corporation.
It is unnecessary to refer to the many cases cited by both parties hereto. Some of them refer to the question as to the nature of such a tax, while others decide, upon the facts appearing in them, whether there was a contract or not. As already stated, the name of the tax or its kind is not important so long as it is plain that the act of 1902 increases the liabilities of the foreign corporation over those which obtain in that of the domestic. And in regard to the cases of contract, while the principle that a contract may arise from a legislative enactment has been reiterated times without
number, it must always rest for its support in the particular case upon the construction to be given the act, and in this case we are not greatly aided by the former cases regarding caxation and legislative contract. We may, however, refer to the following out of many cases regarding contracts as to taxation: Miller v. New York, 15 Wall. 478, 21 L. ed. 98; New York, L. E. & W. R. Co. v. Pennsylvania, 153 U. S. 628, 38 L. ed. 846, 14 Sup. Ct. Rep. 952; Powers v. Detroit, G. H. & M. R. Co. 201 U. S. 543, 50 L. ed. 860, 26 Sup. Ct. Rep.
Holding that the act of 1902 impaired the obligation of the contract existing between the corporation and the state, and is therefore void as to the corporation, it becomes unnecessary to decide the other questions discussed at the bar.
The judgment of the Supreme Court of Colorado is reversed and the case remanded
to that court for further proceedings not | consenting to a consolidation of several inconsistent with this opinion.
The CHIEF JUSTICE, Mr. Justice Harlan, Mr. Justice Holmes, and Mr. Justice Moody
street railroads, including the Euclid avenue and Garden street lines, on condition that but one fare should be charged for a continuous ride.
Street railway-title to property after expiration of franchise.
7. The title to the rails, poles, and other appliances for operating the Garden street branch of the Cleveland street rail
CLEVELAND ELECTRIC RAILWAY COM- way system remaining in the various
streets at the expiration of its franchise is in the railway company which has been
CITY OF CLEVELAND and Forest City operating the road.
Constitutional law-due process of law.
8. The right to take possession of the
CITY OF CLEVELAND and Forest City property of a street railway company re
Railway Company, Appts.,
CLEVELAND ELECTRIC RAILWAY
maining in the streets at the expiration of its franchise cannot, consistently with due COM-process of law, be conferred by municipal ordinance upon another street railway company.
2. Municipal ordinances extending the life of the franchise of the Euclid avenue or
main line of the Cleveland street railway
street branch, on the theory that the latter
3. The words "main line" in municipal ordinances granting respectively the right to construct a small extension to the Garden street branch of the Cleveland street rail
way system and the right to lay a second
4. A street railway franchise made to terminate with the grant to the main line is to be measured by the grant as it then exists, and not by any subsequent extension of the term which may be granted. Street railway-franchise-term.
5. A grant of a street railway franchise by the Cleveland common council, to be valid "until the expiration of the grants for said company's tracks on said Quincy street east of Lincoln avenue, to wit: July 13, 1913," is not a grant extending to that date, where the Quincy street grants were then in fact to terminate at an earlier date. Street railway-franchise-term.
6. An extension of the time for the termination of the franchise of the Garden street branch of the Cleveland street railway system to the date set for the termination of the Euclid avenue or main line was not effected by a municipal ordinance
*Ed. Note.-For cases in point, see vol. 44, Cent. Dig. Street Railroads, § 40.
[Nos. 197, 321.]
Argued November 12, 13, 1906. Decided
CROSS APPEALS from the Circuit Court
See same case below, 137 Fed. 111.
Statement by Mr. Justice Peckham:
circuit court for the northern district of
The record shows that there are, among others, two lines of railroad belonging to the complainant, one of which is known as the Euclid avenue, sometimes called the "main" line, and the other the Garden street branch. Both lines run from east to west through the city in different, though generally parallel, streets up to the point of their intersection at Erie street and Euclid avenue (or Prospect street) from which point west, for a short distance, to the public square and Water street, the Garden street branch is authorized to use the Euclid avenue tracks.
right was granted upon condition that the grantee should pay to the owners of the poles and other property being in the streets an amount to be agreed upon therefor, or such sum as should be finally adjudicated upon by a court. A temporary restraining order was granted. The defendants made separate answers, denying the existence of any contract between the complainant and the city upon the subject of the Garden street branch subsequent to March 22, 1905, and the Forest City Railway Company claimed under the ordinance of January, 1904, the right to take possession of such Garden street branch after March, 1905, and to use the tracks of the complainant's railroad. The case was heard upon the pleadings and various ordinances | gether with the various resolutions of comand resolutions of the council of the city.
The following (among many other) ordinances and resolutions of the council of the city were put in evidence on the trial, to
plainant, in which it accepted such ordinances and resolutions. These constitute the case between the parties, and there is no contradictory evidence. Complainant contends that the Garden street grant must be measured in time by that provided for the termination of the Euclid avenue grant.
The ordinances and resolutions relating to the Euclid avenue line will be first stated. The first is a resolution which granted to the East Cleveland Railroad Company, a corporation incorporated February 28, 1859, for that purpose, the right to construct and operate a railroad from a point on Prospect street at its intersection with Erie street, to the eastern terminus of Prospect street, which grant was for the term of twenty years from September 20, 1859. The com
of the property owners along the line, duly located, constructed, and operated the road under that resolution and within a short time after it was authorized so to do.
After hearing, a decree was made by the circuit court (137 Fed. 111) which decreed that the right claimed by the complainant to operate its Garden street branch railroad in the streets named in the bill expired on the 22d day of March, 1905. It was also decreed that the ordinance of January 11, 1904, was inoperative, so far as it assumed to confer upon the defendant the Forest City Railway Company any legal right to take the tracks, poles, wires, and appliances erected and maintained by the complainant in the streets, because such ordinance authorized the taking of the property of complainant without due process of law. The railroad company, therefore, was enjoined from interfering with the complainant in the peaceable possession of the prop-pany, having obtained the necessary consents erty mentioned, and the city was enjoined from attempting in any manner, by virtue of the ordinance, to put the defendant the Forest City Railway Company into possession of the same. From the decree the complainant and both of the defendants appealed directly to this court, as involving questions arising under the Constitution of the United States. The complainant's appeal is No. 197, and is from that portion of the decree which adjudges that the right of the complainant to maintain and operate its Garden street branch branch railroad expired on the 22d of March, 1905. The cross appeal of the defendants is from that portion of the decree which enjoins the Forest City Railway Company from taking possession of the property described, and which also enjoins the city from in any manner attempting to put that company into possession thereof. It thus appears that the whole controversy turns upon the question whether the right of the Garden street railroad terminated March 22, 1905, or lasts until July 1, 1914, or possibly only until July 13, 1913.
This was the commencement of what is known as the Euclid avenue, or sometimes (after 1868) the main line of one of the roads owned now by the complainant.
By ordinance, April 15, 1862, the company was authorized to extend its line from the intersection of Erie and Euclid streets west to the public square.
September 15, 1879, an ordinance was passed which granted a renewal of the franchise to the East Cleveland Railroad Company to maintain and operate its whole Euclid avenue street railroad as as far as Willson avenue, on the east, for a period of twenty-five years from September 20, 1879 (September 20, 1904). This ordinance makes no reference to the Garden street line, which had then been built and was in operation, and does not mention any of the streets through which that line passed, although the Garden street line had the right, under the ordinance of 1868, herein
after mentioned, to use the tracks of the | Fairmount street. Nothing west of Willson Euclid avenue line from the point of junc- avenue is included in that grant. tion therewith westerly to its terminus.
On the 4th of April, 1883, another ordinance was passed, granting to the East Cleveland Railroad Company the right to extend, lay, and operate its double track on Euclid avenue from the west line of Willson avenue easterly to the east line of Fairmount street, the right granted to terminate on the 20th of September, 1904, "with the said renewal of that part of said company's line lying west of Willson avenue." Ordinance of September 15, 1879, above referred to.
By ordinance of March 15, 1886, another grant was made to the Euclid avenue line east of Fairmount street, which grant was to cease and terminate upon the 20th of September, 1904, "as provided for said company's tracks in Euclid avenue, west of Fairmount street."
In order to change from animal power to electricity an ordinance was passed July 13, 1888, granting to the East Cleveland Street Railway Company the right to construct and operate an electric street railway on Euclid avenue from Willson avenue easterly to the city limits, and on Cedar avenue from a point near the Cleveland & Pittsburg Railway Company's right of way in that avenue, easterly to a point about 1,500 feet east of Fairmount street. The permission was given on the condition that the grant was to be exercised within six months from the passage of the ordinance. The grant was also upon condition that if the company, from any cause, should fail to extend the electric system over its entire main and Cedar avenue lines within eighteen months from the date of the passage of the ordinance, then the ordinance should be void. Nothing in the ordinance was to be construed as authorizing any increase in the fare for transportation ove any portion of the company's line. The th section of the ordinance stated that the privilege of constructing the electric system, as provided in the ordinance, was granted "in consideration of the improved facilities hereby contemplated and the large expenditures necessary to secure the same, and shall be in force for the period of twenty-five years from and after the date of the passage of this ordinance, upon its main and Cedar avenue lines." The right to change to electric power, as given by the foregoing ordinance, was confined, it will be observed, to that portion of the Euclid avenue line east of Willson avenue, and on Cedar avenue to that part lying between the Cleveland & Pittsburg Railway Company's right of way and a point 1,500 feet east of
On May 13, 1889, a resolution was adopted, which authorized and required the railroad company, "as soon as practicable, to extend the use of such motive power over its main and Cedar avenue lines to the westerly termini thereof." This included those lines west of Willson avenue, and under the ordinance and resolution the Euclid avenue line was changed to an electric street railroad within the times mentioned in the ordinance and resolution.
There was no extension of time granted by the resolution of 1889 for the termination of the grant on any portion of the Euclid avenue line.
On July 17, 1893, the right was given to the company to extend its road at the intersection of Prospect and Erie streets to the intersection of Prospect and Ontario streets, and also at the intersection of Superior and Seneca strects, thence along Seneca, Lake, and Ontario streets, and the council imposed upon it the duty, if required by the council, of operating its cars over the entire length of any of the lines. Other duties were imposed upon it. Complainant contends that some part of this ordinance refers to a portion of the Garden street extension, and that it requires the operation of all the Garden street cars over these tracks, and the grant is to terminate at the time mentioned in the 1888 ordinance,-July 13, 1913.
The above list includes the material ordinances and resolutions pertaining particularly to Euclid avenue.
After the Euclid avenue line had been built the council, on the 14th of January, 1868, passed a resolution granting its consent to the East Cleveland Street Railroad Company to lay down its tracks from the intersection
of Prospect and Brownell streets, "to connect with the main line of its railroad," running thence through Garden and other streets to and across Willson avenue, to the eastern boundary of the city, during the period of twenty years. Willson avenue was then the eastern boundary of the city. The road could continue to use and occupy the streets, avenues, and public grounds over which its main line was then constructed and operated westerly from the junction (at Brownell and Prospect streets) of said road with the main line to its westerly terminus, for the same length of time.
This Garden street line was thereafter built, and it is asserted that it was the inception of a new and separate street railroad. It has been extended at various times since, and forms, with its various ex