ERROR to the Supreme Court of Missouri, the case being thus: The North Missouri Railroad Company was incorporated by act of the legislature of Missouri, March 3d, 1851. By an act of January 7th, 1853, its charter was thus amended: 'The capital stock, together with all machines, wagons, cars, engines, or carriages belonging to the company, together with all their works or other property, and all profits which shall arise from the same, shall be vested in the respective shareholders of the company forever, in proportion to their respective shares, and the same shall be deemed personal estate, and shall be exempt from any public charge or tax whatsoever for the period of five years from and after the passage of this act.' Under the provisions of several acts of the State legislature between the date of its incorporation and the year 1857, the State issued its own bonds for the benefit of the road, reserving a mortgage on the road to secure their payment. As between the State and the company the latter was bound to pay the bonds and interest on them, and it was provided that, in case the company made default, the governor should foreclose the mortgage. About the year 1860 the company did make default in the payment of the interest on the bonds, and had paid no part of either interest or the principal since. No sale, however, was made of the road, and on the 29th of March, 1863, the legislature passed an act forbidding the governor to make a sale until he should be required by it to do so. By an act of February 16th, 1865, meant to provide for the completion of the road, the company was authorized to issue $6,000,000 of its mortgage bonds, which should have priority over the mortgage of this State; and this to the extent named, and no farther, was by the act made a second lien. The act provided for the appointment of a fund commissioner for the railroad company. It then proceeded: 'SECTION 5. And the said railroad company shall pay over to the said fund commissioner all the gross earnings and daily receipts of said corporation, which shall be kept in deposit in the bank, subject to the daily draft of said fund commissioner, as the same may be required by said corporation for actual disbursement in operating said railroad, and in carrying on the ordinary business of said corporation, and for the other purposes hereinafter provided; and upon the failure of said company to pay said money to said fund commissioner, as herein provided, the said company shall forfeit and pay to the State of Missouri, for each and every such neglect or refusal, the sum of $10,000. 'SECTION 6. The said commissioner shall pay over to the said corporation, from time to time, out of the funds coming into his hands as aforesaid, the amounts required for purposes of construction and equipment of said railroad, upon vouchers of the chief engineer, and upon the vouchers of the treasurer thereof, he shall pay the amounts required for operating said railroad and carrying on the ordinary business of said corporation; and he shall pay and disburse the funds in the following order of priority, to wit: 'First. To the said corporation the amounts required, from day to day, for the actual current expenditures in operating said railroad and carrying on the ordinary business of said corporation, including all sums that may be necessary for keeping said railroad in a good state of repair, and all sums that may be necessary, for time to time, for such additions to the rolling stock, buildings, and appurtenances of said road, as may be required to enable said corporation to accommodate and transact the business of their said railroad; and,'Second, the amount of his salary as fund commissioner, in monthly instalments; and, 'Third, the interest upon said mortgage bonds, as the same shall fall due; and, 'Fourth, the cost of construction and equipment of said railroad as aforesaid; and, 'Fifth, the accruing dividends on preferred stock, not exceeding six per cent. per annum thereon, in accordance with the provisions of this act in relation thereto; and, 'Sixth, the interest due on the outstanding bonds of the State of Missouri heretofore loaned to said corporation; and,
The opinion of the court was delivered by: 'Lastly, the surplus remaining shall be applied to the payment of the principal of said first mortgage bonds until the same shall be fully paid off, or, if more of said bonds shall have become due, then to the payment of the principal of the said bonds of the State of Missouri if any still outstanding; and the balance shall be paid to the North Missouri Railroad Company, and the said office of fund commissioner shall then cease and be vacated.
'SECTION 9. The holders of the bonds of the State of Missouri, heretofore issued to the North Missouri Railroad Company, are hereby authorized to convert the same, which interest accrued thereon, into preferred stock of the North Missouri Railroad Company, and the holders thereof shall be entitled to receive a special dividend thereon, not exceeding the rate of six per cent. per annum, in the manner and in the order of priority above herein provided.'
The thirteenth section provided for an acceptance of this act by the stockholders, and enacted that in the event of its being so accepted,
'It shall be and become of full force and binding effect upon the said corporation and the State of Missouri.'
The act was accepted in due form by the stockholders.
On the 8th of April, 1865, a convention of the people of Missouri adopted 'An ordinance for the payment of State and railroad indebtedness.' This ordinance levied on the railroad company an annual tax of ten per centum of all its gross receipts for the transportation of freight and passengers, and directed that it should be appropriated by the General Assembly to the payment of the principal and interest now due, or hereafter to become due, upon the bonds of the State, and the bonds guaranteed by the State, issued to the company.
The provisions of the ordinance will be seen more fully on pages 39-40, supra, beginning near the bottom of the former page, at the place marked with a *.
Under this ordinance, the assessor of St. Louis County assessed $68,257 (being ten per cent.) upon the gross receipts of the company from October 1st, 1866, to October 1st, 1867, and delivered the same to one Maguire, collector of taxes, who, on the company's refusal to pay the bill, levied upon its engines, cars, &c. The company thereupon sued him in trespass in one of the State courts, where a case was stated for the judgment of the court, and by which it was agreed that if the court should be of opinion that the ordinance referred to was unconstitutional, there should be judgment for the company for costs and nominal damages; and if of the opinion that it was constitutional, judgment for Maguire for costs.
The Supreme Court of Missouri, where the case finally got referring among other clauses of the act of 1865, to that which provided for the payment in the first place of the 'amounts required from day to day, for the actual current expenditures for carrying on the ordinary business of the corporation'–within which it considered the payment of taxes to fall–rendered judgment for Maguire, and the company brought the case here.
One Jessup, who claimed the whole road under a sale, also stood in some way on the record as a plaintiff in error.
Mr. J. C. Orrick, for the plaintiff in error:
I. The act of February 16th, 1865, is a contract between the company and the State.
The act itself declares that if accepted by the stockholders it shall become of full force and binding effect upon the said corporation and the State of Missouri. The act was accepted by the stockholders.
In addition, its provisions contain all the elements of a contract. The railroad company was a corporation, vested with certain franchises under a charter from the State, and the act of 1865 gives certain other franchises, and imposes certain restrictions, which required the assent of the corporation to make them valid, and the contract was: That the State would release its lien to a certain extent; authorize the company to issue $6,000,000 of first mortgage bonds, and grant other privileges to the company, in consideration that the State, through an officer of its own, should be permitted to take charge of all the funds and earnings of the company, coming from whatever source, and disburse them in a particular way, and for certain objects specified in the act, amongst which was the payment of these very bonds for which the State was liable, and the accrued interest thereon which the State had paid, and which had thus become a debt due by the company to the State.
An important provision of the contract was that the interest on the $6,000,000 of bonds and the dividends on the preferred stock should be paid before the interest or principal of the State bonds. The ordinance is a violation of this contract.
The ordinance, disregarding the obligation of the State to pay, through its fund commissioner, out of the 'gross earnings and daily receipts of the corporation' what might be necessary to keep the road in a good state of repair, and what might be necessary for such additions to the rolling stock, buildings, and appurtenances of the road, as may be required to enable the corporation to accommodate and transact the business of the road, the amount of salary to the fund commissioner, the interest on the first mortgage bonds as the same fell due, the cost of construction and equipment, the dividends on preferred stock, the principal of the first mortgage bonds, to all of which the gross earnings were pledged before the principal of the State bonds could be paid; provides for the levy of an assessment of ten per cent. of all gross receipts for transportation of freight and passengers for two years, and fifteen per cent. thereafter for the payment of the principal and interest of these bonds until they shall be fully paid.
Thus it will be seen that the contract is impaired in an ...