mined, and agreed upon the terms and conditions of such consolidation in conformity with the provisions of this act. In pursuance of the authority thus conferred upon the Maryland corporation, and in virtue of power granted by the legislature of Pennsylvania to the three Pennsylvania corporations, the consolidation was effected, new stock was issued, and a company came into being known as the Northern Central Railway Company, whose affairs were managed by the new board of directors and officers elected or appointed pursuant to the new charter. The corporation, in availing itself of the provisions of the law of 1854, executed articles of consolidation. Although the act of 1854 only provided that the new corporation should have the corporate "powers and privileges" of the constituent bodies, it is stated in argument that the articles of consolidation executed under the law purported to vest the new corporation with, not only the right to the prop erty rights and privileges of the old companies, but also with their immunities. In 1854, at the time the act of consolidation was passed, the Maryland Constitution (of 1850) was in force, and provided in § 47, article 3, as follows: "Corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes; and in cases where in the judgment of the legislature the object of the corporation cannot be attained under general laws. All laws and special acts pursuant to this section may be altered from time to time or repealed." In the years 1872 and 1874 the legislature [262] of Maryland passed an act imposing a tax of 2 of 1 per cent upon the gross receipts of all steam railroad companies incorporated by the state and doing business therein. Two suits were thereafter (the one in 1873 and the other in 1874) brought by the state of Maryland against the Northern Central Railway Company to recover the 2 of 1 per cent tax upon the gross receipts of that company from that part of its railroad lying in the state of Maryland. The defense of the company was substantially, first, that it was entitled to the exemption from taxation granted by the act of 1827 to the Baltimore & Susquehanna Company; that such exemption was existing and had not been repealed, and, if repealed, the repealing act was void because an impairment of the obligations of the contract resulting from the act of 1827 and the transmission of its immunities to the new company created by the act of 1854. The causes were decided in the trial court in favor of the corporation. The cases were taken to the court of appeals of the state of Maryland. That court (in 1875) reversed the judgment of the court below, and remanded the cases for a new trial. The court of appeals in its opinion conceded that when, in 1827, the charter of the Baltimore & Susquehanna Railroad Company was grant ed there was no restriction in the Constitution of the state on the power of the general assembly to make a contractual exemption from taxation. It also conceded that at that time there was no general power reserved in the Constitution to repeal, alter, or amend charters, and that no such reservation was found in the charter of 1827. But the court deemed it unnecessary to pass upon the question of whether the consolidation act of 1854 had endowed the new company with the exemption from taxation expressed in the act of 1827, because, conceding, arguendo, this to have been the case, it was held that as the consolidation had created a new company with new stock, new franchises, new rights, and new officers, the charter of such newly created company as to all its provisions, including the exemption from taxation, if such exemption were found in it expressly or by implication, was subject to the power to repeal, alter, and amend, reserved by the Constitution. Construing the acts imposing the tax which were sued for in connection with other laws [263] of the state of Maryland, the court held that the exemption from taxation had been repealed. 44 Md. 162. The cause on being remanded to the trial court remained untried in 1880. In that year the legislature of Maryland passed an act on the subject of the taxation of the Northern Central Railway Company. The title of that act purported to adjust and settle finally by agreement all pending controversies on the subject of taxation between the state of Maryland and the railroad company. The preamble referred to and recapitulated the organization of the Baltimore & Susquehanna, the consolidation by the act of 1854, and the pending suits on the subject. The title and preamble are reproduced in the margin.† An Act to Adjust and Settle Finally, by Agreement, All Pending Controversies between the State of Maryland and the Northern Central Railway Company, by Subjecting the Franchises and Property of Said Company within This State to Taxation for State Purposes to a Certain Extent, and by Providing for the Payment of a Certain Indebtedness Claimed by the State of Maryland to Exist on the Part of Said Northern Central Railway Company to Said State of Maryland, being an Act Supplementary to the Act of Eighteen Hundred and Fifty-Four, Chapter Two Hundred and Fifty, Entitled An Act to Authorize the Consolidation of the Baltimore and Susquehanna Railroad Company with the York and Maryland Line Railroad Company, the York and Cumberland Railroad Company, and the Susquehanna Railroad Company, by the Name of the Northern Central Railway Company. Whereas, a controversy has arisen and exists between the state of Maryland and the Northern Central Railway Company in reference to the rights of the state of Maryland to subject to taxation the franchises and property of the Northern Central Railway Company, the said company claiming exemption of the same from taxation upon the grounds that among the terms and conditions of the union and consolidation of the several companies by which said Northern Central Railway Company was formed is one, that the latter should have all the rights, privileges, and immunities of each of said companies, which said terms were entered into under the authority given by the act of Maryland of eighteen hundred and fifty-four, [264] *By the 1st section of the act it was pro In 1890 the state of Maryland passed a vided that the Northern Central Railway general law entitled "An Act to Provide for Company "shall have and possess all the pow-State Taxation on the Revenues of Railers, rights, privileges, and immunities, and road, Telegraph, or Cable, Express or Transbe subject to all the duties and obligations, portation, Telephone, Parlor Car, Sleeping which are expressed in the act of assembly Car, Safe Deposit, Trust, Guaranty, Fidelof Maryland of 1827, chapter 72, entitled, ity, Oil or Pipe Line, Title, Insurance, ElecAn Act to Incorporate the Baltimore & Sus-tric Light or Electric Construction Compaquehanna Railroad Company, and all the nies Incorporated under Any General or franchises and property of every descrip- Special Law of This State and Doing Busition and gross receipts of said Northern ness Therein." [Md. Laws, chap. 559.] By Central Railway Company within the state this act a tax of 1 per cent was imposed of Maryland, shall be subject to taxation for state purposes to the extent of an annual upon the gross receipts "of all railroad comtax of one half of one per cent upon the under the authority of this state and doing panies worked by steam incorporated by or gross receipts from its railroad and fran- business therein." Under the asserted auchise lying within the state of Maryland, thority of this statute a tax of 1 per cent and from all other sources within this state, was levied by the state in each of the years and said franchises, property, and gross re1891 to 1895, both inclusive, upon the gross ceipts shall not be subject to any other tax receipts of the Northern Central Railway under the laws of the state of Maryland; Company for the year preceding, and these "The act further provided for the taxes were paid by the company under propayment of a designated sum by the railroad test. Upon demand, however, being made in company for past taxes, declared said pay: 1896 for payment of the tax of 1 per cent ment should acquit such taxes, and directed the discontinuance of all suits pending compliance was refused. A tender by the upon the gross receipts for the year 1895, against the company for such taxes. It was, however, provided that its provisions of 1/2 of 1 per cent, was refused by the state, company of the taxes, calculated at the rate should not be operative until the payment and the present action was thereupon which the act required had been made and brought to recover the taxes thus asserted [265]until the acceptance of the provisions of the to be due and payable under the act of 1890. act by the stockholders of the company. The The company defended on the ground that act was accepted, the money was paid, and the act of 1880 was a contract *protecting it [266] the suits were discontinued. At the time from a higher rate of tax on its gross reof the passage of this act of 1880 the Con- ceipts than in that act specified; that the stitution of Maryland of 1867 was in force, act had not been repealed; that if repealed and therein it was provided (art. 3, § 48) the repealing statute was void, because it "Corporations may be formed under gen- impaired the obligations of the contract reeral laws, but shall not be created by sulting from the act of 1880. There was special act, except for municipal purposes judgment in favor of the corporation. and except in cases where no general case was taken to the court of appeals of laws exist providing for the creation of corthe state of Maryland and the judgment was porations of the same general character as reversed, the court holding that the provithe corporation proposed to be created, and sions of the act of 1880 had been repealed any act of incorporation passed in violation by state statutes to which it referred, and of this act shall be void. All char- that the repeal did not violate the Constiters granted or adopted in pursuance of this tution of the United States by impairing the section, and all charters heretofore granted obligations of the contract, as asserted by and created, subject to repeal or modifica- the company, because the corporation held tion, may be altered from time to time, or its rights subject to the power to repeal, albe repealed." In accordance with the act of ter, and amend, as reserved in the Constitu1880 the company year by year paid the tax tion at the time both the acts of 1854 and on its gross receipts. 1880 were passed. 90 Md. 449, 45 Atl. 465. has been also assessed as liable to taxation for county and municipal purposes. chapter two hundred and fifty, which, more- And whereas, the state of Maryland having, by the act of eighteen hundred and seventy two, chapter two hundred and thirty-four, and the act of eighteen hundred and seventy-four, chapter four hundred and eight, imposed an an nual tax of one half of one per centum on the gross receipts of all railroad companies worked by steam incorporated by or under the authority of said state of Maryland, and claiming that under said acts the gross receipts of said Northern Central Railway Company are liable to said tax, have instituted suits to recover the same. And whereas, the property of said company : The And whereas, the said company has the right to have the question at issue between it and the state of Maryland carried to the Supreme Court of the United States to be there decided. And whereas, it has been represented to this general assembly that what would be the ultimate decision of said question is a matter of great doubt, and it is deemed to be, moreover, just and proper that an equitable settlement should be made of the matters So in controversy, and it having been represented to this general assembly that the said Northern Central Railway Company, for the purpose of making such settlement, is willing to pay a tax of one half of one per centum on the gross receipts within this state, upon the terms and conditions hereinafter set forth; now, there. fore Plenary power in the legislature of the state for all purposes of civil government is the rule, and the prohibition to exercise a particular power is the exception. The case was remanded for a new trial. It | 48 Am. Dec. 531; Philadelphia, W. & B. R. was again tried, the Federal defense of the Co. v. Bayless, 2 Gill, 355; Appeal Tax Court impairment of the obligation of the contract v. Grand Lodge, A. F. & A. M. 50 Md. 428. was again specially urged, the case was decided against the corporation, was taken again to the supreme court of the state of Maryland. That court, adhering to its for mer view, affirmed the judgment. It is to this judgment that the present writ of error is prosecuted. Mr. Bernard Carter argued the cause and filed a brief for plaintiff in error: The title of an act may be considered in ascertaining the intention of the legislature. Church of Holy Trinity v. United States, 143 U. S. 462, 36 L. ed. 229, 12 Sup. Ct. Rep. 511. The preamble is often a key to the proper understanding of the statute. Coosaw Min. Co. v. South Carolina, 144 U. S. 562, 36 L. ed. 542, 12 Sup. Ct. Rep. 689. A state, unless prohibited by its Constitution, may make a contract with a corporation chartered by it, to exempt all of its property from taxation, or agree to accept from it a less rate of taxation than that to be imposed on others, either for a specified time or permanently, if such contract has a sufficient consideration to support it. Delaware Railroad Tax, 18 Wall. 225, sub nom. Minot v. Philadelphia, W. & B. R. Co. 21 L. ed. 894; Ohio Life Ins. & T. Co. v. Debolt, 16 How. 428, 14 L. ed. 1002; Piqua Branch of State Bank v. Knoop, 16 How. 389, 14 L. ed. 985; Home of the Friendless v. Rouse, 8 Wall. 437, 19 L. ed. 497; Appeal Tax Court v. Grand Lodge, A. F. & A. M. 50 Md. 428. Cooley, Const. Lim. p. 104; Baltimore v. State ex rel. Bd. of Police, 15 Md. 387, 74 Am. Dec. 572; Jackson v. Walsh, 75 Md. 315, 23 Atl. 778. Messrs. Louis E. McComas and George R. Gaither argued the cause and filed a brief for defendant in error: The preamble is no part of an act; it cannot enlarge or confer powers, or control the words of the act unless they are doubtful or ambiguous. Yazoo & M. Valley R. Co. v. Thomas, 132 U. S. 174, 33 L. ed. 302, 10 Sup. Ct. Rep. 68. An immunity from taxation by a state will not be recognized unless granted in terms too plain to be mistaken. Phoenix F. & M. Ins. Co. v. Tennessee, 161 U. S. 174, 40 L. ed. 660, 16 Sup. Ct. Rep. ' 471. The act of 1880, chap. 16, does not constitute an irrepealable immunity from additional or greater taxation. Citizens' Sav. Bank v. Owensboro, 173 U. S. 644, 43 L. ed. 843, 19 Sup. Ct. Rep. 530; Covington v. Kentucky, 173 U. S. 231, 43 L. ed. 679, 19 Sup. Ct. Rep. 383; Ford v. Delta & P. Land Co. 164 Ù. S. 662, 41 L. ed. 590, 17 Sup. Ct. Rep. 230; Yazoo & M. Valley R. Co. v. Thomas, 132 U. S. 175, 33 L. ed. 303, 10 Sup. Ct. Rep. 68; Wilmington & W. R. Co. v. Alsbrook, 146 U. S. 279, 36 L. ed. 972, 13 Sup. Ct. Rep. 72; Hoge v. Richmond & D. R. Co. 99 U. S. 348, 25 L. ed. 303. Where a state grants a charter to a corporation, which is accepted, and therein stipulates for an exemption of its property from taxation, partial or total, and the Constitu-leged tion of the state does not prohibit such exemption, a valid contract for such exemption is made. Home of the Friendless v. Rouse, 8 Wall. 437, 19 L. ed. 497. It is entirely competent for a state, unless prohibited by its Constitution, to make an agreement with a corporation, subsequent to its charter, for an exemption of its property from taxation, partial or total; and such an agreement constitutes a valid contract if supported by a consideration of some kind. Appeal Tax Court Grand Lodge, A. F. & A. M. 50 Md. 428; Christ Church v. Phila delphia County, 24 How. 300, 16 L. ed. 602; Tucker v. Ferguson, 22 Wall. 528, 22 L. ed. 805. At the time of the passage of the act of 1880, chap. 16, there was nothing in the Constitution of Maryland, nor has there ever been anything in any of the Constitutions of Maryland, which prohibited the state from exempting the property of a particular corporation from taxation, either total or partial. The Tax Cases, 12 Gill & J. 117; Baltimore v. Baltimore & O. R. Co. 6 Gill, 288, If by the just interpretation of the alcontract there was no exemption from taxation, then there is no Federal question to be here reviewed. St. Paul Gaslight Co. v. St. Paul, 181 U. S. 151, 45 L. ed. 793, 21 Sup. Ct. Rep. 575. Even in a case where the Supreme Court of the United States may exercise an independent judgment, any reasonable doubt will be resolved in favor of that construction of a state statute which has been adopted by the court of last resort in that state. Yazoo & M. Valley R. Co. v. Adams, 181 U. S. 582, 45 L. ed. 1012, 21 Sup. Ct. Rep. 729; Burgess v. Seligman, 107 U. S. 20, 27 L. ed. 359, 2 Sup. Ct. Rep. 10; Flash v. Conn, 109 U. S. 371, 27 L. ed. 966, 3 Sup. Ct. Rep. 263; Clark v. Bever, 139 U. S. 96, 35 L. ed. 88, 11 Sup. Ct. Rep. 468; Board of Liquidation of City Debt v. Louisiana, 179 U. S. 622, 45 L. ed. 347, 21 Sup. Ct. Rep. 263. Mr. Justice White, after making the foregoing statement of the case, delivered the opinion of the court: In order to confine the controversy arising on this record to the propositions upon which its decision must really rest to elim ! 266-269 SUPREME COURT OF THE UNITED STATES. inate the questions discussed at bar, which I become endowed by the effect of a legislative a case sessed, prior to the formation of the new The doctrine as just stated has been so case: First. Where a contract is claimed to arise from a state law, and it is held below that a subsequent statute has repealed the [267]*alleged contract, and effect is thereby given to the subsequent law, the mere question whether the alleged contract has been repealed by the subsequent law is a state, and not a Federal, question. In such this court concerns itself, not with the question whether the state law, from which the contract is asserted to have arisen, has been repealed, but proceeds to determine whether the repeal was void because it produced an impairment of the obligations of the contract within the purview of the Constitution of the United States. In other words, where Coming to apply the principles just stated the state court has given effect to a subsequent law, this court decides whether such to the case before us, it is apparent that uneffect, so given by the state court, violates less there is something peculiar in this case the Constitution of the United States. Gulf which takes it from under the control of the & S. I. R. Co. v. Hewes, 183 U. S. 66, 46 doctrine referred to, that the court below L. ed. 86, 22 Sup. Ct. Rep. 26. We there- correctly held that the new corporation crefore put out of view the question whether ated by the act of 1854 had no irrepealable the acts of 1854 or of 1880 were repealed by contract exempting it from taxation either the subsequent state statutes as held by the as the result of the act of 1854 or of the court below, and, treating such repeal as an act of 1880. The positive prohibition existaccomplished fact, shall determine whethering in the Constitution of the state against the repealing acts were void because impairing the obligations of the contract relied upon, in violation of the Constitution of the United States. In considering this question, it will be borne in mind that it is elementary that where the constitution of a state reserves the right to repeal, alter, or amend, all charters granted by the legislature are subject to such provision, and therefore are wanting in that attribute of irrevocability which is essential to bring them within the intendment of the clause of the Constitution of the United States protecting The cases supcontracts from impairment. porting this doctrine are so numerous that they need not be cited. We content ourselves, therefore, by referring to one of *"It is to be observed that the court does [269] them: Citizens' Sav. Bank v. Owensboro, 173 U. S. 636, 641, 43 L. ed. 840, 842, 19 not rest the inability of the legislature to It is, moreover, conclu- grant to a corporation an irrepealable exSup. Ct. Rep. 530. sively determined that where the constitu-emption from taxation upon the form or tion of a state reserves the power to repeal, character of the particular statute then unalter, or amend a charter, such provision is der consideration, but puts it upon the broad applicable to the charter of a consolidated ground of the want of power in the legislacorporation where, as the result of the con- ture under the Constitution to make such a The court certainly in effect solidation, a new corporation takes being, grant at all. new stock is provided for, new franchises determines that any form of law which are conferred, and new officers appointed. grants to a corporation such a corporate In other words, that where a legislature is privilege as immunity from taxation is one inhibited by the constitution from making passed pursuant to the section of the Conan irrepealable charter it cannot create a stitution referred to, and is therefore subnew contract and bring into being a new cor- ject to alteration or repeal by future legis[268]poration, and yet *by the charter of such latures." corporation give rise to the irrepealable contract which the constitution absolutely prohibits. To state the doctrine in another form, it is this: That where a new corporation is chartered, subject to a constitution which forbids the granting of an irre pealable right, such new corporation cannot irrepealable charter grants, both when the Without pausing to consider whether, as contended, the rule as thus announced may have been in some respects too broadly stated, we think it clear that the mere form adopted by a legislature in conferring a right on a corporation cannot be controlling, 187 U. S. for if it were so the provision of the Con Into these considerations we may not en stitution, instead of being commanding and prohibitive, would merely be precatory or advisory. We are also clearly of the opinion that the act of 1880, in its essential nature and effect, in whatever form couched, was intended to be and necessarily operated as an amendment to the charter of the company created by the act of 1854. Such being its essential nature and necessary effect, we think it plainly came within the provisions of the Constitution of 1867, and was therefore subject to repeal, alteration, *JOHN H. EVANS, as Receiver, Plff. in Err.,[271] or amendment. v. ANDREW J. NELLIS. (See S. C. Reporter's ed. 271-280.) liability Federal courts-enforcement of remedy created by state statute-construction of statute by state courts. 1. The receiver of the assets of a corporation is not authorized to maintain an action to enforce the liability of a stockholder, by Kan. Gen. Stat. 1868, §§ 32, 44, since that act made the liabiHty of the stockholder, not an asset of the corporation, but an asset which a creditor of the corporation alone could recover for his individual benefit to the extent required to pay a judgment obtained by him against the corporation. 2. It is strenuously, however, insisted that this case should not be controlled by the reasons previously stated because of the following considerations: The decision of the court of appeals of Maryland under the act Corporations-enforcement of stockholder's of 1854 (44 Md.), it is urged, was not unanimous. There was an elaborate dissent. For this reason, and because the case was open to review in this court on the question of the impairment of the obligations of the contract, it is said there was necessarily grave doubt as to the rights of the parties. In view of the foregoing conditions and of such doubt, the act of 1880 embodied but an honest effort by way of contract and compromise to close the doubtful controversy in the interest of both parties, the state on the one hand and the corporation on the other; [270] hence the act of 1880 was *not subject to repeal, alteration, or amendment. Conceding, arguendo, the premise upon which the above deduction is based, the conclusion itself is devoid of foundation. It but reiterates in another mode of statement the argument that the form in which a contract is couched, and not its substance and necessary effect, is the criterion by which to ascertain whether it is controlled by the constitutional provision forbidding irrepealable contracts. Moreover, it disregards the elementary principle that the power to grant an irrepealable right by a compromise agreement depended on the existence of the authority to make such grant by original action. The power to compromise on the subject was as limited as the power to contract originally. District of Columbia v. Bailey (1897) 171 U. S. 161, 43 L. ed. 118, 18 Sup. Ct. Rep. 868. Indeed, the entire argument upon this The remedy against a stockholder of an insolvent corporation, given to the receiver of Its ussets by Kau. Laws 1899, chap. 10, cannot be enforced until such receiver has first brought suit against the corporation and all resident stockholders, in order to fix the sum required to pay the corporate debts. 3. A Federal court cannot enforce the statutory liability of a nonresident stockholder of a foreign corporation at the suit of a receiver of its assets, where the latter has not first taken the steps which the statutes of the state, as construed by its courts, make a prerequisite to any action against an individual stockholder. [No. 66.] Argued and Submitted November 4, 1902. 0 States Circuit Court of Appeals for the N A CERTIFICATE from the United Second Circuit presenting a question as to Statement by Mr. Justice White: The questions to be answered and the case on which they arise are shown in the statement of facts and resulting questions of law constituting the certificate of the court below, which is as follows: "Statement of facts. "That the Inter-State Loan & Trust ComNOTE. On the right to enforce stockholder's liability outside of the state of incorporationsee note to Cushing v. Perot (Pa.) 34 L. R. A. 737. the jurisdiction in which he is appointed-see |