created, shall be subject to taxation, except in certain cases, not material to the present inquiry. The subsequent legislation of the state carried out this requirement and provided for the taxation of the property of railroad companies; and the question presented is, whether the act of December, 1855, to amend the charter of the Northeastern Railroad Company, exempted the property of that company from such taxation. The company was incorporated in 1851, and at that time a general law of the state was in existence, passed in 1841, which enacted that the charter of every corporation subsequently granted, and any renewal, amendment or modification thereof, should be subject to amendment, alteration or repeal by legislative authority, unless the act granting the charter or the renewal, amendment or modification in express terms excepted it from the operation of that law. The provisions of that law, therefore, constituted the condition upon which every charter of a corporation subsequently granted was held, and upon which every amendment or modification was made. They were as operative and as much a part of the charter and amendment as if incorporated into them.

The act amending the charter of the Northeastern Railroad Company, passed in December, 1855, provided that the stock of the company, and the real estate it then owned, or might thereafter acquire, connected with or subservient to the works authorized by its charter, should be exempted from taxation during the continuance of the charter. This act contained no clause excepting the amendment from the provisions of the general law of 1841. It was, therefore, itself subject to repeal by force of that law.

It is true that the charter of the company when accepted by the corporators constituted a contract between them and the state, and that the amendment, when accepted, formed a part of the contract from that date and was of the same obligatory character. And it may be equally true, as stated by counsel, that the exemption from taxation added greatly to the value of the stock of the company, and induced the plaintiff to purchase the shares held by him. But these considerations can not be allowed any weight in determining the validity of the subsequent taxation. The power reserved to the state by the law of 1841 authorized any change in the contract as it originally existed, or as subsequently modified, or its entire revocation. The original corporators, or subsequent stockholders, took their interests with knowledge of the existence of this power, and of the possibility of its exercise at any time in the discretion of the legislature. The object of the reservation, and of similar reservations in other charters, is to prevent a grant of corporate rights and privileges in a form which will preclude legislative interference with their exercise if the public interest should at any time require such interference. It is a provision intended to preserve to the state control over its contract with the corporators, which without that provision would be irrepealable and protected from any measures affecting its obligation.

There is no subject over which it is of greater moment for the state to preserve its power than that of taxation. It has nevertheless been

held by this court, not, however, without occasional earnest dissent from a minority, that the power of taxation over particular parcels of property, or over property of particular persons or corporations, may be surrendered by one legislative body, so as to bind its successors and the state. It was so adjudged at an early day in New Jersey v. Wilson, 7 Cranch 164; the adjudication was affirmed in Jefferson Bank v. Skelly, 1 Black 436; and has been repeated in several cases within the past few years, and notably so in the cases of The Home of the Friendless v. Rouse, 8 Wallace 430; and Wilmington Railroad v. Reed, 13 Wallace 264. In these cases, and in others of a similar character, the exemption is upheld as being made upon considerations moving to the state which give to the transaction the character of a contract. It is thus that it is brought within the protection of the federal constitution. In the case of a corporation, the exemption, if originally made in the act of incorporation, is supported upon the consideration of the duties and liabilities which the corporators assume by accepting the charter. When made, as in the present case, by an amendment of the charter, it is supported upon the consideration of the greater efficiency with which the corporation will thus be enabled to discharge the duties originally assumed by the corporators to the public, or of the greater facility with which it will support its liabilities and carry out the purposes of its creation. Immunity from taxation, constituting in these cases a part of the contract with the government, is, by the reservation of power such as is contained in the law of 1841, subject to be revoked equally with any other provision of the charter whenever the legislature may deem it expedient for the public interests that the revocation shall be made. The reservation affects the entire relation between the state and the corporation, and places under legislative control all rights, privileges and immunities derived by its charter directly from the state. Rights acquired by third parties, and which have become vested under the charter, in the legitimate exercise of its powers, stand upon a different footing; but of such rights it is unnecessary to speak here. The state only asserts in the present case the power under the reservation to modify its own contract with the corporators; it does not contend for a power to revoke the contracts of the corporation with other parties, or to impair any vested rights thereby acquired.

Reversed.

Note. See cases cited under Dartmouth College v. Woodward, supra, p. 746, and Yeaton v. Bank, supra, p. 750. 1851, Stevens v. Rutland, etc., R., 29 Vt. 545; 1852, Bank of Pennsylvania v. Commonwealth, 19 Pa. St. 144; 1856, Erie R. Co. v. Casey, 26 Pa. Št. 287; 1867, Zabriskie v. Hackensack R., 18 N. J. Eq. 178; 1871, Wilmington R. Co. v. Reid, 80 U. S. (13 Wall.) 264; 1873, Delaware R. Tax, 85 U. S. (18 Wall.) 206; 1875, Lothrop v. Stedman, 42 Conn. 583. See, also, 1904, Wright v. Minnesota Mut. Ins. Co., 193 U. S. 657.

Sec. 202. 5. Contract between the corporation and members, or among the members themselves.

(a) As to amount to be contributed.

IRELAND v. THE PALESTINE, ETC., TURNPIKE COMPANY.1 1869. IN THE SUPREME COURT OF OHIO. 19 Ohio St. Rep. 369-375.

[Error to common pleas reserved in the district court. The Turnpike Company was organized in 1852, under a law imposing no individual liability upon stockholders beyond their subscription. Ireland was a subscriber to the stock and had fully paid up his subscription. A later act (May 3, 1852) authorized those companies who should accept its provisions to issue bonds to complete their roads or pay their debts, making the stockholders individually liable to the amount of their stock on such bonds. The directors accepted this act, and issued and sold the bonds. A later act provided that a majority of shareholders at a meeting duly called could make an assessment pro rata for the payment of such liability. At a meeting duly called (Ireland not being present or represented) an assessment was ordered. Upon Ireland's refusal to pay, the company brought suit and obtained judgment in the lower court. Petition in error was brought to reverse this].

WELCH, J. In our judgment the act of May 3, 1852, in so far as it authorizes assessments against stockholders who have paid the full amount of their subscriptions, and who by the charter of the company, or the laws under which it was organized, were not individually liable for its debts, is unconstitutional. It impairs the validity of the contract between the company and the stockholder. In a contract between the company and a stockholder, or in an action by the former or its creditors against the latter, the stockholder is to be regarded as an individual person, separate and distinct from the corporation. He becomes a stockholder by virtue of a contract with the company, and he has a right to stand upon the terms of that contract, interpreted and limited by the laws under which it was made. By his contract with this company Ireland agreed to pay a specified sum, and no more. This sum he has fully paid, and to require him to contribute an additional amount would be to violate the contract between the parties. Let it be understood that the amount for which a stockholder becomes liable to the company by his subscription is not limited by his contract, but by the discretion of the directors, or the stockholders at large, and no prudent man will subscribe for stock in a corporation. If such be the law, it is of little importance to the subscriber whether the amount of stock taken be large or small, because it can be indefinitely increased at the pleasure of the company, whenever the legislature sees proper to give the power to do so. If a subscriber contracts to pay a 1 Statement abridged. Arguments and part of opinion omitted.

sum which he deems within his means of payment, he may be called upon to contribute an amount utterly beyond those means, and which may render him bankrupt. No subscriber would be safe under such a law, or have any rule by which to determine the amount of stock he could afford to take. In vain would he look to the charter of the company, or to the provisions of the constitution and subsisting laws. of the state, to learn the nature and extent of the liability he was about to incur, if that liability can, at the pleasure of the legislature, be indefinitely increased or modified by retroactive laws.

Reversed.

Note. See, 1806, Wales v. Stetson, 2 Mass. 143, supra, p. 150; 1820, Livingston v. Lynch, 4 Johns. Ch. (N. Y.) 573; 1824, Natusch v. Irving, 2 Cooper Ch. 358; 1843, Hartford & N. H. R. Co. v. Crosswell, 5 Hill (N. Y.) 383; 1851, Stevens v. Rutland, etc., R., 29 Vt. 545; 1854, New Orleans, etc., R. Co. v. Harris, 27 Miss. 517; 1860, Simpson v. Westminster, etc., Co., 8 H. L. Cas. 712; 1861, Abbott v. Hard Rubber Co., 33 Barb. 578; 1863, Clearwater v. Meredith, 68 U. S. (1 Wall.) 25; 1867, Zabriskie v. Hackensack, etc., R., 18 N. J. Eq. 178, 90 Am. Dec. 617; 1869, Central R. Co. v. Collins, 40 Ga. 582, on 624; 1873, Railway Co. v. Allerton, 85 U. S. (18 Wall.) 223, supra, p. 442; 1879, Kent v. Quicksilver Mining Co., 78 N. Y. 159, infra, p. 790; 1880, Hoey v. Henderson, 32 La. Ann. 1069; 1885, Academy of Music v. Flanders, 75 Ga. 14; 1892, People v. Ballard, 134 N. Y. 269; 1893, Forrester v. Boston & M. C. C. & S. Co., 22 Mont. 430, 55 Pac. Rep. 229; 1899, Pronick v. Spirits Distrib. Co., 58 N. J. Eq. 97, 42 Atl. Rep. 586; 1901, Bedford v. Eastern B. & L. Assn.,

181 U. S. 227.

Sec. 203. Same.

(b) That subscriptions are made in good faith.

WHITE MOUNTAINS RAILROAD CO. v. EASTMAN.

1856. IN THE SUPREME JUDICIAL COURT OF NEW HAMPSHIRE. 34 N. H. Rep. 124-147.

[Appeal from report of commissioner of insolvency upon Eastman's estate, allowing the railroad company $2,642.12 upon a subscription made by decedent for thirty shares to the company's stock. The original subscription was made in writing in the company's subscription book, apparently upon the same terms as other subscriptions, but at the time it was made the proper agents of the corporation agreed in writing to release the decedent, at his or his administrator's election, from all liability upon twenty-five shares. This was the defense made.]

SAWYER, J.

The two contemporaneous writings upon the same subject, between the same parties, are to be considered together as one contract, unless upon other grounds the writing given by the corporation is to be held void. Thus considered in connection, effect would be given to all the stipulations on both sides, con

1 Statement abridged. Only small part of opinion given.

tained in both writings, as constituting together one agreement. If no person were to be affected by the contract but the parties themselves, it would be competent for them to agree that the intestate should take and pay for thirty shares, subject, however, to the condition that if within one year he should elect to reduce the number so subscribed for to five, or any other number not less than five, he might be at liberty so to do, and that the corporation, upon his paying for the thirty or other reduced number of shares, would give him proper certificates therefor, constituting him the owner of them. * If they, for the purpose of misleading and deceiving third persons having an interest in the subject of their contract, held out the subscription of the intestate, as shown upon their subscription book, as the contract between them and him, and concealed from those third persons the fact, material for them to know, that there was a secret stipulation making the contract an entirely different thing, the principles of common honesty would require that they should be compelled to stand to the agreement as they held it out to be. * * *That the proceeding is a fraud upon third persons is clear from the relation in which subscribers for stock in a corporation of this kind stand toward each other. In the subscription of each person every other subscriber has a direct interest. Their respective subscriptions are contributions or advancements for a common object. The action of each in his subscription may be supposed to be influenced by that of the others, and every subscription to be based upon the ground that the others are what upon their face they purport

to be.

The fact that one man has bound himself to place a certain amount of his money upon the risk involved in the enterprise is an inducement to others to venture in like manner. Seeing who are his associates, and the extent of the liability which they have assumed, he regulates his own upon that consideration; and though in form and legal effect the contract of each is with the corporation, yet among the subscribers themselves it is to be regarded as an agreement with every other subscriber to bear that proportion of the common burthen to which he professes to bind himself by the contract which he holds out to them as his contract with the corporation. To hold that the secret stipulation is

valid as between these parties would be to give full effect to the fraud by relieving the estate of the intestate from a part of that burthen which he held out to the other subscribers he had assumed, and throwing upon them the necessity of providing for it. To hold that by fraud the whole contract as between the parties is void would but increase the injustice as to the other subscribers, for it would throw upon them the whole of that proportion of the common burthen which the intestate held out to them he had assumed; while, on the other hand, by holding that the contract which the parties held out to them as the true one, was in fact the contract made by them—all secret stipulations rendering it other than that being void as fraudulent toward third persons-the contemplated fraud is defeated and perfect justice done to the other