Ashley et al. v. Ryan.
Corporations — Fees for incorporation and consolidation of — Foreign and domestic — Constitutional law.
Section 148a, Revised Statutes, as amended February 12,1889, (86 Ohio Laws, 33), requiring the payment of a fee to the Secretary of State for the filing of articles of agreement of incorporation, and, also, of consolidation, proportioned to the authorized capital stock of the company, is a valid law; and applies to articles of agreement of consolidation between an Ohio company and a company or companies of another state, as well as to articles of consolidation between Ohio companies only.
(Decided June 28, 1892.)
Error to the Circuit Court of Franklin county.
The action below was commenced in the court of common pleas to restrain the Secretary of State, Daniel, J. Ryan, from paying into the treasury of the state certain monies, paid him as a fee, for filing in his office “articles of agreement of consolidation” of certain railway companies, which the plaintiffs claim had been wrongfully exacted of them, and having been paid under protest, they also asked a judgment for the return of the money. A demurrer to the petition as amended having been sustained, the case was appealed to the circuit court, where the demurrer was renewed, and sustained by that court. The ruling and judgment on the demurrer is assigned for error here.
The petition reads as follows:
“1. Plaintiffs say that for several years prior to January 1, 1889, The Wabash, St. Eouis & Pacific Railway Company .was a consolidated railway corporation, composed of several constituent corporations organized respectively under the laws of the states of Ohio, Indiana, Illinois, Missouri and Michigan; and as such owned and operated, as a public carrier, a system of connected railway lines extending from Toledo, Ohio, and Detroit, Michigan, on the *505East, to St. Louis and Kansas City, Missouri, and to Chicago, Illinois, on the West.
“That said Wabash, St. Louis & Pacific Railway Company, on or about the first day of June, 1880, as thereto authorized by the laws of Ohio and other states, duly executed and delivered to The Central Trust Company of New York, and James Cheney, trustees, a general mortgage upon all its property and franchises, and issued and sold under said general mortgage, seventeen million dollars of its general mortgage bonds to divers holders for value, and subsequently thereto, to-wit: on or about the first day of June, 1884, said Wabash, St. Louis & Pacific Railway Company defaulted in the payment of interest upon the said bonds.
“That, subsequent to said default and in consequence thereof, proceedings were had for the foreclosure of said general mortgage and the sale of all such railway property and franchises, in the United States Circuit Courts, for the Eastern Distriet of Missouri; 'for the Southern District of Illinois; for the District of Indiana; for the Northern District of Ohio, Western Division; for the Eastern District of Michigan; and in said several foreclosure proceedings under a plan of reorganization entered into by and between the holders of bonds secured by said general mortgage, executed by said company upon .its said lines of railway and 'franchises, and stockholders and creditors, the plaintiffs were, by agreement of said bondholders and stockholders, duly constituted a purchasing committee, to purchase as trustees, the railways formerly owned by said constituent corporations, and reorganize the said property according to the laws of Ohio and such other states, and they did at the sale of said railways, purchase the same, to carry out such plan of reorganization, and received' proper conveyances therefor.
“2. That plaintiffs did thereafter, in furtherance of said plan of reorganization, cause to be organized The Wabash Western Railway Company, under the laws of the state of Missouri, and did thereafter, and on or about the 80th day of September, 1887, duly convey to said -railway company, the lines of railway and franchises situated within the state *506of Missouri, formerly belonging to said Wabash, St. Louis & Pacific Railway Company. The capital stock of such Missouri corporation was $30,000,000.
“That said plaintiffs did also cause to be organized under the laws of the state of Michigan, The Detroit & State Line Wabash Railroad Company, and did on the 13th day of March, 1889, duly convey to the said railroad company, the lines of railway and franchises situated within the state of Michigan, formerly belonging to said Wabash, St. Louis & Pacific Railway Company. The capital stock of such Michigan corporation was $300,000.
“That said plaintiffs did also cause to be organized under the laws of the state of Indiana, The Wabash & Eastern Railway Company, of Indiana, and did, on or about the 23rd day of May, 1889, duly convey to said corporation, thus organized by them, the lines of railway and franchises purchased by them, situated in the state of Indiana, and being the line of railway and franchises formerly belonging to said Wabash, St. Louis & Pacific Railway Company. The capital stock of such Indiana corporation was $9,000,000.
“That said plaintiffs did also cause to be organized under the laws of the state of Illinois, The Wabash Eastern Railway Company, of Illinois, and did, on or about the 23rd day of May, 1889, duly convey to said corporation thus organized by them, the lines of railway and franchises purchased by them, situated in the state of Illinois and being the lines of railway and franchises formerly belonging to said Wabash, St. Louis & Pacific Railway Company. The capital stock of such Illinois corporation was $12,000,000.
“That said plaintiffs did also cause to be organized, The Toledo Western Railway Company under the laws of the state of Ohio,and did, on or about the 23rd day of May, 1889, duly convey to the said corporation, the line of railway and franchises purchased by them, situated in the state of Ohio, formerly belonging to said Wabash, St. Louis & Pacific Railway Company. The capital stock of such Ohio corporation was $700,000.
“That said several lines of railway connected with each other as follows, to-wit: The railroad of the said Toledo West*507ern Railroad Company, of Ohio, extends from Toledo, Ohio, to the western boundary line of Ohio, at a point in Pauld-ing county, and there connected in continuous line -with the railroad of said Wabash Eastern Railwa}' Company, of Indiana. The railroads of the Detroit and State line Wabash Railroad Company,- and of'The Wabash Eastern Railway Company, oj Indiana, at Butler, in the county of DeKLalb, state of Indiana. The railroads of The Wabash Eastern Railway Company, of Indiana, and of The Wabash Eastern Railway Company, of Illinois, at the state line of Indiana and Illinois; the railroads of The Wabash Eastern Railway Company, of Illinois, and The Wabash Western Railway Company at the city of East St. Eouis, state of Illinois. The total mileage of all such railroads is 1921 miles of which only 75 is situated in the state of Ohio.
“3. Plaintiffs further say that in like execution of said plan of re-organization, the board of directors of each of said companies so organized as aforesaid in May, 1889, authorized and directed the president and secretary of each of said companies to sign, seal, execute and deliver an agreement for the consolidation of all of said companies into a single company with a capital stock of fifty-two million dollars, (being the aggregate capital stock of the five contracting companies) to be called The Wabash Railroad Company, a copy of which agreement is herewith attached as “Exhibit A.” At a meeting of stockholders of said companies, held in the month of July, A. D. 1889, said agreement of consolidation was duly ratified and approved and every stockholder in each of said companies in writing assented to said agreement of consolidation, and in said month of July, 1889, the said agreement of consolidation was duly filed according to law in the several offices of the Secretary of State for the states of Michigan, Indiana, Illinois and Missouri.
“4. When the said Toledo Western Railroad Company was organized under the laws of the state of Ohio as aforesaid, it duly paid to the Secretary of State of Ohio, the fees or tax required by law to be paid to such officer, the same being $700, or one-tenth of one per cent upon the entire *508capital stock of said Ohio corporation, the same being $ 700,000.
“The entire railroad, lands, structures, improvements, equipment, personal property and assets of every description, situated in the state of Ohio, belonging to said Ohio corporation, was also fully assessed for taxation according to law for the year 1889 and the taxes levied and paid for in such year, amounted to the sum of f 35,452. 55.
“Between the date of the organization of said Toledo Western Railroad Company, in May, 1889, and the execution of such consolidation agreement in July, 1889, the said Ohio corporation, as thereto lawfully authorized by the laws of the state of Ohio and the acts of Congress, in that behalf and in due discharge of its duties as a public carrier for passengers and freight, operated the said line of railroad, extending from Toledo, in the state of Ohio, south-westwardly to the western boundary line of such state, to the junction on such state line with the railroad in the state of Indiana, belonging to and then being operated by The Wabash Eastern Railway Company of such state.
“As such junction between such railroads was on the state line dividing the states of Ohio and Indiana, the only relation which such two railroads sustained to each other, was the reciprocal exchange of Inter-State Commerce, as to the passengers, freight and express matter and also the United States mails; and such two railroad companies, of Ohio and Indiana, in connection with the before mentioned corporation, organized and owning the railroads in Michigan, Illinois, and Missouri, were between May, 1889, and August of such year, operated as a connected and continuous line of railway, extending from Toledo, Ohio, on the east, to Chicago, St. Eouis and Kansas City, Mo., through passenger and freight trains being several times daily forwarded in either direction carrying ü. S. mails, persons, freights and express matter, and the said Toledo Western Railroad Company, during all such period, held itself out to the public as so being engaged in the business of InterState Commerce as aforesaid, as it then and there lawfully had the right to do.
*509“5. Thereafter, about August, 1889, the plaintiffs, in further execution of such plan of reorganization and as trustees for said several corporations, who had theretofore executed the said agreement of consolidation, at his office at Columbus, Ohio, tendered to the defendant Daniel J. Ryan, who was then and there the Secretary of State of the state of Ohio, the said agreement of consolidation and demanded that he should file the same according to the requirements of the statutes regulating the consolidation of railroads, and then and there tendered to the said Ryan the sum of $700.00 in full, for his lawful fees for filing such consolidation agreement.
“The said Ryan then and there wholly refused to receive the said sum of $700 as and for- his lawful fees for filing such agreement of consolidation, and refused to receive and file such agreement of consolidation unless there should be paid him, not only one-tenth' of one per cent, upon the capital stock of the Ohio constituent corporation, but also one-tenth of one per cent, upon the additional gross capital stock of the corporations of Michigan, Indiana, Illinois and Missouri, aggregating the sum of $51,300,000. In order to secure the filing of such agreement of consolidation, by said Ryan as such Secretary of State, the plaintiffs were, on August 1,1889, compelled under duress and protesting that such charge was illegal, arbitrary, and not authorized by any valid law of the state of Ohio, to pay to said Ryan as Secretary of State, the sum of fifty-two thousand dollars, which the said Ryan demanded and received, claiming the said sum to be the legal fees required by the laws of the state of Ohio for filing such agreement of consolidation, and on receipt of such sum of $52,000 the said defendant as such Secretary of State, received and filed such agreement oi consolidation.
“6. Plaintiffs are advised and believe, and therefore sc aver, that the said defendant claims that such charge and exaction of $52,000 was and is a legal fee fixed by law and required to be paid to the Secretary of State for filing such agreement under and according to an act of the Genera] Assembly of the state of Ohio, passed February 12, 1889. *510and entitled “An act to amend section 148a of the Revised Statutes of Ohio, regulating the amount of fees to be charged by the secretary of state for official services.”
“Whereas the plaintiffs claim and will to the court insist that such enactment is a statute merely attempting to levy a tax and raise revenue for the general purposes of the state, and that the same was and is as applied to such an agreement of consolidation,' wholly inoperative and void because contrary to the constitution of the United States and the constitution of the state of Ohio, and that even if such statute is valid, it cannot be construed to have any extra territorial force, and therefore the only subject of taxation within the jurisdiction of the General Assembly of Ohio is the $700,000 capital stock of the Ohio corporation, signing such agreement of consolidation.
“Wherefore the plaintiffs claim that the sum of $51,300 so demanded of them and received by the defendant was an illegal and wrongful exaction, and that the said sum was demanded and received by the defendant and is now kept by him without right and that the plaintiffs are entitled to receive the same, as they notified the said defendant that the same was paid under protest and suit would be brought against him to recover the same.
“Plaintiffs further say that the said Ryan threatens to pay the said sum, so illegally received by him, into the state treasury when the plaintiffs will be unable to recover the same.
“Wherefore the plaintiffs pray that the defendant be restrained from paying the said money into the state treasury untií the final hearing, and,
“That they also have judgment for a return of the money so unlawfully obtained -as aforesaid, and for all further proper relief.”
Henry Crawford and Swayne, Swayne & Hayes, for plaintiff in error.
*511Brief of Henry Crawford.
I. The doctrine is well settled in Ohio and elsewhere, that illegal fees and taxes thus paid under compulsion, can be recovered back. The principle was fully settled in this state by the case of Bdker v. Cincinnati 11 Ohio St., 534, wherein the English cases were" discussed. Stephen v. Daniels, 27 Ohio St., 527; Mayer v. Tel. Co., 28 Ohio St., 521; Wilson v. Pelton, 40 Ohio 'St., 306; Ersldne v. Van Arsdale, 15 Wall., 75; Section 5848, Revised Statutes.
II. The law under which the charge was made, is not a mere police regulation, but an attempted exercise of the taxing power of the state, ánd must be dealt with as such.
It has no single feature of a license or regulating statute.
Plainly, the law under debate, is neither a license law nor does it purport to regulate, in any way, any kind oí business.
Its single purpose is to force the payment of a heavy charge nominally as compensation for the mere filing of a paper by a state officer.
The section also requires that all-such “fees” shall-be paid directly into the state treasury.
These tests leáve no doubt but that the enactment was passed not for any purpose of regulation but with the distinct object of producing revenue for the general uses of the state.
All the authorities concur that when a statutory charge is laid on an occupation, or a license, privilege or franchise, and a fee is exacted, which is evidently not proportioned to the expense of issuing the license, compensating the officer maintaining the department, or regulating the occupation, but for the evident purpose of producing revenue, the law levies a tax on the privilege or occupation. Mays v. Cincinnati, 1 Ohio St., 268; Cincinnati v. Bryson, 15 Ohio St., 625; State v. Hipp, 38 Ohio St., 199; License cases, 5 Wall., 462; Steam Co. v. Portwardens, 6 Wall., 31; Royall v. Virginia, 116 U. S., 572; Butzman v. Whitbeck, 42 Ohio St., 223; Adler v. Whitbeck, 44 Ohio St., 539.
III. The law levying this tax of $ 52,000 does not comply with the state constitution, and is therefore void.
*512If the statute is valid and applicable, the function of the Secretary of State in fixing the amount of the tax involved only simple calculation, and the subject can properly be discussed as though the tax exacted had been specifically laid by the General Assembly.
While the power of taxation is contained in the grant of legislative power, and is therefore plenary, it can only be exercised when and as conferred and restricted by the constitution.
1. The statute imposing this taxation is contrary to Section 5, Article 12, of the constitution of the state.
It is indisputable that every dollar of the very considerable revenue realized, will find its way into the state treasury without any attempt, whatever, to define in advance the object for which the tax was levied and must be used, State v. Ogilive, 37 Ohio St., 1; People v. Kings Co., 52 N. Y., 556; Tel. Co. v. Mayer, 28 Ohio St., 537; District court case, 34 Ohio St., 431.
2. Construed as a tax on occupation levied for state revenue, the law is invalid. State v. Hipp, 38 Ohio St., 199.
3. This tax as laid is not uniform in its operation.
The enactment only attempts to impose a tax upon such corporations or consolidations, as file articles after the passage of the act.
All organizations of the same class in existance prior to the law are allowed to continue their occupations without being subjected to the tax.
It would hardly be contended that a law would be valid which levied an occupation tax on ordinary avocations, to produce state revenue, and yet limited its operation to some arbitrarily selected portion of the class. Bank v. Apthorp, 12 Mass., 252; Oliver v. Wash. Mills, 11 Allen, 279; Fields v. Conners, 36 Ohio St., 476; Cooley on Taxation, 12S; Youngblood v. Sexton, 32 Mich., 406; McMahon v. Palmer, 102 N. Y., 188; Boyer v. Boyer, 113 U. S., 689; Waring v. Savannah, 60 Geo., 597; Durach’s Appeal, 62 Penn. St,, 494; Whitbeck v, Bank, 127 U. S., 193; Yick Wo v. Hopkins, 118 U. S., 356; R. R. Tax. Cases, 9 Sawyer, 165.
*513IV. The state of Ohio has no power, directly or indirectly,' to impose taxes upon a corporation of another state or upon its franchises, capital stock, income or interstate commerce occupation.
Thus far the law has been considered in its relation to corporations and occupations of a purely domestic character and with reference to the conditions imposed by the state constitution.
It is undeniable that up to the filing of the act of merger, while the state of Ohio had the power to levy taxes on the property of the home company within its territory, it had no jurisdiction whatever to impose taxation, by any method, direct or indirect, upon these four foreign corporations or upon their franchises, capital stock, property, occupations or income.
To sustain the statute as interpreted by the state officer, it will be necessary, therefore, for him to establish that the making and filing of the consolidated articles in his office, so radically enlarged the taxing power of the State of Ohio to bring these foreign matters within its rightful jurisdiction.
The proposition that this taxation does, for the most part, practically rest not only upon franchises, capital stock and occupations beyond the state, but also directly and materially affects inter-state commerce, cannot be successfully disputed. Brown v. Maryland, 12 Wheat., 444; Welton v. Missouri, 91 U. S., 278; Cook v.' Pennsylvania, 97 U. S.,-566; Nor. & West Ry. v. Penn., 136 U. S., 114; McCall v. California, 136 U. S., 104; Pickard v. Pull. Co., 117 U. S,, 34; Robbins v. Shelby Co., 120 U. S., 489; Ferry Co. v. Penn., 114 U. S., 196; Fargo v. Michigan, 121 U. S., 230; Leloup v. Mobile, 127 U. S., 640; Ratterman v. Tel. Co., 127 U. S., 411; Cutcherv. Kentucky, 141U. S., 47; Crandalls. Nevada, 6 Wall., 35. -
The same doctrine which assures to the state of Ohio exclusive jurisdiction and sovereignty over persons and property within its territory, wholly excludes its power when attempted to be exercised so as to affect persons and property beyond its limits.
*514This limitation applies to legislative, as well as judicial action, and forbids the imposition of taxes upon subjects lying outside the state.
There is no force in the contention that a privilege tax, rated upon the whole capital stock, expressed in an interstate consolidation, is not in effect a direct assessment upon all its property or income, wherever situate. The money used to discharge such a tax must necessarily be taken proportionately from the income of property and result of business done outside the state. St, Louis v. Ferry Co., 11 Wáll., 423'; People v. Eq. Trust Co., 96 N. Y., 388.
• Did the contract of consolidation and the filing thereof so alter the previous non-taxable condition of such foreign companies that the corporations themselves and their franchises and capital became thereby constructively subject to taxation,- precisely as though they had been incorporated under Ohio laws? Railroadv. Jackson, 7 Wall., 262; Taxon Foreign Held Bonds, 15 Wall., 300.
To concede, therefore, that Ohio by the filing of this paper had obtained rightful taxing power over the franchises, stock and business of the four corporations created by other states, would be to’ affirm that one state had become vested with the unabridged power to destroy the franchises created by another sovereign.
In substance this would be a declaration that the legislation of Ohio could rightfully assert supremacy even beyond its limits over the laws of other states, and that too, not simply as affecting ordinary tangible property, but prerogative franchises derivable only from such other state. Calif. v. Pac. Ry., 127 U. S.’, 41; 125 U. S. 498.
' The secretary’s construction of this law, as approved by the lower court, is evidently based upon the view that the agreement between these inter-state railway companies is to be dealt with as a purely domestic transaction, precisely like a merger of two ordinary trading corporations organized in Ohio. This theory is radically unsound.
Arrangements of this character create in law only a business union and consolidation of interest and management, but there is no surrender of franchise or dissolution of the *515original corporations and no new unit corporation is resultant. Farnum v, Blackstone Canal Co., 1 Sumner, 467; Nashua R. R. v. Lowell R. R., 136 U. S., 356.
An additional and unanswerable reason exists why tbe filing of this article of consolidation cannot be held to have created a new corporation of Ohio with $52,000,000 capital stock, the proper subject of a state privilege tax.
The constitution of Ohio, Art. 13, Sec. 3, prohibits the formation of any corporation by the legislature unless provision is made making each stockholder individually liable for corporate debts.
On what possible theory, consistent with independent state sovereignty, can it be contended that by force of the consolidation, the Ohio statute imposing the personal liability of stockholders had become supreme, and that the holders of $51,300,000 foreign stock included in the transaction had become individually liable. Yet it is clear upon conclusive authority that there is no new Ohio corporation with $52,000,000 capital stock, subject to be assessed with an Ohio franchise or privilege tax unless such individual liability does attach to the whole share capital as thus assessed. State v. Sherman, 22 Ohio St., 411.
These decisions leave nothing to be added. Applying the principles they declare to the facts of this record, and the conclusion is unavoidable, that the consolidation did not determine the existence or change the identity of the original Ohio corporation which signed it. It still continued in existence as an Ohio corporation, with its $700,000 authorized capital stock, and without- any new franchises. There was no creation of a new Ohio corporation with $52,000,000 authorized capital stock.
The original corporations of the other states remained as before, created by and subject to control and taxation solely according to the laws of their respective states.
In law and in fact the situation was unchanged. As the separate identity of the constituent companies still remained, they continued to be foreign corporations and the situs of their franchises, capital stock, and occupation, was in other states and wholly beyond the. taxing jurisdiction of the *516state of Ohio. There still remained the prohibition of the Federal constitution which rendered nugatory all licenses, fees and taxes, imposed upon the business of transporting inter-state- commerce or the income thereof.
The total lack of legislative power to tax the combined capital stock of such inter-state combination is most clearly recognized in Lee v. Sturges, 46 Ohio St., 167, and made the basis for taxing the shares in such bodies held by state residents.
Recognizing that in such cases the taxing jurisdiction of a state is not exclusive, the assessment of public charges has always been levied only upon some approximately fair proportional share of the whole franchise, stock or earnings. State v. Metz, 32 N. J. E., 199; Pitts. Ry. v. Com., 66 Penn. St., 73; Delaware Tax Case, 18 Wall., 206; Erie v. Penn., 21 Wall., 492; West Un. Tel. v. Mass., 125 U. S., 530; Pull. Co. v. Penn., 141 U. S., 18; Sebastian v. Bridge Co., 21 Ohio St.; 451; Bridge Co. v. Mayer, 31 Ohio St., 317.
Even if the conclusion should be reached that the state of Ohio possessed rightful taxing power over some portion of the franchise or occupation of the consolidated company, inasmuch as the single charge exacted rests to a material extent upon subjects not within its jurisdiction, and the law as thus construed has not supplied any basis of apportionment, the exaction as a whole was illegal and void. California v. S. P. R. R., 127 U. S., 45.
V. Properly construed, section 148a does nor authorize the imposition of a unit franchise or organization tax, rated upon the aggregate capital stock of an inter-state railway consolidation.
It has been the purpose of the previous discussion to establish the proposition that the construction of the act under which the f 52,000 was exacted would render the legislation void because it would be an extra-territorial exercise of the taxing power, and also a burden levied upon inter-state commerce.
Courts will decline to adopt a reading of a statute that will render it nugatory, if it can fairly receive a construction consistent with its validity.
*517In seeking the true interpretation of this law it is important to give due weight to the consideration that its sole purpose is the production of domestic revenue, which in the very nature of things is due exclusively from domestic corporations and occupations. Such legislation should consequently be construed in harmony with that governing principle.
If the construction contended for is adopted it is equally competent for the other four states to pass similar enactments, and it will then result that the entire aggregate capital separately created in each state will be subjected to five taxes on its full amount.
No law ought to receive a construction which would render possible such an -oppressive and unconscionable imposition of special public burdens in excess of usual property taxes. Courts will not assume that such a result was intended by the legislature.
It will further aid the proper construction of this law to-read it in pari materia with section 3387, which is original section 8 of the act regulating domestic and inter-state railway consolidations.
A.s it has been held in Jones v. Davis, 35 Ohio St., 474, that the capital stock of a corporation stands as the legal equivalent of the entire corporate property, any legislation assessing the aggregate share capital of the five consolidated roads would, in effect, rest upon the property in each state or the income therefrom.
This construction would be wholly inconsistent with and Operate as a repeal of sec. 3387, which expressly defines the subjects of the taxing power to be the real estate in the state and a mileage proportion of the equipment.
Examining the text of the law itself it will be found that it does not, in terms or by implication, refer to foreign corporations or inter-state consolidations. Riley v. W. U. Tel, 47 Ind., 516; Mayre v. B. & O. Ry., 127 U. S., 117; Treas. v. And. Gen., 46 Mich., 224; Tel Co. v. Lieb, 76 Ill., 172; Railway v. Aud. Gen., 53 Mich., 79; People v. Rice, 33 St., Rep. 1011.
*518J. K. Richards, Attorney General, for defendant in error.
I. The presumption is always in favor of the validity of the law; and it is only when manifest assumption of authority and clear incompatibility between the constitution and the law appear, that the judicial power can refuse to «execute it. Such interference can never be permitted in a doubtful case. R. R. v. Clinton Co., 1 Ohio St., 82, 83; State v. Cincinnati, 20 Ohio St., 33; Marmet v. State, 45 Ohio St., 64; 25 Ohio St., 274.
The power to raise revenue is included in the general grant of legislative-power, 11 Ohio St„ 542; Ohio exrel. v. Covington, 29 Ohio St., 113; State ex rel. v. Smith, 44 Ohio. St., 372; Cooley’s Constitutional Eimitations, 107.
The limitation of section 2, Article 12, Constitution of 1851, applies to the taxation of property and does not pre«clude the legislature from using other modes of raising money for general revenue purposes,
Opposing counsel insist, that because the fees collected under the act are paid into the public treasury without any express limitation on their use, it follows that what is provided is a tax for general revenue; that no tax for general revenue can be levied except in accordance with article 2, •section 12; in other words, that every tax for general revenue must be levied by a uniform rule upon all property .according to its true value in money.
Section 2, of article 12, thus relied on as furnishing the sole rule and authority for levying taxes for revenue, is (says Gholston, Judge, 11 Ohio St., 543) not a grant of power, but a regulation of the power already granted in the first section of the second article.
While it may be conceded, that the principle of equality and uniformity set forth in section 2, of article 12, should ibe observed, as a general principle of constitutional law, in •all legislation looking to the raising of money for public •purposes, yet I contend, that section 2, of article 12, furnishes the rule for levying raxes for general revenue on property only. It provides that laws shall be passed taxing by a uniform rule all property according to its true value in money. It does not furnish the rule for taxing what is *519not property. It does not furnish the rule for raising revenue in other modes than by the taxation of property. Hill v. Higdon, 5 Ohio St., 246; Zanesville v. Richards, 5 Ohio St., 592; Baker v. Cincinnati, 11 Ohio St., 540; Exchange Bank v. Hines, 8 Ohio St., 43; W. U. Tel. Co. v. Mayer, 28 Ohio St., 533, 536; Adler v. Whitbeck, 44 Ohio St., 565; Anderson v. Brewster, 44 Ohio St., 585; Marmet v. State, 45 Ohio St., 68; Cooley Con, Uim., 617.
II. Benefits accrue from the filing of the articles of incorporation or consolidation to those paying the fees, fully equal to the benefits held sufficient to justify assessments.
The burden imposed by the act in question cannot be justified as an assessment, say our opponents, because, first, it is not laid with reference to the special benefit which the property assessed derives from the expenditure - of the money collected; and, second, because it is not of a character recognized and exercised ‘at and before the time of the adoption' of the present constitution. In support of this is cited: Hillv. Higdon and Reeves v. Treasurer of Wood County.
The rule contended for by the other side, as limiting assessments, has not been followed' by the later decisions. Cincinnati Gas Light Company v. The State, 18 Ohio St., 242; Ohio ex rel. v. Covington,29 Ohio St., 113; W. U. Tel. Company v. Mayer, 28 Ohio St., 523; Anderson v. Brewster, 44 Ohio St., 576; Baker v. Cincinnati, 11 Ohio St., 543.
Reference is made to these cases for the purpose of show: ing that the definition of “assessment,” by counsel on the other side, does not cover the whole ground. In one case, one reason is given justifying an assessment, in another case, another. The reason given for one assessment has not been taken as limiting the right of the legislature to make an assessment for another reason, when the reason arose,
But opposing counsel say, there is no relation between, the charge made and the benefits received by the persons of corporations who pay under this law; that the filing of' articles of incorporation or consolidation, is not for the benefit of incorporations, but an imposition upon them for *520the protection of the public against the acts of those who usurp the franchises of corporations.
This argument, apparently, is on the theory that the granting of franchises by the state, is a perfunctory act; that persons have some inherent or inalienable rights to make themselves a corporate body and invest themselves with corporate franchises, irrespective, except in the most formal way, of legislative authority; that, virtually, the state has no power of control or restriction in respect of the creation of corporations, but that, at the mere will and pleasure of‘'private individuals, corporations, infinite in variety and boundless in extent, may be called into existence, •clothed with all the peculiar powers of these political entities. Such is not the view taken by the constitution and the law. Constitution, article 1, section 2; article 13, section 2; Revised Statutes, section, 3235, 8239; section 3382. See also section 3384b, as amended April 11, ,1890, 87 Ohio Raw, 184,
III. The benefits conferred by the grant of corporate power, and the burden imposed on the State of controlling and restricting its exercise, justify the charge.
It is urged that the charge cannot be sustained as a license, because there is no just relation between the charge made and the expense or inconvenience to the government for the benefit of the incorporators or corporation, In other words, that the charge is extortionate. Baker v. Cincinnati, 11 Ohio St., 544.
The benefits to individuals from being incorporated have been mentioned. The expense and inconvenience to the government in supervising corporations, controlling their operations, and seeing they do not transcend their powers to the prejudice of individual enterprise, is a thing impossible 'accurately to ascertain, and as to which the legislature, acting for the people, has alone the right to speak. Marmet v. State, 45 Ohio St., 67, 68.
IV. The fees are for official service in granting a franchise, not in merely filing a paper.
In filing articles of incorporation, the Secretary of State acts for and on behalf of the state, not on behalf of the *521individuals who desire to become incorporated, The official service he performs as the agent of the state, is to-create a corporation. This is the immediate result of the filing of the articles. The official services- rendered by the Secretary Gf State under this act,, is but another description for the granting of franchises by the state. It is for official services in granting a franchise, in conferring a privilege which the state alone can confer, that the general assembly,. by this act,- representing the state and the people, has seen fit to make the charge imposed. For such services, the charge is not excessive. It is moderate. Many states, for the same service, in conferring the- privilege of corporate existence, require an annual payment to be made during the life of the corporation.
V. There are two broad grounds for sustaining the act. (a,) Power to regulate corporations, (b.) Power to raise revenue, 11 Ohio St., 544; 28 Ohio St., 540; 44 Ohio St.,. 562; State v. Gcczley, 5 Ohio 22.
(a.) The granting of corporate franchises resting entirely within the discretion of the general assembly, under the power to regulate corporations, a contribution to the state. may be exacted, as by the act in question, as a condition of the grant. Article 13, constitution; 37 N. Y., 365; Fire Department of Milwaukee v. Helfenstein, 16 Wis., 136; Leavenworth v. Booth, 16 Kan. 627; W. Ü. Tel. Co. v. Mayer, 28 Ohio St., 523; Californian. Pacific Railroad Company, 127 U. S., 40; Home Insurance Company v. New York, 134 U. S. 599; Monroe Savings Bank v. Rochester, 37 N. Y., 365.
(b.) The raising of revenue being a recognized purpose of government, the legislature, under the general grant, may exact this contribution, which is not imposed on property, but charged for franchises, and is equal and uniform, exacted from all obtaining corporate privileges, and in proportion to the measure of the privileges obtained. Cooley Con. Rim. 619.
I have cited the leading Ohio cases to the effect that the limitation of section 2, article 12,-'is on the power to raise revenue by the taxation of property, and that other proper *522modes of raising revenue may be resorted to by the legislature.
The problem of so framing the laws as to compel corporations to bear their fair share of the increased burdens of the state, is a difficult one. The property rule of taxation has not reached the valuable rights, privileges and franchises, through the enjoyment and exercise of which corporations have grown immensely rich. The effective mode of raising revenue from corporations is to base the charge on the privilege or franchise in one way or another, — to annex as a condition to the privilege of corporate existence, the payment of a contribution to the state. Reading Railway Company v. Pennsylvania, 15 Wall., 284;77z<? Railroad Tax Case (Delaware), 18 Wall., 206; State Railroad' Tax Cases, 92 U. S., 575; Home Insurance Company v. New York, 184 U. S., 594; California v. Pacific Railroad Company, 147 U. S., 41; Provident Institution v. Mass., 6 Wall,, 611.
VI. Answer to additional points of Mr. Crawford, counsel for Wabash system.
1. The act dose not violate section 5, article 12, of the constitution. Leavenworth v. Booth, 16 Kans., 627; 11 Ohio St., 544; 21 Ohio St., 1.
2. An equal and uniform contribution is required under the act.
3. No tax is imposed by the act upon any corporation of another state or upon its franchise or property; nor is there any burden laid upon inter-state commerce.
(a.) The effect of filing articles of consolidation in Ohio is to create a new corporation. For the franchise thus granted, the charge under the act is made.
The result of filing articles of consolidation in Ohio, must be determined by. the provisions of Ohio law. Whether the constituent companies be Ohio corporations, or partly Ohio and partly foreign corporations, the consolidation is an Ohio consolidation, made under Ohio law, and possessing the rights and privileges conferred by the Ohio statutes. Sections 8379 et seq.; Lee v. Sturges 46, Ohio St., 153; Shields v. Ohio, 95 U. S., 324; 114 U. S.,587; *523Nashua v. The Lowell Railroad, 136 U. S., 356; State; Treasurer v. The Auditor General, 46 Mich., 224.
(b.) The act in no way interferes with or places a burden on inter-state commerce.!
An act relating only to the terms upon which corporate capacity in various shapes may be conferred by Ohio laws, a measure regulating and controlling the granting of corporate privileges by this state, has no proper connection with the business to be carried on by the companies when incorporated.
The dollar-a-mile act was an invalid tax on property, and in no respect akin to the law under consideration.
A brief was also filed in the case by Merrick & Tompkins, attorneys for The Pittsburg, Akron & Western Railway Company, who had a like case pending in this court.
A brief was also filed by Watson, Búrr & Livesay, attorneys for The Pittsburgh, Cincinnati, Chicago & St. Rouis Railway Company, who had a like case pending in the court of common pleas of Franklin county.
MiNSHARR, J.
The plaintiffs base their right to relief upon the invalidity of the law under which the money paid by them, was exacted by the Secretary of State. The statute was passed February 12, 1889, and is an amendment of sec. 148a, Revised Statutes, fixing the fees which the Secretary of State is required to charge'for “official services.” It is divided into various paragraphs. The first fixes the fee for filing articles of incorporation of any corporation whose capital stock is over ten thousand dollars, at one-tenth of one per cent, upon the authorized capital of the company.
The third paragraph reads ás follows:
“For filing articles of- agreements of consolidation of corporations having a capital stock, the following fees shall be collected by the Secretary of State: Said articles of agreements of consolidation shall be treated as the articles of incorporation of the new consolidated corporations created by such articles or agreements of consolidation, and the fees for filing such articles or agreements of consolidation, *524shall be the same in each case as is hereinbefore set forth for the filing of articles of incorporation of a corporation having the same amount of capital stock, as is provided for by the articles or agreements of consolidation for the new consolidated corporation, created by any such articles or agreement of consolidation; and in fixing the amount of such fees, no credit shall be allowed for fees previously paid by any of the constituent corporations, parties to such consolidation, but the same shall be determined solely by the amount of capital stock of the new corporation created by such articles or agreements of consolidation.”
The fees are required to be paid into the state treasury, and the secretary is prohibited from filing or recording such articles until the fees have been paid. '
The first objection to the statute is, that it imposes a tax, not authorized by the constitution of the state; and the second is, that, as to the plaintiffs, it imposes a burden upon inter-state commerce, and is, therefore, in violation of the constitution and laws of the United States.
1. In support of the first objection the second and fifth sections of the twelfth article of the constitution, are cited. We think it well settled that the second section simply relates to the taxation of property; and unless it can be shown that the sum exacted of the plaintiffs is such a tax, it has no application to the case. Much stress is placed upon language to be found in the opinions delivered in Exchange Bank v. Hines, 3 Ohio St. 1. The question there, however, was not as to whether the tax complained of was a tax on property, but whether the bank was entitled to deduct its debts from its moneys and credits. The decision of that question in no way involved the question as to the limit of the power of taxation conferred on the General Assembly by the general grant of legislative power. This question arose and was fully considered in the subsequent case of Baker v. The City of Cincinnati, 11 Ohio St. 534. It was there held that the provision of the constitution requiring all property to be taxed by a uniform rule, was simply a limitation on that mode of taxation, and does not necessarily exclude taxation upon that which is not property, nor *525cover the whole ground within the limits of the taxing power; and that “If there be a species of taxation, or a subject matter of taxation, not embraced in that section, there is nothing in it by which they are prohibited or excluded.” The learned judge, delivering the opinion, then proceeded to show, that the taxing power is embraced, in the general grant of legislative power, and'is as ample, except where restrained by express provisions, as the object and purposes of the state government. The doctrine of this case has never been questioned as a sound exposition of the constitution on the subject of taxation, and has since been followed in numerous cases: Gas-light Co v. The State, 18 Ohio St. 237; Telegraph Co. v Mayer, 28 Id. 521; Adler v. Whitbeck, 44 Id. 565; Anderson v. Brewster, Id. 585; Marmet v. State, 45 Id. 68.
The recent decision in Railway Company v. State, is not in conflict with these cases. There the tax was upon property, levied by its miles in length, and hence not permissible under the provision of the constitution requiring all taxes on property to be levied by a uniform rule according to its true value in money. Whether the sum required by this statute for filing articles of incorporation be termed a fee, a tax or an assessment, is, we think, immaterial, for it is clear that it is not a tax on property. The filing and record of such articles is simply an authority or license to the persons filing them to form a corporation, and the sum paid therefor is the consideration demanded and paid the state for the grant of the right to be a .corporation. We fail to perceive anything in the principles of government or sound policy, that should forbid the state from making such an exaction, even for the purposes of general revenue. The franchise is valuable to the corporators, or, it is fair to assume, it would not be sought; and that the burdens of government are greatly increased by the formation of corporations, is daily seen in the business of the courts and the police establishment of the state.. It is further claimed that the exaction made by the statute violates that principle of equality that should underlie all taxation. That this principle should not be disregarded is clear; but perfect equal*526ity is not attainable in any system of taxation. This, however, is equal in the sense that it applies to the formation of all incorporated companies, and is imposed according to the amount of the capital of each; and in this respect it is neither unequal nor unusual. Cooley Const. Eim. 608. The fact that it does not apply to companies already formed, does not make it unequal. If that were so then a change in any fee bill, or rate of charges, would be open to the same objection. The law operates upon the future, and its equality must be determined by the future and not the past.
It is also claimed, that the statute is void because it does not state the object for which the tax is imposed, as required by section 5, of article 12, of the constitution. It may be questioned whether this section has any application to the case. Baker v. Cincinnati, 11 Ohio St. 544. But, if it does, the objection is met by the provisions oí section 181a, Revised Statutes, that “all money paid into the state treasury, the disposition of which is not otherwise provided for by law, shall be credited by the Auditor of State to the general revenue fund.” It is not necessary that the object should be stated in the very statute imposing the tax; it is sufficient, we apprehend, if the object distinctly appear from the statute read in connection with some other provision found elsewhere in the statutes of the state. And, if the raising of a fund for general revenue purposes,, had been expressed in section 148a as amended, the purpose of the exaction would, have been no more definitely stated, than it is by reading that section in connection with section 181a.
We now inquire whether the statute is a restraint upon inter-state commerce, The Wabash Railroad Company as consolidated, embracing a system of roads located in Ohio, Michigan, Indiana, Illinois, and Missouri. The powe'r to regulate commerce between the states, belongs without doubt to the Congress of the United States; the states cannot interfere with or regulate it in any way. But the duty of the states in respect to such commerce -is passive and not active. No state is under any federal obligation to *527furnish highways, nor to create agencies of any kind, for the purpose of faciliating inter-state commerce. The grant of the right to be a corporation is within the sovereign discretion of the state, and cannot be controlled by any other power, state or federal. As it may create or withhold such franchises at its pleasure, it may grant them upon such conditions as best suit its own notions of convenience and policy. Hence the state violates no federal Euty toward non-residents, whether corporate or natural persons, in refusing them corporate franchises or in making an exaction for the grant of the same, simply because such persons may have the control of a system of railways used in inter-state commerce. “The right or privilege,” says Justice Fibrd, “ to be a corporation, or to do business as s(uch body, is one generally deemed of value to the corporators, or it would not be sought in such numbers as at present. It is a right or privilege by which several individuals may unite themselves under a common name, and act as a single person, with a succession of members, without dissolution or suspension of business and with a limited individual liability. The granting of such right or privilege rests entirely in the discretion of the state, and, of course, when granted, may be accompanied with such conditions as its legislature may judge most befitting to its interests and policy. It may require, as a condition of the grant of the franchise, and also of its continued exercise, that the corporation pay a specific sum to thé state each year, or month, or a specific portion of its gross receipts, or of the profits of its business, or a sum to be ascertained in any convenient mode which it may prescribe.” Insurance Co. v. New York, 134, U. S. 599. And so, in Monroe Savings Bank v. Rochester, 37 N. Y. 365, it is said, “It must be régarded as sound doctrine to hold that the state, in granting a franchise to a corporation, may limit the powers to be exercised under it, and annex conditions to its enjoyment, and make it contribute to the revenues of the state. If the grantee accepts' the boon it must, bear the burden. ”
*528The fee required to be paid for the filing of such articles, can, in no proper sense, be said to be a tax upon the business of commerce .between the states. No commodity is taxed directly or indirectly; and the business of the Wabash system is in no way hindered or embarrassed. It is not required to become a consolidated company under the laws of Ohio; nor is the transaction of its business made to depend upon its filing such articles and becoming a corporation. It can continue its business with the same freedom in the state, whether j.t incorporates or not under its laws. That the franchise of being a corporation under the laws of this state would be fruitful of advantages to those who own and operate the Wabash system, may well be inferred from the fact that they are anxious to obtain it. And the state is in no way averse to making the grant; it simply requires that its terms be complied with; and, as we have shown, that it is under no federal obligation to make such grant, there is no ground upon which they can, as we see, object to the terms.
The further claim is made that, by filing the articles of agreement of consolidation of the companies composing the Wabash system, no “new corporation” is created; and, therefore, the provisions of section 148a, as amended February 12, 1889, do not apply to them; that this section only applies where all the companies entering into the consolidation are Ohio companies. If this «were so, then the plaintiffs should not have presented their articles to the Secretary of State to be filed and recorded. But we are of the opinion that it is not so, and that a new company is formed in the one case as well as in the other. Referring to the Revised Statutes on the subject of “consolidation,” it will be observed that section 3379 authorizes the consolidation of Ohio companies and that the next authorizes the consolidation of a company in this state with a company in an adjoining state. The next section, 3381, provides how the consolidation is to be effected, and applies without distinction to either case. It is then provided by section 3382, that when iMta^^ement is made and perfected, and the same, or a copy filed with the Secretary of State, “the several *529companies parties thereto shall be deemed and taken to be one company, possessing within this state all the rights, privileges and franchises, of a railroad company.” And by section 3384 it is provided that, upon the election of the directors of the consolidated company, all and singular the rights, privileges, franchises and property of the companies who are parties to, the agreement, shall be transferred to and vested in the “ new company without furthur act or deed.” The result is that by consolidation, whether between Ohio companies or between an Ohio company and companies of another state, a new company is formed by the extinguishment of the old ones. And it has been so determined in a number of cases. Shields v. Ohio, 95 U. S. 324; Compton v. Railway Co. 45 Ohio St. 592, 615; Lee v. Sturges, 46 Id. 163, 169.
In the subsequent sections the company formed by consolidation is designated as “the new company.” The stockholders of the old company become stockholders in the consolidated company except such as refuse to convert their stock into the stock of the latter company. One who refuses to do so, is paid the highest market value of his stock at any time within six months preceding the making of the agreement, to be determined, where the parties cannot agree, by arbitration. But those who voted for the agreement are estopped to refuse, so that there can be no such thing as a consolidated company without stock.
Many difficulties have been suggested, as arising, if a company, formed by the consolidation of an Ohio company with a company of another state, should be held to be a new corporation. We would have, it is claimed, the anomaly of a corporation with a capital stock, without the individual liability of the stockholders. The fallacy consists in the assumption, for such wrould not be the case. There has been some diversity of opinion as to the status of a corporation formed by the consolidation of companies under the laws of different states. But it seems pretty well settled, upon principle at least, that where formed under co-operative legislation of the different states, it becomes a corporation in each state where its- road is located. It is a legal *530entity residing and doing business in different states, with a status in each, derived from and determined by the laws of that state. If by the laws of one of these states an individual liability attaches to the holder of stock in an incorporated company, the same liability will attach to its stockholders. The liability will, • in this regard, depend upon the laws of the state, where it is- sued. Whatever may be the holding in other states, there can be no doubt but that in Ohio the stockholders of an incorporated company, however formed, are individually liable for its debts to the extent fixed by statute. The stockholders of the company in the other states, must be presumed to know what the Ohio'law is in this regard; and by agreeing to consolidate with an Ohio company, must be presumed to assent to the individual liability attached by Ohio law to the ownership of stock in an Ohio company.
Judgment affirmed.