Philadelphia v. Philadelphia & Gray's Ferry Passenger Railway Co.

The opinion of the court was delivered, March 26th 1866, by Read, J. It is conceded that, according to the original act of incorporation of this company, the verdict and judgment below are correct, the dividends being calculated on the capital stock paid in, and the sum due to the city by the 4th section of the charter being ascertained on that basis. The sums due the city for the years 1861, 1862 and 1863 were never paid by the company. These sums thus to be annually paid into the treasury of the city of Philadelphia for the use of the said city are not called taxes, but simply sums to be paid on the dividends declared by the company — who used the streets of the city which had been graded and paved at the expense' of the citizens of Philadelphia, and not of the company who laid their rails upon them. This charter was for twenty years, and its dividends were upon the capital paid in of $159,312, and not upon its authorized capital of $500,000, of which, as capital, $340,688 had no existence whatever; and yet in 1863 the dividends actually declared on paid-up capital, the only money invested in the enterprise by the stockholders, were about 20 per cent., all raised out of the people of the city of Philadelphia for the sole benefit of this corporation. [180] On the 16th April 1864, Pamph. L. 662, a supplement to this act was passed, but not signed by the governor. After giving certain extensions and connections, the Sd section enacts that “ the charter of the company shall be and is hereby made perpetualthat is, this company is to have the streets they occupy for ever. The 4th section is studiously ambiguous. It allows the president and directors “ to reduce the number of shares by substituting full-paid shares in proportion to the instalments actually paid in, so that the certificates for each share of stock hereafter issued shall represent twenty-five dollars of the capital paid in.” That is, the then number of shares is to be reduced to what will represent the paid-up capital of, say $160,000, or sixty-four hundred shares fully paid up, leaving thirteen thousand six hundred shares to be issued; and each of these certificates for each share of stock thereafter issued shall represent $25 of capital paid in. The meaning of this provision, to persons who are not professional financiers, would be that all shares thereafter issued must be paid for by at least its par value, which would be added to the capital before paid in. Then follows an explanatory proviso, which really explains nothing. “ Provided that the right to issue the whole or any part of the whole number of shares authorized to be issued by the charter shall not be thereby impaired.” This provision was useless, except to introduce the word “authorized,” for it added nothing to the preceding part of the section permitting the future issue of thirteen thousand six hundred shares. And then follows another proviso, “ That the tax on dividends to be paid to the city shall not thereby be increased.” This is clearly prospective; and then, following all these prospective enactments and provisoes, comes another prospective one, “ And it is hereby declared to be the true intent and meaning of the act of incorporation in reference thereto, and the same shall be so construed as to apply to the authorized capital of the company ;” that is, to the capital as regulated by this act, which appears to contemplate that every share issued shall be a paid-up share. Whatever, therefore, is the true meaning of this purposely obscure section, it is clear that it is prospective in its intention, and does not reach the sums actually due to the city before its passage, and which are never called taxes until the word is slipped in here. The whole of such legislation is erroneous, and we are not bound to carry the words in such cases beyond their natural meaning. Judgment affirmed.