Commonwealth v. Pottsville Water Co.

Mr. Justice Mercur delivered the opinion of the court, It is well settled law, that an act of incorporation is a contract between the state and the stockholders. A subsequent grant of additional powers does not necessarily stand on the same high grounds. The original charter of this defendant gave quite limited powers, and authorized it to commence operations with a small capital. At first it supplied the borough of Pottsville with water from a spring within the borough. A supplement increased its capital to $50,000, and authorized it to bring water from outside the borough. Afterwards the Act of 18th February 1854 changed the charter in many important particulars. The capital stock was thereby increased to $200,000, and it was authorized to so enlarge and extend its works as to supply with water two other boroughs, and two other towns; to enter into contracts with those boroughs for the payment by them of specific dividends on the additional [522] cost of supplying them with water. Those boroughs were authorized to subscribe stock and give their bonds to secure the payment of the dividends for which they became responsible. The act further declared “the stock in said company shall be exempt from all taxation whatsoever.” When this act was passed there was no constitutional inhibition against the exemption. The stock now sought to be taxed was subscribed and paid for after the passage of this act of 1854 and under its provisions. Under the powers therein given the corporation extended its works several miles up a stream to procure water, and supplied the boroughs and towns in accordance therewith. The later Act of 12th April 1855 authorized the company to borrow $50,000 to carry on its work. Thus it is shown, the powers of the company inducing large expenditures, were increased and changed by the supplement' of 1854. They were accepted and acted upon. Several other municipalities were brought within the operation of those new powers, and became obligated to the performance of legal duties consequent thereon. The enlarged duties and obligations imposed by the act substantially created a new corporation. It is no answer to say the corpóration was not bound to assume those new powers and duties. That is true, yet it did assume them. Relying thereon it made large expenditures. With as much force it might be said the company was not compelled to accept the original grant of its charter. Its rights are not thus to be determined. Although free to accept or reject, yet having accepted all the rights and exemptions given by the act follow. The learned judge correctly held the stock of the company exempt from taxation. Judgment affirmed.