State ex rel. St. Louis, Kansas City & Colorado Railroad v. Cook

VALLIANT, J. The relator is a railroad company incorporated under the laws of Kansas. It has applied to the defendant, the Secretary of State, for a certificate to authorize it to do business as a foreign corporation in this State, as provided by section 1025, Revised Statutes 1899, but the application has been denied, on the ground, among others, that the relator has not paid incorporating taxes and fees equal to those required of similar corporations organized under the laws of this State as the statute requires, and this suit is brought to obtain a writ of mandamus to require the Secretary of State to issue the license. The petition shows the following facts: That the relator was incorporated in Kansas in 1884, to construct and operate a standard-gauge railroad from a point in the western line of Seward county, Kansas, through certain counties named in Kansas and Missouri, to the Union Depot at Kansas City, thence through certain other counties in Missouri to the city of St. Louis. That in 1887 the charter was amended, increasing the number of directors and changing the line of the proposed road, beginning in the city of St. Louis and running through certain counties specified to Kansas City, with several other routes branching off from that and other branches, one of which was aimed to reach Fort Scott, Kansas, another Ottawa, Kansas, and another Girard, Kansas. That prior to April 21,1891 (the date of the act prescribing the terms on which a foreign corporation is entitled to a license to do business in this State), relator “had built its line of railway into this State, having theretofore built its line of railway in this — 354 — State from the city of St. Louis to the town of Union, in Franklin county,” and that the proportion of its capital stock represented by its property located and its business transacted in this State was $1,600,000, and that on February 11, 1902, the date of the application to the Secretary of State for a license, that proportion had increased by expenditures extending the road, to $1,939,000. That having thus built its road into this State, relator is entitled to the certificate and license upon paying the fee of $1.50 prescribed by law for issuing the same without paying any sum, as for the quasi-incorporating tax under the proviso to section 1025, which is: “that the requirements of this article to pay incorporation tax or fee shall not apply to railroad companies which have heretofore built their lines of railway into or through this State. ’ ’ That relator had duly tendered to the Secretary of State copies of its charter and the amendment thereto, together with the affidavits of its president showing its place of business in this State, the proportion of its capital stock as above specified employed here, and that it was not in any pool or trust, etc. That at the same time relator tendered to the Secretary of State the legal fee of $1.50 for issuing the certificate, and tendered for payment into the State treasury $825 as for the incorporating tax on $1,600,000 if it should be held that relator was liable for such tax on the amount of its capital stock invested in the road from St. Louis to Union, and the sum of $995 if it should be held that it was liable for such tax on the amount of its investment in this State up to the date of the application. That the Secretary of State refused these tenders and refused to issue the license. The prayer is for a writ of mandamus to require him to do so. The defendant being informed of the filing of the suit, waived the issuance of an alternative writ, and demurred to the petition. The questions, therefore, for decision are those arising out of the petition and demurrer. I. The regular course of procedure would have been to let the alternative writ issue and raise the ques — 355 — tions arising on its face by a motion to- quash, bnt as both sides have preferred to present tbe issues in this form, we will so consider them. II. Tbe main ground on wbicb tbe demurrer is rested, is, that on tbe facts stated in tbe petition, tbe relator is not entitled to tbe certificate or license demanded, because it bas not paid into tbe State treasury tbe amount of tbe tax or fee that a railroad company .asking to be incorporated under tbe laws of this State, with tbe same or similar rights, would be required to pay. Under section 21 of article 10 of our Constitution, no corporation, unless formed solely for benevolent, religious, scientific or educational purposes, can be created under tbe laws of this State until tbe persons seeking to be incorporated shall “pay into tbe State treasury fifty dollars for tbe first fifty thousand dollars or less of capital stock, 'and a further sum of five dollars for every additional/ten thousand dollars of its capital stock. And no such corporation, company or association shall increase its capital stock without first paying into tbe treasury five dollars for every ten thousand dollars of increase. ’ ’ Section 764, Eevised Statutes 1879 (we quote from 'the revision of 1879, because that was the law when relator’s rights accrued), prescribing tbe conditions upon which railroad companies may be incorporated, declares that tbe articles of association shall state among other things: “tbe amount of tbe capital stock of tbe company, wbicb shall not be less than ten thousand dollars for every mile of standard or broad-gauge, nor less than five thousand dollars for every mile of narrow-gauge road constructed or proposed to be constructed, ’ ’ ■etc. Section 782, Id., confers on such corporations the right of way through tbe unimproved lands of tbe State and prescribes tbe mode of obtaining tbe right of way through tbe State’s improved lands and lands belonging to cities and towns. Sections 893, Id., and following, make provisions — 356 — for the condemnation of private property for the use of the railroad company. In addition to the comity under which foreign corporations are admitted to this State, section 790 of the same revision enacts: “Any railroad company duly incorporated and existing under the laws of an adjoining State of the United States, may extend, construct, maintain and operate its railroad into and .through this State, and for that purpose shall possess and exercise all the rights, powers and privileges conferred by the general laws of this State upon railroad corporations organized thereunder, and shall be subject, to all the duties; liabilities and provisions of the laws, of this State concerning railroad corporations as fully as if incorporated in this State.' ’ Under the generous invitation there extended, if' a railroad company chartered under the laws of Kansas,, owning a railroad in that State directed towards our border, desired to extend its road into or through the State, it was welcome to do so; the right of way through lands of the State was given, the power to condemn private property for railroad purposes was conferred and all other rights and privileges afforded a domestic railroad corporation were given, for all which no incorporation tax or fee was required. Acting upon that, invitation a railroad company could have been incorporated under the laws of Kansas to build and operate a road from Fort Scott to St. Louis, with such meanders or branch routes through this State as the company might desire, covering, as the relator does, a line or lines of more than 800 miles, for which a domestic corporation would have to pay an incorporation fee estimated at $5 for every $10,000 on a capital of $8,000,000. This would seem to be an unjust discrimination against a domestic corporation, but as long as our Legislature' was satisfied with the law and its effect, no one else could be heard to obj ect. Under that law and before the amendments thereto presently noted, several railroad companies incorporated under the laws of other States had extended their roads across our borders and into — 357 — and through this State. Such was the law when the relator came into this State with its Kansas charter and constructed that part of its road which is now in operation from St. Louis to Union, and so the law continued to be until 1891, and so it is to-day, except as changed by the Legislature in 1891 and 1895, by enactments which now constitute sections 1021 and 1025, Revised Statutes 1899. . The object of those enactments was to prescribe certain conditions to be observed by foreign corporations before they would be permitted to come into the State to transact business, or continue their business if they were already here. Among those conditions are that the corporation shall file with the Secretary of State a sworn statement showing “the proportion of the capital stock of said corporation which is represented by its property located and business transacted in the State of Missouri, and such corporation shall be required to pay into the treasury of this State, upon the proportion of its capital stock represented by its property and business in Missouri, incorporating taxes and fees equal to those required of similar corporations formed within and under the laws of this State.” But that section contains this proviso: ‘ ‘ That the requirements of this article to pay incorporation tax or fee shall not apply to railroad companies which have heretofore built their lines of railway into or through this State.” The relator takes the position that having built its road from St. Louis to Union prior to 1891, it is exempt from the incorporation fee required by that section and is entitled to the certificate or license mentioned therein upon payment of the fee of $1.50 for the issuing of the same. To that the Secretary of State does not agree. In order to understand the meaning of the clause in the Act of 1891 exempting foreign railroad companies who, under the previous law, had built their roads into or through the State, we may call to our aid the situation of such roads at that date in this State. It is a fact of common knowledge, of which the court may take cognizance, that in 1891, there were several foreign — 358 — railroad companies which had theretofore approached our borders with their roads and, under the express leave of the statute above quoted, had extended their lines into this State, some crossing it from one side to the other, some penetrating it to St. Louis, some to Kansas City, and some to other points. Those roads in 1891 were not in prospect merely, nor was the building of them just begun, but they were accomplished facts, and the respective railroad companies were transacting their business over them. Then when the Legislature came to pass the act requiring foreign corpora-ions to pay into the State treasury “incorporating taxes, and fees equal to those required of similar corporations formed within and under the laws of this State, ’ ’ calculated on a basis of the proportion of their capital stock represented by the business transacted here, it was confronted with the situation above described. Those companies had extended their lines into or through this State on express invitation, and in consideration of that fact the Legislature deemed it but right to exempt them from the tax imposed in that act on other corporations. Besides that, there were other facts which, viewed from a revenue standpoint, justified the Legislature in making a class of such railroad companies and exempting them from that particular tax. Those roads, as we have seen, were accomplished facts. But suppose the Act of 1891 found a railroad in course of construction, suppose the charter called for a road from Fort Sco,tt to St. Louis with meanders or branches covering, as relator’s charter does, more than 800 miles in this State, representing according to our law $8,000,000 capital stock, upon which a domestic corporation would have to pay an incorporating tax of $4,-000, and suppose the construction starting at Fort Scott had advanced to and across our State line to a point five miles within this State; did the Legislature intend that the company should be allowed thereafter to construct its 800 miles of road and be exempt from paying the incorporating fee on the theory that it had already built its road into this State? Those companies which — 359 — had already built their roads into this State were absolutely exempt from that tax. But can it be said of a company that it had already built its road when its charter designated particular routes measuring 800 miles, of which it had constructed only five, ten or fifty miles ? Is that what the statute means ? If so, then the part already built must, for all the purposes of that statute, be taken as the whole road. The company can not, for the purpose of relieving itself of the tax imposed by the statute, say this fifty miles constitutes its road, and then for the purpose of obtaining the license authorized by the statute, say it constitutes only a small part of its road. If one of the foreign railroad companies owning railroads built prior to 1891, reaching from St. Louis to Kansas City, should now seek to build a new line over a route not before occupied by it, it could do so only on the same terms that a domestic corporation could. And so a company Mound with an unfinished road when the Act of 1891 went into effect, if it was entitled to any exemption from the incorporating tax therein required, it was so only to the extent to which' it had then built its road into the State, and as to its future building it must stand on a plane with domestic corporations and with other foreign corporations who might now seek to build over new routes. The Act of 1891 (sec. 1025, R. S. 1899), does not require the foreign corporation to pay the tax on all, but only on “the proportion of its capital stock represented by its property and business in Missouri.” Relator construes this to mean that if it is liable to pay any such tax at all, it is so only on that part of its capital stock represented by its property and business in Missouri, which, it says, is the cost of the construction and equipment of the road from St. Louis to Union, that is, $1,600,000. The statute requires the foreign corporation to file with the Secretary of State a sworn statement showing the proportion of its capital stock represented by its property and business in this State and the relator has filed a statement showing that amount to be $1,600,000 — 360 — represented in the road bnilt from St. Lonis to Union. The statement is doubtless correct as an estimate on that basis, but that is not the proper basis on which to estimate the proposition of a railroad company’s capital stock invested in this State. Section 1034, Revised Statutes 1899, fixes the minimum of $10,000 a mile as the capital stock for standard-gauge roads, and whilst the capital stock may go over, it can not fall under that sum. The relator’s charter shows that its capital stock is $20,000,000 and the total length of its road 900 miles, of which 850 are in this State. Our statute will estimate at least $8,500,-000 of that capital as appertaining to the relator’s business in Missouri. In fact, if $1,600,000 is the proportion of relator’s capital represented by its business in Missouri, then that sum has all been expended in the construction and equipment of the road from St. Louis to Union, the relator in such case is without any other capital stock available for use in this State, and its whole corporate capacity is absorbed in that fifty or sixty miles of road. The relator must elect to be confined to those limits, or else it must own to a capital stock of at least $10,000 for each mile of standard-gauge road it aspires to in this State. Railroad corporations are a class in themselves, having peculiar rights and corresponding liabilities, and they are often treated as a class by the lawmaking power. The Act of 1891 covers (with the exceptions mentioned) foreign railroad corporations as well as foreign manufacturing corporations, but when the railroad company comes into the State, having complied with the requirements of that act, it becomes immediately clothed with powers and valuable rights, not possessed by corporations of any other kind. It may invade private property to survey and mark out its lines, make and file maps of its route, and thus mark as for its own lands to be taken by condemnation, the power for which is conferred. In this way when it has surveyed its lines, located its route and filed its maps and profiles, it acquires a right, over any other railroad — 361 — ■company, to condemn that land and build its road along that route. Thus a substantial right accrues to the ■corporation extending over all its surveyed and located lines in the State. The law does not undertake to put .a separate value on that indefinite, inchoate right; it-assumes that the railroad company which acquires it will by use of it build its road, and will not listen to the company, while holding that right, to question its ■own ability or purpose to do so. It will conclusively presume against a railroad company demanding the right to.build a standard-gauge road that its capital is not less than $10,000 a mile. This we will take to be the proportion of the capital stock of the relator represented by the business it purposes to transact within this State. Since, as we have concluded, the building of that part of relator’s road which extends from St. Louis to Union is not sufficient to exempt the relator entirely from the tax or fee required by the Act of 1891, and ■since the cost of that part of the road is not to be taken as the proportion of relator’s capital stock employed in this State, it is not absolutely certain that relator is entitled to have any benefit in this suit of that $1,600,000. But, as. before observed, the property and business ■of a railroad company differ from those of all other corporations, and we must consider that peculiarity in this instance. If a corporation of any other character were found doing business here after the Act of 1891 took effeet, without having complied with its terms, it would be subject to the penalties imposed by the act, because it was intended by the lawmakers that such corporations, if they did not care to submit to our terms, were free to cease their operations here and return to their homes. But that intention could not apply to a railroad company then owning and operating fifty or sixty miles of railroad in this State. To forbid such a company to continue to transact its business within the State worxld be to destroy its property. That our Legislature never intended to do. "Whatsoever sum the relator may have expended in further construction since the Act of 1891 — 362 — went into effect, will be presumed to have been expended with the intention on the relator’s part of complying with the law and will be taken as a part of its capital stock employed in this State, upon which the amount of the quasi-incorporating tax or fee will be calculated. That calculation will be made on a basis of $10,000 a mile of road relator’s charter calls for, less $1,600,000 expended in the construction and equipment of that part of its road extending from St. Louis to Union. III. The point is presented in the demurrer that relator is not entitled to the certificate demanded because its charter gives the right to build and maintain telegraph and telephone lines, which it is said railroad companies under our law do not have. A foreign corporation admitted to do business in this State, either by comity or by express leave of the statute, can not transact any business which a domestic corporation of like character can not transact, anything in the charter of the foreign corporation to the contrary notwithstanding. In such case if the charter of the foreign company contains a grant of power not allowed by our law, that grant will be treated simply as if it had not been made. For the reason given in paragraph II of this opinion, the writ of mandamus is denied. All concur.