
    The People ex rel. Carl Schurz et al., App’lts, v. Frederick Cook, as Secretary of State, etc., Resp’t. The People ex rel. William Mertens et al. App’lts, v. Same, Resp’t.
    
      (Court of Appeals,
    
    
      Filed October 2, 1888.)
    
    1. Corporations—Tax upon stock op new corporations—Applies to EVERY CORPORATION—LAWS 1886, CHAP. 143.
    Laws 1886, chapter 143, by its terms applies to every corporation, and the tax therein provided is payable upon its incorporation. It cannot b& restricted in its meaning to those cases only in which the state directly grants some franchise to a corporation other than the franchise to be a corporation.
    2. Same—-A beobganized cobpobation is a new cobpobation within SAID ACT.
    The relators purchased the whole properties and franchises of certain railroad corporations when they were sold under foreclosure proceedings, and undertook- to reorganize them under Laws 1874, chapter 430, as amended by Laws 1876, chapter 446. Held, that upon the filing of the certificate therein provided in the office of the secretary of state a new and entirely different corporation from that whose property and franchises the purchasers had bought, was formed. That the right to be a corporation which the old corporation had was not mortgaged and was not sold, and did not pass to the purchasers. That before the relators were entitled to file said certificate the tax provided in Laws 1886, chapter 143, must be paid.
    3. Same—Right to be a cobpobation debited ebom the state.
    The purchasers only obtained the right to be a corporation upon filing the certificate mentioned, and then they obtained it by direct grant from the state, and not in any degree by the sale and purchase of the franchises, etc., of the old corporation.
    4. Same—Laws 1886, chap. 143 constitutional.
    The acts passed prior to 1886, under which the frachises of the corporations were duly mortgaged (which mortgages were the ones foreclosed), provided that purchasers at foreclosure sales under such mortgages could upon compliance with the law file certificates and become incorporated bodies. Held, that such acts were in no sense contracts on the part of the-state with persons purchasing bonds secured by such mortgages, or with future possible purchasers at foreclosure sales; that the provisions existing, at the time of the mortgaging of the franchise for the incorporation of such purchasers should remain the same. That the act of 1886 was- not-unconstitutional as impairing the obligation of a contract.
    Appeal in each case from a judgment of the supreme-court, general term, third department, affirming an order of the Albany county special term, which denied the relator’s motion for a peremptory mandamus.
    The facts are stated in the opinion.
    
      Geo. Zabriskie, for app’lts; Chas. F. Tabor, atty-genl., for resp’t.
    
      
       Affirming 14 N. Y. State Rep., 276.
    
   Peckham, J.

The question arising is the same in both of above cases, which were argued together, and the facts, stated are those specially pertaining to the case which is. first above entitled.

Certain railroad corporations properly organized under the laws of this state, duly executed mortgages upon their respective properties and franchises. Subsequently thereto they were consolidated under the provisions of certain consolidation acts of the legislature of this state not material to be further referred to in detail. After such consolidation the company thus formed, also duly executed its mortgage for securing the payment of its bonds therewith issued.

Default was made in the payment of the bonds issued under each of these various mortgages and foreclosure proceedings were taken therein and the mortgages duly foreclosed and the whole properties and franchises' of all the companies were duly sold under such foreclosure proceedings and bid in by the relators who thereupon proceeded to form a corporation under the reorganization acts of the legislature of this state and known as chapter 430 of the Laws of 1874, and chapter 446 of the Laws of 1876, the latter being an amendment of the former act.

Pursuant to its provisions the purchasers agreed upon and executed articles of association and as the act provided that a certificate of such articles should be filed in the office of the secretary of state before the parties forming the organization should become a body corporate, the relators applied to the defendant as secretary of state to file the same, at the same time tendering to him the proper amount of fees for recording it.

The secretary refused to permit it to be filed and based his refusal upon the provisions of the act known as chapter 143 of the Laws of 1886, which provided that every corporation incorporated under any general or special law of the state having capital stock divided into shares should pay to the state treasurer for the use of the state a tax of one-eighth of one per centum upon the amount of capital stock which the corporation was authorized to have, and the tax was to be paid upon the incorporation of the corporation, which should have and exercise no corporate powers until the tax was paid; and the secretary of state and all county clerks were prohibited from filing any certificate of articles of association and from giving any certificate to any such corporation until they were satisfied that the tax had been paid into the state treasury. It was conceded that this tax had not been paid, and the secretary therefore refused to file the certificate.

■The counsel for the appellants claim that the act of 1886 applies only to cases where the state grants franchises to a corporation, and it was stated that none was granted in such a case as this. They also argued that the reorganization act of 1874, as amended in 1876, in such a case as this, simply continued or revived the franchises of the old corporation under the same charter, and with the same immunities and rights held by the former company. Lastly, they claimed that if the act of 1886 was held to apply to this case it was unconstitutional, as violating the provision of-the Federal Constitution that no state should pass any law impairing the obligation of contracts.

We think none of the claims is well founded. The act, by its terms, applies to every corporation and the tax is payable upon its incorporation, and hence it cannot be restricted in its meaning to those cases only in which the state directly grants some franchise to a corporation other than the franchise to be a corporation. There is nothing in the context which should so restrict the provisions of the act, and there is no view of the question in which such a narrow construction could be even plausibly maintained as against the plain language of the law.

We think it is also plain that under the reorganization acts above mentioned, when the purchasers at the foreclosure sale undertake to reorganize under those acts, and for that purpose to file in the secretary’s office a certificate, upon the filing of which they become a body politic and corporate, the corporation thus formed is a new and entirely different one from that whose property and franchises the purchasers may have bought under the foreclosure' proceedings.

It is true that the corporation about to be formed by the filing of the certificate has by force of the statute when formed all the rights, franchises, powers, privileges and immunities which were possessed before such sale by the corporation whose property was sold; but that does not make the corporation the same by any means. The right to be a corporation which the old corporation had, was not mortgaged and was not sold, and did not pass to the purchasers, and they only obtain such a right upon filing the certificate mentioned, and then they obtain it by direct grant from the state, and not in any degree by the sale and purchase of the franchises, etc., of the old corporation.

The last ground argued by counsel is, we think, equally untenable. There has been no violation of any contract. These mortgages, it is true, were all executed, and the bonds issued long prior to the passage Of the tax act of 1886, already mentioned. The franchises of the corporations were duly mortgaged under the provisions of state laws, by which it was provided that purchasers at foreclosure sales under such mortgages could, upon compliance with the law, file certificates and become incorporated bodies. But such acts were in no sense contracts on the part of the state with persons purchasing bonds secured by such mortgages or with future" possible purchasers at foreclosure sales, that the provisions existing at the time of the mortgaging of the franchises for the incorporation of such purchasers should remain the same. I think this question has been decided in. this way by the supreme court of the United States, and further discussion of it is unnecessary. See Memphis Railroad Company v. Commissioners, 112 U. S., 609.

Whether the money exacted by the state on the incorporation of corporations, etc., is a tax in the strict and limited sense of that word or not, is of no importance. It-is a condition imposed by the state in the exercise of its undoubted power, upon the payment of which the certificate may be filed.

The orders of the special and general terms are right, and should be affirmed, with costs.

All concur.  