able ground for interference is presented in any particular case is for the legislature to determine; and their determination on this point must be conclusive.

The objection that it takes the property of the company and appropriates it to the benefit of others is not valid. The depot which they are required to build is to be their own, like all the other depots, and their compensation for all their outlays is in their freights and fares. If the act required them to build a structure for the private benefit of others exclusively, and having no connection with the business of their road, the case might be within the principle stated in Commonwealth v. Essex Co. (13 Gray, 239, 253), as it would take away their property or rights which had become vested under a legitimate exercise of the power granted them. It was there held that an act requiring a water-power company to erect a fish-way in their dam was void. But the act upon which this

action is brought is not subject to such an objection. It is a modification of the charter, within the fair interpretation of the power reserved to the legislature in the charter, and merely requires them to provide what the legislature regards as a reasonable accommodation to the public in a particular locality where they are using property which they have taken for that purpose. Judgment for the commonwealth.

The second case, which was argued at the same time, was a petition, filed January 16, 1869, by George W. Keene and more than twenty-five other legal voters of the city of Lynn, under the St. of 1868, c. 348, (which was passed June 11 of that year, and is printed in the margin),' alleging that the Eastern Railroad Com

1" SECTION I. The Eastern Railroad Company is hereby required to erect a new station-house, and to maintain the same on said railroad at the central station on Central Square in Lynn, reasonably commodious for the use of passengers, together with sufficient platforms, and containing a ticket-office and separate apartments for men and women; and said company is hereby authorized to take such land as may be necessary for the erection of said station-house, with proper approaches thereto, under the provisions of the statutes authorizing railroad corporations to take land for the construction of railroads.

"SECTION 2. In case of neglect or failure of said corporation to erect such station-house, as aforesaid, within six months from the passage of this act, the Supreme Judicial Court may, on the application of any twenty-five legal voters in the city of Lynn, and notice to said corporation, appoint three commissioners at the expense of said corporation, who shall decide all questions relating thereto that may arise between the parties; and the said court or any judge thereof shall have full power and authority to make any decisions or pass any orders in the premises that may be suitable, to compel a specific performance of the requirements of this act.

"SECTION 3. This act shall take effect upon its passage."

pany, though often requested to erect a new station house in Lynn in compliance with section I of that statute, and to do the other acts thereby authorized or required, had wholly neglected and refused so to do, and praying therefore "that three commissioners may be appointed at the expense of said corporation, with instructions to hear the parties and to decide all questions relating to the erection of said station house that may arise between the parties; and that such orders may be passed as may be suitable to compel a specific performance by said corporation of the requirements of said act; and for such other relief in the premises as may be just and proper.' Notice was given to the railroad corporation, and it appeared and made answer, admitting that it had not erected a new station house in Lynn as directed to do by the statute, but denying that the statute was constitutional, and that the court had any jurisdiction or authority in the premises.

By agreement of the parties, the case was reserved by Gray, J., for the determination of the full court, upon the petition and answer "with like effect as if the same were a bill and answer in equity."

BY THE COURT: The statute is constitutional and valid, for the reasons stated in the opinion in Commonwealth v. Eastern Railroad road Company.

Prayer of petition granted; commissioners to be appointed.

Limitations upon.- But there are limits to this power. Numerous cases uphold the statement that the power, if exercised, must be reasonable and

necessary.

"It seems to be universally agreed that there are two limitations upon the police power of the legislature: (1) That the subject of its exercise must have some relation to the peace, the health, the good order, or the morals of the community; and (2) that it must be exercised, at least apparently or presumptively, upon grounds which are reasonable and necessary." 4 Thompson, 5478, and cases cited.

It has been held that the power properly extends to the preservation of health, as in laws regarding foods, drinks, water supplies, fire limits, etc.; to morality, as in gambling, lotteries, local option, etc.; to the employment of women and children; to the protection of labor as evidenced by the lien laws, hours for labor, wages paid by municipalities, etc.; to protection of property, both real and personal; to the regulation of insurance rates, reserves, etc.; and in the matter of railroads, to regulations affecting the location and condition of stations, speed of the trains, grades, heating, lighting, color blindness, and the fixing of tolls and charges.

It is in this last, the fixing of tolls and charges, that limitations have been found, beyond which the police power cannot go. "This power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense of regulating fares and freights, the state cannot require a railroad corporation to carry persons or property without reward; neither

can it do that which in law amounts to a taking of private property for public use without compensation or without due process of law." Railroad Commission Cases, 116 U. S. 307. See also Chicago, etc., Ry. Co. v. Minn., 134 id. 418; Grand Trunk, etc., Ry. Co. v. Wellman, 143 id. 339; Reagan v. Farmers, etc., Co., 154 id. 362.- ED.

V. The Power of Eminent Domain.

See West River Bridge v. Dix, reported on page —.

VI. Taxation.

"Taxes are defined to be burdens or charges imposed by the legislative power upon persons or property to raise money for public purposes.

"The power to tax rests upon necessity, and is inherent in every sovereignty. The legislature of every free state will possess it under the general grant of legislative power, whether particularly specified in the constitution among the powers to be exercised by it or not." Cooley's Const. Lim., 6th ed., 587.

'While taxation is in general necessary for the support of government, it is not part of the government itself. Government was not organized for the purpose of taxation, but taxation may be necessary for the purposes of government. As such, taxation becomes an incident to the exercise of the legitimate functions of government, but nothing more. No government dependent on taxation for support can bargain away its whole power of taxation, for that would be substantially abdication. All that has been determined thus far is, that for a consideration it may, in the exercise of a reasonable discretion, and for the public good, surrender a part of its power in this particular." Waite, Ch. J., in Stone v. Mississippi, 101 U. S. 814. "There are eight methods of taxing capital stock of corporations, to wit: (1) A tax upon the capital stock when the company during any year makes dividends to six per cent. or more on the par value of its capital (People v. Horn Silver M. Co., 105 N. Y. 76); (2) a tax upon the whole capital stock at par (N. J. Law, April 18, 1884); (3) upon the capital stock at its actual cash or market value (Ind. R. S. 1887, § 6357; Ill. R. S. ch. 120, 8 3); (4) upon so much of the capital stock as has been subscribed and paid in (Md. Laws, 1878, ch. 178); (5) upon the capital stock plus the bonded debt of the company at market value (Lehigh Valley Ry. Co. v. Commonwealth, 129 Pa. St. 429); (6) upon the capital stock plus the total debt, both funded and floating (Conn. C. S., § 3919); (7) upon the capital stock less property otherwise taxed (N. Y. Laws, 1837, ch. 456, § 3; Ala. Code, § 453, subd. 9); (8) upon the capital stock less the indebtedness of the corporation (People v. Coleman, 1 N. Y. Supp. 666)." Beach on Private Corp., § 802.- ED.

FARRINGTON V. TENNESSEE.1

95 United States Reports 679 (1877).

The U. & P. Bank of Memphis was organized under a charter granted by the legislature of Tennessee in 1858 and amended in 1 Facts condensed.

1869. A section of the amendment provides that "said company shall pay to the state an annual tax of one-half of one per cent. on each share of the capital stock subscribed, which shall be in lieu of all other taxes." By an act of 1870 it was provided that “all shares of stock in any bank, institution or company, shall be valued and assessed, and subject to taxation." The bank paid its tax for the year 1872. Wood owned fifty shares of the stock, which the state. and the county severally claimed the right to assess and tax. Wood resisted payment, claiming that the act in question impaired the obligation of the contract between the state and the bank.

The state supreme court adjudged the taxes valid; this is the error assigned.

MR. JUSTICE SWAYNE. This case turns upon the construction to be given to the tenth section of the charter of the bank. Our attention has been called to nothing else.

The exercise of the taxing power is vital to the functions of government. Except where specially restrained the states possess it to the fullest extent.

Prima facie it extends to all property, corporeal and incorporeal, and to every business by which livelihood or profit is sought to be made within their jurisdiction. When exemption is claimed it must be shown indubitably to exist. At the outset every presumption is against it. A well-founded doubt is fatal to the claim. It is only when the terms of the concession are too explicit to admit fairly of any other construction that the proposition can be supported. West Wisconsin Railway v. Board of Supervisors, 93 U. S. 595; Tucker v. Ferguson, 22 Wall. 527.

Can the exemption here in question, examined by the light of these rules, be held valid?

Upon looking into the section several things clearly appear:

1. The tax specified is upon each share of the capital stock, and not upon the capital stock itself. 2. It is upon each share subscribed. Nothing is said about what is paid in upon it. That is immaterial. The fact of subscription is the test, and that alone is sufficient. 3. This tax is declared to be "in lieu of all other taxes." Such was the contract of the parties.

The capital stock and shares of the capital stock are distinct things. The capital stock is the money paid or authorized or required to be paid in as the basis of the business of the bank, and the means of conducting its operations. It represents whatever it may be invested in. If a large surplus be accumulated and laid by, that does not become a part of it. The amount authorized can not be increased without proper legal authority. If there be losses which impair it, there can be no formal reduction without the like sanction.

No power to increase or diminish it belongs inherently to the corporation. It is a trust fund held by the corporation as a trustee. It is subject to taxation like other property. If the bank fail, equity may lay hold of it, administer it, pay the debts, and give the residuum, if there be any, to the stockholders. If the corporation be dissolved by judgment of law, equity may interpose and perform the same functions. Wood v. Dummer, 3 Mason, 308; Curran v. Arkansas, 15 How. 304; Gordon v. The Appeal Tax Court, 3 How. 133; People v. The Commissioners, 4 Wall. 244; Van Allen v. The Assessors, 3 Wall. 573; Queen v. Arnaud, 9 Ad. & E. (N. S.) 806; Bank Tax Cases, 2 Wall. 200.

The shares of the capital stock are usually represented by certificates. Every holder is a cestui que trust to the extent of his ownership. The shares are held and may be bought and sold and taxed like other property. Each share represents an aliquot part of the capital stock. But the holder can not touch a dollar of the principal. He is entitled only to share in the dividends and profits. Upon the dissolution of the institution, each shareholder is entitled to a proportionate share of the residuum after satisfying all liabilities. The liens of all creditors are prior to his. The corporation, though holding and owning the capital stock, can not vote upon it. It is the right and the duty of the shareholders to vote. They in this way give continuity to the life of the corporation, and may thus control and direct its management and operations. The capital stock and the shares may both be taxed, and it is not double taxation. The bank may be required to pay the tax out of its corporate funds, or be authorized to deduct the amount paid for each stockholder out of his dividends. Angell & A. on Corp., sections 556, 557; Union Bank v. The State, 9 Yerg. (Tenn.) 489; Van Allen v. The Assessors, supra; Bradley v. The People, 4 Wall. 459; Queen v. Arnaud, supra; National Bank v. Commonwealth, 9 Wall. 353; The State v. Branin, 3 Zab. (N. J.) 484; M'Culloch v. Maryland, 4 Wheat. 316.

There are other objects in this connection liable to taxation. It may be well to advert to some of them.

I. The franchise to be a corporation and exercise its powers in the prosecution of its business. Burroughs on Taxation, § 85; Hamilton v. Massachusetts, 6 Wall. 632; Wilmington Railroad v. Reid, 13 Wall. 264.

2. Accumulated earnings. The State v. Utter, 34 N. J. L. 489; The St. Louis Mutual Insurance Co. v. Charles, 47 Mo. 462.

3. Profits and dividends. The Attorney-General v. Bank, etc., 4 Jones (N. C.) Eq. 287.