ERROR to the Supreme Court of Missouri, the question involved having been the right of a tax-collector of the State of Missouri to levy a tax authorized by an ordinance of the State named, on the property of the Pacific Railroad Company, a corporation incorporated by the said State. The case was thus:
By an act of March 12th, 1849, the railroad company was incorporated, as already mentioned, with a capital of $10,000,000, for the purpose of building a railroad across the State, from the city of St. Louis, on the eastern line of the State, to a point indicated in the western line. Authority was given to the counties through which it should pass to subscribe for the stock, and it was invested also with the powers usually conferred upon such companies.
By an act passed February 22d, 1851, it was enacted that when a certain sum had been collected of the capital stock and expended in the survey and construction of the road, the bonds of the State to the same amount should be lent to the road, and further loans were authorized, not to exceed $2,000,000. The loan was made a lien on the road, and the company was required to pay the principal and interest of the bonds.
By an act of December 25th, 1852, certain public lands were vested in the company, and the company were authorized to build a southwestern branch road to the western boundary of the State. Provision was made for the issue of an additional $1,000,000 of the bonds of the State, to be used in aid of the work proposed, with precaution that subscriptions should have been made and should previously have been applied by the company to amounts stated, and that the bonds should not be sold at less than their par value, and that the road should be completed and put in operation within five years after the passage of the act. The companies were to pay the principal and interest of these bonds also, and the State had its lien.
The twelfth section contained the following provision:
'The said Pacific Railroad and the said Southwestern Branch Railroad shall be exempt from taxation respectively until the same shall be completed, opened, and in operation, and shall declare a dividend, when the road-bed, buildings, machinery, engines, cars, and other property of such completed road, at the cash value thereof, shall be subject to taxation at the rate assessed by the State on other real and personal property of like value. . . . Provided, that if said company shall fail, for the period of two years after said roads respectively shall be completed and put in operation, to declare a dividend, then the said company shall no longer be exempt from the payment of said tax, nor from the forfeitures and penalties in this section imposed.'
This act and its grants were duly accepted by the company, in a mode which the act prescribed, in case the company desired to accept it.
This constituted one ground relied on, in connection with certain other matters, by the company. Now, as to another ground relied on by them, in connection with the same certain other matters, as ground independent of that already stated.
With the outbreak of the rebellion, in 1861, both the railroad company and the State made default in the payment of the interest on the State bonds, and on the 10th of February, 1864, the westernmost sixty-five miles of the road being yet unfinished, the legislature passed an act authorizing the company to issue its bonds for $1,500,000 and to mortgage that unfinished part; the State agreeing to relinquish for this object and to this extent her first lien, and retaining only a second one.
The bonds when issued were to be delivered to a fund commissioner, created by the act, and to be sold by him, and the money arising from such sale was to be applied by him to the construction and equipment of the road. The act also required all the gross earnings of the road to be paid to said find commissioner, and that he should, after paying the running expenses of the road and his salary, apply the residue, first to the extension and equipment of the road until it was completed, after reserving sufficient for the payment of the interest accruing semi-annually on the bonds sold; secondly, to the purchase or payment of the bonds; third, to the payment of the interest on certain other bonds authorized by the act, which were never issued; fourth, to the payment of dividends on certain preferred stock, also authorized by the act, which was never issued; the surplus, if any, to the purchase of State bonds with the interest coupons.