Park, C. J.
The first question presented by this record [119]*119requires a consideration of the nature and character of the tax in controversy. Is it a tax imposed upon the property of the defendants, in5 contradistinction to a tax imposed upon the defendants themselves as a body politic ?
If the tax is of this character, then another question arises, which is, are the defendants entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ?
These are the two leading questions in the case, and we will consider them in their order.
First, then, is the tax in question a tax upon property ? We think it is, although the cases of Coite v. The Society for Savings, 32 Conn., 173, and Coite v. The Connecticut Mutual Life Ins. Co., 36 Conn., 512, seem to countenance the contrary doctrine.
The court went, we think, to the verge of the law in those cases, in holding that the tax then in controversy was a tax upon the corporations themselves and not upon their property. The cases were, however, well considered, and are recent ones, and we do.not feel disposed to disturb them. But we do not incline to go further in the same direction, as we should have to do, should we hold that the tax now in controversy is likewise a corporate tax.
The principal argument in support of the conclusions of the court in those cases was, that the statutes on which the cases were based, took no notice of the real value of the assets of the corporations. In Coite v. The Society for Savings, the court says :—“ It [the statute] takes no notice of the manner in which this sum [the amount of the deposits] may be invested, or whether it is invested at all; and it never inquires into the profits, or losses, or conditions, or prospects, of the bank. If its assets double in value, it pays no more; if they decrease one-half, it pays no less. If they consist partly of forged notes not collectible, no allowance is made. Why then should a deduction be claimed when a like part is invested in notes not taxable merely?” The same argument was used in the other case referred to.
Chief Justice Denio uses the same reasoning in giving the [120]*120opinion of the Court of Appeals of the State of New York in the case of the The Bank of the Commonwealth v. The Commissioners of Taxes, 23 N. York, 220, in order to show that the tax in that case was a tax upon the corporation itself, and not upon its property. He says:—“It would seem plain enough that it is entirely immaterial what the assets of the bank then are. If the amount of the original nominal capital is alone to be taken into account, it would be officious and improper, or at least useless, for the assessors to make any examination or inquiry into the actual assets. If it could be shown that the discounted paper held by the bank, or the currency notes in its drawer, were forgeries, the assessors would not z’egard that circumstance; because the assets do zzot ezzter izzto the question, and az’e not znade a part of the data by which the taxable valuation is to be ascertained. Azid for the same z’eason, when it was showzi on behalf of the bank that its securities were not in their zzature taxable, this circumstance became utterly immatez’ial, since neither the character nor amount of such secuzities have anything to do with the question which the taxing officers' were to determine.” But the statute ozi which the present case is based, is materially diffez’ezzt in this respect. It takes notice of the real value of the assets of the corporatiozzs within its purview, in detezmining the aznount of tax they shall pay; for it makes the “ market value of the stock ” the criterion izi ascertaining the amount. The stock of a corporation represents its property, azzd the stock is valuable just in proportion to the amount of such propez’ty. The market value of the stock of a corporation, therefore, is the maz’ket value of all the property of the coz’poration in which the stock has beezi izzvested. If a coz-poz’atiozz has zzot property enough to represent its- entire stock, the stock is depreciated in value; it is below par. If the corporation has more property than enough to represent its entire stock, the stock is at a premium in the market; it is.above its par value. Hence a tax imposed upon the market value of the stock of a corporation, must be a tax imposed upon the market value of the property of the corporatkm which repre[121]*121sents the stock. Judge Nelson, in the Bank Tax Case, 2 Wallace, 200, says:—“It is not easy to separate the property in which the capital is invested from the capital itself. It requires some refinement to separate the two thus intimately blended together. The capital is not .an ideal, fictitious, arbitrary sum of money set down in the articles of association, but, in the theory and practical operation of the system, is composed of substantial property, which gives value and solidity to the stock of the institution. It is the foundation of its credit in the business community. The legislature well knew the peculiar system under which these institutions were incorporated, and the working of it; and when providing for a tax upon their capital at a valuation, they could not but have intended a tax upon the property in which the capital had been invested.” This language of Judge Nelson was used in a case where the legislature of the State of New York had passed a law rendering all banks and other moneyed corporations liable to taxation on a valuation equal to the amount of their capital paid in or secured to be paid in and their surplus earnings, and the question was, as here, whether the tax was imposed upon the institutions themselves, or upon their property. The case was not as strong as the case at bar in favor of a property taxation; for the capital was not taken, as it is here, at its market value, but at its nominal value. The case of the Bank of Commerce v. New York City, 2 Black, 620, is precisely analogous to the present case. In 1857 the State of New York directed that the capital stock of banks should be assessed and taxed “ at their actual value.” The question arose whether the law imposed the tax upon the corporations themselves or upon their property, and Judge Nelson in an elaborate opinion held that the tax was a property tax.
It is true that the same court in The Delaware Bailroad Tax Case, 18 Wallace, 206, held the contrary doctrine. This case cannot be reconciled with the two well considered ones we have cited. It is a singular fact that the court, in giving its opinion in this case, makes no reference to those cases, although they had been very recently decided. No reason is [122]*122given for the opinion. The opinion consists merely, so far as relates to the question we are considering, in a naked declaration that “ the tax is neither imposed upon the shares of the individual stockholders, nor upon the property of the corporation, but is a tax upon the corporation itself, measured by a percentage upon the cash value of a certain proportional part of the shares of its capital stock.” We think the two cases we have cited are by far the better authority.
Again, it is evident from the statute that it seeks to ascertain the value of the property that railroad corporations possess, and to tax that value. Hence it takes, in the first place, the market value of the stock of the corporations, and then adds to that value their funded and floating debts ; for the sum total of the market value of the stock and of the funded and floating debts of a corporation is equal in amount to the total value of the property that the corporation possesses. This is clear. If a corporation has only property enough to pay its debts, its stock has no real value, and ought not to have any market value. If a corporation has more property than enough to pay its debts, the stock has some value; and that value depends upon the excess of property above wliat is required to pay the debts; for, the debts of a corporation must be paid, and before we can come to the value of the stock; property enough to pay these obligations must be set aside, and the value of the stock will of course depend upon the value of what remains. Hence we see, if the stock of a corporation is at its par value, it must hdtve property of some kind, consisting in its railroad, rolling stock, franchise, privileges, immunities, or some other equivalent, equal in value to the amount of its stock. If the corporation is in debt, and the stock still remains at its par value, it must have additional property of some kind, equal in value to the amount of the debts, or else the stock would be at a discount. Hence the statute taxes the market value of the stock of a corporation and the amount of its funded and floating debts; for it must be taxed, like individuals, on all the property it possesses, whether it is in debt or not.
The statute then goes on to say that the valuation thus [123]*123obtained shall be regarded as fixing the measure of value, of railroads, and of the rights, franchises, and property of such corporations, for purposes of taxation, and that the tax shall be in lieu of all other taxes on railroad property and franchises. And then, as if to put at rest the question whether the tax imposed by it is a tax upon railroad corporations themselves or upon their property, the statute declares that, “ when any tax hereby imposed upon the property and franchise of any railroad company becomes due, &c.” This language of the statute declares the tax to be a tax upon railroad property and franchises. °What further doubt then can there be upon the subject ? The tax is upon every thing that belongs to railroad corporations which is valuable; and everything is included in the phrase “ railroad property and franchises.” This shows that the phrases “ railroad property and franchise of a corporation,” and “ the market value of its stock, together with its funded and floating debts,” are used in the statute as synonymous terms. They mean the same thing. The property is taxed, and the franchise is taxed. State v. The Norwich & Worcester R. R. Co., 30 Conn., 290. This case seems to take it for granted that the tax is a tax upon the property of corporations. The case is a strong one, inferentially, as to the view we have taken of the question.
We are satisfied that the tax is a tax upon the property of the defendants.
But suppose that it were not so, but is to be regarded as a corporate tax irrespective of the defendants’ property, still, are the defendants liable to pay the tax in controversy provided they are entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ? Or, in other words, assuming the tax to be upon the corpus of the defendants, would the Farmington Canal Company be liable to pay the sum in dispute, if they were now in existence operating their canal under their original charter, and the statute had included canal corporations within its provisions, as well as railroad corporations ? This question has been ably discussed by the learned- counsel who have argued the, case.
[124]*124Manifestly this question depends upon the solution of another ; which is, did the immunity of the Farmington Canal Company include its body politic, as well as the property of the company ? For, obviously, if the immunity extended to the body corporate of the company upon which the tax is assumed to be imposed, then nothing is gained to the State by making the claim that the tax is a corporate tax. The question then is, did the immunity extend to the corporation itself ?
Suppose this question had arisen under a similar statute, as soon as the stock of tlie Farmington Canal Company had been taken and the capital paid in under the.promise of the State that the stock of the company and its income up to six per cent, upon its capital should be forever free from taxation. What would be thought of the integrity of the State in saying to the stockholders in effect, “ True it is that we promised that the stock and net income of the company up to six per cent, upon its capital should never be taxed, in order that the stock of the company might be taken; but we did not promise that the company itself should not be taxed in respect to its stock to the same extent as the stock would have been taxed if no promise had been made ? The State can no more be guilty of fraud in making contracts, and justify itself, than can individuals; and how could it escape from the imputation of bad faith, should it seek to tax the company under such circumstances ? A promise made to the stockholders of a company, enures to the benefit of the company; for the stockholders, in fact, are the company. All its property of every,name and nature belongs to them; and a tax, therefore, in any form upon the company, is a tax, in reality, upon t]ie stockholders of the company. The State knew this when the promise was made. It knew that, if the public were told that the promised exemption from taxation related only to one form of taxation, but under another form the corporation would be taxed, and that too to the same extent as it would otherwise have been taxed if no promise had been made, the stock of the company would never be taken. It knew, therefore, what construction the stock[125]*125holders must have put upon the promise—that it was a promise of exemption from taxation in every form whatsoever, so far as the stock, and franchise, and property, and the company itself, were concerned. Such being the manifest import of the promise, every consideration of justice and honesty requires that it should have such construction. For, although the promise does not expressly include a tax upon the body politic, still, unless it is included, the State itself cannot show how the stockholders of the company could ever be benefited in the slightest degree by the exemption. The charter of the company protends to hold out inducements to persons to subscribe for the stock. It says, “ Whereas said canal, if completed, would be of great public utility; therefore, for the purpose of inducing persons to sub'cribe to the stock of said company, be it resolved, &c.” There can be no escape from the conclusion that this language was intended for deception, unless the body politic of the company was intended to be included, and was included, in the promised exemption from taxation.
It is true that all exemptions from taxation are to be construed strictly in favor of the State, and against the grantee; but this principle has never been carried so far as to require courts to be governed by the strict letter of the grant, ignoring its manifest import, or so far as to justify bad faith in the making of such contracts.
It might be claimed with truth that the value of the franchise of a corporation enters into and forms a part of the value of the stock of the corporation. The franchise is valuable in proportion to the yearly net income which the corporation receives and is likely to receive in carrying on its business. The stock of the corporation derives its value, to a great extent, from the franchise and income together; and in some cases, these sources of value double and treble its nominal value. Hence the value of the stock of a corporation embraces the value of its franchise; and consequently, if the stock is exempt from taxation, so must the franchise likewise bo exempt. Wilmington Railroad Company v. Reid, 13 Wallace, 264.
[126]*126Wo entertain no doubt, therefore, that the immunity of the Farmington Canal Company extended to every form of taxation that could be imposed upon the company.
We come now to the last question presented by the record; which is, Are the defendants entitled to the exemption from taxation which was originally conferred upon the Farmington Canal Company ?
In the year 1836 the Farmington Company and the Hampshire & Hampden Canal Company having failed and become bankrupt, a new company was chartered by the General Assembly, called the New Haven & Northampton Company. The capital stock of the new company was fixed by the charter at the sum of tliree hundred thousand dollars, which was the amount of stock of the old Farmington Canal Company. The charter of the new company provided that the creditors of the two bankrupt corporations might transfer their claims against those corporations to the new company, and take stock therein to the amount of their claims, not exceeding the sum of one hundred and sixty-five thousand dollars; and the new company was required to take these claims in payment of the stock thus taken. The balance of the capital stock, to wit, one hundred and thirty-five thousand dollars, was required to be paid in cash.
The seventh section of the charter was as follows:—r“ The company hereby created may receive from the Hampshire & Hampden Canal Company, and from the President, Directors and Company of the Farmington Canal, a conveyance of all the franchises, rights, powers, privileges and immunities of said companies, and thenceforth hold, exercise and enjoy the same within the respective limits of those companies, in as full and ample a manner, to all intents and purposes, as the same have been heretofore held, exercised and enjoyed by the said corporations respectively, for the purposes and with the limitations herein contained.” The now corporation was organized according to the terms of the charter. And the first question in this part of the case is, did the seventh section of the charter transfer to, or create in, the new corporation, the exemption from taxation which the old company [127]*127had previously enjoyed ? It should be observed that the same necessity existed at this time for exempting the stock and income of the new company from taxation as existed originally. The people of the state had not yet received the great public benefit from the canal which had been expected, and which induced the legislature to grant the original exemption. The old companies had not only expended their capital in constructing the canal, but had likewise expended one hundred and sixty-five thousand dollars belonging, to their creditors, and had become bankrupt by so doing. The capital of the new corporation called for one hundred and thirty-five thousand dollars in cash; and those who should take- this stock would have to take it with the rest of the capital already expended in the project, whether it had been judiciously expended or not. The enterprise was still new in the state and in the country, and there was very little encouragement, as the matter presented itself to the minds of moneyed men, to go further in the work. More than half the capital of the new company was to come from the old company equitably entitled to the exemption; and justice to the old stockholders, and to the people of the state in general, seemed to require that the project should not die, and all the money that had been expended in the undertaking be lost. The old companies had failed, and the new company was to take their place; was to step into their shoes, so to speak, and go on with the undertaking. It was all the same to the State whether the work was to be performed by one company or the other; and they were entitled, if performing it, to the same favor. By granting this the State would create no new immunity, but would be merely continuing one already created. It would seem that every consideration that induced the grant originally, existed now with increased weight, and required a continuance of the exemption. If the seventh section is read in the light of these circumstances, can any one doubt that the legislature intended by it to continue the exemption in the new. company, in order to do justice to the creditors whose money had been-expended in the enterprise, and to induce persons to subscribe to the cash capital of the [128]*128.corporation; so that the people of the state might enjoy the great public benefit expected from the canal. The language used certainly so imports. The new corporation was to “ have all the immunities of the old corporations in as full and ample a manner to all intents and purposes as the same had been held and enjoyed, &c.” This language can have no other meaning. It is susceptible of no other construction. The immunity of the old company extended to its entire stock of throe hundred thousand dollars, and to its franchise. The immunity of the new company, therefore, was equally extensive. It embraced the entire capital and franchise. It seems to us there is no escape from this conclusion.
But, it -is said that the immunity from taxation of the old corporation, was confined to its stockholders, and was not granted to the corporation itself; and that therefore the corporation transferred no immunity to the new corporation, for it had none to convey. This is making a distinction between the stockholders of a corporation and the corporation itself, when the language of the grant is, “ the stock and income of the corporation shall be forever exempt,” &c. Stockholders are not mentioned in the grant. The grant is directly to the body politic, for the benefit of its stockholders. At any rate, the legislature supposed that the old corporation had some immunity to convey, and intended that it should bo conveyed; or else, again, they were guilty of fraud in holding out the deception; for it cannot be doubted that by it they obtained the organization of the new corporation, which they so much desired for the public good.
But, if anything more is needed upon this point, the question is put at rest by the eleventh section of the new charter. This section, after specifying various things which the new corporation should do, proceeds as follows:—“And said company hereby incorporated, and the stockholders therein, may thenceforth- exorcise all the powers, and enjoy all the privileges and immunities conferred upon said old companies respectively, and the stockholders therein.” Here, all the immunities conferred upon the stockholders of the old companies, as well as upon the companies themselves, are expressly [129]*129granted to the new corporation. If, therefore, the conveyance from the old corporations did not transfer the immunity from taxation to the new corporation, this section makes an original express grant to the new corporation, of immunity from taxation to the same extent to which it had been granted to the old corporations and their stockholders. That exemption extended to the entire stock and income of those corporations; so this exemption must have extended to the entire stock and income of the new corporation.
If further confirmation is needed upon this point, the case still further furnishes it, in the fact that, in the year 1846, the legislature authorized the defendants to increase their capital stock from three hundred thousand to twelve hundred thousand dollars, and expressly made the additional capital subject to taxation. Was there any necessity for doing this, if the existing capital was, at the time, so subject? Can: another instance be found in our legislation where this lias; been done ? It has been common, and still is, for legislatures ; to authorize corporations to increase their capital stock; but when this has been done, where is the instance in which the legislature has taken the precaution to say that the increased, capital shall be subject to taxation, when the existing capital, was so subject? The instance cannot be found. The additional capital always takes its character from the existing-capital. If the existing capital is subject to taxation, so would the additional capital be subject. If the existing capital is exempt from taxation, the additional capital would likewise be exempt, unless the legislature should make it, as here, subject to taxation. State v. Norwich & Worcester R. R. Co., 30 Conn., 290. The inference deduced from this act of the legislature is almost as conclusive that the existing capital of the company was not subject to taxation, as an express declaration to that effect would have been.
We are satisfied that the defendants had an\ immunity from taxation, co-extensive with that of the Farmington Canal. Company.
In passing from this question we- cannot help observing,, that it seems remarkable that the organization, of the new/ [130]*130corporation, could have been procured under its charter, even with the immunity from taxation which we suppose to have been given by it, for it appears by the tenth section of the charter that the new company was required to run all the hazard of loss without any corresponding prospect of gain. By that section tlie old companies could at any time re-possess themselves of the franchise and all the rights and property of the new company, by simply paying their debts transferred to the new company, and further paying them for all the time and money expended by the company upon the canal. So at that time it appeared that if the enterprise should turn out disastrously the new company must bear the loss, but that if profit should be made the old companies stood by to reap the benefit. Under such circumstances, was it strange ■•that the State should have continued the grant which had ¡already been made ?
But it is said that the legislature reserved to itself the •right to alter, amend, or repeal the charter of the corporation, and that it exercised this right when it passed the statute on which this suit is brought, by repealing the clauses of the charter conferring the right of exemption from taxation. The repeal is claimed on the ground that the statute •and the charter are repugnant to each other, so far as the exemption is -concerned, the statute therefore repealing this provision of the charter by necessary implication. But the statute in another section contains a provision that the stock of corporations which had been exempted from taxation, •should continue so to be. We think there is nothing in this claim. State v. Norwich & Worcester R. R. Co., 80 Conn., 290.
i The next question grows out of the following facts. It ■appears that the General Assembly in 1846 authorized the defendants, “ to add to their capital stock by increasing the •nominal or par value of the present shares from twenty-five ■to one hundred dollars,” and to construct a railroad along the line of their canal. The resolution authorizing them so •to do provided as follows:—“The capital stock hereby created .■shall be assessed at its just value in money, and taxed at the [131]*131same rate as personal estate.” The State claims that this change in the corporation converted the canal company into a railroad corporation, which conversion extinguished the canal company, and with it the exemption from taxation.
We do not so regard it. There was no change in the corporation itself. What was done consisted merely in authorizing a change from one mode of transportation to another. Certainly such a change could not affect the chartered rights of the corporation, especially when the legislature authorized it to be done without any intimation that the change wrould have any such effect. But it is claimed that the resolution subjects the entire capital to taxation, when increased according to its provisions. The taxable stock, however, is expressly limited to “ the capital stock hereby created.” If the addition to the capital stock had been made by adding shares to the number then existing, it would be manifest, that the taxable stock would be confined to the shares thus added. And can the mere mode of adding to the capital stock make any difference ? “ Stock hereby created”—is .the language. What was the stock then created by the act ? Certainly not the old stock. That was as old as the corporation itself. We are unable to see any force in this claim.
Nor do we see anything substantial in other claims of the the State, which we have not particularly considered.
A majority of the court are satisfied that the plea of the defendants is sufficient. And we so advise the Superior Court.
In this opinion Foster and Pardee, Js., concurred.