Butler, J.
It appears from the finding and the resolutions referred to, that the corporation defendant was organized in [294]*2941832, under a special charter, with a capital of $1,000,000, by the name of the Boston, Norwich and New London Railroad Company, and by the 17th section of its charter it was provided that the capital stock of the corporation should be and remain free from taxation, until the tolls collected by the company should be sufficient to afford a dividend of six per cent per annum on its capital stock.
In 1836 the corporation was united with a similar one incorporated by the legislature of Massachusetts, and the name changed to that by which it is now distinguished. Referring to the resolution of that year we find nothing affecting or impairing any of the provisions of the original charter. It introduced the stockholders of the Massachusetts company as stockholders of this company, and so far forth added to the members of the company and the amount of the capital stock; and it changed the name by which the company should thereafter be known. But it expressly gave to the company thus enlarged and continued under a new name, “ all the tolls, franchises, rights, powers, privileges and property then or at any time owned, acquired or enjoyed by the stockholders of the Boston, Norwich and New London Railroad Company, in proportion to the number of shares by each of them owned.” It is apparent that it was the intention of the legislature to merge the Massachusetts corporation in the Connecticut one, by making the stockholders of the former, stockholders of the latter, and increasing the capital, without in any respect impairing or changing any of its chartered powers or privileges.
It also appears from the finding that by several subsequent resolutions of the general assembly and subscriptions, the capital stock of the defendants was increased to more than double its original amount. Referring to these resolutions we find nothing directly or expressly repealing or modifying any of the original provisions of the charter, or any which are in any manner repugnant to the provisions of the 17th section of the charter, and that section must be deemed and taken to be in full force, and applicable to -the additions made to the capital stock, unless the contingency which is mentioned in it has happened and it has thereby become inoperative.
[295] It further appears from the finding, that the net earnings of the corporation during any given year since its organization have not equaled six per cent on the capital stock then subscribed and paid. It does appear that in 1854 a dividend was paid of six per cent, but a part of it was earned in previous years, and it was not paid on all the stock. We are of opinion that by a true construction of the 17th section of the defendants’ charter, it was the intention of the legislature to exempt their capital from taxation until the net annual receipts accruing during any year, after deducting all proper charges and expenses incurred during the same year, should be equal to six per cent on the then capital of the company entitled to dividends, and that such an event has not happened, and that therefore the exemption is still in full force.
In 1850 the legislature imposed a special tax upon all the railroads of the state. It is not material to inquire whether the defendants were embraced in the exempting clause contained in the sixth section of that act, as originally enacted, for the defendants paid the tax until 1856, and in that year a declaratory act was passed which shows a clear intention to exempt the defendants, if-they were still exempt by the terms of their charter. We have already expressed the opinion that they are so exempt upon the facts found unless there is something more in the case. The plaintiff claims that there is. It is claimed on the par-t of the state that the resolution of 1850, which authorized an increase of the capital stock by the addition of four thousand two hundred and fifty shares, and constituted such additional stock, together with the old stock oí such of the stockholders as subscribed for the new, “ prefeired stock,” deprived such ^preferred stock of the benefits of the 17th section of the charter, or at least all except the original $1,000,000. These claims are hot supported by authorities nor sustainable on principle ; and it is obvious that the officers of the state have not distinguished between the capital of the corporation, strictly speaking, and the shares into which it is divided, and have misapprehended the character impressed upon a part of those shares by constituting them “ preferred stock.” It would perhaps be a sufficient answer [296] to the claims to say that if the “preferred stock” is still a part of the capital stock, it is within the letter and spirit of the 17th section of the charter. If it is not a part of it, it is not within the letter or spirit of the statute which imposed the tax. But that such “ preferred stock ” is part of the capital stock of the company, entitled to all the privileges conferred by the charter, seems too clear to be questioned. The capital of the corporation consists of the sums due by virtue of the subscriptions, or collected from the subscribers and invested for its benefit; and the body of the subscribers,'or their assigns, constitute the corporation. The subscribers to the new stock of 1850, as well as those who subscribed for the previously authorized additions, became immediately stockholders or shareholders, and the sums which they respectively became obligated to pay, became immediately part and parcel of the capital of the company. Ward v. Griswoldville Manufacturing Co., 16 Conn., 598.
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Butler, J.
It appears from the finding and the resolutions referred to, that the corporation defendant was organized in [294]*2941832, under a special charter, with a capital of $1,000,000, by the name of the Boston, Norwich and New London Railroad Company, and by the 17th section of its charter it was provided that the capital stock of the corporation should be and remain free from taxation, until the tolls collected by the company should be sufficient to afford a dividend of six per cent per annum on its capital stock.
In 1836 the corporation was united with a similar one incorporated by the legislature of Massachusetts, and the name changed to that by which it is now distinguished. Referring to the resolution of that year we find nothing affecting or impairing any of the provisions of the original charter. It introduced the stockholders of the Massachusetts company as stockholders of this company, and so far forth added to the members of the company and the amount of the capital stock; and it changed the name by which the company should thereafter be known. But it expressly gave to the company thus enlarged and continued under a new name, “ all the tolls, franchises, rights, powers, privileges and property then or at any time owned, acquired or enjoyed by the stockholders of the Boston, Norwich and New London Railroad Company, in proportion to the number of shares by each of them owned.” It is apparent that it was the intention of the legislature to merge the Massachusetts corporation in the Connecticut one, by making the stockholders of the former, stockholders of the latter, and increasing the capital, without in any respect impairing or changing any of its chartered powers or privileges.
It also appears from the finding that by several subsequent resolutions of the general assembly and subscriptions, the capital stock of the defendants was increased to more than double its original amount. Referring to these resolutions we find nothing directly or expressly repealing or modifying any of the original provisions of the charter, or any which are in any manner repugnant to the provisions of the 17th section of the charter, and that section must be deemed and taken to be in full force, and applicable to -the additions made to the capital stock, unless the contingency which is mentioned in it has happened and it has thereby become inoperative.
[295] It further appears from the finding, that the net earnings of the corporation during any given year since its organization have not equaled six per cent on the capital stock then subscribed and paid. It does appear that in 1854 a dividend was paid of six per cent, but a part of it was earned in previous years, and it was not paid on all the stock. We are of opinion that by a true construction of the 17th section of the defendants’ charter, it was the intention of the legislature to exempt their capital from taxation until the net annual receipts accruing during any year, after deducting all proper charges and expenses incurred during the same year, should be equal to six per cent on the then capital of the company entitled to dividends, and that such an event has not happened, and that therefore the exemption is still in full force.
In 1850 the legislature imposed a special tax upon all the railroads of the state. It is not material to inquire whether the defendants were embraced in the exempting clause contained in the sixth section of that act, as originally enacted, for the defendants paid the tax until 1856, and in that year a declaratory act was passed which shows a clear intention to exempt the defendants, if-they were still exempt by the terms of their charter. We have already expressed the opinion that they are so exempt upon the facts found unless there is something more in the case. The plaintiff claims that there is. It is claimed on the par-t of the state that the resolution of 1850, which authorized an increase of the capital stock by the addition of four thousand two hundred and fifty shares, and constituted such additional stock, together with the old stock oí such of the stockholders as subscribed for the new, “ prefeired stock,” deprived such ^preferred stock of the benefits of the 17th section of the charter, or at least all except the original $1,000,000. These claims are hot supported by authorities nor sustainable on principle ; and it is obvious that the officers of the state have not distinguished between the capital of the corporation, strictly speaking, and the shares into which it is divided, and have misapprehended the character impressed upon a part of those shares by constituting them “ preferred stock.” It would perhaps be a sufficient answer [296] to the claims to say that if the “preferred stock” is still a part of the capital stock, it is within the letter and spirit of the 17th section of the charter. If it is not a part of it, it is not within the letter or spirit of the statute which imposed the tax. But that such “ preferred stock ” is part of the capital stock of the company, entitled to all the privileges conferred by the charter, seems too clear to be questioned. The capital of the corporation consists of the sums due by virtue of the subscriptions, or collected from the subscribers and invested for its benefit; and the body of the subscribers,'or their assigns, constitute the corporation. The subscribers to the new stock of 1850, as well as those who subscribed for the previously authorized additions, became immediately stockholders or shareholders, and the sums which they respectively became obligated to pay, became immediately part and parcel of the capital of the company. Ward v. Griswoldville Manufacturing Co., 16 Conn., 598.
It is the capital of the corporation which is in fact subjected to taxation or exempted from it; and the imposition of the tax according to the- number and market value of the shares of stock, is but a means of ascertaining the taxable value of that capital. The provision in the resolution of 1850, that the new shares, and the old shares of the subscribers who took the new, should be “ called preferred stock,” did not render these subscribers any the less stockholders, or the sums due by virtue of their new subscription any the less a part of the capital óf the corporation. The obvious, sole and simple purpose of the provision for constituting such new and old shares “ preferred stock,” was to encourage the taking of the new, by giving to those who should take it a preference in the division of the future earnings of the company. • It reached and could reach no other, provision of the charter than that relating to such distribution. The new, and the old shares of those who subscribed for the new, had no other distinctive mark or character impressed upon them. They were “ preferred ” in no way and for no purpose over the shares of those who did not subscribe for the new stock, except in the making of dividends. The provision for the surrendry of the cer[297] tificafes and the delivery of nevr ones, had no object pus-pose except to distinguish the shares of those who subscribed for the new, so that they could enjoy the intended preference 'in the distribution of the annual receipts. The “ preferred stock!S is to all other intents and purposes part and parcel, undistinguishably, of the capital stock of the company, and its holders are entitled to all the privileges, exemptions and rights conferred upon the original stockholders, and the sums by them subscribed for the new stock are as undistinguishably a part of the capital by which the dividends are to be earned for all, if sufficient, and on which the value of the stock for taxation when taxable is to depend. Any other construction of the resolution of 1850 would be strained, and against the clear intention of the legislature, and would be productive of embarrassments in conducting the affairs of this corporation which the general assembly never could have contemplated.
The result to which we come is, that the superior court must be advised that the defendants are entitled to judgment.
In this'opinion the other judges concurred.