13L 407 2pi 615 3pi 156

The State v. Butler.

lot on Adams street, will be confirmed and the chancellor's decree will be modified so as to disallow the item of $263 decreed in favor of Kortrecht, administrator, and in all other respects will be affirmed and the cause remanded to the chancery court to be pro-ceeded in according to said decree with this modification above specified.

The costs of this court will be paid equally by Mrs. Carlisle and Wray and wife, they having alone appealed, and the costs of the chancery court as decreed by the chancellor.

THE STATE v. BUTLER et al.

1. CONTRACTS, LEGISLATIVE. Taxes. Under the Constitution of 1834, the Legislature had power to grant to incorporations created by it, either partial or total immunity from taxation for any length of time it deemed proper.

2. CORPORATIONS. May exercise new powers. When. The State may authorize a corporation to alter its original enterprise and exercise new franchises to any extent without impairing any contract with the corporators. The effect of such a law is merely permissive, and takes away no existing power and affects no existing right.

3. SAME. Special provision as to taxation of. The provision in an act of incorporation that the 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" is valid, and relieves the corporation from all other taxes, State or municipal. Under this provision its real estate necessary for the transaction of its business, is not subject to taxation.

The State v. Butler.

4. SAME. Charters inviolable. Neither the Legislature nor a Constitutional Convention has the power to violate the contract between the State and a corporation contained in the charter of the latter.

FROM SHELBY.

Appeal from the Chancery Court at Memphis. W. W. MCDOWELL, Ch.

MINOR MERRIWETHER, W. M. RANDOLPH and ATTORNEY-GENERAL LEA for complainant.

FRAYSER & SCRUGGS and TAYLOR & CARROLL for defendants.

COOKE, Sp. J., delivered the opinion of the court.

By an act of the Legislature passed March 20, 1858, the DeSoto Insurance and Trust Company was incorporated with power to conduct a fire and life insurance business, the capital stock not to exceed $300,000.

By the tenth section of said act of incorporation it was provided, "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 a subsequent act of the Legislature passed February 12, 1869, the president and directors of said company were empowered, upon being authorized by a vote of the stockholders, to discontinue the business of insurance and adopt that of banking, under the name and style of the Union and Planters' Bank of Memphis, with privilege of increasing the capital stock to a sum not exceeding $1,000,000, retaining "all their present rights, privileges 26-VOL. 13.

The State v. Butler.

and immunities, excepting only that of insurance." The stockholders authorized the change, the capital stock was increased to $600,000, a banking institution was organized under the style of the Union and Planters' Bank of Memphis, and has continued to conduct a general banking business ever since. It provided itself with a banking house in Memphis necessary for the conduct of its business, which was paid for out of its capital stock and which it occupies and uses exclusively as its banking house and place of business.

The DeSoto Insurance and Trust Company and the Union and Planters' Bank of Memphis have regularly paid the one-half of one per cent upon each share of the capital stock subscribed as required by section ten of said act of 1858. The capital stock subscribed to the Union and Planters' Bank is now worth one dollar and forty cents on the dollar. The municipality of Memphis assessed said banking house for taxes for the years 1874, 1875, 1876, 1877 and 1878, at the same rate and in the same manner that other real estate in the city was assessed, and which is standing uncollected upon the tax books of the extinct municipality of Memphis, in the hands of Minor Merriwether, backtax collector and receiver of said municipality, who is seeking to collect the same. The above agreed state of facts was submitted to the chancellor for adjudication as to the validity of said assessment, and the liability of said bank to pay said taxes. Said Union and Planters' Bank insists, that by virtue of said tenth section of said act of 1858, and their payment of onehalf of one per cent upon each share of its capital

The State v. Butler.

stock subscribed, said banking house, etc., are exempt. from said municipal taxes.

For the State it is insisted that said tenth sectionis in contravention of the Constitution of 1834, which was in force at the dates both of the passage of said acts of 1858 and of 1869, and the organization of said bank thereunder, and also of the Constitution of 1870 and of the bill of rights, and that said tenth section, so far as it attempts to restrict the power of subsequent Legislatures to tax the property of said bank was a nullity, and if the immunity existed under the act of 1858, it was not transferred or continued by the act of 1869, and does not exist in favor of said Union and Planters' Bank.

The chancellor determined the questions submitted in favor of the bank, and the State has appealed.

The main questions submitted and relied upon in behalf of the State have been so so often adjudicated and determined both by this court and the Supreme Court of the United States as not to require any further discussion or attempt at elucidation, and the cases are too familiar to require citation. That charters of incorporation are contracts between the State and corporation, the obligation of which cannot be impaired; and that the Legislature had power under the Constitution of 1834 to grant to incorporations created by it either partial or total immunity from taxation for any length of time it deemed proper, has been held by the uniform current of decisions of this court and also of the Supreme Court of the United States, and while this latter power has been se

The State v. Butler.

riously questioned and dissented from by some of the most eminent jurists. And while it may be conceded that if it were a new question it might well be determined against the power, we concur in the opinion so often announced, that it has been too long settled now to be disturbed. Its practical importance in this State has been greatly lessened by the adoption of the Constitution of 1870. Hence we dismiss this branch of the case without further comment.

It is insisted, however, that if it is granted that the immunity existed under the original act, it only belonged to the corporation as an insurance company, and was not continued to it as a banking corporation under the act of 1869, which was amendatory of the original act. The only changes of the original charter made or authorized by the act of 1869 was the privilege of changing the business of the company from that of insurance to that of banking, to change its name and authorize the increase of its capital stock, expressly retaining "all their present rights, privileges and immunities, excepting only that of insurance." This was not to abolish the original incorporation, or to grant a new charter, or to in any manner restrict the rights or powers originally possessed by it, except as to the business of insurance. "It is evident," says Mr. Morawitz, "that a State may authorize a corporation to alter its original enterprise and exercise new franchises to any extent without impairing any contract with the corporators or between the corporators. The effect of such a law is merely permissive; it enables the corporation