Statement of the Case.

January 30, 1884-called of the incorporators of the Energetic Insurance Company of Nashville, and in response to that call four of such incorporators appeared. A moderator was selected and books were opened, or ordered to be opened, for subscriptions to the capital stock of the company, and it was resolved that the first directory should consist of five persons. Stock was then subscribed by the various persons, amounting to $100,000, and the stockholders thus subscribing, being present either in person or by proxy, it was unanimously agreed by the incorporators present that the stockholders should go into an election for directors, and that the incorporators as such should adjourn. Thereupon, on the same day, it appears from the minutes that a meeting of the stockholders of the company was held and a board of directors elected, and the stockholders then voted to call a meeting of the directors for the same day. A meeting of the directors was then held, and a president, secretary, and treasurer of the company elected, and from that day (January, 1884) the organization of the corporation plaintiff in error was regular and continuous.

After its name was changed by the legislature to the Planters' Fire and Marine Insurance Company, and it was authorized to remove its situs to the city of Memphis, its stock was increased to $150,000 and it removed its place of business to Memphis, and bought out the assets and property of the Planters' Insurance Company and reinsured its risks. Since that time the defendant has regularly paid the commutation tax of one fourth of one per cent on each share of capital stock subscribed to the State of Tennessee, pursuant to the terms of the charter, up to the present time. By virtue of the general revenue laws of the State, the corporation, plaintiff in error, or its stockholders, have been taxed upon the capital stock or shares of stock at a greater rate than that provided for in the sixtieth section of the act of incorporation, and the plaintiffs in error claim that by virtue of that sixtieth section they are entitled to exemption from all taxation, except that therein provided for.

Opinion of the Court.

Mr. T. B. Turley, (with whom was Mr. L. E. Wright on the brief,) for plaintiffs in error.

Mr. S. P. Walker, (with whom were Mr. C. W. Metcalf and Mr. F. T. Edmondson on the brief,) for defendants in

error.

MR. JUSTICE PECKHAM, after stating the case, delivered the opinion of the court.

The claim set up by plaintiffs in error is that the insurance company was duly incorporated as the Energetic Insurance Company of Nashville, under the act passed March 24, 1860; that it is the same company as therein incorporated, and entitled to all the benefits and immunities, among them that of exemption from taxation granted by that charter.

The defendants in error deny that claim, and assert the right to tax by virtue of the general revenue laws of the State. They assert that by reason of the failure to accept the charter and organize thereunder until after the lapse of 24 years the corporation did not acquire the right of exemption provided for in the sixtieth section of the charter, because at the time the company was organized in 1884 the constitution of the State of Tennessee, adopted in 1870, was in full force, and by that constitution any exemption of the property of the corporation, its capital stock or its shares of stock, was prohibited.

The plaintiffs in error answer that they are either a corporation organized under that charter or else there is no corporation, and the individuals assuming to act as such should be sued in their individual capacity, and if liable at all for any taxes whatever, they must be liable as individuals only. They further say that the State by its action herein recognizes them as a corporation, and if a corporation at all, they are such under the original charter above mentioned, and if they be a corporation under such charter, they are entitled to all the rights and privileges and immunities granted by that charter as a whole, and that they cannot be prosecuted as a corporation under that charter for the purpose of compelling them to

Opinion of the Court.

pay taxes, and, at the same time, be denied the right of exemp tion from such payment granted by that sixtieth section. They also allege that this action of the State is a collateral attack upon their charter by denying their immunity from taxation given by its sixtieth section, and therefore calling in question its existence as a corporation, and an action of that kind can only be maintained by the State by means of a quo warranto, either against the corporation itself for the exercise of powers not granted it, or against the individuals for assuming to exercise the corporate powers.

For the purpose of effecting a dissolution of a corporation grounded upon some alleged forfeiture of its rights and powers, the State must act through its attorney general and by action in the nature of quo warranto. This is not such an action, and the dissolution of the corporation is not its object. The State in effect so far recognizes it as a corporation as to demand payment of taxes on its capital stock, or on its shares of stock, and when as a defence to that action the corporation plaintiff in error, or its stockholders, set up its alleged right of exemption under the sixtieth section of the charter, the answer of the State is, you are not entitled to that exemption, because at the time your charter was accepted, 24 years after it was granted by the legislature, the constitution of the State prevented the grant of any exemption such as is claimed by you, to which the plaintiffs in error rejoin, that in this action you cannot look at the time when the charter was accepted, but as the corporation is acting under the original charter, the sixtieth section remains in full force.

We think that even in this action it is proper for the State to inquire as to the time of the acceptance of the charter for the purpose of determining what powers were actually granted. If the charter had been accepted and the individuals organized under it prior to the adoption of the constitution of 1870, then the exemption might have gone with it; but we think it entirely possible to hold that by the acceptance of the charter, assuming it to have been within a reasonable time, but after the constitution was adopted, such acceptance (while subsequently recognized by the legislature in permitting it to

Syllabus.

change its situs) must be taken in connection with the provisions of the constitution existing at the time, and that while the incorporators might take all the other rights, powers and privileges granted by the charter, so far as to give them the franchise to be a corporation and exercise the powers therein granted, the immunity of exemption would not pass under the grant. It might possibly have been held, in a direct attack of the State upon the charter, that there had been an unreasonable delay in accepting it, and that consequently there was in law no corporation under the charter. That course was not taken, and the legislature, after the assumed organization under the charter in 1884, passed an act changing the name of the corporation and permitting it to change its situs. It might, therefore, be claimed that it thereby recognized the existence of the corporation under the charter, but in subordination to the constitution and laws existing at the time when the charter was accepted.

We think upon these facts the exemption from taxation did not pass to the corporation, and the assessments were in consequence legal and valid.

The judgment is, therefore,

Affirmed.

PLANTERS' INSURANCE COMPANY v. TENNESSEE AND SHELBY COUNTY, No. 679, by stipulation, is to abide the event of this cause.

HOME INSURANCE AND TRUST COMPANY v. TENNESSEE FOR THE USE OF MEMPHIS.

ERROR TO THE SUPREME COURT OF THE STATE OF TENNESSEE.

No. 679. Argued and submitted January 20, 21, 22, 1896.- - Decided March 2, 1896.

The charter of the Memphis Life and General Insurance Company contained a provision" that there shall be a state tax of one half of one per cent upon the amount of the capital actually paid in." The charter of the Home Insurance and Trust Company authorized that company to "or

Statement of the Case.

ganize with all the forms, officers, terms, powers, rights, reservations, restrictions and liabilities given to and imposed upon the Memphis Life and General Insurance Company." Held, that the Home Company was not subject to the provision respecting taxation in the charter of the Memphis Life Company.

THE plaintiffs below sought by this bill to recover certain taxes against the Home Insurance Company, or its shareholders, under the general revenue laws of the State, at a greater rate than the plaintiffs in error claimed they are liable to pay. This case was also tried on an agreed statement of facts, by which it appears that on the 29th day of February, 1856, the legislature of Tennessee passed an act incorporating the Home Insurance Company. On March 20, 1858, the legislature passed an act, the fourteenth section of which provides: "That the name of the Home Insurance Company of Memphis be changed to that of the Home Insurance and Trust Company, and said company may organize with all the forms, officers, terms, powers, rights, reservations, restrictions and liabilities given to and imposed upon the Memphis Life and General Insurance Company, provided nothing herein contained shall in anywise be construed to release said company from any existing liability."

The present company organized under this charter. The Memphis Life and General Insurance Company, referred to in the above section, was chartered March 2, 1854, the thirtieth section of which reads: "That there shall be a state tax of one half of one per cent upon the amount of the capital actually paid in." It is conceded that the Home Insurance Company has regularly paid this tax. The Supreme Court of Tennessee held that the shares of stock, the capital stock, the surplus and franchises of the company were subject to taxation, and that the exemption from taxation claimed by it and its shareholders was not well founded. The court rendered a decree against the company under the stipulation, by which the company assumed the liability of its shareholders for taxes against them, from which decree plaintiffs in error have prosecuted this writ of error.