State v. Illinois Central Railroad (246 Ill. 188, 1910)

Mr. Justice Carter

delivered the opinion of the court:

. This is a suit for an accounting, brought by the State of Illinois against the Illinois Central Railroad Company. The original bill was filed in this court to its February term, 1907. A motion made by; appellee to dismiss the suit for want of jurisdiction was allowed at the April term, 1907, and leave given by the State to withdraw its bill without prejudice. The bill was thereupon filed in the circuit court of LaSalle county to the June term, 1907. Appellee, by motion to dismiss, challenged the right of the Attorney General to bring this suit. Afterwards the motion was withdrawn and July 8, 1907, a demurrer was filed. After argument the State asked and obtained leave to amend the original bill. However, instead of amending, an entirely new bill was filed April 6, 1908, without objection, including interrogatories and exhibits. It will be hereafter called “the bill.” August 6, 1908, demurrers were filed thereto. They consist of a general and special demurrer to the bill as a whole, and twenty-eight separate demurrers, both general and special, to its different parts. In November and December, 1908, these demurrers were argued in the circuit court, and June 16, 1909, that court entered a decree sustaining them and dismissing the bill for want of equity. From that decree the State prayed an appeal to this court.

The bill is based on certain provisions of the charter granted to appellee by the State in' 1851,■ and seeks an accounting from October 31, 1877, down to the time of stating the account to be fixed by the court. To understand the questions raised in this case a brief historical review of the legislation which led to the granting of that charter seems necessary.

In 1836 an act was passed to incorporate the “Illinois Central Railroad,” to build a railroad commencing near the mouth of the Ohio river and extending north to a point on the Illinois river near the termination of the Illinois and Michigan canal. ' (Laws of 1835-36, p. 129.) Nothing appears to have been done under this act, and it was repealed February 17, 1851. (Laws of 1851, p. 192.) In 1837 the legislature passed an act for a general system of internal improvement, among other things authorizing the construction of a railroad from Cairo to LaSalle and appropriating three and one-half million dollars for that purpose. (Laws of 1836-37, p. 121.) After a right of way had been surveyed and acquired and a large amount of money spent the work was abandoned. The legislature in 1843 passed an act to incorporate the Great Western Railway Company, granting it authority to build a line from Cairo to LaSalle and then to Galena. (Laws of 1842-43, p. 199.) The act granted the company all the right of way, land and property acquired by the State under the act of 1837, to be appraised and paid for as provided therein. Nothing was accomplished under that law, and the charter of this company was repealed March 3, 1845. (Laws of 1844-45, p. 253.) Efforts were then made to obtain from the Federal government aid in building the railroad, and on April 13, 1849, the General Assembly re-enacted the former act for the incorporation of said Great Western Railway Company. By this latter act the Governor of the State was authorized to contract with and hold in trust for said Great Western Railway Company whatever lands might be donated to the State to aid in the completion of that railroad. (Private Laws of 1849, p. 89.) Congress, on September 20, 1850, passed an act granting to the State of Illinois a right of way through the public lands and the ownership of every alternate section of land for six miles in width on each side thereof, to aid the State in constructing a railroad from Cairo to LaSalle, with a branch to Chicago and another to Dubuque. The act provided that the lands granted should be subject to the disposal of the legislature of Illinois and be applied to the construction of the said road and branches, and to no other purpose. At the time of this grant by Congress the charter of the Great Western Railway Company was still in force. That company, however, did not undertake the work, but subsequently surrendered its charter on condition that the release of its rights should be accepted by the legislature and a new company organized for the work. This release and the conditions therein contained were accepted and the acts incorporating the company repealed by the legislature February 17, 1851. (Laws of. 1851, p. 192.) February 10, 1851, the legislature' passed an act incorporating the Illinois Central Railroad Company, the appellee in this suit. This act or charter contained twenty-seven sections. It authorized the company to locate, construct and operate a railroad and two branches, the main line to extend from the southern terminus of the Illinois and Michigan canal (near LaSalle) to a point at Cairo, with a branch to Chicago, and another branch, by way of Galena, to a point on the Mississippi river opposite Dubuque, Iowa. The Governor of Illinois was made director ex-oMcio, with power to vote either in person or by proxy. By section 15 of the charter appellee was granted all the lands ceded to the State by the act of Congress oí 1850; also depot grounds in the city of Cairo, the right of way and all the improvements made thereon by the Internal' Improvement Commission and the Great Western Railway Company under the acts of 1837. Tips latter property was in addition to that ceded to the State by the act of Congress of 1850.

The appellee was duly organized, a board of directors elected and the charter accepted March 15, 1851. It thereupon proceeded to lay out and construct the railroad and branches described in the charter. Under the authority conferred by the legislature of the State June 22, 1852, (Laws of 1852, p. 130,) the appellee constructed what is known as the “St. Charles Air Line,” extending from its eastern branch in Chicago, near Twelfth street, to the Chicago river. September 26, 1856, appellee completed the construction of its charter lines, the same being 705.5 miles in length. Since that date they have been in continuous operation, and are the only lines which appellee, under its charter and the amendments thereto, was authorized to build and operate. The State of Illinois granted to appellee by this charter 2,595,000 acres of land. In addition to this appellee was granted so much of the right of way two hundred feet in width and 705.5 miles in length as was owned by the United States or the State at the time the charter was granted. It appears from certain provisions of the charter that some of this right of way,—just how much is not shown,—was owned by private individuals, and the charter provided for appellee acquiring the right of way through and over this last named property. As the business of appellee expanded it purchased, built and leased other railroad lines, until at the time of the filing of this bill it was operating about 4400 miles of railroad, known as the “Illinois Central System.” In acquiring these branches and lines of railroad appellee did not act or assume to act under its charter powers, but under and by virtue of additional powers created and conferred by the State through general statutes. The various lines of railroad owned or operated by appellee at the time this litigation was instituted, both charter and non-charter, are as follows:

Charter Lines.

Chicago, 111., to Cairo, 111...........

Dunleith, 111., to Branch Junction, 111.

Miles.

•36473

..340.77

Non-charter Lines.

Gilman, 111., to East St. Louis, 111............'.... 209.06

St. Charles Air Line Junction, 111., to Freeport, 111. .112.14

East St. Louis, 111., to Murphysboro, 111........... 84.25

Murphysboro, 111., to Texas Junction, 111.......... 1.00

Texas Junction, 111., to Carbonéale, 111........... 7.72

Pekin, 111., to Decatur, 111....................... 67.38

Hervey City, 111., to Evansville, Iné..............160.22

Pinckneyville, 111., to Eldorado> 111............... 59.85

Murphysboro, 111., to Carbonéale, 111...............7.00

Carbonéale, 111., to Brookport, 111................70.64

Belleville, 111., to East Carondelet, 111............ 17.30

Carbonéale, 111., to Johnston City, 111............. 19.15

Texas Junction, 111., to Gale, 111.................46.65

Gale, 111., to Thebes, 111......................... 1.67

McClures, 111., to East Cape Girardeau, 111........ 4.18

Champaign, 111., to Havana, 111...................100.58

Miles.

7°5-5°

White Heath, 111., to Decatur, 111................ 31.04

Otto, 111., to Normal Junction, 111................ 79-46

Buckingham, 111., to Tracy, 111................... 10.00

Kempton Junction, 111., to Kankakee Junction, 111.. 41.80

Reevesville, 111., to Golconda, 111................. 17.20

Christopher, 111., to Herrin Junction, 111.......... 11.88

Mounds, 111., to Olive Branch, 111................ 10.49

Groves, 111., to Sand Ridge, 111................... 17.26

Wallace, 111., to Madison, Wis................... 61.80

Cedarville Junction, 111., to Dodgeville, Wis...... 57-36

Mounds, 111., to Mound City, 111.................. 2.87

Stewartsville, Ind., to New Harmony, Ind........ 6.33

West Lebanon, Ind., to Leroy, 111................ 74-43

Sixty-seventh St., Chicago, to South Chicago..... 4.76

Blue Island Junction, 111., to Blue Island......... 3.96

Kosciusko, Miss., to Aberdeen, Miss.............. 87.89

Winfield, Ala., to Brilliant, Ala.................. 7-^4

East Cairo, Ky., to New Orleans, La............547-71

East Cairo, Ky., to Paducah, Ky................ 31.89

Aberdeen Junction, Miss., to Kosciusko, Miss..... 18.37

Grenada, Miss., to Memphis, Tenn...............100.00

Louisville, Ky., to Memphis, Tenn................392.21

Cecelia, Ky., to Hodgenville, Ky................. 17.10

Horse Branch, Ky., to Owensboro, Ky............ 42.16

Evansville, Ind., to Princeton, Ky................ 99.84

Gracey, Ky., to Hopkinsville, Ky................ 10.06

Morganfield, Ky., to Uniontown, Ky.............. 6.43

DeKoven, Ky., to Ohio River, Ky................ 1.46

Blackford, Ky., to Dixon, Ky.................... 18.40

Dubuque, Iowa, to Sioux City, Iowa.............326.26

Manchester, Iowa, to Cedar Rapids, Iowa........41.85

Onawa, Iowa, to Sioux Falls, S. D...............155.58

Tara, Iowa, to Council Bluffs, Iowa..............133.38

Cedar Falls Junct., Ia., to Glenville Junct., Minn... 94.88

Stacyville Junction, Iowa, to Stacyville, Iowa..... 7.93

Hervey City, 111., to Decatur, 111., (half interest). 7.52

Hopkinsville, Ky., to Nashville, Tenn............ 84.64

Trackage Rights.

Pekin, 111., to Peoria, 111........’................ 9.21

Olive Branch, 111., to Thebes, 111................. '9-34

Total miles operated.........................4,377.44

These lines are all located approximately as indicated on the following map:

The chief contention of the parties to this litigation centers about the construction that should be given to sections 18 and 22 of appellee’s charter, which read as follows:

“Sec. 18. In consideration of the grants, privileges and franchises herein conferí ed upon the said company for the pui-poses aforesaid, the said company shall, on the first Mondays of December and June in each year, pay into the treasury of the State of Illinois five percentum on the gross or total proceeds, receipts or income derived from the said road and branches for the six months then next preceding,' the first payment of such percentage on the main trunk o'f said road to commence four years from the date of said deed of trust, and on the branches six years from the date aforesaid, unless said road and branches are sooner completed, then from the -date of completion. And for the purpose of ascertaining the proceeds, receipts or income aforesaid, an accurate account shall be kept by said company, a copy whereof shall be furnished to the Governor of the State of Illinois, the truth of which account shall be verified by the affidavits of the treasurer and secretary of such company. And for the purpose of verifying and ascertaining the accuracy of such account, full power is hereby vested in the Governor of the State of Illinois, or any other person by law appointed, to examine the books and papers of said corporation, and to examine, under oath, the officers, agents and employees of said • company, and other persons; and if any person so examined by the Governor or other authority shall knowingly and willfully swear falsely, or if the officers making such affidavits shall knowingly and willfully swear falsely, every such person shall be subject to the pains and penalties of perjury.”

“Sec. 22. The lands selected under said act of Congress, and hereby authorized to be conveyed, shall be exempt from all taxation under the laws of this State until sold and conveyed by said corporation or trustees, and the other stock, property and effects of said company shall be in like manner exempt from taxation for the term of six years from the passage of this act. After the expiration of six years, the stock, property and assets belonging to said company shall be listed by the president, secretary or other officer with the Auditor of State, and an annual tax for State purposes shall be assessed by the Auditor upon all the property and assets, of every name, kind and description, belonging to said corporation. Whenever the taxes levied for State purposes shall exceed three-fourths of one per cent per annum, such excess shall be deducted from the gross proceeds or income herein required to be paid by said corporation to the State, and the said corporation is hereby exempted from all taxation of every kind, except as herein provided for. The revenue arising from said,taxation, and the said five per cent of gross or total proceeds, receipts or income aforesaid, shall be paid into the State treasury in money and applied to the payment of interest-paying State indebtedness until the extinction thereof: Provided, in case the five per cent provided to be paid into the State treasury and the State .‘taxes to be paid by the corporation do not amount to seven per cent of the gross or total proceeds, receipts or income, then said company shall pay into the State treasury the difference, so as to make the whole amount paid equal at least to seven per cent of the gross receipts of said corporation.”

The bill alleges that from 1859, to and including 1904, appellee did not list its property with the Auditor, as provided for in section 22 of its charter; that the Auditor did not require said property to be listed and did not assess the State tax thereon in any of said years; that during all of those years appellee paid no State tax on any of its property, but did pay the State seven per cent of what the company claimed were the gross receipts of its charter lines; that in the years 1905 and 1906 appellee listed its ■ property with the Auditor for taxation; that the Auditor assessed the State tax thereon; that the tax so assessed, together with the five percentum, did not amount to seven per cent of the gross receipts from its charter lines as claimed and reported by it. The bill further alleges that from October 31, 1877, down to and including 1906, appellee should have paid seven per cent on the gross or total proceeds, receipts or income derived from the charter lines and branches, including receipts from its charter lines from traffic which originated or terminated on the non-charter lines and other lines of transportation and carried in part on the charter lines, but that it has failed to properly account for said proceeds, receipts or income; that it has not properly accounted, since October 31, 1877, for the receipts from express companies or from hotels, eating houses and dining cars operated in connection with such road or for receipts from traffic across the bridges at Cairo and Dubuque ; that in computing the gross proceeds upon which the seven per cent should be paid to the State appellee did not make a proper division of the joint earnings between its charter and non-charter lines; that it has improperly allowed the free use of charter line property and charter line services for the benefit of its non-charter lines; that it has not made a proper return as to draying and switching charges and as to newspaper advertising, and in various other ways has failed to malee proper statements and returns as to the proceeds upon which it should have paid the seven per cent to the State. No attempt will be made to set out at length the allegations of the bill.

According to the semi-annual statements made up by appellee and given to the State, from 1877 to 1906, inclusive, it appears that seven per cent on the gross proceeds for the half year ending April 30, 1878, was $151,229.54, and that the amounts turned over semi-annually have gradually increased from that date until the six months ending October 31, 1906, when it was $600,102.55.

The demurrers raise many objections, both as to the substance and form of the bill. These objections'have been argued at length in the briefs of counsel. We shall not consider them in detail now, but will dispose of those we deem it necessary to decide in connection with the points hereafter considered.

Three principal contentions are urged: First, that the bill is bad because it seeks to recover an amount equal to seven percentum of the gross proceeds of the charter lines without the State tax having been first levied and collected, prior to the year 1905, on the property of the company, as required by section 22 of its charter; second, that the bill is erroneous because it is drawn upon the theory that the receipts from inter-State commerce must be included; and third, that the allegations of the bill show that the semi-annual statements made by appellee to the State are stated accounts, and that the bill has alleged no facts showing that in equity such accounts should be opened. These questions will be taken up and considered in the order just stated.

Tax Qtiestion. ■

The State contends that the revenue required to be paid to the State under this charter is all based upon a contractual relation between the State and appellee, and that the State tax provided for in said charter is not any more a tax, in the strict sense of the term, than is the remainder of the amount necessary to malee up seven per cent on the gross proceeds of appellee. On the other hand, it is contended by counsel for appellee that the State tax provided for in said charter, although growing out of a contract, is a tax in the strict sense of the word.

This court has held that this charter formed a contract between the State and the company. (Neustadt v. Illinois Central Railroad Co. 31 Ill. 484; Illinois Central Railroad Co. v. Irvin, 72 id. 452; Illinois Central Railroad Co. v. Goodwin, 94 id. 262.) It has also been held that the provisions of this charter with reference to the revenue to be paid the State are constitutional and binding. (Illinois Central Railroad Co. v. County of McLean, 17 Ill. 291; State v. Illinois Central Railroad Co. 27 id. 64.) In State Board of Equalisation v. People, 229 Ill. 430, this court held that the provisions of the charter for the payment of this revenue was “a substituted method of taxation” in the nature of a commutation of taxes. Some of the other decisions just cited in effect hold the same. The right to tax is of necessity inherent in every government. With us it is vested in the legislature, which possesses plenary power over the subject, except so far as it may be restricted by the constitution of the State or United States. (Porter v. Rockford, Rock Island and St. Louis Railroad Co. 76 Ill. 561; 1 Desty on Taxation, 88.) A contract of exemption from taxation is generally upheld. The State may commute a tax by recovering therefor a percentage of receipts, or something similar, on the basis that it is a fair equivalent for what the customary taxes would be. (2 Cooley on Taxation,—3d ed.—p. no; 1 Desty on Taxation, p. 145; Judson on the Power of Taxation, p. 68; Mobile and Ohio Railroad Co. v. Tennessee, 153 U. S. 486; State Board of Assessors v. M. & E. Railroad Co. 49 N. J. L. 193; Stearns v. Minnesota, 179 U. S. 223.) The authorities have not always carefully distinguished between the word “tax” as applied to an ordinary tax and as applied to a payment in lieu of taxes. ■ Indeed, it is frequently necessary to decide in which way the word is used, from its connection. The payrirent of a percentage of the receipts from ■a railroad, thus .exempting its property from the ordinary burdens of taxation, is usually spoken of as a tax. It is properly so in the general use of the word, since the sum goes into the public funds to meet the public expenses. In the recent case of Powers v. Detroit, G. IT. & M. Railway Co. 201 U. S. 543, the court, in considering such a law, characterized the exaction as a “tax,” and while it was there held that the obligation upon which it was based was contractual, the opinion used the word “tax” substantially as if dealing with taxes in the ordinary sense.. Contracts exempting property from ordinary taxation or releasing such property for an equivalent are properly treated, as, indeed, they usually are, under the subject of taxation. Such contracts are a special form of tax. While they may, to a greater or less degree, have an element of compulsion somewhat similar to ordinary taxes, yet the sovereign authority may bestow them with or without conditions, and the corporations with whom they are made are at liberty to accept or reject the terms proposed. (State v. Railway Co. 128 Wis. 449.) Beyond question all of the revenue provided under this charter is based on a contract and in lieu of and intended as a fair equivalent for ordinary taxes. It is on this ground that these provisions of the charter with reference to revenue to be paid to the State have been upheld. People v. Barger, 62 Ill. 452; Illinois Central Railroad Co. v. County of McLean, 17 id. 291.

The conclusions that we have reached on other branches of the case make it unnecessary for us to consider and decide whether, in order to collect,the State tax, so called, in said charter, it is necessary to have the property of appellee listed with the Auditor and the tax levied as therein provided or whether such requirements of the charter can be waived. Demurrer No. 3 raised this question.

Inter-State Commerce.

Another question raised relates to inter-State commerce. Said section 22 of appellee’s charter provides that it shall pay to the State an amount “equal at least to seven per cent of the gross receipts of said corporation.” The State insists that under this provision appellee must pay to it a percentum or share of the gross receipts derived from inter-State traffic carried over the charter lines. Appellee insists that the payment of this per cent on such gross receipts derived from inter-State traffic is an attempt to regulate inter-State commerce, and is therefore in contravention of that part of section, 8 of article i of the Federal constitution which provides that Congress “shall have power to regulate commerce with foreign nations and among the several States and with Indian tribes.” (Hurd’s Stat. 1909, p. 10.)

It may be well to notice at this point the contention of appellee that when this charter was granted there was very little inter-State traffic, and therefore it could not have been intended to include the receipts from inter-State* commerce in the amount upon which the seven per cent was to be figured.

The United States government, when it made the grant of land, September 20, 1850, to this State for the building of a railroad, at the same time and by the same act ceded lands to the States of Alabama and Mississippi, stating in the act that it was “in aid of the construction of a railroad from Chicago to Mobile.” (9 U. S. Stat. at Large, p. 466.) The charter of appellee stated that the road was to begin at Cairo, and one branch was to end at Chicago and another opposite Dubuque, Iowa. The Ohio and Mississippi rivers were then known as navigable streams and were carrying at that time most of the inter-State traffic in the west. It is clear from that fact as well as from what is stated in these land grants, that it was then understood that the railroad was, in fact, to be inter-State, and was to carry not only inter-State commerce from other railroads but that taken as well from the navigable streams. In discussing this charter in Illinois Central Railroad Co. v. Illinois, 163 U. S. 142, the court stated (p. 150) : “The manifest purpose of Congress was to establish a railroad in the center of the continent, connecting the waters of the Great Lakes with those of the Gulf of Mexico for the benefit of inter-State commerce.” In Cleveland, Cincinnati, Chicago and St. Louis Railway Co. v. Illinois, 177 U. S. 514, it was stated that the Illinois Central railroad was an inter-State highway established by the authority of Congress. Manifestly, all parties to this charter intended that “the gross or total proceeds, receipts or income derived from said road and branches” should include those derived from the charter lines for transporting inter-State commerce. This is the natural and obvious meaning of the language. The word “gross” is defined by the Standard Dictionary to be “the entire amount; the sum total; without deduction of any kind.” That has been the construction put upon this section ever since the charter was granted, for it is conceded that during all these years appellee has paid without objection, semi-annually, to the State seven per cent of what it claimed was the amount of such interstate traffic receipts from its charter lines.

The State has the inherent power to create and control corporations by legislative action, subject only to Federal and State constitutional limitations, (i Purdy’s Beach on Private Corp. sec. 34.) A corporation is the mere creature of local law, and can have no legal existence beyond the limits of the State where created, except by the authority of the sovereignty in which it wishes to act. As was said in Augusta v. Earle, 13 Pet. 519: “It must dwell in the place of its creation and cannot migrate to another sovereignty.” Having no absolute right of recognition in other States but depending for such recognition and enforcement of its contraéis upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely. They may restrict its business to particular localities, or they-may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion. (Paul v. Virginia, 8 Wall. 168.) The right or privilege to be a corporation and do business is generally deemed of value to the corporators. The State may require, “as a condition of the grant of the franchise and also of its continued exercise, that the corporation pay a specified sum to the State each year or month, or a specific portion of its gross receipts or of the profits of its business, or a sum to be ascertained in any convenient mode which it may prescribe. The validity of the tax can in no way be dependent upon the mode which the State may deem fit to adopt in fixing the amount for any year which it will exact for the franchise. No constitutional objection lies in the way of a legislative body prescribing any mode or measurement to determine the amount it will charge .for the privileges it bestows. It may well seek in this way to increase its revenue to the extent to which it has been cut off by exemption of other property from taxation.” (Home Ins. Co. v. New York, 134 U. S. 594.) It is the settled law, however, that only the Federal government may control inter-State commerce. “Inter-State commerce,” as that term is understood with reference to this provision of the Federal constitution, consists of intercourse and traffic between the citizens of the States and includes the transportation of persons and property between points in different States. (Gray on Limitation of the Taxing Power, secs. 827, 830.) It applies to all commerce which crosses the State line, regardless of the distance of the point from which it comes or to which it is bound, before or after crossing such line. It matters not, as applied to a particular carrier, that the whole line is within a State, if the transportation by such carrier is a part of one continuous journey from one State to another under one continuous contract of carriage. (Gloucester Perry Co. v. Pennsylvania, 114 U. S. 196; St.Clair County v. Inter-State Co. 192 id. 454; Nezv York v. Knight, 192 id. 21; Louisville and Nashville Railroad Co. v. Behhner, 175 id. 648; People v. Miller, 178 N. Y. 194.) In McCulloch v. Maryland, 4 Wheat. 316, Chief Justice Marshall held that as “the power to tax involves the power to destroy,” the State governments have no right to tax any of the constitutional means employed by the government of the Union to execute its constitutional powers, nor to tax or otherwise retard, impede, burden or in any manner control the operations of the constitutional laws enacted by Congress to cany into effect the powers vested in the national government. In Gibbons v. Ogden, 9 Wheat. 1, the court, in considering the extent of the Federal government’s power to regulate commerce, declared that it was complete within itself, and without limitations other than those prescribed by the Federal constitution; that the power was co-extensive with the subject on which it acted, and could not be stopped by the external boundary of a State but must enter its interior as well. The same court held that transportation w-as essential to commerce, “and every burden laid' upon it is pro tanto a restriction. Whatever, therefore, may be the true doctrine respecting the exclusiveness of the power vested in Congress to regulate commerce among the States, we regard it as established that no State can impose a tax upon freight transported from State to State or upon the transporter because of such transportation.” (P. & R. Railroad Co. v. Pennsylvania, 15 Wall. 232.) Necessarily that power, alone, which governs the whole country can prescribe regulations as to inter-State commerce. “It needs no argument to show that the commerce with foreign nations and between the States, which consists in the transportation of persons and property between them, is a subject of national character and requires uniformity of regulation. Congress alone, therefore, can deal with such transportation. Its non-action is a declaration that it shall remain free from burdens imposed by State legislation, otherwise there would be no protection against conflicting regulations of different States, each legislating in favor of its own citizens and products and against those of other States. It was from apprehension of such conflicting and discriminating State legislation, and to secure uniformity of regulation, that the power to regulate commerce with foreign nations and among the States was vested in Congress.” (Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196.) A grant by the Federal constitution on this subject must necessarily be as extensive as the mischief, and should comprehend not only commerce among States but all foreign commerce as well. Brozan v. Maryland, 12 Wheat. 419.

Many decisions have been rendered by the United States courts on this question. A few others, only, will be referred to for the purpose of illustrating the application of the rule. It was held in Smith v. Turner, 7 How. 283, that the imposition of State taxes upon alien passengers arriving in State ports was in contravention of the constitution. In Almy v. California, 24 How. 169, that a State law imposing a duty upon the import of gold and silver was unconstitutional. In The Daniel Ball v. United States, 10 Wall. 557, that there was no distinction between the authority of the courts to regulate an agency employed in commerce between the States when that agency extended through two or more States and when it was confined within the limits of a single State. In Railroad Co. v. Husen, 5 Otto, 465, that a statute was unconstitutional which prohibited the driving or conveying of Texas, Mexican or Indian cattle into Missouri between the first of March and the first of December each year, not being a legitimate exercise of the police power as a quarantine regulation. In Pensacola Telegraph. Co. v. Western Union Telegraph Co. 6 Otto, 1, that the power of Congress to regulate commerce with foreign nations and the several States included the electric telegraph as an agency of inter-State commerce. In Pickard v. Pullman Southern Car Co. 117 U. S. 34, that a law of Tennessee was void which imposed a-privilege tax of $50 per annum on every sleeping car used on every railroad in Tennessee, so far as it applied to the transportation of inter-State passengers. In Wabash, St. Louis and Pacific Railroad Co. v. Illinois, 118 U. S. 557, that a State statute which attached a penalty for unjust discrimination as to the carrying of freight and passengers was void so far as it applied to inter-State commerce. In Bowman v. Chicago and Northwestern Railroad Co. 125 U. S. 465? that a statute forbidding common carriers bringing intoxicating liquors into Iowa without first obtaining a certificate from that State was a regulation of commerce and unconstitutional. In Crutcher v. Kentucky, 141 U. S. 47, that a law which provided that the agent of an express company not incorporated by the State could not carry on business there without first obtaining a license was unconstitutional so far as it applied to inter-State commerce. In Cleveland, Cincinnati, Chicago and St. Louis Railway Co. v. Illinois, 177 U. S. 514, that a law of the State which required all passenger trains to stop at county seats was an unlawful interference with inter-State commerce. In Hanley v. Kansas City Southern Railway Co. 187 U. S. 617, that the attempt of a railway commission of Arkansas to fix the rates for goods between two points within that State when a large part of the route was outside of the State, through Indian Territory or Texas, was a regulation of inter-State commerce.

Not everything which affects inter-State commerce amounts to its regulation within the meaning- of the constitution. The courts have often found it difficult to draw the line between the State and Federal power. Nice distinctions have been made in attempting to distinguish as to Federal and State affairs, and the line of distinction is apparently often indistinct and shadowy. (Cooley’s Const. Lim.—4th ed.—732; Gloucester Perry Co. v. Pennsylvania, 114 U. S. 196.) As was said by the late Justice Miller in Par go v. Michigan, 121 U. S. 230, on page 240: “As to what enactments by the State legislatures are in violation of the constitutional provision, [on inter-State commerce,] it may be admitted that the court has not always employed the same language, and all the judges of the court who have written opinions may not have meant precisely the same thing” in what they have written.

A tax may be imposed upon the property within the State of a foreign or domestic corporation whatever business it may be engaged in, and may take the form of a tax for the privilege of exercising its franchise in the State, if the amount of the tax is dependent upon and fixed by the value of the property situated in the State. “The corporation is thus made to bear its proper proportion of the burdens of the government under whose protection it conducts its operations, while inter-State commerce is not, in itself, subjected to restraint or impediment: * * * The right of a State to tax the franchise or privilege of being a corporation, as personal property, has been repeatedly recognized by this court, and -this whether the corporation be a domestic or a foreign corporation doing business by its permission within the State. But a State cannot exclude from its limits a corporation engaged ’ in inter-State or foreign commerce or a corporation in the employment of the general government, either directly in terms or indirectly by the imposition of inadmissible conditions. Nevertheless, the State may subject it to such property taxation as only incidentally affects its occupation, as all business, whether of individuals or corporations, is affected by common governmental burdens.” Postal Telegraph-Cable Co. v. Adams, 155 U. S. 688.

The decisions cited and relied on by the appellee on this point are, without exception, cases in which the State has attempted to levy a tax on inter-State commerce after the charter of the corporation was granted. No case has been cited, and we have found none, declaring a charter contract similar to the one here in question invalid as a regulation of inter-State commerce. Perhaps the case most nearly like this is that of Baltimore and Ohio Railroad Co. v. Maryland, 21 Wall. 456. That was an action by the State of Maryland against the railroad company to recover a certain sum under a provision of said company’s charter that it should pay to the State every six months one-fifth of the whole amount received during that period for the transportation of passengers on said road. The charter was accepted and payment made for many years, but the company finally disputed the constitutionality of that provision of its charter and refused further payment. -In discussing the right of the State to collect said payment the court said (p. 471) : “This unlimited right of the State to charge, or to authorize others to charge, toll, freight or fare for transportation on its roads, canals and railroads arises from the simple fact that they are its own works or constructed under its authority. It gives them being. It has a right to exact compensation for their use. It has a discretion as to the amount of that compensation. That discretion is a legislative—a sovereign—discretion, and in its very nature is unrestricted and uncontrolled. * * * This exercise of power on the part of a State is very diEerent from the imposition of a tax or duty upon the movements or operations of commerce between the States. Such an imposition, whether relating to persons or goods, we have decided the States cannot make, because it would be a regulation of commerce between the States in a matter in which uniformity is essential to the rights of all and therefore requiring the exclusive regulation of Congress. * * * While it is commonly said that the State has absolute control over the corporations of its own creation and may impose upon them such conditions as it pleases, ’and like control over its own territory, highways and bridges, and may impose such exactions for their use as it sees fit, on the other hand it is conceded that it cannot regulate or impede inter-State commerce nor discriminate between its own citizens and those of other States, prejudicially to the latter. The problem is to reconcile the two propositions, and as the latter arises from the provisions of the constitution of the United States, and is therefore paramount, the question is practically reduced to this: what amounts to a regulation of commerce between the States or to a discrimination against the citizens of other States? This is often difficult to determine. In view, however, of the very plenary powers which a State has always been conceded to'have over its own territory, its highways, its franchises and its corporations, we cannot regard the stipulation in question as amounting to either of these unconstitutional acts. * * * It may incidentally affect transportation, it is true; but so does every burden or tax imposed on corporations or persons engaged in that business. Such burdens, however, are imposed diverso intuitu and in the exercise of an undoubted power. The. State is conceded to possess the power to tax its corporations, and yet every tax imposed on a carrier corporation affects, more or less, the charges it is compelled to make upon its customers. So the State has an undoubted power to exact a bonus for the grant of a franchise, payable in advance or in futuro; and yet that bonus will necessarily affect the charge upon the public which the donee of the franchise will be obliged to impose.”

It is argued by counsel for appellee that this decision has been practically overruled by later decisions of that court. While it is true that the court overruled its statement in the case just referred to,—that the rates of transportation were entirely discretionary with the State authorities,—in Wabash, St. Louis and Pacific Railroad Co. v. Illinois, 118 U. S. 557, it has never attempted to distinguish or overrule its holding that the State has the undoubted power to exact a bonus for the grant of a franchise, payable in advance or in futuro. On the contrary, it has repeatedly referred to this doctrine with approval. (Stone v. Farmer’s Loan anda Trust Co. 116 U. S. 307; Pickard v. Pullman Southern Car Co. 117 id. 34; Ashley v. Ryan, 153 id. 436; Horn Silver Mining Co. v. New York, 143 id. 305; Covington and Cincinnati Bridge Co. v. Kentucky, 154 id. 204; Northern Securities Co. v. United States, 193 id. 197.) The authorities have always held that there is an essential distinction between a tax and a bonus. (Commonwealth v. Brie and Western Transportation Co. 107 Pa. 112; 2 Beach on Railways, sec. 10x7; 1 Bouvier’s Law Diet.—Rawle’s ed.—p. 254.) In Ashley v. Ryan, 153 U. S. 436, an application was made to the State of Ohio to allow a consolidation of certain railroads. The State would only permit such consolidation on condition that it be paid a fee of one-tenth of one per cent of the value of the entire stock of the consolidated company. The court in that case stated (p. 446) that “the payment of the charge was a condition imposed by the State of Ohio upon the taking of .corporate being or the exercise of corporate franchises, the right to which depended solely on the will of that State, and hence the liability for the charge was entirely optional.” The court concluded that the exaction “constituted no tax upon inter-State commerce or the right to carry on the same or the instruments thereof, and that its enforcement involved no attempt on the part of the State to extend its taxing power beyond its territorial limits.”

In Philadelphia and Reading Railroad Co. v. Pennsylvania, 15 Wall. 284, the State of Pennsylvania levied' a tax upon the gross receipts of the railroad company, and it was held that such a tax was not a tax upon inter-State transportation or in conflict with the Federal constitution. It is contended by counsel for appellee that this case has been overruled in Fargo v. Michigan, 121 U. S. 230, and Philadelphia Steamship Co. v. Pennsylvania, 122 id. 326. In neither of these last mentioned cases did the court state in precise terms that the case in question was overruled, but, on the contrary, it attempted in both cases to distinguish the former case. No one, however, can examine the opinions in those cases and the later opinions of that court upon inter-State commerce without'being impressed with the obvious tendency of that court to enlarge the Federal power and limit the power of the State as to collecting revenue in any form from commerce and its instruments. But conceding that Philadelphia and Reading Railroad Co. v. Pennsylvania, supra, had been practically overruled by the later decisions, such fact would be far from conclusive in deciding the present case, as that case concerned a tax in the strict sense of the term, levied after the charter had been granted, and involved in no way the question of a voluntary contract entered into by the railroad company at the time its charter was granted. Furthermore,, the later decisions of that court wherein the facts were more nearly like those in the present case tend to uphold the contention of the State as to the proper construction of the appellee’s charter. In Maine v. Grand Trunk Railway Co. 142 U. S. 217, the court held that a State statute which required a railroad corporation to pay an annual tax for the privilege of exercising its franchise, on the amount of its gross transportation receipts, and provided that a railroad lying partly within and partly without the State should pay a tax computed in a specified way on the gross receipts in the State, did not conflict with the Federal constitution. In Adams Bxpre'ss Co. v. State Auditor, 165 U. S. 194, the court laid down practically the same rule, and held that such a requirement by the State was not an .attempt to tax property having a situs outside of the State, but only to place a just value on that within. To the same effect are Wisconsin and Michigan Railway Co. v. Powers, 191 U. S. 379, and McHenry v. Alford, 168 id. 651.

„ Appellee insists that the late decision in Galveston, Harrisburg and San Antonio Railroad Co. v. Texas, 210 U. S. 217, is decisive of this question in its favor. In that case the State of Texas had imposed a tax upon railway companies whose lines were -wholly within the State, equal to one per cent of their gross receipts, where in some cases much the larger part was derived from inter-State commerce. The court there said (p. 218) : “It being once admitted, as, of course, it must be, that not every law that affects commerce among the States is a regulation of it in a constitutional sense, nice distinctions are to be expected. Regulation and commerce among the States both are practical rather than technical conceptions, and,-naturally, their limits must be fixed by practical lines. * * * The State must be allowed to tax the property, and to tax it at its actual value as a going concern. On the other hand, the State cannot tax the inter-State business. The two necessities hardly admit of an absolute logical reconciliation. Yet the distinction is not without sense. When a legislature is trying simply to value property, it is less likely to attempt or to effect injurious regulation than when it is aiming directly at the receipts from inter-State commerce. A practical line can be drawn by taking the whole scheme of taxation into account. That must be done by this court as best it can. Neither the State courts nor the legislatures, by giving the tax a particular name or by the use of some form of words, can take away our duty to consider its nature and effect. If it bears upon commerce among the States so directly as to amount to a regulation in a relatively immediate way, it will not be saved by name or form.” In that case the court quoted with approval from Postal Telegraph-Cable Co. v. Adams, 155 U. S. 688, the following: “By whatever name the exaction may be called, if it amounts to no more than the ordinary tax upon property, or a just equivalent therefor, ascertained by reference thereto, it is not open to attack as inconsistent with the constitution.” The court held that the Texas law was unconstitutional, as directly affecting and regulating interState commerce. The fact that four of the members of that court dissented shows that the case was a close one, and that the line of distinction between the power of the State and Federal governments was, indeed, dim and shadowy.

Under the reasoning of the majority opinion in the last case the provision of the charter here in question would not be unconstitutional, for it amounts to no more than a requirement that a just equivalent for an ordinary-tax- shall be paid the State, and this court has so held. In Illinois Central Railroad Co. v. County of McLean, 17 Ill. 291, on page 292, the court said that “the payments provided for in the eighteenth section of their charter have been constitutionally substituted under the second section of the constitution in lieu of the general rule of uniformity and proportion fixed in its first clause.” In People v. Barger, 62 Ill. 452, this, court, in referring to the decision just quoted from, said (p. 456) : “That case holds that it is within the constitutional power of the legislature to exempt property from taxation or to commute the general rate for a fixed sum, and that the provision in the charter' of the Illinois Central Railroad Company exempting its property from taxation upon the payment of a certain portion of its earnings was constitutional. The case proceeds on the principle that the proportion of the earnings of the company to be paid to the State is equal to the burden of the State tax imposed on the citizens and other corporations in the State, which is thought to answer the requirements of the constitution that ‘every person or corporation shall pay a tax in proportion to his or her property.’ The case can be supported on no other principle.”

Clearly, the provisions of appellee’s charter as to revenue were inserted as a fair method of fixing an equivalent for a tax that would otherwise ordinarily be levied on the property of appellee, and were in no sense an attempt to regulate or impose a tax upon inter-State commerce. Such payment of seven per cent on the gross receipts was used as a substitute measure for ordinary taxes. Under the .reasoning in Galveston, Harrisburg and San Antonio Railway Co. v. Texas, 210 U. S. 217, a payment, under such circumstances, of- seven per cent of the gross proceeds on interState traffic would be upheld. The provisions of appellee’s charter for the payment of the percentage in question are based upon an entirely different principle from the levying of taxes on a corporation after its franchise has been granted. The payment differs in principle from an ordinary tax. It was a'contract voluntarily entered into by appellee. We agree fully with the reasoning: of the United States Supreme Court in Western Union Telegraph Co. v. Kansas, 30 Sup. Ct. Rep. 190, where it was said: “It is of last importance that the freedom of inter-State commerce shall not be trammeled or burdened by local regulations, which, under the guise of regulating local affairs, really burden rights secured by the constitution and laws of the United States.” The provisions of this charter in no way conflict with that doctrine: Their enforcement will not, in our judgment, unduly interfere with inter-State commerce or such free intercourse between all parts of the country as is demanded by the letter and spirit of the Federal constitution. The demurrers or parts of demurrers'which seek to raise only this question cannot be sustained.

Accounting.

The third question raised is, that the facts averred in the bill show that the semi-annual statements were settled accounts, and that no facts are set out in the bill showing that in equity these accounts should be re-opened and reexamined. The Attorney General insists that no copy of the accounts, as that term should be understood under the charter, was ever furnished by appellee during any of these years to the Governor of the State, and he further insists that the Governor has no power to fix and approve the proper amount to be paid semi-annually. Copies of these semi-annual statements for the years in question were attached to the bill as exhibits. The first copy of said semiannual statements reads as follows:

“ILLINOIS CENTRAL RAILROAD COMPANY. Statement of gross earnings in Illinois for the six months ending 30th April, 18/8.

Freight. Passenger. Mail. Express. Miscel. Total. Nov. Dec. Jan. Feb. Mar. Apr. $274,978 75 233,714 42 276,347 34 199.896 36 218.896 89 225,658 76 $82,821 15 93*867 90 78,768 14 71,853 61 81,677 66 82,333 98 $8,295 14 8.295 14 8.295 14 8.295 34 8.295 23 8.295 24 $7,839 00 7,839 00 10,935 00 5,640 00 8,450 00 8,644 80 $22,995 7i 23,609 26 22,188 71 25,639 99 24,483 10 21,571 23 $396,929 75 367.325 72 396,534 33 311.325 30 341,802 88 346,504 01 $1,429,492 52|$49i,322 44 $49,77i 23 $49,347 8o|$i40,488 00 $2,160,421 99

Recapitulation.

Freight........................................................$1,429,492 52

Passengers.................................................... 491,322 44

Mail........................................................... 49,771 23

Express.................... 49,347 80

Miscellaneous.......................?.......................... 140,488 00

Total.................................................$2,160,421 99

Seven per cent upon which is......................................$151,229 54

1 j

S’ “State oe Illinois,

igo. Cook County, Chicago.

“John C. Welling, being duly sworn, states upon oath that he is the auditor of the Illinois Central Railroad Company in Illinois, and that said company has no secretary in said State; and that this affiant further states the foregoing statement of gross earnings derived from said road for the six months ending 30th April, 1878, is a correct abstract and statement from the books and ac-

counts of said company.

J. C. Welling.

“Subscribed and sworn to before me this 5th day of June, 1878. (Seal.) Bernt MoE# Notary Public.”

Endorsed on the back as follows:

“Illinois Central R. R. Co.—Statement of gross earnings for six months ending April 30th, 1878, $151,229.54.—Examined and approved June 8, 1878.—S. M. Cullom, Governor. No. 45, filed in Auditor’s office June 8, 1878.—T. B. Needles, Auditor P. A.”

The form of affidavit attached to this first report has been substantially followed in all the other reports, excepting that since 1890 “gross earnings” has been changed to “gross receipts.” All of the affidavits except two of the later ones have been sworn to by John C. Welling, in the successive capacities of auditor in Illinois, auditor, general auditor, comptroller, and vice-president. One of the two not signed by him was sworn to by the comptroller and the other by the assistant to the president.

A typical report from near the middle of the period here involved is as follows:

A typical report in the latter part of the period in question is as follows:

The exhibits show that these semi-annual reports, from that ending April 30, 1878, to that ending October 31, 1881, were signed by Gov. Cullom as “examined and approved.” The two following, in the year 1882, were signed by him as “approved.”' The four signed by Gov. Hamilton during 1883 and 1884 were marked by him as “approved.” The first statement to Gov. Oglesby (for the six months ending April 30, 1885,) was marked as “received and examined,” and the following ones, down to and including the six months ending April 30, 1888, (with the exception of two filed in 1886, which are not signed in any manner by the Governor,) were signed by him as “examined and referred to the Auditor of Public Accounts for filing.” The last report filed during Gov. Oglesby’s term (for the half year ending October 31, 1888,) does not seem to have' been examined or acted upon by him, but on March 4, 1889, it was signed by Lyman B. Ray, acting Governor, with this notation: “The within statement has been examined and is respectfully referred to. the Auditor of Public Accounts.” Gov. Fifer signed all the reports submitted during his term in 1889, 1890, 1891 and 1892, with a notation substantially the same as that just referred to by acting Governor Ray. Gov. Altg'eld signed the first two reports submitted during his term as “examined and referred to Auditor.” Since that time, and down to and including’ 1906,—-that is, during the remainder of Gov.' Altgeld’s term, and during Gov. Tanner’s, Gov. Yates’, and the first two years of Gov. Deneen’s terms,—there has been no signature or notation on the reports by the Governor or in his office, with the exception of the one for the half year ending October 31, 1895, which was marked “approved” by Gov. Altgeld, and the one for the six months ending October 31, 1903, during Gov. Yates’ administration, which is simply marked “received executive office,” without any signature. Most of these statements are marked with the filing marks of the Auditor’s office, while a few have no marks on them to indicate that they were ever filed in that office.

That part of section 18 of appellee’s charter which refers to the keeping of accounts and furnishing a copy to the Governor reads: “For the purpose of ascertaining the proceeds, receipts or income aforesaid, an accurate account shall be kept by said company, a copy whereof shall be furnished to the Governor of the State of Illinois.” In their brief, counsel for the State argue that this means that the company must necessarily include all the items that go to make up its total or gross receipts, but the Attorney General in the oral argument finally summed up his contention on this point by stating that the copy of the accounts need not be a copy of all the books, schedules and data which enter into and make up the account; that such an account would be wholly impractical and useless; that the purpose of furnishing a copy of an account was to furnish the Governor with such knowledge of the company’s affairs and insight into its methods that he could make a speedy investigation into the correctness of the report; that the copy should “not only show classified totals and ledger balances, but how the earnings which produced these totals were made up, the methods employed in dividing joint receipts, distributing joint expenses, deducting bridge arbitrarles, using charter line terminals, and in a general, way all the methods employed which directly affected the basis of the account.” It is conceded by all parties to this litigation that the books of account and the vouchers referred to were so numerous and voluminous that those pertaining “to a single period of six months since the year 1877 would occupy almost the entire space of an ordinary freight car in use at the present time.” To furnish an itemized account containing all-items of receipts under such circumstances would be not only impractical, but would defeat the very purpose for which the accounts were required. It might consume almost as much time to investigate and pass upon such an account as to prepare it in the first place. Under this provision of the charter the Governor could require a reasonable statement of account, showing, generally, from what sources the receipts were obtained, in order to furnish him with such knowledge of the company’s affairs that he might be able to pass understandingly on the correctness of the account. This ■ does not appear to have been required by any of the Governors. Must it be held that the accounts or statements that were returned to the Governors do not comply with the requirements of the charter? The word “account” has no clearly defined legal meaning or definition. In its primary meaning an account is some matter of debt or credit, or of a demand in the nature of a debt or credit between the parties, arising out of a contract or fiduciary relation or from some duty imposed by law, and is not required to be in any particular form or necessarily to contain detailed information. The word is flexible in its meaning, depending somewhat on surrounding circumstances and the connection in which it is used. (Preston Nat. Bank v. Purifier Co. 102 Mich. 462; Nelson v. Posey County, 105 Ind. 287; Millet v. Bradbury, 109 Cal. 170; Bouvier’s Law Diet.; 1 Ency. of L. & P. p. 680, and cases cited.) An account may be no more than a list or catalogue of items, whether of debts or credits. (Rensselaer Glass Factory v. Reid, 5 Cow. 587.) Parties who have the authority to pass upon and settle an account may waive their right to have the account fully itemized. Ogden v. Astor, 4 Sandf. 311; Parnam v. Brooks, 26 Mass. 212.

What power or authority rested in the Governor as to settling and fixing the amount of these semi-annual statements ? The general rule is, that the State, like a municipal corporation, is bound by the acts of its officers when they are acting within the scope of their authority, but when this authority