I concur in the opinion of my brother Campbell, with the single exception of the views he has intimated upon a question which, so far as regards the proof, is merely hypothetical.
Had it appeared in evidence, as alleged in the bill, that $300,000 of fictitious stock had been issued upon which nothing had in fact been paid, I should not be prepared to hold that it could be taxed under a charter which taxes *459only “capital stock paid in;” notwithstanding the company may have held it out to the world as full paid stock. I am not satisfied that the doctrine of estoppel has any application to such a case, though as a question of public policy, its effect may be salutary in restraining the issue of fictitious stock.
But as I concur entirely in the view my brother Campbell has taken of the evidence, that, as respects this item, the proof fails to sustain the case made by the bill, I forbear to enter upon the discussion of the case upon this •hypothesis.
Manning J.:This court in the case of The People of the State of Michigan v. The Michigan Southern and Northern Indiana Railroad Company, 4 Mich. 398, decided the present complainant was not entitled to any deduction from its tax on the capital stock and loans of the company on account of the 3000 shares of stock alleged to have been gratuitously distributed among its stockholders; and the $185,459,84 lost by the company in negociating its loans; and the $250,000 of Jackson Branch bonds. That decision I think was correct.
The charter of the Michigan Southern Railroad Company makes the capital stock and loans of the company for constructing the road the basis of the tax to be paid to the State. In doing this, the Legislature probably intended the company should pay to the State, after the first day of February, 1851, three quarters of one per cent, on what the construction of the road should cost the company. But how should the cost of constructing the road be ascertained ? Should it be left with the company who was to pay the tax to fix the amount? or should the capital stock and loans made by the company, as the company would have no other means to build the road, be taken as the cost of the road, and be made the basis of- taxation? The latter *460was probably adopted as less objectionable than the former. However that may be, the company is required to pay a tax of throe - fourths of one per cent, annually to the State on its capital stock paid in, and upon all loans to the company for constructing the road. And the question is, what is meant by capital stoch paid in, and loans made to the company.
By the words “ capital stoch paid in,” I understand that the company is not to be taxed on what is due it from its stockholders, who would be called on from time to time to pay for their stock as the work progressed, and the company should stand in need of the money. It was not intended to exempt from taxation stock which the company, for some imaginary or actual past or future benefit, or other-cause, might think proper to dispose of without an equivalent in money. Such stock, within the meaning of the charter, is paid in, as there is nothing due on it to the company to be paid at a future day. When I say I own a certain number of shares of stock, with ten per cent, or any other amount paid in, my language implies, and I am understood as saying, at the same time, that- there is something still due from me to the company whose stock I hold.
And “upon all loans made to said company,” &c. This language, it is to be observed, is not upon all moneys borrowed or received on its loans; but “ upon all loans made.” There is a difference between these phrases, and they can not be used or construed to mean the same thing when the money received is less than the -amount mentioned in the bond given to secure the loan. The loan is the sum mentioned in the bond, and not the money received, and the interest payable on the loan, is interest on the amount mentioned in the bond, and not on what the bond may have been sold for in the market to effect the loan.
By a recent act of the Legislature, the Governor and State Treasurer are authorized, for war purposes, to negocíate and contract for a loan or loans not exceeding one *461•million of dollars in all, on the most favorable terms that in their judgment can be obtained. Suppose, to negooiate the loan, the Governor and Treasurer should find it necessary to sell the bonds of the State at ninety cents on the dollar; would they be authorized, after having sold bonds to the amount of a million, and received $900,000 only, to issue as many more bonds as might be necessary to bring into the State Treasury $1,000,000 ? Most clearly not; and if not, then the loan is the sum the State agrees to pay, and not the sum it receives.
The company in its first reports to the Auditor General -seems to have understood the word loans in this sense. And so it appears to be understood by Mr. Barhydt, one of complainant’s witnesses, and by the company, if we are to judge of its understanding from the entries in its books, Mr. Barhydt, in his answer to the first direct interrogatory says, “he can not answer of his own knowledge, but he says he has examined the books kept by said companies, •and from information derived from said books, he states upon his belief, that the entire amount of loans made by the M. S. R. R. Co., at the date of consolidation, was two millions five hundred thousand dollars, which loans appear •by the course of entries in said books to have been made for the purpose in the first part of this interrogatory mentioned.” That is, for the purpose of constructing said railroad, &c.
In regard to the $250,000 Jackson Branch bonds, they are not only a part of the $2,500,000 loaned to the company, but the allegation in the bill relative to them is not sustained by the proofs. The bill states that one of the officers of the Michigan Southern Railroad • Company, without authority from the ' corporation, handed over these bonds to a person interested ih the Chicago and Mississippi Railroad Company, on the promise of said person to return 'them, he giving out and pretending that he desired them •only temporarily to pledge, as collateral security, for a *462loan to aid in the construction of said latter company’s, road; that the bonds have not been returned; that they are-in the hands of bona fide purchasers, and that the company has not realized any thing from them. Mr. Barhydt gives the following entries relating to these bonds from the books of. the company.
“ Bills Receivable, Dr.
“February 23, 1854.
“To mortgage bonds Jackson Branch, obligation of H-Dwight, Junior, dated October 15, 1853, payable July 4,. 1855, with interest payable semi-annually, principal or any part payable in bonds, either Michigan Southern or North-. ern Indiana Railroad at par, at option of payer: 250 bonds, Nos. 1 to 250 both inclusive, $250,000; collateral security for the above note of H. Dwight, Junior, $33'T,000, second mortgage bonds of the Chicago and Mississippi R. R.
“Chicago and Mississippi Bonds to Bills Receivable.
“July 13, 1855.
“To 300 bonds of $1000 each, second mortgage Chicago, and Mississippi R. R., numbered as per bill of sale on file, taken from H. Dwight, in payment of his obligation for $250,000.”
From these entries it appears the bonds were sold on. the 15th October, 1853, to Henry Dwight, Junior, for $250,000, to be paid for on the 4tli July, 1855, with in-, terest .payable semi-annually; the principal or any part thereof, at the option of the purchaser, to be paid in Michigan Southern or Northern Indiana Railroad bonds at par:, that Dwight gave his note or obligation for the $250,000, and $33l7,000 of second mortgage bonds of the Chicago and Mississippi Railroad Company, as collateral security for the payment of his note or obligation. And that on the 13th July, 1855, $300,000 of these bonds were taken from Mr. Dwight, in payment of his note.
The nest two sums, $466,848,02, cost of steamers, and $300,000 lent to the Chicago and Mississippi Railroad Com»*463pany, it is claimed should be deducted from the amount of capital stock and loans. The first sum because one of the steamers has been lost by fire, and the others, since the consolidation, have not been used and employed within the State of Michigan, but in other States, and are there taxed. And the $300,000 because the same has been lost by the failure of the Chicago and Mississippi Railroad Company.
To this part of the bill, as well as to all other claims for deduction to be made from the company’s capital and loans, for any cause, there is a very short and conclusive answer, viz: that the Auditor General is not authorized by law to make any deduction whatever, while it is made his duty to levy the tax on the whole amount of the company’s capital stock paid in, and all loans made to the company for constructing its road. This is also a sufficient answer to the $60,136,37 deduction claimed for commissions and expenses in negociating its loans.
The third section of the act authorizing the consolidation of the two companies, it was held, in the case in 4 Mich., and I think correctly, did not change the principles of taxation on that part of the consolidated company’s road in the State of Michigan. I think the decree dismissing the bill should be affirmed.
Martin Ch. J. concurred with Manning J.Decree affirmed.