The respondent, Samuel Bancroft, Jr., began an action in the circuit court of the United States for the district of Maryland to enjoin the county commissioners of Wicomico county from levying taxes on the property of the Baltimore, Chesapeake, & Atlantic Railway Company, alleging that he was the holder of twenty bonds secured by mortgage upon the company's property, which, under the laws of the state, had been exempted from taxation. Such proceedings were had that a decree was entered enjoining taxation of certain property of the railway company. Upon appeal to the circuit court of appeals, the judgment was affirmed (70 C. C. A.287, 135 Fed. 977), and the case was brought here by writ of certiorari.
The case was tried upon an agreed statement of facts, from which the following, pertinent to the determination of the case, may be extracted: The Baltimore & Eastern Shore Railroad Company, organized to build a line of road from Eastern Bay, in Talbot county, to Salisbury, Wicomico county, in the same state, by act of the legislature of Maryland, was granted certain privileges (Acts of the Assembly, 1886, chap. 133), §§ 2, 4, and 5 being as follows:
'Sec. 2. And be it enacted, That said corporation shall have perpetual existence, and its franchises, property, shares of capital stocks, and bonds shall be exempt from all state, county, or municipal taxation for the term of thirty years, counting from the date of the completion of said road between the termini mentioned in its charter.'
'Sec. 4. And be it enacted, That the said Baltimore & Eastern Shore Railroad Company aforesaid shall have power to unite, connect, and consolidate with any railroad company or companies, either in or out of this state, so that the capital stock of said companies so united, connected, and consolidated (respectively) may, at the pleasure of the directors, constitute a common stock, and the respective companies may thereafter constitute one company and be entitled to all the property, franchises, rights, privileges, and immunities which each of them possess, have, and enjoy under and by virtue of their respective charters.
'Sec. 5. And be it enacted, That the Baltimore & Eastern Shore Railroad Company shall have power to lease or purchase and operate any railroad or railroads, either in or out of this state, for the purpose of carrying on their business, and any other railroad company in this state shall have the right to lease or sell its railroad or other property to the said Baltimore & Eastern Shore Railroad Company.'
The Baltimore & Eastern Shore Railroad Company accepted the provisions of the act and completed the construction of its road between the termini named in August, 1891. In June, 1890, it purchased the property of the Wicomico & Pocomoke Railroad Company, extending from Salisbury to Ocean City. Afterwards, the Baltimore & Eastern Shore Railroad Company mortgaged the entire property to secure $1,600,000 of mortgage bonds. This mortgage was foreclosed in 1894, and the purchaser proceeded to organize a new corporation-the Baltimore, Chesapeake, & Atlantic Railway Company-the respondent becoming the holder of some of its mortgage bonds. This reorganization was under § 187 and 188 of art. 23, Maryland Code of 1888, which provides as follows:
Section 187, that in case of the sale of any railroad under foreclosure of mortgage, the purchaser may form a corporation for the purpose of owning, possessing, maintaining, and operating such railroad, by filing in the office of the secretary of state, a certificate of the name and style of such corporation, the number of directors, etc.
'Sec. 188. Such corporation shall possess all the powers, rights, immunities, privileges, and franchises in respect to such railroad, or the part thereof included in such certificate, and in respect to the real and personal property appertaining to the same, which were possessed or enjoyed by the corporation which owned or held such railroad previous to such sale under or by virtue of its charter, and any amendments thereto, and of [any] other laws of this state,' etc.