burden of such repairs properly to be borne by the railroad, they joined in an application to the legislature for the enactment of a law which should regulate that and other subjects. Such a law was enacted February 27, 1869, and its fifth section was as follows:

"Said company shall put, keep and maintain the surface of the streets inside the rails of its tracks in good and thorough repair, under the direction of the committee on streets and bridges of the common council of said city of Rochester; but whenever any of said streets are, by ordinance or otherwise, permanently improved, said company shall not be required to make any part or portion of such improvement, or bear any part of the expense thereof, but it shall make its rails in such street or streets conform to the grade thereof."

On the twenty-fifth day of February, 1890, the Brighton Railroad duly executed and delivered a lease of its property, franchises, rights and privileges, for the unexpired term of its charter, to the Rochester Railroad, which accepted the lease and took possession of the property. Subsequently, in the same year the Rochester Railroad acquired the entire capital stock of the Brighton Railroad. The acquisition of stock was in pursuance of the authority contained in chapter 254 of the Laws of New York of 1867, which, as amended by chapter 503 of the Laws of 1879, is as follows:

"Any railroad corporation created by the laws of this State, or its successors, being the lessee of the road of any other railroad corporation, may take a surrender or transfer of the capital stock of the stockholders, or any of them, in the corporation whose road is held under lease, and issue in exchange therefor the like additional amount of its own capital stock at par, or on such other terms and conditions as may be agreed upon between the two corporations; and whenever the greater part of the capital stock of any such corporation shall have been so surrendered or transferred, the directors of the corporation taking such surrender or transfer shall thereafter, on a resolution electing so to do, to be entered

Statement of the Case.

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on their minutes, become ex officio the directors of the corporation whose road is so held under lease, and shall manage and conduct the affairs thereof, as provided by law; and whenever the whole of the said capital stock shall have been so surrendered or transferred, and a certificate thereof filed in the office of the Secretary of State, under the common seal of the corporation to whom such surrender or transfer shall shall have been made, the estate, property, rights, privileges and franchises of the said corporation whose stock shall have been so surrendered or transferred shall thereupon vest in and be held and enjoyed by the said corporation, to whom such surrender or transfer shall have been made, as fully and entirely, and without change or diminution, as the same were before held and enjoyed, and be managed and controlled by the board of directors of the said corporation to whom such surrender or transfer of the said stock shall have been made, and in the corporate name of such corporation. The rights of any stockholder not so surrendering or transferring his stock shall not be in any way affected hereby, nor shall existing liabilities or the rights of creditors of the corporation, where stock shall have been so surrendered or transferred, be in any way affected or impaired by this act."

Subsequently, the Rochester Railroad duly obtained permission to convert the road into an electric trolley road, expended large sums of money in doing so, and, in the acquisition of the stock of the Brighton Railroad and the conversion of its road into an electric road, relied upon the provisions of the act of 1869 as a contract exempting it, with respect to the streets covered by the tracks of the Brighton Railroad, from other street repairs than those therein described. The city acquiesced in this view until October, 1898, when, upon the suit of an owner of adjoining property, the Court of Appeals held that under section 9 of the Act of 1884 and section 98 of chapter 39 of the General Laws, which were regarded as substantially the same, the Rochester Railroad was bound to bear the expense of a new pavement on

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Argument for Plaintiff in Error.

the location acquired from the Brighton Railroad. Conway v. Rochester, 157 N. Y. 33. Subsequently, the city repaved two streets which were within the location acquired and operated by the Brighton Railroad, prior to the passage of the Act of 1884, and, in obedience to the decision in the Conway case, assessed against the Rochester Railroad its share of the expense of pavement and brought this action to recover the amount of the assessment. It was set up in defense of the action that by the Act of 1869, the State of New York had entered into an inviolable contract with the Brighton Railroad, exempting it from the expense of pavement, that the contract had passed with the property of the Brighton Railroad to the Rochester Railroad and that the assessment was in violation of the Constitution of the United States. The contentions of the Rochester Railroad were denied by the Court of Appeals of New York, 182 N. Y. 116, which held, first, that the statute mentioned did not constitute a contract between the State and the railroad company, and, second, that if it did, the exemption granted by the statute was personal to the Brighton Railroad and did not pass to the Rochester Railroad. The case was remanded to the Supreme Court and a judgment entered pursuant to the remittitur from the Court of Appeals, and by writ of error that judgment is brought here for review.

Mr. Charles J. Bissell, with whom Mr. William C. Trull and Mr. Joseph S. Clark were on the brief, for plaintiff in error: The general railroad acts, in imposing liability upon the plaintiff in error and the railroad and property of the plaintiff in error for the permanent improvement of the streets mentioned in the complaint, impair the obligation of the contract existing between the plaintiff in error, and the State of New York, and the city of Rochester, relieving plaintiff in error from liability to pay or bear any portion of such expense.

The company accepted the franchise and acted under it for many years, extending its road and complying with all the conditions of the act of 1869. This property right was transVOL. CCV-16

Argument for Plaintiff in Error.

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ferred to the plaintiff in error, under the merger acts, which accepted the provisions and expended upon the faith thereof nearly four millions of dollars. Under the practical construction placed upon the contract by the state and city authorities, extending from 1869 to 1897, no question was raised that the railroads were exempted from paving between the tracks and two feet outside, in all the streets in which the franchise was obtained and the road constructed, prior to the date of the passage of the General Street Railroad Act of 1890, under which, as construed by its highest court, the State now seeks to strike down benefits annexed to this franchise, and enforce to the letter the burdens imposed by it.

This cannot be done. Chicago v. Sheldon, 9 Wall. 50; Detroit v. Railway Co., 184 U. S. 368; Cleveland v. Railway Co., 194 U. S. 517; Pearsall v. Gr. Northern Ry. Co., 161 U. S. 646; L. S. & M. S. R. R. Co. v. Smith, 173 U. S. 694; New Jersey v. Wilson, 7 Cranch, 164; Dodge v. Woolsey, 18 How. 331; McGee v. Mathis, 4 Wall. 143; Farrington v. Tennessee, 95 U. S. 679; Asylum v. New Orleans, 105 U. S. 362; Powers v. D. G. H. & M. Ry. Co., 201 U. S. 543.

The court erred in holding that even if the act of 1869, together with the ordinances of 1862 and 1869, constituted a contract, it was personal to the Rochester City & Brighton Railroad Company, and did not pass to the plaintiff in error, under the lease, followed by the merger, made pursuant to the provisions of the act of the legislature of the State of New York, chapter 254 of the Laws of 1867 and chapter 503 of the Laws of 1879, the latter act amending the act of 1867.

The merging company, the plaintiff in error, took everything which the lessor had by the same title and to the same extent as any stockholder purchasing the entire stock would take it, only the merging company took title to all the property, privileges, etc., as well as to the stock. That everything was to pass to the merging company was clearly the legislative intent. Each corporation continued in life, the lessor corporation, although it had parted with all its property, as well as the

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Argument for Defendant in Error.

lessee corporation which acquired it. In re New York Elec. Co., 133 N. Y. 690; Morgan v. Louisiana, 93 U. S. 217; L. & N. R. R. Co. v. Palmes, 109 U. S. 244; C. & O. R. R. Co. v. Virginia, 94 U. S. 718; C. & O. Ry. Co. v. Miller, 114 U. S. 176; Wilson v. Gaines, 103 U. S. 417; Shields v. Ohio, 95 U. S. 319, and other cases discussed and applied.

In the light of all these cases, giving to them all their full force and effect and construing the grant to the Rochester City & Brighton Railroad Company of an exemption from paying for new pavements, as a privilege personal to that company, the same legislature, the same power that conferred the privilege, expressly provided in the Merger Acts of 1867 and 1879, that that particular privilege should pass to any merging company which might thereafter comply with the provisions of the Merger Acts.

The Rochester Railway Company was a merging corporation contemplated by the statutes, and when it acquired the entire capital stock of the Rochester City & Brighton Railroad Company, then held under lease, and filed the certificate required by the Merger Acts, it acquired all the estate, property, rights, privileges and franchises of the Rochester City & Brighton Railroad Company, and now holds them as "fully and entirely and without change or diminution, as the same were before held and enjoyed," and that directly within the meaning and the authority of the several cases examined and digested under this head.

Mr. William B. Webb and Mr. Benjamin B. Cunningham for defendant in error:

The alleged immunity from taxation being personal to the Rochester City & Brighton Railroad Company could not be acquired by the plaintiff in error by lease or purchase of said company's property and franchises, unless with the permission of the legislature of the State of New York. The decision of the state court, that the state statutes did not permit this immunity to pass to plaintiff in error, was based upon the on