of the United States and of the State. Greenwood v. Freight Co., 105 U. S. 13.

A territorial legislature has all the power of a state legislature, except as limited by the Constitution and by the act of Congress. Walker v. Southern Pac. Ry., 165 U. S. 593.

A distinction between an exemption from taxation contained in a special charter and general encouragement to all persons to engage in a certain class of enterprise is pointed out in East Saginaw Co. v. East Saginaw, 13 Wall. 373; Wisconsin & Michigan Ry. Co. v. Powers, 191 U. S. 379.

The test of a covenant, according to the court in the Wisconsin & Michigan case, is that the consideration should purport to be the motive for the promise, and the promise must purport to be the motive for the consideration. This test is met and satisfied in this case. The State proposed the terms on which it was to get a completed railroad highway, and these terms were accepted, and by these terms some millions of money were expended in providing that highway. See New Jersey v. Yard, 95 U. S. 114.

In the present case, the legislature was making a contract and not a law, because, first, the statute was passed with reference to this case alone, and not generally as to all; second, acceptance was provided for and doubtless was made.

The tax limit is part of the charter, and is not such a contract under the state constitution as to make it subject to amendment. That it is a contract appears from its form and the circumstances under which it was made; that is to say, the need and desire on the part of the people in 1855 to have a railroad across the State.

No new corporation resulted from the merger.

The act itself speaks of the transaction as merger, consolidation or purchase, but it is essentially a merger. No new corporation is created; but the old Detroit & Pontiac Company is given a new name. The period of its existence is not prolonged. The name is not a controlling circumstance. A new corporation might have been created with the old name or a

new name given to the old corporation, as was done here. But it is significant that the act declares that the Detroit & Pontiac Company shall be known hereafter by the name of the Detroit & Milwaukee Railway Company. No new company purchases or absorbs the property of both companies, but one company purchases all the property of the other. The charter of the one continues; its functions continue; new stockholders are admitted. In short, "the Oakland & Ottawa Rail Road Company shall thereupon become merged in the Detroit & Milwaukee Railway Company." The case is covered by Keokuk & Western Railroad v. Missouri, 152 U. S. 301. No new stock is created. There is no new property to be represented by stock. See also Tennessee v. Whitworth, 117 U. S. 137; Tomlinson v. Branch, 15 Wall. 460; Central R. R. v. Georgia, 92 U. S. 665; Wilmington &c. R. R. v. Alsbrook, 146 U. S. 279.

The act of 1855 is not repugnant to the constitution. Attorney General v. Joy, 55 Michigan, 94. And the Federal courts choose to be bound by such decision. Pennsylvania College, 13 Wall. 190; Cromwell v. County of Sac, 94 U. S. 359, 365.

The statute of 1901 increasing the rate of tax impairs the obligation of the contract. Pingree v. Michigan Central, 118 Michigan, 314; New Jersey v. Yard, supra; Pearsall v. Great Northern R. R., 161 U. S. 663.

This appellee is the identical Detroit & Pontiac Rail Road Company, and entitled to enjoy charter rights and immunities both of that company and of the Detroit & Milwaukee Railway Company under the amendment of 1855. No new corporations resulted from foreclosure.

A grant of corporate existence, that is, of a new corporate existence, is never implied. In the construction of the statute every presumption is against it. Memphis Railroad Company v. Commissioners, 112 U. S. 609, 618; Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 670. Unless restricted by constitutional provisions the legislature has supreme power with reference to corporations either in endowing them with life or

continuing their existence. Williamette Company v. Bank of B. C., 119 U. S. 191; Morris v. Railroad, 67 Texas, 692, 700. Corporate life is not cut short by insolvency. Chemical Bank v. Hartford, 161 U. S. 4. A reorganization is not necessarily the organization of a new corporation. 2 Clark & Marshall, Private Corporations, 974. The enlargement of the powers of a company is not by any means necessarily the creating of a new corporation. Broughton v. Pensacola, 93 U. S. 266.

The act of 1901 which assumed to enact that this and other like companies, in whose chartered history there had been a foreclosure and sale, should thereby become extinct as corporations and get new and different life under the general statute, or should be deemed to have done so, impaired the charter tax limit. Wallace v. Loomis, 97 U. S. 154.

The charter was construed by the legislature as well as by the courts prior to the act of 1901. See act of 1861 reaffirming tax limitation. This legislative construction will be followed. Gelpcke v. Dubuque, 1 Wall. 175; Southern Pacific R. R. v. Orton, 32 Fed. Rep. 478; Webster v. Cooper, 14

How. 504.

This court will follow the decision of the Supreme Court of the State; and by reason of the long acquiescence in the decision, will hold the State estopped from claiming the contrary. Wilkes Co. v. Coler, 180 U. S. 506; Burgess v. Seligman, 107 U. S. 20.

The terms "capital stock paid in," as used in the charter tax limit, extend to and mean the corporate property in which that stock is invested. The company is to pay this tax. The words "paid in" signify the capital amassed in the treasury. There is no thought in this language of the shares in the hands of shareholders. It is capital collected, not capital distributed among the shareholders. This extends to the corporate property represented by the capital and in which the capital is invested. Railroad Co. v. Gaines, 97 U. S. 697, 707; D., L. & W. Ry. Co. v. Pennsylvania, 198 U. S. 354.

MR. JUSTICE BREWER, after making the foregoing statement, delivered the opinion of the court.

Many questions which might otherwise be perplexing are settled by the decision of the Supreme Court of Michigan in Attorney General v. Joy et al., 55 Michigan, 94. That was an information brought by the Attorney General in the Supreme Court of the State, charging the defendants with claiming and usurping the corporate rights and franchises of the Detroit, Grand Haven and Milwaukee Railway Company. The act of 1855 was sustained, notwithstanding some alleged defects in its passage, and it was decided that it did not create a new corporation but simply authorized the old territorial corporation, the Detroit and Pontiac Rail Road Company, to change its name and extend its line of road, and, further, that this act in no respect conflicted with sections 1 and 8, article XV, of the state constitution. The court also sustained the act of 1859, under which the foreclosures took place, and held that by them no new company was chartered, that there was simply a reorganization and continuance of the old company.

The latter act provides that upon certain conditions new stock shall be issued in lieu of the old stock, the old officers of the company superseded, "and the new stockholders and officers shall, in the law, be deemed and taken to be the stockholders and officers of said corporation, the charter and all laws appertaining thereto continuing to be the charter and laws regulating and governing said corporation, except that it may be known and called, and sue and be sued, and may contract and do all acts which in the law it could have done in its old name, in and by the name set forth in the declaration aforesaid" (p. 253).

The testimony in this case shows compliance with these conditions. Compliance was also shown in Cook v. Detroit, Grand Haven & Milwaukee Railway Company, 43 Michigan, 349, and in that case the validity of the new organization as a continuance of the old corporation was recognized.

We thus come to the question of the effect of section 9 of the act of 1855. It has been often decided by this court, so often that a citation of authorities is unnecessary, that the legislature of a State may, in the absence of special restrictions in its constitution, make a valid contract with a corporation in respect to taxation, and that such contract can be enforced against the State at the instance of the corporation. It is said that we are not concluded by a decision of the Supreme Court of a State in reference to the matter of contract; that while the rule is to accept the construction placed by that court upon its statutes, an exception is made in case of contracts, and that we exercise an independent judgment upon the question. whether a contract was made, what its scope and terms are, and also whether there has been any law passed impairing its obligation. Douglas v. Kentucky, 168 U. S. 488. It is in order to uphold the provision of the Federal Constitution that no State shall pass a law impairing the obligation of a contract that this duty of independent judgment is cast upon this court. But here the Supreme Court of the State has ruled in favor of the continued existence of a corporation and the applicability of certain statutes, and when upon the face of such statutes a valid contract appears we accept the ruling that the statutes are valid and applicable enactments. In other words, the Supreme Court of the State having sustained the validity of a statute from which a contract is claimed, this court follows that decision, and starts with the question, what contract is shown by statute?

The particular section which it is claimed creates the contract (section 9 of the act of 1855) provides that the company shall pay an "annual tax of one per cent on the capital stock of said company paid in, which tax shall be in lieu of all other taxes, except for penalties imposed upon said company by its act of incorporation, or any other law of this State. It is contended in the first place that this is a mere gratuity, which can be withdrawn at any time, a statute in respect to taxation subject to change like other revenue statutes, and Wisconsin