should, with all convenient despatch, make and complete the said branch to a junction with The Eastern Counties Railway at Cambridge, and that, whenever the net earnings of The Newmarket Railway Company should not be sufficient to pay a dividend equal to three per cent. per annum on their capital of 350,000l., The Eastern Counties Railway Company would pay to The Newmarket Railway Company such a sum of money as would be sufficient to make up the dividend to three per cent. per annum, so that this sum should not exceed 50002.

The branch was accordingly made by The Newmarket Railway Company, and opened on the 9th October, 1851; and the agreement, which was entered into for 99 years, was, in 1852, confirmed by Act of Parliament. The branch railway continued to be occupied and worked by the appellants; and, the year preceding the making of the rate appealed against, the appellants were unable from their net earnings to pay a dividend of three per cent. upon their capital; and The Eastern Coun ties Railway Company paid them 37051. 98. 7d., under the agreement, to make up the dividend to three per cent. per annum.

The appellants contend that this sum ought not to be taken into consideration in assessing them as occupiers of the railway to the relief of the poor, as it is not an earning of their railway, nor rent, nor money in the nature of rent, paid for the use of the railway, but a payment arising from a contract of guarantee, and not derived from the profits of the occupation of the land. And I am of this opinion. *The rateable value of the railway is, by the Parochial Assess*101] ment Act, (a) the rent at which the same might reasonably be expected to let from year to year, free of all usual tenants' rates and taxes, and deducting the probable costs necessary to maintain it in a state to command such rent. If the railway was let, the amount of rent would depend on the amount of annual profit to be derived therefrom, and it would be immaterial to the tenant whether this exceeded or fell short of three per cent. on the cost price of the line; the cost of construction does not indicate the profit to be obtained therefrom as a matter of fact; and it was decided in Regina v. Mile End Old Town, 10 Q. B. 208 (E. C. L. R. vol. 59), to be no criterion in law of the rateable value of any property to the poor rate. If the purchaser of a farm had a guarantee that the rent should yield him three per cent. on the purchase-money, the rateable value, that is the rent which a tenant would pay for the farm, would not be increased by this collateral contract between the landlord and the guarantor; now the Newmarket shareholders are, in effect, the landlords of the railway; the Company are the tenants paying dividend for rent; and the Eastern Counties Railway Company are the guarantor; and the contract of guarantee is irrelevant to the rateable value. Furthermore, the sum paid under the guarantee is not rateable, for it is not a parochial profit;

(a) Stat. 6 & 7 W. 4, c. 96.

nothing is due under the guarantee until the profits, upon both the Newmarket and Chesterford, and the Newmarket and Cambridge, lines, have been ascertained, when, if the sum total is less than 10,5007., the guarantors must pay. I am not able to discover how the failure of profits, upon the parts of the line in distant parishes, becomes a [*102 *net profit, upon the part of the line in St. Andrew's the Less, for which a tenant of that part alone would pay rent. Indeed this parish offers as proof of the rateable value of the part in their parish that it is worked at a loss; that loss contributes to the general loss, and so to earning the deficiency of profit for which the guarantors pay: thus the parochial loss is, by reason of the guarantee, pro tanto a parochial profit; and, on this principle, the greater the loss in the parish the greater would be the parochial share of the payment made by the guarantor; which seems a strange result.

Furthermore, the rate upon the sum paid under the guarantee is not legal; for it falls, not on the occupier, but the guarantor. The rate is, nominally, on The Newmarket Railway Company: but, if it is sustained, it must be paid by The Eastern Counties Railway Company, who agree to make good the deficiency in case the net profits after paying all deductions will not yield a dividend of three per cent. on the capital. In proportion as the deductions are increased, the net profits are less, and the deficiency to be made good is greater. The poor rate is one of the deductions to be provided for before any dividend is payable; and, if the 37057., now required to make up the deficiency, be subject to poor rate, it will no longer yield the required dividend, but must be increased by the amount of that rate. Nay, if the principle is followed out, the guarantors will not only pay the poor rate on this deficiency, but that poor rate will, by the same process, become also profit, and also rateable value, and the subject of a further poor rate thereon. And these consequences, which may be followed further, also lead to strange results.

With respect to the profits derived from the terms on which traffic is interchanged between the two *Companies: those profits are [*103 liable to be rated where they arise, and are not included in the present question: and it should be observed that the terms in the agreement are, throughout, a premium to the Newmarket shareholders. to induce them to advance the necessary capital for making the line. With respect to the argument from the expected amount of rent or profit that may be presumptive evidence of the rateable value; but it is a presumption open to being rebutted; and, here, there is no room for presumption, as it is found by the case that the sum in question is not a profit derived from the railway in the parish, but a payment under a contract by reason of the absence of profit.

With respect to the argument from the tendency of the line of The Newmarket Railway Company to increase the profits of The Eastern

H

Counties Railway Company: The Newmarket Railway Company are not liable to be rated for any profit, or tendency to profit, enjoyed by another Company; that Company must be rated for the profits they actually make in the parish where they arise: but no Company is liable to be rated for a supposed tendency to profit, not resulting in actual profit. The respective values of two rateable subjects may be increased by combining their operation; and, in that event, the rate will be increased accordingly; but the rate must be on the actual profit, when it arises, and not on a tendency to profit.

I consider that this principle was laid down in Regina v. Great Western. Railway, 15 Q. B. 1085 (E. C. L. R. vol. 69), where it was contended that a branch railway, yielding no profit, was liable to be *104] rated on account of its tendency to increase the *profit of the trunk line, and the Court decided to the contrary, and, in so deciding, did not impair the principle that the rateable value of each of two rateable subjects may be increased by their combined operation, in case the aggregate of the profits from both is increased thereby.

On these grounds I have come to the conclusion that the sum paid under the contract of guarantee in this case was not rateable, and that the rate ought to be reduced accordingly.

COLERIDGE, J.-The facts of this case have already been sufficiently stated; and it is unnecessary for me, therefore, to repeat them. And the question which they raise is, Whether a proportional part of a sum of 37051. 98. 7d., paid by The Eastern Counties Railway Company to the appellants, ought to be taken into account in assessing them as occupiers of land in the respondents' parish, on the ground that it forms part of the rateable value of that land. There can be no dispute as to the principle which is to determine this question; that money, or money's worth, should form part of the rateable value of land, it is not enough that the occupier should receive it being the occupier, or even because he is the occupier; but it must directly or indirectly spring out of and be part of the fruits of the occupation. If the Marlborough pension, granted under stat. 5 Ann. c. 4, had been limited to John Duke of Marlborough, and his heirs, occupiers of the Blenheim Estate, it would have been received by the Duke for the time being, in some sort because he was occupier; that is, if not occupier, he would not receive it; and yet, it never could have been considered as forming part of the *rateable value of the estate. It would not in that sense *105] spring out of the occupation. This distinction was I think recognised by this Court in Rex v. The Aire and Calder Navigation Company, 3 B. & Ad. 533 (E. C. L. R. vol. 23), where the occupiers of certain mills in Hunslet received tolls, collected in a different township, as a compensation for loss of water by the work of an adjoining Navigation Company, and these were sought to be included in the rateable value of the mills, as increasing the value of the occupation of them.

Lord Tenterden, delivering the judgment of the Court against the assessment, says: "Suppose that instead of the toll an annual rent had been given, or a sum in gross from which they derived an income. Could they have been rated in respect of that, as profit arising from their property in Hunslet?" There are special circumstances in that case which prevent me from considering the decision as a direct authority for the case before us: but the passage which I have cited from the judgment illustrates the distinction which must be kept in view.

The very nature of the distinction makes it rather difficult to apply it; and very small changes in the circumstances would make the case fall within one or the other branch of it. Thus, if The Eastern Counties Railway Company were under an agreement to pay absolutely a sum per head, in addition to the ordinary fare, for every passenger brought upon the appellants' line to be forwarded on their line, this would have been a sum received for the transit of such passengers, and would have been as much a part of the profits of the occupation as the ordinary fare which the passenger himself paid. But the substance of the actual agreement seems to be rather that of a guarantee, which is not to come into operation till the actual fruits of the occupation fall below a certain amount.

[*106

The dividend on the capital is to be paid from the clear profits of the occupation; when they fail, the guarantee comes in, not to increase those profits, but to make the dividend good from another and independent and collateral source. But it is the profits, after deducting the proper outgoings, upon which the rate is to be assessed; and when that is done, and not before, it will be seen whether the guarantee is to ope

rate or not.

In the present case, the total receipts fall below the outgoings. The line is worked to a loss: but suppose there had been a surplus sufficient for a dividend of two per cent., ought not the rate to have been imposed on that? and then, when The Eastern Counties Railway Company had under their guarantee paid one per cent., would not the distinction between the sources of the two and the one have been obvious, and would it not have followed that the latter ought not to be brought into the assessment?

This was an obligation which The Eastern Counties Railway Company, for the interest which it was conceived they had in the appellants' line being made and worked, took on themselves. Supposing it had, instead of being shaped in the present form, been by way of a large sum paid down on the completion of the line, which sum the appellants had set apart as a rest or reserved fund: and then, in any year, the dividend falling low, a sum had been voted from that rest, and applied in addition to the dividend, so as to raise it to a given amount: could it have been said that that addition *formed any part of the [*107 fruits of the occupation during the preceding six months? I

think not; and yet I do not see how that case would have differed in principle from the present. The "rateable value" must always have been included in, and formed part of the "gross estimated rental;" and that gross rental must have been estimated before the process of deduction from it commenced. In the present case it might be perfectly clear, before commencing that process, that the outgoings would overtop the gross receipts; but it is by no means an unreasonable thing to suppose the gross receipts mounting so high as to make it impossible to say, before hand, whether there would be any, and if any what, amount of clear profits, until the process of deduction had been gone through. The necessity then for recourse to the help of the guarantee would be contingent; and the addition ultimately to come from that source to make up the three per cent. dividend would be subsequent to the com. plete ascertainment of the two sums, the ascertainment of which w alone necessary to arrive at the rateable value.

It will be said of course that, in order to arrive at the rateable val a negotiation for a lease from year to year must be supposed, and tl that negotiation must be supposed to proceed on the footing of the 1 see being placed in exactly the same position as the present occupier and this is unquestionably true as to everything which necessar arises from the occupation. But, if thence it is inferred that the su posed lessee would necessarily, as such, have the benefit of this guarant it seems to me the very question in the case is begged. In point fact, a lease of the line might very well be made, supposing the req site powers, without involving a transfer of the benefit of t agreement to the lessee.

*108]

Suppose, at any six months' end, the accounts made up, and cl‹ profits shown from which a dividend of two per cent. might be pa The Eastern Counties Railway Company, upon application, refusing perform their agreement and an action brought on it; I apprehend that, before such action brought, the course would have been to declare the dividend of two per cent., which would have been after deduction of the poor rate, and then to sue for the difference. Now the foundation of that action would have been the deficiency of those clear profits upon which the assessment must have been made; that is to say, in the words of the agreement, "the net earnings of the appellants, after payment of working expenses and other charges upon revenue and interest on borrowed capital." In this case it seems to me clear that, if the appellants succeeded in their action, and recovered in damages the difference sued for, that sum could not find its way properly into the rateable value and I do not see any distinction in principle between that case and the present, as to the question before us.

The facts of this case are very peculiar, and will seldom form a precedent for any other. Upon the best understanding of them which I