54 Tex. 125 | Tex. | 1880
Lead Opinion
This suit was originally instituted against the Waco & N. W. R. R. Co., to recover certain sums alleged to be due for work done under a contract with the Waco Tap R. R. Co. to construct its road from its junction with the Houston & Texas Central Railway to the city of Waco, and to recover damages, actual and exemplary, for an alleged breach of said contract. When formerly before this court on appeal by the Waco & N. W. R. R. Co., it was decided that under his contract Shirley had no equitable mortgage on the roadbed, etc., for any damages he might be entitled to for breach of contract, but that he had such equitable mortgage for sums due him under the contract and not paid. 45 Tex., 355. It was also decided that in estimating the damages sustained'by plaintiff by the breach of the contract his future profits under the contract thereby lost were to be taken into consideration.
After the case was remanded to the district court, the Houston & Texas Central Railway Company was made a
The result of the trial this' time was a verdict in the plaintiff’s favor for §8,509.41 due under the contract ■—• for §54,001.09 actual damages, and §37,500 exemplary damages—and judgment was accordingly rendered foreclosing the equitable mortgage claimed for the sum just named, and awarding execution against the Houston & Texas Central for .the amount of damages, actual and exemplary.
To the extent of the §8,509.41, proved to be due and secured by mortgage, the judgment is not complained of, but all further liability on its part is denied by the appellant.
The act of May 24, 1873, is as follows:
“ An act to provide for the merger of the Waco & Northwestern Railway Company, with its properties, rights, privileges and franchises, in the Houston & Texas Central Railway Company.”
Seo. 1. Be it enacted, etc.: That the said Waco & Northwestern Bailroad Company is hereby, merged in the Houston & Texas Central Bailway Company, and the said Waco & Northwestern Bailroad is hereby made, to all intents and for every purpose in law, a part of the Houston & Texas Central Bail way. And the Houston & Texas Central Bailway Company is hereby authorized and empowered to operate, manage and control the said Waco & Northwestern Bailroad in the same manner as every other part of the said Houston & Texas Central Bailway; and shall have the right to continue the con
Seo. 2. This act of consolidation is passed, and shall become operative, on condition that said consolidated road shall not, in either of its branches, be sold, leased or rented to, or consolidated with, any other parallel, competing or converging railroad; and that said company shall not purchase, own or control any such parallel, competing or converging road; and upon the still further condition that the portion of said Northwestern Railroad not yet built, if built at all by said company, shall be constructed and put in operation "within the time required by the charter of said road; and should the general line of the portion of said road not yet built, pass within five miles of any established county seat, then said road shall run to said county seat, and said company shall establish and keep a depot for freight and passengers within one-half mile of the business portion of said town, on condition that the right of way through said town, and sufficient ground, not less than fifteen acres, for switches, turn-outs, and such building as may be necessary and proper, shall be furnished to said company free of charge; provided, that said company shall not be compelled to construct said road within one-half mile of any county seat where, from natural obstacles, it is impracticable to do so; but in such case said road shall run, and a depot be established, as near said town as such natural obstacles will admit; and should the line of said road be definitely located through any county before the permanent location of the county seat thereof, then it shall not be necessary for said road to "be so varied from its line as to run within one-half mile of said town.
Approved May 24, 1873.
On the subject of the rights and liabilities of the appellant, the court instructed the jury as follows:
“ 20. That the papers and documents in evidence show a valid title in the Central Railway Company to the existing property therein conveyed, so far as the plaintiff is concerned, and which the plaintiff has no right in this action to question on account of want of authority to convey and receive, and there is no evidence of allegations of fraud in the conveyances, and it is not deemed necessary or’ proper to submit the issue of estoppel raised by the pleadings, in view of the law and the evidence.
“21. But you are charged, that the act of the legislature in evidence before you, merging the Waco & Northwestern Railroad Company in the Houston & Texas Central Railway Company, and the acceptance of said act and its benefits by said last named corporation (which is not controverted), the Houston & Texas Central Railway Company became hable for all obligations of the Waco Tap, and its nominal successor, the Waco & Northwestern Railroad Company, whether in debt or damages; and in forming your verdict, if for plaintiff, you will find your verdict in terms against the defendants, the Waco & Northwestern Railroad Company and the Houston & Texas Central Railway Company.”
The papers and documents referred to show that in October, 1871, pending this suit, the Houston & Texas Central entered into an original and supplementary agreement with the Waco & Northwestern Railroad Company, to aid in the construction and completion of its road, under which the Waco road became largely indebted to the Central, said indebtedness being secured by a deed of trust, including its road-bed, right of way, depot grounds and appurtenances, etc., and ah its “chartered rights,
Ordinarily the consolidation of two railroad corporations is accomplished by agreement under legislative authority; the terms of consolidation providing for the rights of both creditors and stockholders of the original corporations.' Says a recent text writer: “The consolidated corporation, for the purpose of answering for the liabilities of the old corporations, is deemed the same as each of its constituents, and may be sued under its new name for their debts as if no change had been made in the name or organization of the original corporation.” pTones B. B. Securities, sec. 415.) Evidently a voluntary consolidation is intended. An examination of the authorities cited by the author, as well as those cited by appellee in support of the’charge of the court, will show that they are all cases of consolidation by agreement under legislative sanction. Evidently such a consolidation cannot be accomplished in disregard of the rights of creditors or stockholders, and accordingly either in the statute authorizing or in the agreement consummating such consolidation, stipulations are inserted for the protection of those rights. And even if neither statute nor agreement make mention of creditors, the consolidated corporation is held to have assumed the liabilities of its constituents. ) Pierce on Am. R. R. Law, p. 503, citing 1 Am. Rail. Cas., 96, notes/
But clearly the purchaser of property at a sale under
The laws of this state allow a railroad corporation to incumber by deed of trust for the payment of its debts and legal liabilities, its “road-bed, track, franchise and chartered rights and privileges,” to be deemed an entire thing and to be sold as such; and “the purchaser or purchasers at such sale and their associates shall be deemed and taken to be the true owners of said charter, and corporators under the same, and vested with all the powers, rights, privileges and benefits thereof, in the same measure and to the same extent as if they were the original corporation of said company; and shall have power to construct, complete, equip and work the road upon the same terms and under the same conditions and restrictions as are imposed by their charter and the general laws of the state.” Pasch. Dig., art. 4912; R. C., art. 4260.
It is provided that such sale shall not pass to the purchaser any right to recover of “ former stockholders any sums which may remain due upon their subscriptions of stock, but said stockholders shall continue hable to pay the same in discharge and liquidation of the debts due by the sold-out company.” The directors of the sold-out company at the time of sale are made “trustees of the creditors and stockholders of the sold-out company, and shall have full powers to settle the affairs of the sold-out company, collect and pay the outstanding debts, and divide among the stockholders the money and other property that shall remain after the‘payment of the debts and necessary expenses; and the persons so constituted trustees
The plain intent of the statute is to transfer the roadbed, track, franchise and chartered rights entire to the purchaser and associates, upon their adopting the form of organization prescribed in the charter and complying with its other requirements; and to remit creditors unsecured by lien to their remedy against such assets as pass to the trustees of the sold-out company.
Under this statute it is believed that a number of railroads in this state have been sold out and purchased by individuals, who have proceeded to organize and manage the corporation under the originakcharter. Galveston R. R. v. Cowdrey, 11 Wall., 459-474./Hot only the road-bed and other mortgaged property, but the franchise to operate a road and the very corporate existence of the sold-out railroad passes to the new organization by virtue of the statute^zÓrdinarily such purchaser and associates need no further legislation. But hi this case the secured creditor, itself a railroad corporation, became the purchaser. The statute does not in terms provide for a purchase by another railroad or corporation. The powers of corporations are strictly limited to those granted in their charters or by law. If the charter of the Houston & Texas Central was not comprehensive enough to authorize it to operate a railroad from Bremond to Waco, it might well hesitate to attempt to organize under the charter of the
If there were effects or rights of the Waco & N. W. R. R. Co. not included in the deed of trust and not transferred to the Central before the act was passed, our opin
On the subject of exemplary damages the court charged as follows:
• “15. A mere breach of the contract on the part of the company will not authorize' a verdict for exemplary or punitory damages; but if there was a breach of the contract by the corporation, and there was an act done by it, and such breach was done and made with a fraudulent intention to deprive Shirley of his legal rights, or with a malicious intent to oppress him, you may find a verdict for plaintiff for exemplary damages in any sum in your discretion, not exceeding the amount claimed by plaintiff as exemplary damages. If there was such a breach of the contract as entitles the plaintiff to the recovery of exemplary damages, under this charge his right to a verdict for the same is not impaired, although he may have suffered no actual -damage such as mentioned in charges number ten and eleven.”
The court rightly treated the action as one for breach of contract. No damages were claimed or recovered for a tortious conversion of plaintiff’s property. The recovery sought and obtained was of sums due under the contract, of actual damages for the breach of contract, and of exemplary damages for such breach, on the ground that it was committed with a fraudulent and malicious intent to oppress.
Appellant claims that exemplary damages for a breach
The exclusion of such issues in suits on, contract may be justified on the policy of hmiting the uncertainties and asperities attending litigation of such issues, to that class of cases in which the nature of the wrong com-' plained of renders those issues and evils to some extent unavoidable. It is to be remarked that our statute, where a suit is founded on a certain demand, does not permit the defendant to set off unliquidated or uncertain damages. Pasch. Dig., art.‘3447. At all events, the allowance of exemplary damages in suits on contract is not supported by authority, and the innovation is one which we are not prepared to make.
On the trial appellant objected orally to the depositions
Our opinion is that the objection, if well founded, was fatal to the entire deposition, and we are unable to see that there was such an amount of other testimony to the same effect as to show that the erroneous admission was an immaterial error.
The judgment is reversed and the cause remanded.
Beversed and remanded.
[Opinion delivered January 16, 1880.]
Rehearing
ON MOTION FOR REHEARING.
In disposing of the motion for rehearing, it is proposed to do little more than to state our conclusions, on what we regard as the material points or questions raised in its support. The want of time forbids an attempt to discuss all of the legal positions assumed by counsel for appellee, each in elaborate briefs and printed arguments, characterized by great zeal, industry and ability.
The point is made that those sections of the statute referred to in the opinion as authorizing a railroad company to mortgage its franchise, were repealed by the constitution of 1866. Art. 1, sec. 6; Pasch, Dig., p. 943. In
■ The original opinion proceeds on the idea that the foun
It is urged that the original contracts and the trust sale and purchase were all ultra vires and void] and it seems to be argued that the legislature in passing, and the Central in accepting, the act, must be presumed to have treated all these proceedings as nullities. It is replied, and the position seems to us sound, and supported by the authorities cited by counsel, that though the Central had exceeded its powers in acquiring property, it was a consummated transaction, subject only to be impeached for that reason by the state. But a further reply is, that at the time the act was passed the Central appears to have been in undisputed possession under its contracts and purchase, and there is nothing to indicate that it was treated by the legislature as having acquired no rights thereby. In one instance, at least, the same legislature treated the purchase of a railway at sale and foreclosure of mortgage, by another railway corporation, not as a nullity, but as making the latter the ee owner” of the former, and reciting these facts in the preamble, proceeded to enact that the
It is claimed that the Central controHed the Waco & E". B. B. Company, owning over nine-tenths of its stock, and a majority of the directors of the latter being directors of the Central, and that the act of merger was passed, looking upon the application of the Central as equivalent to the assent of the other company. We think the record shows that the act was not passed in contemplation of any agreement fixing terms of consolidation, and it is therefore not important to inquire whether the Central was in a position to force the assent of those stockholders not interested in the Central. Counsel have made no suggestion how these stockholders were to be disposed of, under their view of the act of merger. We think the reasonable conclusion is that their rights, after the sale, were regarded as valueless, though we certainly do not intend to say that the land donation of the state was or was not embraced in the deed of trust, or that in fact the stockholders had nothing left. An insuperable objection to construing the act of merger as attempting to vest the property of one company in another, is the want of power in the legislature to do this. If the Central be estopped from denying the constitutionality of the act, we still think it highly improbable that the legislature intended to affect property rights by the act.
It is claimed that the original and supplementary contracts show an agreement on the part of the Central to pay off all of the existing liabilities of the Waco & E". R.
Upon the whole, looking at all the surroundings, we are still of opinion that the act was passed to give the assent of the state to the purchase made by the Central, and to enlarge its corporate rights so as to enable it to operate the Waco & 1ST. B. B.; that the act was not designed to affect, and did not affect, the rights of either stockholders or creditors; that as to creditors, it neither took away any assets from their reach, nor placed new assets within their reach; and that by accepting the conditions of the act the Central did not subject itself to the liabilities of the Waco & U. B. B. On this branch of the case we will only add that no question has been before us as to the rights of a judgment creditor of the latter road, and that we are not aware of having said anything which would preclude such a creditor from any remedy he may be entitled to, or embarrass him in seeking that remedy.
II. On the subject of exemplary damages because of alleged malice in the breach of a contract, we adhere to the views expressed in the opinion. The charge of the court submitted to the juey no issue as to whether or not a tort had been committed, or as to the amount of actual damages to the “character, reputation and standing among business men33 of plaintiff from any alleged tortious act of defendant, established to their satisfaction, but allowed them to give exemplary damages, if there was a
But counsel assert the right to sue in one action for a breach of contract, and for damages for a tort, where both claims grow put of the same transaction, and are so connected that they may conveniently and appropriately be litigated together. Thus qualified, this proposition is believed to be in accordance with the decisions in this state. But we regard the petition of plaintiff, in* so far as it at-' tempts to allege a tort and to recover damages therefor in addition to damages for a breach of contract, as substantially seeking a double recovery for the same wrong. .The real purport of the petition was to claim damages for breach of contract, including profits lost by the breach, and to claim also exemplary damages because of alleged malice in committing the breach.
It is not believed that the authorities require the exclusion of depositions in all cases where the witness has failed to answer every question. Much must be left to the discretion of the court. The rule should not be allowed to he presented to obstruct or retard trials, or to exclude depositions because of a manifest casual failure to answer some unimportant question.
The motion for rehearing is overruled.
Overruled.
[Opinion delivered December 17, 1880.]