29 N.J. Eq. 242 | New York Court of Chancery | 1878
The complainants seek to be protected against an invasion of their franchises. They were incorporated by a charter approved March 1st, 1849 (P. L. 1849, p. 29). Besides being authorized to make and sell gas, they were empowered to lay down gas-pipes in the public highways and grounds of Jersey City, and to do all things necessary to light Jersey City with gas. Under this authority they claim to have expended, in erecting gas-works and putting down gas-pipes, $500,000.
The defendants are thirteen in number. They claim to have acquired corporate existence under the name of The Consumers Gas Company of Jersey City, pursuant to the provisions of a public statute entitled “An act to authorize the formation of gas-light corporations and regulate the-same ” (Rev. p. 460.) That act provides that any number of persons not less than thirteen may become a corporation on complying with certain prerequisites prescribed by it. These are : First, the making and signing of articles of association, to be filed and recorded in the office of the secretary of state; and, second, the subscription of at least one-half ' of the entire capital stock, and the payment of twenty per centum thereon in cash. To be more explicit, it is necessary to say the statute, after prescribing what the articles of association shall contain, how they shall be .signed, and who shall be eligible to the office of director, then declares that, on compliance with the provisions of the next section, the ai’ticles of association shall be filed and recorded in the office of the secretary of state, and, upon tendering the articles to the secretary to be filed, the persons who have subscribed them, and all persons who shall become stockholders in such company, shall be a corporation by the name
The complainants deny the corporate existence of the defendants. They allege the defendants are not now a corporation, and never have been. It is admitted they have filed articles of association and an affidavit showing an ostensible compliance with the statute, but their compliance is charged to have been vicious and fraudulent. The complainants say that one-half of the capital stock of the projected corporation was not actually subscribed, and that twenty per centum was not paid in cash by each subscriber, on his subscription, before the articles were filed, but that some of the subscriptions were entirely fictitious, having been procured under promises that the subscribers should not be required to take the stock subscribed by them, nor to pay for it, and solely for the purpose of enabling the defendants to simulate a compliance with the law. The truth of this charge, as to one of the subscriptions, seems to be conclusively established.
In addition to the facts already mentioned it is proper to state, that of the three thousand shares purporting to have been subscribed before the articles of association were filed, two thousand and forty-nine were taken by the chief promoter of the new corporation. The whole capital was-to be |600,000, divided into six thousand shares. He admits he is not able to pay for the number of shares covered by his subscription, but says he subscribed for others besides himself, who are able to pay. But as to how much he subscribed for himself and how much for others, who they are and by what authority he assumed to act for them, his answer is silent. In this respect it is not ingenuous. The articles of association and the affidavit represent him as a stockholder in good faith to the extent of two thousand and forty-nine shares; no intimation is given that he was not acting for himself exclusively in making his subscription. In form the whole thirteen subscriptions are alike. If the answer is true, the articles are not. The statute requires that “ each subscriber shall subscribe his name to the articles.of association, his place of residence and the number of shares he agrees to take.” It is not necessary he should - act in person, but the subscription must be his act, and must so appear. Each -subscription must be real, actual and honest-. This one was not. The person making it neither intended to take all the stock he' subscribed nor to pay for it. Who did ? Is it certain anybody did ? Unless it is, there is neither corporate life nor the grant of a franchise, for unless every share of the two thousand and forty-nine was subscribed in good faith an indispensable prerequisite is lacking. I deem it necessary also to say, the defendants have not made full and frank discovery respecting the payment of the twenty per centum. Full and precise discovery on this point is asked by the bill. Only four of the defendants have answered. The.answer of the two composing the syndicate appointed to receive all the payments seems to have been
But does this finding entitle the complainants to the protection they seek ? The business of manufacturing and selling illuminating gas is not a prerogative of government; like the manufacture and sale of any other ordinary article of traffic, it is open-to all, and may be carried on by any person without legislative authority. Any one of the defendants, in point of right and privilege, is the equal of the complainants in this respect. They are invested with no exclusive privilege or monopoly to make and sell gas. But the defendants also claim the right to use the public streets of Jersey City for the puipose of placing pipes therein through which they may furnish gas to their customers. • This is a right which sovereign power alone can confer. The rule must be considered settled, that no person can acquire a right to make a special or exceptional use of a public highway, not common to all the citizens of the state, except by grant from the sovereign power. State, Montgomery v. Tren
Chancellor Zabriskie, in Glasby v. Morris, 3 C. E. Gr. 72, seemed to question even the power of municipal government to construct sewers without an express legislative grant. The right to use the public streets of a city for the purpose of laying gas-pipes therein is, in my opinion, a franchise which the state alone can confer. This view is supported by authority. Bilim’s Man. Corp., § 546; State v. Cincinnati Gas Co., 18 Ohio St. 262, 291.
Judge Gray, in City of Boston v. Richardson, 13 Allen 146, 160, says he is not aware that the right of putting gas-pipes in public highways has ever been exercised in Massachusetts, except by virtue of an express statute; and Justice Yan Syckel, in State v. Trenton, supra, says, that while custom has sanctioned the use of the streets for placing therein gas and water-pipes, it has always been exercised under legislative authority. In view of this rule, the position of the parties towards each other in this litigation is this : The complainants have a right to use the public highways of Jersey City for the purpose of carrying their gas, by pipes, to all who want it; the defendants have no such right, but threaten to exercise it by usurpation, and thus acquire part of the complainants’ business. In this condition of affairs, I do not think there can be the slightest doubt as to the duty of the court. The right of a corporation to seek the protection of a court of equity against an infringement or usurpation óf its franchises, is a familiar rule of equity jurisprudence. And it is equally well established that a franchise is property, which, like every other thing susceptible of private ownership, is under the protection of the law. And it must also be declared as the established law of this state, that the grant of a franchise by the state, is, by its own intrinsic force, and without express words, exclusive against all persons but the state, and that any attempt to exercise like
But it is insisted that this case is not within the jurisdiction of a court of equity, the contention being that this court cannot take cognizance of any case involving the determination of the question of the existence or non-existence of a corporation. This is undoubtedly true when the suit is by information, on behalf of the state, for the purpose of procuring a judgment of ouster, or of inflicting punishment, or of enforcing a forfeiture. Att'y-Gen. v. Stevens, Sax. 369, 377; Att'y-Gen. v. Utica Insurance Co., 2 Johns. Ch. 371; Att'y-Gen. v. Bank of Niagara, Hopkins 354; Att'y-Gen. v. Tudor Ice Co., 104 Mass. 239.
This court has no jurisdiction in criminal, quasi-criminal, or penal actions ; its power is limited to the protection of civil rights. The principle controlling the decision of the
An injunction should issue prohibiting the defendants from using the public highways of Jersey City, or any part of them, for the purpose of laying or placing gas-pipes as conductors therein.