New Central Coal Co. v. George's Creek Coal & Iron Co., 37 Md. 537

New Central Coal Co. v. George's Creek Coal & Iron Co.

37 Md. 537 | Md. | 1873

Alvey, J.,

delivered the opinion of the Court.

The bill in this case was filed by tbe appellees to have the appellants restrained by injunction, from prosecuting proceedings of condemnation of a right of way for a railroad, through the lands of the appellees. The inquisition had been taken and returned into Court for ratification, before the bill was filed; and by the injunction that was granted, the appellants were restrained “from doing or causing or permitting to be done, any act, matter or thing, in or towards, or for the purpose of obtaining possession of any part of tbe lands of said company, and from, in any way, entering thereon, or on any part thereof, or in any way interfering with said company’s possession of said lands, and the said company’s free and uninterrupted use thereof,” until the further order of the Court.

After the granting of this injunction the inquisition that had been returned to the Circuit Court for Allegany County was set aside for cause shewn; and, upon motion to dissolve the injunction, the Judges in the Court below-being divided in opinion, the motion was overruled; and it is from the order overruling the motion to dissolve, in consequence of the division in opinion of the Judges, that this appeal is taken.

There are several questions presented by the record, some of whieh are of considerable interest and importance; and, without unnecessary detail of fact, we shall take them up and consider them in their order.

1. The first among the questions seriously urged is, whether the appellants ever acquired corporate franchises from the State to enable them to do what they attempted to do, and which was restrained by the injunction?

The appellants were chartered by the Act of 1865, chapter 206, by the name of the Lincoln Coal, Iron, Fire*554Brick, and Oil Company, of Allegany -County. By the Act', it was declared that the three persons therein named, and such other persons as might be associated with them in the manner therein provided, should be and were thereby incorporated and made a body politic by the name jand style of, &c., “and the said company shall have all the privileges and rights necessary for carrying on the mining of coal and ores, and the manufacture of iron and fire-brick, and for transporting to market the produce of their mines, land, and manufactories, and shall also have power to lease or purchase lands, mines, and furnaces, with their appurtenances, and to hold all such property, personal, real and mixed, as they may require for the purposes aforesaid,” &c., and by the second section of the Act for the purpose of enabling the Company to transport the produce of their mines and manufactories to market, they are invested “with all and singular the rights, profits, powers, authorities, immunities and advantages for the surveying, locating and constructing a railroad, with the necessary appurtenances, from their mines or works to connect at any convenient point or points with other existing railroads in Allegany County, or with the Chesapeake and Ohio Canal, at Cumberland,” in the same manner as have been given and delegated to the Baltimore and Ohio Railroad Company, which includes the full and ample power of condemnation for right of way. By the same section, it is made the duty of the appellants to carry “all persons and propert}’’ at the same rates of tolls and prices of transportation as the Baltimore and Ohio Railroad Company are, or shall be by law, allowed to charge and receive.” It is further provided, by the fourth section of the Act, that until the first election of directors should be held, as therein provided, the- three persons named in the first section as corporators, or a majority of them, should have full power and authority to exercise all the corporate power *of the Company. *555There is no time limited for accepting the charter, or for organizing the corporation under it.

The books for subscription to the capital stock were first opened on the 1st of September, 1871, and, upon subscriptions being taken, the stockholders, on-the same day, held a general meeting, and elected president and directors of the Company.

Afterwards, by the Act of 1872, chapter 50, the name of the appellants was changed from their first corporate name to that of the “ISTew Central Coal Company,” and it is by the latter name that the appellants have answered the bill in this case. The Act authorizing the change of name also authorized an increase of capital stock from two and a half millions to five millions of dollars, and also provided for an additional number of directors to manage the affairs of the corporation.

The Act of incorporation in this case is almost identical in its provisions with that of the Frostburg Coal Company, also a Maryland Act of Incorporation, which came under consideration of the Supreme Court of the United States, in the case of Frost’s Lessee vs. Frostburg Coal Co., 24 How., 278. In that case, in reference to the question of the corporate existence, the Court held that the persons named in the Act of incorporation constituted the corporate body, and were clothed with all the powers and privileges conferred by the charter, and that the latter took effect immediately on its acceptance by the persons named in the Act; and the subsequent steps, such as the subscription of the stock, procurement of the coal lands, election of the directors, of the president and secretary, passing by-laws, &c., were steps taken in perfecting the organization, and to enable it to use its powers and privileges for the purpose for which they were granted. The principle of this case in 24 Howard is unquestionably correct, and, as such, has been recognised by this Court, in the case of the Franklin Fire Ins. Co. vs. Hart, 31 Md., 59.

*556In this case, however, it is alleged and contended, that before the charter was accepted by the corporators therein named, and before any rights had been acquired thereunder, the charter itself had become abrogated and annulled by force and effect of the 48th section of the 3rd Article of the Constitution, adopted in 1867.

What is sufficient evidence of acceptance of the charter by the corporators, is often a question depending upon the circumstances under which the charter itself was procured. It is not necessary that the Act of acceptance be evidenced by writing, nor even by the vote of the corpora-tors. Acceptance of the charter may generally be inferred from the exercise of the corporate powers granted. “If a peculiar charter is applied for, and it is given, there can be no reasonable ground to doubt of its immediate acceptance. It has, indeed, been held that grants beneficial to corporations, may be presumed to have been accepted, and an express acceptance is not necessary.” Ang. & Am. on Corp., sec. 83; Charles River Bridge vs. Warren Bridge, 7 Pick. Rep., 344. Here, there is express proof by one of the corporators, that the Act of incorporation was immediately accepted, though nothing appears to have been-done under it until September, 1871.

But, apart from the question whether the charter had been accepted before the adoption of the Constitution of 1867, and conceding that it had not been, does the provision of the Constitution relied on by the appellees, apply to or affect this charter in the manner supposed ?

The Constitution, by the 48th section of the 3rd Article, provides, that “corporations may be formed under general laws; but shall not be created by special Act, except for municipal purposes, and except in cases, where no general laws exist, providing for the creation of corporations of the same general character, as the corporation proposed to be created ; and any Act of incorporation, passed in violation of this section shall be void; ’ ’ and, by *557the last clause of the same section, it is provided, that “all charters heretofore granted, subject to repeal or modification, may be altered, from time to time, or be repealed.” The Act of incorporation now before us was, as we have before stated, passed before the adoption of this constitutional provision, and at the time of its passage there was in existence a general law, which still exists, with some modifications, providing for the creation of corporations of the samo general character, as that created by the special Act. This special Act was a competent exercise of legislative power and discretion at the time of its passage, and unless the present Constitution was intended to have a retrospective operation and to embrace prior acts of legislation as well as the future, there can be no question as to the validity of the appellants’ charter.

The general rule for the construction of statutes is plain and well settled, and is founded in the most obvious principles of justice, and that is, that the law shall be taken to have a prospective operation, and never a retrospective effect, unless there is something on the face of the enactment putting it beyond doubt that the Legislature meant it to operate retrospectively. Moon vs. Durden, 2 Exch., 22. There can be no good reason suggested why this same general principle, so wise and just, should not also apply as a rule of interpretation of the Constitution. It is stated as the rule upon the subject, by Judge Cooley, (Const. Lim,., 62,) and he is not only supported by the reason and justice of the thing, but by authority. In the case of Cass vs. Dillon, 2 Ohio, N. S., 607, a question arose as to the effect of a clause in the State Constitution, which declared that the Legislature “shall never authorize any county, town, or township, by vote of its citizens or otherwize, to become a stockholder in any joint stock company, corporation, or association,” and it was held that a law enacted before the adoption of the Constitution, authorizing such subscription, was not repealed by *558implication, as the clause in the Constitution referred only to future laws. Other cases might be cited, if it were necessary, illustrative of the same general proposition. The principle, however, is too well founded in reason and justice to require the support of authority.

With this rule of construction in view, the terms of the constitutional provision relied on here, would seem to admit of no doubt. When it is declared that corporations shall not be created by special Act, except in particular cases, it is manifestly intended to create prohibition to future legislation of the character described, and not to repeal previous legislative Acts. And so, when it is declared that any Act of incorporation, passed in violation of the particular section of the Constitution, shall be void, it would seem to be plain, from the ordinary grammatical sense of the terms, that they refer to future Acts of the Legislature; as it is not easy to conceive how a previous Act could have been passed in violation of this particular constitutional provision, which at the time had no existence. And it is not less clear, we think, that the Act of 1872, chapter 50, passed as an amendment of the appellants’ charter, is also a valid Act of the Legislature. The .power is expressly reserved to the Legislature, by the section of the Constitution already referred to, to alter or repeal all previous charters; and as the amendment here obtained was but an alteration, it was clearly competent to the Legislature to make it.

In the course of the argument.for the appellees several cases were referred to as authorities for the position that the Constitution operated a repeal of the previous Act of incorporation; but, in reference to those cases, it is sufficient to say that in none of them, except those in 16 Ind. Rep., 40, and 17 Ind. Rep., 243, were the questions decided at all analogous to that presented here; and as to the cases in the Indiana Reports, they would seem to be based upon a course .of reasoning that we could not apply *559to this case. Besides, the language employed in the clause of the Indiana Constitution, with reference to which those cases were decided, is not the same as that in our Constitution.

2. The next question presented is, whether the use for which the appellees’ land is attempted to be condemned and appropriated by the appellants, is such a public use as is authorized by the 40th section of the 3d Article of the Constitution?

The section of the Constitution just referred to declares that “The General Assembly shall enact no law authorizing private property to be taken for public use, without just compensation, as agreed upon between the parties, or awarded by a jury, being first paid, or tendered to the party entitled to such compensation.”

By the plain and well acknowledged construction of this constitutional provision, which is found in nearly if not all American Constitutions, the Legislature is absolutely prohibited by implication from taking private property for any private use whatever, without the consent of the owner. This is but declaratory of the previously existing universal law, which forbids the arbitrary and compulsory appropriation of one man’s property to the mere private use of another, even though compensation be tendered. For, as was very justly said by the Supreme Court of the United States, that government can scarcely be deemed to be free, where the rights of property are left solely dependent upon the will of a legislative body, without restraint. The fundamental maxims of a free government seem to require that the rights of personal liberty and private property should be held sacred. At least no Court of Justice in this country would be warranted in assuming that the power to violate and disregard them— a power so repugnant to the common principles of justice and civil liberty — lurked under any general grant of legislative authority, or ought to be implied from any general *560expression of the will of the people. Wilkinson vs. Leland, 2 Pet., 657.

With this restriction, however, the Legislature has, by virtue of the right or power of eminent domain, the right to authorize, by compulsory process, the taking of private property for public uses, but for public uses only; and it is for the regulation of the exercise of this high and delicate power, and to secure full and ample compensation to the party aggrieved, that the constitutional provision has been adopted. “It undoubtedly must rest as a general rule,” says Chancellor Kent, (2 Com., 340,) in the wisdom of the Legislature, to determine when public uses require the assumption of private property; but if they should take it for a purpose not of a public nature, as if the Legislature should take the property of A, and give it to R, or if they should vacate a grant of property, or of a franchise, under the pretext of some public use or service, such cases would be gross abuses of their discretion, and fraudulent attacks on private right, and the law would clearly be unconstitutional and void.” Whenever, therefore, the use is in fact public, or has for its object the public benefit or utility, though coupled with private objects of gain and emolument, the question of the exercise of the power of eminent domain over private property, is exclusively one of discretion in the Legislature; but whether the use, in any particular .case, be public or private, is a judicial question; for-otherwise, the constitutional restraint would be utterly nugatory, and the Legislature could make any use public by simply declaring it so, and hence its will and discretion become supreme, however arbitrarily and tyranically exercised.

These general propositions we do not understand to be controverted ; but the question remains, whether the use to which the right of- way through the appellees’ land is sought to be applied, is public, as contended by the appellants, or merely private, and therefore not authorized, as insisted by the appellees ?

*561The primary object of the charter in this case, as in a great many others granted by the Legislature, was to enable the corporators to work the mineral lands of the State, and to transport the produce of the mines to market. It has certainly been the settled policy of the State, for many years past, to stimulate enterprise and to encourage the combination of capital, for the purpose of developing the large mineral resources in the western portion of the State; as upon their full and successful development depend, in a great measure, the success of the works of internal improvement upon which the State has expended many millions of money. As means of wealth and revenue, therefore, the State has a material interest in the operation of the coal and other mineral lands in that section ; and the statute hook, within the period of the last thirty or forty years, will abundantly attest the policy of the State upon the subject, by the great number of liberal charters granted, all having for their object the same genera] purpose as the charter before us. Indeed, among the first of these charters, (Act of 1835, chapter 328,) was one to the appellees, containing provisions and powers in nearly all respects similar to that granted to the appellants. It was under that charter that the railroad was made with which the appellants propose to connect their road; and it is by an express condition in that charter that the right is reserved to the citizens, or other incorporated companies, to make such connection. In all the mining charters granted, as also in the general law providing for the formation of mining corporations, power is given to construct railroads, coupled with the power to obtain the right of way by condemnation. Indeed, without such right, and a general ramification of railroads through the coal fields, many of the most valuable mines could he hut very partially and imperfectly worked, and much of the coal could never be got to market. Without the facility of transportation from the mines by railroads, *562there would be little or no inducement to the investment of capital, and but small progress could be made in developing the vast mineral wealth of the State, in which the public at large .are interested. To furnish the requisite facilities for the construction of railroads for the successful operation of the mines is therefore, in some sense, a public necessity, and that being so, the use of the ways for such roads may well be said to be public, and therefore the right of condemnation exists. That the right should be placed in the hands and under the control of a private corporation, detracts nothing from the public nature of the use. For, as was very correctly said by the Supreme Court of Pennsylvania, in Hays vs. Risher, 32 Penn. St., 169, that an individual expects to gain by the use of the way, and has private motives for risking the whole of the necessary investment, and acquires peculiar rights in the work, detracts nothing from the public aspect of it. The same can be said of every railway corporation, and of almost every public enterprise.

Nor is there any want of authority for the proposition that such use as here proposed is of a public nature, and therefore within the right of the eminent domain, as authorized to be exercised by the Constitution. In Pennsylvania, where the constitutional provision on the subject is very similar to our own, the right to take by compulsory process, land for the construction of lateral railways to coal mines, has been very fully sustained, as being for public use, and therefore within the power of the eminent domain ; and the case in 32 Penn. St., 169, just referred to, is direct and full to this proposition.

And in the case of Bankhead vs Brown, 25 Iowa Rep., 540, cited and relied on by the appellees’ counsel, the power of the Legislature to authorize the taking by compulsory process, the right of way to coal or other mines, as being for public use, is fully conceded by the Court.

*563Our conclusion is, therefore, that the use in question is of a public nature, and that it is competent to tbe appellants, under tbe authority of their charter, if there be a reasonable necessity for it, to condemn tbe right of way for their railroad; and that there was no proper ground for the injunction in this respect.

3. The next question raised by the appellees is, as to the effect of the alleged selling of the franchises by tiie corporators, for a consideration, before’any of the stock was subscribed for, by means of which alone corporate rights could be transferred. In other words, the fraudulent organization of the corporation : it being contended that, by reason thereof, the present holders of the franchises, are not entitled and should not be allorved to exercise the powers granted by the charter, in .taking the land of the appellees, to promote the objects of the corporation so organized.

In regard to tins proposition, however, it is enough to say, that, though the fact he as alleged, it forms no ground for an injunction against the corporation to stay it in the exercise of its franchises. If there has been a misuser or abuser of the franchises granted to the corpora-tors, the State alone can take advantage of such acts, and that by a direct proceeding for the purpose. No cause of forfeiture can be taken advantage of, or enforced against a corporation, collaterally or incidentally, or in any other mode, than by a direct proceeding, instituted by tbe State, for that purpose. In this proposition, all the authorities concur. Ang. & Am,, on Corp., secs. 776, 777.

4. We come next to the question, whether the appellants have a reasonably convenient way for their railroad over their own premises, and whether there exists any necessity in fact for the condemnation of the appellees’ land, for such way ?

The general rule doubtless is, as applicable to a railroad to be located between given termini, the Act of *564incorporation not defining the precise location, that the managers or directors of the corporation are made the sole judges of what is proper or convenient, as well with reference to location, as to the execution of all other powers granted, as means of attaining the objects of the charter. Attorney General vs. The Eastern Counties, & N. & E. Railway Cos., 2 Railw. Cas., 823; Hill vs. West. Ver’t. Railw. Co., 32 Vert. Rep., 68; Brainard vs. Clapp, 10 Cush., 6; Boston Gaslight Co. vs. Old Colony & Newport Railw. Co., 14 Allen, 444; Ham vs. Salem, 100 Mass., 350. But this rule can hardly be applicable to a case circumstanced like the present. Here, as alleged, there are two parties having adjoining lands, and one, desiring a right of way to a particular point, or to connect with a certain other way, attempts by compulsory means, to take the way of his neighbor, instead of constructing the road on his own premises. Now, if such be the case, and the road can be made on the land of the party desiring its construction, with anything like reasonable convenience for the accomplishment of the objects authorized to be attained, there certainly exists no public necessity for resorting to the extreme power of compulsory appropriation of private property for the purposes of the way ; and the exercise of such power, under the circumstances, would be arbitrary, and a fraud upon the .great fundamental guarantee of private rights. To justify the exercise of this extreme power, where the Legislature has left it to depend upon the necessity that may be found to exist, in order to accomplish' the purposes of the incorporation, as in this case, the party claiming the right to the exercise of the power should be required to show at least a reasonable degree of necessity for its exercise. Any rule less strict than this, with the large and almost indiscriminate delegation of the right to corporations, would likely lead to oppression, and the sacrifice of private right to corporate power. Indeed, in the delegation of the *565power is implied the condition that it shall only be exercised when, and to the extent, actually found necessary.

This rule, however, may, and generally does involve questions of engineering, and other questions, that a Court of Equity cannot undertake to determine. It is proper, therefore,' that they be referred exclusively to the Court specially clothed with jurisdiction and power to pass on the propriety of the inquisition of condemnation. That tribunal can hear testimony of competent persons upon the subject, and have the whole matter explained and illustrated before them, in a manner that would be difficult to accomplish in a proceeding in equity. Besides, the proceedings on the return of the inquisition are intended to be summary and expeditious, and are never attended with the delays that are necessarily incident to suits in chancery. If such questions were allowed to be drawn to a Court of Equity, great inconvenience, and frequently ruinous delays, would likely be the consequence. No ground, therefore, in this respect, was or could be shewn for the injunction.

5. As the inquisition taken in the proceedings of condemnation has been set aside, the allegations of the bill in this case in reference to the misconduct of the sheriff, the irregularities of the proceeding in taking the inquisition, the inadequacy of the damages assessed, and all such like grounds of objection to the inquisition, are no longer subject matters of complaint here. It is proper to say, however, that they formed no ground for the injunction, even if the allegations in regard to them were all true. They were matters exclusively for the Circuit Court in passing upon the question of the ratification or rejection of the inquisition. This Court has, at the present term, in the case of the West. Md. Railroad Co. vs. Patterson, ante 125, expressly decided that all such questions can only arise before and be decided by the tribunal to which the inquisition is required to be *566returned for ratification or rejection. That a Court of Equity can properly exercise no jurisdiction over such questions.

6. The remaining question has reference to the acts and conduct of the appellants after the taking of the inquisition and before it was acted on by the Circuit Court. The allegation is, that during the pendency of the inquisition before the Circuit Court for ratification or rejection, and before any astion was had thereon, the appellants entered upon the premises described in the inquisition, and commenced the work of construction of their road. This was clearly unauthorized, as no rights could be acquired under the inquisition until it was finallj’’ ratified, and, in addition to that, the actual payment or tender of the damages assessed. These are conditions precedent to the vesting of the right condemned, under the express terms of the Constitution ; the section before referred to providing that property shall not be taken without just compensation being first paid, or tendered, to the party entitled. And if these conditions are disregarded, and the party taking the inquisition enters upon the premises without authority, a Court of Equity will enjoin such unlawful entry until the conditions are fully complied with. This is well settled. West. Md. R. Co. vs. Owings, 15 Md., 199; Balto. & Susq. R. Co. vs. Nesbitt, 10 How., 395; Stacy vs. Vert. Central R. Co, 27 Vert. Rep., 39. But the injunction in this case was too broad. Itshould have simply restrained the appellants from entering on the premises attempted to he condemned, until the final action of the Circuit Court on the inquisition, and until actual payment of the damages, in the event of the inquisition being ratified. As, however, the inquisition was set aside before the motion to dissolve the injunction in this case was heard, and the appellants no longer claiming á right to enter the premises under the inquisition, the injunction should have been dissolved. There was no *567longer any ground upon which the injunction could be sustained, and, consequently, it should have been dissolved, and the bill dismissed.

(Decided 21st February, 1873.)

Order reversed, injunction dissolved, and bill dismissed.