143 Ky. 102 | Ky. Ct. App. | 1911
Opinión op the Court by
Reversing.
The appellant Plummer while engaged for a shipper in loading a railroad car with tan bark was injured by the negligence of the trainmen in moving without notice to him the car in which he was at work. To recover damages for the injuries thus sustained he brought suit against the Chesapeake & Ohio Railway Company, a Virginia corporation, and the Chesapeake & Ohio Railway Company of Kentucky, a Kentucky corporation. The lower court directed the jury to return a verdict in favor of the Chesapeake & Ohio Railway Company of Kentucky, and from the judgment upon this verdict this appeal is prosecuted.
It appears from the admitted facts that for several years prior to July 1, 1907, the railway and its appurtenances were owned by the Chesapeake & Ohio Railway Company of Kentucky, and that during this period the railway was operated by the Chesapeake & Ohio Railway Company as lessee. That on July 1, 1907, The Chesapeake & Ohio Railway Company of Kentucky executed and delivered to the Chesapeake & Ohio Railway Company a deed of conveyance, by which it transferred and conveyed to it in fee simple the railway with all the rights, privileges and appurtenarfces appertaining thereto, and all property, real and personal, possessed or used in connection therewith. That the Chesapeake & Ohio Railway Company of Virginia, in 1893, when it first undertook as lessee to operate the Kentucky railway, complied with section 841 of the Kentucky Statutes, hereafter copied, but has made no attempt to comply with section 765 of the Kentucky Statutes, hereinafter set forth. Its contention, which was sustained by the lower court, being that as it had while operating the road as lessees complied with section 841, this act relieved it from the necessity of complying with section 765, when it became the purchaser of the railway. The correctness of the ruling of the trial court depends primarily' upon the question, whether or not this compliance with section
Only two questions are presented by the record for decision, (1) was the purchase and conveyance made on July 1, 1907, made and executed in accordance with the constitution and laws of this State, and therefore sufficient to divest the selling corporation of title. (2) Assuming that it was not, can the validity of the purchase and conveyance be questioned by any person other than the State of Kentucky. Taking up the first question, its solution renders it necessary that we should construe section 211 of the constitution of the State, reading as follows:
“No railroad corporation organized under the laws of any other State, or of the United States, and doing business, or proposing to do business, in this State, shall be entitled to the benefit of the right of eminent domain, or have power to acquire the right of way or real estate for depot or other uses, until it shall have become a body-corporate pursuant to and in accordance with the laws of this Commonwealth.”
Section 765 of the Kentucky Statutes, which provides that:
“No railroad corporation, organized or created by or under the laws of any other State, shall have the right to condemn land for, or acquire the right of way for, or*105 purchase or hold land for its depots, tracks, or other purposes, until it shall have first filed in the office of the Secretary of State of this State, in the manner provided in the first article of this chapter, its acceptance of the Constitution of this State, and shall have become organized as a corporation under the laws of this State, which it may do by filing in the offices of the Secretary of State and the Railroad Commission articles of incorporation in the manner and form provided in section 763 of this article.”
And section 841 of the Kentucky Statutes, reading:
“No company, association or corporation created by, or organized under, the laws or authority of any State of country other than this State, shall possess, control, maintain or operate any railway or part thereof, in this State until, by incorporation under the laws of this Staté, the same shall have become a corporation, citizen and resident of this State. Any such company, association or corporation may, for the purpose of possessing, controlling, maintaining or operating a railway or part thereof in this State, become a corporation, citizen and resident of this State by being incorporated in the manner following, namely: By filing in the office of the Secretary of State, and in the office of the Railroad Commission, a copy of the charter or articles of incorporation of such company, association or corporation, authenticated by its seal and by the attestation of its president and secretary, and thereupon, and by virtue thereof, such company, association or corporation shall at once become and be a corporation, citizen and resident of this State. The Secretary of State shall issue to such corporation a certificate of such incorporation. ’ ’
In the consideration of the case before us, it is not necessary to consider or discuss the power of the State to directly prohibit a foreign railway corporation from owning property or doing business within its territory, or its power to impose such restrictions and conditions as would virtually amount to a denial of this right; as neither the constitution nor the statute attempt to prohibit a foreign railway corporation from purchasing a domestic railway corporation, nor do they place any unreasonable restrictions or limitations upon the right so to do. The conditions annexed to the right of a foreign railway corporation to come into this State and purchase a domestic railway corporation and operate the same are neither prohibitory nor unreasonably restrictive. The only terms imposed are that before the foreign railway
The next question is — How is a foreign railway corporation that desires to purchase, hold and operate a line of railway in this State to become a body corporate under the laws of this Commonwealth? The answer to this question is found in section 765 of the Kentucky Statutes, which points out the manner in which the constitutional provision may be complied with. This section was enacted for the purpose of furnishing a means by which foreign railway corporations desiring to purchase, hold and operate railways in this State might become in the language of the section “a body corporate pursuant to and in accordance with the laws of this Commonwealth.” As the legislature has pointed out in section 765 the manner in which a foreign railway corporation desiring to purchase, hold and operate a railway in this State may become incorporated in this State, this method must be pursued to the exclusion of all others. A compliance with this section is a condition precedent to its right to engage in this character of business in this State. Until it has done this, it may operate and control but it
“It must be regarded to begin with as finally settled by repeated decisions of this Court that for the purpose of jurisdiction in the Federal courts, a State corporation is deemed to be indisputably composed of citizens of such State”.
the Court in the course of the opinion, proceeded to say—
“It is competent for a railway corporation organized under the laws of one State, when authorized so to do by the consent of the State which created it to accept authority from another State to extend its railroad in such State and to receive a grant of powers to own and control by lease or purchase railroads therein, and to subject itself to such rules and regulations as may be prescribed by the second State. Such legislation on the part of two or more States is not in the absence of inhibitory legislation by Congress, regarded as within the constitutional prohibition of agreements or compacts between States. Such corporations may be treated by each of the States whose legislative grants they accept as domestic corporations. The presumption that a corporation is composed of citizens of the State which created it accompanies such corporation when it does business in another State, and*111 it may sue or he sued in the Federal courts in such other State as a citizen of the State of its original creation. ’ ’
In Louisville, New Albany & Chicago Ry. Co. v. Louisville Trust Company, 174 U. S. 552, 43 L. ed., 1081, the Supreme Court again said—
“This Court has often recognized that a corporation of one State may be made a corporation of another State by the legislature of that State in regard to property and acts within its territorial jurisdiction.”
Again in Southern Railway Co. v. Allison, 190 U. S. 326, 47 L. ed., 1078, it appears that the State of Forth Carolina enacted a statute containing some of the features of both sections 765 and 841 of our statute, providing a means by which foreign railway corporations desiring to own property and carry on business in that State might become domestic corporations. In compliance with this statute, the Southern Railway Company, a Virginia corporation, became a North Carolina corporation, and the question presented to the Court was, whether or not this compliance operated to divest the corporation of the right to remove to the Federal court a suit brought against it in a State court of North Carolina. In the course of the opinion holding that it did not, the Court said—
“So it seems that a corporation may be made what is termed a domestic corporation or in form a domestic corporation of a State in compliance with the legislation thereof by filing a copy of its charter and by-laws with the Secretary of State, yet such fact does not affect the character of the original corporation. It does not thereby become a citizen of the State in which a copy of its charter is filed, so far as to affect the jurisdiction of the Federal courts upon a question of diverse citizenship. ’ ’
In each of these cases the Court had before it legislation in substance similar to ours, but in neither did the Court hold that the legislation was invalid. On the contrary, its validity was impliedly at least recognized. Without further extending the opinion upon this branch of the case we are of the opinion that a compliance by the Virginia corporation with section 765 of the Kentucky Statutes was essential to its purchase and ownership of the Kentucky corporation, and as it did not do this, it cannot be treated in this State as the owner of the Kentucky corporation. It follows from this that the lower court erred in directing a dismissal of the action as to the Kentucky corporation, unless it be that the ap
“It is not for the judiciary, at the instance or for the benefit of private parties claiming under deeds executed by the person who had previously conveyed to the corporation, according to the forms prescribed for passing-title to real estate, to inflict the additional and harsh penalty of forfeiting, for the benefit of such parties, the estate thus conveyed to tire corporation and by it conveyed to others. * * * If the legislature had intended to declare that no title should pass under a conveyance to a foreign corporation purchasing real estate before it acquires the right to engage in business in the State, and that such a conveyance should be an absolute nullity as between the grantor and grantee, leaving the grantor to deal with the property as if he had never sold it, that intention would have been clearly manifested. If the construction placed by the plaintiff upon the constitution and statutes of Colorado be sound, there would be*115 some ground to say that a foreign corporation, taking a conveyance of real estate for purposes of its business in Colorado, before it bad acquired tbe right to do business there, would have no standing in tbe courts of that State for the purpose of having the estate so acquired protected against trespasses upon it * * * Where a corporation is incompetent by its charter to take title to real estate, a conveyance to it is not void, but only voidable, and the sovereign alone can object. It is valid until assailed in a direct proceeding instituted for that purpose. ” To the same effect is Chattanooga Ry. Co. v. Evans, 66 Fed. Rep. 809, and many other cases cited in the authorities mentioned.
But the question here does not involve a controversy as 'to the title to property between contending claimants. The right of property is not in any manner presented by the record. It is a case between a Kentucky corporation and one of the public to whom the Kentucky corporation owed a duty that it seeks to avoid by the plea that it had disposed of the property. We think there is and should be a broad distinction between cases like this and eases in which the title to the property attempted to be conveyed is drawn in question, and that the rule laid down in the cases cited should not be extended to railway corporations. In short, in cases like this, our conclusion is that a conveyance made by a domestic railway corporation to a foreign corporation that has not complied with the laws of this State is void and of no effect in a controversy between the domestic corporation and a party to whom as such domestic corporation it owed duties. As the conveyance was void and of no effect, it did not present any defense to a cause of action that might have been maintained against it if the conveyance had not been made.
Wherefore the judgment is reversed with directions for a new trial in conformity with this opinion.