107 Ga. 164 | Ga. | 1899
It appears from the record that the Augusta Southern Railroad Company, in the year 1897, entered into a written contract with the South Carolina and Georgia Railroad Company. In this contract, denominated by the parties as a lease, the former company (which will hereinafter be referred to as the lessor), granted, demised, leased and farm-let to the latter company (hereinafter to be referred to as the lessee) its railroad, right of way, depots, yards, rolling-stock, and all its other property, during the corporate existence of the lessor, with a warranty of quiet enjoyment. The lessee on its part agreed to divers and sundry covenants, among which were that the lessee should assume certain bonded indebtedness of the lessor, maintain the condition of the property, keep it in repair and return it at the termination of the lease in as good condition as it received it, and should pay to the lessor one half of the earnings of the leased road after deducting therefrom (1) the expenses of maintenance and operation, including taxes and liabilities incurred in the operation of the road, (2) the amounts paid out for interest upon the bonds, for the repayment of which interest no recourse was to be had except upon the earnings of the leased road, and (3) such betterments as might be made; certain means being prescribed for ascertaining the amount of the road’s earnings. The instrument further gave to the lessor the right, upon the breach of the covenants, to re-enter and take possession of the property, such reentry not to prejudice the lessee’s right to she for damages for such breach. Provision was made for the arbitration of all differences arising as to the due performance of any of the covenants. It seems that differences did arise, some of which were settled by arbitration, and some of which were, according to the allegations of the petition, never submitted to arbitration. In 1899, the lessor filed its equitable petition against the lessee, charging various breaches of covenant on the part of the lessee, among them that it had failed to pay the interest on the coupons of the bonds according to contract, that it had failed to keep in repair the road-bed and rolling-stock, and that it was mismanaging the road to such an extent as to lose it much of its patronage. Other allegations of misconduct were
The trial judge predicated his judgment upon the position that the written instrument, termed by the parties a lease, really constituted the two corporations partners, or that, if this were not true, at least the lessee occupied a position of trust towards the lessor. We can not agree with him in either of these positions. It is now settled in this State, and in accordance with the very decided weight of authority in other States, that .a corporation of this character can not enter into a partnership with another corporation or with an individual, except by authority of its charter. Gunn v. Central R. Co., 74 Ga. 509; Ledsinger v. Central Line Steamers, 75 Ga. 567; Parsons, Partn. §24; 7 Am. & Eng. Enc. L. (2d ed.) 794. We believe that this fact shows that the intention of the parties was not to enter into a partnership. We could not suppose that the two intelligent gentlemen who are the presidents of these railroads and the able counsel who prepared this lease would, for a moment,
Nor do we think that there is any such fiduciary relation on the part of the lessee toward the lessor as to create a trust in
Having shown that the law does not permit tw© corporations to enter into a partnership unless they have express charter authority to do so; that, even if it did, this contract was not one of partnership; that the contract was a lease; and that no trust relations were established between the parties which would give a court of equity jurisdiction in the premises, it follows that
Judgment reversed.