45 Wis. 579 | Wis. | 1878
This is a proceeding by information in the nature of quo .warranto, filed by the attorney general, by leave of the court, in the name and on behalf of the state, against the defendant corporation, to vacate its charter, annul its corporate existence, and to have its rights, powers, privileges and franchises adjudged and declared forfeited.
As the grounds of the information, it is alleged that the principal or general office of said corporation is located without this state, and in the city and state of New York; that the books and records of the corporation are not kept, and have never at any time been kept, within this state, but have been kept, and are and now remain, in the city and state of New York; and that none of the general officers of said corporation reside in this state, but that its president, secretary and treasurer all reside in the city and state of New York.
It appears by the return of the sheriff of Milwaukee county, that the summSns and information herein were served at the city of Milwaukee, by delivering to and leaving with one A. F. Graham, a freight agent of the company, a copy thereof — the general office of said company not being within the state of Wisconsin,— and by delivering also a copy thereof to, and leaving the same with, one F. W. Rhinelander, the president of said corporation defendant.
Notwithstanding the last part of this return, the allegation in the information, “ that none of the general officers of said corporation reside in this state, but that its president, secretary and treasurer reside in the city and state of New York,” on demurrer to the information, must be taken as true.
The demurrer to the information is upon four grounds:
The jurisdiction of the court in this proceeding is not now an open question. State v. Milwaukee Gas Light Co., 29 Wis., 454; Attorney General v. The West Wisconsin Railway Co., 34 id., 197; and Att’y Gen. v. West Wis. R'y Co., 36 id., 466.
The last ease was similar to this, and the same relief asked, and the question of jurisdiction was distinctly raised upon demurrer, and fully sustained by a most able and elaborate opinion by the late chief justice.
Questions of very great public interest, involving the sovereignty and jurisdiction of the state over the corporations of its own creation, charged with gross abuse and misuser of its powers and franchises, are presented by this information; and if tlyis court could take jurisdiction only of cases in quo war-ranto of paramount public importance, this would seem to be such a case.
If, by the objection that there is a defect of parties plaintiff, is meant that the United States Eolling Stock Company, the plaintiff in the attachment proceedings, injured by the conduct of the defendant, should have been made-the relator or joined with the-state, it is sufficient to refer to the statute authorizing and regulating this particular proceeding. Sec. 1, ch. 283, Laws of 1874.
This proceeding is not to enforce a private right or to administer a personal remedy; and the said attachment proceedings, and their alleged failure by reason of the conduct of the corporation complained of, can be considered only as an instance of what might be a common mischief resulting from the same cause.
The third objection is somewhat obscure, for it is not perceived that there is more than one cause of action stated
But if the information should be held to set up several and distinct causes of forfeiture, it would not be demurrable for that reason. “ Quo warranto being in the nature of criminal proceedings, the attorney general may plead or reply as many distinct causes as he thinks proper.” The People v. The President and Directors of the Manhattan Co., 9 Wend., 351.
The last ground of demurrer, “that the information does not state facts sufficient to entitle the plaintiff to the relief demanded,” raises a question of very grave importance, and, so far as I have been able to find, a question in many. respects new,’ and one of considerable difficulty. There may have been cases in quo warranto to forfeit the franchises of a corporation for the precise cause assigned in this information; but I have found none in the limited examination I have been able to make. But the cases in which the same causes in principle have been decided to be a fatal misuser and abuse of the franchises of a corporation, and a violation of the implied conditions of its existence, are numerous.
There appears to be no statute of this state, now in force, specifically requiring a railroad corporation of the state to
There are many statutes that would seem to require such a corporation to so far keep its general business, books, records and officers within the state, as to at least make effectual and operative the statutes themselves. Of such are the provisions of secs. 12, 13 and 14 of ch. 130, E. S. 1858, relating to the attachment of shares of stock in corporations, and the interest and profits thereon, and authorizing the service of a certified copy of the attachment and notice thereof, upon the ;president, secretary, cashier, or managing agent of the 'company, and requiring such officer to furnish the sheriff a certificate under his hand of the number of rights and shares of the defendant in the attachment, in the stock of the company,
Of such, also, are the provisions of sections 33, 34 and 35 of chapter 134, R. S. 1858, relating to the levying of execution upon any share or interest of a stockholder in any corporation of the state, and requiring an attested copy thereof to be left with the officers of the company, or with the officer having at the time the custody of the books and papers, and such officer to furnish a certificate of such shares of stock and the particulars thereof. Section 18, chapter 120, R. S. 1858, authorizes the service of process against a corporation upon the president, cashier or other principal officer, or by leaving a copy thereof at his last usual place of abode.
Chapter 148, R. S. 1858, entitled, “Of proceedings by and against corporations,” contains numerous provisions consistent only with constant accessibility, through the courts, to the officers, books, records, papers and management of a corporation within the state; and section 15 of said chapter confers upon the circuit courts of the state the most comprehensive jurisdiction, and the fullest power of visitation, over the directors, managers, trustees and other officers of corporations, and over their conduct, management and disposition of the funds and property in their charge.
Section 22 of chapter 78, R. S. 1858, confers upon the attorney general, and reserves to the legislature, the most extensive visitorial power over all corporations of the state, and provides for the fullest examination and inspection of their “ vaults, safes, boobs, papers and documents,” and to obtain access to them by summary process of the courts, or the judges thereof, and for the examination on oath of the directors or officers in relation to the condition and affairs of the corporation. These last provisions are expressly made apart of chapter 119, Laws of 1872, under which the defendant corporation was organized,
In view of these numerous and important provisions of the statutes, it is difficult to say that the laws of this state do not directly require, and impossible to say that they do not by necessary implication require, that the jn'incipal place of business, the books and records and principal officers of the corporation should be constantly kept within the state, to an extent, at least, adequately to give full effect and operation to these statutes. If this be so, then clearly this information may be sustained strictly under ch. 283, Laws of 1874, which prescribes the causes for vacating the charter and annulling the existence of a corporation offending in these particulars. Section 16, ch. 160, B. S. 1858, is still in force, and the language is quite comprehensive and general, that, “if it shall be adjudged that a corporation against which an action shall have been brought pursuant to this chapter, has, by neglect, abuse or surrender, forfeited its corporate rights, privileges and franchises, judgment shall be” rendered,” etc.; which language would seem to give the specific causes of forfeiture named a construction broad enough to embrace all the causes of forfeiture known at common law.
But, notwithstanding the statute, causes of forfeiture at common law may be embraced in the information, with the statutory causes. The statute does not use any language indicating an intent to cut off any of the ancient grounds on which
These common-law causes embrace “ an abuse of powers and delinquency” (Rex v. Pasmore, 3 Term, 244); “malfeasance and nonfeasance ” (Commonwealth v. Union Fire & Marine Ins. Co., 5 Mass., 232); “negligence and abuse of franchises” (1 Black. Com., 485); “nonuser and neglect ” (Rex v. Amery, 2 Term, 515); “.things done or omitted to be-done” (3 Harg. St. Tr., 627). The corporation “ may be dissolved by a forfeiture of its charter through abuse or negleet of its franchises, as for condition broken; there being a tacit condition in every such grant, that the corporation shall act up to the end of its institution.” Ches. & Ohio Canal Co. v. Balt. & Ohio R. P. Co., 4 Gill & John., 121. This is probably more than sufficient to show that this information sets up sufficient causes of forfeiture, if the acts complained of are illegal either under the statute or at common law, or in violation of the charter of the corporation, or of the inherent and fundamental principles and implied conditions of its existence. These principles and conditions, which are so vital to all corporations holding the franchises of the state, are aside from, and perhaps above, the statute law prescribing the causes of forfeiture; for they are more permanent and important, and it is questionable whether legislation abolishing this remedy, and giving the right to a corporation to act in such manner as to be independent of and paramount to the sovereignty of the state and the jurisdiction of its courts, would be of any validity.
In consideration of what has already been said, and the authorities cited, and supported by other authorities hereafter to be considered, we hold that it is the duty of the defendant corporation to keep its principal place of business, its books and records, and its principal officers, within the state, to an extent necessary to the fullest jurisdiction and visitoriál power of the state and its courts, and the efficient exercise thereof in all proper cases which concern said corporation; and that the information sufficiently shows a total neglect of this duty, and
The great importance of this case demands further investigation of the particulars of this general duty of corporations, and a fuller consideration of the authorities upon the subject.
The visitorial power of the state over its corporations does not depend alone upon the statute, but exists as a necessary and inherent power in the government which creates the corporations, at common law. This common-law right of- visitation, in its strict sense, was primarily exercised in England almost exclusively over eleemosynary corporations; for it was said in respect to them, that there were virtually two founders of the corporation, the king, who incorporated, and the persons who gave it revenues; the first called the funclaiio in-cipiens, and the latter the fundaiio perficiens; and the right of visitation, so called, was in the endower or patron, subject, however, in all cases, to the government. In analogy to this right of visitation as to charitable corporations, the common-law right of visitation over civil corporations existed in the government alone, as being the sole founder, as well as the grantor of their franchises; and in England the king always exercised this right as sole visitor; but, as Sir William Blackstone says in his Commentaries (1 Black. Com.,-480): “The king being thus constituted by law visitor of all civil corporations, the law has also appointed the place wherein he shall exercise this jurisdiction, which is the court of King’s Bench;” and to that jurisdiction all civil corporations were constantly amenable and subject, through the officers of the crown. In this country, this common-law right of visitation is in the state or government which creates the corporation; and “ civil corporations are visited by the government itself, through the medium of the courts of justice.” Angelí & Ames, § 684. In Re Taylor Orphan Asylum, 36 Wis., 554, the visitorial power of the courts of this state over eleemosynary corporations, in cases where no visitor is appointed, is fully asserted by the able opinion of the chief justice, as a
According to the facts set up in the information, this visi-torial right of the state cannot be fully exercised over this corporation; for its affairs, books, records and officers are outside of the state, and not practically within the jurisdiction of its legislature, its officers or its courts.
According to the civil law, corporations were created in Rome by imperial or senatorial decree, with privileges and franchises limited and well defined, which no merely voluntary associations were allowed to exercise or enjoy, and these corporations were cautiously and constantly kept subject to the laws. Deriving their sole authority from the government, they were called collegia licita, in contradistinction to unauthorized bodies, or collegia, illicita. That such corporations should use their privileges and franchises for the legitimate objects and purposes of their creation, and not usurp powers not expressly granted, and should always be amenable to the laws, were the very foundation principles and conditions of their existence; and in adopting from the civil law the institution of such corporations, England and this country adopted these principles. 2 Kent’s Com., 268.
“ It is a tacit condition of a grant to a corporation, that the grantees shall act up to the end or design for which they are incorporated; and hence, through neglect or abuse of its franchises, a corporation may forfeit its charter as for condition broken, or for breach of trust. The duties assigned by an act of incorporation are conditions annexed to the grant of the franchises conferred” (Angelí & Ames, § 776); “and duties implied are equally obligatory with duties expressed, and their breach is visited by the same consequences.” Att’y Gen'l v. Petersburg & Roanoke R. R. Co., 6 Ired., 456; Field on Corp., § 456, and note.
A corporation is an artificial entity and a fictitious person, and is- only endowed with life and the capacity to organize,
"Whenever a corporation is created by a state, and nothing further is done, and it performs none of its corporate functions within such state, and its business is done, its principal place óf business and its books and records are kept, and its officers reside, in another state, it may be said to exist in the former state; but such an existence is only fictitious and artificial, while it inhabits the latter state, and'is for all practical purposes a resident and citizen thereof, and can sue and be sued therein. Hanna & Finley, v. International Petroleum Co., 23 Ohio St., 622; Runyan v. The Lessee of Coster, 14 Peters, 122. In Covington Drawbridge Co. v. Shepherd, 20 How., 233, in determining whether the corporation was a citizen of the state of Indiana, to give jurisdiction to the federal court, the court said: “ Consequently, the Oovington Drawbridge Company being chartered by the state of Indiana, it necessarily has its home and place of business in that statef and it held that the mere existence of a corporation in one state, while all its stockholders reside and its business is done in another state, does not make the corporation a citizen of the former state, so as to sue or be sued^by a citizen of another state in the federal courts; and that it was necessary to show, in addition to the fact that the company was incorporated by the state of Indiana, that it had its principal place of business in that state, to make the corporation a citizen thereof.
The question of the locality, residence or citizenship of a corporation, so as to confer jurisdiction upon the federal courts in cases between citizens of different states, has received more attention from the federal courts than from any other; and the nature and duties of a corporation have been more fully considered. It had been held in Strawbridge v. Curtiss, 3 Cranch, 267, and in U. S. Bank v. Deveaux, 5 id., 84, and several other cases, that the citizenship of the governing or private
In Bank of Augusta v. Earle, 13 Peters, 598, where the same question was raised, the court uses, verbatim, the same language above quoted, and adds that a corporation “ must dwell in the place of its creation,” and “ cannot migrate to another sovereignty.”
In. Hill v. Beach, 1 Beas., 31, it is held that a corporation organized under the general laws of the state of New York to do business exclusively in the state of New Jersey, “is mo Corporation, and a fraud upon the laws of New York.” In Land Grant Railway & T. Go. v. The Commissioners of Coffey County, 6 Kansas, 343, it is held that a company incor■porated in Pennsylvania, not to do business in that state, but elsewhere, “ is no corporation; ” and the court says: “ A corporation, in order to have any legal existence, must have a home, a domicile, a principal place of busi/ness, within the boundaries of the state which creates it. _ It may send agents into other states to do business, but it cannot migrate in a body; to go beyond the jurisdiction of the laws which bind and hold it together, it dissolves into its original elements, and the persons who compose it become only individuals.” In Hilles v. Parrish, 14 N. J. Ch., 383, the court says that, “ independent of statutory provisions, it is a rule of law that a private corporation whose charter has been granted by one state, cannot hold meetings and pass votes in another state.” In Conn. Mutual L. Ins. Co. v. Cross, 18 Wis., 109, it is held,
There can be no doubt that a private corporation may be created by the concurrent act of two or more states (Bishop v. Brainerd, 28 Conn., 289); but in such case the residence of the corporation is determined by its general place, of business, the residence of its officers, and the place where its books are kept. In Culbertson v. The Wabash Navigation Co., 4 McLean, 544, the corporation was created by the states of Indiana and Illinois. The stockholders resided in both states, and the works of improvement were in both. The plaintiff was a citizen of Pennsylvania, and the suit is brought in the circuit court of the United States for the district of Indiana. The court upon the facts decided the residence and citizenship of the corporation to be in the state of Indiana, on the following grounds: “that the act was first passed by Indiana, the company was organized in it, the president and secretary haVe constantly resided in Indiana, and a majority of the directors, and their principal business, at least, has been done at Yin-cennes, the residence'of the president and secretary, the books of the company are kept at Yincennes, Indiana, which is the general place of meeting, and where the business of the directors is partially done; ” and the. court says in reference to the case in 2 Howard above cited: “By the decision of that case, the right of a corporation to sue in the courts of the United States as a citizen of the state in which its business is done, is recognized, without regard to the citizenship of the stockholders;” thus using the term “business” as meaning the general management of its affairs, and not the works of improvement made. In Jenkins v. The California Stage Co., 22 Cal., 537, the question was, in what county the corporation resided^ in which to bring suit against it, and to determine .the place of trial. The action was brought in Nevada county.
The authorities cited by the learned counsel of the defendant, although most ingeniously construed, do not appear to militate against the conclusions already reached. McCall v. The Byram Manf’g Co., 6 Conn., 429, upon casual reading, might well be mistaken as holding that corporate acts may be done outside of the state in which the corporation was created. The case, in brief, is, that it was a corporation of Connecticut; the directors were chosen and appointed a secretary in the city of New York; and the secretary resided and kept his books and records in that city. Being in the state of Connecticut, an attachment was served upon him there. The only question raised or decided was, whether the directors could meet in New York and elect or appoint a secretary there; and it was held that, under the charter and by-laws, they might, but the court also holds that, “ if the duties of the office were of perpetual recurrence, requiring perpetual residence in Connecticut, his total absence from that state would be good ground of removal.” The question of the legality of the election of the directors outside of the state is
Mumford v. Am. Life Ins. Co., 4 N. Y., 463, decides only that a corporation may make contracts outside of the state. Bard v. Poole, 12 N. Y., 495; New York Floating Derrick Co. v. N. J. Oil Co., 3 Duer, 648; The Wood Hydraulic H. M. Co. v. King, 45 Ga., 34; Copp v. Lamb, 12 Maine, 312; Smith v. Alvord, 63 Barb., 415, only consider the power to make contracts outside of the state. In Railroad Co. v. Harris, 12 Wall., 65, it is held, that when a railroad company of one state is authorized to act as a corporation in another state, by the laws of the latter state, or is incorporated also by such state, its residence is in either state where it does its business.
The further consideration of this question may well be concluded by the statement of the law, as gathered from the an-
“ The law seems so entirely well settled, that corporations created by one sovereignty cannot so transfer their locality as legally to exist and act in their organic, corporate capacity in another sovereignty, that it appears very singular that such multitudes of speculative joint-stock corporations, deriving their charters from the legislature of the state, should attempt to transfer their entire local action to another sovereignty and jurisdiction. For there is no principle better settled, than that the locality of a business corporation is determined by that of its principal business office. And there are unquestionably hundreds of business corporations chartered by the legislature of one state, having their principal and only business offices in other states. This is done, doubtless, by holding the stockholders’ meetings in the states where the charters were 'obtained, and appointing a board of directors with full powers, and thus carrying forward the business of the company through the agency of the board of directors themselves. But that seems scarcely less than an evasion; and though it may be held binding upon the members of the company, so long as acquiesced in by them, it might at any time be enjoined by proceedings in equity.”
By the OouH. —The demurrer is overruled, and the defendant has leave to answer within ninety days.
A motion by the defendant for a rehearing was denied.