State ex rel. Bradford v. Western Irrigating Canal Co.

40 Kan. 96 | Kan. | 1888

Tbe opinion of the court was delivered by

IíortON, C. J.:

It is claimed that the Enterprise Irrigating Company, even if its stockholders desired it, had no right to sell all of its property, surrender its franchises, and terminate its existence, without the assent of the state; therefore, that the Western Irrigating Canal Company could not exercise the powers, privileges and franchises granted to the Enterprise Company. For the purposes of this case, we assume this to be true, and that so much of the deed of December 11, 1886, as attempts to transfer and convey the franchises of the Enterprise Company, is wholly 'void; and yet we do not think the plaintiff is entitled to its judgment of ouster in this action. The Enterprise Company was organized under the laws of the state, and had the power, during its existence as a corporation, “to hold, purchase, mortgage, or otherwise convey such real and personal estate as the purposes of the corporation should require; . . . also to enter into any obligation or contract, essential to the transaction of its ordinary affairs.” (Comp. Laws of 1885, ch. 23, §11. See also the general provisions of chapter 23, Compiled Laws of 1885, relating to private .corporations.) The word “franchise” is generally used to designate a right, or privilege, conferred by law. What is called “the franchise of forming a corporation,” is really but an exemption from the general rule of the common law prohibiting the formation of corporations. All persons in this state have now the right of forming corporate associations upon complying with the simple formalities prescribed by the statute. The right of forming a corporation, and of acting in a corporate capacity under the general incorporation laws, can be called a franchise only in the sense in which the right of forming a limited partnership, or of executing a conveyance of land by deed, is a franchise. (2 Mora-wetz, Priv. Corp., § 923.) Even if the Enterprise Company had attempted so to do, it could not, we suppose, sell or convey its corporate name, or its right to maintain and defend judicial proceedings, or to make and use a common seal.

It is not essential to the existence of a corporation that it should possess property. Its legal existence, therefore, is not necessarily determined by the deed or its attempted conveyance. Its franchises remained, although the corporation may have conveyed all its property. There is no stockholder or creditor intervening or objecting. Therefore we are not called upon to consider the rights of such parties. There is no complaint that the property of the Enterprise Company was not properly acquired, and that the corporation legally owned it. The power to sell or dispose of the same necessarily attached as an,incident to the ownership. If the corporation could convey a part, it could convey all, if its stockholders assented, and its creditors, if it had any, did not interfere or object. It may be that the business of the Enterprise Company had proved unprofitable, and rendered it necessary to dispose of its property and wind up the concern, as the only means of avoiding insolvency. It may have been necessary to sell the whole of its property in order to raise means to pay its debts and avoid a sacrifice by forced sale. In either event, the sale and conveyance of the property with these objects in view would be a lawful purpose of the corporation. (Miners’ Ditch Co. v. Zellerbach, 37 Cal. 543; Willamette Manufacturing Co. v. Bank of British Columbia, 119 U. S. 191; Town v. Bank, 2 Doug. [Mich.] 530: Boston Glass Manufactory v. Langon, 41 Mass. [24 Pick.] 49.)

A private person could make a transfer of all his property if it was done bona fide. Now the Enterprise Company possessed all of the powers of a private person in regard to the disposition of its property. It had the absolute jus disponendi.

The route and profile of the Western Irrigating Canal Company is practically the same as that laid out and proposed, by the Enterprise Company. The Western Company under the .statute has full power to purchase and hold real and personal ■estate for the purposes of the corporation; therefore the Western Company was acting for the benefit of its stockholders when it purchased and took possession of the .right-of-way of •.the Enterprise Company, and in purchasing and taking possession of such property it was carrying out the purposes of its corporation. Under its charter it had the power to excavate and construct an irrigating canal, commencing at some point in section 35, in township 27 south, of range 22 west, on the north bank of the Arkansas river, in Ford county, Kansas, with dam, and such lateral ditches as it deemed necessary for irrigation, water works and manufacturing purposes. Upon the agreed statement of facts and the evidence produced upon the trial, the Western Canal Company is only exercising the powers, privileges and franchises conferred by its charter of November 26, 1886. In taking possession of, and in using, the property purchased of the Enterprise Company, it exercises its own rights and privileges.

■ Again, all of the franchises of the Enterprise Company have been extinguished by the state, in an action brought in this court for that purpose. The state has resumed its franchises, and that company is no longer in existence; therefore the Western Canal Company cannot exercise the powers, privileges and franchises granted the Enterprise Company, because they have been taken away by the state, and the latter company has no franchises to be exercised by any person or corporation.

Further, if the deed from the Enterprise Company to the Western Company transfers and conveys nothing, as it is alleged, then of course there is nothing to complain of. If the Western Company has not obtained any right or title to the public domain over which its right-of-way is laid out, the state has no cause of action therefor.

Judgment will be rendered in favor of the defendant for all costs.

All the Justices concurring.