36 Minn. 246 | Minn. | 1886
Lead Opinion
Upon the facts admitted on the face of the record, the attorney general applies for judgment dissolving these corporations, on the ground of non-user of their franchises, and a suspension of their business as railroad companies. The information shows, and the answers admit, that the respondents have heretofore sold and conveyed the lines of road authorized by their charter, and by them constructed thereunder, and for more than four years they have neither owned nor operated any railroad in this state. It further appears that they claim still to be corporations exercising certain other franchises, to wit, the right to hold and dispose of lands granted upon the construction of the roads, or designated portions thereof, exempt from all taxation. The attorney general insists that the corporations have abandoned the chief purpose and business for which they were organized, and endowed with grants and chartered privileges, and that the suspension of the exercise of their principal franchises amounts to a non-user, for which a forfeiture should be-declared.
To this end an information may be filed and prosecuted to judgment; and it was held in State v. St. Paul & Sioux City R. Co., 35 Minn. 222, (28 N. W. Rep. 245,) that a forfeiture under section 11, chapter 76, just quoted, might be enforced by quo warranto in this court. But the general rule is that a corporation is not to be deemed dissolved until a forfeiture is judicially ascertained and adjudged, (People v. Hillsdale, etc., Turnpike, 23 Wend. 254; Bradt v. Benedict, 17 N. Y. 93; Minnesota Cent. Ry. Co. v. Melvin, 21 Minn. 339;) and a cauBe of forfeiture can only be taken advantage of by the state in a direct proceeding for the purpose. Heard v. Talbot, 7 Gray, 113, 120. In a forfeiture for neglect or non-user of corporate privileges at the common law, the court was left to determine whether, under the circumstances of every particular case, the acts and omissions had been such, or had been continued for such length of time, as to warrant a judgment. Harris v. Mississippi Valley, etc., R. Co., 51 Miss. 602; Hart v. Boston, etc., R. Co., 40 Conn. 524. But the statute re-, ferred to expressly provides for a judgment of dissolution of a railroad corporation “which for one year suspends the lawful business of such corporation.” This leaves no room for any discretion on the part of the court, where this fact clearly appears, to refuse judgment of forfeiture. The terms of the statute admit of no excuse or explanation. People v. Northern R. Co., 53 Barb. 98, 123; State v. Building Ass'n, 35 Ohio St. 258, 264; Bradt v. Benedict, 17 N. Y.
These railroad corporations were created by the state to maintain, have, use, and operate railroads. This was their lawful business, and the end and object for which they were created, and the consideration and condition upon which they were given their franchises and special privileges, and endowed with land grants. 2 Morawetz, Corp. (2d. Ed.) §§ 1114, 1115. It would seem, therefore, that a suspension of such business by the corporations would necessarily bring the case within the statutes, notwithstanding their reservation of the land grants and franchises upon the sale or transfer by them of the railroads. The right to acquire and dispose of these lands, and the right to hold the same in the mean time exempt from taxation, are corporate franchises, but ancillary and subordinate to the main purpose and object for which the companies were chartered. The failure to discharge their duties to the public, and the non-user or suspension of their principal business as railroad companies, are a sufficient ground for an absolute forfeiture of their corporate rights. Ward v. Sea Ins. Co., 7 Paige, 294; Matter of Jackson Marine Ins. Co., 4 Sandf. Ch. 559; Mickles v. Rochester City Bank, 11 Paige, 118, 126, (42 Am. Dec. 103;) Attorney General v. Petersburg, etc., R. Co., 6 Ired. 456, 469; Heard v. Talbot, 7 Gray, 113, 120.
By the consent of the state such subordinate franchises may exist and continue to be exercised, independently of the franchises to construct and operate railroads. State v. St. Paul & Sioux City R. Co., 35 Minn. 222, (28 N. W. Rep. 245.) But the right to exercise such franchises cannot lawfully survive after a sale of the railroads, and a suspension by the corporations of their principal business, unless by the authority and consent of the state, expressed or clearly implied ; and the consent, ratification, or waiver must be through legislative enactments. The state is not, in such case, bound by the acts of its executive officers. People v. Phoenix Bank, 24 Wend. 431, (35 Am. Dec. 634;) People v. Plank-road Co., 27 Barb. 458; Ang.
The discussion in these cases is therefore narrowed down to the question whether the legislature has authorized or consented to such a separation of corporate franchises and the continued existence of the corporations for the purpose of holding and disposing of the granted lands, notwithstanding they had ceased to hold or operate any railroads, or has waived the forfeiture resulting from the suspension by them of their lawful business as railroad companies. The contention of the respondents is that such waiver appears from special acts, and the course of legislation on the subject.
1. In respect to the case of the Minnesota Central Railway Company. The proportion of the land grant falling to the Minneapolis & Cedar Valley Railroad Company, in aid of the construction of the line finally built by the respondent, the former company was authorized to take, under the act of May 22, 1857, (Laws 1857, Ex. Sess., c. 1,) which provided that the company should be capable in law of taking and holding such lands in fee-simple, and that said lands so granted should be exempt from taxation until the same should be sold and conveyed. After the foreclosure by the state, all the franchises, rights, and property theretofore belonging to the Minneapolis & Cedar Valley Railroad Company were transferred by the legislature to the respondent, and the lands set apart for that line of road were authorized to be conveyed to the respondent, upon the construction thereof, as provided in the Special Laws of 1864, c. 2; and it was also therein provided that the lands so granted should be exempt from taxation until conveyed or contracted to be sold by the company. Minnesota Cent. Ry. Co. v. Melvin, 21 Minn. 339. The respondent thereafter, in pursuance of its charter as amended, completed the construction of the road to Austin, in the county of Mower, about the year 1866, and was thereupon entitled to a conveyance of the land grant appurtenant to so much of that line of road. The McGregor Western Railway Com
It is admitted that its articles of incorporation were duly filed in pursuance of the act of 1866, and the purchase of a part of respond•ent’s road was thereafter-consummated in 1867, under which the latter sold and conveyed its line of railroad from Minneapolis to Austin, isaving and reserving, however, in the conveyance, its right to the .lands and its right to be a corporation. Soon after, the McGregor Western Company transferred its purchase to the Milwaukee & St. Paul Eailway Company. It may be conceded, therefore, that the McGregor Western Company, by virtue of the general provisions of ■the statute referred to, was authorized to acquire that portion of respondent’s road; and the validity of the subsequent transfer thereof to the Milwaukee & St. Paul Company, which is not disputed, is not ■a proper subject of inquiry in this proceeding. The respondent after-wards completed the remaining portion of its road from Austin to the state line, which was thereafter, in 1870, also transferred, in like manner, to the Milwaukee & St. Paul Eailway Company, since which time the respondent has not operated any portion of its railroad, but has •continued to hold and enjoy the franchise pertaining to the lands acquired by it in aid of the construction of the road, a limited amount •of' which still remains undisposed of.
By the act of February 29, 1868, (Sp. Laws 1868, e. 5,) the legislature expressly authorized the governor “to certify to the secretary •of the interior the construction and completion of that part of the
2. In respect to the Hastings & Dakota Railway Company. We-find no legislative authority or sanction for the suspension, by the respondent, of its franchises, business, and duties as a railroad company, and the continued, separate, and independent exercise of the-business of a land company for the disposition of the land grant acquired by the corporation. When the respondent had constructed that portion of its road east of Glencoe, it sold and conveyed the same-to the Milwaukee & St. Paul Railway Company, with its rolling stock, equipment, etc., appertaining to that portion of its road, and thereafter wholly ceased to operate the same, but reserved all the lands-earned by and granted to the respondent, under its charter, for the-construction thereof, and also its corporate franchise; and afterwards, upon the completion of its line to Big Stone lake, it in like manner-
The charter, and amendments thereto, secured to respondent the benefit of the lands granted by congress to aid in the construction of the main line, referred to, from Hastings to the west line of the state; and these lands were to be transferred to the company “as soon and as often as ten miles of said road shall be constructed and completed; * * * and the grant shall not become void, nor the company be dissolved, by the non-completion of the entire extent of said road, but shall be good and valid, to all intents and purposes, for the parts or portions of said road completed, and the said company shall continue and survive to that extent.” Sp. Laws 1866, c. 12, § 15; Sp. Laws 1867, c. 9, § 4. Undoubtedly the company acquired an absolute right to the lands actually earned as the construction of the road progressed; but these provisions involve no recognition or sanction by the state of its right to suspend its active exercise of the franchises of a railway company as to the completed roads, or otherwise. The provisions relating to taxation, and under which the exemption is claimed, (Sp. Laws 1867, c. 11, § 19,) are, substantially, that the percentage upon the gross earnings therein required to be paid to the state should “be in full of all taxation and assessment whatever;” “and, for securing to the state the payment of the aforesaid pereentum, it is hereby declared that the state shall have a lien upon the railroad, and upon all the property, estate, and effects of said company, whether real, personal, or mixed.” These provisions relate wholly to the obligations and duties of the respondent; and the granted lands are a part of the company’s property for which a peculiar mode of taxation is thus provided, and are a part of the corporate property
The counsel for respondent, however, rely upon subsequent acts of the legislature, extending the time for the completion of the unsold portion of the line, as evidence of the legislative sanction and approval of the past acts of the company. But, until a forfeiture was adjudged, the company might exercise its franchises, and proceed with the construction of the road within the time fixed by the legislature; and it will be borne in mind that the gravamen of the charge Ihere is not misuser, but non-user, — a suspension of its business as a railroad company by the respondent. The time limited for such purpose having expired, an act was passed February 28, 1876, (Sp. Laws 1876, c. 115,) extending the time for the completion of the road by the respondent. Undoubtedly this was so far a recognition of the continued existence of the company as a railway corporation. But the object of the statute clearly appears from the preamble, which recites the default of the company in failing to construct the railroad “according to the terms and conditions of the several acts of the legislature of the state of Minnesota granting the right to said railroad company to construct said line of railroad, and granting to said company lands to aid in such construction;” reciting also the importance of an early completion of the road, and the expressed willingness of the company to complete and put it in operation within a reasonable time.
Stress is also laid upon the fact that in the acts of 1876,1877, and 1878, referred to in the answer, which also still further extended the
The Milwaukee & St. Paul Eailway Company was then a foreign corporation, which had no right, under the laws of this state, to purchase or take an assignment of respondent’s railroad and franchises. It was not so authorized by Gen. St. 1866, c. 34, § 39, (Gen. St. 1878, c. 34, § 69,) because that applies to domestic corporations only, or corporations clothed with like .powers by the state. And the rights ■and privileges conferred on that corporation by Sp. Laws 1872, c. 93, were expressly, by that act, limited to the line of the St. Paul & Chicago Eailway Company, the sale of which was confirmed. Such authority was for the first time conferred, in so far as we are able to find, by Sp. Laws 1881, c.. 221, referred to in the answer. Nevertheless, it appears that the respondent, having then completed the main line of its road to the west boundary of the state, thereupon, in January, 1880, as before stated, sold the division west of Glencoe to the Milwaukee & St. Paul Eailway, reserving its land grant and right to be a -corporation. No subsequent action of the legislature is relied on, showing any ratification of such transfer or waiver by the state. Subsequently, in 1882, the branch from Minneapolis to Benton was sold to the same company without reservation, as we presume there was no land grant connected with it, and since that time the respondent has suspended its lawful business as a railway corporation. It was not material that the last sale was authorized by the act of 1881. It saved to the respondent no right to continue
8. From the foregoing it is apparent that the transfer of the section of its road from Austin to the state line, and the entire suspension of its lawful business and functions as a railway corporation by the respondent, the Minnesota Central Railway Company, were equally without such legislative sanction as to bar these proceedings.. It was the closing out and cessation of its railroad business, and was so intended to be. It is no answer or excuse that the Milwaukee Company has continued to operate the roads, and has paid the taxes required by the charters of these respondents. It cannot and. does not, we presume, claim to be operating them under such charters. These facts do not affect the question of the suspension of corporate duties by respondents. Lake Ontario Shore R. Co. v. Curtiss, 80 N. Y. 219; People v. Northern R. Co., 53 Barb. 98, 123; Com. v. Tenth Mass. Turnpike Co., 5 Cush. 509.
In Conro v. Port Henry Iron Co., 12 Barb. 27, 63, the defendant corporation leased its works for the term of two and one-half years for the purpose of closing out its business, but the business was carried on as before the lease, and the court held, per Willard, J., that, conceding the lease to be binding on the company, it suspended for two years and six months its ordinary and lawful business, and was
Nor is it material that the records of the executive department of the state disclose the fact that the Milwaukee Company claim to own, and have in fact operated, these roads as a part of its system, or that the legislature, having notice of these records, have omitted to take action in the premises. The Milwaukee Company has paid its own taxes on its gross earnings, and has discharged its own public duties; and in the mean time the respondents have paid no taxes, nor discharged any duties to the public. The remedies of the state, under the statute, have continued to exist, and have not been suspended by the legislature. No further legislation was needed to secure its rights, and the absence of it is no waiver, and the respondents have' suffered no prejudice from the leniency of the state.
The fact that authority is given by section 2 of chapter 93, Sp. Laws 1872, before referred to, authorizing the Milwaukee & St. Paul Company to make “a continuous connection, through the city of St. Paul, ” to and with “its present line of railway in Dakota and Hennepin counties heretofore belonging to tlie'Minnesota Central Bail-way Company,” even if construed to be a recognition of the title of that company to the whole line of the last-named company, is immaterial upon the question here under consideration. It is evident that the legislative mind was not directed to the status of the Central Bail-way Company, or the terms and conditions of its last transfer to the Milwaukee Company, and it involves no waiver of its right to proceed against the former company on account of a suspension of its functions as a railway corporation. It is admitted that, as between the parties at least, these roads have both been transferred to the Chicago, Milwaukee & St. Paul Bailway Company, which has for years controlled and operated the same, and is at present, since the act of 1881, recognized as a domestic corporation, and these respondents have in fact, as corporations, retired from the management or operation of any railroads, and disclaim any ownership or interest therein. The rights of the grantees are not in issue here, and may never be ques
Without attempting a discussion in general as to what acts or conduct may or may not amount to a suspension of the lawful business cf a railroad company further than is applicable to the cases before us, we see no escape from the conclusion that, upon the record presented, the state is entitled to judgment of forfeiture, as asked in the information in each of these cases, and it is accordingly so ordered.
Dissenting Opinion
(dissenting.) I understand my brethren- to hold that the sale of that part (branch) of the Hastings & Dakota road lying between Minneapolis and Benton Junction was authorized by 'the act of 1881. This appears to me to be the fact; but, as no part of the land grant appertained to this branch, it is not very important in this ■case, except as going to show that, the sale and consequent non-user of the branch being authorized by law, neither would furnish any ground for forfeiting any franchises of the Hastings & Dakota Company, or, at most, none except such as that sale would deprive the •company of power and right to use.
I dissent generally from the conclusions arrived at by my brethren as respects the rest of the Hastings & Dakota road, being that part of it which lies between Hastings and Ortonville. As to this, I think its non-user by the Hastings & Dakota Company in person, (if I may use that phrase,) and its maintenance and operation by the Chicago, Milwaukee & St. Paul Company, have been acquiesced in, assented
As to that part of the Minnesota Central road lying between Minneapolis and Austin, I understand my brethren to agree, as I do, that the sale to the McGregor Western was expressly authorized by various acts of the legislature; so that, as in the case of the Hastings & Dakota branch, I see no reason why such sale, or the consequent non-user by the Minnesota Central, should at most furnish any ground for forfeiting any franchise of the latter company except such as that sale would deprive it of power and right to use; and, as to this part of the Minnesota Central, there has been a like acquiescence, assent, and sanction as in the case of the Hastings & Dakota, and even more explicit as respects the sale, the non-user by the Central, and the maintenance and operation by the Chicago, Milwaukee & St. Paul, for nearly 20 years, and, as to the 10 or 12 miles lying between Austin and the state line, for more than 15 years.
In my judgment, this conduct on the part of the state waives any right which it might have had to demand a forfeiture of the entire franchises of these companies on account of the alleged sales and non-user of the roads. If the sales are inválid and abortive, so that the roads are still owned and held by the Hastings & Dakota and Minnesota Central Companies, respectively, it is not perceived why such sales, or the merely personal non-user of the roads by these companies, should call for such forfeiture, so long as the non-user has been acquiesced in, assented to, and sanctioned by the state. But, conceding that the sales are valid and operative, so that there is not only a non-user by the Hastings & Dakota and the Minnesota Central Companies of what may for brevity be called their railroad franchises, and that, as they have no further use for them, and nothing for which they can use them, they may as well be forfeited, I can conceive of no reason why, in view of the state’s acquiescence, assent, and sanction, before mentioned, these companies should be deprived of the franchise to hold and sell their lands, upon the terms, as to taxation and otherwise, upon which they were granted
With respect to the statute relied on as requiring a forfeiture when a corporation has suspended its lawful business, I have only to say that it cannot have reference (so as to require an entire forfeiture) to a ease in which the suspension is partial, and sanctioned by the state.
For these reasons I dissent from the conclusion reached in the majority opinion. I content myself with briefly stating the general results which I have arrived at in the case, because a full and detailed statement of the facts and grounds upon which I stand, would render this (which is only a dissenting) opinion unjustifiably voluminous. A full presentation of the facts will be found in the pleadings, and in the briefs of counsel.
