24 Mich. 389 | Mich. | 1872
Swartwout was a subscriber to the capital ’stock of the Grand Trunk Bailway of Michigan, a corporation after-wards consolidated with another, under the name of the Michigan Air Line Bailroad Company. Having paid thirty-five per cent, of his subscription, he refused to pay the balance, and suit was brought for its recovery. In the circuit court the plaintiff has succeeded in obtaining judgment, and Swartwout has brought the record to this court by writ of error, assigning various errors in the rulings below.
Many of the alleged errors relate to the original organization of the Grand Trunk Bailway Company under the general railroad law7 of the state. It is insisted, among other things, that by the articles of association one of the proposed termini of the road is not indicated with sufficient precision; that the meeting of stockholders for the election of directors and the permanent organization of the company, was called before the requisite amount of stock had been subscribed; that the commissioners in determining upon the call for such meeting, which could only be made after a certain amount of subscriptions had been obtained^ reckoned as a part of such amount certain sums unlawfully voted by municipalities, and that the court erred in not allowing tire defense to show, by way of establishing the failure to effect a legal organization, that some of the subscriptions to the stock were conditional, and that on some the five per cent, required by law to be paid on subscribing was not paid. It is also objected that the proceedings to effect the consolidation of the Grand Trunk Bail way with another organization, before referred to, were ineffectual by reason of certain irregularities, and that the circuit court erred in holding otherwise.
Before the suit below was brought, the railroad company
Under these circumstances, I think the circuit judge was correct in holding that no question of the regularity of the organization of the Grand Trunk railway, or of its subsequent consolidation, could be raised by the defendant in this suit. It will be seen that the associates, under a statute which authorized them to incorporate themselves, had taken steps for that purpose; had assumed that the purpose was accomplished, and had for some time exercised corporate powers. The defendant was one of their number; he had acted with the rest in laying claim to corporate authority, and he had made payments on the assumption that the claim was well based. Important acts, extending over a long line of territory, had been done upon this assumption, and with acquiesence on the part of the public authorities. The original associates, together with those with whom they became united by the consolidation, were unquestionably a corporation de facto, whether they were such de jure
The injustice of requiring of every man who may deal with the associates in reliance upon the corporate personality, that he should at his peril take notice of all failures on their part in a strict compliance with the law, and that he should raise questions of usurpation of corporate authority which the state waives or passes by without notice, is too manifest to require comment. But apart from its injustice, it is obvious that all questions of regularity in the proceedings on the part of the associates in taking upon themselves corporate functions purporting to emanate from the sovereignty, are questions which concern the state rather than individuals, and should only be raised in a pro
The trial of an issue on a complaint by the state, of usurpation, would determine the matter finally, but the trial of the same issue in a suit with an individual would settle nothing for future controversies, but the same question might arise again and again, and perhaps be decided differently on different trials.
This point would have been open to no controversy whatever, had the plaintiff been organized under a special charter, and had we had no constitutional provision forbidding the granting of such charters. Proof of the charter and of user under it, would have been sufficient to establish a' prima facie right in the plaintiff to sue. — Snow v. Peacock, 2 C. & P., 215; Dutchess Manuf. Co. v. Davis, 14 Johns., 245; Williams v. Bank of Michigan, 7 Wend., 540 ; Penobscott, etc. R. R. Co. v. Dunn, 39 Me., 587; Jameson v. People, 16 Ill., 257; Cahill v. Kalamazoo Ins. Co., 2 Doug., 124 ; Way v. Billings, 2 Mich., 397; Wood v. Coosa, etc. R. R. Co., 32 Geo., 273; Baker v. Admr. of Backus, 32 Ill., 79; Cochran v. Arnold, 58 Penn. St., 399; Ronded v. Fay, 32 Cal., 354 ; A. & A. on Cory., 354. And this prima facie case an individual would not be suffered to dispute, for the reason already suggested, that the question is not to be tried in a suit where it would only arise collaterally, and where the state, as the party chiefly concerned, could not be heard by its counsel.
As was well said by Mr. Justice Bronson in a similar case: “It is unnecessary to inquire what may be the rights of the people in relation to this corporation, or as against-the individuals who were concerned in getting it up and setting it in motion. The defendant does not represent the sovereign power, and has nothing to do with the question whether the company should be dissolved. So long as the
But both in reason and on authority the ruling should be the same where an attempt has been made to organize a corporation under a general law permitting it. If due authority existed for the organization, and the question is one of regularity merely, “the rule established by law as well as reason is, that parties recognizing the existence of corporations by dealing with them, have no right to object to any irregularity in their organization, or any subsequent abuse of their powers, not connected with such dealing. As long as these are overlooked or tolerated by the state, it is not for individuals to call them in question.” — Selden, J., in Methodist Ep. Union Church v. Pickett, 19 N. Y., 485. “Any other rule,” as has been justly said in another New York ease, “ must be fraught with serious consequences, and great public mischief. Most of the persons who subscribe in good faith for the stock do not examine to see whether all the requirements of the statute in the organization of the corporation have been complied with; and if they did, would not probably discover defects like those now pointed out. The stock is sold in market from hand to hand, without any such examination. The corporation may carry on its business for years, and its stock have entirely changed hands, when its property may be destroyed by a trespasser, and in an action against him, in the name of the corporation, his only defense: ‘You are not legally a corporation by reason of a defect in your constitution,’ would, upon the doctrine contended for by the defendant, be successful.” “The error,” as is further said in the same case, “is in not recognizing the distinction between what is sufficient to constitute a corporation de facto, and what is necessary to
In further illustration of these views, reference is made to Smith v. Heidecker, 39 Mo., 157 ; Low v. Railroad, 45 N. H., 378; Heaston v. Cincinnati, etc. R. R. Co., 16 Ind., 275 ; Society, etc. v. Commonwealth, 52 Penn. St., 125; Goodrich v. Reynolds, 31 Ill., 490.
But although the plaintiff below was a corporation de facto, and entitled to maintain actions as such, it may still be true that it was not authorized to recover upon subscriptions to its corporate stock. For this purpose it is not sufficient that its corporate powers are, under the circumstances, to be taken as conceded by the subscribers. The statute has pointed out certain steps which are to be taken by the corporation, and has made these conditions precedent to its right to enforce the obligations of its
“Sec. 66. Whenever any railroad company shall have filed its articles of association, as provided in the act to which this act is amendatory, and obtained sufficient subscription to its capital stock, including any municipal aid actually voted in its behalf by virtue of any law of this •state, to construct a division of its line of not less than fifteen consecutive miles, at the rate of six thousand dollars per mile, such company shall be authorized to call a meeting of its stockholders, and elect directors of said company, in the manner prescribed in sections four and five of the act to which this act is amendatory, and said directors may proceed to designate a division of not less than fifteen consecutive miles of the line of said company for construction; and said company shall have full power and authority to construct, operate and maintain a railroad upon the division of said company’s line which may have been thus designated as aforesaid, and for that purpose shall have ample power to assess and enforce collection of its capital stock subscribed by persons residing along or collateral to, or within two miles of either of the termini of such designated
It was objected by the_ defendant that this amendatory act was ineffectual, because.its object was not, sufficiently expressed in the title. The title, is: “An act to amend an act entitled, ‘An act to provide for the incorporation of railroad companies,’ approved February 12, 1855, being chap
It is further objected that the section added cannot have effect, because inconsistent with other sections>of the original act, which it does not purport to amend, and which? nevertheless, must have an amended operation by implication, to enable any effect whatever to be given to the section added. The position is, that a new statute which only purports to add a new section cannot have the effect by implication to amend sections of the original act without coming directly in conflict with § 25, of Art. IV. of the constitution, which requires the sections amended to be re-enacted and published at length. But we have heretofore decided that statutes which amend others by implication are not within the contemplation of that section. — People v. Mahaney, 13 Mich., 482. And in a more recent case we have applied this decision to an act which presents the point in the same manner in which it arises here. — People v. Wands, 23 Mich., 385. I consider these cases as fully disposing of the point here referred to.
How far the original railroad law is impliedly amended by the act of 1867, I do not deem it necessary to consider in this suit. The question here arises under the new section sixty-six; and if that is capable of enforcement, it is immaterial to the present suit whether any difficulty has been introduced in cases in which the company is not undertaking to avail itself of the provisions of that section. In
Acting under this authority, the company appears to have chosen officers, and to have designated a division of the road for construction.. It is shown, however, that the sum of six thousand dollars per mile was made up in part of municipal subscriptions, and these being void, it is insisted that the designation of a division was also void. The legislature, it is said, intended that six thousand dollars per mile of legal subscriptions should be obtained before the road should be begun. We are compelled, however, to find the legislative intent in the language employed to express it; and from that language there cannot be the least doubt that the intent was to reckon as a part of the six thousand dollars per mile such municipal aid as should be voted. That they expected that aid to be available, is not, I think, a fact that can affect the case. They had a right to prescribe such conditions as they pleased to the complete exercise of the corporate powers; and if those prescribed proved of no value, we cannot hold their action ineffectual because they failed to prescribe others. We must be governed by what
A further objection made on behalf of the defendant in the court below, appears to me to be one of more difficulty. By the amendatory act of 1867, the company was authorized, when subscriptions, etc., sufficient to construct a division of its line of not less than fifteen consecutive miles, at the rate of six thousand dollars a mile, had been obtained, to proceed to elect directors, and the directors might thereupon designate a division of not less than fifteen consecutive miles of the line of the company for construction, and assess and enforce collections of its capital stock subscribed by persons residing along,, or collateral, or within two miles of either terminus of such designated division. The company having secured subscriptions and municipal votes to the amount of six thou sand, dollars a mile for that portion of their line between the city of Jackson and the west line of St. Joseph county, proceeded to designáte that as a division for construction. If, then, they had ordered assessments upon the subscriptions to stock, made by persons residing along this division, or within two miles of its termini, without discrimination, they would have been strictly within the terms of the law. Instead of doing so, however, the directors proceeded to make of this division two subdivisions; the second of which extended from the’ west line of Tekonsha township, to the west line of St. Joseph county; and work was ordered to be commenced on this second subdivision, and an assessment of ten per cent, per month was made upon the subscriptions along the line thereof. It is upon this assessment that suit was brought against the defendant below.
The division set apart for construction in this case, was that portion of the line lying between the west line of Tekonsha and the west line of St. Joseph county. Though called a subdivision, I am of opinion that this is immaterial, and that the setting it apart was sufficient if in fact
But as this difficulty may perhaps be obviated by a different showing on a new trial, or by a new assessment, it becomes necessary to consider some further questions which the record presents.
It is objected that the commissioners, designated in the articles of association to receive subscriptions to the capital stock of the Grand Trunk Bailway Company of Michigan, had no authority to determine that the proper amount of subscriptions had been obtained for the construction of a division of the road of not less than fifteen consecutive miles, at the rate of six thousand dollars a mile, and thereupon to call a meeting to choose - officers. It does not appear to me of importance in the present case whether they were or were not. The meeting was called and the officers were chosen, who were at least officers cle facto. It must be conceded that the board of directors, and not the commissioners, are the authority to set apart a division for construction; and though the commissioners state, in their call for a meeting of stockholders to choose directors, that this setting apart had already taken place, the statement is of no importance. If the commissioners had assumed to take such action, it was merely void, and the proper proceedings appear to have been taken by the directors afterwards.
The question which is raised, whether stock was not awarded by the commissioners to persons whose names were not on the stock book, or to persons who had not actually paid in the required five per cent, on subscribing, is not -one which is shown to concern the defendant. If one who
It is also objected that this suit could not be maintained, because pending it, the plaintiff consolidated with another company, and thereby ceased to exist. As, however, the cause of action did not die, but passed to the new company, this, if a valid objection in any form, should be considered 'matter in abatement merely; and if so, it should have been pleaded puis darrein. If it had been so pleaded, perhaps the suit might have proceeded on the proper suggestion being made. But in Hanna v. Cincinnati, etc., R. R. Co., 20 Ind., 30, the court sustained the right of the original corporation to maintain suits on its subscriptions, notwithstanding a consolidation. The precise question raised here, namely, that the consolidated companies were no longer in being for the purposes of suits, is fully met by the decision in that case. It does not become necessary here to express an opinion whether that case was or was not correctly decided.
The defendant also claimed that if originally liable on his subscription, he was released therefrom by an arrangement under which, if the town in which he resided voted a certain amount of municipal aid, and the subscribers to stock paid thirty-five per centum of their subscriptions, they were to be discharged from liability upon the balance. The circuit judge held this arrangement to be ineffectual. The
The defendant’s subscription was made “ upon condition that the line of the road shall be located and built within one mile of the post-office in the village of Three Kivers.” The circuit judge charged the jury that he was assessable thereon when the road was finally located within one mile of said post-office, notwithstanding it was not yet constructed. This view of the subscription is supported by the case of Chamberlain v. The Painesville & Hudson R. R. Co., 15 Ohio St., 225, in which parties promised to pay the company certain sums “provided that said road is permanently located through the village of Chagrin Falls, or within one hundred and sixty rods of the High Falls, so-called, near A. C. Gardner’s mill; and that a freight-house and depot be erected or built on the line of said road, within one hundred and sixty rods of said High Falls.” The court was of opinion, in that case, that the only .condition to the payment of the subscriptions, was the permanent location of the road; and that the clause regarding the freight-house and depot was to be looked upon as a stipulation merely, which the company undertook to perform at the appropriate time. I am inclined to think a similar construction was intended by the parties when the subscription, now under consideration, was made and received.” When can a road be said to be “built” within one mile of a specified point which it is to pass ? Is it when a piece a rod in length, or a mile, or any other given distance is constructed, though such fraction of the road may be unavailable for use, and of no possible value to the subscribers ? Or is it only when the whole line is
The only other error assigned, which it is deemed important to notice here, relates to the circuit judge haying read to the jury the sixty-sixth section of the general railroad law without making it a part of his written charge. The statute of 1869 requires the whole charge to be in writing and filed. — Bess. L. 1869, Yol. 1, p. 118. The object of that statute is supposed to have been to hold the circuit judges to a more strict accountability, and to insure to parties the benefit of all legal exceptions.
The spirit of the statute appears to me to have been complied with in this case. The party is as fully protected as if the statute had been copied into the charge. If the jury were to take the charge with them to their rooms, it might be different ; but when it is only to be filed, and there is proper reference in it to any statute read, I think it sufficient. Had something besides a general law of the state been thus referred to, perhaps the conclusion should have been different; but it appears to me that in this the judge committed no error.
For the error before pointed out, the judgment must be reversed, with costs, and a new trial ordered.