50 N.H. 50 | N.H. | 1870
The statute of 1857 authorizing a sale, provided that “ the White Mountains Railroad shall exist as a corporation so long as may be necessary after such sale, for the purpose of settling its affairs and for no other purpose.”
It is urged that under this statute the old corporation must be regarded as substantially extinguished by the sale and the subsequent proceedings; and that this bill is, in effect, for the dissolution of the new corporation; a result not attainable in this suit, but only by a proceeding in behalf of and in the name of the State. We need not inquire whether the existence of the old corporation is not admitted by the demurrer; for the statute of 1857 will not bear the construction put upon it by the defendants. That act had no effect to terminate the existence of the old corporation except after a legal and valid sale. If no such sale has taken place, the act does not apply.
The dissolution of the new corporation is not an object directly aimed at by the bill. If dissolution should seem likely to be the indirect result of compelling the new corporation to give up property acquired by fraud, such a contingency would afford no bar to a prosecution of the ordinary remedies against the new corporation by all parties interested in the property so acquired. In the language of plaintiffs’ counsel, “ The position of the defendants is, virtually, that if a corporation acquires property by fraud, the Court, before they make a decree to restore the property, must stop to .inquire what effect such a restoration would have upon the charter of the corporation, and its capacity afterward to do business. As well might the Court stop to inquire what effect the restoration of stolen goods to the owner would have upon the business prospects of the thief. A corporation is not privileged to acquire property by fraud any more than an individual.”
It is unnecessary to consider the sufficiency of all the reasons urged against the validity of the sale; for the sixth reason, alleging the bribery of one of the trustees and his fraudulent collusion with the purchasers, alone and of itself, affords ample ground for declaring the
The defendants strenuously contend that the plaintiffs are barred by their acquiescence, or waiver, at the time; and also by their long-delay in commencing this proceeding.
The bill admits that the plaintiffs withdrew their opposition to a decree of sale, in consideration of an agreement by those who afterwards purchased at the sale that the full value of the property should be accounted for to the plaintiffs, whether it sold at a nominal sum or for full value. The failure of the purchasers to perform this agreement does not restore the plaintiffs to the position they occupied before the decree of sale, nor authorize them to revoke their own action and contest the validity of a decree to which they once substantially assented. If the plaintiffs have any remedy for the damage occasioned them by that decree, it must be by suit against the purchasers on their contract. Our conclusion on this point is, that the decree ordering a sale under the mortgages cannot be rescinded; and that, consequently, the prayer for restoration of the property, or, in other words, for redemption, must be denied.
But it by no means follows that the sale which was professedly made under that decree is to stand. It was not such a sale as was contemplated in the decree of the court, or in the act of 1857. The plaintiffs only acquiesced in a decree that a legal and valid sale should be made. They did not assent to fraudulent collusion between the trustees and the purchasers. Undoubtedly they contemplated the possibility that the property might sell for much less than its real value, for they took measures to guard against damage from such a result by obtaining the above-mentioned agreement from the purchasers. Indeed, the plaintiffs’ conduct, in taking this security from the purchasers, and in delaying to commence this proceeding till they had discovered not only the fraud but the breach of the contract, affords some ground for the inference that after the purchasers made the above agreement it was a matter of comparative indifference to the plaintiffs whether the property sold for full value or not. Still, the plaintiffs never assented to the use of improper means to reduce the price; and it is not inconceivable that the plaintiffs might have been willing to trust the purchasers to make up the difference between the price realized at a fair sale and the actual value of the plaintiffs’ interests, but not willing to trust them to make up the difference between the price realized at a fraudulent sale and the actual value.
Upon the whole, we think that there has been no such acquiescence on the plaintiffs’ part in the fraudulent sale as should bar their right to object; and that they have exercised this right within a reasonable time after discovering that there was fraud, and that they had been damnified by it. Upon the allegations of the bill no laches can be imputed to them on account of the years which elapsed after the sale before the discovery of the fraud.
The defendants rely on the statute of 1859 (chap. 2297), entitled “An act to incorporate and establish the White Mountains (N. H.)
Section 7 enacts that the agreement of said corporation with the Boston, Concord, and Montreal Railroad, dated February 4, 1859, relative to running the road of this corporation, is hereby approved, ratified, and confirmed; and this corporation is fully invested with all the powers and privileges, franchises and immunities, granted to and conferred upon the late White Mountains Railroad by its act of incorporation, approved December 25, 1848.
It would not be unreasonable to presume that the legislature were ignorant of the fraudulent character of the sale, and, by confirming the sale, intended only to relieve the purchasers from the consequences of mistakes or formal defects.
But whatever knowledge or intention they may have had, the statute cannot operate to prevent the plaintiffs from invalidating the sale by proof of fraud. Such a result is beyond the power of the legislature. It does not come within the principle of that class of cases (decided in other States) in which a legislature has been held to have the power to confirm, by retroactive laws, the acts of public officers who have exceeded or imperfectly executed their authority; or to cure defects in conveyances. Statutes of this kind “ are of a purely remedial nature;” their purpose being to correct mistakes in order that the intention of the parties may be carried out. The legal rights affected by such statutes are “ deemed to have been vested subject to the equity existing against them ; ” and the statutes accomplish only what, upon principles of natural justice, a court of equity ought to have power to decree. Such legislation has been held valid “ when clearly just and reasonable, and conducive to the general welfare; ” “ but the cases,” says Chancellor Kent, “ cannot be extended beyond the circumstances on which they repose without putting in jeopardy the energy and safety of the general principles.” 1 Kent’s Com. 456. In this instance the statute of 1859, if it cures the fraud in the sale, goes far beyond the correction of mistakes, or the remedying of formal defects; and is not only open to objection as a retrospective law, but also as an act of a judicial nature. Could the legislature before the sale have passed an act authorizing one of the trustees to receive a bribe from the purchasers ? If not, how can their subsequent confirmation have greater efficacy than their previous authorization ? “ The
What, if any, measures should be taken to protect subsequent bona fide purchasers of stock in the new corporation, is a question which can be considered hereafter, if it should appear that there are any such parties. Upon the allegations of the bill, the plaintiffs are entitled to some relief. Whether the auction sale should be annulled and a resale ordered, or the purchasers be compelled to account for the property at a fair price, or whether relief should be granted in some other manner, need not now be determined.
Demurrer overruled.
Bellows, C. J., and Foster, J., did not sit.
