New York, L.&W.R. Co. v. Union Steam-Boat Co.

• Decision Date: 14 April 1885
• Parties: In re NEW YORK, L. & W. R. CO. v. UNION STEAM-BOAT CO.
• Court: New York Court of Appeals Court of Appeals

99 N.Y. 12

1 N.E. 27

In re NEW YORK, L. & W. R. CO.

v.UNION STEAM-BOAT CO.

Court of Appeals of New York.

Filed April 14, 1885.

FINCH, J.

Among the numerous questions raised by the appellant there are three which force themselves upon our attention. The proceeding is by the New York, Lackawanna & Western Railroad Company to condemn the lands of the Union Steam-boat Company, and so results in a collision of corporations.

1. It is claimed, on behalf of the resisting land-owner, that the railroad company has not legally established its corporate existence. In its petition, by which the proceeding was initiated, and which was verified, a due incorporation of the company was affirmatively alleged. In a special proceeding, the moving affidavit, or verified petition, if full and complete, is ordinarily a sufficient basis for an order formed upon it. If its material allegations are not denied by some counter-affidavit, they stand sufficiently proved for the purposes of the ultimate order. But if these are denied by a counter-affidavit, and so an issue of fact is distinctly raised, it is common, and in many cases necessary, that such issue should be solved upon a reference, or by the court itself upon the examination of witnesses, and the production of appropriate proofs. In re Lockport & B. R. Co. 77 N. Y. 563. In the present case there was no such issue raised over the question of corporate existence, since the counter-affidavit of the land-owner did not deny the positive allegation of the petition in that respect, but contented itself with saying that such owner had no knowledge or information sufficient to form a belief upon the subject.

The language used is: ‘The said Union Steam-boat Company, respondent, denies that it has any knowledge or information of, or as to all or any part of, the allegation of or in the said petition that the said petitioner, at the time in that respect in said petition mentioned, was a railroad corporation, duly incorporated and organized under and in pursuance of the laws of the state of New York, sufficient to form a belief.’ Treating the answer of the land-owner simply as an affidavit, it fails to contradict the positive averment of incorporation, and results only in saying that the affiant does not know, and has not learned, whether the sworn assertion of the petition is true or not. If there was nothing in the case but the two affidavits, touching the question of corporate existence, the court would be justified in acting upon the affirmative averment of the one, not effectively disputed by the other. But it may be suggested that we ought to treat these affidavits as pleadings, and assimilate the proceeding to an action. That has been done in this court upon a question of costs. Rensselaer & S. R. C.o. v. Davis, 55 N. Y. 145. Even then, the result is not changed. Treated as an answer, there is no sufficient contradiction of the petitioner's pleading, viewed as a complaint, for the Code provides, reproducing the amendatory act of 1875, that the plaintiff corporation need not prove its corporate existence unless the answer is verified, and contains an affirmative allegation that the plaintiff is not a corporation. Section 1776. So that, in either aspect of the proceeding, the issue of corporate existence was not effectively raised, and the court was entitled to proceed upon the uncontradicted assertion of the moving petition.

The question of corporate existence was first raised in the case upon exactly that state of the facts. The petitioner gave no further proof of incorporation beyond the statement sworn to in the petition, and rested. The steam-boat company thereupon insisted that an issue was raised as to that subject by the answering affidavit, and the burden was still upon the petitioner. The referee ruled otherwise, and correctly; for, stopping at that point, there was proof in the papers of corporate existence, and neither contradiction nor effective denial. In re Lockport & B. R. Co., supra. The land-owner company thereupon undertook to disprove the corporate existence. Under the provisions of the statute, (Laws 1850, c. 140, § 15,) it is apparently provided that the land-owner, even without filing a counter-affidavit or answer, may still ‘disprove’ any of the facts alleged in the petition. But that leaves him, where he should be left, with the burden upon him of proving that the plaintiff is not a corporation, or contradicting the proof to that effect. In a case where he comes before the court not denying the affirmation of the petitioner, leaving that uncontradicted till he comes to his proofs, the burden must be upon him to establish the negative, since without that the petitioner's positive affidavit is sufficient ground and foundation for the order of the court. But the land-owner stands here disproving nothing upon that issue and recorded articles of association. land recorded articles of association.

If we should grant that the articles of association which it put in the case and criticised were shown to be the only articles which were ever signed or filed, and that, however defective, the state by subsequent legislation has never recognized and ratified the corporate existence, still it remains that the articles filed purport to be executed by twenty-five different persons, the execution by four of them being by an agent. Now, with the burden on the land-owner company of showing no corporate existence, it must do one of two things: it must establish that some of those whose names appear did not in fact sign the articles, because the signatures were forgeries or the agents unauthorized, or it must convince us that such articles of association cannot legally be executed by a duly-authorized agent. The first it has not done, nor attempted to do; and the second would require us to say that one of the intended associates who had agreed with his fellows upon all the terms of the articles as expressed in the writing could not authorize one of them to do the mere manual act of signing his name, and if disabled in his hand so as to be incapable of writing, could not become a corporator at all. The statute does not forbid it; the ordinary rules of law justify rather than condemn it; and we can discover no adequate reason for denying the right.

The question here is, not what presumptions should be drawn in a case where the burden was upon the corporation of proving affirmatively its corporate existence, in the face of a direct denial sufficient to raise an issue to be tried, though even then, as has been argued here, that provision of the general act which makes the articles of association as filed and recorded presumptive evidence of the incorporation, might very well have the effect to dispense in the first instance with proof of the genuineness of the signatures or the authority of the agents, and leave both prima facie established until some hostile proof was given; but the question here is barely whether the positive affidavit of due incorporation, sufficient by itself, if unassailed, as the foundation of an order in the proceeding, has been so contradicted as to raise an issue, and if not, whether its truth has ‘been disproved’ by the land-owner having the burden of proof resting upon him. Is he entitled to overthrow a positive affidavit by calling to his aid a presumption that a signature is not genuine, or an agency exercised was without authority in fact? We think not. The provision of the railroad act, and that of the Code, to which we have adverted, indicate a general policy of the law.

The charters of corporations are made matters of public record; their operations are carried on openly and in the face of the community; it is possible and easy for every citizen to ascertain their existence, and, in a generalway, the scope of their powers; the state stands on guard to challenge and defeat any unauthorized usurpation of a corporate franchise; and therefore it has been deemed just and wise not to permit the corporate existence to be drawn in question upon every assertion of a right or resort to a remedy, and to require that...