Atchison

• Decision Date: 10 June 1893
• Citation: 51 Kan. 617,33 P. 312
• Court: Kansas Supreme Court
• Parties: THE ATCHISON, TOPEKA & SANTA FE RAILROAD COMPANY et al. v. THE BOARD OF COMMISSIONERS OF SUMNER COUNTY et al

33 P. 312

51 Kan. 617

THE ATCHISON, TOPEKA & SANTA FE RAILROAD COMPANY et al. v. THE BOARD OF COMMISSIONERS OF SUMNER COUNTY et al

Supreme Court of Kansas

June 10, 1893

Error from Sumner District Court.

ACTION by the County Board of Sumner county and another against the Atchison, Topeka & Santa Fe Railroad Company and others. Judgment for the plaintiff, at the September term, 1891. The defendants come to this court. The opinion states the nature of the action and the material facts.

SYLLABUS

1. ACTION -- Misjoinder of Causes -- Practice. The petition of plaintiff erroneously grouped and blended together in one general allegation several causes of action and the motion of defendants to separately state and number them, as well as to make the averments thereof more definite and certain, should have been sustained.

2. TWO ACTIONS, not to be United. A cause of action in favor of the plaintiff and against one defendant cannot be united with another cause of action in favor of the same plaintiff against another defendant, where neither defendant is interested in the cause of action alleged against the other.

3. CORPORATE WRONGS -- Action by Stockholder, When. Before a stockholder in a corporation can maintain an action in his own name to obtain a remedy for wrongs committed against the corporation, it must appear that the stockholder has in good faith but without success attempted to secure action by the directors or managing officers of the corporation, or that demand for their action would be unavailing.

4. CORPORATIONS -- Consolidation -- Action to Try Validity, by Whom Brought. Where several railway companies have entered into articles of agreement for consolidation, and have observed the forms of the statute in such organization, and filed the articles of agreement with the secretary of state, and the consolidated company has for a considerable time assumed to be and to act as a corporation, an inquiry into the invalidity or nonexistence of the consolidation can only be brought by the proper prosecuting officer in the name of the state.

Geo. R Peck, A. A. Hurd, and C. N. Sterry, for plaintiffs in error:

1. The demurrer should have been sustained, upon the ground of a misjoinder of causes of action in plaintiff's petition. A motion to make more definite and certain by separately stating and numbering the several causes of action, etc., was duly filed, argued, overruled, and excepted to. Under the rule established by this court in Stewart v. Balderston, 10 Kan. 131, the petition should be construed as if each cause of action was separately stated and numbered, as required by the motion.

2. The court erred in overruling the fourth ground of demurrer, as the petition wholly failed to state facts sufficient to constitute any cause of action against the demurring defendants and in favor of the plaintiff. It seems to us that the rule stated by this court in the case of Stewart v Balderston, supra, should be applied in considering this demurrer upon this ground; and that only the facts stated in this petition which are well pleaded should be considered, and that the allegations of the petition should be taken most strongly against the pleader, although it makes very little difference, practically, so far as this proposition is concerned. See 2 Beach, Priv. Corp., § 885, and authorities there cited.

The fact that some of the officers of the Fort Smith company were officers and agents of the Atchison company cuts no figure in this case. A. T. & S. F. Rld. Co. v. Davis, 34 Kan. 209; S. K. & P. Rld. Co. v. Towner, 41 id. 78.

Again, this whole transaction, on the face of it, was and is barred by the statute of limitations, as it must have taken place at some point of time between the incorporation, in October, 1878, and the consolidation, alleged to have taken place on the 6th of September, 1882; and no facts whatever are stated to prevent the bar of the statute from running.

The next alleged wrong is the delivering to the Atchison company by the secretary of the Fort Smith company of a certificate for 11,994 shares of the capital stock of the Fort Smith company, of the face value of $ 1,199,400. The allegations of conclusions stated as reasons why the contract is void are wholly insufficient to show a void contract. The State, ex rel., v. Williams, 39 Kan. 517. See, also, Brown v. City of Atchison, 39 Kan. 37, and cases there cited; City of Ellsworth v. Rossiter, 46 id. 237; Town Co. v. Morris, 43 id. 282; Mor. Priv. Corp., PP 632, 634; The State, ex rel., v. Comm'rs of Nemaha Co., 10 Kan. 578.

The proposition that, when a consolidation took place, the old ceased to exist and the new was created as an entirely separate and independent corporation, was emphatically affirmed by this court in the case of K. O. T. Rly. Co. v. Smith, 40 Kan. 192. See, also, Shields v. Ohio, 95 U.S. 319; Railroad Co. v. Georgis, 98 id. 362; Palace Car Co. v. Mo. Pac. Rld. Co., 115 id. 587, and cases there cited; Mor. Corp., §§ 939-956; Beach, Corp, §§ 338-356; Terhune v. Potts, 47 N.J.L. 218; Bell v. P. & N. E. Rld. Co., 10 A. 741; Rice v. National Bank, 126 Mass. 303; North v. The State, 8 N.E. 159; Baker v. Administrator, 32 Ill. 110; C. K. & W. Rld. Co. v. Comm'rs of Stafford Co., 36 Kan. 102; In re Short, Petitioner, 47 id. 250; Cook, Corp., § 632; A. C. & P. Rld. Co. v. Comm'rs of Phillips Co., 25 Kan. 273; Fee v. Gas Co., 35 La. Ann. 413.

P. V. C. Pool, county attorney of Sumner county, for defendant in error; James Lawrence, and W. W. Schwinn, of counsel.

The position of this defendant in error, plaintiff below, is, that there are only such causes of action pleaded in its petition as may be properly joined in one action, and these each show a right to an accounting with the Atchison, Topeka & Santa Fe Railroad Company, and to recover such moneys as the Atchison, Topeka & Santa Fe Railroad Company has in its hands justly belonging to the county of Sumner, by reason of its interest in the Cowley, Sumner & Fort Smith Railroad Company. And in order to show that there are only such causes of action pleaded, or attempted to be pleaded, so far as the allegations of fact in the petition are concerned; we will call the court's attention to the following facts:

[After stating certain facts, counsel continued.]

So, it seems to us that there is a clear and unquestionable right, under the facts as above related, all of which are set out in the plaintiff's petition in the court below, in the Cowley, Sumner & Fort Smith Railroad Company to call upon the Atchison, Topeka & Santa Fe Railroad Company for an accounting, and require it to show what the real cost of the construction of the line of railroad built by it was, and to pay over to the Cowley, Sumner & Fort Smith Railroad Company every dollar of the $ 1,098,600, over and above the actual cost of the railroad.

We think this state of facts also shows the right of the Cowley, Sumner & Fort Smith Railroad Company to call on the Atchison, Topeka & Santa Fe Railroad Company for an account of all earnings of the Cowley, Sumner & Fort Smith railroad, from the time it went into operation to the time of the bringing of this suit. While the prayer of the petition in the court below embraces demands for other relief, still, we believe the facts, as pleaded in the petition, show a right to this relief; and the simple fact that the prayer demands relief that the court cannot give under the petition does not render the petition objectionable or demurrable on the ground that there are several causes of action improperly joined. The prayer is not such a part of the petition as to render the petition demurrable on the ground of a misjoinder, because the prayer is for other relief than that to which the petition shows the plaintiff entitled.

While the doing away with these offices and of the organization of the Cowley, Sumner & Fort Smith Railroad Company was an act that would bind no one, and could bind no one who owned any stock in the Cowley, Sumner & Fort Smith Railroad Company, yet the physical fact existed at the time of the bringing of this action that, by reason of the contract and agreement of consolidation, there had ceased to be any corporate organization of the Cowley, Sumner & Fort Smith Railroad Company. And this rendered it impossible for this defendant in error to apply to said company to bring an action to right the wrongs of which it complained in the court below, and useless to attempt to procure the bringing of an action by the Cowley, Sumner & Fort Smith Railroad Company to recover what had wrongfully been taken from it by the Atchison, Topeka & Santa Fe Railroad Company. And where it is impossible or useless for a stockholder to apply to the corporation, the stockholder may bring a suit. See Green's Brice's Ultra Vires, p. 645, note A; Cook, Stock and Stockholders, § 674; Mor. Corp., 2d ed., § 242.

The petition shows that the county of Sumner and the county of Cowley were and are the only stockholders of the Cowley, Sumner & Fort Smith Railroad Company. These two counties held all the stock that was ever properly or legally issued to anyone. The issuing of 11,994 shares of the capital stock of that company to the Atchison, Topeka & Santa Fe Railroad Company did not confer on the Atchison, Topeka & Santa Fe Railroad Company any rights whatever. And the possession of those shares of stock did not give the Atchison, Topeka & Santa Fe Railroad Company any power to interfere with the affairs of that company, or to acquire any rights to its property.

In order for any statute of limitations to constitute a bar to a right of action, there must be some color of right in the person who sets it up at the time his pretended right began. No person who acquires possession of any kind of property...