Attorney Gen. v. Cape Fear Navigation Co.

• Decision Date: 30 June 1843
• Citation: 37 N.C. 444,2 Ired.Eq. 444
• Parties: ATTORNEY GENERAL v. THE CAPE FEAR NAVIGATION COMPANY.
• Court: North Carolina Supreme Court

2 Ired.Eq. 444

37 N.C. 444

ATTORNEY GENERAL

v.THE CAPE FEAR NAVIGATION COMPANY.

Supreme Court of North Carolina.

June Term, 1843.

Under the acts of Assembly relative to the Cape Fear Navigation Company and to the Board of Internal Improvement, the Board had a right, under the act of 1823, 2 Rev. Stat. p. 272, to direct the application of the money subscribed as stock by that act, according to their discretion.

The State is not bound to pay interest, unless it specially contracts to do so.

There was no time specified in the act of 1823, within which the instalments of the stock were to be paid, and, in the absence of any agreement, even if it were a case between private individuals, interest would not accrue until a demand was made.

Such a company has no right to retain dividends due to the State on stock subscribed, to answer a supposed and independent claim of theirs against the State, not acknowledged by her and not provided for by an appropriation.

Under the act of 1823, above referred to, the Board of Internal Improvement had a right to charge the salary and expenses of an Engineer, employed in the improvement of the Cape Fear River, as a part of the sum to be advanced in stock by the State to the Cape Fear Navigation Company.

This case was removed from the Court of Equity of Wake County, at Spring Term, 1843, to this Court for hearing.--It was an information filed by the Attorney Qeneral in behalf of the State, in pursuance of an act passed in 1837, against the Cape Fear Navigation Company.

The facts, as disclosed by the pleadings, the proofs and the admissions of the parties, are set forth in the opinion delivered in this Court.

Attorney General for the plaintiff .

W. H. Haywood, Jun. for the defendant

RUFFIN, C. J.

By several acts of the General Assembly, prior to the year 1823, the Cape Fear Navigation Company was incorporated for the purpose of improving the navigation of the Cape Fear River. Its capital stock was created by subscriptions by the State and individuals, and was divided into shares of $100 each, and the capital had been subscribed and all expended in works on the river, which, though they had improved the navigation to a considerable extent, yet left it imperfect in many places, so much so, that the tolls paid but small dividends to the stockholders, and the value of the stock in the market fell one-half or more. In that state of things, the company applied to the Legislature for assistance by a further advance of money, to be applied to the improvement of the navigation, and thereupon the act of 1823, 2 Rev. St. 272, was passed. That act directs, that for the purpose of completing the navigation of the river Cape Fear from the town of Wilmington upwards, the President and Directors of the Board of Internal Improvements should, on behalf of the State, subscribe to the stock of this company the sum of $25,000, to be paid in instalments, not exceeding $10,000 in any one year, out of the fund set apart for Internal Improvements. But the subscription was to be made on certain conditions, as follows: First, that, before it should be made, the stockholders should, within a certain time, give their assent to a reduction of the capital stock from its nominal amount of $100 to the share, to a sum to be fixed by them, not exceeding $50 to the share. Secondly, that the stock, which the State then owned in the company, should be reduced in the proportion of the stock of individuals, that the property then belonging to the company, and the subscription thereby authorized, should, respectively, constitute parts of the capital stock of the company, and the State should have, and own as many shares as the subscription there authorized should amount to, according to such reduced capital. Thirdly, that the President and Directors of the Company should consent in writing, that the Board of Internal Improvements should have the sole and exclusive direction of the operation of the works, the making of contracts for the same, and all the improvements to be made on the river. Then are added these words: “The improvements in the navigation shall commence at Wilmington, and regularly proceed up the river, as far as the capital stock of the company shall admit.”--In March, 1824, the stockholders assented to the act, and sunk the stock one half by reducing the share of stock from $100, to $50, and the President and Directors gave their consent in writing, as required in the act. Thereupon, the Board of Internal Improvements subscribed, on behalf of the State, for five hundred shares of the reduced stock, amounting in value to $25,000, and proceeded soon afterwards to expend for work on the river between Wilmington and Fayetteville, the sum of $12,143 13, to which expenditures no objection is raised by the President and Directors of the Navigation Company. When the subscription was made, no certificate of stock was issued to the State, nor any evidence given of the stock to which the State became entitled thereby, except the books of the company themselves. But for some years the State was treated as a corporation in the premises, and dividends declared and paid into the Public Treasury as upon the 500 shares of stock thus subscribed. At the passing of the act of 1823, the Board of Internal Improvements was organized under the act of 1819, c. 2, and consisted of the Governor, as president ex officio, and six commissioners to be chosen annually by the Legislature, one from each of the then judicial circuits. It was constituted a corporation, for the purpose of preserving and improving the fund for internal improvement thereby created, and disbursing such portions thereof as the Legislature might from time to time direct to be applied to any such purpose, and had authority to appoint a principal and assistant engineers, as, in their opinion, the public service might require, who should direct and superintend all the public works, which the assembly had or should authorize, and should receive such compensation as the board might allow, to be paid out of the revenue of the fund for internal improvements when adequate thereto. In 1831, by an act, ch. 21, it was provided, that thereafter the said board and corporation should consist of the Governor for the time being, the Public Treasurer, and one other person to be chosen annually by the Legislature, and this last named person, whom the act calls superintendant, was required to investigate the condition of all the incorporated navigation companies, and the liability to the State of each, in which the State was a stockholder, and the board was to represent the State at meetings of the stockholders in all such companies.

In 1831, the residue of the State's said subscription, namely, the sum of $12,856 87, not having been expended or called for by the company, remained in the Public Treasury. In April, 1833, the president and directors of the navigation company communicated to the board of internal improvements a resolution passed by them, that, in their opinion, the interest of the company required that the residue of that fund should be expended on the river below Fayetteville, and requested the attendance of the superintendant at the next general meeting of the stockholders on the first of June following, and pointed out certain improvements below Fayetteville, which they desired to be made, and requested that one A. G. Keen, who had been in the service of the company, should be employed to direct and carry them on, as he was an energetic man and a good practical engineer. The board of internal improvements accordingly employed Mr. Keen as engineer to conduct the works.--But, being of opinion, that a competent navigation had been made between Wilmington and Fayetteville, and that the interest of the company and the State required that the remaining fund should be laid out in works above Fayetteville, or such part of it as might be necessary to effect certain improvements upon that part of the river, the board did not accord with the resolution of the president and directors, that the money ought to be spent below, but undertook and carried on the works above Fayetteville, and expended in that manner, as is alleged, the residue of the State's subscription. In 1833, the board rendered to the company an account of those expenditures, to part whereof, viz, the sum of $1375 53, the company objected, because it was the salary of Keen and another engineer, which, it was insisted, was a charge that ought not to be thrown on the company, but should be defrayed by the State. The...