Attorney General v. N. Y., N.H. & H.R. Co.

• Decision Date: 14 January 1908
• Citation: 197 Mass. 194,83 N.E. 408
• Parties: ATTORNEY GENERAL v. NEW YORK, NEW HAVEN, and HARTFORD RAILROAD COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

197 Mass. 194

83 N.E. 408

ATTORNEY GENERAL v. NEW YORK, NEW HAVEN, and HARTFORD RAILROAD COMPANY.

Supreme Judicial Court of Massachusetts, Suffolk.

January 14, 1908

Jan 14, 1908.

COUNSEL

D Malone, Atty. Gen., and F. B. Greenhalge, Asst. Atty. Gen., for the plaintiff.

J. H. Benton Jr., for the defendant.

OPINION

KNOWLTON C.J.

This is an information in the nature of a quo warranto by the Attorney General against a railroad company owning and operating a railroad in this Commonwealth by virtue of its incorporation under the laws of the Commonwealth. It alleges that the defendant "has directly and indirectly subscribed for, taken and held the stock and bonds and has guaranteed the bonds and dividends, and is guaranteeing the bonds and dividends of certain domestic corporations" named, which are street railway corporations incorporated under the laws of this Commonwealth. It alleges that this holding and guaranteeing is without authority of law and in violation of the St. 1906, p. 511, c. 463, Part II, § 57. It also alleges that the defendant is using without any warrant or grant, the liberties, privileges and franchises of subscribing for, taking and holding the stock and bonds, and guaranteeing the bonds and dividends of these street railway corporations, and has usurped and is usurping said liberties, privileges and franchises. The prayer is that the defendant be excluded from the said liberties, privileges and franchises, and for such other orders and decrees as law and justice may require.

A demurrer was filed for four causes therein stated. Of these the third was waived and the first and second are the same in substance; so that the two questions for consideration under the demurrer as stated in the defendant's brief are: "First, can the information, in the manner and form in which it is brought, be maintained as an information at the common law? Second, if the information can be maintained as an information at the common law, does it set forth facts upon which the judgment asked for therein can be rendered at the common law, or upon which any judgment at the common law can be rendered?"

Except for the alleged limitations in the statutes hereinafter referred to, no question is made as to the power and authority of the Attorney General to bring, in his own name and upon his own initiative, an information in the nature of quo warranto against a corporation which has abused or misused its corporate franchise, or has usurped a franchise not granted to it, with such injurious consequences to the public as to justify a forfeiture of its charter. His general authority in this particular is well established. Goddard v. Smithett, 3 Gray, 116, 122. Attorney General v. Sullivan, 163 Mass. 446, 448, 40 N.E. 843, 28 L. R. A. 455.

The question raised by the first ground of demurrer depends, first, upon the fact that the acts complained of are such as might lawfully be done by a natural person, although ultra vires of the corporation and having no direct relation to the object for which it was chartered, and secondly, upon the further fact that under the statute such corporations are forbidden to do these acts. The Attorney General does not aver that the acts are of such a character as to require a forfeiture of the original franchise granted to the corporation, but asks that it be excluded from these "liberties, privileges and franchises." This means, we suppose, that it be restrained from doing the acts; or, if the conduct of the corporation be treated as the exercise of a usurped franchise, that it be ousted from this franchise.

Our statutes and decisions do not deal directly with this question (Rev. Laws, c. 156, § 3; c. 192, § 6,) and the decisions that bear upon it in England and in other States are not uniform. In the English courts, such conditions would seem to call for an information in equity by the Attorney General, while in this Commonwealth, under the statutes existing when the cases arose, such informations have been sustained only in cases of public nuisance and public charitable trusts. Attorney General v. Tudor Ice Co., 104 Mass. 239, 244, 6 Am. Rep. 227; Attorney General v. Pitcher, 183 Mass. 513, 520, 67 N.E. 606; Attorney General v. Great Northern Ry. Co., 1 Drew. & S. 154; Attorney General v. Mid Kent Ry. Co., L. R. 3 Ch. 100. It has been held in many States, sometimes under local statutes, that the exercise of powers by a corporation which are not authorized by its charter, but which do not affect the public interest so injuriously as to warrant an ouster from its corporate franchise, may be restrained on an information in the nature of quo warranto, to oust it from the enjoyment of the usurped franchise. State v. Portland Natural Gas & Oil Co., 153 Ind. 483, 53 N.E. 1089, 53 L. R. A. 413, 74 Am. St. Rep. 314; People v. Utica Ins. Co., 15 Johns. (N. Y.) 358, 8 Am. Dec. 243; State v. Standard Oil Co., 49 Ohio St. 137, 30 N.E. 279, 15 L. R. A. 145, 34 Am. St. Rep. 541; Stewart v. Father Mathew Society, 41 Mich. 67, 1 N.W. 931; People v. Dashaway Association, 84 Cal. 114, 24 P. 277, 12 L. R. A. 117; State v. Norwalk & Danbury Turnpike Co., 10 Conn. 157; Illinois Midland Ry. Co. v. People, 84 Ill. 426; People v. North Chicago Ry. Co., 88 Ill. 537. For a different view see State v. Minnesota Thresher Mfg. Co., 40 Minn. 213, 41 N.W. 1020, 3 L. R. A. 510. Inasmuch as corporations derive their authority from the Legislature, they can exercise only such powers as are either expressly included in their franchise, or are fairly incidental to the enjoyment of it. An attempt to do that which is ultra vires is a usurpation of what would be a franchise if the right to do it had been granted. As was said by ...