East Line & Red River R. Co. v. State

• Decision Date: 17 December 1889
• Citation: 12 S.W. 690
• Parties: EAST LINE & RED RIVER R. CO. <I>v.</I> STATE <I>ex rel.</I> HOGG.
• Court: Texas Supreme Court

12 S.W. 690

EAST LINE & RED RIVER R. CO.v.

STATE ex rel. HOGG.

Supreme Court of Texas.

December 17, 1889.

Appeal from district court. Travis county; W. M. KEY, Judge.

Baker, Botts & Baker, and Fisher & Townes, for appellant. J. S. Hogg, Atty. Gen., for appellee.

STAYTON, C. J.

This is a quo warranto proceeding by the state, upon the relation of the attorney general, seeking a forfeiture of the charter rights and franchises of the respondent, upon the following alleged grounds: (1) Permitting its road-bed, rolling stock, and general equipments to so get out of repair as to retard travel and commerce, and to render the transportation of passengers over its road hazardous, dangerous, and extremely uncomfortable; thereby rendering itself unable to perform its duties to the public, or to carry out its objects and purposes of its creation. (2) Failure to keep a public office in the state, and on the line of its road, and the removal of the same beyond the limits of the state. (3) Failure of its stockholders and directors to hold annual meetings on the line of its road for more than five years. (4) The sale of all its franchises, rights, and privileges, together with all its stock, roadbed, buildings, depots, tools, bonds, grants, and other property, to the Missouri, Kansas & Texas Railway Company, a railroad corporation chartered under the laws of Kansas, and controlling and operating a competing and parallel line of railway. (5) That the president, managers, superintendent, and other officers and employes of said parallel and competing line of railway are in control of, manage, and operate respondent's railway and corporate affairs exclusively at and from the state of Missouri, in violation of the laws and constitution of this state; and that under said foreign and unlawful management its franchises have been so abused as to bankrupt and render insolvent respondent's railway. (6) That its bonds and stocks have been increased far beyond the value of its entire corporate property and franchises, and not for money paid, but to increase the burdens of said railway, and to form an excuse for heavier and more unreasonable charges on freight and passenger traffic. (7) That it has entered into a contract and conspiracy with other railway companies for the purpose of stifling and preventing competition in passenger and freight rates; that instead of exercising its own franchises, and regulating and fixing its own tolls of passenger and freight traffic, and time-tables, and regulations of its trains, over its own line, it has by the contract, sale, and combination left all such matters to the control of the other railways, and to an organization known as the "International Traffic Association." (8) That, by said sale of all its property and franchises, respondent has committed self-destruction, violated its public duty to maintain and operate its road, suspended the exercise of its franchises as a railroad company, and wholly rendered itself unable to resume its obligations or to perform its duties to the public.

The respondent filed a general demurrer to the state's bill, and especially excepted to each of the averments therein, which, on preliminary hearing, was overruled, upon the ground that while some of these allegations, considered separately, might not justify a forfeiture, yet there were good grounds for a forfeiture stated, especially those concerning the run-down and bad condition of the road, and the sale of franchises, and, in determining whether or not the judgment sought should be rendered, all the charges in the bill should, upon the question of intent, be inquired into. The respondent also filed a general denial, but admitted the sale of its properties and franchises to the Missouri, Kansas & Texas Railway Company, reserving its right to remain a corporation; and claims that said sale was not unlawful. It also admits that it is subject to the constitution and general laws of the state, and that the Missouri, Kansas & Texas Railway Company is chartered and organized under the laws of the states of Kansas and Missouri. The cause was tried without a jury.

Respondent is a railway corporation chartered, organized, and acting under and by virtue of the special laws passed by the legislature of the state on the 22d day of March, A. D. 1871, and amendments thereof passed, respectively, May 17, A. D. 1873, and March 6, A. D. 1875, authorizing it to construct, own, and maintain a line of railway, with either a single or double track, from the city of Jefferson, in Marion county, to the town of Greenville, in Hunt county, via Mt. Pleasant, in Titus county, and Sulphur Springs, in Hopkins county; thence, in a westwardly or north-westwardly direction, to the western limits of the state. The duration of the charter is fixed at 60 years from the date of the completion of the railroad; and it further provides that the company shall be entitled to 16 sections, of 640 acres each, of land for each mile of road completed. The act of March 22, 1871, contained the following provision: "Said company is authorized, and the right is hereby granted them, to cross or connect with any other railway, to join stocks or consolidate with any other railway company, running in the same general direction." And the act of May 17, 1873, the following: "That the state reserves the right to regulate, by general law, the rates, * * * as well as the management and control, of said railroad, its officers and employes," etc. "That said company shall not have the right to rent, sell, lease, or consolidate with any parallel or competing railroad in this state." Appellant specially pleaded the acts from which the foregoing quotations are made, and no other. The right to grants of land was given by the act last named, which authorized the construction of a single or double track, of the gauge of four feet eight and one-half inches; but by act of March 6, 1875, the company was authorized to adopt any gauge, not less than three feet. The only law of this state having special relation to the Missouri, Kansas & Texas Railway Company, brought to the attention of the court below or this court, is the act of August 2, 1870, which contains the following provisions: "The Missouri, Kansas & Texas Railway Company, a corporation authorized by congress, * * * shall have the right to extend its railroad, with its present gauge, together with its telegraph lines, from some convenient point on Red river, between Preston and Doaksville, where its road shall cross from the Indian Territory, into and through the state of Texas, in the general direction of Waco and Austin, to the Rio Grande, with a view of extending the same to Camargo and the city of Mexico; and also the right to construct a branch road from a point at or near its crossing of Red river, westwardly," etc. "That the said company, in constructing, extending, and operating its railroad and branches, shall have and exercise, and are hereby vested with, all the rights, powers, privileges, and immunities granted by its acts of incorporation and amendments thereto, so far as the same may be applicable to this state, and not inconsistent with the constitution thereof," etc. "That the said company shall have the right to purchase, sell, lease, join stocks, unite, or consolidate with any connecting railroad company," etc.

The court below made findings of fact, which are sustained by the evidence, and we do not understand appellant seriously to controvert their general correctness. These, so far as necessary to a correct understanding of the case, will be here given:

"(2) That, as such railway company, respondent constructed and built a narrowgauge railroad from said city of Jefferson, via Greenville, in Hunt county, to McKinney, in Collin county, Tex., a distance of one hundred and fifty-five miles, and received from the state for so doing land certificates at the rate of sixteen sections (640 acres each) per mile.

"(3) That on the 28th day of November, 1881, respondent sold and delivered all its corporate franchises, rights, and privileges, together with all its stock, road-bed, buildings, depots, rolling stock, engines, tools, etc., to the Missouri, Kansas & Texas Railway Company, a corporation chartered under the laws of Kansas and Missouri. That by said sale and the deed of conveyance respondent reserved the right to be and remain a corporation until such time as might be agreed upon for its dissolution, and provided that its power to carry out its contracts should remain unimpaired; and it obligated the said Missouri, Kansas & Texas Railway Company to fulfill all of respondent's charter obligations to the state, and to the public; and the conveyance contains this recital: `The object and intent of this contract, conveyance, and agreement being to so merge the rights, powers, and privileges of the party of the first part into the party of the second part, under its own charter, corporate name, and organization, that it shall, without impairing any existing right, exercise, in addition thereto, all powers, rights, privileges, and franchises, and own and control all properties, that the party of the first part now exercises, owns, or by its charter or the laws it has the right to exercise, own, or control.'" The last quotation is from the contract between the two corporations.

"(5) It is shown that a majority in interest of the stockholders of both respondent and the Missouri, Kansas & Texas Railway Company, in proper form, consented to, authorized, and approved the aforesaid sale.

"(6) In accordance with said act of the legislature of August 22, 1870, the Missouri, Kansas & Texas Railway Company constructed its road across Red river into Texas, in a southward direction, and in the general direction of Waco and Austin, via Denison, Whitesboro, Fort Worth, and to the city of Waco; thence, in the general direction of the city of Austin, southward to Taylor, in Williamson county, and a branch road...