Hawkins v. Central of Georgia Ry. Co.
| Decision Date | 10 December 1903 |
| Citation | 46 S.E. 82,119 Ga. 159 |
| Parties | HAWKINS v. CENTRAL OF GEORGIA RY. CO. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. Without legislative exemption a corporation charged with a duty to the public remains responsible for the proper discharge thereof, even after a lawful sale or lease.
2. The purchaser or lessee of a railroad company is likewise responsible for the violation of such public duty, where the liability arises from the acts of omission or commission.
3. Where there has been no sale, but a merger, and no provision made for the payment of the debts of the absorbed company the consolidated corporation is liable for the debts of the former, at least to the extent of the value of the property received.
4. But where there has been a lawful and absolute sale of a railroad, the grantee is not responsible for the existing debts of the grantor.
5. Where, for a consideration furnished by C., A. promies to pay B., the latter, though a stranger to the consideration, may maintain an action on the promise. Civ. Code 1895, § 3664.
6. Actions must be brought in the name of the party in whom the legal interest in such contract is vested, and where A. makes no promise to C. the latter cannot maintain a suit on the contract, even though A. undertook therein to pay B.'s debt to C. Civ. Code 1895, § 4939; Gunter v. Mooney, 72 Ga. 205.
7. Where the Chattanooga Railroad Company sold its property and vendible franchises to the Central Railway Company in consideration of $1,300,000 and an agreement by the Central Company to pay the Chattanooga Company's current liabilities, the Central was not subject to a suit by a plaintiff for personal injuries alleged to have been inflicted before the making of the sale.
Error from Superior Court, Polk County; A. L. Bartlett, Judge.
Action by W. W. Hawkins against the Central of Georgia Railway Company. Judgment for defendant, and plaintiff brings error. Affirmed.
Seaborn & Barry and Wright, Bunn & Trawick, for plaintiff in error.
J Branham and Sanders & Davis, for defendant in error.
There is conflict in the authorities as to how far a lessor corporation, charged with a public duty, is liable for the acts of its lessee. But whatever the rule elsewhere, unless there is a legislative exemption, our statute (Civ. Code 1895, § 1864) preserves to the public the liability of the vendor or lessor company, preventing it from escaping responsibility by a transfer of its property or franchises to a nonresident or insolvent, or even to a resident and solvent, grantee. Singleton v. S.W. R. R., 70 Ga. 468, 48 Am.Rep. 574; Hart v. R. R., 33 S.C. 427, 12 S.E. 9, 10 L.R.A. 794; Harmon v. R. R., 28 S.C. 401, 5 S.E. 835, 13 Am.St.Rep. 686. Contra, Arrowsmith v. Nashville R. R. (C. C.) 57 F. 165. The original company remains liable for the proper discharge of the obligations which it assumed to the public. It may be held responsible, in damages or otherwise, for a failure to perform the same, even though the act may be committed or omitted by its grantee. Notwithstanding the sale, the duty to carry freight and transport passengers continues; and after the sale or lease a person having a claim for damages by reason of a failure to perform such duty might have maintained an action against the Chattanooga Company, or the Central Company, or possibly both in the same action.
2. It is everywhere recognized that those operating a corporation charged with a duty to the public are subject to its burdens. The franchises are incumbered with corresponding duties, which, like covenants running with the land, are binding upon all who exercise the powers conferred. This principle is codified in Civ. Code 1895, § 1863, which makes the purchaser or lessee liable for its own acts of omission or commission while operating the franchises of another corporation. It is also, of course, solely liable on its private contracts, or for injuries to its own employés. Seaboard Air-Line Ry. v. Leader, 115 Ga. 702, 42 S.E. 38; Georgia R. Co. v. Strauss, 110 Ga. 191, 35 S.E. 332.
3. But while it is conceded that the vendee is responsible for its own contracts or torts committed since the sale, it is claimed that these sections are not exhaustive of the law on the subject, and that on general principles one railroad cannot, by a transfer of any sort, defeat the rights of creditors, or of persons having claims ex delicto, which existed at the time of the conveyance; that the purchaser takes the property burdened with all its pecuniary obligations; and that, therefore, the Central can be made to pay for damages inflicted by the Chattanooga Company upon the plaintiff in December, 1900, although the purchase was not made until May, 1901. In support of this position plaintiff cites Montgomery & West Point R. Co. v. Boring, 51 Ga. 582, and Tompkins v. Augusta Southern R. Co., 102 Ga. 442, 30 S.E. 992, holding that the company which succeeds to the charter rights and privileges conferred upon the other is to be regarded as at the same time becoming responsible for all of its debts and liabilities. But those cases are to be construed in the light of the facts. Both were cases of merger, in which the corporate existence of the company against which the plaintiff had a claim had been merged into and consolidated with the company sued. The liability there was analogous to that of the husband for the debts of the wife under the old law of baron and feme. There had been a sort of corporate marriage, in which not only the name of the debtor had been changed, but its legal entity lost in the consolidation. They twain had become one. The suit necessarily had to be against the new creature. The shares of the old stockholders had been surrendered and exchanged for scrip in the consolidated company. There had been no sale or payment of the purchase price; and, as the interests of stockholders were inferior to those of creditors it would have been mere repudiation to preserve the rights of the shareholders by issuing stock in the consolidated company in exchange for their holdings in the old without protecting or providing for the rights of its creditors. Hence it was held (102 Ga. 443, 30 S.E. 994) that: "Where a consolidation actually takes place between two companies under a written contract providing for the absorption of the one by the other, but making no provision for liabilities against the company which goes out of existence, these liabilities, by operation of law, become binding upon the new company to the extent of the assets of the absorbed company, or to the extent of the latter's ability to perform the contracts out of which such liability arose." See, also, Morrison v. American Snuff Co., 79 Miss. 330, 30 So. 723, and note in 89 Am.St.Rep. 598. But this is not such a case. Here there was no merger, but an absolute sale, and the purchase price was paid. There is no suggestion of any fraud, or attempt to hinder, delay, or defeat the creditors of the Chattanooga Company; no allegation that the price paid was less than the value of the property bought; while it does distinctly appear that the Central paid $1,300,000 in mortgage bonds for property already incumbered to the extent of $2,743,000. If, as contended by the plaintiff, the purchaser becomes responsible for all the existing indebtedness of the selling road, the Central Company would be liable not only for claims like his, but for any deficiency on the foreclosure of the mortgage securing the outstanding bonds of the Chattanooga Company, even though the $1,300,000 paid was the full value of the property bought. There is no principle of law which requires the buyer to pay twice, or more than the property is worth, or more than the contract price. In the absence of any allegation to the contrary, it is fair to presume that the Chattanooga Company, in exchanging the railroad for negotiable bonds, was expected out of the proceeds to pay all its outstanding claims before any distribution was made among its stockholders. But if it failed in the performance of this...
To continue reading
Request your trial