Huff v. Winona & St. Peter R. R. Co.

• Decision Date: 01 January 1866
• Citation: 11 Minn. 114
• Court: Minnesota Supreme Court
• Parties: HENRY D. HUFF vs. THE WINONA & ST. PETER RAILROAD COMPANY.

11 Minn. 114

HENRY D. HUFFvs.

THE WINONA & ST. PETER RAILROAD COMPANY.

Supreme Court of Minnesota.

Appeal from order of district court, Winona County.

Points and authorities for appellants: —

1. The legislature had no power at the time of the passage of the act of 1862 to form or create a new corporation, and did not by said act so intend. Constitution, art. 10, § 2.

2. It is the duty of the court to so construe a legislative enactment as to give it effect and validity, if it be susceptible of such construction, and never to annul it by construction. See Smith on Statutory Construction, §§ 180, 488; People v. Supervisors of Orange, 17 N. Y. 241; Mayor of Savannah v. Georgia, 4 Geo. 26; 4 Paige, 481.

3. The legislature had the power to revive and continue the old corporation, notwithstanding a forfeiture had taken place, and a corporation continues to exist until dissolved by judicial action. Breaches of conditions may be waived, etc. People v. Kingston & Middletown Turnpike Road Co. 23 Wend. 193; People v. Phœnix Bank, 24 Wend. 431; People v. Oakland Co. Bk. 1 Doug. (Mich.) 282; Black River & U. R. R. Co. v. Barnard, 31 Barb. 258; Com. v. Union Ins. Co. 5 Mass. 232; Angell and Ames on Corp. § 777; People v. Pres. Manhattan Co. 9 Wend. 378; 1 Parsons Cont. (3d ed.), 427; 1 Smith Lead. Cas. 19, as to waiver, etc.; See Angell & Ames, § 780; Rex v. Pasmore, 3 Term R. 241; and see Mayor of Colchester v. Seaber, Ex. etc. 3 Burrows, 1866; D. & N. Railroad v. Wilson, 22 Conn. 435; 1 Me. 79; 17 Serg. & R. 64.

4. The amendment to sec. 10, art. 9 of the Constitution, is not intended to qualify sec. 2 of art. 10, and the state could, without violating the provisions of sec. 2, art. 10, avail herself of the foreclosure by continuing and releasing to the old company, or transferring the property thus acquired, to a corporation created under the general laws.

5. The state could, by its foreclosure, divest subsequent liens, but could not affect vested rights, and upon relinquishing to the corporation as provided in the act of 1862, the property, etc., so divested of liens, only released its own acquired lien, and left the company discharged thereof. The claim of Huff is not a lien, but a debt due from the corporation, which the legislature could not and did not attempt to interfere with.

6. It is the identity of the franchises and not of the persons connected with a corporation, that determines whether it is the same corporation. The change of name of incorporators does not affect it, or convert an old into a new corporation. 2 Mason, 43, rule laid down by Judge Story.

7. A corporation cannot avoid its debts by dissolving and reorganizing. 4 Mee. & W. 621.

8. The state, by the act of 1862, is estopped from denying the existence of the old corporation, and defendants also, by acceptance of statutes. Commonwealth v. Pejepscut Propr. 10 Mass. 155.

9. The theory adopted for the purpose of preventing a recovery of the debt set up, will, if carried to its legitimate conclusions, destroy the charters of all the old land grant companies, and should not upon the grounds of public polity be adopted.

Points and authorities for respondent: —

The court in refusing to receive the bond in evidence, and in granting the motion to dismiss the action, did not err.

1. A franchise is an incorporeal hereditament, known as a species of property as well as any estate in lands. It is property which may be bought and sold, which will descend to heirs and may be devised. Enfield Toll Bridge v. Hart. & N. H. Railway, 17 Conn. 40; Redfield on Railways, 589, 590; Grinnell v. The Trustees of Sandusky, Mansfield & Newark Railway, C. P. Ohio, 2; Bowman v. Wathen, 2 McLean, 393.

2. A corporation may exercise all the powers and privileges conferred upon it by its charter not prohibited by the constitution of the state or United States. Angell and Ames on Corp. (7th ed.), 53, 54, § 71. And the legislature may confer any power or privilege upon a corporation, not prohibited by the constitution of the state or of the United States.

3. The legislature had the constitutional right to, and did confer upon the Transit Railroad Company, the authority to mortgage all its rights, privileges, and franchises, as well as its other property, real and personal. And the state was authorized to become the purchaser of said property, rights, privileges, and franchises, at a sale thereof on foreclosure of such mortgage, and to hold and transfer the same, as her property. Ch. 27, Laws 1855; ch. 2, Laws 1857; ch. 126, Comp. Stat. 840, § 5 (22); Constitutional Amendment 1858; Comp. Stat. 66, art. 9, § 10; Laws of 1860, p. 269; Fletcher v. Peck, 6 Cranch, 87.

4. If, however, there is any question on the last point, in so far as the right of the company to mortgage its property and franchises is concerned (which it seems to us there cannot be), of this we think there can be no doubt, that the act of the legislature, passed and approved March 6, 1860, declaratory of the conditions broken of the trust deed, and authorizing and requiring the governor to proceed with the foreclosure, and the act passed and approved March 10, 1862, making the grant or conveyance of the property and franchises of the Transit Railroad Company, acquired by the state at the foreclosure sale, to the persons named in the act under the name and style of the Winona and St. Peter Railroad Company, constitute a full and complete confirmation and ratification by the State of the act of the said Transit Railroad Company in making the trust deed, and thus making it valid ab initio. Laws 1860, p. 269; Laws 1862, p. 226; Shaw et al. Trustees v. Norfolk County Railroad, 5 Gray, 62; Redfield on Railways, 585-589, note; Jackson v. Brown, 5 Wend. 590.

5. The presumption is, that every state statute, the object and provisions of which are among the acknowledged powers of legislation, is valid and constitutional; and that such presumption is not to be overcome unless the contrary is clearly demonstrated. And when the constitutionality of a statute passed by state legislature depends upon the existence of any facts, the presumption is conclusive, that the legislature had proof before them of the existence of such facts. Fletcher v. Peck, 6 Cranch, 87; Ex Parte McCollom, 1 Cow. 564; Morris v. The People, 3 Denio, 381; Newell v. The People, 7 N. Y. 109; De Camp v. Eveland, 19 Barb. 81; Rumsey v. People, 19 N. Y. 47. So the presumption is conclusive, that the legislature had proof before them of all the facts necessary to make the act of 1862 (Laws of that year, page 226) valid and constitutional.

6. This respondent is not the Transit Railroad Company, nor is it liable to the appellant for the debt of that company in question. The respondent owns and holds the property, rights, privileges, and franchises, of the Transit Company, free and clear of all claims against the same, under the state — the purchaser of the same on foreclosure sale thereof. Comp. Stat. 840, § 5; Laws of 1862, p. 226; Pierce v. Emery, 32 N. H. 512; Vilas v. Milwaukee and Prairie du Chien R. R. 17 Wis. 497; McDonald & Graham v. The Minn. Central R'y Co., U. S. C. C. for district of Minnesota, June term, A. D. 1865.

W. H. Dunnell and Smith & Gilman, for appellant.

Sargeant, Franklin & Keyes, for respondent.

WILSON, C. J.

The legislature of Minnesota, by an act approved March 3, 1855, incorporated the Transit Railroad Company, conferring on it power to sue and be sued, contract and be contracted with, and authorizing and empowering it to build and operate a railroad westerly from Winona to the Minnesota River. The company, having organized under the charter, by its bond duly executed in March, 1858, bound itself to pay to the plaintiff the sum of $19,500, and interest, on or before the third day of April, 1859, on which bond this suit is brought.

To understand the issues involved in the case, it is necessary to follow the legislation with reference to the Transit Railroad Company, and the steps taken by the company and its trustees, and by the state officers, in incumbering and disposing of the property and franchises of the company. The United States, by an act of congress approved March 3, 1857, made a grant of land to the Territory of Minnesota, for the purpose of aiding in the construction of certain railroads; and the territorial legislature, by an act approved May 22, 1857, granted a portion of said lands to the Transit Railroad Company, to aid in the construction of the road which it was authorized to build.

In April, 1858, the constitution of the State of Minnesota was so amended as to authorize the state to loan its credit to certain railroad companies, of which the Transit Company was one; and the constitution as thus amended, provided, that, "as a further security, (for the payment of the interest and principal of the bonds of the state loaned and delivered to said companies) an amount of first mortgage bonds on the roads, lands, and franchises, of the respective companies, corresponding to the state bonds issued, shall be transferred to the treasurer of the state, at the time of the issue of the state bonds, and in case either of said companies shall make default in the payment of either the interest or principal of the bonds issued to said companies, * * the governor shall proceed in such manner as may be prescribed by law, to sell the bonds of the defaulting company or companies, or the lands held in trust as above, or may require a foreclosure of the mortgage executed to secure the same." The legislature, by an act entitled "An act concerning land grant railroads," approved August 12, 1858, provided that whenever default should occur in the payment of the interest or principal of the railroad bonds transferred to the state, the governor should "immediately proceed to provide for such payment or payments, and to indemnify the state for such payment or payments, or responsibility, by sale of a sufficient amount of...