In re New York Cable Ry. Co.

• Citation: 15 N.E. 882,109 N.Y. 32
• Parties: In re NEW YORK CABLE RY. CO.
• Decision Date: 20 March 1888
• Court: New York Court of Appeals

109 N.Y. 32

15 N.E. 882

In re NEW YORK CABLE RY. CO.¹

Court of Appeals of New York.

March 20, 1888.

Appeal from general term, supreme court, First department.

Appeal from an order of the general term of the First department denying petitioner's application for a rehearing of a motion to confirm the report of the commissioners originally appointed by the general term to determine whether the petitioner's proposed railways ought to be constructed and operated, and also denying an application for an order remanding to said commissioners their report for a further hearing. It appears from the order appealed from that the denial of these motions was made wholly and solely upon legal grounds and legal objections; the court considering that it was without jurisdiction to grant the same.

Esek Cowen, Everett P. Wheeler, and Chas. P. Shaw, for appellant.

D. J. Dean, Wm. C. Trull, and Osborn E. Bright, for respondent.

GRAY, J., ( after stating the facts as above.)

When the petitioner's matter was before this court upon a previous appeal, it was decided that in certain respects the articles of association, as prepared by the mayor's commissioners, failed to comply with essential requirements of chapter 606 of the Laws of 1875, known as the ‘Rapid Transit Act,’ under the provisions of which certain individuals had sought legal incorporation by the name of ‘The New York Cable Railway Company.’ Cable Co. v. Mayor, etc., 104 N. Y. 1, 10 N. E. Rep. 332. The decision referred to mentioned as one defect that the commissioners had not provided, as section 7 of the act required they should, for a release and forfeiture to the supervisors of the county of all the rights and franchises acquired by the company, in case of its failure to complete its railways within the prescribed times. A further defect in the organization of the company was that those commissioners had not decided, as it was required of them by section 5, upon plans for the construction of the railways and other appliances specified in that section, and a compliance with its requirements was essential to valid organization. Because of the failure to comply with the requirements of the act in those respects, there was no valid organization of the incorporators. Those requirements are material, and a compliance with them is a condition precedent, upon performance of which depend legal incorporation, and the acquisition of powers and rights. The opinion of this court was elaborate and comprehensive in its exposition of the statute, and of the scheme embraced within its provisions; and it was concurred in, in the respects mentioned, by all the members of the court. Since that decision was made, the appellants have sought to cure the defects in their organization, and thus to remove the objection which existed to the exercise of corporate powers, and, to that end, have caused to be made amendments of the articles of association. A meeting of the commissioners originally appointed by the mayor, and who prepared the articles of association, was called, and three attended. They proceeded to amend the articles by inserting a provision for the release and forfeiture of corporate rights and franchises, as section 7 of the rapid transit act required it should be; and they made locations of works, and detailed plans of construction for the railways, to comply with section 5. The directors of the company met, and they ratified and approved the action of the commissioners, and filed an amended certificate of incorporation.

The appellants insist that, by virtue of the proceedings which have been taken and had, they are now validly organized, and have legal capacity to carry out corporate aims and purposes. Their argument, in effect, is based on these grounds, namely: That chapter 135, Laws 1870, gave authority to the directors to so amend; that the mayor's commissioners had the power, as it was their duty, to reconvene, and to amend; and that the amendments, when made, relate back, and operate to give to the incorporators existence as a corporation de jure. They also contend that no legal objection exists to the confirmation of the report of the commissioners as to the surface railways, for in that respect this court's decision did not affect. We think that the argument of the learned counsel for appellants proceeds upon a misapprehension of the effect of the decision of this court. The defects pointed out were fatal, and were not of a nature which permitted of amendments which might relate back with force and curative effect. RAPALLO, J., said, referring to petitioner's organization: ‘Unless validly organized in pursuance of the rapid transit act, it acquired no right to construct the road, and consequently could not demand that the supreme court confirm the report of its commissioners, as a substitute for the assent of a majority of the property owners, and the order of confirmation would be of no avail if granted.’ Cable Co. v. Mayor, supra. No powers, authority, or franchises were conferred directly by the legislature on the petitioner. The act only prescribed the proceedings by which such could be acquired; and upon a substantial compliance with its material requirements necessarily depend the due organization and constitution of the corporation. Not to incorporate a provision for release and forfeiture as required by the act, and to leave the question of plans of construction of the railway and its appliances undetermined, and to relegate it to the discretion of the directors of the company, were material departures from the commands of the act. The act required, in its seventh section, that ‘the commissioners shall prepare appropriate articles of association for the company; * * * in which said articles of association shall be set forth and embodied, as component parts thereof, the several conditions, requirements, and particulars by said commissioners determined, pursuant to sections four, five, and six of this act, and which further...