North & South Rolling-Stock Co. v. People ex rel. Schaefer

• Decision Date: 27 October 1893
• Citation: 147 Ill. 234,35 N.E. 608
• Court: Illinois Supreme Court
• Parties: NORTH & SOUTH ROLLING-STOCK CO. v. PEOPLE ex rel. SCHAEFER, State's Attorney.

147 Ill. 234

35 N.E. 608

NORTH & SOUTH ROLLING-STOCK CO.

v.PEOPLE ex rel. SCHAEFER, State's Attorney.¹

Supreme Court of Illinois.

Oct. 27, 1893.

Appeal from city court of East St. Louis; B. H. Canby, Judge.

Quo warranto by the people, on the relation of M. W. Schaefer, state's attorney. There was judgment of ouster. Defendant appeals. Reversed.L. H. Hite, for appellant.

M. W. Schaefer, State's Atty., and M. Millard, for appellee.

The other facts fully appear in the following statement by BAILEY, J.:

This was an information in the nature of a quo warranto, brought by the people of the state of Illinois, on the relation of the state's attorney of St. Clair county, in the city court of East St. Louis, against the North & South Rolling-Stock Company. A petition for leave to file the information having been granted, an information was filed, the substantial portions of which are as follows: ‘M. W. Schaefer, state's attorney in and for said county, who sues for the people of the state of Illinois in this behalf, comes into court on this day, and for the said people, and in the name and by the authority thereof, gives the court here to understand and be informed that the North & South Rolling-Stock Company, for the space of two years last past, and more, in the county and city aforesaid, has used, and still does use, without any warrant, charter, or grant, the following liberties, privileges, and franchises, to wit, of owning, buying, and leasing, selling and operating, railroad rolling stock, all of which said liberties, privileges, and franchises the said company, during all the time aforesaid, upon the said people, has usurped, and still doth usurp, in the county and city aforesaid, to the damage and prejudice of the people, and against the peace and dignity of the same. Whereupon the said state's attorney, for the said people, and in the name and by the authority thereof, prays the consideration of the court here in the premises, and due process of law in this behalf to make the said North & South Rolling-Stock Company answer to the said people by what warrant it claims to have, use, and employ the liberties, privileges, and franchises aforesaid.’ To this information, the defendant filed the following plea: ‘And now, on this day, comes the said North & South Rolling-Stock Company, by L. H. Hite, its attorney, and, having heard read the said information, for plea in this behalf, says it is a duly organized and chartered company, incorporated under the laws of the state of Illinois, with license and charter duly issued by the secretary of state of said state, authorizing it to carry on the business of owning, leasing, buying, selling, and operating railroad rolling stock; said corporation being organized under and by virtue of sections 1 to 28, inclusive, of an act entitled ‘An act concerning corporations,’ passed by the legislature of Illinois, approved by the governor, and in force July 1, 1872. And by this warrant the said North & South Rolling-Stock Company has used, during all the time mentioned in said information, and still uses, the said liberties, privileges, and franchises of owning, leasing, buying, and selling and operating railroad rolling stock, as the said North & South Rolling-Stock Company well might and still may; without this that said North & South Rolling-Stock Company has usurped or does now usurp, the liberties, privileges, and franchises aforesaid, or any or either of them, upon the said people, as by the said information is above supposed. All which matters the said North & South Rolling-Stock Company is ready to verify,' etc. ‘Wherefore, it prays judgment,’ etc.

To this plea the state's attorney filed two replications, as follows: ‘And the said people of the state of Illinois say that the plaintiff ought not to be barred from maintaining the said information by reason of anything alleged in said plea, because the defendant has not kept, or caused to be kept, at its principal office or place of business in this state, correct books of account of all its business, as required by the statute in such case made and provided, whereby the defendant has forfeited its franchises aforesaid. And this the plaintiff is ready to verify. And, for a futher replication to said plea, the plaintiff says that all the stockholders, directors, and officers of the defendant are now, and always have been, nonresidents of this state; that the defendant does not now and never has kept an office or place of business in this state, but has hitherto and does now keep its office and place of business in the city of St. Louis, state of Missouri, at which the business of defendant is transacted; that the franchise of the defendant was procured for the purpose of being exercised outside of this state, in the manner aforesaid, and without any intention of making the defendant a domestic corporation, in fact and substance; and that, in truth, the defendant has, since its organization, acted, for all practical purposes, as a foreign institution, and has maintained in this state a mere nominal existence. And this the plaintiff is ready to verify.’

The following rejoinder was thereupon filed by the defendant to the second or additional replication, but by order of the court, entered by agreement of the parties, it was subsequently extended so as to apply to both replications: ‘And the said defendant, as to the additional replication of the people's' etc., ‘plaintiff, filed herein November 2, 1891, says that said plaintiff ought not, by reason of anything by them in that replication alleged, to have or maintain their aforesaid action against it, the said defendant, because it says, that ever since the granting of its said charter, and since its organization, up to the present time, it had kept an office in the city of East St. Louis, in the state of Illinois, where it elections and stockholders' meetings, and meetings of its board of directors, are regularly held, and where all its records and books of accounts and papers have been and are produced for the inspection of any stockholder or his attorney, or other person interested, whenever requested by such person, and that the said charter and its privileges were sought and procured for the purpose of being exercised in the state of Illinois, and since its organization all its dealings in the matter of handing and running its rolling stock have been in the hands of, and with, the St. Louis, Alton & Terre Haute Railroad Company, an Illinois corporation, and that the situs of defendant's only property, its cars and rolling stock, has actually, all the time, been, and now is, in the state of Illinois; that no stockholder or other person interested, has ever sought to obtain any information, or to do any legitimate business, at defendant's said East St. Louis office, and been denied the privilege or right to do so. And this said defendant is ready to verify. Wherefore, it prays judgment if said plaintiff ought to have or maintain the aforesaid action thereof against said defendant.’

This rejoinder was traversed, and issue taken thereon to the country. The cause was then tried by the court, a jury being waived by stipulation of the parties; and at such trial the court found the issues in favor of the people, and rendered judgment ousting the defendant from the franchises in question, and precluding it from exercising the same under any right or claim whatever, and the defendant was also adjudged to pay the costs of the prosecution. From that judgment the defendant has now appealed to this court.

At the trial, the defendant, to maintain the issues on its part, read in evidence an agreement between Henry O'Hara, J. S. Berthold, and C. M. Jennings, dated December 1, 1887, and by which, after reciting that O'Hara and the firm of Berthold & Jennings were the owners of certain railroad freight cars, and were desirous of putting the same under one management and virtual ownership, for the purpose of avoiding conflicting interests, and for the better management of the property, it was agreed by them to form and incorporate themselves into a joint-stock company, under the laws of the state of Illinois, by the name and style of North & South Rolling-Stock Company, for the purpose of owning, leasing, and operating railroad rolling stock, and buying and selling the same, and for any other purpose for which like companies are formed. And it was further agreed that the individuals named should subscribe equally to the capital stock of the proposed corporation,-the amount of capital stock, the number of shares, and the par value of the shares to be agreed upon before making application for incorporation; that the affairs and business of the company should be conducted and managed by a board of directors consisting of the stockholders, who, for the first 12 months, and until their successors were elected, should be the three parties to the agreement; that the officers of the corporation should be a president, vice president and manager, and secretary and treasurer, who should comprise the board of directors, as above stated; that O'Hara and Berthold & Jennings should lease to the proposed corporation the railroad freight cars owned by them, respectively, and then running on the St. Louis. Alton & Terre Haute, Railroad (Belleville & Southern Illinois Division) and connections, for the term of 15 years, with the privilege of purchase to be specified in the lease; that O'Hara should lease to the corporation 75 stock cars and 200 box cars, described as bearing certain numbers, and marked ‘St. Louis & Cairo Short-Line Railroad;’ that Berthold & Jennings should lease to the corporation 100 refrigerator cars and 156 box cars and 58 coal cars, all bearing certain numbers, and being marked same as above. And it was agreed that the parties would not be interested in any manner in any other rolling stock running on the St. Louis, Alton & Terre Haute Railroad and connections, other...