Oregonian Ry. Co. v. Oregon Ry. & Nav. Co.

• Decision Date: 16 April 1886
• Citation: 27 F. 277
• Parties: OREGONIAN RY. CO., LIMITED, v. OREGON RY. & NAV. CO. (NO. 1120.) SAME v. SAME. (NO. 1143.) SAME v. SAME. (NO. 1178.) SAME v. SAME. (NO. 1179.)
• Court: U.S. District Court — District of Oregon

27 F. 277

OREGONIAN RY. CO., LIMITED, v. OREGON RY. & NAV. CO. (NO. 1120.)

SAME v. SAME. (NO. 1143.)

SAME v. SAME. (NO. 1178.)

SAME v. SAME. (NO. 1179.)

United States Circuit Court, D. Oregon.

April 16, 1886

Earl C Bronaugh, for plaintiff.

Charles B. Bellinger, for defendant.

DEADY J.

These actions are brought by the plaintiff, a corporation alleged to have been formed in Great Britain under the companies act of 1862, against the defendant, a corporation formed under the Oregon corporation act of the same year. They are brought on the covenants in a lease alleged to have been executed on August 1, 1881, by which the former demised to the latter its railway in Oregon for the term of 96 years, upon a rental to be paid in advance, in semi-annual installments, of $68,131 on May 15th, and November 11th, together with the further sum, at the same times, of $1,459.95 for the purpose of paying the expense of keeping up the lessor's organization. The first three actions are brought to recover three several installments of rent falling due on November 11, 1884, May 15 and November 11, 1885, and the fourth one to recover the installment of the expense money falling due on November 11, 1885. The first two of the actions were commenced on March 18, 1885, and on November 7th there were amended complaints filed in each of them. The last two were commenced on November 28th, and they were all heard on December 30th and January 2d thereafter, on (1) motions to strike out parts of the answer as 'sham, frivolous irrelevant, immaterial, and redundant;' (2) demurrers to so much of the answers as denies the corporate existence of the plaintiff, and its right to have and exercise the powers and privileges claimed by it; and (3) demurrers to the second and third replies of former adjudications of certain matters between the same parties, in reply to certain defenses set up on the answers.

The answers in these cases are alike, except in the last two there is defense of a former adjudication set up in bar. They are all specimens of what may be called the conglomerate style of pleading, in which denials and other matters, having no legal or logical connection with one another, are run together so as to form a continuous statement, instead of being pleaded separately as distinct defenses, in the manner required by section 72 of the Code. But the plaintiff, instead of moving to strike out the answers on this account, as it might, (Code, Sec. 81,) has undertaken to purge them of sundry clauses and statements, and has demurred and replied to the remaining portions thereof, distinguishing them by their character.

The motions to strike out include 14 portions or clauses of the answers.

The first one is a denial of the allegation in the complaint that the plaintiff 'is a citizen of Great Britain. ' The complaint alleges that the plaintiff is a foreign corporation, formed under the laws of Great Britain, and adds, 'is a citizen of Great Britain. ' As there are no 'citizens' of Great Britain, and as the allegation that the plaintiff is a foreign corporation, formed in and under the laws of Great Britain, is sufficient to show that it is, in contemplation of law, an alien, and therefore entitled to sue in this court, this allegation as to its citizenship is a meaningless and immaterial one, and so is the denial. The only proper response to it was a motion to strike out. Besides, matter in abatement, as that the plaintiff is not a corporation or citizen as alleged in the complaint, must be set up in a separate plea, and if pleaded with any other defense, is deemed waived. Circuit Court Rule 40; Sheppard v. Graves, 14 How. 509.

The second clause is an allegation that the plaintiff has not specified in his memorandum or articles of association the termini of the road it was incorporated to construct, lease, or operate in Oregon. This allegation is based on the assumption that subdivision 6 of section 4 of the Oregon corporation act, (Or. Laws, 525,) which provides that the articles of a corporation formed thereunder to construct a road shall specify the termini thereof, applies to a foreign corporation formed to construct a railway in Oregon. But the validity of the organization of a corporation is to be determined by the law of the place of its formation. In the exercise or assertion of its corporate power in Oregon, a foreign corporation may be required to conform to the law of the state concerning the conduct of corporations, but the sufficiency of its incorporation must be tested by the law of the place of its origin. And this is not all: By the act of October 20, 1880, (Sess. Laws, 56,) 'the plaintiff was directly recognized as an existing corporation, lawfully engaged in the construction and operation of a railway in Oregon from 'Portland to the head of the Wallamet valley.' ' The effect of this act is to establish the legal right of the plaintiff to construct and own the road in question, and, in my judgment, to dispose of the same. Oregonian Ry. Co. v. Oregon R. & Nav. Co. 10 Sawy. 481; S.C. 22 F. 245, and 23 F. 232.

The third clause is a denial of any knowledge whether the plaintiff's memorandum of association specifies the purpose of its incorporation as alleged in the complaint. This is moved against particularly as sham. But it does not appear to be false. On the contrary, there is no reason to doubt its truth. The defendant does not appear to have ever had any connection with this memorandum from which it could be inferred that the contents thereof are known to it. Oregonian Ry. Co. v. Oregon R. & Nav. Co., supra.

The eighth one is also a denial of knowledge whether the plaintiff's directors ever adopted a resolution authorizing the execution of said lease. It is also moved against as sham. But it does not appear to be false, and must be taken to be true for the same reason.

The fourth one is an allegation as to what the memorandum of association under the companies act of Great Britain is required to contain, without any averment that the plaintiff has not complied therewith in its formation, or any other application of the matter, and is therefore immaterial.

The fifth one is a denial of the defendant's power to lease or operate the plaintiff's road. This is a mere conclusion of law, and should have been alleged, if relied on, by a demurrer to the complaint. Oregonian Ry. Co. v. Oregon R. & Nav. Co., supra.

The sixth, seventh, and twelfth ones are allegations to the effect that the plaintiff's road has no near connection with the defendant's; that the capital stock of the latter was not contributed to operate leased roads; and that the lease in question was not ratified by its stockholders. These matters are immaterial and utterly frivolous. Oregonian Ry. Co. v. Oregon R. & Nav. Co., supra.

The ninth, tenth, and eleventh ones are clauses and phrases found in an allegation that the lease in question was executed by the president and assistant secretary of the defendant in pursuance of an invalid resolution passed by a minority of the directors without authority of law, to the effect that, while the defendant's principal office is at Portland, its president and assistant secretary signed and sealed said lease at New York. These clauses are omitted from the answers in the last two cases. They are clearly immaterial. It is well settled that while a corporation can have no legal existence beyond the boundaries of the state of its creation, yet it may act anywhere through its agents the same as a natural person, unless prohibited by law. Bank v. Earle, 13 Pet. 588; Runyan v. Coster's Lessee, 14 Pet. 129; Galveston R.R. Co. v. Cowdrey, 11 Wall. 476; McCall v. Byran Manuf'g Co., 6 Conn. 436; Bellows v. Todd, 39 Iowa, 217; Ohio & M.R. Co. v. McPherson, 35 Mo. 25; Field, Corp. Secs. 25, 254.

The thirteenth and fourteenth ones are statements to the effect that on May 15, 1884, the defendant offered to return the road to the plaintiff, but that the defendant retained possession of the same, under a stipulation with the plaintiff that such possession should not have the effect to prejudice wither party, until November 5, 1884, when, in a suit brought in this court by the plaintiff, the defendant was enjoined, and required to operate the road until the further order of the court, which it did until the appointment of a receiver in said suit on the motion of the plaintiff, who thereupon took possession of the property, and held it during the period for which the rent is sought to be recovered in this action. This is not an action to recover money for the use and occupation of the premises. It is brought on the covenant of the defendant contained in the lease to pay the specific amount therein reserved as rent. Therefore these allegations concerning the possession of the property are immaterial. They do not affect the obligation of the defendant to pay the rent according to its contract, unless it is further alleged that such non-occupation was the direct result of the fraud or misconduct of the lessor. Oregonian Ry. Co. v. Oregon R. & Nav. Co., supra. And so far as the possession of the receiver is concerned, it is for the benefit of whom it may concern, and, so far as appears, that is defendant.

All the clauses in the answer moved against except the third and eighth ones are immaterial. The matter contained in these comes within the purview of the demurrers to the answers.

The demurrers are taken to all those portions of the answers that controvert or deny the corporate existence and due organization of the plaintiff, or the powers, franchises, or ownership of the...