Pacific R.R. v. Hughes

• Decision Date: 31 October 1855
• Citation: 22 Mo. 291
• Parties: PACIFIC RAILROAD, Defendant in Error, v. HUGHES, Plaintiff in Error.
• Court: Missouri Supreme Court

22 Mo. 291

PACIFIC RAILROAD, Defendant in Error,

v.HUGHES, Plaintiff in Error.

Supreme Court of Missouri.

October Term, 1855.

1. The acceptance by the Pacific Railroad of the act of March 1, 1851, amendatory of its original charter, did not discharge one, who had previously made a subscription to the capital stock of said company, from his obligation to pay calls regularly made upon such subscription; nor did the act of December 25, 1852, (Sess. Acts, 1853, p. 10,) in so far as it fixed the location of the Pacific Railroad. (Renshaw v. Pacific Railroad, 18 Mo. 210, 2. When legislative changes in a charter of incorporation of a railroad are such as consist only of an increase of the corporate powers, or of a different organization of the corporate body, leaving it with lawful power to execute what may be considered as substantially the original objects of its creation, one who has previously subscribed to the stock of said railroad company can not set up such changes as a defence at law to an action for calls upon such subscription of stock. The remedy, if any, is in equity.

Error to St. Louis Court of Common Pleas.

This was an action brought by the Pacific Railroad to recover calls made upon a subscription of ten shares of stock of plaintiff taken by defendant, Hughes. The action is founded on the sixth section of the original act of incorporation, approved March 12, 1849. (Sess. Acts, 1849, p. 220.) Defendant's subscription was made February 8, 1850. The defence relied on was that subsequent acts of the legislature, to-wit, that approved March 1, 1851, (Sess. Acts, 1851, p. 268,) and those approved December 25, 1852, (Sess. Acts, 1853, p. 10, 363)--being amendatory of the original charter, and having been accepted by plaintiff without the consent of defendant, had effected such changes in said charter as to discharge the defendant from his obligation to pay subsequent calls upon his subscription of stock.

The seventh section of the original act of incorporation, (Sess. Acts, 1849, p. 219,) gave to the Pacific Railroad “full power to survey, mark, locate and construct a railroad from the city of St. Louis to the city of Jefferson, and thence to some point in the western line of Van Buren county (now Cass county) in this state, with a view that the same may be hereafter continued westwardly to the Pacific ocean.”

By the ninth section of the amendatory act of March 1st, 1851, the seventh section of the original charter was repealed, and power was given to the company “to survey, mark out, locate and construct a railroad from the Mississippi river, or any other point in the city of St. Louis, on any route the said company may deem most advantageous, to any point on the western line of this state which the said company may select.” By the fourth section of this act, the seventh section of the general act concerning corporations (R. C. 1845, p. 230), which provides that “the charter of every corporation that shall hereafter be granted by the legislature, shall be subject to alteration, suspension and repeal in the discretion of the legislature,” which was left in full force, as respects plaintiff, by the original act of incorporation, was abrogated as respects said plaintiff.

By the eleventh section of an act approved December 25, 1852, (Sess. Acts, p. 12,) it was provided that “the Pacific railroad shall be deemed a railroad beginning in the city of St. Louis, and running westwardly by the way of Jefferson city, and thence along the best and most practicable inland route through the county of Johnson, and terminating at any point in Jackson county which may be designated by the said company, any thing contained in the charter thereof to the contrary notwithstanding.” By the second section of this act it was provided that “the Pacific railroad may lay out, construct and maintain a line of railway or branch railroad, with a single or double track, from any point on the main line of the Pacific railroad east of the Osage river, to any point on the western boundary of this state, south of the Osage river, which the said corporation may select,” &c. The tenth section of this act is as follows: “The said company shall keep separate accounts of the cost of surveying, locating, constructing, maintaining, altering and operating said south-western branch railroad, and also of the earnings thereof, and may, if the board of directors shall deem it advisable, create a new stock for said branch, and shall apply the same, as well as the proceeds of the lands due to said south-western branch, and the proceeds of the bonds authorized by the ninth section of this act, exclusively to the construction of said south-western branch, and pay the dividends declared from the net profits of said branch to those who shall become stockholders therein, or their legal representatives, according to their respective shares.”

By section first of another act of the general assembly, approved December 25, 1852, (Sess. Acts, 1853, p. 363,) power was given to the Pacific railroad company “to extend and construct a branch railroad from any point on the main trunk line or the south-west line, not nearer than twenty miles of St. Louis, to the Iron Mountain, in St. François county, and Pilot Knob, in Madison county, and may extend the same to the Mississippi river, and also to the boundary line of the state of Arkansas;” “and the said company shall keep separate accounts of the operations of said branch road, including the cost of construction, and the earnings thereof, and shall make dividends of its net earnings among the stockholders in said branch and the Pacific railroad,” &c.

The finding of the facts by the court is as follows: “That the defendant subscribed to ten shares of the capital stock of the plaintiff, and agreed to pay the calls as charged in the petition; that the various calls set out in the petition were duly made, and that the defendant failed and refused to pay the several calls which the petition charges he failed and refused to pay; that the several acts of the general assembly stated in the answer were passed amending the charter of said plaintiff subsequent to said subscriptions by the defendant, and that the defendant did not consent to any of said amendatory acts; that the board of directors of the plaintiff and a majority of the stockholders assented to and accepted said amendments to the charter, and the plaintiff is acting under said amendments. The south-west branch, authorized to be constructed by the act of the general assembly, has been surveyed and located, and the costs of surveying and locating the same, amounting to $40,000, has been paid out of the general funds of the plaintiff. Said branch begins to diverge from the main road at a point about forty miles from St. Louis, and said branch is about 181 miles long. The plaintiff has held no election to obtain the consent of the stockholders to build said branch out of the common stock, and it has not yet been determined whether the said branch shall be built by the creations of separate stock or out of the common stock. A contract has been made by the plaintiff for the construction of the said branch, and the work done with reference to said branch has been paid for, thus far, out of the common funds of the plaintiff. Some stock has been subscribed separately for said branches, but nothing has as yet been paid on said stock subscriptions, nor has any of the lands ceded to the plaintiff, for the construction of said branch, been sold. The plaintiff keeps distinct accounts for said branch--accounts entirely distinct from the accounts for the construction of the main road. The said southwestern branch is to cost between eight or nine millions of dollars. The plaintiff caused surveys to be made for about sixty miles for the Iron Mountain branch, and paid the expenses thereof. The plaintiff has relinquished the said Iron Mountain branch. The amount of calls due from the defendant to the plaintiff, on defendant's subscription, was, at the commencement of this suit, two hundred dollars; that the interest on said calls, from the times they were respectively due, amounts to thirty-one dollars. Thereupon, the court declares that the plaintiff is entitled to recover the sum of two hundred and thirty one dollars and costs.” Judgment was accordingly given for that sum.

Dayton and Buckner, for plaintiff in error.

1. At the time of defendant's subscription of stock the general assembly had power, under the 7th section of the general act concerning corporations, to alter or modify or amend any charter of incorporation, even against or without the consent of the stockholder. (Renshaw v. Pacific Railroad, 18 Mo. 210.) By the amendatory act of March 1, 1851, this power was abandoned as respects the Pacific railroad. After the passage of this act the general assembly could not make any essential change in the charter of plaintiff, without its consent; nor could the consent of the corporation, or a majority of the stockholders, to such a change. bind any stockholder refusing to ratify the amendatory act. 2. The act of December 25, 1852, worked a thorough and essential change in plaintiff's powers. It was in fact a new charter. It is no answer to this to say that the company was authorized to keep separate accounts between the main trunk road and the branch road, and could also have a separate and distinct stock. The same company had the construction of both roads, and the mere authority given to the company to determine whether five hundred miles of railroad, instead of two hundred and fifty, should be constructed, and eighteen millions of dollars instead of half that sum expended, was such a change in the contract of defendant as to abrogate it entirely. It has not yet been determined whether new stock shall be issued or not, as authorized by the act of December 25, 1852. All expenses for both roads have, as yet, been paid out of a common fund. 3. Defendant contracted to pay a certain...