State v. Sunset Ditch Co.

• Decision Date: 19 January 1944
• Docket Number: No. 4741.,4741.
• Citation: 48 N.M. 17,145 P.2d 219
• Parties: STATEv.SUNSET DITCH CO. et al.
• Court: New Mexico Supreme Court

48 N.M. 17

145 P.2d 219

STATE

v.SUNSET DITCH CO. et al.

No. 4741.

Supreme Court of New Mexico.

Jan. 19, 1944.

Appeal from District Court, Santa Fe County; Bryan G. Johnson, Judge.

Suit by the State of New Mexico against the Sunset Ditch Company, sometimes known as the Sunset Canal Company, and others, to declare the defendant corporation dissolved for failure to comply with the statute concerning annual reports, and to enjoin defendant corporation from functioning as such. From a decree in favor of the plaintiff, the defendants appeal.

Reversed, with instructions.

Corporation organized under Laws of 1887 for purpose of operating a ditch and irrigation works, with capital stock divided into shares, was a “private corporation,” and not a “public corporation,” and hence 1921 act, declaring all private corporations organized under laws of territory of New Mexico which have failed to file annual reports required by law in office of State Corporation Commission to be dissolved, applied to it. Laws 1887, c. 12; Laws 1921, c. 185; 1941 Comp. § 54-236.

Everett M. Grantham, U. S. Dist. Atty., of Santa Fe, Frank E. Flynn, U. S. Dist. Atty., of Phoenix, Ariz., and Rodey, Dickason & Sloan, of Albuquerque, for appellants.

Edward P. Chase, Atty. Gen., and Fred E. Wilson, Sp. Asst. Atty. Gen., for appellee Inter-State Stream Commission.

MABRY, Justice.

Suit was brought by the State of New Mexico, plaintiff-appellee, against defendant-appellant corporation, and others named as officers thereof, to declare the corporation dissolved for failure to comply with the statute concerning annual reports, and to enjoin the corporation from functioning as such. From a decree in plaintiff's favor the defendants prosecute this appeal. The parties may hereinafter, at times, be referred to as “the State” and “the Company”, respectively.

The Company was organized on Feb. 3, 1903, for the purpose of operating a ditch and irrigation works and supplying water to a certain area in Grant county, New Mexico, from the Rio Gila. The articles of incorporation recite that the capital stock of the corporation was to be $50,000, divided into 200 shares at par value of $25 per share. It was incorporated under C. 12, Laws 1887, secs. 468-492, Comp.Laws 1897. The chapter title of the enactment relates to “the formation of companies for the purpose of constructing irrigating and other canals and the colonization and improvement of lands.” The articles of incorporation appear to follow the requirements laid down in the statute authorizing such corporations. The Company contends that it was never operated for profit, that it paid no dividends, that it derived revenue only from assessments against water users and that arising from water served by its ditches. Stock in the Company was issued and transferred from time to time, but whether such stock transfers in all cases were related to the land benefited, the record does not clearly disclose.

The corporation has continued to function to the time of this suit. No annual report was ever filed by the Company, and the State Corporation Commission on Feb. 19, 1940, by certificate, declared and held the corporation to be dissolved as of June 14, 1921, for violation of C. 185, Laws 1921, also hereinafter to be noticed.

As counsel for the Company in their able brief have suggested, it is appropriate to consider all assignments together following a general analysis of the problems they present rather than to discuss each one separately. These are appropriately and conveniently grouped in the Company's brief as presenting five related issues, which are:

1. There is no evidence to support the district court's action in granting plaintiff's requested finding of fact No. 3 or in making the court's finding of fact No. 3, relating to the cancellation of the company's charter;

2. Laws 1921, C. 185, should be construed as not applicable to the appellant corporation;

3. Laws 1921, C. 185, is repugnant to Art. IV, S. 18, of the New Mexico Constitution;

4. Laws 1921, C. 185, if applied to the defendant-appellant corporation, would be void because contrary to U. S. Constitution, Art. I, S. 10, and N. M. Constitution, Art. II, S. 19, in impairing the obligation of contracts;

5. Laws 1921, C. 185, is repugnant to Amendment XIV of the U. S. Constitution and Art. II, S. 18, of the N. M. Constitution, in denying the defendant corporation the equal protection of the laws and due process of law; and

6. Laws 1921, C. 185, if applied to the defendant corporation would be void because contrary to the Fourteenth Amendment of the U. S. Constitution and Art. II, S. 18, of the N. M. Constitution, in depriving the defendant corporation of its property without due process of law.

The challenge to the trial court's finding of fact to the effect that the defendant Company, organized and registered as a corporation on Feb. 3, 1903, never filed any annual reports nor paid the required fees, is without merit. Whether the Company's charter was, or could be, dissolved ipso facto by Chap. 185, Laws of 1921, becomes the one important question presented. If the statute be self-executing, it may not become important, although a decision on this point is passed, whether the order of dissolution by the State Corporation Commission was entered on June 14, 1921, the effective date of the act, or nearly twenty years thereafter, as was the case.

[1] The question posed under Point 2 is, likewise, without merit. If we can hold that the Company in question was organized and authorized to do business as a private corporation this question is disposed of; and we can, and must, so hold. The Company was obviously either a private or public corporation. The statutes which we deal with in this connection make no other classification. The Company was governed by the general corporation law.

“Those corporations are public which are created for public purposes only, connected with the administration of the government, and the interests and franchises of which are the exclusive property and domain of the government itself ***. Private corporations are created for private as distinguished from purely public purposes, and they are not in contemplation of law public because it may have been supposed by the legislature that their establishment would promote either directly or consequentially the public interest ***. A railroad corporation, though engaged in a quasi-public business, is a private corporation, and the fact that the state owns a portion of the stock does not change its character. *** The character of a corporation as public or private is determined solely by the terms of its charter and the general law under which it was organized. ***.” 13 Am.Jur. 171-173, § 17.

The Company concedes that the act of 1905, C. 79, refers to irrigation companies, but contends that the vague and limited manner of reference thereto robs it of much of its force. With this principle we do not agree.

[2] We look only to its articles of incorporation to determine whether the Company was organized for profit. The question is not whether the corporation, after being organized for such purpose, made a profit or even undertook to do so. The charter becomes the guide in distinguishing such corporations from ones organized solely for religious, charitable or benevolent purposes. We do not look to any specific acts, or results flowing from an exercise of its corporate powers, to determine the character of the corporation or the purposes for which it was organized. See State ex rel. Biel v. Royal Neighbors of America et al., 44 N.M. 8, 96 P.2d 705. Obviously, a corporation organized, as was this one, with capital stock divided into shares and sold and assigned in the course of doing business, was a private corporation organized for profit. It is agreed that the organization was effected under Laws of 1887, C. 12, authorizing “formation of companies for the purpose of constructing irrigating and other canals and the colonization and improvement of lands.”

It may be true that it is not possible to give a precise and satisfactory definition of a public, as distinguished from a private, corporation (18 C.J.S., Corporations, p. 394, § 18); yet, the corporation with which we are now dealing could not reasonably be said to fall under any other classification but that of private.

[3] Under the above standards we cannot escape the conclusion that appellant Company was a private, as distinguished from a public, corporation, and that the 1921 act in question would apply to it, if it can be said that under the law, and notwithstanding the constitutional objections relied upon, it was required to file an annual report. Annual reports are required of every corporation except those not organized for profit. Laws 1905, C. 79, § 48(1), Sec. 54-236, Comp.1941.

Thus appraising the corporation the State contends that by the Laws of 1905, C. 79, § 48(1), Sec. 54-236, Comp.1941, it was required to file annual reports; and, upon the failure to so do, the 1921 act provided such corporation “be and the same [is] hereby declared to be dissolved.” Under the provisions of C. 112, Laws 1917, having failed to file any annual report, corporations governed by the act, forfeited their right to do business in the state long before the enactment of Laws 1921, C. 185, now under attack as not applicable to appellant, if proper notice to them were given and no appropriate response made.

Under the provisions of the 1917 act, amendatory of the general corporation act of 1905, C. 79, it will be noticed that provision is made for the cancellation of the certificate of every domestic and foreign corporation, excepting those organized for religious, charitable and benevolent purposes and those not organized for profit, which shall not have made and filed its annual report within ninety days after notice from the State Corporation Commission. The record before us is silent upon the question of notice having...