Terre Haute & I.R. Co. v. State ex rel. Ketcham

• Decision Date: 25 November 1902
• Citation: 65 N.E. 401,159 Ind. 438
• Parties: TERRE HAUTE & I. R. CO. v. STATE ex rel. KETCHAM, Atty. Gen.
• Court: Indiana Supreme Court

159 Ind. 438

65 N.E. 401

TERRE HAUTE & I. R. CO.

v.STATE ex rel. KETCHAM, Atty. Gen.

Supreme Court of Indiana.

Nov. 25, 1902.

Appeal from superior court, Marion county; Vinson Carter, Judge.

Suit by the state, on the relation of W. A. Ketcham, attorney general, against the Terre Haute & Indianapolis Railroad Company. From a decree for plaintiff, defendant appeals. Affirmed.John G. Williams, Samuel O. Pickens, and Lawrence Maxwell, Jr., for appellant. Wm. A. Ketcham, Atty. Gen., R. S. Taylor, R. O. Hawkins, and F. Winter, for appellee.

HADLEY, C. J.

Suit by appellee for an accounting, to the use of the common schools, for earnings in excess of amount authorized by law. The facts material to the decision of the case not disclosed in the opinion are these: The general assembly, by an act approved January 26, 1847 (Loc. Laws 1847, p. 77), constituted a number of gentlemen named, and their successors in office, a body corporate and politic under the name of “The President and Directors of the Terre Haute & Richmond Railroad Company,” with full power to construct and operate a railroad from a point on the western line of the state of Indiana, and running thence eastwardly through Terre Haute, Greencastle, and Indianapolis, to Richmond, in Wayne county. The authorized capital was $800,000, which might be increased if found necessary. The corporation might borrow money, but no power was given to mortgage its property; and, if the directors contracted debts beyond the amount of the good, solvent subscription to the capital stock, such directors should be personally liable. The corporation might fix its own rates for the transportation of freights and passengers, and when the stockholders should receive as dividends an amount equal to the full sum invested, and 10 per centum per annum, the legislature might then regulate the tolls, and all net profits thereafter accruing, above a sum sufficient to pay 15 per cent. dividends and to meet future contingencies, should be paid to the treasurer of state for the use of the common schools. In 1851 the corporation was authorized to mortgage its property to raise money for construction and equipment, and at the same session (Loc. Laws 1851, p. 80), upon solicitation of its officers, the company was relieved from the construction of that part of the proposed road east of Indianapolis. In 1865 the corporation name was changed to “The Terre Haute & Indianapolis Railroad Company,” which name it still retains. The road was opened to traffic in the fall of 1851 between Terre Haute and Indianapolis. Improvements, however, were continued through the years 1852, 1853, 1854, and 1855, and to November 30, 1856, when the construction account was declared closed. The company commenced paying dividends to its stockholders in 1852, and in every year thereafter, to 1873, when it surrendered its special charter and organized under the general railroad laws of 1852, paid regular and large extra dividends. About the close of 1872 the prosecuting attorney of Putnam county instituted a quo warranto proceeding in the Putnam circuit court to forfeit the charter of the company. On a change of venue to Owen county a trial was had, which resulted in a disagreement of the jury. Pending this action a written agreement was entered into between the state and appellant, which stipulated that a suit should be brought in the Marion superior court for any money claimed to be due the state, and, if it should be determined in said suit that nothing was due the state from appellant, then the quo warranto action in the Owen circuit court should be dismissed; and, if it should be found that money was due the state, the sum so found should be paid before the dismissal of said suit. Pursuant to this agreement the state, ex rel. the attorney general, brought suit against appellant in the Marion superior court in 1875. The complaint contained three paragraphs. The first and second paragraphs sought to recover money due the common school fund under the twenty-third section of appellant's charter. The third paragraph sought to recover money paid by the state to appellant for the transportation of troops and munitions of war. Appellant filed a demurrer to each paragraph of that complaint for insufficiency of facts, and each of said demurrers was sustained; the judges filing a written opinion in which they purported to state the grounds of their judgment. The state refusing to amend, judgment was rendered in favor of the company on the demurrers. On the state's appeal to this court, the judgment of the superior court was affirmed in 1878 on the ground of irregularity and insufficiency of the record. State v. Terre Haute & I. R. Co., 64 Ind. 297. In 1897 the legislature passed three acts,-one, approved January 27th, to require appellant to account to that body, pursuant to section 23 of its charter, for the amount expended in construction and operation of its road from January 26, 1847, to January 17, 1873, and the total earnings, profits, etc., for that period; one, approved February 24th, purporting to amend said original section 23 so as to require the excess of profits paid over to the treasurer of state semiannually on the first Monday of July and December; and the third, approved March 4th, providing for an accounting to the use of the common schools, authorizing the attorney general to demand such accounting, and to institute suit upon failure so to do. Acts 1897, pp. 8, 59, 145. The appellant neglecting to render an account, and pursuant to this latter legislation, this action was commenced in April, 1897. The complaint is in one paragraph, reciting the above and other material facts with much elaboration. A demurrer for want of facts was overruled, and appellant answered in 11 paragraphs. The first was a general denial. The second set up the legislative consent of 1851 to the company's abandonment of the construction of that part of the proposed railroad lying east of Indianapolis, and appellant's acceptance of the general railroad law of 1852 in bar of the state's right to recover. The third pleaded the judgment in the Marion superior court of 1876 as a former adjudication. The fourth was an argumentative denial. The fifth, sixth, seventh, eighth, ninth, and tenth presented the statute of limitation in various forms; the ninth, that the cause of action accrued more than 20 years prior to the 19th day of September, 1881; the eleventh, acquiescence and laches on the part of the state in bar of the action. A demurrer was sustained to each paragraph of the answer except the first, third, and ninth. A reply was filed to the third and ninth. Upon the closing of the issues the case was referred, over the objection of appellant, to a master commissioner, to hear and report to the court the evidence, together with his findings of fact and conclusions of law thereon. Exceptions were filed to the master's report by both plaintiff and defendant, and, upon final hearing by the court, judgment was given the plaintiff for $913,905. A new trial was denied the defendant, and it appeals. Errors and cross-errors are assigned on all adverse rulings.

The state's action is based upon the obligations assumed by appellant in the acceptance of its original charter of 1847, or it has no case. This, in effect, is conceded by the state's counsel. An effort of the general assembly, by amendatory legislation in 1897, to create in the state a right in the earnings of appellant, where none existed before, or to impose upon appellant any new charter liability or obligation, would be so clearly unconstitutional as to leave no ground for argument. We are therefore inclined to dismiss the first contention with the observation that in so far as either of the acts of 1897, supra, attempts, if either does so attempt, to increase the liabilities or impose any new burden upon or in any way change the obligations of appellant, the same is invalid, and the respective rights and liabilities of the parties must now be determined by their contractual relations entered into in 1847, in the same way as if the legislation of 1897 had never been enacted. However, as we read the complaint and understand the theory of the state, the late legislation is appealed to only as providing a remedy for enforcing the pre-existing charter obligations of appellant, and to this extent it is valid. Railroad Co. v. Clifford, 113 Ind. 460-466, 15 N. E. 524;Webb v. Moore, 25 Ind. 4;Hopkins v. Jones, 22 Ind. 310-315.

We pass, then, the legislation of 1897, as being out of the case, except as conferring certain powers upon the attorney general, and as defining the procedure whereby the claims asserted by the state, as arising under the original charter, may be fully and fairly contested with appellant. The sections of the charter important in this inquiry are these:

“Sec. 22. The corporation may charge and receive such tolls and freights for the transportation of persons, commodities and carriages on said road, or any part thereof, as shall be for the interest of said company, and to charge, lower or raise at pleasure: provided, that the rates established from time to time shall be posted in some conspicuous place or places on said road.

“Sec. 23. That when the aggregate amount of dividends declared shall amount to the full sum invested and ten per centum per annum thereon, the legislature may so regulate the tolls and freights that not more than fifteen per centum per annum shall be divided on the capital employed, and the surplus profits, if any, after paying the expenses and receiving [reserving] such proportion as may be necessary for future contingencies, shall be paid over to the treasurer of the state for the use of the common schools, but the corporation shall not be compelled by law to reduce the tolls and freights so that a dividend of fifteen per centum per annum cannot be made; and it shall be the duty of the corporation to furnish the legislature,...