Thompson v. Waters

• Decision Date: 10 July 1872
• Citation: 25 Mich. 214
• Court: Michigan Supreme Court
• Parties: J. Edgar Thompson v. Ira Waters

25 Mich. 214

J. Edgar Thompson v. Ira Waters

Supreme Court of Michigan

July 10, 1872

Re-argued April 6, 1871; April 14, 1871, Heard; April 24, 1872; April 25, 1872.

Error to St. Joseph Circuit.

In view of the importance of the question involved, the court of its own motion ordered a re-argument of this cause.

Judgment reversed, with costs, and a new trial awarded.

H. H Riley and R. Brackenridge, for plaintiff in error.

Shipman & Loveridge, for defendant in error.

Christiancy Ch. J. Cooley, J., Campbell, J. concurred. Graves, J., did not sit in this case.

OPINION

Christiancy, Ch. J.

This was an action of ejectment brought by the plaintiff in error against the defendant in error, in the Circuit Court for the county of St. Joseph, to recover the north half of the south half of section 24, township seven south, of range 11 west, situated in said county of St. Joseph.

Both parties claimed title through J. Eastman Johnson, who owned the land previous to the deeds stated below.

The plaintiff's claim of title was this: On the 20th of July, 1853, Johnson, by warranty deed, conveyed the land to the Fort Wayne & Chicago Railroad Company, a company incorporated under the laws of Indiana. By several acts passed by the legislatures of the States of Pennsylvania, Ohio, Indiana and Illinois, authorizing the consolidation of railroad companies, and by the articles of consolidation of the 6th May, 1856, consolidating the Ohio & Penn. R. R. Company, the Ohio & Indiana Railroad Company, and this Fort Wayne & Chicago Railroad Company, under the name of "The Pittsburgh, Fort Wayne & Chicago Railroad Company," all the powers, rights and franchises of said several companies so consolidated, passed to, and became vested in, the said Pitts burgh, Fort Wayne & Chicago Railroad Company. This consolidated company, on the first day of December, 1856, executed to Hugh McCullough, as trustee, a mortgage upon this and other lands and property. And the said Pittsburgh, Fort Wayne & Chicago Railroad Company, and McCullough, the mortgagee, by their several deeds, dated respectively October 17th, and October 24th, 1860, conveyed the land in question to the plaintiff. All the foregoing were duly recorded in the office of the register of deeds for St. Joseph county, prior to the execution of the deed from Johnson to Merrick, mentioned below.

The defendant claimed title under the following conveyances:

1st. A quit-claim deed from J. Eastman Johnson to Benajah G. Merrick, dated November 29, 1860, and

2d. A quit-claim deed from Merrick to defendant, dated November 30, 1866; both of which deeds are duly recorded. The lands lie at least fifty miles from any part of the railroad in question.

The court charged the jury at the request of the defendant, "that the Fort Wayne & Chicago Railroad Company, at the time of the execution of the conveyance from Johnson to it, had no power to purchase and hold the lands in question in this State," and "that the jury will find for the defendant."

This raises the only question in the case which needs to be noticed. Was the Fort Wayne & Chicago Railroad Company, being a corporation created by, and existing under, the laws of the State of Indiana, competent to take the title to this land in this State, under the deed executed to it by Johnson?

This question depends, first, upon the laws of Indiana; and, second, upon the laws of this State, and the public policy indicated by its legislation.

1st. As it was an artificial being, created only by the laws of Indiana, and by them alone endowed with whatever powers and capacities it possesses, it could have no capacities, nor exercise any powers anywhere, which were not, expressly or by implication, given by those laws; or, in other words, no powers or capacities which would not be recognized and sustained by the courts of that State, had the same question of capacity to take these lands come before them for adjudication.

The Fort Wayne & Chicago Railroad Company, to whom this land was conveyed, was organized under the general railroad law of that State, entitled, "An act to provide for the incorporation of railroad companies," approved May 11, 1852. Most of the provisions of this act, in reference to the powers of companies to take lands, confine the power to such as the necessities of the company require in exercising its franchises of building and maintaining the road.

The second subdivision, however, of the thirteenth section, gives power to "receive, hold, and take such voluntary grants and donations of real estate and personal property as shall be made to it, to aid in the construction, maintenance, and accommodation of such railroad; but the real estate thus received by voluntary grants, shall be held and used for the purpose of such grants only. It might admit of a question whether, under this provision, there was not power to acquire lands to be converted into money for the use of the company; but the question is quite immaterial, since the act of the legislature of the State of Indiana, of January 20th, 1852--which, if it did not take effect at an earlier date, took effect at least with the Revised Statutes of that State, of which it is a part (Chap. 184), on the 6th of May, 1853 ( Jones v. Cavins, 4 Ind. 305; Ledley v. The State, id., 580; State v. Kiger, id., 621)--gives power (§ 2) to any railroad company which then or thereafter might be incorporated, by the consent of the directors of the same, "to receive the subscription for the capital stock of said companies, under such regulations and restrictions as their boards of directors may prescribe, any lands, town lots, real estate, or other description of property as may be offered for that purpose: Provided however, That the same shall be sold, except so much as may be necessary for the use of said road, or for the purposes aforesaid" [referring to certain provisions in the first section, in reference to lands taken on subscription of stock, or purchase for depots, turnouts, workshops, warehouses, etc.,] "within a reasonable time, and the proceeds applied for the construction of said roads, or their appurtenances." That under this act the courts of Indiana would hold that these lands, though out of the State, might have been received for stock of the company, is sufficiently apparent from the decision in Cincinnati, Union & Fort Wayne R. R. Co. v. Pearce, 28 Ind. 502, in which it was held that lands situated in the State of Ohio, conveyed to an Indiana corporation, under authority of this act, constituted a valid consideration for a contract on the part of the company to issue stock for the amount.

And I see no reason to doubt that the courts of that State would recognize the right of the company to take lands in another State, in payment of a debt due the company, accruing in the legitimate prosecution of its business, and which would, therefore, be represented by the stock of the company. Indeed, independent of this act of January 20th, 1852, I see no reason why the courts of that State should not recognize the right of the company to take such lands in payment of a debt so accruing, though they might not allow them to take the funds of the company to invest in another State. The main objection to allowing corporations, in the State of their creation, to hold lands not occupied and used in, or necessary to, the exercise of their franchises, is based upon the idea that it might be prejudicial to the public interest of that State, to allow corporations to become speculators in lands, or to hold them in large amounts, keeping them out of market for an unreasonable time, and preventing improvement, etc.; but this objection could not well be urged in the State of their creation, against their holding lands in other States, taken in payments of debts justly due them, accruing in the course of their legitimate business. The State in which the land lies might, if it chose, object; but the State of their creation could not be interested in raising such objection; but so far as it was interested at all, it would seem to be in favor of sustaining the right; for, unless the creation and prosperous continuance of such corporations were supposed to be objects of public interest, which deserve to be fostered, it is not likely the State would have authorized their creation. The courts and public authorities of such State may therefore, be presumed to look with favor upon such facilities afforded to their corporations for collecting the debts due them in other States. And if the case were reversed, and one of our corporations should take lands in the State of Indiana, in payment of a debt due them there, we should, without hesitation, say, "if Indiana makes no objection to this, we do not see how any public interest of Michigan or its people, can be promoted by our refusing to allow the corporation to avail itself of the facility thus afforded for the collection of its debts."

We may, therefore, safely assume that the courts of Indiana would not refuse to recognize the right of this company to take lands in this State, in payment or security for debts due to it here.

But these considerations only go to show that the laws of Indiana present no obstacle to the taking or holding of these lands by the company; in other words, they show that, by the laws of Indiana, so far as the question depends upon them, this company was competent to take this land in this State.

But the laws of Indiana have no force or operation (as laws giving powers, or creating or enforcing obligation) within the State of Michigan. No State has the power to create corporations, or to regulate their powers, or to authorize the exercise of corporate franchises, in other States. It may confer powers, in the nature of a...