Case ID: ind-l-rep_1/html/0483-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Woods.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Silas Shipley v. The City of Terre Haute.
    1. Municipal Corporation as Stockholder.—Where a municipal corporation is-authorized to become a stockholder in a railroad company, and actually does so, it: has the same privileges, rights and benefits, and is subject to the same duties and obligations as an individual stockholder.
    2. Title of an Act.—Where an act is entitled, An act to provide for the-organization of railroad companies,” the title properly embraces a provision in the act concerning the individual liability of stockholders in such companies as should be organized under the law.
    Filed May 25, 1881.
    Appeal from Vigo Circuit Court.
   Opinion of the court by

Mr. Justice Woods.

The demurrer of the appellee was sustained to the complaint,, and judgment rendered accordingly. The defendant, The City of Terre Haute, alone was served with process from the court below,, and the only question urged upon our attention is whether the complaint showed a good cause of action against said city. The purpose of the action was to charge the city and other defendants for labor done in the construction of the railroad of the Cincinnati and Terre Haute Railway Company, of which the defendants were the stockholders at the time the labor was done.

We find it unnecessary to set out a copy of the complaint or to give special consideration to its allegations, as no defect is claimed which could be supplied by an amendment. The whole contention of the counsel on either side is upon the question whether a municipal corporation, organized under the general laws of the State for the incorporation and government of cities, is bound by the same liability which under the 38th section of the “Act to provide for the incorporation of railroad companies,” approved May 11, 1852, attaches to an ordinary stockholder in such company. The city made her alleged subscription of stock in September, 1871. The section of the law referred to is as follows: Sec. 38. The stockholders shall be individually liable to laborers, their executors, administrators and assigns, for all labor done in the construction of said road, that shall remain unpaid after the assets of the corporation shall have been exhausted.” 1 Davis Rev. 1876, p. 712.

By an act appproved May 4, 1869, it was enacted, “ That any city incorporated under the general law of this State, upon petition of a majority of the resident freeholders of such city, may hereafter subscribe to the stock of any railroad, hydraulic company, or water power, running into or through such city, or near the corporate limits of such city; * * subject, however, to the limitations, direction and restriction named in the provisos to the sixtieth section of the act entitled ‘An act tp repeal all general laws now in force for the incorporation of cities, prescribing their powers and rights/ &c., approved March 14, 1867. The provisos referred to contain nothing pertinent to our present inquiry.” 1 Davis Rev. 1876, p. 299.

These provisions of the law seem to be so plain and direct to the point as to leave little room for debate upon the question presented for decision. The counsel for the appellee has favored us with an elaborate brief, wherein he argues that the city defendant is not subject to the individual liability which is imposed on the individual stockholder. The argument turns entirely upon the following propositions, advanced by the counsel, namely:

“First. That the liability of municipal corporations must appear in their character—that being the instrument from which their power to become stockholders is derived; if no liability is authorized to be incurred or credited by. the charter, then none exists.”

Second. That the section of the railroad act above set out is unconstitutional, because the subject matter thereof is not expressed in the title of the act, nor does it relate to a subject properly connected therewith.”

We do not question the accuracy of the first proposition, but its application leads us to a conclusion directly the opposite of that for which the appellee contends. By the act of May 4, 1869, the legislature made an express grant to the defendant, of the power to become a stockholder in a railroad company. So far as in their nature, they could be exercised or enjoyed, it is clear that the rights and privileges of an ordinary stockholder belonged to the city, when it became a stockholder as alleged; and it seems to be equally clear, that in conferring the power to'acquire the rights and benefits, the legislature must have intended to impose the attendant burdens. Indeed, the right conferred has no legal existence or definition apart from the duties and obligations expressly connected therewith. It is true, as suggested, that the city could not become the president, director, or other officer or agent of the railroad company, and it may be, could not be counted as one of the “ number ” of persons, not less than fifteen, being subscribers to the stock of any contemplated railroad, which the first section of the general railroad law requires in order to form a railroad corporation. But it is plain that these things are not essential to and inseparable from the fact of membership in the corporation. They are essential to the corporate existence, but not to membership therein. The shareholder may or may not be the president or director; but he cannot have a shareholder’s common rights, and not be subject to the common liabilities, unless there is in the law some warrant for the exception. The act of December 17, 1872, To require railroad companies to issue stock paid for by taxes,” etc., in certain specified cases, contains an express proviso, That the stock so issued under the provisions of this act, being involuntary in its character, no personal liability shall attach to the original holder thereof for any debt contracted by the railroad'company; ” and a similar proviso should, and doubtless would have been embodied in the act of May 4, 1869, if the legislature had intended a like exemption from liability on the part of such cities as should avail themselves of the powers conferred by that act. In this respect there is some analogy between this case and the case of Gray, Governor, v. The State ex rel. Coghlen (last term), wherein the court, in considering the rate of interest which the creditor of the State was entitled to receive on his bond (one of the internal improvement bonds of 1836), says: “We see no reason why the State, as a debtor, should be placed in any other or different situation, as to its obligation to pay interest, than that occupied by any private debtor or other public corporation.” 1 Daniel’s Neg. Inst., § 436; Murray v. Charleston, 96 U. S., 432. In the case last cited, the court said:

“ The truth is, States and cities, when they borrow money and contract to pay it, with interest, are not acting as sovereignties; they come down to the level of ordinary individuals. Their contracts have the same meaning as that of-similar contracts between private persons.”

It has been held that if a sovereign State, which cannot be sued without its own consent, has voluntarily rendered itself liable to a private action; and if it has become a stockholder in a private corporation, it has subjected itself to the same liabilities which attach to any private stockholders. Curran v. Arkansas, 15 How. 304; Robinson v. Bank of Darien, 18 Ga. 65; Thompson on Liability of Stockholders, § 20; Morse on Banks, 516-518; Germania Nat. Bank, etc. v. Case, Receiver, 96 U. S. 628. In the case last cited, the Germania Bank, held as collateral security for money loaned, shares of stock in the Crescent City National Bank of New Orleans, and, the latter bank having become insolvent, was held subject to the liability of a stockholder, the court, among other things, saying: “There is nothing in the argument on behalf of the appellant that the bank was not authorized to make a loan with the stock of another bank, pledged as collateral security. That is an ordinary mode of loaning, and there is nothing in the letter or spirit of the national banking act that prohibits it. But if there were, the lender could not set up its own violation of law to escape the responsibility resulting from its illegal action.” And much less can the appellee escape the responsibility of having taken stock which the law expressly authorized it to take.

In support of his proposition that the thirty-eighth section of the act for the incorporation of railroad companies is unconstitutional, after quoting section 19, article 4, of the constitution, the counsel for the appellee cites and comments on the following cases: State v. Young, 47 Ind. 150; State v. Wilson, 7 id. 516; Foley v. The State, 9 id. 363; Gillispie v. The State, 9 id. 380; Newhertir v. Price, 11 id. 199; State v. Bowers, 14 id. 195; I<?pe v. The State, 14 id. 239; Spaugh v. Huffer, 14 Ind. 305 ; Grubbs v. The State, 24 Ind. 295 ; Town of Fishkill v. Fishkill, etc., 22 Barb. 634; The People v. Allen, 42 N. Y. 405; The People v. Hills, 35 N. Y. 449 ; The People v. O’Brien, 38 N. Y. 193; City of San Antonio v. Gould, 34 Texas, 49 ; Prothers et al. v. Orr et al., 12 Geo. 36; Cut-lip v. Calhoun County, 3 W. Va. 588; The People v. Com’r of Highways, etc., 53 Barb. 70; Gaskin v. Anderson, 7 Abb. Pr. (N. S.) 1; Gaskin v. Meek, 8 id. 312 ; Settle v. Van Evra, 49 N. Y. 280.

William Eggleston and W. G. Buff, for appellant.

T. M. Harper, for appellee.

Without taking the time to make a statement of the scope and bearing of these cases, as we should hardly be justified in extending our opinion to the length necessary for that purpose, we content ourselves with saying that they do not require ns to accept, nor would they justify us in adopting the conclusion for which counsel contends. The constitutional provision is that, Every act shall embrace but one subject, and matters properly connected therewith, which subject shall be expressed in the title. But if any subject be embraced in an act, which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be expressed in the title.” Davis’ Rev. Stat. 1876, vol. 1, p. 30.

The title of the act in question is : “An act to provide for the incorporation of railroad companies.” The incorporation of railroad companies is the “ one subject ” of this act; and we entertain no doubt that it was “ matter properly connected therewith ” to provide for the individual liability of the stockholders in such companies as should be organized under the law. It is only the one subject ” which must be expressed in the title.

We hold, therefore, that the complaint is good as against the objections which have been brought to our attention, and consequently that the circuit court erred in sustaining the demurrer thereto.

The judgment is reversed with costs, and the cause remanded with instruction to overrule the demurrer to the complaint.