PROOF REQUIRED FROM A RAILWAY OF FOREIGN INCORPORATION SEEKING TO EXERCISE EMINENT DOMAIN.

Court of Appeals for Pike County.

#### Keziah D. Barger et al v. The Chesapeake & Ohio Northern Railway Company.

Decided, May 31, 1917.

*Eminent Domain*— ■Burden *of Proving Authority to Exercise Bight*of— *'Where Plaintiff Company is Incorporated Under the Laws of Another State*— Necessity *for Such Proof Not Abrogated by Section*8759.

A railway company, incorporated under the laws of another state and seeking to exercise the right of eminent domain in this state, has at the preliminary hearing the burden of proving by a preponderance of the evidence—

' (1) Its incorporation in accordance with the laws of the state of its domicil.

(2) That those whose names appear as stockholders are stockholders in good faith.

(3) That it has organized a board of directors and said board has met and organized.

(4) That it is a *de jure*corporation, vested with the power of eminent domain in the state of its creation.

(5) That it is unable to agree with the owner of the land in question as to the compensation to be paid therefor.

(6) That a necessity exists .for appropriation of the land for railway purposes, and that its board of directors has so declared.

*G. W. Rittenour,*of Waverly, and *C. E. Blanchard*and *Robert J. Odell,*of Columbus, for plaintiffs in error.

*Henry Bannon,*of Portsmouth, and *Levi B. Moore,*of Waverly, contra.

Error to the Court of 'Common Pleas of Pike County, Ohio.

Walters, J.

The railway company filed its petition in the Probate Court of Pike County, Ohio, to condemn certain lands of the defendants *93through, which it proposed to build its railroad. In its petition it alleged that it “is a corporation duly organized under the laws of the state of Kentucky,’’ and that “it is authorized as well by the laws of the state of Kentucky, and by its charter fully granted to it by the state of Ohio, as by the laws of the state of Ohio, to appropriate lands under the statutes of the state of Ohio.”

These allegations were denied by the defendants, and it was necessary for it to prove these facts by a preponderance of the evidence. The laws of a foreign state must be proven as , any other fact in the case. There is no evidence in this ease showing that it was authorized by the laws of the state of Kentucky, authorizing its incorporation and organization and that it has complied with these laws, and that the power of eminent domain has been conferred upon it by the laws of the state of Kentucky.

“The laws of another state, where they come in question in the courts of this state, must be pleaded and proven as matters of fact.” *Williams*v. *Finley,*40 O. S., 342.

No attempt was made to prove these laws, and this was error. The ¡burden of proof is upon the railway company to prove that it has a *cle jure*organization, and that its stockholders and directors are *tona fide*stockholders and directors in their own right.

In *Powers*v. *Hazelton & L. Ry. Co.,*33 O. S., 429, the court held:

> “It is essential to the exercise of the right of eminent domain for the company to prove that it has fully organized by the election of directors, and that they are unable to agree with the owner of the property upon the compensation to be paid therefor.”

In this case, at page 432, the court says:

> “The condemnation of land for the construction of the road comes within the powers to be exercised by the corporation through its directors. It was therefore incumbent on the company to show, in addition to the fact of its incorporation, that it had brought itself into a condition to exercise its powers for the construction of the road, by a full organization in the election of directors.”

*94In *Telephone Co.*v. *Cincinnati,*73 O. S., 64, at page 77, the court said:

> “In *Powers*v. *Ry. Co.,*33 O. S., 429, it is held that it is essential to a judgment of condemnation in an appropriation proceeding that the company should prove its corporate existence, and among other things show that it has fully organized by the election of directors.

> “Proof of the existence of the corporation and of its right to make the appropriation is also now required by Section 6420, Revised Statutes, and the determination by the court of those questions favorable to the company is made jurisdictional.”

It is contended that the filing of articles of incorporation was conclusive evidence of the existence and incorporation of the corporation, but the court,, at page 360 of the case last cited, following 49 O. S., 440, holds that: •

> ‘ ‘ The making and filing for the purpose of profit of articles of incorporation in the office of the Secretary of State do not make an incorporated company; such articles are simply authority to do so.”

In 2 N.P.(N.S.), 349, the court says:

> “The organizing of "a corporation is the election of officers by the stockholders. All lawyers .use the word ‘organizing’ in this sense. * * * To obtain a ‘charter and to certify that ten per cent, of the stock is subscribed are only the first steps towards forming a corporation. At such a state of its existence a corporation can not be said to be organized, and .the term is not so used in the .reports. ”

This decision was affirmed by both the circuit and Supreme Courts, 5 C.C.(N.S.), 411, and 73 O. S., 641.

In *American Ball Bearing Co.*v. *Adams,*222 Fed. Rep., 967, Mr. Justice Clarke delivering the opinion of the court held:

> “Whether or not an organization is a valid corporation is to be determined by. the statutes and decisions of the state where it is organized.”

In *State*v. *Insurance Co.,*49 O. S., 440, it is said:

> *95"The making and filing of articles of incorporation in the office of the Secretary of State do not make an incorporated company; such articles are simply authority to do so. No company exists within the meaning of the statute until the requisite stoclt has been subscribed and paid in, and the directors chosen.”

In the case at bar it was necessary for the railway company to prove by the statutes and decisions of the state where it was organized that it is organized as a valid corporation. All these preliminary steps must be strictly pursued and proven.

*Cemetery Assn.*v. *Traction Co.,*93 O. S., 161, syllabus 1, 2 and 3:

> "1. The right of eminent domain belongs to the sovereign power, and statutes delegating authority to exercise it must be strictly construed. When it is sought to take the property of an individual under statutes granting such authority to corporations, subject to conditions specifically set forth, the protection of the constitutional guaranty of the right of private property requires that the powers granted by the Legislature be strictly pursued and all of the prescribed conditions be performed.

> "2., In a proceeding by a railroad company to appropriate land for its use, it is incumbent on the company to prove its incorporation according to law, including the due and legal election of directors, its right to make the appropriation, its inability to agree with the owners and the necessity for the appropriation. By the provisions of Section 11046, General Code, the determination by the court of those questions favorably to the company is made jurisdictional.

> "3. The statutory requirements provided by Section 8632 *et seq.,*General Code, for the creation of a corporation are mandatory and must be complied with before the corporation can be in existence.”

Certain extracts from a book referred to as the "Plaintiff’s Corporate Minute Book” were offered in evidence. The book was not identified by any witness who made it, or who was the official secretary, or who had official possession of it. The extracts were incompetent evidence.

105-106 O. L., p. 347: This section, as amended, does not excuse the company from showing that it is a foreign corporation or from showing the preliminary steps which shall be taken.

*96The fact that a demand was made to produce certain books and papers containing evidence relating to the merits of the action and defense does not estop the Bergers from objecting to their introduction The object of the production of books and papers is that the party demanding them may have an opportunity of inspecting them.

The Bargers are not estopped by having given an option on the land because they never received any benefit thereunder .and the said contract was abrogated before any benefits were received by them, and therefore no injury was done the railway company.

The railway company must prove by a preponderance of the evidence, in order to acquire jurisdiction to exercise the right of eminent domain, before the probate court on the preliminary hearing:

1st. That it was duly incorporated under the laws of the state where such incorporation was had when the hearing is had in a state other than that of its incorporation, and it must be proven as any other fact in the case.

2d. It must prove that its stockholders are real stockholders in good faith.

3d. That it has organized a board of directors, and that said board has organized.

4th. That it is a *de jure*corporation.

5th. That it has attempted to agree with the owner of the land as to the compensation and damages, and has failed to do so.

6th. That it was necessary to appropriate the land for the uses and for railroad purposes.

7th. That the road’s directory has declared that it is necessary for the purposes of the road.

8th. That the power of eminent domain has been conferred upon it by the Kentucky laws.

For the errors indicated the judgment of the court below is* reversed, and the cause remanded to the probate court for further proceedings according to this opinion and according to law.

Allread, J. (of the second district, sitting in place of Middleton, J.), and Sayre, J., concur.