Case Name: Olive C. Atkinson and others v. The Marietta and Cincinnati Railroad Company, as reorganized
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1864-12
Citations: 15 Ohio St. 21
Docket Number: 
Parties: Olive C. Atkinson and others v. The Marietta and Cincinnati Railroad Company, as reorganized
Judges: Brinkrrhoee, C.J., and Scott, Wilder, and White, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 15
Pages: 21–39

Head Matter:
Olive C. Atkinson and others v. The Marietta and Cincinnati Railroad Company, as reorganized
L A railroad company authorized to change the location of its track, on account of “ difficulty of construction ” and other causes, may do so at any time before the construction of its road is completed at the point where the change is made. Moorehead v. The Little Miami B. B. Co,} 17 Ohio Rep. 340, followed and approved.
2, Corporate existence, and the right to exercise the power of eminent domain, can only he derived from legislative enactment; and before a company can demand a judgment of condemnation, it must show that both have been conferred upon it by a valid law, and that it has substantially complied with the conditions which the law has annexed to the exercise of the power.
8. The charter of the Marietta and Cincinnati Railroad Company, did not authorize it to mortgage .or sell its corporate franchise to he a corporation; and a judicial sale upon mortgages executed by it, would not invest the purchasers with any corporate capacity whatever.
3„ A “special act” of the general assembly undertaking to give such an effect to the sale, and authorizing the purchasers to reorganize, create a new stock, and elect another board of directors, is, in substance and legal effect, an attempt to create a corporation and confer corporate powers by a special act; and is in conflict with the first and second sections of the thirteenth article of the constitution of the state.
Error to the court of common pleas of Athens county. Reserved in the district court.
The defendant in error, the “ Marietta and Cincinnati Railroad Company, as reorganized,” filed a statement in the probate court of Athens county, on the 2d of March, 1861, alleging that it was a corporation organized and acting under the laws of the State of Ohio; that it sought to appropriate certain lands for the use of a railroad track, and that it was unable, to agree with the plaintiffs in error, owners of the lands sought to be appropriated, in regard to the compensation therefor, specifying the lands to he appropriated by metes and bounds, and praying that proceedings be had as directed and required by the act of the general assembly entitled “ An act to provide for compensation to the owners of private property appropriated to the use of corporations,” passed April 30, .1852.
Proceedings were taken in conformity with said act, and on the 7th of March, 1861, the case was brought to a hearing, on the motion of the plaintiffs in error, to dismiss the application, because —
“1. The act entitled An act for the relief of the creditors and stockholders of the Marietta and Cincinnati Railroad Company, passed February 23, 1860, is unconstitutional.
“ 2. The said plaintiffs are not a corporation, organized and acting under the laws of the State of Ohio within the meaning and intent of the act entitled An act to provide for compensation to owners of private property appropriated to the use of corporations, passed April 30, 1852.
“ 3. Said plaintiffs have no power or authority to abandon the line of the railroad as originally adopted and located by the Marietta and- Cincinnati Railroad Company, and adopt the line, a part of which is sought to be condemned and appropriated by the proceedings in this action.
“ 4. The said plaintiffs have no right, powers or authority by the laws of the State of Ohio, to abandon the original line as adopted and located by the Marietta and Cincinnati Railroad Company, and adopt another and entirely different line from said railroad.”
On the hearing of this motion, the same was overruled by the court, and judgment of condemnation was entered in. accordance with the application of the company and the verdict of the jury, to which ruling and judgment the defendants excepted, and the court signed and sealed a bill of exceptions, which is made a part of the record.
This bill of exceptions recites, that on the trial of the cause before the probate court of March 7, 1861, evidence had been given showing that the Marietta and Cincinnati Railroad Company as originally organized, had, prior to the year 1857, commenced and located a right of way for the track of their road on a line through the north part of the incorporated village of Athens, and had gone on and taken possession of said, right of tvay and partially completed their road thereon. That in March, 1858, said Marietta and Cincinnati Railroad Company having completed its line of road up to a point on said original line west of said village, instituted proceedings in the probate court of said county to condemn and appropriate the same land sought to be condemned and appropriated by these proceedings for a term of three years, and a part of a temporary track used by said company ever since the completion of its road. That said temporary track diverges from said original line at a point west of said village, runs through the south part of said village, and again unites with the said original line at a point east of said village.
That the proceedings to condemn said lands as a part of a temporary track have been by the supreme court of Ohio reversed in the court of common pleas of said Athens county, and dismissed in said probate court at the suit of Olive Currier v. said company.
That from March, 1858, to March, 1861, said company had considered the line merely as a temporary one, and contemplated using the same only so long as the original line was incomplete.
That on the 1st day of March, 1861, the plaintiff in these proceedings claiming to be the Marietta and Cincinnati Railroad Company as reorganized, at a meeting of the directors thereof, passed a resolution of which the following is a copy:
“ Whereas, It has become impracticable in the present condition of this company to proceed to complete that portion of the line of its railroad heretofore adopted and located lying between the point of divergence of the present used track from the said adopted and located line east of the station house in Athens, and the point where said present used track again intersects the adopted and located line aforesaid west of Athens. Therefore, resolved, that so much of the line' of said 4 railroad heretofore adopted and located in the township of Athens, Athens county, Ohio, as lies between the poinls above stated, be and hereby is declared abandoned; and resolved further, that the track as at present built^and now in use by this company around the point at Athens from the place of divergence of the original adopted and located line to the place of intersection thereof by said track as built and in use, be and the same is hereby declared to be the adopted and permanent line of this company for its railroad; and the president of this company be and he is hereby authorized and instructed to procure, by condemnation or otherwise, the right of way on. the line hereby located and adopted in all cases where arrangements have not already been made for such right of way.” That evidence was further introduced showing the reorganization of said company and the proceedings as reorganized under and in pursuance of the provisions of an act entitled “ An act for the relief of the creditors and stockholders of the Marietta and Cincinnati Railroad Company,” passed Febroary 23, 1860. A copy of which said proceedings, it is further recited in said bill of exceptions is thereto attached, marked “A,” and made a part thereof.
[Said copy “A” is embodied in the transcript, it being a transcript of the record of the reorganization of said company at large.]
The bill of exceptions further recites that, there-being no further evidence introduced to show the legal capacity or authority of said plaintiff to institute these proceedings, or to condemn or appropriate said lands, the defendants objected, and moved to dismiss the proceedings as above set forth, and that said motion was overruled, etc.
It further appears from the transcript that said motion to dismiss being overruled, and said bill of exceptions signed, sealed and made part of the record: “ Afterwards came all the parties in person and by their attorneys, and came also a jury to-wit: R. K. Bridges,” etc., “ who were duly impanneled and sworn according to law,” etc. That thereupon a writ was issued (a copy of which is set forth), directed to the sheriff to conduct the jury on to the premises sought to be appropriated for the purpose of viewing the same. That said writ was returned into court, the view having been made, etc. “Whereupon the plaintiffs and defendants by their counsel examined a number of witnesses upon the question of damages exclusively.”
It further appears that the jury rendered a verdict assessing the damages of the defendants at $816 00, “and thereupon it was agreed by the parties that the cause be continued for judgment until April 1, 1861,” on which day a new trial not being granted, the verdict of the jury was confirmed by the court, and the costs, $75 92 taxed to the plaintiff, and said amount of damages, $816 00 and costs $75 92, having been paid into court by the plaintiff, it was by the court adjudged that the plaintiff “ bold the property in the statement mentioned for the purposes therein specified,” and that the sheriff put the plaintiff in possession.
To reverse the judgment of the probate court the defendants therein, on April 15, 1861, filed their petition in error in the court of common pleas of Athens county, assigning for error:
1. That the probate court overruled their motion to dismiss the application of the company.
2. That judgment was given for the company instead o'f for plaintiffs in error.
On May T3, 1861, the common pleas affirmed the judgment of the probate court.
To reverse this judgment of affirmance, the present petition in error was filed in the district court, and therein reserved to this court for decision.
Smith $ De Steiguer, for plaintiff in error:
1. The questions of law arising upon the first and second reasons urged for the motion to dismiss the application of 'the company in the probate court, are submitted without argument, except to call the attention of the court to article 13, section 1, of the constitution of the State of Ohio.
2. The company (as reorganized), can not abandon a line adopted and located and partially constructed by the old company, and condemn and appropriate permanently another and entirely different line, even conceding that the company (as reorganized), is invested with the powers of the old company, for that company having once located and partially constructed its line of road, could not again exercise the power which it had thus exhausted. Moorhead v. The Little Miami R. R. Co., 17 Ohio, 340.
Hunter Daugherty, for defendant in error:
The error in the original proceedings relied upon as the ground for reversal’is, that the probate court overruled the motion of the plaintiffs in error to dismiss the proceedings. Several reasons set forth in the bill of exceptions wrere assigned in support of the motion, which we propose to notice in their order.
The first and second may be considered together, and their substance stated as follows:
That the act entitled “An act for the relief of the creditors and stockholders of the Marietta and Cincinnati Railroad Company,” passed February 23,1860, is unconstitutional, and that said’ company as reorganized, is not a corporation organized and acting under the laws of this state within the meaning and intent of the act entitled “ An act to provide for compen Bat-ion to owners of private property appropriated to the use of corporations,” passed April 30, 1852.
As we understand it, the proposition intended to be sustained in behalf of the plaintiffs in error is, that if the act of February 23, 1860, be unconstitutional, the reorganization of the company authorized by the terms of the act, and shown by the copy of its records set forth in the bill of exceptions, is a nullity; and, therefore, that the company is not a corporation within the meaning of the act of April 30, 1852, and that, for that reason, the motion to dismiss should have been sustained.
To this we reply: First, That if the question- touching the validity of the 'corporate organization of the company were open to be inquired into in this collateral way, and depended on the constitutionality of the act of February 23, 1860, said act is constitutional. Second, That there being, as the record admits, a corporate organization, in fact, of the company, it was not legally competent for the court, upon the hearing of the ease to adjudicate, collaterally, upon the validity of such organization.
1. As to the constitutionality of the act. As we understand the argument of the counsel for the plaintiffs in error, they rest this question upon article thirteen, sections one and turo of the constitution, claiming that the act, in violation thereof, provides for “ conferring” corporate powers; it being a special act.
Section one of said article provides: “The general assembly shall pass no special act conferring corporate powers.”
We submit, that the act in question does not assume to “confer” corporate powers.
It will be seen by the recitals of the preamble of said act, that the “ Marietta Cincinnati Railroad Company ” is recognized as a corporate body, organized and acting by a board of directors; and that the general assembly in passing said act acted upon the memorial of said board. And throughout the original proceedings in this case, and in the arguments of the counsel for the plaintiffs in error, the fact of the previous corporate existence of said company and its acting as such, in reference to the location of its road, and in virtue of a charter, is conceded. Also by the recitals of the preamble of the act, the insolvent condition of the company and its inability to pay its debts and complete the unfinished parts of the road, is set forth as matter of fact; and that a decree had been rendered by the court of common pleas of Ross county, for the sale of said road and the franchises of said company under proceedings by mortgagees thereof. Said preamble also recites that, “ doubts exist whether upon such sale so decreed to be made, the purchaser or purchasers will be invested with the franchises of said company, and the charter of said company; and that it is expedient and for the interest of all the parties, and for the security and benefit of the public, that said road shall, after spch sale, be maintained and managed under said charter, and subject to all rights and liabilities therein provided.” “ Therefore, to settle said doubts,” it is enacted:
Sec. 1. “That if a sale of said road shall be made and confirmed as provided for in said decree, all the franchises of said company shall thereby pass to and vest in the purchaser or purchasers, and such purchaser or purchasers shall become invested with said charter, and be entitled to reorganize thereunder by the creation of stock not exceeding eight millions of dollars, and by the election of a board of directors, with all the rights and privileges and subject to all the liabilities, except as herein provided, of said company.”
The object of the prohibition contained in section 1, article 13, of the constitution, as everybody knows, was to prevent the passage of special acts of incorporation, such as before the adoption of the new constitution had grown to be an evil, whereby the statute books were incumbered with an endless multitude of such enactments, and the expense of legislation greatly increased. But would anybody understand the act in question as belonging to that class or as within the operation of the prohibition ? Does it assume to “ confer” corporate powers ? Is it not rather an act, declaratory of the effect of a sale of the road and franchises in pursuance of the decree referred to, which was before in doubt? Is not the express object and purpose of the enactment to remove and settle doubts ? This it does, not by conferring corporate powers, but by declaring the legal effect of the judicial sale, as a transfer, to the purchaser of the property and franchises, theretofore conferred by legislative grant upon the company. But even such transfer is not by authority of the act, though sanctioned by it, as a necessary incident to the sale and purchase, including the right of the purchaser to reorganize, without which the corporate franchises would be a barren acquisition in the hands of the purchaser.
The exercise of this right does not arise out of the act as a right newly conferred, but is authorized as a declaratory provision merely. The enactment of the law is evidence of its constitutionality in the view of the legislature — and it can not be pronounced, judicially, to be unconstitutional, except upon clear and unquestionable grounds.
As a further test of the legal nature of this enactment, suppose, instead cf its being a special act it had been general, and had, in precisely the same terms, declared the effect of all judicial sales under decrees of foreclosure of railroad mortgages, ordering the railroad and corporate franchises granted by the charter, to be sold, to be, to vest in the purchaser, the said franchises, with the right to reorganize the company, would anybody suppose such an enactment would confer corporate power? If, being a general law, it would not operate to confer corporate power, but only to remove doubts as to the effect of the judicial sale, by declaring its effect, such only would be its operation as a special act, limited to the particular case.
2. The defendant in error, as fully appears from the case, being de facto in the exercise of the corporate franchises conferred by the charter of the Marietta and Cincinnati Railroad Company, under á reorganization of the purchaser under the decree referred to in the act in question, we deny that it was competent for the probate court, upon the mo* tion to dismiss, to have collaterally inquired into the legal validity of the reorganization, or exercise of corporate franchises.
We admit that a corporation, suing as such, must show that it is a corporation. But how is that fact shown ? What sort of proof satisfies the legal necessity, for all purposes, in such cases ? Simply the act of incorporation and user under it. Bank of St. Charles v. Barnales, 1 Car. & Payne, 569; Utica Insurance Company v. Tillman, 1 Wend. 555; Utica Insurance Company v. Badger and others, 3 Wend. 296, 301; Bank of Michigan v. Williams, 5 Wend. 478; Do. 7 Wend. 549.
And proof, on the other side, of defects or omissions in the steps to carry the charter into effect, does not avail. It must be avoided, if at all, by quo warranto. Chester Glass Co. v. Dewey, 16 Mass. R. 101; Commonwealth v. Union Insurance Co., 5 Mass. R. 230; Center Road Co. v. McConolly, 16 S. & R. 144; Hughes v. Bank of Somerset, 5 Litt. 45; Receivers of the Bank of Circleville v. Renick and others, 15 Ohio Rep. 322, Attorney General v. Utica Insurance Co., 2 J. C. R. 389; 5 Ib. 381.
The recitals of the special act, and the proofs and admissions, show the original act of incorporation of the Marietta and Cincinnati Railroad Company, and the reorganization by the purchasers under the decree of sale, and the user of the charter by the reorganized company.
All this, we understand, not to be controverted by the plaintiffs in error; but what they insist upon is the want of legal corporate capacity on the part of said reorganized company to condemn private property — and that it was the duty and province of the probate court to adjudicate the matter as upon quo warranto. This we controvert, and insist that such adjudication can not take place collaterally except touching the existence of the charter and user under it — facts conceded in this case.
The principle settled in The Atlantic & O. R. R. Co. v. Sullevant, 5 Ohio St. Rep. 276, is entirely consistent with what we here claim. It certainly was not intended by the court, in that case, to overthrow the uniformly recognized principle, that the validity of a corporate organization can not be inquired into, and what is in effect a judgment of ouster be rendered, collaterally.
This is not a case falling within the principle settled in the case cited. It rests upon the act of incorporation of the Marietta and Cincinnati Railroad Company, and upon user thereof by the defendant in error.
Now, whether this user, defacto, is or not de jure also, is a question between the state granting the charter, and the defendant, and can only be drawn in question at the instance of the state.
3. The ground of objection under consideration embraces a further idea, namely: that the company, as reorganized, is not such as is, within the meaning of the act of April 30,1852, entitled “ to* condemn property.”
The first section of that act extends its operation “ to any and every corporation now existing, or that may hereafter be created, in this state, which may be authorized by law to malee such appropriations for the right of way, or for any other purpose which may be within the scope of the legal authority of such corporation.”
The company, as reorganized, is a corporate organization, having legal capacity as such to institute proceedings under the act of April 30, 1852, giving compensation to owners of private property appropriated to the use of corporations.
The company is vested with the corporate franchises of the Marietta and Cincinnati Railroad Company, and has all the same rights and powers that said company possessed to abandon that part of the road in question before it is completed, and re-locate it as proposed. And under the circumstances disclosed in the record, such right to abandon and re-locate exists both under ' the charter and the enabling provisions of section eleven of the act of May 1, 1852.

Opinion:
Ranney, J.
Upon two of the questions raised in argu-* ment, the court has found no difficulty, and I shall do no more than state its conclusions without going into any extended examination.
For the plaintiffs in error it is claimed that, although the defendant should have been legally invested with all the powers 'of the Marietta and Cincinnati Company, yet this proceed ing could not be maintained, because that company had exhausted its power of appropriation by the location and partial construction of its road upon another line.
The case of Moorehead v. The Little Miami R. R. Company, 17 Ohio Rep. 340, relied upon to support this position, furnishes a complete answer to it; and very clearly shows that the power to re-locate upon another line, for any of the causes specified in the charter, may be invoked until the construction of the road upon the original location has been completed. Among the causes which will justify such a change, is that of " difficulty of construction." Now, it must be very evident that, in many cases, these difficulties, although such as to make it impossible to secure a firm and safe foundation for the road, or such as to involve the company in bankruptcy to attempt to complete it, could not be discovered until after the location was made, and the construction had so far progressed as to develop them; and we entertain no doubt that the legislature intended to allow the company to extricate itself from such difficulties, by making a re-location. Although the causes for making this change are somewhat obscurely stated, we think they fall, substantially, within one or more of those allowed by that charter.
2. On the part of the defendant in error, as we understand the argument, it is claimed that, although the special act of February 28,1860, "for the relief of the creditors and stockholders of the Marietta and Cincinnati Railroad Company" (57 O. L. 128), and the proceedings thereunder had, should be held inoperative to invest, de jure, this organization with the powers conferred upon that company, yet, as it is de facto acting as a corporation, and exercising those powers, n ither its existence, nor its right to exercise the power of eminent domain, can be collaterally questioned. While we do not question the correctness of many of the observations made in argument, or of the authorities brought to their support, we still think the proposition itself explicitly answered by the judgment of this court in The Atlantic & O. R. R. Co. v. Sullivant, 5 Ohio St. Rep. 276. In that case as in this, the attempt was made to appropriate lands upon which to construct a railroad: there as here, the organization professed to act as a corporation authorized to construct such a work; and in that case a valid and constitutional law existed, under which it claimed to have effected its organization. And yet, the court held that the right of such an organization to appropriate private property, depended 'upon the legal Validity of its certificate, through which its corporate powers were derived; and when that was so grossly defective as not to have named the termini of its road, or the counties through which it was to pass, the right to exercise the eminent • domain was denied. Corporate existence, and the power to take private property for public uses, can only be derived from legislative enactment. A grant of both are made indispensably necessary to the employment of the process invoked in this proceeding. Before a company can demand a judgment of condemnation, it must show that both have been conferred upon it by a valid law, and that it has substantially complied with the conditions, which the law has annexed to the exercise of its powers. How this may be proved, and under what circumstances those who have dealt with it as a corporation, may be estopped .to deny its corporate existence or powers, it is not material hereto inquire. No claim is made that this company has pretended to organize under any general law of the state; and,, on the other hand, it is not doubted, that it has effected a-regular organization in accordance with the provisions of the special act of February 23,1860. If that act is constitutional, no valid objection to these proceedings exists; if otherwise), the lands of the plaintiffs have been condemned without the-authority of lav,', and the judgment should be reversed.
3. From the preamble to this act, it appears, that the board» of directors of the 'Marietta and Cincinnati Company, repre sented to the legislature that the corporation was hopelessly insolvent; that a decree had been rendered in Ross county, at the suit of mortgagees, for the sale of the road and its franchises; and that an agreement had been made between a large majority of the mortgage creditors, and the board of directors, acting with the approbation of a majority of the stockholders,'intended to secure to stockholders and unsecured creditors an interest in the road after the sale; that if the mortgagees became purchasers at the sale, they should hold the property subject to a reorganization upon the basis of the agreement. That doubts existed whether the sale would invest the purchaser with the franchises' and charter of the company, and " to settle said doubts," it was enacted that, if a sale was made and confirmed as provided in the decree, "all of the franchises of said company shall thereby pass to and vest in the purchaser or purchasers, and such purchaser or purchasers shall become invested with the said charter, and be entitled to reorganize thereunder by the creation of a stock, not exceeding eight millions of dollars, and by the election of a board of directors, with all the rights and privileges and .subject to all the liabilities, except as hereinafter provided, of .said company." That " all the property and franchises so decreed to be sold, shall forever remain exempt from the •claims of all creditors and stockholders, existing before such •sale and reorganization;" that preferred stock might bo -created to carry out the terms of the reorganization; and that •the directors should not incur debts without the concurrence -of two thirds of the stock represented at a meeting, nor the •corporation beyond, one third of the capital stock of the company. The other provisions of the act are not material.
The plaintiffs -insist that this act is in conflict with the first .and second sections of the thirteenth article of the constitution of the state; that it is an attempt to create a corporation out of the purchasers of this property, and by .special act to confer upon them corporate powers, and is therefore null and void. The sections referred to are as (follows:—
Sec. 1. " The general assembly shall pass no special act conferring corporate powers."
Sec. 2. " Corporations may be formed under general laws ; but all such laws may, from time to time, be altered or repealed."
The defendant's counsel insist that the act does not assume to confer corporate powers, but is simply declaratory of the effect of a sale of the road and franchises under the decree; that the object of the act is to remove doubts as to the effect of such a sale, which it does, not by conferring corporate powers, but by declaring that the sale shall transfer to the purchasers the powers and capacities theretofore conferred upon the Cincinnati and Marietta Company, which it sanctions as an incident of the sale and purchase, including the right of the purchasers to reorganize, without which the purchase of the franchises would be a barren acquisition in their hands. That the transaction assumed this form, there is no doubt; but this does not relieve us from the necessity of inquiring what it was in substance. Constitutional provisions would be of little value if they could be evaded by a mere change of forms. These provisions of the constitution are too explicit to admit of the least doubt, that they were intended to disable the general assembly from either creating corporations, or conferring upon them corporate powers, by special acts of legislation. It was intended to correct an existing evil, and to inaugurate the policy of placing all corporations of the same kind upon a perfect equality as to all future grants of power ; of making such laws applicable to all parts of the state, and thereby securing the vigilance and attention of its whole representation; and finally, of making all judicial constructions of their powers, or the restrictions imposed upon them, equally applicable to all corporations of the same class. We must give such a construction to the constitution, as will preserve its great leading objects intact; and we now proceed to inquire, whether this enactment can stand consistently with the full and just effect of these provisons.
To enable us to see clearly what the act has attempted to accomplish, and what it must have effectually accomplished, to invest the defendant with the capacities and powers of the old charter, it may be well to consider what would have been their position, if this act had not been passed. They were mortgage creditors of the old company, having a decree for the sale of its road. If, without this act, they had become the purchasers of the property, they would also have been invested with the franchise of maintaining, operating, and making profit from the use of the road, according to the grant made to that company. But neither their mortgage nor decree gave them any right to, or lien upon, the corporate existence of the Marietta and Cincinnati Company; nor could any sale made under the decree have divested the stockholders of that company of this franchise, or have invested the purchasers with a corporate existence. The capacity to have perpetual succession under a special name, and in an artificial form; to take and grant property, contract obligations, and sue and be sued by its corporate name as an individual, were franchises belonging to the individual stockholders of that company, inalienable in the hands of. the artificial being thus created, and without any power " to transfer its own existence into another body, nor could it enable natural persons to act in its name, save as its agents, or as members of the corporation, acting in conformity to the modes required or allowed by its charter." Although it may be divested of its property, together with the franchise of operating and making profit from the use of its road, its corporate existence survives the wreck, and endures until the state sees fit to terminate it by a proper proceeding. It is hardly necessary to add, that a delegation of the power of eminent domain to a corporation as a necessary means to carry into effect the grant of its franchises, can not be made the subject of either grant or sale. These principles were so fully considered, and explicitly stated, in Coe v. The Columbus, Piqua and Indiana R. R. Co., 10 Ohio St. Rep. 372, as to require no further comments from us. •
Erom this hasty glance at the position of this company, and its mortgage creditors becoming purchasers of its property, without the aid of the act in question, we can now determine, with a good degree of certainty, what the act must have effected, to make good the claim of the defendant, that it is a corporation invested with the power of eminent domain.
There is no pretense for saying that the governing body of. this organization, has, in any way, succeeded to the stock of the company, or is simply continuing the organization, and wielding the powers of the old company. On the contrary, the act declares that the entire charter shall pass from the company and vest in the purchasers; that they [the purchasers] may create a stock not exceeding $8,000,000, and upon it elect a board of directors. Indeed, so careful has the act been to place an impassable gulf between the old organization and the new, between the thing as it was, and as it was to be, that it is expressly declared, that both property and franchises " shall forever remain exempt from the claims of all creditors and stockholders, existing before such sale and reorganization."
Now, if the defendants are invested with the capacities a.nd powers which they claim, what has effected the transfer of the franchise of being a corporation, from the stockholders of the company to the purchasers at the sale? And what has invested them with the additional powers of creating a new stock, instituting a new governing body, and electing a new board of directors ? Counsel answer, the judicial sale, sanctioned, and the effect declared by the legislative act. But it must be admitted, that the mortgages gave no right to this franchise; that it never was judicially condemned or ordered to be sold, and that a sale without the act, would not have affected it. If, then, the act alone, either directly or indirectly, has been legally operative to take this franchise from the stockholders and vest it in the purchasers, what is this but conferring upon them, by " special act," not only corporate existence, but very important "corporate powers?" What the general assembly can not do directly, it can not do indirectly. To provide for the creation of corporations, is a legislative function which, the general assembly is permitted to exert through general laws, but prohibited from applying to special cases; and it can no more authorize a court to decree into existence a particular corporation, or to make it result from a particular judicial sale, than it could accomplish the same purpose by a direct enactment. Although this judicial sale was very well calculated to obscure the naked reality of what was intended, it is no further significant than as fixing the time when, and the person upon whom, the general assembly intended to confer the corporate powers of the old charter, and those particularly specified in this enactment. If the mortgagees shall become purchasers at the sale, the charter shall pass to them, and invest them with the corporate powers to reorganize, create a new stock, and elect a new board of directors; and from thenceforth no right of any former stockholder or creditor shall be recognized to exist — is the substance of the enactment. It is said these are not rights newly conferred, but simply declared as the result of the judicial sale. It will not do to deceive .ourselves with mere forms of expression. It is certain that the mortgagees, as such, were invested with no corporate capacity; and it is equally certain that a mere purchase at the sale would have invested them with none; if they have it, then, it must have arisen, in some way, from the legal effect of the legislative enactment; and as without the enactment, they had it not, and, with the enactment, are invested with it, it would seem-to follow that it was not only conferred by the enactment, but also newly conferred. It does not belong to human power to make that which is false, true by declaring it to be so. A statute in this form, although inoperative to change the fact, or rights dependant upon the fact, may nevertheless have its effect as a new and prospective legislative regulation. The legislature declared that the water craft law, as originally passed, extended to causes of action arising outside of the limits of the state; but the supreme court refused to give the declaration effect, and upheld the statute as prescribing a new rule for future cases. If in the case before us, tbe legislature intended to declare as a fad, that tbe judicial sale would, as a legal effect, invest tbe purchasers with corporate capacity, they declared to be true what this court has judicially settled was untrue. The only other effect which their enactment could have, would be derived from the supposed legislative power, either of giving to the sale the new and further effect of investing the purchasers with the corporate capacity of the old company, or of conferring the same powers directly upon them — and, thus, in either way, of investing these persons with corporate capacity and powers, by a "special act."
We have examined this question with much care, not only with a view of giving a proper construction to these important constitutional provisions, but also of subjecting the defendants to as little embarrassment as possible in the control and management of an important line of railroad communication. But in whatever way we have been able to view it, we are unanimous in the opinion that the general assembly mistook its powers in the passage of the act in question, and that the defendants can derive no authority from it. Our conclusion is perhaps the less to be regretted, as the tenth section of the general law of April 11, 1861, for the sale and reorganization of railroads, seems to have fully provided for this case, and to enable the defendants to put themselves on a perfect equality with all other companies similarly situated, in the state.
The judgment of the probate court, and that of the common pleas affirming it, must be reversed.
Brinkrrhoee, C.J., and Scott, Wilder, and White, JJ., concurred.