Case Name: The People, Resp'ts, v. The Equity Gas Works Construction Co. et al., Impl'd, App'lts
Court: City Court of Brooklyn
Jurisdiction: New York
Decision Date: 1893-04-03
Citations: 52 N.Y. St. Rep. 317
Docket Number: 
Parties: The People, Resp'ts, v. The Equity Gas Works Construction Co. et al., Impl'd, App'lts.
Judges: 
Reporter: New York State Reporter
Volume: 52
Pages: 317–319

Head Matter:
The People, Resp'ts, v. The Equity Gas Works Construction Co. et al., Impl'd, App'lts.
(City Court of Brooklyn. General Term,
Filed April 3, 1893.)
'Corporations Forfeiture of charter— Restraint from exercising CORPORATE POWERS NOT GRANTED.
The Equity Gas Company was organized in 1874, and was given three years in which to organize and commence business by a special act of that year which bound it to furnish gas for two dollars a thousand feet. It did not commence business for ten years and not until after the price of gas was fixed at $L50,_when it contracted with the defendants to lay its pipes. Eela, vaa,t the Equity Gas Company by its delay in commencing business forfeited its charter and its corporate powers ceased, and that an action to restrain the defendants from laying its pipes in the streets of the city could be maintained under sub. 3 of § 1948 of the Code, as an action to restrain them trom exercising corporate rights not granted by the law of the state.
Appeal from interlocutory judgment overruling demurrer to the complaint.
Action to restrain the laying of pipes of the Equity Gas Company in the streets of Brooklyn on the ground that the corporate powers of the company have ceased and been forfeited by operation of law.
Simon Rosendale, att'y gen'l, for resp'ts; Sullivan & Cromwell (Wheeler H. Peckham, of counsel), for app'lt, Construction Company; William A. Poste, for app'lt, Devlin.

Opinion:
Clement, Ch. J.
This is an appeal from an interlocutory judgment overruling the demurrer of the defendants, who content! that the complaint does not set forth facts sufficient to constitute a cause of action. In the complaint the plaintiffs allege, inter alia," that the city of Brooklyn is a municipal corporation and that its streets are public high wavs-of the state of New York and of the plaintiffs; that the Equity Gras Light Company, a defendant in this action, but not an appellant, was duly organized by articles of association filed in the office of the secretary of state in January, 1874, pursuant to chap. 37 of the Laws of 1848, which, at that time, was the general law for the incorporation of gas companies ; that an act of the legislature affecting said company was passed and is designated as chap. 144 of the Laws of 1874; that said company has no right or franchise to lay gas pipes in this city for the reason that the corporate powers of said company have ceased: that the said company was subject to a provision of the Revised Statutes, that the corporate powers of any corporation should cease which should not organize and commence the transaction of its' business within one year from the date of its incorporation.
After some hesitation, I conclude that this action can be maintained against the appellants under subdivision 3 of § 1948 of the Code of Civil Procedure. Whether or not the action can be upheld against the Equity Gas Light Company is not before us. The counsel for the appellant, Devlin, admits, in his brief, that, on the facts, an action could be brought under said § 1948, but contends, on the authority of the Attorney General v. Utica Ins. Co., 2 Johns. Ch., 371, and Attorney General v. Bank of Niagara, Hopkins, 354, that no action in equity well lie to enjoin the exercise of corporate powers. The court of chancery had no such jurisdiction up to the adoption of the Revised Statutes. By § 31, 2 R. S., 462, the chancellor was empowered to restrain, by injunction; a corporation or individuals from exercising any corporate rights not granted by law. See People v. Ballard, 134 N. Y., 269, note, 276; 48 St. Rep., 166. On the adoption of the new Code, the sections in point of the Revised Statutes were repealed and reincorporated in § 1948 (see § 432 of old Code) and 1955. I am of opinion that this action may be treated as brought to restrain the appellants from exercising corporate rights not granted to them by the law of the state.
The legislature passed an act that the Equity Gas Light Company should have three years to organize and commence the transaction of its business. The general provision is, that if a company does not organize and commence the transaction of its business within one year from its incorporation its corporate powers shall cease. 'The Equity Company did not commence the transaction of business for over ten years. When the act of 1874 was passed, gas was selling in Brooklyn at three dollars per 1,000 feet. The company in question, by an act presumed to be drawn in its interest, agreed to furnish gas within three years (1877) at two dollars per thousand. Nothing was done under the act until the price of gas was, by statute, fixed at $1.50 per thousand. The public would have been benefited if the company had complied with its charter. As it is now, a stale charter is revived for the benefit of its stockholders, who have failed to keep their contract with the people.
If a self-executing forfeiture can exist in a charter, it seems to me that it should be so held in this case. In the Winfield R. R. case, 72 N. Y., 245; 75 id., 335, it was provided that, 'the corporate existence and powers shall cease; " and in the Steam Transit case, 78 N. Y., 524, the words in point were, "this act and all the powers, rights and franchises herein and hereby granted shall be deemed forfeited and terminated." In the case before us, the words " its corporate powers shall cease " are plain, and the legislature intended that if gas was' not furnished at two dollars per thousand feet in 1877, then that the Equity Company should pass out of existence.
Judgment affirmed, with costs.
Yah Wyok, J., concurs.