Case Name: The State of Ohio ex rel. John Drake v. James M. Roosa et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1860-12
Citations: 11 Ohio St. 16
Docket Number: 
Parties: The State of Ohio ex rel. John Drake v. James M. Roosa et al.
Judges: Brinkerhoff, C.J., and Scott, Sutliff, and Gholson, JJ.; concurred.
Reporter: Ohio State Reports, New Service
Volume: 11
Pages: 16–29

Head Matter:
The State of Ohio ex rel. John Drake v. James M. Roosa et al.
A special act passed prior to the adoption of the Constitution of 1851, authorized commissioners therein named to open books, receive subscriptions to capital stock, and thereupon to organize a corporation under it. No steps were taken by the commissioners toward such subscription and organization until after the Constitution took effect, but such subscriptions were made and organization effected, within the period limited by said special act for that purpose — Held:
1 That the special act was not abrogated or repealed by the second seetion of Article 13, of the Constitution of 1851, nor by the act “ to create and regulate railroad companies,” passed May 1, 1852.
2. That said second section is prospective, and not retrospective, in its intent and application, conferring merely an authority to legislate, and does not repeal unaccepted acts of incorporation, enacted under the Constitution of 1802. Citizens’ Bank of Steubenville u. Wright, Auditor, 6 Ohio, St. Rep. 318, followed and approved.
Information in the nature of quo warranto.
On the 16th day of March, 1860, Mr. Attorney General Wolcott, on the relation of John Drake, a citizen of Warren county, filed in the supreme court an information in the nature of quo warranto, in the name of the state of Ohio, giving the court to understand, and he informed “ that James M. Roosa,. Jacob Egbert, Daniel Yoorhis, Durbin Ward, James M. Eisher and James Boyer, of Warren county, and John Cox, of Hamilton county, Ohio, for the space of three months last past,, and more, have assumed to exercise, and do yet claim to exercise, under the name of the Cincinnati, Lebanon and Xenia Railroad Company, without any lawful grant, warrant or right whatever, the privileges and franchises following, to-wit: 1. The right to exercise corporate powers and franchises as a railroad company, to sue and be sued, to plead and be impleaded. 2. The right to construct a railroad from Xenia through Lebanon to Cincinnati; and to purchase, receive and hold all real and personal estate necessary for the proper construction and maintenance of said road. All of which authorities, privileges and franchises the said James M. Roosa, Jacob Egbert, Daniel Yoorhis, Durbin Ward, James M. Eisher, James Boyer and John Cox, during all the time aforesaid, have usurped, and still do usurp, to-wit: at the county of Warren and State aforesaid, to the damage and prejudice of the State of Ohio, and against its dignity.
“ The said attorney general, therefore, prays the consideration of the court here in the premises, and that due process of law’ may be awarded against the said James M. Roosa, Jacob Egbert, Daniel Yoorhis, Durbin Ward, James M. Eisher, James Boyer and John Cox, in this behalf, so that they may be made to answer to the State of Ohio, by what warrant or authority of law they claim to have, hold, assume, exercise and enjoy the several powers, privileges, authorities, rights and frachises hereinabove mentioned.”
On the 18th day of October, 1860, the defendants in answer to the information, admit that since their election and qualification as directors of the Cincinnati, Lebanon and Xe nia Railroad Company, to-wit: about the 20th of August, 1859, they have assumed to exercise, and still claim the righ< to exercise the privileges and franchises mentioned in the in formation, for the reasons, in substance : that on the 22d day of March, 1850, the general assembly of Ohio, passed au act incorporating said company, and vesting it with all thá privileges and franchises mentioned in the information, unde/ specified conditions, as to the subscription of stock, the meet ing of stockholders, election of directors, etc.; and that, iu compliance with those conditions, on the 22d day of November, 1852, books for the subscription of stock in said company were opened by a part of the commissioners named in said act of incorporation, and that stock to the amount of one hundred and five thousand dollars was subscribed, and that on the 29th of November, 1852, said commissioners and stockholders met and elected seven directors of said company, who were then legally qualified as such, and immediately organized by the election of a president, secretary and treasurerj and that said board of directors, and their successors in office, have, ever since, proceeded, under said act of incorporation, to exercise the rights, privileges and franchises therein granted; receive subscriptions of stock; surveyed, located and established the route of their railroad from Xenia through Lebanon to Cincinnati; contracted for the building of the same, and have expended large sums in its construction.
Wherefore, defendants insist, that as' directors of said company duly elected and qualified, they are entitled to use, exercise and enjoy all the privileges conferred upon said company by said charter.
To the answer of defendants a demurrer was filed.
Worthington & Matthews, for plaintiff.
The question is, whether the Cincinnati, Lebanon and Xenia Railroad Company so constituted has a legal existence as a corporation. We maintain the negative, upon the following propositions:
1. The act of incorporation does not by its terms create a present corporation. It simply provides the mode for its future organization. The subscription of stock to a certain amount was a condition precedent to its existence. Its members were the future subscribers of stock. 48 Ohio Local Laws, 284; Crocker v. Crane, 21 Wend. 211; Fire Department v. Kip, 10 Wend. 266.
2. The constitution (art. 13, secs. 1 and 2) provides the only mode by which, after it took effect, corporations could be formed, viz : under general laws.
It thus repeals all laws previously passed providing for the formation of corporations in a different manner, so far as they were merely in fieri; no rights having vested under them.
It can not be doubted that it is competent for the sovereign power, or even the ordinary legislative power, to repeal a grant of corporate franchises at any time before it has been accepted. Angell & Ames on Corp., secs. 81, 82; Falconer v. Higgins, 2 McLean, 196; Cov. and Lex. R. R. Co. v. Kenton Co. Court, 12 B. Monroe, 144.
It is a case of clear repugnancy between the previous statute and the constitution. No reasonable construction can reconcile them. The statute must, therefore, be held to be repealed. Cass v. Dillon, 2 Ohio St. Rep. 612; Citizens’ Bank v. Wright, 6 Ohio St. Rep. 338; The Perrysburg Canal and Hydraulic Company v. Fitzgerald, 10 Ohio St. Rep. 513; Aspinwall v. Com’rs. of Daviess Co., 22 How. 364.
3. If not repealed by the terms of the constitution, its repeal is worked by the passage of the act of May 1, 1852, which provides for the organization of railroad companies, and by necessary implication forbids any inconsistent mode after it took effect.
We rely also on the following cases: 10How. 395; 1 Paine, C. C. R. 55; 3 Ohio Rep. 576; 3 Dallas, 199; 1 Wash. C. C R. 322; 1 Hill (N. Y.), 324; 10 How. 72; 8 How. 113; 5 Cranch, 281; 6 Wend. 531; 13 How. 429; 3 How. 534; 1 Gallison, 181; 11 Pick. 350; 1 Wm. Blackstone, 451; 3 Burrows, 1456; 9 Barn. & Cress. 750; 4 Bing. 213; 4 Moore & Payne, 341, 351; 5 Ohio Rep. 494; 16 Ohio Rep. 571; 2 Peters, 492, 523.
Caleb B. Smith, also for plaintiff.
The question presented for the consideration of the couuin this case is, was the charter repealed by the new constitu tion. If it was, the attempt to exercise corporate power? under the special charter was a mere usurpation.
We assume, first, that the special charter was a mere pro position, on the part of the legislature, authorizing the creation of a corporation. Until accepted by the corporators, it did not assume the form of a contract, and was, therefore, liable to be repealed. It could have been repealed by the legislature at any time before it was accepted. Upon this point, we cite Angell & Ames on Corporations, sec. 82; Lin. & Ken. Bank v. Richardson, 1 Greenleaf, 81; Fire Department v. Kipp, 10 Wend. 266; Crocker v. Crane, 21 Wend. 211.
The next question is, was this charter repealed by the> constitution of 1851 ?
It was evidently the intention and policy of the new con stitution to inaugurate a new system in relation to corpora tions. It was intended to put an end to the practice of com ferring exclusive corporate powers and privileges by special, acts.
Those corporations which had been duly organized under special charters, were not affected by the constitution, because the acceptance of the charters, and the organization of the companies, upon the terms, and in the mode prescribed by the charters, made them contracts between the state and the corporators, and the rights which had thereby become vested,, could not be divested by the constitution. There were, however, on the statute books of the state, .when the constitution» of 1851 was adopted, a great variety of acts, passed by the legislature, authorizing the formation of corporations, but which had never been accepted by the corporators, and under which no organization had been made, no stock had been subscribed, and no rights had become vested.
This was the condition of the Cincinnati, Lebanon and Xe nia Railroad Company. Did these laws all continue in force after the constitution was adopted? Could the corporators, named in them, still accept the terms offered by the legislature, and organize, or form corporations, notwithstanding the adoption of the new constitution?
Section 1 of the schedule of the constitution, by implication, repealed all laws then in force, which were inconsistent with the constitution.
The charter under consideration was a law. It was not a contract, because it had not been accepted. It was a proposition on the part of the state to certain persons, authorizing them to form a corporation on certain terms. It was a law authorizing the creation of a corporation.
It comes then within the meaning of terms used in the schedule of the constitution. If then it was inconsistent with the constitution, it was repealed.
The 1st section of article 13 of the constitution is an express. limitation upon the legislative power. The 2nd section of article 13 defines the rule by which corporations may be formed; and upon the principle of the maxim, “ex-pressio unius est exelusio alterius,” they can be formed in no other way.
Whether the 2nd section of article 13 shall be held, as it was in the case of Citizens’ Bank of Steubenville v. Wright, 6 Ohio St. Rep. 328, to be “prospective only in its intent and application,” or whether it shall be held as a rule, governing the formation of corporations under previous as well as future laws, we think is wholly immaterial in this case. The free banking law of 1851 was decided, in the case above cited, to be in force after the adoption of the new constitution, not because the 2nd section of article 13 was prospective, but because that law was not inconsistent with the constitution.
The charter of the Cincinnati, Lebanon and Xenia Railroad Company was a special act, conferring special corporate powers upon one company. No others were allowed to share in the privileges conferred. It did not look to the same end, noi contemplate the same policy, as that specified in the constitution relative to corporations. This law provided for the formation of a corporation under a special law; the constitution provides that they may be formed under general laws The inconsistency between this special law and the provisions-of the constitution, is so clear and palpable that it is impossible to reconcile them. The repugnancy is so manifest that no argument or reasoning can render them consistent with each other.
We do not think, however, that the 2nd section of the 18th article of the constitution can be so construed as to make it operate merely as a limitation upon the legislative power. The terms “ may be formed,” refers to such acts as were necessary to bring into existence corporations. The legislature had no power to create or form corporations by its own action alone. They could grant the authority, but its acceptance by the parties to whom the power was granted, was essential to the formation of the corporation.
A fair construction of the constitution requires that a more enlarged construction should be given to the words “ may be formed,” than to limit them to a mere restriction upon the-legislative authority. The evident intention of the framers of the constitution was that no corporations should be formed, created or brought into existence, except under the general laws.
It can hardly be supposed that the framers of the.constitution, with the object in view, so clearly manifested, to prohibit the enjoyment of corporate privileges, except under general laws, equally open to all the citizens of the State, should have designed that the hundreds of unaccepted charters, now remaining upon the statute books, should be used as authority for the formation of new corporations.
Neither the case of Cass v. Dillon, 2 Ohio St. Rep. 607, nor that of Citizens’ Bank of Steubenville v. Wright, 6 id. 318, conflict with this construction of the section of the constitution under consideration.
The former case decided that a law authorizing a county to • subscribe for stock in a railroad company, passed before the the adoption of the new constitution, was not inconsistent with the 6th section of the 8th article of the constitution, which prohibits the legislature from passing any law to authorize ruch a subscription.
This section, which is, in direct terms, prospective in its operation, and refers only to the action of a subsequent legislature, did not repeal a law previously passed, conferring such authority.
The difference between the cases is this: Section 6 of article P, is in express terms confined to future legislative actions, *nd could be construed to repeal a previous law, giving the power contemplated, only upon the principle that nothing could be done under a previous law, which the legislature could not authorize by a new law. This rule of construction seems to have been repudiated by the court in that case.
But the rule of construction adopted in that case does not apply to the 2nd section of article 3. In that section the prohibition is not alone upon the legislative power, but upon all acts necessary to form corporations under special laws. The acceptance of the charter, the subscription of stock, and the election of officers, are as essential to the formation of a corporation as the passage of the law. Without these acts no corporation could be formed; and when the constitution provided that “ corporations may be formed under general laws,” it certainly prohibited the performance of such acts as were essential to its formation under special laws, whether previously or subsequently passed.
The Steubenville Bank case was decided upon the ground that the Free Banking law of 1851, was a general law providing for the formation of corporations, in the very mode provided for in the constitution, and was not, therefore, inconsistent with it.
The special law authorizing the formation of this corpora tion was inconsistent with the 2nd section of article 3; and we think was repealed by the constitution.
Ward, Williams, Smith and Thurman for defendants.
Durbin Ward for defendants.
I. We claim that the acts of 1848 and 1850 were not repealed by the new constitution of September 1, 1851.
1. Because the abrogation of a constitution does not legally operate to repeal the laws passed under it, while in force. Cass v. Dillon, 2 Ohio St. Rep. 608; Evans v. Dudley, 1 Ohio St. Rep. 437; and cases cited.
2. Because those statutes are not inconsistent with the new •constitution, and all such laws are recognized and continued in force by its provisions. Schedule, sec. 1.
3. Because all the clauses of the 13th article of the constitution are prospective, except the 4th section, and especially are the 1st and 2d sections prospective in their operation and effect. Cass v. Dillon, 2 Ohio St. Rep. 623; C. W. & Z. R. R. Co. v. Com’rs. of Clinton County, 1 Ohio St. Rep. 77; Citizens’ Bank of Steubenville v. Wright, 6 Ohio St. Rep. 322; State ex rel. Garret et al. v. Van Horne, 7 Ohio St. Rep. 327; State ex rel. Smead et al. v. Trustees of Union Township, etc., 8 Ohio St. Rep. 394.
4. Because a statute will not be held to be repealed, unless it is done by express words, or by a necessary irresistible implication. Dwar. on Stat. 52, 8, 9, 30, 33; Sedgw. on Oonst. Law, 123, 7, 8, and cases cited; Cass v. Dillon, 2 Ohio St. Rep. 607; Citizens’ Bank of Steubenville v. Wright, 6 Ohio St. Rep. 318.
II. 1. The act of May 1, 1852, did not repeal the act of 1848, for each relates to corporations, organized in a different manner; and the acts are not inconsistent.
2. The subscription of the $105,000 was a valid basis for an organization, and its invalidity, if established, could not defeat the incorporation after its acts of user. Redf. on Railways, 8; Walker v. Devereaux, 4 Paige Ch. Rep. 229.
III. 1. The corporation is one existing de facto, at all events; and all its obligations are binding for the purpose, at least, of closing its affairs, and all debts especially due to or from it can be legally enforced.
2. The quo warranto laws of the state can be applied to it, if it is found necessary, for the purpose of justice, even if the court should find that it has technically, no valid existence as a corporation.

Opinion:
Peck, J.
The only question raised upon the demurrer is, whether the act creating the Cincinnati, Lebanon and Xenia Railroad Company, passed March 22, 1850 (48 Ohio Laws, 284), was a valid and subsisting law, at the time of the subscription to its capital stock and its organization, in November, 1852.
It is claimed by the relator that, being a special act conferring corporate powers, and no step having been taken by the commissioners named therein, to procure subscriptions and organize under it until after the new constitution took effect, that it was by necessary implication thereby repealed. Secondly, it is claimed that if not abrogated by the new constitution, the special act was, nevertheless, repealed by the general law " to create and regulate railroad companies," of May 1, 1852 (Swan's R. S. of 1854, p. 197), enacted in pursuance of the new constitution, and providing for the organization of such companies in a very different manner, and which by necessary implication, it is said, forbids any inconsistent mode of organization after the new constitution took effect.
The provisions of the new constitution, to which this effect is attributed, are sections 1 and 2 of article 13, relating to corporations, which read 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."
It is said, and with truth, in 6 Ohio St. Rep., p. 328, that both these sections are prospective. The first section, in its terms, merely prohibits future special legislation conferring corporate powers, and does not, expressly nor by implication, abrogate former legislation of that character; and we think it equally manifest, that the 2nd section contemplates none other than future legislation in the creation of corporate powers, and this is apparent from the last clause of the section, " but all such laws may, from time to time, be altered or repealed." This reservation of the right to repeal all the laws authorized by the first clause, indicates clearly that the 2nd section, like the 1st, refers to future legislation alone, and that the two united, amount merely to an express authority to subsequent legislatures to pass general laws creating corporations, and prohibiting them from passing any special laws for such a purpose.
The general grant of legislative power in the constitution of 1851, Avould have sufficed for the purpose attained by the first clause of said 2nd section; but the manner in which the constitution was framed, each title being the work of a separate committee to which it had been intrusted, which strove to make the title confided to it perfect in itself, without much regard to the minuter provisions of other articles, will account for the repetitions to be found throughout the instrument, and the someAvhat different language in which they are clothed, so that the occurrence of such repetitions in language somewhat variant, will scarcely warrant us in attaching some occult and less obvious meaning to the peculiar language employed.
It is proper in this connection to notice the argument based upon the peculiar phraseology of the 2nd section — "corporations may be formed under general laws " — which, it is insisted, was resorted to, to meet cases like the one under consideration — a previous law authorizing the formation of a corporation, not then acted on, and to prohibit its subsequent formation. If this were so, the convention adopted language illy calculated to express their meaning; and had they so intended, they would doubtless have used a more simple and direct form of expression — one abrogating all unaccepted acts ' of incorporation. It is manifestly a grant of legislative power, and not the enunciation of a general principle. The existence of such grants did not probably occur to them, or if it did, they were content with the prohibition as to future legislation contained in the 1st section.
It is apparent that neither in the constitution of 1851, nor yet in the general statute of May 1,1852, " to create and regulate railroad companies," is there to be found any express repeal of the special act of March 22, 1850; so that the repeal, if any, is one by implication only. Repeals by implication are never favored; it being but reasonable to suppose, in the absence of'words of express repeal, that the legislature in enacting a law, presumed to have been passed with deliberation and a full knowledge of all existing laws upon the same subject, did not intend to abrogate or repeal any prior law relating to the same matter, or they would have expressly repealed it. Hence the rule that one statute does not repeal a prior statute upon the same subject, except in cases of very strong repugnance or irreconcilable inconsistency. If the acts may well subsist together, the prior act is not repealed. 5 Hill, 221; 2 Bail. S. C. 816; 6 Watts a.nd Serg. 209; 10 Barr, 442; 21 Penn. 37. " Or unless, in the latest act, some express notice is taken of the former, plainly indicating an intention to abrogate it." 5 Hill, supra. The same rules apply to repeals by the adoption of a new constitution. There must be such clear repugnancy, or a manifested intention to repeal, and, indeed, the constitution of 1851, in section 1, of the " schedule," declares that all laws in force when it took effect, and not inconsistent therewith, shall continue in force until amended or repealed.
With these rules to guide us, let us inquire whether there is any such clear and irreconcilable repugnance between the special act of March 22, 1850, and these sections of the new constitution. As we have seen, the constitution of 1851 prescribes a rule for future legislation merely, and does not, in words, interfere with laws enacted under the old constitution. How, then, can it be said that the two can not subsist together ?
It is very true that the act of March 22, 1850, did not ere ate a present corporation. It merely authorized the commissioners to open books, receive subscriptions, and thereupon to organize the company. It is also true that no steps had been taken by the commissioners toward such subscription and organization until after the adoption and taking effect of the new constitution; and it is equally true that it would have been competent for the legislature or the constitutional convention, at that time, to have repealed or abrogated such special grant. It is not, however, a question as to what it might have done, but as to what it did in fact do. And we think, as was determined in Citizens' Bank of Steubenville v. Wright, auditor, 6 Ohio St. Rep. 318, " that the 2nd section of the 13th article of the constitution of 1851, is prospective, and not retrospective in its intent and application, and that it is a grant of powers to the general assembly; the power, first, to authorize the formation of corporations under general laws; and, second, to alter or repeal those laws ;" and that it did not have the effect to repeal any special law passed prior to its adoption, authorizing the formation of a railroad corporation.
The second ground of demurrer, that the special act of March 22, 1850, was repealed by the general law " to create and regulate railroad companies," passed May 1, 1852, has already been incidentally answered. That act is, by its terms, limited to companies and associations to be organized under its provisions, and has no reference to the formation of companies under pre-existing laws,'except that existing corporations are authorized to accept certain of its provisions if they desire to do so, and contains no express repeal of former grants of corporate powers. The two acts may therefore well subsist together. The legislature at that time, no steps having been taken toward an organization under it, might have repealed the act incorporating the defendants, and it is possible they would have done so, if aware of its existence, and the fact that no subscription had been made to its capita] stock; but we can not, without violence to the well settled rules of statutory construction, hold that the law of May 1,. 1852, had any such effect.
Demurrer to answer overruled.
Brinkerhoff, C.J., and Scott, Sutliff, and Gholson, JJ.; concurred.