Court Opinion

ID: 3591418
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:00.66312+00
Date Added: 2024-06-11T13:56:26.906817
License: Public Domain

The complaint averred, that the defendant was a corporation, created by the laws of the State, and carriers for hire of passengers and freight in and by railroad, and other conveyance, owned and employed for that purpose; that for the purpose of conveying passengers, coming from and going to the village of Schaghticoke, by or on said defendant's railroad, it did use and employ a stage drawn by horses, to convey such passengers to and from the station nearest said village, about one mile distant; that said stage was wholly under the control of said defendant; that in March, 1857, the plaintiff entered and became a passenger in said stage, with the intention of being carried from said village to Troy, at and for the regular fare charged therefor; that plaintiff, then and there, undertook to pay said fare; and that defendant assumed, and undertook to carry said plaintiff by said conveyance and cars, and plaintiff then and there became a passenger. That defendant not regarding its undertaking, did negligently conduct the said stage, whereby it was overturned, and plaintiff injured, c. The answer was a denial.
When the plaintiff rested his case, the defendant moved for a nonsuit, on the grounds: *Page 174 
1st. That no contract, express or implied, had been proved between the parties.
2d. That the defendant was a common carrier only when transporting freight or passengers on its road, and had not legal capacity or power under its charter to contract to carry the plaintiff by stage from Schaghticoke to the railroad station, and that any such contract was void.
The motion was overruled, and a verdict was taken for the plaintiff, upon which judgment was entered. That judgment having been affirmed at General Term, the defendant appealed to this court.
The questions in this case arise on the motion for a nonsuit. In considering them, the proof is to be taken most strongly against defendants. Thus considered, these facts must be regarded as established. That the defendant is a corporation, created by the laws of this State, authorized to construct a railroad from Troy to the State line, and operate the same in the transportation of freight and passengers; that its road approached within about a mile of Schaghticoke village, at which place it had a station; that it had a contract with one Downs to transport, by stage, its passengers to and from the station and village; that in March 1857, the plaintiff got upon one of said stages on its way from the village to the station, without purchasing a ticket for the cars, although Downs had tickets for sale, intending to take the cars at the station for Troy; that on the way to the station, the stage was overturned by the negligence of the driver, and the plaintiff injured; that the plaintiff did not then take the cars, nor did he at that time become a passenger on the cars; or pay, or offer to pay, the defendant for his ride on the stage, or on the cars.
The first question is, was there any contract, express or implied, established by the proof? This line of stages had only been chartered by the defendant, to take its passengers to and from the station, without fare; not to take travelers, or persons desiring to pass between the village and station simply with or without pay. The plaintiff was not such a *Page 175 
passenger; he had not purchased a ticket entitling him to the rights of a passenger on the railroad, nor had he entered upon the cars, whereby he became liable to pay, so as to establish between him and the corporation the conventional relation of passenger and carrier. If it was conceded that the charter of this stage was within the incidental powers of the corporation, it could only reach to the transportation of its passengers, for an incidental power is only that which is directly and immediately appropriate to the execution of the specific powers granted by the act; hence, until the conventional relation was established, the plaintiff had no right upon that stage as against the defendant, and the defendant owed him no duty.
As a passenger between the village and station, simply, he was not a passenger of the defendant. It had not chartered the stage for such purpose; it could not legally engage in such traffic; the plaintiff did not pay for such passage, and the defendant could not compel payment; the right of compensation for such ride belonged to the stage proprietor, not to the defendant, as the service was outside the charter of defendant. The plaintiff's intention of becoming a passenger was not sufficient. It was still at his option, whether he would, or would not, enter upon defendant's cars. Had he arrived safe at the station, and then seen fit to ride back to the village, he would have violated no contract, express or implied, with the defendant. The plaintiff bases his action entirely upon contract arising from his relation to the defendant by reason of being upon a stage, which it had chartered to carry a particular class of persons; but as he was not one of that class, and, as against the defendant, had no right upon the stage, and as no express or binding agreement was proved, none can be implied; therefore, the plaintiff entirely failed to make out a cause of action against the defendant.
The defendant, however, further insisted that the corporation had not power to enter into a contract to carry passengers by stage, even between the station and village. On the other side, it is insisted that this business of transporting passengers *Page 176 
at this place, was one of the incidental powers of the corporation, and if not, that defendant is estopped from denying the binding obligation of the contract relied on.
This case does not involve the question as to the power of railroad corporations to form connecting lines, and their liability thereunder, as common carriers, beyond the line of their roads.
The special charter under which the corporation defendant was created, authorized it to construct and operate a railroad. By the general statute it had the power of succession, of suing and being sued, of using a common seal; the right to purchase, hold and convey real and personal estate, as its purposes required; to appoint officers and agents, and make by-laws; and in addition to the powers thus enumerated and expressly given, by its charter, the statute declares that no corporation shall possess or exercise any powers, except such as are necessary to the exercise of the powers so enumerated and given. (1 R.S., 599, § 173.)
Much is claimed for corporations under this last clause of "necessary powers;" they are usually denominated "incidental powers." But it is not every act of a corporation outside of its declared powers, that can be classed as incident to the purposes of its creation. As I have said, before, "an incidental power is one that is directly and immediately appropriate to the execution of the specific power granted, and not one that has a slight or remote relation to it." (Hood v. N.Y. and N.H.R.R. Co.,22 Conn., 1.)
"Surely, running stages and steamboats, are not necessary to the execution of the specific power given to the defendant." Perhaps by such means, a few more passengers might be obtained to travel upon the railroad, and the public at that place might be better accommodated; but stages and steamboats are not necessary to enable the corporation to run its cars over its road. When the passengers of defendant pass off the line of its road, they pass beyond its jurisdiction, and the company could no more contract to carry them one mile by stage than it could one hundred miles. The *Page 177 
question is not one of degree, but of power. "If a railroad corporation could run a line of stages, as incident to its business, because it would facilitate its passenger traffic, it might run a saw-mill on the line of its road as well, because it would increase its lumber freight."
Transporting persons or property by stage is not among the powers given this defendant by its charter, nor enumerated within the general statute, or necessary to the exercise of those powers. Chartering this stage, even for transporting its passengers to and from the station and village, was in excess of its powers; and was particularly so, if the charter was for general purposes. In either case, the contract was ultra vires
and void.
Justice SELDEN says, in Bissell v. M.S. and N.I.R.R. Co. (22 N.Y.): "The real ground upon which ultra vires rests, and the only one upon which it has, to any extent, been judicially based, is, that contracts of corporations which are unauthorized by their charters are to be regarded as illegal, and therefore void." "That there are three classes of illegal contracts; malain se, mala prohibita, and in contravention of public policy; and that contracts of corporations not authorized by their charters are illegal, because they are made in contravention of public policy; and contracts, which do in reality contravene any principle of public policy, are illegal and void."
"The public have an interest in railroad corporations; they are regarded as public institutions; are endowed by the legislature with valuable franchises, and important privileges, which give them great advantages over individuals; and as the public has an interest in their creation, so it has equally an interest in the nature and extent of the powers conferred, and is deeply interested in their being confined to the exercise of their legitimate powers," "Every additional power usurped by a corporation, extends its advantages over persons unincorporated. If a bank is permitted to trade in merchandise, it comes in competition with others so employed. If a railroad company is permitted to build and sail ships, it comes *Page 178 
in competition with others engaged in commerce;" or, if permitted to run stages to and from its road, it comes in competition with others engaged in conveying passengers by stage; and so of every other class of business.
The importance of limiting the powers of corporations was appreciated and acted upon by the legislature, and the courts should not, by nice and subtle distinctions, or loose construction, fail to keep these soulless institutions within the limits fixed by the acts creating them.
It is claimed, that the defendant, having engaged in the business of staging, and having entered into the contract with the plaintiff, is estopped from denying the binding obligation of such contract. When an action is brought by a third person, against a corporation, to enforce its contract, and the contract is one, in which its want of power would be apparent, by comparing the contract with the terms of its charter, the party dealing with the corporation, is presumed to have knowledge that the contract is not within the provisions of its charter; and, in such case, the defence of ultra vires, is admissible, and available. This principle is distinctly sustained in Safford v.Wyckoff (1 Hill, 11.) That was an action against the defendant, as the president of a bank, organized under the free banking act of 1838, upon a time draft drawn upon a New York bank in favor of one Dodge, and indorsed to the plaintiff. The Supreme Court held, 1st. That the bank had no authority to issue drafts on time; and, 2d. That such fact constituted a good defence to the action. The case was afterwards reversed by the court for the correction of errors (4 Hill, 442), but upon the ground that the bank had power to issue such drafts. Its reversal, however, in no manner affected the other point.
In McCullough v. Moss (5 Denio, 567), the court for the correction of errors held, that a corporation could not be bound by its agents for acts not within the powers conferred upon it by its charter; that such acts were void. So in Leavitt v.Palmer (3 Comst., 19), a case with which the bench and the bar of this State are quite familiar, the question was *Page 179 
distinctly presented, whether a corporation could avoid its own contract, by showing that it was made in contravention of the provisions of a public statute, and it was held that the notes sought to be enforced, having been issued in violation of law, were illegal and void, and could not be enforced against the company. (See, also, Talmage v. Pell, 3 Seld., 528.)
I am, therefore, of the opinion:
1st. That because the conventional relation of passenger and carrier never existed between the plaintiff and defendants, no contract, express or implied, was established.
2d. That the charter of the stage, as proved in this case, was not authorized by defendants' charter, was not within its powers, and therefore, the acts of its officers in making such contract, was ultra vires and void.
3d. That the corporation may avail itself of such invalidity as a defence.
4th. That the plaintiff should have been nonsuited.
Judgment of the General Term and of the Circuit reversed, and new trial ordered.
All the judges for affirmance except JAMES, J.
Judgment affirmed. *Page 180 
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