Court Opinion

ID: 7367059
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:52:41.497028+00
Date Added: 2024-06-11T16:20:47.886547
License: Public Domain

MAYFIELD, J.—
(dissenting). — I cannot fully concur in either the opinion or the decision of the majority. In my opinion the majority have in part misconstrued our statutory proceeding in the nature of quo warranto, under which this proceeding is filed. It is decided in this case that a private corporation, as an entity, may be proceeded against under section 5453 of *415the Code, for a mere failure to properly discharge the duties enjoined upon it by its charter; and that if it be shown that it has failed to properly discharge such duties, as to any of its franchise rights, it may be deprived of such franchise right, on account of such neglect, though its charter be not vacated nor its corporate life taken. I cannot agree to this. The statute does not so provide, and I know of no power or authority, in this court or any other court, to amend or extend a statute; and in my judgment this is the effect of the decision.
Our statutory system in the nature of, and as a substitute for, the common-law writ of quo warranto, provides in unmistakable language that, if the state desires to proceed against a corporation as such, the proceedings must be had under section 5450 of the Code; and that if you desire to proceed against- individuals for usurping office, or corporate or franchise rights, you must proceed under section 5453 of the Code. To show that this is true, you have to read the two sections in connection with each other. They read as follows:
“An action may be brought, in the name of the state, against the offending corporation, on the information of any person for the purpose of vacating the charter, or annulling the existence of any corporation, other than municipal, whenever such corporation — (1) Offends against any of the acts creating, altering, or renewing such corporation. (2) Violates the provisions of any law, by which such corporation forfeits its charter, by abuse of its powers. (3) Has forfeited its privileges or franchises by failure to exercise its powers.
(4) Has done or omitted any act which amounts to a surrender of its corporate rights, privileges, and franchises. (5) Exercises a franchise or privilege not conferred on it by law.” — Section 5450.
*416“An action may be brought in the name of the state against the party offending, in the following cases: (1) When any person usurps, intrudes into, or unlawfully holds or exercises any public office, civil or military, or any franchise within this state, or any office in a corporation created by the authority of this state. (2) When any public officer, civil or military, has done •or suffered any act, by which, under the law, he forfeits his office. (3) When any association, or number of persons, acts within this state as a corporation, without being duly incorporated.” — Section 5453.
The only possible event or contingency in which a corporation can be proceeded against, under the latter section, is expressly provided in section 5456 of the Code, which reads as follows: “When the action is against persons acting as a corporation without being duly incorporated, the alleged corporation may be ■joined as a party defendant, and such joinder does not admit its corporate existence, or otherwise prejudice the case of the plaintiff; a judgment and execution may go against it by its alleged corporate name, as in other cases.”
Our statutory system had existed for more than 50 years before section 5456 ever appeared as a part of it, and before which there was no authority for proceeding against the corporation under section 5453, and there is now no authority except in the case provided for in the statue. If the corporation could have been proceeded against under section 5453, prior to the adoption of section 5456, which first appeared in the Code of 1896, what was the use of section 5456, and why limit its application to the case mentioned in the statute? That section 5453 did not apply to corporations, and that they could not be proceeded against by virtue of it was in effect decided by this court in the case of Leigh v. *417State, 69 Ala. 261, 266, in which, the Solomon of this court, speaking for the court, and with special regard to the subject of section 5453, then section 3422 of the Code of 1876, before the enactment of section 5456. of the present Code, said: “Our statutory system, and the common-law writ, its prototype, have ordinarily but two functions; and the writ runs only against a natural person, or collection of natural persons. It inquires by what right the person proceeded against exercises official authority, and it determines the question of his right to exercise such authority. And it inquires by what right any number of persons, one or more, exercise or enjoy a franchise, and determines that'right. The judgment either quashes, or, what is the same thing, dismisses the information, or it ousts from the office or franchise. ‘It can afford no relief for official misconduct, and cannot be employed to test the legality of the official action of public or corporate officers.’— High, Ext. Leg. Rem. § 618.”
It having been thus decided that the writ issued under section 5453 ran against “natural persons or a collection of natural persons,” and not against artificial or corporate persons, and that its only object was to inquire “by what right any number of persons, one or more, exercised or enjoyed a franchise, and determined that right,” and that it afforded “no relief for official misconduct, and that it could not be employed to test the legality of the official action of public or corporate officers,” and the statute having been re-adopted with this theretofore undoubted construction, section 5456 was adopted as a part of the system to authorize proceedings against the corporation in one case only, mentioned in section 5456 of the Code.
It is true that section 1 of the Code provides that the word “person,” when used in the Code, includes “cor*418porations”; but this section, or its progenitor, was early construed to have limitations, one of which was that the word “person” did not include “corporation,” if to so read it rendered the statute inharmonious — as it will certainly do in the case at bar. — Mayor v. Rowland, 26 Ala. 498, 503. In this case it was said: “The statute, it is true, authorizes any person to be summoned as a garnishee (Code, § 2516), and section 1 of the Code declares that the word ‘person/ when used in it, includes a corporation as well as a natural person; but this must be understood only of such provisions as will allow this signification to be given without violating their evident sense and meaning. When by the context it is clear no such meaning was intended, and when by thus construing the word ‘person’ it would render the Code, which must be taken as a whole, incongruous, we must depart from the letter, to give effect to the spirit and manifest meaning and intent of the Legislature.”
The above-quoted language from Chief Justice Chilton could never be more aptly applied than in the case at bar. Here the statutes clearly say: “You may proceed against corporations and persons by the statutory action in the nature of quo warranto. If you desire to proceed against the corporation, you must proceed under section 5450 of the Code, for one of the five offenses enumerated in that section. See section 5450. If you desire to proceed against a person, or an association of persons, you must proceed under section 5453 of the Code, for one of the three offenses or grounds mentioned in this section.” This remained the law continuously, until the Code of 1896 was adopted, when section 5456 (present Code) was adopted, and this provision ingrafted upon the law an exception to the effect that when the proceeding was under section 5453, against persons, for acting as a corporation without being duly *419incorporated, then, and only then, the “alleged” corporation may be joined as a party defendant, bnt that the joinder, in snch case, did not admit its corporate existence, or otherwise prejudice the case of the plaintiff..
This is therefore the only instance in which a corporation may be proceeded against under section 5453., And it has been only in such a case that a corporation, has ever heretofore been proceeded against under section 5453. In the case at bar, no persons are proceeded against, for acting as a corporation without being; duly incorporated, and hence section 5456 cannot apply. I contend that under all, or any, of the facts alleged in this complaint, it not only appears that no proceeding.can be had under section 5453, but that it also appears, affirmatively and authoritatively, that the state cannot proceed under this section. If any coloring of a case is - made, it is under section 5450, and not under section. 5453 or section 5456.
I do not believe that, before the filing of this information in the lower court (except as I shall further show), it was ever contended that a corporation, as such, could be proceeded against under section 5453, except in the-one solitary contingency provided for in section 5456. I may be wrong in this, but I do not think I am. I have-of necessity been required to examine all the statutes of' a general nature, which have ever operated in this state, and of necessity to examine every decision and opinion of this court, from the first one reported in Minor to the-the last one reported in 174 Alabama; and I must confess that I have never seen a statute or a decision (unless it be the one in Tillis v. Brown, 154 Ala. 403, 45 South. 589) until this one, which in my judgment would authorize a proceeding under section 5453 of the Code, under the facts averred in the information in this case.. To my mind this decision and opinion is revolutionary •„ *420it institutes, and gives sanction to, a practice never heretofore dreamed of, and which is counter to everything ever heretofore enacted by the Legislature or decided by this court.
It was never contemplated by those who drafted or enacted section 5453 of the Code that one of the franchise rights of a corporation properly granted, should be taken away from it, for a failure to exercise such franchise right, or for the improper exercise thereof. This much is made certain by section 5450 of the Code, which makes a failure to exercise its privileges, franchises; or powers a ground for forfeiture, for the complete vocation of its charter, for the annulment of its existence as a corporation.
Under our statute a forfeiture of any one of a corporation’s franchise rights is made a specific cause or ground for the annulment of the corporation’s entire charter and its corporate existence. I concede that but for our stattues a franchise right, once granted, might be taken from a corporation for “neglect, abuse, or surrender,” without further disturbing its charter. But our statute (section 5450 of the Code) makes a forfeiture of any franchise right or power a ground for vacating the charter or annulling the existence of the corporation under the same section, and provides that in such cases “judgment must be rendered that the corporation be excluded from such corporate rights, privileges, and franchises, and be dissolved.” The only instance in which a corporation can be proceeded against for exercising a given franchise not granted or conferred is where the corporation itself has usurped, or unlawfully holds or exercises, such franchise. Section 5453 of the Code applies only where there is a holding, or an exercise, of franchise rights by individuals without authority of law; it has not now, and has never had, *421any application to a failure to hold or to exercise the powers of an office or a franchise, which the person or the corporation had the legal right to hold or to exercise, nor to a negligent or corrupt holding or exercise thereof. For such offenses the person is impeached and removed from office, or the corporation is deprived of its franchise and its charter, as a penalty. Or, if the offense is not serious, long-continued, willful, or inexcusable, the proper performance of these duties is sometimes compelled by mandamus, or the breach thereof prevented by injunction or some other appropriate remedy.
In other words, section 5453 is to prevent action by a person or corporation not lawfully authorized to act; while section 5450 is to punish a corporation which is authorized to act, for its failure to act, or for the doing of the act improperly, and to prevent it from further exercising rights which it possesses.
There is no complaint in this case that the corporation proceeded against has no right to exercise the functions here complained of; the whole theory is that the corporation has the right, and that it is its duty, to exercise the franchise rights, but that it has failed to properly exercise such franchise rights and to discharge the duties imposed upon it by the grant which conferred the franchise rights. For this reason, there is shown no color of right to proceed under section 5453 of the Code. The proceeding, therefore, of necessity, must be under section 5450 of the Code. It cannot be under both see1 tions, because the facts necessary to authorize the proceeding under the one would absolutely, affirmatively, deny the right to proceed under the other. I do not mean to say that the information or complaint at present filed in this case is sufficient to authorize the state to proceed under section 5450 of the Code; but I do say *422that the facts alleged affirmatively show no right to proceed under section 5453.
The basic error in this decision, and in the majority opinion, is in treating a mere failure to perform and discharge the duties imposed by the grant of franchises, as an “unlawful exercise” of the franchises within the meaning of section 5453 of the Code. I take it that the “unlawful exercise” of a franchise, within the meaning of this section, is the exercise of the franchise without authority of law. This interpretation is conclusively borne out by the context, and by other words used in the same phrase and connection, such as “usurps” and “intrudes into.” You cannot usurp nor intrude into an office, if the law makes it your duty to hold the office and to exercise the powers and discharge the duties thereof; and if the law confers rights, and imposes duties, upon you as to such office, your failure, total or partial to exercise the functions and to discharge the duties, does not make you an intruder or an interloper. The same is necessarily true as to a franchise which a corporation as well as an individual may hold and exercise. This seems to me to be so plain that argument or reasoning cannot make its meaning clearer or more certain.
If the information in the nature of quo warranto is intended to oust the defendants from acting as a corporation and to test the fact of the incorporation, it must of necessity be filed against individuals; but if the object is to effect a dissolution of the corporation which has an admitted existence, or is merely to oust such corporation from some franchise which it is unlawfully usurping, the information must then be filed against the corporation as an entity.
If the proceeding is to forfeit a franchise lawfully acquired and held, for neglecti of public duties enjoined *423by the grant of the franchise or by other law, or for abuse of a franchise lawfully acquired and held but wrongfully exercised, the information must set forth the facts with that exactness required in pleadings claiming penalties. The information in such case must not only show a sufficient cause of forfeiture, but must set forth the facts and the data on account of which the forfeiture is demanded. If, however, the object of the proceeding is to oust individuals or corporations of franchises which the state asserts that it has never granted, then the proceeding is analogous to the ancient writ of quo warranto which was a prerogative writ, and in such case its purpose is merely to require the defendant to show by what right he holds or exercises the office or franchise. In such case the information has no analogy to an indictment or to a declaration. To illustrate by referring to our statutes, if you proceed under section 5450 of our Code, upon complaint or information, as it is indiscriminately called, the allegations are analogous to those in indictment or declarations claiming penalties, and must clearly and succinctly set forth the facts and data which show a forfeiture of the charter or franchise right which is alleged to have been granted; but, if you proceed under section 5453 of the Code, you merely require or request the defendant to show Ms or its authority for holding the office or usurping the franchise which you allege has never been granted to or conferred upon the defendant. In this last case it is a complete answer to the information to say that the sovereign has granted to or conferred upon the defendant the office or franchise complained of, and then set out the charter or grant, if required to be in writing.
Under section 5450 of the Code, you allege that the defendant corporation has the right to use the franchise, *424but that it bas failed to discharge the duties imposed upon it as a consideration of the grant; and that, as a penalty therefor, it has forfeited its charter or its franchise right, as the case may be. While, under section 5453, you require the defendant, individual or corporation, to come in and show by what right or authority he or it holds such office or exercises such franchise right; and, if he or it cannot show such right or authority, a judgment of ouster as to such office or franchise is entered.
Under section 5453 of the Code, the defendant or respondent must either disclaim the office or franchise, or affirmatively show authority to hold or to exercise the same; a plea of not guilty is no answer, because the complaint or information requires the defendant or respondent to show by what authority he holds the office or franchise in question. The only appropriate pleas under this section are those of disclaimer or of justification. The plea of justification is essentially a plea asserting title to the office or franchise, and must set out the source of the title claimed by the respondent. If the plea shows a bad title, judgment may be rendered against the defendant on demurrer to the plea.
The information in this case not only admits, but affirms, that the respondent was properly incorporated and properly invested by grant with title to the franchises complained of; it does not attempt to show that its franchises have been usurped, but alleges that the same are misused, and therefore forfeited; and that for this reason the franchise should be returned to the state, the sovereign, from whence it proceeded.
Judgment of seizure of the franchise is the only judgment proper to be rendered, if the allegations be sufficient. Such a judgment is the only judgment contemplated under section 5450 of the Code. The judgment *425contemplated, when the proceeding is under section 5453 of the Code, is one of ouster merely; — not one of forfeiture or of seizure — and the section provides for the cases only where there has never been any grant or vesting of the office or franchise in the respondent. The judgment, when the proceeding is under the last section, is that the assumed or usurped office or franchise has never been granted to or vested in respondent, and that the claim thereto is null and void, and that it be divested out of the respondent and revested in the sovereign, as under section 5450.
The forms of judgment prescribed by sections 5465 and 5466 of the Code show this: Section 5465 shows the kind of judgment to be rendered when the proceeding is under section 5453; and section 5466 shows the kind of judgment to be rendered when the proceeding is under section 5450. The majority opinion proceeds upon the idea that the kind of judgment prescribed by section 5465 can be rendered under an information like the one filed in this case. To this I cannot agree. The only judgment which can be rendered on an information containing the allegations which the one in question contains is one of the kind described in section 5466 of the Code. How could any court adjudge this respondent guilty of usurping, intruding into, or unlawfully holding or exercising its franchise, when it is alleged repeatedly that the franchise was lawfully granted, and that both the law and the contract enjoined the duty of exercising it? Such a judgment on such an information could not be supported. The judgment would not only fail to be supported by the pleading, but would be plainly and exactly contradicted thereby.
The opinion has also misconceived the statute as to ' the right of jury trial.. It is said that each of the parties has the right to demand a jury trial, at the time, *426and in the mode, specified in section 5458 of the Code, if the proceeding is had under section 5453; but that neither has such right if the proceeding is had under section 5450. The statute makes no snch distinction, and I see no reason for the distinction. To my mind the court in effect amends the statute. I do not think the authorities cited support the conclusion, but, if so, they are to my mind as clearly wrong as this case would be, if it were the pioneer announcing such construction. How any one can read this section of the Code, to wit, section 5458, and say that it refers or relates to section 5453, but not to section 5450, is more than I can understand.
The history of section 5458 is well known. This court held that in proceedings under this article of the Code, relating to quo warranto, the Constitution did not guarantee the right of jury trial, and that, in the absence of a statute to that effect, the court might try without a jury. The Legislature, to meet this decision, passed the act of February 21, 1893, which is codified as section 3425 of the Code of 1896, and brought forward as section 5458 of the Code of 1907; and this statute provides that either party may demand and secure a jury trial, if moved for within the time and in the mode prescribed under the statute; and how it can be said that it applies only when the proceeding of quo warranto, or the information in the nature thereof, -is brought under one section of that article of the Code, and not under the other, is more than I can understand.
The opinion in this case modifies, if it does not overrule in terms, one or more decisions in this court. To this part of the opinion I cannot agree. There may be some other erroneous decisions of this court on the subject óf quo warranto proceedings, but in my opinion they are not those pointed out in the majority opinion. *427If any of the cases cited in the majority opinion support the conclusion reached in this case, I must say that I do not so read the case cited. In my judgment the cases cited were construing statutes different from ours. The statutes therein construed did contain provisions very much like section 5453 of our Code; but they did not contain sections like 5450 of our Code, provided expressly for all cases against corporations, or else they contained other provisions expressly authorizing proceedings against corporations, similar to the proceedings contemplated in section 5453 or other sections like it.
The fact (which the majority opinion entirely overlooks) is that there are other sections of our Code which exclude corporations from the operation of section 5453 if the section, standing alone, would allow it. The majority opinion also overlooks or ignores the fact that, if a corporation can be proceeded against under this section, it cannot be so proceeded against unless it is alleged that it has done one of the things specified in one of the three subdivisions of that section; and I do not think that it can be said that it is averred, or attempted to be averred, in this information, that the defendant corporation has done, or is doing, anything prohibited in either of those subdivisions.