Court Opinion

ID: 6583377
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:40:20.052547+00
Date Added: 2024-06-11T15:57:22.290397
License: Public Domain

Torrance, J.
(dissenting). In the result reached by the majority of the court in this case, I cannot concur. That result is, that the defendant is liable for what was in fact the negligent conduct of another corporation. It is based on the conclusion that the lease of February, 1869, though “ ratified and confirmed ” by the legislature, does not so transfer the franchise of the defendant, as to absolve it from liability for the acts of the lessee. Although the lease was in fact made before there was any legislative permission to make it, the subsequent legislative ratification placed it, in legal effect, •upon the same footing as if it had been made and entered into after such permission had been granted. Regarding the matter from this point of view, let us consider briefly the Act granting such permission, and the lease which was, in legal effect, made in pursuance of it.
The Act (Public Acts of 1869, Chap. 76) provides as follows: “ Any railroad company in this State * * * may take a lease of the property and franchises of, or lease its property and franchises to,” any other railroad company “ with whose railroad its own railroad may connect or intersect. All *256such leases and contracts heretofore made are hereby ratified and. confirmed; provided that nothing in this Act shall be so construed as to authorize the merger or consolidation of the stock of any railroad companies.”
By this Act the defendant was authorized to “lease its property and franchises ” to the lessee for such a period of time and upon such terms as might be agreed upon by the parties. Authority to “ lease its property and franchises ” as here used, clearly gives the lessor the right to convey and transfer “its property and franchises ” to the lessee for and during the term of the lease. What does the word “franchises ” as used in this Act mean ? The word “ franchise ” is often used as a generic name, descriptive of all the rights, privileges, and immunities contained in the charter, including the right of the corporation to become and to continue to be a legal person; but in a narrower sense it includes only the rights, powers and privileges conferred by the legislature upon the corporation as such, after it has come into existence as a legal person. The right to form a railroad corporation is a franchise which may be said to belong to the corporators; while the right to take land for railroad purposes, to operate the railroad, and to take tolls therefor, are properly called “ franchises ” which belong to the corporation. It is in this narrower sense that the word “ franchises ” is used in this Act, for it clearly contemplates the continued existence of the lessor, as a corporation, in the use of all its “ franchises ” not transferred by the lease, and ready to resume the exercise of all its franchises at the termination of the lease ; and it is expressly forbidden to merge or consolidate its stock with that of the lessee. By this Act, then, the defendant was clearly authorized to transfer to the lessee for one hundred years, the right which it had under its charter to operate its then existing railroad, and its right to take tolls therefor, and any other “franchises ” of a similar nature, which the lessor might see fit to transfer. It was not authorized to transfer or assign its “ franchise,” meaning by that its entire charter powers, either permanently or tempo*257rarily; it was only authorized to transfer temporarily its “ franchises ” in the narrower sense of the word franchise.
Such being the nature of the Act under which the lease was, in legal effect, made, let us look at the lease to see what it does transfer and convey to the lessee.
In the first place it begins by a recital which the legislature adopted, “ that it is believed to be for the advantage of the public ” that the railway and steamboat property of the defendant “should be managed and operated” by the lessee for the term of one hundred years. In the next place the lease by apt and appropriate words transfers to the lessee for the term of one hundred years, the then existing railway of the defendant, and all its visible, tangible property of every kind, real or personal, and all its “ rights, easements, franchises and privileges, in connection therewith, or which are appurtenant thereto.” It further provides as follows:— “ The business in connection with the leased property shall be managed and conducted as follows, to wit: The party of the second part shall fix and determine the number and time of all trains to run on the leased railway, to fix all rates of passenger and freight transportation, employ and control all employees in connection with the business, and have control of the business done or to be done, in connection with or on the leased property.”
The legal effect of these provisions, unless they are controlled by other provisions of the lease, is to transfer to the lessee for one hundred years, the exclusive right to use all the railroad property of the'defendant for railroad purposes; the exclusive right to operate, use, and control that property as a railway; and the exclusive right to hire, discharge, and control the persons who should be engaged in its operation and management.
But the only other provisions which can by any possibility be claimed to control the legal effect of those already considered, are the following: First, the lessor is to appoint a treasurer satisfactory to the lessee, who is to receive as they accrue all earnings of the road, and pay all such expenditures as he knows to be correct and such others as are *258ordered or approved by tbe lessee’s managing agent, and semi-annually retain for tbe defendant the agreed rental, and turn over to the lessee the balance; second, the provisions in the lease respecting indemnity to the lessor for defaults or failures of the lessee in the operation and management of the railway, or in the use of the leased property; third and last, the provisions in relation to the appointment of a managing agent.
The provisions relating to the appointment and duties of the treasurer, are evidently put in as a method for securing the payment of the rent, and nothing more; they have no reference to the actual management and operation of the railway, or the hiring or discharge of employees, which are elsewhere provided for.
The provisions for indemnity were evidently put in as a matter of caution, to cover cases where a duty still rested upon the defendant which the lessee had engaged to perform.
As to the managing agent the lease provides as follows: “ It is mutually agreed that the general charge and determination of what expenditures shall be made to keep the railway bridges, buildings, equipment, and supplies of the party of the first part equal to the present condition of the same, and what additions thereto may be required by the increased business of the road, shall be confided to a managing agent, to be agreed upon by the board of directors of the two companies,” or, in default of such agreement, by certain arbitrators. This agent is to be removed on request of either of the parties. The duties of this agent relate solely to the preservation and protection of the reversionary interests of the lessor, and to the protection of the lessee upon its covenants with reference to such reversionary interests, and have nothing to do with the hire or discharge of servants and agents, or the actual operation of the railway in the running of trains.
The lease further provides that the lessee “ shall have a person in charge of the railroad and property, to be called the managing agent, who shall be a person satisfactory ” *259to the lessor. This agent is appointed solely by the lessee, and at the time of the injury to the plaintiff this position was filled by its general superintendent. As stated in the finding: “ He chose officials who had the power of hiring and discharging all employees, including the employees causing said injury, and the defendant company had no control over these employees except in its approval of the choice of said managing agent.” This managing agent was in no legal sense the agent or appointee of the lessor, any more than the treasurer of the lessor was the agent or appointee of the lessee. The fact that such agent was to be “ satisfactory ” to the lessor, gave it no control over the hire and discharge of the lessee’s emplojrees, or the running of trains upon the leased railway; for the exclusive control of these matters is expressly given to the lessee, in the lease, just before the provision for the existence of this managing agent.
These provisions, then, whether singly or combined, do not affect or control the legal effect of the provisions heretofore considered; and so the lease must be regarded as transferring to the lessee for one hundred years the exclusive right to operate this railway, and the exclusive right to hire and discharge and control the persons who from time to time are engaged in operating it. This being done with the legislative consent, with what propriety can the defendant be held liable for the acts of persons over whom it had and has no sort of control? The liability of a person for acts legally hurtful to another, is based, usually, upon his power to prevent or control such acts, or upon his power and control over the person who does them; and where there is no such power of prevention or control there can be, as a rule, no liability.
In the case at bar as the defendant had no power or control over the lessee or its employees who did the act complained of, I think it ought not to be held liable for the results of that act.
In this opinion Hall, J., concurred.