Court Opinion

ID: 6314895
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:24:20.060999+00
Date Added: 2024-06-11T08:59:13.360290
License: Public Domain

The opinion of the court was delivered by
Gibson, C. J.
Our turnpike roads have been made by incorporated companies, in which the state has usually been the principal Stockholder. But though the funds have been furnished by individual subscription, the consideration for the corporate franchise, as well as the object to be promoted, has exclusively been the public benefit. With this the individual interest of the stockholder has been combined, by giving him a share of the tolls, in full compensation of his share of the capital. That an expectation of benefit from a rise in the value of property near the route, has been a powerful spring, in putting these incorporated bodies in motion, is not to be denied. Yet, though reliance has been placed on the effect of it, the legislature has never encouraged it so far as to recognize it as a condition of the contract of subscription. Our acts of incorporation have been moulded to more general interests. Their provisions have been adapted to the protection or encouragement of no local interest whatever, further than to compensate direct injury to private property in the execution of the work; and this, too, without deduction of the indirect benefit supposed to be received by the owner. In fact, I have found nothing to indicate that it had ever entered into the consideration of the legislature at all. We doubtless owe many of our roads to it — at least, it has furnished a very powerful incitement — but it is doubtful whether its advantages have not been attended with more than an equal amount of mischief in the predominance of private interest over public convenience. But certain it is, that in no instance has the legislature au*471thorized a conditional subscription, dependent on a particular location of the road; or given color to a notion that it might be regarded as an implied consideration of the contract. On what principle, then, are toe to recognize it as such? By the constitution, the right of the stockholders to every thing granted in the charter, is made inviolable; consequently their rights as corporators are riot to be impaired. But the public welfare being paramount to every thing beside those rights, and power to correct errors of location being essential to the promotion of it, subscriptions are necessarily subject to it where the contrary is not expressly stipulated. The objection to this, seems to be rested on the occasional hardship of its operation; as an instance of which, a liberal subscription, by the inhabitants of a town, named as a point, has been put in a strong light, But the abstract propriety of a principle cannot be determined, by ■an application of it to masses instead of individuals, or by the aggregate hardship of its operation in a given case. Such masses, like individuals, take their measures at their oyvn risk, and subject to the paramount rights of still greater masses. The fallacy of the whole seems to be, in confounding the motive for entering into the contract, with the consideration of it; for nothing is part of the consideration that is not regarded as such by both parties, and nothing but the benefit to be received as a corporator is held out to the subscriber by the corporation or the state. Of benefit to be received as a landed proprietor, he has no assurance but his calculation of the chances, and this, it seems to me, the defendant was bound to know;, yet he relies on representations by the commissioners, that the site of the bridge was fixed by law, where it would be peculiarly advantageous to him. What is that but to offer the motive which impelled him to subscribe, as a circumstance to influence the construction of the contract? It is not pretended that the commissioners misrepresented any fact which it was material for him to comprehend, or did not leave him to judge of the permanency of the legislative provisions then in force; and for all beside, he was bound to know, that acting under a limited authority, they, had no power to make conditions, or bind the corporation in a matter not committed to them. As there is, then, no peculiar circumstance to distinguish this case, it must be decided on the abstract nature of the contract. It will hardly be pretended that the managers of a road may not correct errors of location between intermediate points, consistently with the rights of previous subscribers; and I am unable to perceive a reason why the legislature should not be taken to have reserved a like power over the intermediate points themselves. An error would be as hurtful in the one as in the other; and if an injudicious point may not be abandoned out of respect for private interests, it must be because such interests are superior to those of the commu*472nity, and because the charter has been granted for individual enrol" ument, and not the public good. That is not pretended. On the contrary, a power to correct errors is conceded tó be inherent and indispensable. But how may it be exercised consistently with the constitution, if it be according to the argument, inconsistent with an implied condition of the contract of subscription? The defendant goes for a recision of the contract. But the change of an intermediate point, is not a recision of the contract, or it surpasses the legislative power. It then comes to this, that a power conceded on all hands to be an essential one, cannot be exercised without discharging all previous responsibilities, and resolving the corporation into its original elements. It will be said that no one would be released who had not suffered a substantial injury. Butthelegal effect of an alteration, cannot depend on its actual effect, or the extent of the injury occasioned by it. It is a rudimental ¡principle of the common law, that the violation of a right, without actual injury, entitles the party to nominal, damages. So an estate may be acquired' or lost by the performance or omission of a condition which, in the abstract, is perfectly indifferent; and if permanence of location, were at all a condition here, it would be so in favor of all who had subscribed, whether with a view to indirect advantage, or the benefit to be had from the tolls. Let it not be thought that the subscriber assents to the act which creates the change, by embracing the alternative which it is thought to put within his reach. His assent would ratify the act, if at all, in all its parts; and in that aspect there would be no recision in the case. Beside, to assent implies a power to dissent; and what is the alternative that would be presented? Merely to renounce the benefits of the corporation, or submit to the new conditions; and in that predicament, the contract would be as much impaired with his assent as without it. Suppose he should still insist on the original contract: the consequence would be a direct collision between an act of the legislature and theconstitution. It may be thought unnecessary to view the question In that aspect, as it may be supposed the defendant has not thought proper to insist on it. But does he not insist on it, when he refuses to perform his part of it, because one of its conditions has been, as he says, violated by the plaintiff? He refuses his assent to the act of the legislature, when he refuses to abide by the conditions it imposes; and those conditions must be executed, or an act of the legislature admitted to be indispensable to the public welfare, must be rendered abortive. Apply the principle of this supposed assent, to the case of a stockholder, whose subscription has been in part paid in. According to the argument, he would be released from further liability. But what would compensate the loss of payments already made? If the act would really infringe on a contli*473tion of the contract, the privilege of retiring with the loss of a part of his capital, would be no reparation. Give him an action to recover his money back, and the difficulty still remains; for the violation of the constitution is found in the very act which would make a resort to an action necessary. But the extreme consequences of the principle would be positively destructive, as it would, for the same reason, give an action to those who had paid the last farthing, and enable them to withdraw their share of the capital, at the expense of ruin to the enterprise. And thus a power admitted on all hands to be indispensable to the successful prosecution of the work, could be exercised after experience had demonstrated a fatal error in the plan, only by undoing all that had been done; which is in effect to say, it cannot be exercised at all. Were we to indulge these imperfect equities, we would, to preserve consistency, be compelled to go that far, as a middle course would lead to a labyrinth of inextricable subtilties. Either, then, the consequential benefits to the stockholders, not as corporators, but proprietors, are so far superior to the public good, that the legislature may do no act to affect them, or an unlimited right to interfere is a tacit condition of subscription. The defendant was allured by a prospect of gain in a matter collateral to the object of the enterprise, and he embarked his capital, as he would have.done in any other speculation, at the risk of disappointment. He got no pledge that, in the event of competition, the public interest would not be preferred to his — he exacted none — it would have been a breach of trust to have given him any. Whatever might be the effect of such a pledge, it certainly cannot be implied from the bare act of subscription; and with this, the decisions cited from the Massachusetts Reports entirely agree. There the capital was to be raised, not as with us, by instal-ments, enforced by an action on the contract of subscription, but by assessments on the share enforced by forfeiture and a re-sale of the stock, which, as'the act of subscription was abare agreement to become a share-holder, without incurring personal responsibility, was deemed to be the only remedy provided .by the act of incorporation. An action, therefore, could be maintained only on an express promise to pay; and as"there was no moral obligation in thp case, a sufficient consideration was sought for, and thought to be. found, in the peculiar advantages of the location. As the legislature had prescribed neither contract nor conditions, the parties were at liberty to establish any terms of responsibility which they might think proper to adopt; and it is not surprising that the courts refused to enforce the promise wherever there was a failure of what was regarded as the consideration of it by the parties themselves. It is obvious that the present is not that case, the liability of the defendant having arisen 'from a promise in consideration of benefits to be *474drawn from the profits of the corporation, and not from a locations of the road peculiarly beneficial to him as a landholder. I take it, then, that the change of an intermediate point does not rescind the subscription.
But it is said that the change here was not of an intermediate* but a terminative point; to which, on the authority of the Indiana and Ebensburg Turnpike v. Phillips, 2 Penn. Rep., 183, is attributed greater effect, by reason of its operating a fundamental change in the objects and identity of the company. In that case* an incorporated company, to which subscriptions had been made, was divided into two distinct corporate bodies; and to the one or the other of these, the'original subscribers, were arranged according to their residence east or west of the specified point; to do which, without their consent, the legislature was deemed incompetent. What is the case at bar? The legislature had incorporated two companies to make a road from Waterford to Northumberland, and had fixed the West Branch of the Susquehanna “at or near the mouth of Anderson’s creek,” as the line of division between the two sections. Over this a bridge was to be built at the joint expense of the two companies; and it is certainly fair to admit that the eastern bank was intended to be a terminative point of the eastern section. That section was afterwards subdivided and assigned to five new companies formed out of the old one, of which the plaintiff is the one that adjoins the point intended to be the site of the bridge. r At this juncture the defendant subscribed the shares that have occasioned the controversy; subsequent to which the legislature authorized the companies to change the site of the bridge to the mouth of Sugar-camp Run, a mile or two below, and defray the expense of its erection with the public subscription to the route;, in consequence of which the termination of the plaintiff’s section was shifted from the east to the west bank. But the change was essentially in the site of the bridge, the termination of the section continuing to be, in the words of the original act, “the river Sus-1 quehanna at or near the mouth of Anderson’s Creek.” It was in fact within two hundred feet of the point specified, which, in a tract of more than as many miles, can hardly be esteemed a- material deviation. Perhaps the maxim de minimis might be applied to it. But was the change, small as it is, in any thing but an intermediate point? This corporation was not to conduct its operations as an isolated body and with detached views, but as an individual associated with similar bodies in the systematic accomplishment of a great public work, which was viewed as a whole. The extremities of the .sections were, in truth, intermediate points as respects the entire route, a change of which could not vary the productiveness of the stock. Of what, then, has the defendant to complain? Not of a *475decrease of corporate interest, nor of a change of corporate object on identity; of nothing, in short, but a loss of advantages expected to be realized from the location of the bridge, of which I have attempted to show, he might be legally deprived by the change of an intermediate point; and it therefore seems to me he cannot set it up as a defence to the action.
Rogers and Kennedy, Justices, dissented.
Judgment affirmed.