Court Opinion

ID: 7898560
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:54:00.372131+00
Date Added: 2024-06-11T16:32:10.791386
License: Public Domain

Bryan, J.,
delivered the following dissenting opinion, in which Robinson and Eowler, J. concurred:
I maintain that the appellee is validly invested with corporate power And I shall briefly state the reasons-for my opinion.
The statute of 1872, chapter 284, is entitled “An Act to incorporate the Baltimore, Hampden and Lake Roland Railroad Company. ” In September, 1891, the first subscriptions to the stock of the corporation were made; it was then organized, and is now regularly conducting its business under the claim- of chartered right. The question affecting its corporate existence arises under the eleventh section of the Act of Assembly, which is in these words: “And be it enacted, That said company shall commence said railway within three years from the passage of this Act, and complete the same in ten years. ” The appellant contends that inasmuch as the railway was not commenced within three years, and not completed within ten, the Act lost all its efficacy; that it was not competent for the subscribers to the stock to organize and to exercise the franchises offered by the *357Act; but that they were entirely lost by reason of the long delay in making, use of them. We cannot correctly estimate the force of this objection without an accurate view of the rights conferred by the Act of Assembly, and the natural relations.of the State and the subscribers to the stock. The Act of incorporation is an offer on the-part of the State to give certain privileges to those persons named in the Act as incorporators; when this offer is accepted, the grant of privileges from the State is complete, and full corporate power is conferred. All the authorities without exception consider the State and the incorporators as occupying the same position as private persons contracting, or proposing to contract with each other. It is on this conceded principle that their respective rights and duties are ascertained ■and determined. Another important consequence also follows; and that is, that third persons are not interested in this contract, and are not authorized to interfere between the parties to it. Their relation has been likened to the case of landlord and tenant, where there is a ■clause of forfeitxire for non-payment of rent. Eor however long a period the rent may be in arrear, no one can take advantage of the clause of forfeiture but the landlord, and he only by entry for condition broken. No reference is now made to these cases in which by the terms of the lease the estate becomes ipso facto void when the rent is not paid by the appointed day. They are like the provisions in some Acts of incorporation which declare that on failure to do certain acts “the corporate existence and powers shall cease.” In such cases.it has been sometimes held that the forfeiture accrues immediately, and that the franchises are lost without any ■act or proceeding on the part of the State; as in the analogous case of landlord and tenant, the lease absolutely determines without entry. In Canal Company vs. Railroad Company, 4 Gill and Johnson, 124, the case before *358the Court is compared to a grant of land. The Court say: “And it is like the gramt of an estate in land,, defeasible on the non-performance of a condition subsequent strictly speaking, as if an estate be granted expressly upon condition to be void on the happening of a certain event. In such case it is perfectly clear, that the estate is not defeated by the mere happening of the event, but that the law permits it to continue, beyond the time when such contingency happens unless the grantor or his heirs, take advantage of the breach of condition by entry, &c., which cannot be done by a stranger. The proceeding by the Government, (the grantor,) for the breach of a condition subsequent, contained in a charter of incorporation, is by scire facias, or quo warranto; by an individual grantor (or his heirs) of land, by entry." There can be no valid distinction between the different kinds of forfeitures which the State-has power to enforce. It may enforce all or any; and it may waive all or any; and no private individual is authorized to interfere either with enforcement or waiver; No distinction has been suggested in any text-book, or in any decided case between forfeitures of rights before the organization of a corporation, and those which occur afterwards. Certainly the jiower of the State is the .same in each case; and the general principle must apply to each case that a right to subject toforfeiture continues to exist, until the forfeiture is enforced by the party who has a right to enforce it. In the County of Macon vs. Shores, 97 United States, 272, one of the defences to an action by a corporation was that it had no corporate power or existence, that it did not organize, or accept the Act of incorporation within one year as required by law, and that it did not commence the transaction of business within the time prescribed by law for that purpose. The Court said: “ The objection that the corporation was not organized within the time limited by the *359charter, is unavailing. It is in effect a plea of mil tiel corporation. In Keyser vs. Trustees of Bremen, (16 Mo., 88,) the Supreme Court of the State said: 'It cannot he shown in defence to a suit of a corporation, that the charter was obtained by fraud, neither can it he shown that, the charter has been forfeited by misuser or nonuser.. Advantage can only he taken of such forfeiture by process on behalf of the State, instituted directly against the corpoi’ation for the purpose of avoiding its charter; and individuals cannot avail themselves of it in collateral suits, until it he judicially declared.’” I quote this passage to show that the Supreme Court of the United States considered that there was no difference between a forfeiture committed before a corporation is organized, and one which occurs afterwards. In State vs. Bull, 16 Connecticut, 179, an information at the suit of the State, the franchises granted by an Act of incorporation were declared to have been forfeited and lost because of unreasonable delay on the part of the corporators in accepting the charter. But it was not suggested in the argument or decision of the case that there was any difference between forfeiture of this kind, and any other, so far as its effects were concerned, or the mode of proceeding to take advantage of it. It was not supposed that it was in the power of any one hut the State to implead the corporators for such defaults. And as it has never been questioned that the State can at its own will and pleasure waive these forfeitures, it must follow that a private individual cannot enforce them; because if he could do so the State’s sole and exclusive prerogative of waiver would he defeated. The proceeding on the part of the appellant would virtually annul the charter, and consequently the right of the State to continue it in force by waiver would he taken away.
I cannot see how the completion of the railway within ten years after the passage of the Act of incorporation *360can be regarded as a condition precedent to the existence of the corporation; as one of those indispensable preliminaries which must be performed before the corporation can have an existence. It was impossible that the railway could be constructed before the corporation was organized; its construction was the principal result to be accomplished by the corporation after it should be invested with its franchises. To be sure as this corporation was organized after the expiration of the ten years, it had become an impossibility to complete the road within the prescribed time. But the State has as much right to waive a condition which it has become impossible to perform, as one which, being possible, the corporation refuses or neglects to perform. In what respect is the State’s power limited on this subject? By what authority has the limitation ever been declared ? On what principle of reason can a distinction be maintained between the power to waive the possible, and the power to waive the impossible. Finally, in what treatise, or in what judicial decision, has the distinction ever been intimated ? In Hodges’ Case, 58 Md., 603, it appeared that a railway company had been authorized by a city ordinance to lay railroad tracks in certain streets in Baltimore. The ordinance enacted that the work was to be commenced within six months from its approval, and to be completed within twelve; and that “otherwise the rights and privileges herein granted shall be null and void.” It was attempted by private persons on many grounds to enjoin the railway company from laying its tracks; and among others, for the reason that the work had not been commenced within the appointed time. This Court did not trouble itself with any attenuated distinctions between conditions which had become impossible from lapse of time, and other conditions; but decided that the condition was intended for the benefit of the city, and that the city *361might waive it at pleasure, and it denied the right of interference by third persons. I will quote a passage from the Court’s opinion: “This is a provision, however, intended for the benefit of the city, and one which' its authorities may waive at pleasure. No principle is better settled than that a cause of forfeiture cannot be taken advantage of or enforced against a corporation collaterally or incidentally, or in any other mode than by a direct proceeding for that purpose against the corporation. ” Now on the mere point of waiver, it is impossible to draw a distinction between this case and the one at bar. If the corporation has forfeited its right to become incorporated, it must be that the State has the power to waive it; and it is a question exclusively between the State and the corporation. The appellant in this case has no more right to take advantage of it than the complainants possessed in Hodges’ Gase.
(Filed 17th Feburary, 1892.)