Court Opinion

ID: 3555656
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:06:47.396024+00
Date Added: 2024-06-11T13:46:10.180604
License: Public Domain

The state claims to recover from the defendants sums alleged to have been received by them in excess of the amount they are allowed to receive and retain, as against the public. It charges that the defendants have divided to their stockholders more than the ten per cent specified in the statutory grants *Page 429 
to them. The parties disagree as to what the amount is upon which the percentage is to be reckoned, and also as to whether the stockholders are entitled to interest upon deferred dividends.
The claim of the state is that the defendants can divide ten per cent upon the capital stock issued, and no more; while the defendants insist that they are entitled to that per cent upon all money expended in the construction of the road. It is not necessary to construe the provision of the charter upon this point (Laws 1847, c. 549, s. 5), because it is so nearly identical with the general law as to be superfluous. State v. Railroad, 69 N.H. 35, 49. The act which controls here is the law which was applicable to all railroads. Opinion of the Justices, 66 N.H. 629, 671. It reads as follows: "Such corporations shall keep exact accounts of all their receipts and expenditures, and make annual reports thereof to the railroad commissioners, who shall annually communicate the same to the legislature, and in any and ever year when their net receipts shall be found to exceed the average of ten per cent on their expenditures, from the commencement of their operations, the excess shall be paid into the treasury of the state, until otherwise directed by the legislature." Laws 1844, c. 128, s. 11. The question is: What was intended by the use of the word "expenditures"? Did the parties to the legislative grant understand that the meaning of this word included all that the corporation paid out in the construction of the road, irrespective of whether the funds so used were actually contributed by the owners of the enterprise, or was the amount so contributed (i.e., the capital stock paid in) the sum in mind?
One intention which the legislature of 1844 had was to establish a general railroad law, and this intention found expression in the act of which the section under consideration forms a part. Concord Railroad v. Greely, 23 N.H. 237, 242. Sections 10 to 20 of the act "were evidently intended to be a system of uniform law applicable to all railroads." Opinion of the Justices, 66 N.H. 629, 650. It is therefore necessary to construe all the sections together. Each part is to aid in the interpretation of the whole. "One part of a statute must be so construed by another that the whole may (if possible) stand." The interpretation should furnish "matter for every clause of the statute to work . . . upon." 1 Bl. Corn. 89; Barker v. Warren, 46 N.H. 124; Stanyan v. Peterborough,69 N.H. 372, 373. In another section of the act is the following provision: "The rates of toll for freight of passengers and merchandise, when the net income of the stock shall exceed ten per cent, shall be subject to alteration by the legislature, according as they shall deem just and expedient." Laws 1844, c. 128, s. 13. Here there is no uncertainty as to the principal sum upon which *Page 430 
the percentage is to be computed. It is the capital stock — the amount contributed by the owners of the joint venture. They are allowed a net income of ten per cent upon their investment, or, from the standpoint of the stockholders, upon their expenditures. Is the meaning different in section 11?
This section provides for the return of unreasonable exactions as nearly as possible to those who have suffered thereby. State v. Railroad,69 N.H. 35, 48. Section 13 provides a method by which like future exactions may be prevented. In one instance there is to be an accounting for excessive charges received; in the other there may be a legislative prohibition of the wrong in the future. It is natural to suppose that the limit of what was allowed to the railroad would be the same in either case. The evil to be guarded against or remedied was excessive tolls; and no reason appears why a rate should be considered unreasonable as to the future and not as to the past. In section 11 the language is "net receipts . . . on their expenditures," and in section 13 "net income of the stock." In view of the fact that both provisions are found in one scheme of general law, the inference is that the phrases mean the same thing. If this is not so, the act is inconsistent with itself. The object to be attained is the same under either section — the limitation of tolls to reasonable rates. "The general statute was not a change of policy, but of method." State v. Railroad, 69 N.H. 35, 48. In pursuit of this object, both remedial and preventive legislation was enacted. If there is any evidence to show that the public rights sought to be protected were greater or less in the one case than in the other, it has not been pointed out.
If the defendants' position were sound, it would follow that while the railroad could retain the sums here sought to be recovered, yet the state by reducing the tolls could have prevented the railroad from receiving the money. In this way one part of the act could be used to defeat the operation of another. Action by the state reducing. the tolls might still later be nullified by the road. For example, if stock was issued to the amount of $500,000, and the road was built at a cost of $1,000,000 (of which sum the corporation owed one half), the corporation could in the first year divide to its stockholders ten per cent upon the cost of the road, or $100,000. The state could not recover any part of this; but the legislature might enact that for the next year the tolls should be reduced so that the net income would be only $50,000. For this year the legal limit of the dividend, because of legislative action fixing the tolls, would be only one half what it was the previous year. Now if, in the third year, the corporation should fix its tolls so high that it would have $150,000 net profits, and should divide *Page 431 
that sum to the stockholders, when sued for the excess it would answer it had only divided an average of ten per cent from the beginning upon the cost of the road, and that the law allows. A construction which leads to such results puts "an undesigned and novel inequality in the place of uniformity, in violation of elementary principles." "If a statute is capable of two meanings, and one is more reasonable and therefore more probable than the other, this fact is necessarily considered with all other competent evidence, on the question of intent." Opinion of the Justices,66 N.H. 629.
If the provisions of these sections were in acts passed at different times, there would be more ground for claiming that they had different meanings. When, as in this case, they are parts of one act, the rule to so construe it that the whole will, if possible, stand is of the highest importance. It has heretofore been said that the provision of section 11 "relates to . . . an excess of net income above ten per cent," and that of section 13 "to the alteration of tolls when the net income exceeds ten per cent." Opinion of the Justice, 66 N.H. 629, 671. There was in that opinion no suggestion that the net income should be computed in one way in one event and in another way in the other event. While there are many reasons for fixing the same sum as the basis for computation in each case, no reason is suggested for a different rule. The sole argument advanced is based upon a technical construction of the language of the act. The competent evidence tends to prove that the legislative intent was that the net income should be computed upon the basis of the stock. "What is within the legally proved intention of the legislature is within the statute, though not within the letter; and what is within the letter but not within the intention is not within the statute." Opinion of the Justices,66 N.H. 629, 655.
The defendants' arguments against this conclusion are chiefly drawn from the construction which they say should be placed upon section 10 of the general law and section 9 of the charter. "The state may, at any time after twenty years, resume the right and privilege of the corporation. in such railroad, on giving one year's notice and paying to the corporation all it may not have received its expenditures, and interest on such. expenditures, at the rate ten per cent per annum." Laws 1844, c. 128, s. 10. It is argued that here, at least, expenditures means cost of construction. An examination of the section shows the claim to be unfounded. The object of this section was different from that of sections 11 and 13. Their aim was to prevent the corporation from taking what did not belong to it, while this was enacted to enable the state to buy the property of the corporation. The property to be purchased was not necessarily the railroad free from all debt. It was *Page 432 
"the right and privilege of the corporation in such railroad." For the amount stipulated the state could succeed to the right of the corporation. Like any other successor who pays a price for the interest of another in an enterprise, the state would take the concern as it was, subject to the burden of debts, or made valuable by credits due to it. Here, as in the other sections, the expenditures. referred to were those of the stockholders. Upon repayment of those and any deficiency in the annual income, the state steps into the place of the corporation, so far as owning the property goes. This is the only intelligible meaning to be given to the phrase "resume the right and privilege of the corporation in such railroad." This meaning is made still clearer by an examination of the provision of the charter upon the subject. "The state, . . . after the expiration of twenty years from the time of the completion of said road, may purchase the same of said corporation, and all the franchise rights and privileges of said corporation, by paying them therefor the amount expended in making said road, and in case at the time of the purchase the said corporation shall not have received a net income equal to ten per cent per annum on the amount of such expenditure from the time of the payment thereof by the stock-holders, by paying said corporation such additional sum as, together with the tolls and profits of every kind which they shall have received from said railroad, will, be equal to a net profit of ten per cent per annum on the cost of said road, from the time of the payment thereof by the stockholders to the time of purchase." Laws 1847, c. 549, s. 9. Here is a further specification of what is meant by expenditures. They are what has been expended by the stock-holders. The phrase "the payment thereof by the stockholders" shows in a clear light the legislative intent. The sum upon which the income was to be computed was what the stockholders had expended — not what the corporation might be owing for borrowed money.
It is further argued that if the corporation built the road without issuing any stock, the whole net profit might be recovered by the state, — a result which the defendants assume is beyond question outside the legislative intent. Conceding, for the purpose of the argument, that the corporation could legally carry on business in this way, the result would be as stated. This is the true construction of the act. The defendants assert that the legislature could not have intended such a result, but they advance no reason why a corporation which has risked nothing of its own should reap a profit. To whom would such profit go? Not to those who loaned the corporation money, for payment of interest to them must be made before there could be any net income. It would not go to stockholders, for there would be none in existence. *Page 433 
The intangible thing called the corporation, in which no one had any financial interest, might well be called upon to return to the state the privileges in the development of which no one had risked anything as proprietor. Beyond this, it is not probable that the legislators of 1844 had in mind the modern methods of doing business referred to in the defendants' proposition. It was then supposed that the right to issue stock was granted for the purpose enabling the company to accumulate the capital with which to carry on business. The construction of the act cannot be based upon the unfounded assumption that the legislature expected that this and other railroad corporations were to be nothing but names, and without financial substance. "The meaning of a written law is not found, beyond the fair scope of its terms, in . . . a policy not sufficiently established at the date of the act to be presumably known to the legislature." Opinion of the Justices, 66 N.H. 629, 665.
The legislature intended to pass a general law applicable to all railroads. It intended to have each section of the act have some effect. It intended to pass a law which was not in conflict, one part with another. Its members thought, understood, and intended in accordance with what was then known and understood. Giving due weight to these facts in the interpretation of the statute, it appears more probable than otherwise that the phrases "expenditures and interest on such expenditures" (Laws 1844, c. 128, s. 10), "their expenditures from the commencement of their operations" (Ib., s. 11), "the net income of the stock" (Ib., s. 13), and "the cost of said road from the time of payment thereof by the stockholders" (Laws 1847, c. 549, s. 9) all refer to a common quantity as the basis upon which the computations were to be made. This quantity is the capital stock paid in, and upon this sum the percentage is to be calculated.
For a considerable time the annual dividend or net income was less than ten per cent upon the capital stock. In one year it exceeded that amount. Upon the whole, it exceeded an average of ten per cent from the commencement of their operations, unless the stockholders are to be credited with interest upon the deferred dividends. Whether they are to be so credited depends upon the meaning of the statute. The referee ruled that such meaning, or the intent of the parties, was a question of fact, and he passed upon it as such. The defendants now contend that this finding is conclusive, and cannot be reviewed here. It was based upon the statement that "the interpretation of this charter, like the interpretation of any other grant, statutory, contractual, or testamentary, is the ascertainment of intention; and the question of intention is a question of fact to be determined upon competent *Page 434 
evidence." Burke v. Railroad, 61 N.H. 160, 233. Taken by itself, this might justify the ruling of the referee; but the remark was not intended for a statement of the whole law. The fact that in the case in which the language is used the court decided the question referred to at the law term, and as questions of law are disposed of, is sufficient to show that the application of the remark made in the present case was erroneous. The law is more fully stated in a companion case to that quoted from. "The legal construction of the act is the ascertainment of the intention of the legislature. In one sense, their intention is a matter of law: it is a question for the court. In another sense, and for the purposes of the present inquiry, it is a matter of fact: it is to be determined by the natural weight of competent evidence." State v. Hayes, 61 N.H. 264, 330. Whatever name is given to the question involved, — whether it is called a question of fact determinable by the court upon all the competent evidence, or a question of law determinable by the court, but like a question of fact, — the essential proposition concerning it remains. It is a question for the court. As the referee treated this inquiry as one upon which his finding was conclusive, he did not pass upon certain questions of fact which are material in the view here taken of the nature of the question under consideration.
There is a finding as to the amount distributed to stockholders, but whether it was taken from the net income is left undetermined. Until this fact is found for the state there can be no recovery in this suit. "The state in this action stands precisely as an individual in a like action. It is subject to the same rules of law and evidence. It has no greater power, rights, or privileges than any plaintiff. It must establish the defendants' legal indebtedness, or it must fail." State v. Railroad, 69 N.H. 35, 49. It appears that the total dividends exceed ten per cent per annum by $69,100.38. What the nature of these dividends was, whether they came from earnings, from an illegal division of the capital, or from some other source, is not distinctly found. An essential fact for the state to establish is that they came from the earnings or net receipts for the use of the road. It must show that the defendants have taken from the public and distributed to their stockholders more than the amounts fixed in the statutory grants. If the sums distributed have come from different sources, and not more than the legal amount has been collected from the public as tolls, the state cannot prevail here. This statute was enacted for the sole purpose of securing to the public reasonable rates of toll. Its purpose was not to obtain revenue, but to enforce the established policy of the state; and the suit is brought to recover excessive tolls, in order that the same may be returned as nearly as *Page 435 
possible to those who suffered by the exaction. State v. Railroad,69 N.H. 35, 48. If no more has been taken from the public than the law permits, there is nothing to return. The statute under which this suit is brought relates only to the question of reasonable tolls. It was not designed to regulate the acts of railroad corporations in other matters; and whether the funds have been legally or illegally divided is of no consequence in this proceeding, unless it affirmatively appears that they came from the net receipts for the use of the road.
It appears that this objection was seasonably made at the trial. It was claimed by the defendants that a large part of the sum recovered in their suit against the Concord Railroad, and distributed as dividends, was an award for their rights in certain property and of interest upon payments of income which should have been made at a time when the principal sum would not have exceeded the legal limit of dividends. The referee did not pass upon the question so raised because, as stated in the report, it was immaterial in the view he took of the method by which the legal limit for dividends was to be determined. The question now becomes material. "It often happens that grave and difficult questions of law arise, . . . which disappear upon an investigation of the facts. In these cases, it is clear that the facts should be found before an attempt is made to settle the law controlling the rights of the parties." Fellows v. Fellows, 68 N.H. 611,612; Winnipiseogee etc. Co. v. Gilford, 66 N.H. 621; State v. Morin,65 N.H. 667.
The report should be recommitted for further findings of fact.
Case discharged.
CHASE, PIKE, and YOUNG, JJ., did not sit: the others concurred. *Page 436