Court Opinion

ID: 3610404
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:54:43.692579+00
Date Added: 2024-06-11T14:24:05.886470
License: Public Domain

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Assuming that a denial by the defendants, in their answer, of each and every allegation and averment in the complaint in this action contained, not therein before specifically admitted, is sufficient to controvert the matters, if any, not so admitted, and put them in issue, it appears by an examination of its contents that no material fact is denied.
It is true, that there is no admission in express terms, as alleged in the complaint "that ever since October, 1854, the said corporation has remained insolvent and neglected to pay its notes and other evidences of debt and entirely suspended the ordinary and lawful business of such corporation;" but the statements and admission of the defendants incontrovertibly concede and prove each of those facts. They admit the execution of certain mortgages by the corporation on its property as stated in the complaint, that certain persons were elected directors thereof on the 26th day of July, 1854, and that they on the 6th day of October, 1854, surrendered the possession of its property to the second mortgagees, who took possession thereof and its franchise, and ran and operated the road until on or about the 1st day of August, 1865; that it was then transferred to the Ogdensburgh and Lake Champlain Railroad Company, and that it had possession thereof at the time of the commencement of this action, that prior to such transfer, and on or about the 20th day of February, 1856, proceedings were instituted in the Supreme Court of this State against the said corporation for the foreclosure of the mortgages given by them, that a judgment decreeing such foreclosure and directing the sale of the corporate property and the franchise of the company was, after an appearance by attorneys for the company, made and entered on the 8th day of April, 1856, that such sale was thereafter and on or about the 23d day of October, 1856, made to the said second mortgagees, and that a deed of the property was subsequently executed to them; that the proceeds of sale were insufficient to satisfy the amount adjudged to be due, and that a deficiency amounting to upwards of a million of dollars, on the 19th day of December, 1865, remained unsatisfied. *Page 228 
They also state, that by an act of the legislature of this State passed on the 31st day of March, 1857, the holders of the second issue of bonds were authorized to form a corporation under the general railroad act and the several acts amendatory thereof, and that one was on or about the 1st day of December thereafter so formed by and under the name and style of the Ogdensburgh Railroad Company, and that directors thereof were duly elected, that by a subsequent act of the legislature duly passed on or about the 15th day of April, 1858, the said Ogdensburgh Railroad Company was declared a duly incorporated company in pursuance of the said act of 1857, and they aver that the said company has never been dissolved, and that it is entitled to all the property and privileges given to it by said act or belonging to it as a corporation, and to all the property in the hands of the said trustees, if any corporation could be authorized by law to receive said property, that the said trustees continued in the actual and continued possession of said property after the organization of the said company, and that the owners of the said second issue of bonds claiming to act under the said act of 1857, and an act amendatory thereof, passed on the 8th day of April, 1864, proceeded to form and did on or about the 1st day of August, 1865, organize the said Ogdensburgh and Lake Champlain Railroad Company, and that the said company since that time have been, and were, at the time of putting in the said answer "in the actual possession, use and occupation of all of the corporate property and franchises of the said Northern Railroad Company," on a transfer thereof from the said mortgagees by the permission and in pursuance of an order of the Supreme Court. It is then stated that upon proceedings instituted by the holders of the first two mortgages for the foreclosure thereof, a judgment on or about the 12th day of December, 1859, was entered in the Supreme Court declaring the same to be valid and existing mortgages for the amount thereof, which by the terms thereof had become due on the 1st day of July, 1859. *Page 229 
After some further allegations not necessary to be noticed here, the following statement is made:
"And these defendants further aver, that on or about the 7th day of March, 1866, the stockholders of said Northern Railroad Company, in pursuance of a call for that purpose, met at Ogdensburgh in the county of St. Lawrence, for the purpose of electing directors of said company, said company not having elected directors for several years prior thereto, their property having been in the hands of the mortgagees as aforesaid, and thereupon proceeded to the election of, and did elect thirteen directors in pursuance of the charter and by-laws of the company; that they elected the defendant, Lovering, president, and also elected a treasurer and secretary."
These statements fully establish the allegations in the complaint, that the said Northern Railroad Company has ever since October, 1854, remained insolvent, and neglected to pay its evidences of debt, and been actually insolvent, and entirely suspended the ordinary and lawful business of such corporation; and the counsel of the appellants, in his points, states that the complaint and the answer both expressly allege, that the defendant's road was operated by trustees from 1854, to August 1st, 1865; the complaint and answer both also allege, that ever since August 1, 1865, the Ogdensburgh and Lake Champlain Railroad Company have carried on all the business of the said railroad, and the defendant's property and franchises have been in use by that company.
There can be no question upon those facts, that the plaintiff was entitled to a judgment declaring that the Northern Railroad Company had forfeited its charter, and that it should be dissolved.
It then remains to be considered, whether the answer of the defendant sets up any fact to prevent such a judgment. The principal and controlling ground relied on is, that the persons elected directors of the company, at the election held on the 26th day of July, 1854, were not eligible, because they did not own any of the capital stock of the said *Page 230 
company, and none of its stock was standing on its books in the names of said persons, or in the names of any or either of them, and that therefore they were not in fact, or in law, a legally elected board of directors of said company, and could not bind it; that the summons and complaint in the action commenced in February, 1856, for the foreclosure of the second mortgages above referred to, were served upon one Samuel C.F. Thorndike, who it is alleged "was the pretended treasurer of the said company in 1854, elected by said illegal directors as aforesaid, and who was not in 1856, and had not been for a long time prior thereto, an officer of said company, and who was, on the 27th day of February, 1856, the day upon which he was served with said summons and complaint, as appears from the judgment roll in said foreclosure suit, in the actual employ of the plaintiff in said action to foreclose said mortgages;" that neither of the defendants, nor any of the other stockholders of the company, nor any director or officer of the company "was served with, or notified of the commencement of said action;" and that the attorneys who appeared for and represented the company were employed by the said Thorndike at the instance, and on the employment in fact of the said plaintiff, and claim that such appearance "could not, and ought not to be allowed to prejudice or foreclose the rights of said company, or the stockholders thereof." And it is also alleged, that the referee who made the sale was the law partner of the attorneys of record for the plaintiffs and son of one of them; and some other acts tending to show irregular and improper action in the conduct of the proceedings and sale.
It is a sufficient and perfect answer to these objections and grounds of defence, that there is nothing in the charter of the company requiring the directors to be stockholders; that the person appointed treasurer was an officer de facto, and that the judgment after an appearance assuming it to have been procured as stated, was at most voidable, and not having been set aside or reversed, but remaining in full force and effect, it is conclusive, and cuts off all right of redemption *Page 231 
by the company, and the title acquired under it is good in the parties claiming under it.
The facts stated by the defendants preclude an assumption or inference that those proceedings were unknown to any of them. The allegation that a meeting for the purpose of electing directors was held on or about the 7th day of March, 1866, "said company not having elected directors for several years prior thereto, their property having been in the hands of the mortgagees as aforesaid," is an admission of the knowledge of the fact of such possession, and that the stockholders had for that reason not even elected directors to take charge or protect the interests of the company, and must be held chargeable with notice of their acts. It is, in any aspect of the case, an admission that the company had for more than one year, prior to that election, suspended the ordinary and lawful business of the company, and that the Ogdensburg and Lake Champlain Railroad Company had been, during that time, holding adversely to them.
There are several charges of fraud alleged against the second mortgagees, which, if true, are immaterial and irrelevant in this action.
Assuming that there might have been grounds of relief against the judgment and proceedings in the foreclosure suit, which would have warranted a judgment restoring the property to the company, they were not available in this action. The parties to be affected thereby are not defendants in this action, and consequently no judgment can be made therein impairing their rights. These considerations show that there was no issue of fact to be tried either by the court or by a jury, and judgment could therefore be properly rendered on the complaint and answer.
The judgment rendered thereon, declaring a forfeiture by the company of its rights and franchises, and its dissolution, was proper, and as the defendants, other than the company, have admitted the exercise of such rights, after a knowledge of the facts above referred to, the fines imposed on them were legally adjudged, and the views presented in the opinion *Page 232 
delivered at General Term, in which I concur, show that a receiver was properly appointed.
I may add that the refusal to stay proceedings in this action was discretionary, and is not reviewable in this court.
It follows that the judgment appealed from must be affirmed with costs.