Court Opinion

ID: 6974035
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:07:43.517629+00
Date Added: 2024-06-11T16:08:54.457689
License: Public Domain

Mr. Justice Hand delivered the opinion of the court: It is first contended that the ordinance of February 11, 1907, impairs the charter rights of the Chicago City Railway Company as they existed at .the time of the passage of said ordinance, and that said ordinance is therefore ultra vires the city of Chicago and the Chicago City Railway Company, and void. To sustain this proposition the appellant sets out in -his bill the ordinance of August 15, 1858, the acts of 1859 and 1865, and the ordinances passed by the city of Chicago, the village of Hyde Park and the town of Lake from 1858 to 1906, so far as they apply to the Chicago City Railway Company, and then insists that under, those several ordinances and statutes the Chicago City Railway Company had the'right, on February 11, 1907, to continue to. operate its entire system of street railroads in the streets of the city of Chicago upon the south side until such time as the city, under the ordinances of 1858, should purchase from the Chicago City Railway Company its entire system of street railroads. It is urged, however, by the appellees, that from an examination of said ordinances and" the acts of the legislature it will be found that the contention of the appellant is not true as a matter of law or as a matter of fact. It was held in Blair v. City of Chicago, 201 U. S. 400, that the act of 1865 did not have the effect to extend the right of the Chicago City Railway Company to occupy the streets of the city of Chicago, but that the right to occupy said streets could only be acquired from the city of Chicago, and that the only effect of the act of 1865, in the particular now under consideration, was to extend the corporate life of the Chicago City Railway Company ninety-nine years from February 14, 1859. In People v. Chicago Telephone Co. 220 Ill. 238, it was held that where the corporate authorities of towns or villages had granted rights to public service corporations to occupy their streets arid no time was fixed when such rights should cease, such rights did not exist in perpetuity, but that they would cease to exist when the municipalities granting such rights ceased to exist, as the village of Hyde Park and the town of Lake ceased to exist, by annexation to the city of Chicago. It will be found that in some of the ordinances of the city of Chicago passed prior to 1875, when the city adopted the City and Village act, the right of the Chicago City Railway Company to occupy the streets of the city was limited to a time certain and not until, the city should purchase said street railroads, and that in a number of the ordinances passed by the corporate authorities of the village of Hyde Park and the town of Lake prior to 1878, the date of annexation, there was no time limit when the right to occupy the streets of said village or town conferred upon the Chicago City Railway Company should expire. It will also appear that several' of said ordinances were passed by the city of Chicago subsequent to the time of the adoption of the City and Village act, which act expressly limited the power of the city to grant the right to occupy the streets of the city with street railroads to the period of twenty years. In those cases, therefore, where the ordinances of the city fixed a time when the right to occupy the streets of the city should expire, and that time had expired prior to February 11, 1907, and in those cases where the Chicago City Railway Company was operating its railroad in streets formerly located in the village of Hyde Park or the town of Lake under ordinances passed by said village or town fixing no time when such right should expire, the Chicago City Railway Company was operating its railroads in such streets without authority of law. And the same would be true where the Chicago City Railway Company was operating under ordinances passed by the city subsequent to 1875, when it. had been operating under said ordinances more than twenty years. The ordinance of 1858 provided that the cars in the streets covered by that ordinance should be operated by animal power. By ordinances passed by the city of Chicago the city had authorized the Chicago City Railway Company to operate its cars by electricity. The right to so operate was, however, limited to ten years in one instance and in another to eight years. The city had, as early as 1883, denied the power of the Chicago City Railway Company to operate its railroads in the streets of the city for ninety-nine years under the act of 1865, and when an ordinance was passed in that year by the city extending the Chicago City Railway Company’s right to operate its railroads in the streets of the city for twenty years, it was expressly provided that no new rights for a longer period than twenty years should be conferred upon the Chicago City Railway Company to operate its railroads in the streets of the city by said ordinance, and when the act of 1883 expired, in 1903, the city, with like limitations, extended the rights of the Chicago City Railway Company to occupy the streets of the city with its railroads for short periods. At the time the ordinance of 1907 was passed,hot only was there pending a bitter controversy between the city of Chicago and the Chicago City Railway Company over the right of the Chicago City Railway Company to occupy the streets of the city with its railroads, but in many instances the Chicago City Railway Company was operating in the streets of the city without any authority and in open disregard of the law. The act of 1903 provided for the taking over of the street railroads by the municipalities of the State in which they were located, (Lobdell v. City of Chicago, 227 Ill. 218,) and the time was ripe in 1907 for some adjustment of the differences between the city of Chicago and the Chicago City Railway Company, the result of which was the passage of the ordinance of February 11, 1907, by the city of Chicago and the acceptance of such ordinance by the Chicago City Railway Company, and the question is, had the city the power to pass-said ordinance and the Chicago City Railway Company the power to accept the same? By the act of 1865 it was provided “that it shall be competent for the said common council, with the written consent or concurrence of the other party or parties, or their assigns, to any of said contracts, stipulations, licenses or undertakings, to amend, modify or annul the same.” In the Blair case, supra, the Supreme Court of the United States held that the above provision was amply sufficient to allow the city of Chicago and the Chicago City Railway Company, by agreement, to change the power by which the Chicago City Railway Company should operate its cars from animal power to electricity, and we think said language sufficiently broad to allow the city of Chicago and the Chicago City Railway Company to abrogate the rights of the city and the Chicago City Railway Company created by the ordinances of 1858 and those subsequently passed, under which the Chicago City Railway Company had the right to operate in the streets of the city a fragmentary system of street railroads, and to adopt in place thereof the ordinance of 1907, which would give to the city of Chicago and the Chicago City Railway Company a complete system of street railroads in the south section of the city. The corporate powers of the Chicago City Railway Company are, as defined by the act of 1859, “to construct, maintain and operate a single or double track railway, with all necessary and convenient tracks for turn-outs, side-tracks and appendages in the city of Chicago, and in, on, over and along such street or streets, highway or highways, bridge or bridges, river or rivers, within the present or future limits of the south or west division of the city of Chicago, as the common council of said city have authorized said corporators, or any of them, or shall authorize said corporation so to do, in such manner and upon such terms and conditions, and with such rights and privileges, as the said common council has or may have contracted with said parties, or any or either of them, prescribed.” In Morville v. American Tract Society, 123 Mass. 129, on page 136, the court said: “The power to make all such contracts as are necessary and usual in the course of business, or are reasonably incident to the objects for which a private corporation is created, is always - implied, where there is no positive restriction in the charter.” We therefore conclude that the ordinance of February 11, 1907, was not ultra vires the city of Chicago or the Chicago City Railway Company, and void. It is next contended that even though it be conceded that the city of Chicago had the power to pass the ordinance of February 11, 1907, the board of directors of the Chicago City Railway Company could not accept said ordinance, and that before said ordinance would be binding upon the city of Chicago and the Chicago City Railway Company it must be unanimously accepted by the stockholders *' of the Chicago City Railway Company. Section 4 of the act of 1859 provides that “all the corporate powers of said corporation shall be vested in and exercised by a board of directors and such officers and agents as said board shall appoint.” As we have seen, it was within the corporate powers of the city of Chicago to ‘pass, and of the Chicago City Railway. Company to accept, the ordinance of February 11, 1907. That being true, we think it necessarily follows that the acceptance of the ordinance could be con-~ summated for and on behalf of the Chicago City Railway Company by its board of directors, and that their acceptance would be binding upon the stockholders of the corporation. In the American and English Encyclopedia of Law (vol. 21,—2d ed.—p. 863,) it is said: “The general power to administer the affairs of a corporation is usually vested in a board of directors or trustees elected by the stockholders. The authority of directors is very extensive, and includes, generally, the power to do any act or make any contract in the conduct of the company’s affairs or business which is within the limits of the powers conferred upon the corporation by its charter and which is necessary or proper to enable the corporation to accomplish the purposes of its creation. And contracts so made, in the absence of any express restriction, will bind the corporation although not assented to or ratified by the stockholders.” This text is well supported by the adjudicated cases. (Dickinson v. Consolidated Traction Co. 114 Red. Rep. 232; Leslie v. Lorillard, 110 N. Y. 519; 18 N. E. Rep. 363; Beveridge v. New York Elevated Railroad Co. 112 N. Y. 1; 19 N. E. Rep. 489.) The cases relied upon by appellant, notably that of Chicago City Railway Co. v. Allerton, 85 U. S. 233, involved the exercise of powers by the board of directors other than corporate powers, and those cases are not in point. In Dickinson v. Consolidated Traction Co. supra, on-page 254, it was said: “It is unreasonable to suppose that a power conferred by the creative act should, in the absence of any other mode prescribed for its exercise, be made to depend upon the unanimous consent of the stockholders. Corporate existence might be so imperiled and corporate ends defeated.” In Beveridge v. New York Elevated Railroad Co. supra, it was said: “What business a corporation can do within its chartered limits and in or about that business by statutory authority, its directors hold a delegated power from the legislature to do for it.” It is also urged that the ordinance of February 11, 1907, is invalid by reason of the fact that the property owners of the land abutting upon the several lines of the Chicago City Railway Company’s railroad in the streets of the city are not required to consent to the adoption of said ordinance or to the continuation of said railroads in said streets, as it is claimed is provided by clause 90 of section 62 of the City and Village act. The act of 1903 provides that the city shall have the power to grant the use of its streets for street railway purposes without the petition or consent of any of the owners of the land abutting or fronting upon any street or public way, or portion thereof, in which street railway tracks are already located at the time of making such grant. It is apparent, therefore, that the act of 1903, 'and not clause 90 of section 62, controls in this case, and that the consent of the owners of property abutting upon the several lines of railroad of the Chicago City Railway Company laid in the streets of the city of Chicago was not necessary to the passage of said ordinance of February 11, 1907. It is also said that by the ordinance of February 11, 1907, a partnership is created between the city of Chicago and the Chicago City Railway Company for the purpose of operating the street railroads of the Chicago City Railway Company in the city of Chicago. The law is clear that the city of Chicago has the right to exact compensation from street railway companies occupying its streets with their railroads for the privilege of so doing, (Lobdell v. City of Chicago, supra,) and the fact that the city is to receive fifty-five per cent of the net earnings of said Chicago City Railway Company during the term that it shall occupy ,the streets of the city of Chicago with its' tracks under the ordinance of February 11, 1907, does not make the city of Chicago and the Chicago City Railway Company partners in the operation of said street railway system. It is also urged that the Chicago City Railway Company, by the acceptance of said ordinance, has taken the control of its street railway system- from its board of directors and delegated such control to the board of supervising engineers created by said ordinance. The ordinance of February 11, 1907, provides for an appraisement of the property of the Chicago City Railway Company; that to the amount of the appraisement, which is fixed by the ordinance at $21,000,000, there shall be added the cost of the re-equipment of said street railway system. It also provides for the payment of certain fixed charges, and then provides that thereafter the net earnings of the Chicago City Railway Company shall be divided between .the city of Chicago and the Chicago City Railway Company. It is apparent that it was necessary to provide, by ordinance, for some method whereby the net earnings of the Chicago City Railway Company might be determined, and the board of supervising engineers created by the ordinance was created to supervise the re-building and re-equipment of the roads of the Chicago City Railway Company and the operation of said roads so far as might be necessary to reach a correct conclusion' of what the net earnings of the railroad would be when it was in operation.. The city must necessarily be represented by some officer or some board in the determination of the- amount which it is to receive from the Chicago City Railway Company for the use of its streets for street railway purposes, and we see no legal objection to the creation of said board of supervising engineers or to the power's conferred upon such board or the duties imposed upon it by the ordinance of February n, 1907. The board of supervising engineers occupies a relation to the street car system operated upon the south side of the city somewhat analogous to that which the board of local improvements occupies to public improvements which are to be made in the city, and we are unable to see, and the appellant has not pointed out, how the creation of said board of supervising engineers works any injustice to the city of Chicago, the Chicago City Railway Company or to him. We have given every contention of the appellant made in a brief containing three hundred and twenty-four pages and a reply brief containing fifty-two pages the most careful consideration, and are of the opinion that the ordinance of February 11, 1907, is a valid ordinance and binding upon the city of Chicago, the Chicago City Railway Company and the appellant, as a stockholder of said Chicago City Railway Company. To hold otherwise would be to hold that the Chicago City Railway Company has the right, under the ordinance of August 15, 1858, to occupy all the streets upon the south side of the city until such time as the city should, under the terms of that ordinance, purchase the street railway system of the Chicago City Railway Company, and that as the city is now indebted to substantially the constitutional limit, the city could never purchase, for want of funds, from the Chicago City Railway Company, said street railway system, which would, in effect, confer upon the Chicago City Railway Company the right to perpetually occupy the streets of the city upon the south side for street railway purposes. It would also require a holding to the effect that if the appellant, or any other single stockholder owning one share of stock in the Chicago City Railway Company, should object and refuse to give his consent to an ordinance which was satisfactory to the city of Chicago and the people of the city of Chicago and to every other stockholder in the Chicago City Railway Company, whereby the worn-out street railway system of the south side should be re-organized, rehabilitated and rejuvenated, he could prevent the acceptance of such ordinance and the modernizing of said street railway system practically for all time. We cannot, therefore, give our assent to the view of the appellant. There are a number of other grounds which we will briefly advert to, which we are of the opinion clearly show the superior court properly sustained demurrers to said bill. First—It is clear, we think, that the appellant, as a single stockholder,—and no other stockholder has joined him in this suit,—cannot maintain this bill. Under the ordinance of February n, 1907, the Chicago City Railway Company only agreed to construct and operate a system of street railways in the streets of the city of Chicago, which was clearly within the chartered powers of the company. The charter provides, in express terms, that the contracts under which the street railway company shall operate in the streets of Chicago may be “amended, modified or annulled” by the city council with the written consent of the company, and that the terms and conditions upon which the company shall operate its railways in the streets shall be such as the city council shall, by contract with the company, prescribe. It was therefore clearly within its chartered power for the Chicago City Railway Company, by the acceptance of said ordinance, to" enter into a contract by which the terms and conditions upon which its street railway should be operated should be prescribed, and it is elementary that in the absence of any provision to the contrary in the charter, a majority of the stockholders control in deciding corporate questions' requiring their action. In Clark & Marshall on Private Corporations, on page 1688, it is said: “A stockholder cannot maintain a bill in equity to set aside an act or transaction which was done irregularly or illegally but which a majority of the stockholders are entitled to do regularly or legally. Nor can a stockholder sue to set aside a transaction on the part of the directors on the ground that it was fraudulent, irregular, illegal or in excess of the powers conferred upon the directors where the transaction is within the powers of the corporation, and such, therefore, as a majority of the stockholders may ratify, unless, as may sometimes be the case, it is impossible to procure a meeting of the stockholders to pass upon the transaction.” And in Purdy’s Beach on Private Corporations (vol. 2, sec. 681, p. 998,) it is said: “If the thing complained of is a thing which, in substance, the majority of the members are entitled to do, or if something has been done irregularly which the majority are entitled to do regularly, or if something has been done illegally which the majority are entitled to do legally, there can be no use in having a litigation about it, the end of which is only that a meeting has to be called and then ultimately the majority gets its wishes. If it is a matter of that nature it only comes to this: that the majority are the only persons who-can complain that a thing which they are entitled to do has been done irregularly.” It is expressly stated in the bill that over 169,000 shares of the total capital stock of 180,000 shares of the company are registered in the names of J. P. Morgan & Co. and Walter B. Horn and Thomas W. Joyce, and .“that the defendants J. P. Morgan & Co., the said directors, and said Horn and Joyce last named, have conspired together and agreed to act together for the purpose of accepting and executing the said illegal ordinance of February n, 1907.” It is also alleged that in accepting the ordinance the said directors were acting upon the direction of the defendants J. P. Morgan & Co., who are claimed to control a large majority of the stock of the company. It therefore affirmatively appears from the allegations of the bill that the registered owners of more than nine-tenths of the capital stock of the Chicago City Railway Company' affirmatively approved of the acceptance of the ordinance by the board of directors at the date of such acceptance. Second—We are also of the opinion that the appellant was barred of the right to attack the ordinance of February 11, 1907, by his laches. The ordinance was passed on February 11, 1907, and after having been ratified by the electors of the city of Chicago was accepted by the Chicago City Railway Company on April 15, 1907, and on July 1, 1907, the Chicago City Railway Company executed its trust deed and bonds to the amount of $10,000,000, which bonds it sold and was proceeding to expend the proceeds thereof in the re-equipment of its street railway property covered by said ordinance. On the 25th day of July, 1907, the appellant protested to the officers and directors of the Chicago City Railway Company that the ordinance was void and demanded that no money be expended under the ordinance. He, however, took no action in court, by filing his bill, until the 21st day of October, 1907,—six months after the passage of the ordinance and three months subsequent to his protest. If he desired to act in the premises he should have acted with sufficient promptness to have enabled the court to do justice to him without doing injustice to others. In Galliher v. Cadwell, 145 U. S. 373, the court said: “Laches is not, like limitation, a mere matter of time, but principally a question of the inequity of permitting the claim - to be enforced,—an inequity founded upon some change in. the condition or relations of the property or the parties.” And in Townsend v. Vanderwerker, 160 U. S. 171, the court said (p. 186) that laches depends on “whether, under all the circumstances of the particular case, plaintiff is chargeable with a want of due diligence in failing to institute proceedings before he did.” And in Morse v. Seibold, 147 Ill. 318, this court said (p. 325) : “Laches has been defined to be such neglect or omission to assert a right as, taken in conjunction with lapse of time more or less great, and other circumstances causing prejudice to an adverse party, operates as a bar in a court of equity.” In Coolidge v. Rhodes, 199 Ill. 24, this court said (p. 32) : “The more important question in the case is whether complainants are barred by laches. Where this defense appears upon the face of the bill it may be taken advantage of by demurrer, either special or general.” The appellant became a stockholder in 1905, and after the street car controversy between the city of Chicago and the Chicago City Railway Company was at its height, and he having injected himself into the controversy by becoming a stockholder in the Chicago City Railway Company at that time, if he desired to prevent the consummation of the settlement of that controversy by the acceptance of the ordinance of February 11, 1907, by the railway company, he should have acted at once upon its passage by the city council and not have waited until October 21, 1907, when the city of Chicago, the Chicago City Railway Company and the bondholders of the railway company could not be placed -in statu quo without great loss to them. Third—The bill sought relief on grounds other than that the ordinance of February 11, 1907, was ultra vires and void and against parties in no way connected with the ''city of Chicago, and we therefore think it multifarious. In Swift v. Eckford, 6 Paige’s Ch. 22, the court said: “If a joint claim against two or more defendants is improperly joined in the same bill, with a separate claim against one of those defendants only, in which the other defendants have no interest and which is wholly unconnected with the claim against them, all or either of the defendants may demur to the whole bill for multifariousness.” The amendment to the bill and the supplemental bill were not sworn to, and the court did not abuse its discretion in refusing to permit the amendment to be made or the supplemental bill to be filed. Finding'no reversible error in this record the decree of the superior court will be affirmed. Decree affirmed.