Court Opinion

ID: 7891331
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:15.817627+00
Date Added: 2024-06-11T16:31:55.545454
License: Public Domain

Doster, O. J.
(dissenting from the third and fourth paragraphs of the syllabus and corresponding portions of the opinion) : I concur in the above opinion of Mr. Justice Smith that the franchises acquired from the city of Topeka by The Topeka Water Company (the Kansas corporation) were of the kind denominated as “secondary,” and that they constituted a species of property vendible in character, and that *566they passed by mortgage foreclosure aud sale to Charles P. Street, and that they were acquired from him by the Topeka Water Company (the New Jersey corporation), provided it be a corporation capable of acquiring and holding property in Kansas. I dissent, however, from the view taken of it as a legally constituted corporation with power to do business in this state. The paper quoted in Mr. Justice Smith’s opinion is not the charter of the company, and, although that fact has no material bearing upon the question, I mention it for the purpose of accuracy in the use of terms. Such papers are often, perhaps usually, called charters. They are, however, only the articles of association entered into by the corporators. The charter of a corporation is the legislative enactment which grants its franchises and confers upon it its powers. The charter of the New Jersey corporation, so called, is the statute of that state.
It is a fundamental rule in the construction of public grants made without consideration, that they are construed most strongly against the donee. This applies to grants of corporate franchises as well as to grants of all other character. The same rule of construction should apply to the certificate of incorporation or articles of association between the corporators. In stating the objects of their association these corporators choose their own language, and in the exercise of the special privileges they ask and obtain they should be strictly limited by the terms they themselves use.
In the expression of my views it will be unnecessary to enter upon a critical analysis of this anomalously worded writing called the “charter” of the New Jersey corporation. Within its incongruous and ungrammatical mass of verbiage a few important facts *567have not been successfully hidden, but stand forth with sufficient prominence to indicate the character of the paper and the purpose of the company. To begin, the instrument localizes the company as a Kansas institution by designating it the “ Topeka Water Company.” It next states that the object for which the company is formed is “to do any and all the things herein set forth, . . . and in any part of the United States.” It next states that the object thus ‘herein set forth” is to “build, construct, repair, purchase, own and operate a water-works plant in the county of Shawnee, state of Kansas, and elsewhere in the United States of America, for the purpose of supplying the city of Topeka, and the county of Shawnee in the state of Kansas, . . . with water for public, private and domestic use,” etc. The statement of all the other objects for which the company was formed shows such objects to be subsidiary and incidental to the principal one above stated.
It is true that the instrument states that the company was formed to do the things herein set forth “ in any part of the United States,” but the object herein set forth is “to build, purchase, repair, own and operate a water-works plant, in the county of Shawnee, for the purpose of supplying the city of Topeka with water.” By no rules of construction, grammatical or legal, can any other statement of object be evolved out of the nearly incoherent jargon of words which made up this so-called charter. It is a charter for the purpose of doing business in Kansas and nowhere else. Being such, the case is brought within the principle of Land Grant Railway v. Comm’rs of Coffey County, 6 Kan. 245, referred to in the majority opinion. While the company whose charter claims were considered in that case was excluded by the terms of *568its incorporating act from- doing business in the state of its nativity, yet a company organized in one state to do business solely in another stands upon the same footing. A company organized in New Jersey to do business in Kansas is by necessary implication ex-cliided from doing business in the state where organized.
But, while believing that the New Jersey company should be ousted of the franchises and privileges which as a corporation it has been holding and exercising, I do not wish to be understood as denying the right of the incorporators to own the water-works property in question or to carry on the business of furnishing water to the city of Topeka. I think the water-works property and the right to furnish water to the city of Topeka passed from The Topeka Water Company, the Kansas corporation, through the Atlantic Trust Company and Charles F. Street, to the so-called incorporators of the New Jersey company as members of a partnership.
It is a rule, to which I know there are many exceptions, that defective corporate organization will expose the corporators to liability as partners, but I think there could be no exception to the rule that defective corporate organization,. preventing the corporators from prosecuting their enterprise in a corporate capacity, would not deprive them of property acquired as a corporation, nor prevent them from transacting the business in which they had been engaged, provided it be such as could be carried on by individuals. (1 Bates, Part. § 6 ; Holbrook v. St. Paul Fire & Marine Insurance Company, 25 Minn. 229.) The business of owning a water-Works plant and furnishing water to a city is not one which, either by law or by necessity, is to be exclusively conducted by corporations.
*569What rights the state or the city of Topeka might have as against the New Jersey partnership, in the event the corporators were to be treated as such, are not involved in the case before us, and therefore have not been considered by me.