Court Opinion

ID: 7096882
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:11:55.800421+00
Date Added: 2024-06-11T16:13:16.780317
License: Public Domain

ON REHEARING.
Beck, J.
A rehearing was granted in this case and it has been again argued and submitted for our consideration. While Ave do not all concur in our conclusions, we all unite in holding that the judgment of the court below must be affirmed. I will proceed to state the views I entertain upon the questions' necessary to be determined, after having given them a careful reconsideration, and will indicate the concurrence, or dissent thereto, of the other members of the court.
4_. flUng Habiñtylof: stockholders, I. I believe it is conceded on all hands that the defects set out in plaintiff’s petition, relating to the organization of the Construction Company, will not render defendant Bable, unless it be the failure to file the articles of incorporation in the office of the Secretary of State. Two sections of the statute bear upon the question involving the effect of this omission, namely 1166 and 1156 of the Revision. :
The section last named' provides that a failure to comply, substantially with the foregoing requisitions, in relation to organization and publicity, renders the individual property of all the stockholders liable for the corporate debts. It is not claimed that the filing of the articles of incorporation in the office of the Secretary of State pertains to the organization of the company. It clearly appears that the same act does not pertain to the publicity to be given to the fact of organization.
It cannot be claimed that notice — publicity, of any matter is given by instruments and documents'filed in the office of the Secretary of State. I am unable to call to mind a single instance where notice, required by the laws, of property or contracts, is imparted by documents filed in that office. Prae*436tically, the filing of articles of incorporation in the Secretary’s office, required by the statute, imparts no publicity, for no man will seek knowledge of the existence of a corporation there. I conclude, therefore, that the omission to deposit the articles of incorporation in the office of the Secretary of State is not contemplated by § 1166.
Nowhere in the statute is any other provision found for rendering a stockholder liable for the debts of the corporation. The statute provides that private property may be exempted from' liability for corporate debts, except as therein otherwise provided. § 1150, ¶ 5. Let this be kept in mind.
I come now to the consideration of section 1156. It provides that .the “doings” of a corporation shall be valid if a copy of the articles of association be “filed in the office of the Secretary of State within three months.”
It would certainly be a harsh, oppressive and unreasonable rule of law which would permit a corporation to exist legally and do lawful acts up to a certain time, and after that all their past and future acts would be void, because of failure to do certain prescribed acts. What good would come of such a law % The gross hardships and inj ustice that would be wrought are apparent to all. We ought to put no such construction upon a statute, unless compelled thereto by its plain, unmistakable language. In the construction of statutes courts must seek for a legislative intention consistent with justice and right. It would be a strange rule of law indeed,- which would hold a.corporation to exist, to be in the exercise of its franchises, and yet regard its acts void, because 'of some irregularity or illegality in the omission of an act to be done after its organization.
I will now inquire if, for the omission of the Construction Company to file-its charter with the Secretary of State, it ceased to be a corporation — was deprived of its franchises without proceedings instituted for that purpose.
Rev., § 1180, provides that, “persons acting as a corporation under the provisions of this chapter, will be presumed to be legally incorporated until the contrary is shown, and no *437such franchise shall.be declared actually null or forfeited, except in regular proceedings brought for that purpose.”
Now the persons composing the. Construction Company “are acting as a corporation.” Under this statute they are to all intents -a corporation in contemplation of law until their franchise is taken away; this has never been done. How can it be said that the stockholders are no longer a corporation, but are liable as partners? The position is utterly untenable.
III. The foregoing consideration, in my judgment, disposes of this point of the case; but there is another view which, in my opinion, is just as conclusive.
I have already called attention to the fact that stockholders are personally liable under the statutes in one case only, namely, where there is a failure to comply substantially with the requirements of § 1166 in regard to organization and publicity.
. Now, suppose it to be admitted that the acts of this corporation for the irregularity shown, viz., the failure to file the articles of association in the office of the Secretary of State, are invalid, where do we find authority for holding that, on account of such irregularities, the stockholders are individually liable?
It is said that their “ doings’’ — their acts of organization, are invalid and they are no longer a corporation, and are liable as co-partners. But § 1180 provides that they shall be a corporation until dissolved; the position, therefore, conflicts with this section. The word “ doings,” therefore, cannot relate to their acts of organization. If it be other acts that are void, and it must be, then the stockholders are not liable, for the corporation still exists and there is no statute that makes them liable except for failure to comply with the requirements relating to publicity of the organization and to the organization itself.
Seevebs, Cii. J., and Eothrock, J., concur in the foregoing conclusions; Day and Adams, J. J., do not.
5.-: what way. IY. I am fully persuaded that the Construction Company is not a corporation of the cliai’acter contemplated in Sec. 1338 of the Eevision, and I'base my conclusion upon these grounds:
*4381. The language of the statute does not admit of application to the Construction Company of which defendant is a stockholder. I never heard the term railroad company applied to organizations called construction companies. I am sure that not a man in the state would understand me if I should use the expression railroad company to designate a construction company. Railroad corporations are understood to be common carriers, corporations who build, own, and operate railroads. But it is said á railroad company may build a railroad and yet never operate it. Tes, it may go into bankruptcy before it completes its road, or for some other reason it may never accomplish the design of its organization, which was to become an owner of a railroad and a common carrier. It may lease its road, but it would accomplish one purpose of its organization in that way.
I believe that, at the date of the enactment in question, 1858, there was not a railroad construction company in this state. Surely the legislature, in using the term railroad company, did not intend to describe a coi-poration of a character wholly unknown to the people of the state.
The very name of the corporation in question indicates its true character and is descriptive of the objects and purposes of its organization.
The fact that the charter of the corporation permits it to own lands is no foundation for an argument against the view I take, but in fact rather supports it. Railroad companies necessarily need not own one foot of land; all they need is an easement upon land — -the right to occupy it as long as they continue to discharge the duties of common carriers; they may condemn land for such purpose. Rev., § 1314. The construction company could not condemn land whereon to build shops, for the construction of bridges, for rolling iron, or to erect stables for its horses or boarding-houses for its employes. They ought, therefore, to have power to purchase land, which is given in its charter.
Neither does the fact that the construction company under its articles of association may own a railroad, make it a railroad company. Many banks have authority under their char*439.ters to. acquire by purchase property of all kinds, and others can acquire whatever property it becomes necessary to take in order to secure debts. Under these powers they would have the right to' purchase and acquire railroads. Surely they would not be ealled, because of these powers, railroad companies.
The difference between a railroad company and the Bailroad Construction Company whose character we have been considering is this: The first is organized to build, own, and operate railroads; the second, to build railroads for the first.