Court Opinion

ID: 5515448
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:29:26.785029+00
Date Added: 2024-06-11T08:34:17.823640
License: Public Domain

Nelson, C. J.
By the Court, It is contended that the matters set forth in the several replications of the attorney-general, are not causes of forfeiture of the corporate privileges of the defendants, and that, therefore, the replications are no answers to the plea. The first 24, contain matters which, if true, shew a failure to perform six separate and distinct conditions annexed to the grant, specifying particularly the nature of each. The remain, ing replications will be noticed hereafter. The question for the present *204will be, whether this breach, or neglect to comply with any or [ *204 ] all the requirements of the charter, shall work a forfeiture either by statute, or at common law.
The statute, 2 R. S. 483 § 39, provides for the filing of an information against a corporate body, whenever it shall, 1. Offend against any of the provisions of the act or acts, creating, altering or renewing such corporation ; or 2. Violate the provisions of any law, by which such corporation shall have forfeited its charter by misuser; or 3. Whenever it shall have forfeited its privileges and franchises by nonuser ; or 4. Whenever it shall have done, or omitted any acts which amount to a surrender of its corporate rights, privileges and franchises, or 5. Whenever it shall exercise any franchise or privilege, not conferred upon it by law.
It has been strongly urged for the defendants, that the two first clauses, though apparently declaratory of two separate grounds of forfeiture, should be read together; and that the offences against the provisions of the act, creating the corporation, as' specified in the first, the same, as the violation of any of the provisions of law, as specified in the second, must be such as will work a forfeiture by misuser in terms, in order to justify the filing of the information. This is supposed by the defendants’ counsel to have been the substance of the act of 1825, Sess. Laws, p. 450, § 7, from which these provisions were taken. But on a reference to that act, it will be found otherwise : the two separate grounds are as distinctly marked there as here. The seventh section provides, that in case the president, directors and company of any corporation, shall at any time offend against any of the provisions of the act or acts of incorporation, or against the provisions of any laiu by which such company shall have forfeited its charter by misuser, &c., it shall be the duty of the attorney-general, to prosecute, &c. and obtain judgment that such corporation be dissolved. Both statutes obviously intended, that corporations should fulfil the conditions, and perform the duties enjoined by the fundamental law of their creation, as the terms upon which to enjoy their privileges. The principle is not new; it has been always so held at common law as fundamental. Lord Holt said, in London * City v. Vanacre, 1 Ld. Raym. 498, all franchises which are [ *205 ] granted, are upon condition, that they shall be duly executed, according to the charter that settles their constitution : and that being a condition annexed to the grant, the citizens cannot make an alteration: but if they neglect to perform the terms of the patent, it may be repealed by scire facias.” The principle is so thoroughly, and firmly fixed in the law of coporate bodies, that I need do no more than refer to some of the authorities. A non-performance, therefore, of the conditions of the act of incorporation, is deemed per se a misuser, 'that will forfeit the grant even at common law; and hence, if the reading of the statute claimed, be conceded, it would not change the legal effect. 12 Mod. 271. Cruise, tit. Franchise, § 79. J. in Heane v. Rogers, 9 Barn. & Cress. 577. Being pleaded, however, Willcocks on Corp. p. 334, Angel & Ames on Corp. 510, and cases there cited.
*205Rut granting this to be the general principle, the question still comes up for consideration, what departure from the provisions of the charter will work a forfeiture ? Shall every omission, or non-performance of a condition of the grant have this effect ? Though the proceeding by information be against the corporate body, it is the acts or omissions of the individual corporators, that are the subject of the judgment of the court. The powers and privileges are conferred, and the conditions enjoined upon them ; they obtain the grant, and engage to perform the conditions: and when charged with a breach, I do not perceive any reason against holding them accountable upon principles applicable to an individual to whom valuable grants have been made upon conditions precedent or subsequent. As to him, performance is indispensable to the vesting or continued enjoyment. If a feoffment be made of lands upon condition of paying rent, building a house, or planting an orchard, and a failure to perform, the feoffer may enter. So if an office be granted, a condition is implied that the party shall faithfully execute it, and for neglect the grantor may discharge him. 1 Bacon, 629. 15 Wendell, 291. 1 id. 388. 3 id. 498. 13 id. 530.
Placing corporate grants upon this footing, there can be no [ *206 ] great difficulty in ascertaining the principles that should *govern conditions annexed to them. The analogous cases of individual conditional grants will give the rule. In these a reasonable and substantial performance according to the intent of the grantor is required. Shep. Touch. 133.15 Wendell, 291. In cases of conditions subsequent, if impossible to be performed, or rendered impossible by the act of God, the grantee is excused and the estate is absolute. 2 Bacon, 676, tit. Condition. Shep. Touch. 133. 157. So if waste be committed by a stranger, it shall not be a breach of the condition of the lease. 2 Bacon, 652. The whole law on the subject will be found reasonable; and nothing is required but what is within the means and ability of the party to comply with. It is emphatically so with respect to corporators: for we all know the nature of the conditions in their charters depend very much upon themselves: they usually settle the terms of the grant, and therein consult their own as well as the public interests. The acceptance also, is voluntary, and must be unconditional. Willcocks on Corp. 31, and cases there cited. This view of the case of conditions subsequent in acts of incorporation, is confirmed by the settled doctrine in respect to those which are precedent. There, as in the case of individual grants, the condition must be first performed before the franchise vests. 18 Johns. R. 137. 9 Cowen, 194. 9 Wendell, 378, 9. 15 id. 127. Angel & Ames, 379. Even where the corporation undertakes to enforce a contested claim or title in a court of justice, performance of a condition precedent, if any exists, must be either admitted or proved: because being essential to its existence, the proof must be given before a suit can be maintained in the corporate name.
Now I am noj; etware of any ground that cap warrant us in distinguishing *206between tbe materiality or the legal effect of conditions precedent and subsequent ; or that would exact the performance of the one as a condition of corporate being, and not of the other; the same authority prescribed both, and we are to presume for good and wise ends. Neither has the statute authorizing the filing of informations against corporations made any such distinction, as has already been seen. 2 R. S. 483, § 39. We could not, therefore, make one, were we so disposed.
*One strong ground for regarding the conditions in these grants [ *207 ] in the same light as in cases of private individuals is, that they are mainly obtained with a view to private interests. I admit the public in. terests are often thereby promoted ; and that this is the chief inducement to the grant on the part of the legislature. But most of them are sought for, from considerations of private gain, and which more or less enter into the grant of every private company. In this respect, they differ from public corporations, which are but the investment of a body of citizens with municipal authority for the better government of a place. The corporators have no private interest in the matter. The former are but individuals stipulating for and accepting the grant upon certain terms for their own benefit. The acceptance implies an undertaking to perform them ; and to neglect or refuse, is a fraud upon the legislature.
In further illustration of the sort of neglect of duties, which are imposed by the grant of a franchise, or, in other words, the misuser that will work a forfeiture, we may refer to a class of cases arising out of the forfeiture of offices. These cases are not all strictly analogous, because the duties enjoined are not so definite and accurately prescribed as in cases of corporations; but they will serve as illustrations. It is laid down as a general principle that if an officer acts contrary to the nature and duty of his office, or refuses to act at all, he forfeits it; and if granted by patent, he may be turned out by scire facias. 5 Bacon, 210, 212, tit. Offices and Officers. 9 Coke, 50, 98. For in every grant of an office, there is an implied condition that the grantee will diligently and faithfully execute the duties of it. Lord Coke says, in the Earl of Shrewsbury’s Case, 9 Coke, 50, that there are three causes of forfeiture : 1. Abuser ; 2. Nonuser; and 3. Refusal. The first, is where the sheriff or gaoler permits a voluntary escape, or abuses the prisoners, &c. ; or a forester or parker cuts wood, unless for necessary brush. The second, where the officer is concerned in the administration of justice, or of the commonwealth, and neglects to attend upon his duties; and the third, where he is bound to attend upon request, and refuses ; in either case *the office is forfeited. Sickness is an excuse ; but in [ *208 ] the case of a searcher of a port, voluntary absence when search should be made, is not. Cro. Car. 491. And Lord Holt, held that the voluntary absence of a recorder of Ipswich, he holding a public office, was .cause of forfeiture, though no inconvenience ensues. 2 Ld. Raym. 1237. *208Mr. Hawkins doubts this, but adds, that he who so far neglects a public office as plainly to appear to take no care of it, should rather be immediately displaced than the public be in danger of suffering damage. 1 Hawk. 311, b. 1 ch. 67, § 1. Lord Mansfield, in Rex v. Wells Corporation, 4 Burr. 2004, said, that a general neglect, or refusal to attend the duties of a public office, is a reason of forfeiture, a determined neglect or wilful refusal, but a single instance of omitting to attend, when no particular business was expected, nor in fact happened, is a very different case. It is said that one negligent escape by a sheriff is not cause of forfeiture; but that one voluntary escape is ; so of two or more negligent escapes. 5 Bacon, 210. 4 Burr. 2007. Thus it will be seen that the franchise of an office held upon the implied condition of diligently and faithfully executing the duties belonging to it, may be forfeited by general neglect, or wilful refusal to perform. The ingredient of a bad or corrupt motive need not enter into the cause ; it is enough if the duty is neglected, or designedly omitted.
The hardship of exacting from corporations a fulfilment of all the requirements of the charter, has been urged upon us; but the appeal is made to the wrong forum. That is a question to be settled with the legislature that prescribed them. It is not for courts to say one condition is material, and must be performed on pain of forfeiture ; and another is unimportant and may be dispensed with, or enforced by indictment or pecuniary penalty. Where shall we draw the line ? The statute makes no such distinction ; if corporations offend against “ any of the provisions of the act or acts creating^ them, the information may be filed, and judgment of ouster rendered. 2 R. S. 483, § 39. Id. 485, § 49. Besides, the hardship is no greater than in the case of individual grants, where in a court of law nothing short of performance, or the act of God, or of the grantor, will excuse [ *209 ] *the forfeiture. While this rule is steadily enforced against them, I do not perceive how we can deny its application to the case of a private association of individuals. If the condition is onerous, and unessential to the purposes of the charter, relief is plain, and at” hand ; the legislature will repeal it. While it remains on the statute book we are to presume it was deemed material by those who had a right to judge of the matter, and should be enforced. I speak now of express conditions; where they are implied, and of course undefined, except by construction of law, a more indulgent consideration may well be given; we are not then tied down to the letter of the statute. Their materiality to the great end of the institution may be regarded, and enter into the judgment of the court.
The remedy by repeal being thus plain and easy, I am unable to appreciate the force of the appeal on the ground of hardship, even if properly made to us. I desire to treat these institutions with all reasonable indulgence, consistent with the express injunctions of the law. Under proper-regulations, they are often eminently useful instruments in the hands of citi*209zens lo promote valuable and meritorious enterprizes, public and private; and at an early day, and even at this time, none more so than those instituted to construct our public thoroughfares, or less gainful to the corporators. But their usefulness as well as public favor depend upon an honest and faithful fulfilment of the duties they have assumed. It is the neglect of these, the failure to live up to the fundamental law of their being, that has mainly contributed to the doubt as to the wisdom of their creation, and the disfavor with which they are now regarded by many. Their own as well as the public interests will be best consulted by holding them to a strict accountability. The terms and conditions of their grant being settled and accepted, they ought not to be allowed to act beyond its scope and end, nor come short of it. Within this line of duty, their acts should be liberally expounded, and indulgently regarded both by the courts and the public.
For the above reasons, I am of opinion that the true construction of the statute authorizing proceedings against ’‘corporations [ *210 ] by information, imposes the penalty of forfeiture on failure to perform any express condition annexed in the act of incorporation : that it is a misuser' within the meaning of the 49th section, and would be so regarded even at common law, as a fundamental rule in respect to corporate bodies ; and applying this principle to the issue upon the first twenty- four replications, it follows that the people are entitled to judgment, unless concluded by the license of the governor.
The 32d section of the General Turnpike Act, 2 R. S. 587, provides, that as soon as the company shall have completed their road, or any ten miles thereof, they shall give notice to the governor, who shall appoint three discreet freeholders not interested, to view the road and report to him, in writing, whether the same is completed in a workmanlike manner, according to the requisitions of the law. § 33. If they report in the affirmative, he shall grant a licence to permit the erection of so many gates on the road as shall be sufficient to collect the tolls authorized by law. It is insisted that this report and license are conclusive upon the people, (even in this direct proceeding to inquire into the matter;) that the road has been made agreeably to the terms of the charter ; that the question is res judicata, and that the only ground for setting up a misuser to work a forfeiture, is a subsequent default as to repairs, &c.
After the best consideration I have been able to bestow upon the question, I am inclined to think the construction insisted on would give to the clause an effect beyond the intent of the legislature. It appears to me the object was simply to afford reasonable evidence of the completion of the work, before the exaction of toll should be allowed : for this purpose, the license is conclusive in favor of the company, but not equivalent to a general judgment on the writ of quo warranto. The proceeding is ex parte in respect to the people ; it does not contemplate a contested trial, where the whole matter would be brought out for discussion and adjudication. True, the *210governor may in some respects be regarded as representing the public interest, but his power and duty end in the appointment of the free- [ *211 ] holders — it is made upon an ex parte application of the ‘company, without even the security arising from an opposing interest. It seems to me it would be an unsound as well as unsafe construction of the statute, under the circumstances, to give to the report of the freeholders the high and conclusive effect claimed. I am therefore of opinion that the people are entitled to judgment upon the demurrer to the first twenty-four replications, with the exception of the fifth, eleventh, seventeenth and twenty-third, which are not well pleaded. The facts as averred do not shew with sufficient certainty that the road was so constructed in any part of it as to require a fender.
I have said that the whole law on the subject of performance of conditions precedent or subsequent is reasonable, and within the ability of the company to perform. A substantial performance according to the intent of the charter is all that is required. Under the issues presented, this will be a question on the trial. If such a performance is shown, the defendants will be entitled to the verdict. The law in respect to individual grants on condition will afford familiar principles to guide the court and jury. Slight departures are overlooked. The leaning of the law is against the party claiming the forfeiture ; and if the failure is such as cannot be disregarded in a court of law upon settled principles, and has arisen from mistake or accident, the legislature will apply the remedy. They, and not the court, possess the dispensing power.
The demurrer to the remaining six replications I am of opinion is also not well taken. The first replication alleges, that the company erected gates and collected toll before the license of the governor was procured, and the others, that after the license more toll was demanded and received than was allowed by law. Either is an infraction of an express provision of the act of incorporation, and therefore within the mischief of the statute authorizing the information as already expounded. It was argued, that admitting the toll had been taken in violation of the charter, still it would only forfeit that franchise, and not all the franchises conferred. The rule at the common law is, that if the franchises are not dependent upon each other, the mis- [ *212 ] user of one does not ‘forfeit all; Cruise, 305, tit. Franchise, § 86 ; Finch, 165 ; and our statute may, I think, admit of a construction to a similar effect. 2 R. S. 483, § 39, 48. But the distinction is not worth contending for here ; the charter would be worse than useless to the company without this privilege. The right is so vital, and connected with the enjoyment of the grant, that a severance ought not to be permitted. It would be unreasonable to enforce the burthen imposed upon the company, after ousting them of the only countervailing benefit; they would *212not have assumed the one without the enjoyment of the other, and they should be deemed inseparable.
It was urged that the time for completing the road, as extended by the act of 1836, had not expired when the information was filed, and therefore this proceeding is premature. But the plea avers the construction and finishing of twenty-five miles of the line, as a part of the defendant’s title to' the franchises claimed. This is therefore a very material averment, and must be maintained. It is properly met and overthrown by the replications. It is too late for the defendants now to say they have a longer time to comply with the requirements of the charter. The franchises claimed and exercised, according to the plea, depend upon the completion of the twenty-five miles.
It is further urged that the legislature confirmed the road as constructed, by the act of 1836, (the act of 1834 passed before any part of it was made,) extending the time to complete it. They have not done so in express terms, and I am unable to perceive any such implied intent, in any of its provisions. 9 Wendell, 382, 3, 4.
It is made a point, that the six last replications should have concluded to the country ; but as they set up new matter in answer to the plea, and which went to overthrow it, they properly concluded with a verification. The defendants were entitled to an opportunity to answer by rejoinder if they could.
It was also said that the demurrer to the five last replications was mainly intended to raise and settle the construction of the act, whether the rate of tolls shall be in proportion to the distance actually travelled, or shall be determined *by the distance between the gates as located. [ *213 ] The latter, I am of opinion, is clearly the rule intended by the act. Statutes of 1831, p. 49, § 5. By the section referred to, the company may erect the gates at such places as they see fit; but they can demand only “ the following rates of toll for every ten miles, and in the same proportion for a shorter distance,” &c. This clause refers to the distance between the gates; if that be five miles, the corporation may demand half toll; if it be two and a half miles, they may demand a quarter toll, and so in proportion. 1 Caines, 182. There may be some ground for doubt whether the gates can be placed more than ten miles apart; but as the places for the erection of gates are left at the discretion of the company, I am inclined to think the subsequent clause does not necessarily restrict the power' conferred in this respect.
I am accordingly of opinion that the plaintiffs are entitled to judgment on the demurrer to all the replications except the fifth, eleventh, seventeenth and twenty-third, and as to those that the defendants are entitled to judgment ; and that leave to amend on the Usual terms should be given.
Mr. Justice Bronson concurred.