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THE

AMEEIOAN

AND

ENGU8H

Eaileoad Cases

Edited by ADELBEBT HAMILTON.

A COLLBCnOK OV ALL THB

Raileoaj} Oasbb in the Goubts of Last Bbsobt ik Amebioa

AND EnGLAKD

VOL. XXIV.

NORTHPORT, LONG ISLAND, N. T.

EDWARD THOMPSON, Pctblishek.

»• *

STANFORD

LIBRARY^^

^/l/ER

fRIOHT, 1886, BT

EDWARD THOMPSON.

DannoHD ft NlRr,

^FtnUt% Meetrotypen andBindin

1 to 7 Btkfgae Street,

New York.

TABLE

OP THE CASES KEPORTED.

PAOS

Alford, iOng «. 881

AichiBon, T. & 8. F. R Co. v,

Fletcher 84

Aicbi«>ii,T.&SJ*.RCo.«.Wilaoii. 628 AYcr, New York, C. & St. L. R

Co.« 888.

Baltimore & O. R Co. «. McEenzie 895 Baltimore ft O. R. Co., Peake v., . 467 Blair «. Gnuid Bapide & L R Co.. 480

Blake, Chicago ft JB. B. Co. o 288

Blatzer 9. Bfleigh ft A. A. L. R

Co 854

Bloxham, Littlefield 9 208

Blozham, Reed« 208

Boeton ft L. R Co., Peirce v., ... 684 Boston ft M. R Co., McEimble^. 468 Boston ft N. Y. A. L. R Co.,

Gates » 148

Boetonft N. Y. A. L. R Co., Town

of IQddletown « 158

Brown •. State of Maryland, etc.,

RCo 192

Brown Countj, Fremont, B. ft M.

V.RCo.e 616

Barlington ft M. R Co. «. Crockett 890 Burnett e. Great North of 8. R Co. 647

Bybeee. Oregon ft C. R Co 127

California «. Central P. R Co 528

California e. Southern P. R Co. .. 528

Cameron v. Tome ^ 208

Campbell, Nixon 9 605

Campbell •. Penneylvania R Co. . 427

Cassidy •. Old Colony R Co 271

Central Pac. R Co., California v.. 528 Central PacRCo.,United States 9. 120 Central Pac. RCo., United States «. 257

Central R Co., MOla 47

Chicago ft A. R Co. v. Derkes. ... 251 Chicuro ft A. R Co., Farmen' L.

ft T. Co. e 166

Chicago, B. ftQ. R Co. v. Jackson 105

Chicago ft £. R Co. 9. Blake 288

Chicago ft R I. R Co. e. Gnertin. 885 Chicago ft E. L R Co. e. Wiltse.. 261 Chicago, M. ft 8t P. R Co., Glan-

don « 866

Chicago, IL ft St. P. R Co., Siooz

City, etc., R Co. « 100

Chicago, M. ft St. P. R Co.,

Wood« 91

PAoa Chicago ft W. I. R Co., People «. 612 City of Minneapolis, St. Paiu, M.

ft M. RCo. 9 809

Clark, Williams v 460

Commonwealth v, Richmond ft P.

B.Co 482

Crockett. Burlington ft M. R Co. e. 890 DeCamp, Hibemia Underground

RCo. 9 273

Dennis,Vicksburg,8.ftP. RCo.9. 500 Denver ft R G. K. Co., Howard e. 448 Derkes, Chicago ft A. R Co. «. . . 251 Farmere' L. ft T. Co. v, Chicago

A.R Co 166

Juts' L. ft T. Co. v. Wright.. . 812

sh^Utah ft Northern R Co. e. 116 Fletcher, Atchison, T. ft S. F. R

Co. « 84

Freeportft M. R Co., Johnson v, 266 Fremont, B. ft M. V. R Co. e.

Brown County 616

Gudner v, Michigan C. R Co. . . . 485 Gates f). Boston ft N.Y.A.L.RCO. 148 Gibson, State ex rd, Holman e. . . . 6 Glandon v, Chicago, M. ft St P.

RCo 866

Gottlieb V. New York, L. B. ft W.

R Co 421

Grand Rapids ft I. R Co., Blair v. 480

Greany, Long Island R. Co. v 478

Great North of 8. R Co. ,Burnett e. 647 Gregory e. New York, L. £. ft W.

RCo 88

Guertin, Chicago ft £. I. R. Co. v. 886 Gulf. C. ft S. F. R Co., Miller v,. 158 Hastings ft D. R Co. e. Whitney. 106 Herbert, Northern Pac. R Ca i^.. 407 Hibemia Underground R Co. «.

DeCamp 278

Hollerbach, Louisville ft N. R

Co. e 840

Holman «. State ex rel, Gibson. ... 6 Howard v. Denver ft R G. R Co. 448

Illinois C. R Co., People « 494

Indianapolis, etc., R Co., St

Louis, etc., R Co. e 56

Indianapolis, B. ft W. R Co. «.

Eoons 876

Indianapolis ft Y. R Co., Welty v. 871 Jackson, Chicago. B. ft Q.R. Co. v. 105

IV

TABLE OF THS OASBS SEPOBTXD.

Johnson «. Freeport A M. R Co. . 965 Eelley «. Newburyport, etc. , R Co. 87 Kentucky & G. £. R Co. , Wright o. 812

Kingv.Alford 881

Eooos, Indianapolis, B. & W. R

Co. « 876

Lilly, Northern Pac. R Co. «. 111

Littlefleld 9. Blozham 908

Lon^ Island R Co. «. Greany. .... 478 LouisYille & N. R Co. v. fioUer-

bach ... 840

Louisrllle & N. R Co. «. Moore. . 443 Louisville, N. A. & C. R. Co. e.

Sumner 641

Mansfield «. New York C. <& H. R

R Co 628

Maryland, State of, «. Brown, and

Annapolis <& E. R Co 192

Matthews, Montgomery 8. R Co. e. 9 McEenzie, Baltimore & O. R Co. e. 896 McEimble e. Boston & M. R Co. . 468 Michigan Central R Co., Gardner v. 486 Middletown, Town of, e. Boston &

JN . x . A. L. ri. Co. ...••....••. lo8

Midland R. Co. v. Miles 187

Miles, Midland R Co. v. 187

Miller v. Gulf, C. & S. F. R Co. . . 158

Mills e. CenlralR Co 47

Minneapolis, L. & M. R Co., New-

qI] 1^ 2QQ

Missouri P.' R'Oo.,'PhmipeV.!.*!! 868

Montgomery R Co. v, Matthews. . 9

Moore, Louisyille & N. R Co. 9. . . 448

Moses, Pittsburgh, C. <& Y. R Co. «. 296

Newburyport, etc. , R. Co. , Kelly v, ^

Newell V, Minneapolis, L. & M. R. qq 298

New York 0. &' h! R R." " Co.,

Mansfield «. 628

New York, C. & St. L. R Co. «.

Ayer 888

New York, L. E. & W. R Co.,

Gotlieb e 421

New York, L. K & W. R Co.,

Gregoiy«. 88

Nixon «. Campbell 605

Northern Pac. R Co. v, Herbert. . 407

Northern Pac. R. Co. v. Lilly Ill

Northern Pac. R. Co. «. Shimmell. 1 North Pacific C. R Co., People «. 610 Old Colony R Co., Cassidy e. ... 271

Oregon & C. R Co., Bybee e 127

Penke v. Baltimore & O. R. Co. . . . 467

Peirce v, Boston & L. R. Co 684

Pennsylvania R Co., Campbell v., 427 Pennsylvania R Co. «. St. Louis,

etc.,RCo 58

Pennsylvania S. V. R. Co., Setzler

« 280

People V, Chicago & W. L R Co.. 612

VAGS

People «. Illinois C. R. Go 494

People «. North Pacific C. R Co.. 610

Phimpa e. Missouri P. R Co S6S

Pickerd •. Pullman S. C. Co 61 1

Pittsburgh C.& Y.R Co. «. Motes 295

Pullman S. C. Co., Pickerd « 511

Railroad Companies, Slevens e. . . . 217 Raleigh & A. A.L.R Co., Blatzer «. 854

Reed «. Bloxham 206

Richmond & P. R Co., Common-

wealthe 482

St. Louis, etc., R Co. v, Indianap- olis, etc., R Co 58

St. Louis, etc., R. Co., Pennsyl- vania R Co. « 58

St. Paul, M. & M. R Co. «. City of

Minneapolis 809

San Bernardino Co. e. Southern P.

RCo 540

Sandy River R Co. v. Stubbs 87

Santa Clara County v. Southern P.

RCo 628

Setxler v. Pennsylvania S. Y. R Co. 280 Shimmell, Northern P. R. Co. e. . . 1 Sioux Ci^, etc., R Co. v. Qiicago,

M. & St. P. R Co 100

Southern Pac. R Co., California •. 588 Southern Pftc. R. Co., San Bernar- dino County e. 540

Southern Pac. R Co., Santa Clara

County e 523

State Board of Assessors v. State. . 546 State ex rel. Gibson, Holman e. . . . 6 State of Maryland v. Brown, and

Annapolis h E. R. Co 192

State of Maryland, and A. & E. R

Co., Brown e 192

State, State Board of Assessors e. . 546 Stevens e. Railroad Companies. . . 217

Stubbs, Sandy River R Co. e 87

Sumner, Louisville, Nk A. & C. R.

Co.« 641

Tome, Cameron e 203

Town of Middletown e. Boston &

N. Y. A.L.R. Co 158

United States e. Central Pac. R Co. 120 United States v. Central Pftc. R Co. 257 Utah & Northern R. Co. v. Fisher. 116

Van Weel f>. Winston 179

Vicksburg, S. & P. R. Co. t>. Dennis 600 Welty «. Indianapolis & V. R Co. 871 Whitney, Hastings & D. R Co. v, 106

Williams e. Clark 460

Wilson, Atchison,T.&S.F.RCo.e. 623 Wiltse, Chicago & E. L R Co. e. . 261

Winston, Van Weel v : . 179

Wood V, Chicago, M. & St. P. R

Co 91

Wright, Farmers' L. & T. Co. e. . . 812 Wrighte.Eentucky<&G.E. R Co. 812

NOBTHEBN PaOIFIO B. Oo.

V.

Shdocell. ^

(Advance Case, Montana. January, 1886.)

The franchise of the Northern Pacific K. was given by act of Con- gress, and the road made a military and post road for the benefit of the goyernment of the United States. Whatever is necessary and useful in operating the road belongs to and goes with the franchise, and no law of Montana Territory, or any other jarisdiction less than that which created it, can in any manner rightfully invade or impair the privileges and immunities thus conferred.

If an office safe at a depot on the road, in which the agent of the company deposits and keeps his daily receipts of money and valuable papers, is use- ful and facilitates the operation of the road, it cannot be seizea on execution against the company. The finding of the jury, that the safe in question was not necessary or useful for such purpose, reviewed, and held contrary to the evidence.

Appeal from the first district court of Custer County. Sander^y CktUen <& Sanders for the appellant.

Wade, C. J. The only questions presented by this appeal are the following, viz.:

1. Does the evidence support the verdict and justify it f

2. Can the property of the Northern Pacific K. Co. S5S2f"

in the Territory of Montana, necessary, convenient, and usual for running and operating said road, be lawfully seized and sold on execution to satisfy a judgment against said company t

The property in question is a certain office safe, known as a Diebold combination safe, which was seized on an execution issued out of the probate court of Yellowstone county, and taken from the plaintifrs depot and station, at the town of Billings, in said county, and sold at auction, whereby the defendant claims title and right of possession. There was a verdict and judgment for defend- ant, and the plaintiff appeals.

As to the question whether the safe in controversy was a part of the usual, neoessary, and convenient equipment of the facu,

Norihern Pacific K. Co., to enable it to operate its road, at the time it was seized on execution, the testimony showed that the safe was in use by the plaintiff in and about its business as a railroad

24 A. ft £. R Gas.'!

2 NOBTHEBN PAOIPIC B. 00. V. SHIHHELL.

company, in the depot at Billings, and was the only safe there ; that it was in daily use by the company in its railroad business thereat, in keeping therein the moneys received by the company which amounted to from two hundred to five thousand dollars per day, and in the preservation of its books of account of said railroad business at said station ; that since the safe had been taken away the agent at Billings, in consequence of its seizure, had been com- pelled to use safes of other parties, by their consent, or else carry said moneys on his person, and in the opinion of said agent said safe was, under the circumstances, a necessaiy part of the equip- ment and furniture of the plaintiff at said depot. It also appeared in evidence that there was a bank in said town, with a vault, where- in plaintiff was permitted to deposit its moneys, books, .and papers, and that the plamtiff had procured no other safe since the one in question was seized.

The foregoing was all the testimony at the trial concerning the questions proposed.

Upon this state of facts the court instructed the jury as follows : ^^ If it has been proved to your satisfaction, by a preponderance of iKSTBuonomTo evidence, that this safe was an office safe was in use at '^^' the depot at this station that it was a usual and neces-

sary part of the furniture in such office, in the preservation and safe-keeping of the moneys, books of account, ana valuable papers used in the transaction of the business of the plaintiff at such depot, and essential to the proper and safe conduct of such business there, then you should find for the plaintiff.

^^ In this case the question arises, whether the property can be seized under execution for the payment of the debts of the com- pany, inasmuch as it is held to be essential to the ordinary and economical use of the railroad company. There are certain clafises of property belonging to railroad companies not subject to seijsare ana sale upon execution, such as their tracks, rolling stock, depots, shops, and machinery, the use of which is essential to the opera- tion of the road ; the reason for this being that such seizure ana sale would result in the destruction of the property.

^^ There are certain other classes of property which maybe seized and sold upon execution against a railroad company, sucn as lands and personal property not used in the running and operation of the road. Such property is always subject to execution, and it is the duty of the snenff to search for tnis kind of property upon which to levy. An office safe is a necessary part of the furniture in a town where the business is important and extensive, and where the receipts of the railroad company are of so large an amount, and the books required to keep the accounts of the office containing valuable memoranda, as that it would be proper and prudent U> preserve them from depredation or destruction by the use of a safe.

FEANCHISB— EXKOUTION OFFICE SAFE. 3

^^And in this case, if yon find from the evidence the business here so extensive, the receipts so valuable, as that a pradent man would require the use of a safe, then you should find for the plaintiff."

These instructions correctly stated the law, and were applicable to the facts in the case. Borer, in his work on railroads, ^S£SI^S?to op* vol. 2, p. 901, says: " The corporate franchise, rights, JStTSloioTM and property of a railroad corporation incidental J^SSi.*^" "*" thereto cannot at common law be seized or sold upon execution at law against the company ; nor can the appurtenances, easements, appliances, or works used for the practical operation of the road be levied upon or sold at law upon execution separate from the franchise any more, or more legally than the whole can be sold together. Such sale would impair its value and impede its use by the public," citing the following authorities: Gue t;. Tide-water Canal Co., 24 How. 263 ; Borer on Judicial Sales, sec. 1068 ; Coe V. Columbus, P. & I. B. Co., 10 Ohio St. 372; Western Pa. E. Co. V. Johnston, 59 Pa. St. 290 ; Youngman v. Elmira & W. B. Co., 65 Id. 278 ; Bayard's Appeal, 72 Id. 453 ; Thomas v. Arm- strong, 7 Cal. 286 ; Stewart v. Jones, 40 Mo. 140 ; Hatcher v. Toledo, W. & W. B. Co., 62 111. 477 ; James v. P. & G. E. Co., 8 Mich. 91 ; Ammant v. New Alexandria & P. T. Co., 13 Serg. & E. 212; Plymouth B. Co. v. Colwell, 39 Pa. St. 337; Borer on Judicial Safes, sec 1069.

In One v. Tide Water Land Co., Chief Justice Taney says : ^^ It would be against the principles of equity to allow a single creditor to destroy a fund to which other creditors had a right to look for

Eyment, and equally against the principles of equity to permit m to destroy tlie value of the property of tlie stockliolders, by dissevering from the franchise property which was essential to its useful existence.'' .

In Herman on Executions, 551, it is said the rule and common law is, that the franchises and corporate rights of a corporation, and the means invested in theni, which are necessary to tne exist- ence and maintenance of the object for which they are created, are incapable of being transferred and granted away by any ad- vene process against them.

The plaintiff has the right to operate its road through the Terri- tory of Montana, and to have all the works and appliances essen- tial to its useful existence as a railroad. This franchise was given by act of Congress, and the road made a military and PujtmrrB post road for the benefit of the government of the K?°^ °tE Uoited States, and whatever is necessary and useful in '^'»«>* operating the road belongs to and goes with the franchise, and no law of the Territory, or any other jurisdiction less than that which created it, can in any manner rightfully invade or impair the privi- leges and immunities thus conferred.

4 IfOBTHEBN PAOIFIO B. CO. V. 8HIMKELL.

If an office safe at a depot, in which the agent deposite and keeps his daily receipts and valoable papers, is useful and facili- tates the successful operation of the road, it could no more be . seized on execution than could a section of the rails, or road bed, or a water-tank. These things are incidental to the franchise and cannot be disturbed. They are the means by which the franchise is exercised. They are the necessary instruments of its use.

The charter of the plaintiff authorizes and empowers it to lay out, locate, construct, furnish, maintain, and enjoy a continuous

8HIZUBX OF oF^ ^*^1^^^^ ^^°®j ^^^^ appurtenances, from Lake Supe- r^'^Sm wr rior to Puget's sound, and if an office safe at any depot on said road is useful and convenient to the plaintiff in the enjoyment of said franchise, then the same is protected from seizure on execution. This franchise or right to maintain and enjoy the road is not limited and restricted to what is barely necessary for that purpose, but extends to what is appropriate and useful, and actually in use.

Bailroad companies can be made to pay their debts, bat the remedy is not by seizing and selling property that would destroy the road, and thereby prevent it earning money for its creditors.

The testimony shows, without question or contradiction, that this safe was an office safe, used by plaintiff in its depot at Billings station, in the regular daily business of the road, ana tliat the same was a necessary part of the equipment and furniture of said depot for the purposes of such business. The court instructed the jury that if it had been proved by a preponderance of the evidence that the safe in question was an omce safe, used in the depot at Billings, and that it was a usual and necessary part of the furniture in such office for the safe-keeping of moneys, books of account, and valuable papers, used in the transaction of plaintiff's business* and essential to the proper and safe conduct of such business, then they should find for the plaintiff.

The jury, by their verdict for the defendant, must have found from the evidence that the safe was subject to sale on execution, ▼noicT OP- ^^^' *^* reason that the same was not a usual and neces- FOBSD TO m- sary part of the equipment and furniture of said depot, and essential and proper to the safe conduct of the business oi the road. There is no evidence to support such a finding or verdict. The verdict is a direct contradiction of all the testimony in the case.

The agent of the plaintiff testified that the safe, considering the business at the Billings depot, was a necessary part of the equip- SAra SABT ^^^^ *^^ furniture of the depot for the purposes of TO BQuipraT such business, and there was no evidence to contradict OF DKPOT. ^j^^ agent, or to call in question his statement as to the necessities of plaintiff's business at that point. But the jury, in answer to a special issue submitted, say that the safe in controversy

yRANCHISB ^EXECUTION— OFFICE SAFE. 6

was not necessary in carrying on the business of the company. In this they contradicted the only witness on the subject, and make a special hnding in the yery face of all the testimony on the question submitted.

Appellate courts are slow to disturb the yerdict of a jurp', and will not do so if there is eyidence to support the yerdict. Ming v. Tniett, 1 Mont. 328. But if the yerdict is a flat contradiction of all the eyidence in the case, and there is nothing to support it, it woald be a reproach to the law, and to those who administer it, to permit such a yerdict to stand.

Judgment is reyersed, and cause remanded for a new trial.

What Property of a Raifroad can be taken in Execution. ^The franchise of a railroad or other corporation cannot be subjected to sale on judgment and execution for its debts without legislative authority. Hatcher e. Toledo, etc., R. Co., 62 111. 477; Bruffett e. G. W. R. Co., 25 111. 853; Atkinson v. Railroad Co., 15 Ohio St. 21 ; Toung e. Railroad Co., 65 Pa. St. 278; W. R. Co. 9. Johnson, 59 Pa. St. 295; Oue v. Canal Co., 24 How. 268; Wood v. Turnpike Co., 24 Cal. 474. The franchise of a corporation is held to be a privilege, granted and held in personal trust, and cannot b^transferred by forced sale, or by voluntary assignment, except by permission of the govern- ment, and when that permission is granted the mode of transfer pointed out must be followed. Wood v. TVuckee Turnpike Co., 24 Cal. 474.

The land of a railroad company beyond what is actually dedicated to cor- porate purposes is bound by the lien of judgments against the corporation, and is liable to be levied upon under execution and sold by the sheriff as is the land of any other debtor; but the purchaser at such sale takes only that which is not necessary for the full enjoyment and exercise of the corporate franchise, no matter how the land may have been acquired by the corpora- tion. Plymouth R. Co. v. Colwell, 89 Pa. St. 847; see also Ammant e. New Alexandria, etc.. Turnpike Co., 18 S. & R. 212; Toungman e. Elmira, etc., R. Co., 65 Pa. St. 278.

In those States in which the rolling stock used in operating the road is considered to be affixed to the realty, and as such to pass under a mortgage of the railroad, it is not subject to levy or sale upon execution. Macon, etc., R. Co. e. Parker, 9 Ga. 877; Coney e. Pittsburg, etc., R. Co., 8 Phila. (Pa.) 178; Shamokin Valley R. Co. e. Livermore, 47 Pa. St. 465. But in other States such property is treated as nersonalty, and as such is subject to levy and sale upon execution. Randall e. Elwell, 52 New York, 521 ; Hayle v. Plattsburg, etc., R. Co., 54 N. T. 814; Stevens «. Buffalo, etc.,R. Co., 81 Barb. 590; Williamson i). New Jersey, etc., R. Co., 29 N. J. Eq. 811; Bos- ton, etc., R Co. V. Guimore, 87 N. H. 410; Coe v, Columbus, etc., R. Co., 10 Ohio St. 372.

In the case of Coe e. Columbus, etc., R. Co., mpra^ the court, after decid- ing that locomotives, cars, etc., should be considered as personalty, says: *' We have no hesitation in coming to the^ conclusion, that what we have de- scribed as the personal property of the corporation, employed in the use of its road and franchise, is liable for the payment of its debts. We think the line can be clearly drawn between the interest in real estate and the franchise connected therewith, and the movable things employed in the use of the franchlBe.^'

In 'ntus e. Mabee, 25 III. 257, it was held that an iron safe was liable to be taken in execution against a railroad company owning it; also a planing- mill not attached to the freehold.

6 HOLMAir 0t (U. V* STATU €X rd. GIBSON.

HoLMAK et al.

V.

State ex rd. Gibson.

(Advance Cau^ Indiana, March 12, 1886.)

Where the State, by an information in the nature of a quo tearranto, di- rectly challenges the right of certain parties to act as a railway corporation, and it appears that many of the subscribers for the stock were notoriously insolvent, and had no expectation, at the time they subscribed, of ever paying their subscription, thus leaving the amount subscribed in good faith less than that required by the statute, a judgment of forfeiture is proper.

Appeal from Huntington circuit court.

Z. M. Nimde and T, E, EIMson for appellant.

C. W. Wathina and MiUigan dk Whddock f oi appellee.

MrroHELL* J. The State, by an information in the nature of a quo warrcmto^ charged that William J. Holman and 10 others were assuming to act as a corporation under the name of the Fort Wayne, Warren & Brazil R. Co.; that, as such corporation, they Facts. Were making contracts, incurring debts, soliciting aid

from townships, towns, and cities, making surveys, appropriating lands, etc., without any warrant or authority of law. They were challenged to show by what authority tliey assumed so to act. By a special answer the defendants admitted they were acting ^ a railway corporation, and alleged that they were dnly organized and incorporated under the law. With their answer they exhibited a copy of their articles of association, which they averred had been duly filed in the office of the Secretary of State. Upon the articles thus exhibited it appeared that 15 persons had each subscribed for $3400 of the capital stock, the whole amount of which was fixed at $60,000. A reply was filed admitting the signing and filing of the articles of association, and the subscription to the stock. It was, however, averred that many of the subscribera to the stock were, at the time of making such subscriptions, wholly and noto- riously insolvent, and made no pretence of being able to pay their subscriptions, and that others oi such subscribers were not worth half the amount subscribed by them ; that the solicitor of the sub- scriptions, and promoter of the corporation, was a subscriber to the stock, was wholly and notoriously insolvent himself, and knew of the insolvency of many of the other subscribers ; that one of the subscribers, in addition to being insolvent at the time of making his subscription, was also a minor, which was known to the pro- moters of the scheme. It was further charged that the capital stock had not been subscribed in good faith, but that the subscrip-

SUBSCRIPTION— INSOLVENT SUBS0RIBEB8 ^FOBFSITUBB. 7

tions were received for the parpose of securing a colorable organi- zation to be made on paper. Evidence was offered tending to prove the averments contained in the reply. A judgment of for- feiture was rendered.

The statute providing for the organization of railroad corpora- tions enacts, in substance, that, whenever stock to the amount of at least $50,000, or $1000 for each and every mile of proposed road, sfiall have been subscribed, any number of the statdtoetpbo. subscribers, not less than 15, may, under certain regu- ^^°"- lations prescribed, form a railroad corporation. The question pre- sented for consideration is, must the $50,000 of stock, which is required to be subscribed as a condition precedent to the organiza- tion, be subscribed in good faith by persons who had a reasonable expectation that they will be able to pay, or will subscriptions, some of which are merely simulated, lulfil the purposes of the statute? Where the information is against the corpomtion eo nomine^ an inquiry such as that proposed cannot be made. In such a case the bringing of the suit against the corporation in its corporate name is an admission of its corporate existence, and it is not necessary for the corporation to show that it had performed the conditions precedent to its corporate existence. High, Extr. Rem. § 661. So, also, where the question of the regularity of the organization is made in a collateral proceeding, it is not admissible to show the insolvency of subscribers to the stock. It was accord- ingly held in Miller v. Wildcat Gravel Boad Co., 52 Ind. 51, that in a suit upon an unconditional subscription of stock evidence of the insolvency of some of the subscribera was immaterial. There are cases which hold that an assessment against a subscriber to stock cannot be collected until at least the minimum amount re- quired by the statute has been subscribed by persons apparently able to pay for the shares subscribed. In such cases the subscrip- tions 01 insolvent persons, infants, and married women are not counted. Railroad Co. v. JBolton, 48 Me. 451 ; Philh'ps v. Bridge Co., 2 Mete. (Ky.) 219; Mor. Priv. Corp. § 279; Pierce R. 55 and notes. The fact that some of the subscribers to the stock of a corporation become insolvent after such subscriptions are made will not of itself support an information in the nature of a quo wa/rramjto. State v. Bailey, 16 lud. 46.

The case before us is an information by the State challenging the right of certain individuals to act as a corporation, and assert- ing that, by reason of the colorable character of the subscriptions, they never became an incorporation. It is therefore a natum of thb direct inquiry on behalf of tlie State, calling upon the ^^'• individuals named to show by what authority they assume to act as a corporation. In such case, while it may be sufficient prima fade to show the filing of articles of association, and a subscription of the minimum amount of stock required by law, we do not think

8 HOLMAN et al. V. STATE ex rd. gibson.

such showing is conclasive npon the State. It is true, the statate does not in terms prescribe tnat the subscriptions mnst have been ma^e in good faith, or that the subscribei'S must have been at the time of making their sabscriptions solvent, and apparently able to pay. But it mnst be impliea that, at least between the State and the persons to whom the privilege of erecting themselves into a 8UBS0RIBBB8 corpoKition is granted, good faith and fair dealing ivomiBij!! "' should be observed. Merely simulated subscriptions, made by persons who are neither actually nor apparently able to pay the amount subscribed, cannot answer the purpose of the statute. Such subscriptions are shams, and are to be denounced as a fraud upon the law. They are an attempt to acquire corporate functions, not by a compliance with the law, but by a disingenuous evasion of it. Jersey City Gas Co. v. Dwight, 29 N. J. Eq. 242. Such subscriptions must stand upon the same basis, and be deter- mined upon the same considerations, that govern any other busi- ness transaction. It cannot be doubted that a person may in good faith become a subscriber to the stock of a corporation, as he may become the purchaser of goods, for a sum larger than he is then able to pay, and more than he is at the time actually worth in property. But such a subscriber must have subscribed in good faith, with a reasonable expectation and an apparent itoSt'"^ or prospect of being able to pay assessments on his stock GOOD FAITH. ^ ^^^^ might thcrcaf tcr be called for. Where, how- ever, a subscriber is both insolvent, and has no prospect or expec- tation of being able to pay, and such subscription is taken with knowledge, it cannot be counted in making up the minimum re- quired by statute. Where articles of association were tendered with a subscription of $50,000 to the capital stock by 15 persons, it was a representation that that amount was pledged and available as necessity might require. Upon the faith of that representation, the State authorized the persons making it to assume the functions and franchises of a corporation. On the same principle that one individual may reclaim his property which has been sold to an- other who is insolvent, and who had at the time no intention to pay or prospect of being able to pay for it, may the State reclaim the privilege granted by it under like circumstances. Standing by until important interests were acquired by the corporation might estop the State, or lapse of time might cure the defect in the or- ganization. Sleeth V, Gordon, 87 Ind. 171.

Nothing of that kind is either pleaded or proved in this case. It is abundantly established by the evidence that most of the sub- scribers to the stock had not only neither the ability, actual or nfsoLVBHCY OF apparcut, at the time they subscribed to pay any calls, BUBscRiBKRs. |j^j. j|. appcars further that they had no purpose or ex- pectation that they would be called upon to pay, or tnat they could pay anything, if called upon. As a condition to its assent to the

SCrBSORIPnON ^FBAUDULENT BEPBB8BKTATI0K. 9

grant of corporate powers to a railway company, the State requires XhBt an available capital of at least $50,000 shall be provided as a seenritj for persons with whom the corporation proposes to tran- sact business, and as a guaranty that it will prosecute the proposed work. If obtaining merely feigned subscriptions [>uts it beyond the power of the State to withdraw its assent, then it is within the power of designing persons to obtain the franchise of a corporation by a merely pretentious compliance with the law, and by that means exclude others who might execute a beneficial public im- provement, while the existing coiporation is wholly unable to do anything except to harass those who may be induced to deal with it.

We think the evidence sufBciently shows that the defendants held themselves out as a corporation.

The judgment is affirmed, with costs.

ZoLLASS, J., did not participate in the decision of this case.

MONTGOMEBY SoUTHEBN B. Cfo.

V.

Matthews. (77 Alabama, 867.)

Tbs mere ezprefleion of an opinion cannot be a fraudulent representation, nnleaa fidaely made, with intent to deceive, and actually deceiying; nor can it constitute a fraud, vitiatine a contract thereby procured, when it re- lates to a matter equally open to both parties.

A subecription to the stock of an incorporated railroad company, procured by the fraua of the company's agent soliciting subscriptions, may be defeated on the plea of fraud, when the company attempts to enforce it by suit.

There are cases of fraud, and other unlawful acts, particularly acts of the same general character continuous in their nature, where it is permissible to proTe other similar transactions occurring at or about the same time, as shed- dinff some light on the particular transaction in controversy ; but, in an action against a subecriber for stock in a railroad company, who defends on the ground of fraudulent representations by the company's agent in procuring bis subscription, he cannot be allowed to prove similar representations made by said agent to other subscribers in the same neighborhood.

A statement as of fact by the vendor of an article, on which the purchaser has a right to rely, and on which he does rely, purchasing on the faith of it, constitutes, if false, a good defence to an action for the purchase-money, thouffh not known by the seller to be false ; and this, not on the ground of fraud, but of failure of consideration; but this principle does not apply to a statement which is merely the expression of an opinion.

Representations by the agent of a railroad corporation, soliciting sub- scriptions for stock from persons living along the contemplated route of the roao, as to its intended location, and the time within which it will be com-

i

10 MONTOOMEBY 80UTHSBN B. CO. t. MATTHEWS.

pleted to a particular place, are but the mere ezpreflsion of an opinjon, and neither constitute a fraud, nor are arailable as a defence to an action on a subscription for stock made on the faith of them, unless known by the agent to be false, and made by him with intent to deceive.

Although an action on the defendant's subscription for stock cannot be de- feated on the ground of fraud, when the represen^tions of the corporation's soliciting agent were merely the expression of an opinion as to the probable location and completion of the road ; yet, if the agent further represented that the money subscribed would be refunded unless the road was so located and completed, and he was authorized to make these representations, the action will, it seems, be enjoined in equity, on proof of the insolvency of the corporation and its abandonment of the work before completion.

Appeal from the Circuit Court of Crenshaw.

Tried before the Hon. H. D. Clayton.

This action was brought bj the appellant, a domestic corpora- tion, against Eli Matthews and M. T. Mathews ; was commenced on the 14th February, 1883, and was founded on a writing signed by the defendants, which was in these words :

" Crenshaw County, Ala., July 26th, 1881. On the first day of December, 1882, we promise to deliver to the Montgomery South- ern R. Co. two bales of middling cotton, of 500 lbs. each, at the Alabama Warehouse in the city of Montgomery, the proceeds of which is to be credited to our account, as payment upon two shares of the capital stock in said railway company subscribed by us; and in case we make default in the delivery of said cotton, or any part thereof, as above provided, then we hereby agree to pay to said Montgomery K. Co., in money, the market price of such cotton in said city of Montgomery on said day; and to secure the faithful performance of this contract, we hereby waive all exemptions to which we are or may then be entitled under the laws or constitution of this State." »

The complaint set out this instrument, averred the failure of the defendants to deliver the cotton as stipulated, whereby they became liable to pay the money as specified, and claimed the money, with interest. The defendants pleaded the general issue, and several special pleas, some of whicli alleged that the writing sued on was void for fraud, having been procured by the false representations of the plaintiflE's a^nt. These representations were stated in the several