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well pause and strive to mark out the boundaries of even legislative will upon this subject.
In the case of Zabriskie v. Hackensack f N. Y. R. R. Co., 6 Am. Law Reg. N. S. 420; s. C., 3 C. E. Green 178, a company was chartered to build a road from Hackensack to the Paterson and Hudson River Railroad, a distance of five miles, which was accordingly built and operated for a number of years. Subsequently, the legislature authorized the company to extend their road to Nanuet on the Erie Railroad, a distance of about twelve miles, and the company, under this liberty, made preparations to construct about two and a half miles of this extension. The Chancellor enjoined them at the suit of a stockholder, from using the funds of the company to construct this extension. There was at the time the company was incorporated, a general statute in the New Jersey laws, authorizing the legislature to alter, modify, or repeal charters to be granted in the future.
The theory of the case is this : that a simple legislative permission to the company to enlarge their enterprise, is in no sense mandatory in its character; that the original agreement between the corporators was to build a road of five miles length, and they could not have extended it further without legislative authority: when this legislative authority was given, it required another agreement, in which all should unite, in order that the new enterprise might be sanctioned, and unless this unanimous assent was obtained, the original . purpose must be taken as the measure of the company's powers.
In the case of Durfee v. Old Colony and Fall River Railroad, 5 Allen 230, an incorporated company had constructed a road from Fall River to Boston. Subsequently, the legislature authorized it to extend the road to the Rhode Island line, there to connect with another line which was so located as to appear to be a consistent and component part of the original enterprise of this company, upon the extension being approved of by two-thirds of the stockholders. The court, at the suit of a. stockholder who had voted against the extension, refused to enjoin the company in the undertaking.
We understand the argument of the case to be about this :
That where stockholders enter into an agreement to construct a road from A. to B., with notice that the legislature reserves to itself power to alte: or amend their charter, they thereby agree,
that in case the legislature subsequently authorizes an extension of the road from B. to C. that they will also go into the enterprise of constructing the road from B. to C., provided, that the extension is simply ancillary to the design which was had in building the road from A. to B., or, in other words, so that the extension is but an enlargement or expansion of the original design, and provided also, that the extension be voted for by a majority of the stockholders.
That where stockholders go into an incorporation, it becomes a fundamental contract, that the majority shall manage the affairs of the corporation, and use its means and resources in any manner that they may think best to carry out the design which was had in forming the incorporation, provided they do not use them in the prosecution of an enterprise which is outside of the general purpose had in view at the beginning.
That the future prospect thereby guaranteed to them of extending the road from B. to C. when they should be in a condition to do it, may have been one of the most influential and controlling considerations to the majority in inducing them to go into the enterprise of constructing the road from A. to B. : that therefore, when they are in a condition to make the extension, the minority have no right to stop short and say that the majority may go, but they, the minority, will not, but the minority must go also into the new enterprise, as the faith that they would do it, provided it should be within the scope of the original purpose, and voted for by the majority, was what led the majority to go into the first plan with them. See also Hanna v. The Cincinnati and Fort Wayne R. R. Co., 20 Ind. 30; Curry v. Scott, 54 Penn. 270: Bailey v. Hollister, 26 N. Y. 112; Pacific R. R. Co. v. Hayes, 22 Missouri 291; Northern R. R. Co. v. Miller, 10 Barb. 260: Schenectady and Saratoga Plank Road Co. v. Thatcher, 1 Kern. 102; McLaren v. Pennington, 1 Paige R. 102; State, Jersey City and Bergen R. R. Co. v. Mayor, 31 N. J. L. R. 579; Am derson v. Commonwealth, 18 Gratt. 285.
It is impossible to reconcile the reasoning of the case of Durfee v. Old Colony R. R. Co. with that of Zabriskie v. The Hackensack R. R. Co. The one proceeds upon the theory, that when the legislature authorizes the extension of a road, even though but an expansion of the original undertaking, every stockholder must assent to the extension before it can be undertaken ; while the other assumes, that when the first enterprise is undertaken, with notice that the legislature reserves to itself power to alter the charter, every stockholder agrees that he will go into the new enterprise, when the legislature shall tack it on, provided it be but an expansion of the original design, and provided it be voted for by a majority of the stockholders.
This case may fairly be regarded as an authority for the last proposition. So that, under it, the single question before the court when such a case arises, is, whether the majority have wrongly judged, in concluding that a particular extension is no more than a bare expansion of the original design.
It would seem, in the case before the court, to have been a considerable tax upon the powers of inference, to assume that an agreement to construct a road from Fall River to Boston, contemplated a future extension of the road to the Rhode Island line. As to this, see 1 Redfield on Railways 614 note, ed. 1869.
Before leaving this case, it is as well to call attention to what is said by the court in the conclusion of the opinion, as to what it was intended to decide by the case. In order, it would seem, to prevent any misapprehension in regard to what the case decided, the court say, “all that we mean to determine is, that the obligation of the contract which subsists between the corporation and a stockholder, by virtue of his being a proprietor of shares in the corporate stock, is not impaired by an act of the legislature which amends and alters the charter, and authorizes the corporation to undertake new and additional enterprises of a nature similar to those embraced within the original grant of power, if such act is accepted by a majority of the stockholders in the mode provided by law.”
Reading this passage in the light of the case at large, we take it to mean, that the corporators contract to go into all “new and additional enterprises of a nature similar to those embraced within the original” purposes of the incorporation. We feel constrained to believe that this language was inadvertently used. The court had the case before it in its mind, and intended to use language applicable to it. It had concluded that the extension of the road from Fall River to the Rhode Island line, was but an amplification of the original plan of building a road from Fall River to Boston; therefore, we feel constrained to believe that it intended to say, that when the new enterprise is one, (not of a nature similar to that embraced within the original purpose, but,] which is simply an expansion of the original enterprise, to longer proportions, in that case, the stockholders must be held to have contracted to go into it, if the majority require it. For, if this reading be refused, what interpretation are we to give to the expression, “of a nature similar to those embraced within the original" purposes? Are we to conclude that the court intended to say, that a corporator going into the enterprise of building a road from Fall River to Boston, contracts to go into every enterprise of a nuture similur to that one? What would be an enterprise of a nature similar to that one? Building another road from Fall River to Boston, or building a road from one village of local traffic, on the coast of Massachusetts, to another village of like traffic upon the same coast?
Tở interpret the judge's language literally, would be to hold that an engagement to build one railroad, is an engagement to build any other railroad, for, building any railroad, is of a nature similar to building any other railroad; a proposition for which We suppose no one would contend.
But, though we confine the case to what it really did decide, viz., that stockholders who go into an enterprise with notice that the legislature reserves to itself power to alter or amend their charter, thereby contract that they will go into such future enter prises as the legislature may authorize, provided they be within the scope of the original design, and approved of by the majority, can it then be supported upon principle ? It seems difficult to put the limit
the corporator's contract as to the future, which the court puts, if the principle that it may be enlarged, is admitted at all. No reason is apparent why, if it be once admitted that the majority is to be at liberty to go one step beyond the very purpose which the corporators set about accomplishing, they may not go a dozen steps beyond. It seems difficult to say, that the corporator does contract that the majority may carry him into such new enterprises as are an expansion simply, of the first, but that he does not contract that they may carry him into all such enterprises as they may choose if the legislature authorizes them.
When a corporator contracts to build a road from A. to B., if nothing is said at the time about extending it to C., we can see no more reason for assuming that he impliedly gives the majority
authority to carry it to C. than for assuming that he gives them authority to carry it to any other place. It is true he contracte that the majority shall direct the operations and shape the policy of the incorporation, within the particular charter given to them, but only within the limits of that. To continue the use of the illustration just used, the corporator may have property in A. and B. but none in C., and the controlling motive with him may have been to improve those two places. He may have been violently antagonistic to the interests of C., and if it had been mooted at the time the contract was made, whether the road should be continued to C., even though an apparent amplification simply of the first design he might have said that he would not go into the enterprise at all. Indeed, we can conceive of no new enterprise which will be simply an expansion of the old. A road from A. to B. is one thing, an extension of it to C. is quite another: and when the simple expansion is undertaken, the old purpose and design is wholly abandoned. Therefore, if the principle is admitted, that the corporator contracts that the majority may take him into some new enterprises, it is difficult to perceive where the majority is to find its limit, and how the corporator can refuse to go into every future and new enterprise. There is no more reason for saying that he is willing to extend the road from B. to C. than there is that he is willing to extend it to the Rocky Mountains. There is no more authority for saying that he is willing to enlarge the particular enterprise, than there is for saying that he is willing to go into all enterprises.
case to be cited directly, it is urged that it would be exceedingly hard for the holder of one single share in an incorporated company, to have it in his power to restrain the owners of millions of dollars worth, from putting their capital into some new enterprises that promised them great returns. In answer it may be said that it would be equally hard for the owners of millions of dollars worth to force the single shareholder into an enterprise that he did not wish to go into, and had never contracted to go into. But with reference to either, if he had contracted in such manner as to give the other that power, all that could be said would be, "hoc perquam durum est, sed ita lex scripta est."
But the hardship suggested, is one that is imaginary rather than real. There is a lawful way by which the majority stockholder can go into the new enterprise, consistently with his