Carolina, Clinchfield & Ohio Railway v. McCown

66 S.E. 418, 84 S.C. 318, 1909 S.C. LEXIS 276

• Court: Supreme Court of South Carolina
• Decided: November 27, 1909
• Docket: 7393
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. Justice Gary.

This is an application to the Court, in the exercise of its original jurisdiction, for a writ of mandamus, requiring the Secretary of State to accept and file a copy of the charter of the Carolina, Clinchfield and Ohio Railway, and to issue to the petitioners a charter under section 1 of an act entitled “An act to amend sections 1, 3 and 6 of an act entitled ‘An act to provide the manner in which owners or projectors of any railroad companies, incorporated under the laws of other States or countries, may become incorporated in this State,’ approved February 25, 1902, so as to provide a more practical method for the incorporation of such companies and their stockholders, owners or projectors.”

The sole question is, whether that act is unconstitutional, on the ground that it is in violation of section 8, article IX of the Constitution of South Carolina, which is as. follows :

“The General Assembly shall not grant to any foreign corporation or association a license to build, operate or lease any railroad in this State; but in all cases where a railroad .is to be built or operated, or is now being operated, in this State, and the same shall be partly in this State and partly in another State, or in other States, the owners or projectors thereof, shall first become incorporated under the laws of this State; nor shall any foreign corporation or association lease or operate any railroad in this State, or purchase the same or any interest therein. Consolidation of any railroad lines, and corporations in this State with others, shall be allowed only where the consolidated company shall become a domestic corporation of this State. No general or special law shall ever be passed, for the benefit of any foreign corporation operating a railroad under any existing license of this State, or under any existing lease, and no grant of any right or privilege, and no exemption from any burden, shall be made to any such foreign corporation, except upon the condition that the owners or stockholders thereof shall first organize a corporation in this State, under the laws thereof, and shall thereafter operate and manage the same and the business thereof, under said domestic charter.”

Section 1 of the act hereinbefore mentioned is as follows: “That each and every railroad company or railroad corporation, created or organized under or by virtue of the laws of any government or State, other than this State, and the stockholders, owners or projectors thereof, desiring to own •property or carry on business, or exercise any corporate fanchises in this State whatsoever, shall first apply for and obtain a charter, and become- incorporated as a corporation of this State, in the following manner, that is to say: Said corporation and the stockholders, owners or projectors thereof, shall file or cause to be filed in the office of the Secretary of State, a copy of the charter of said corporation, duly authenticated in the manner directed by law for the authentication of the statutes of the State or country, under whose laws such corporation is chartered or organized, accompanied by a petition, signed on behalf of said company by its president and secretary, and by one or more of the stockholders of said company, setting forth: (1) the name of the company or corporation and the State or government under the laws of which it was created or organized; (2) the residence of the stockholder or stockholders joining in the petition; (3) the place at which the company has its principal place of business, and the place at which it is proposed to maintain a principal office or place of business in this State; (4) 'the total authorized capital stock of such company; (5)'that the company or corporation, by its said officers and the stockholder or stockholders signing the petition, thereby apply on behalf of the corporation, and on behalf of all its stockholders, owners and projectors, ro be .incorporated under the laws of the State of South Carolina-, with power to own property and carry on business, and exercise the corporate franchises of said company in this State, as a railroad corporation organized under the laws of South Carolina; ( 6 ) any other matter which it may be desirable to set forth in said petition. At least one of the stockholders signing said petition, shall be a resident of this State. Upon the filing of said petition and of the copy of the charter of said company, and the payment of the filing fees fixed by law, and the charter fees provided in section 4 of this act. the Secretary of State shall issue a certificate to said corporation or company, and the stockholders, owners or projectors thereof, to be known as a charter, that the said corporation or company and the stockholders, owners or projectors thereof have been fully organized and incorporated under the laws of South Carolina, under the name and for the purposes indicated in said petition. * * *

“When the Secretary of State issues such a certificate, such foreign railroad corporation and its stockholders, owners and projectors shall ipso facto become a domestic corporation, and shall ipso facto be incorporated under the laws-of this State, and shall enjoy the rights, and be subject to the liabilities of a domestic corporation, and may sue and be sued in the Courts of this State, and shall be subject to the jurisdiction of this State as a corporation, created under the law's of the State of South Carolina.”

“What was the intention of the framers of the Constitution in adopting section 8 article IX? ' The main object was to require foreign railroad companies, operating or seeking to operate railroad's in this State, to be placed on the same footing with domestic corporations as to their rights and liabilities, under the jurisdiction of the State Courts.” This is the language of the Court in R. R. v. Tompkins, 48 S. C., 49, 25 S. E., 982, and it assigns the only reasonable ground for inserting this section in the Constitution.

In the case of R. R. v. James, 161 U. S., 545, the Court pointed out the manner in which this result could be accomplished, when it said: “In order to bring such an artificial body as a corporation, within the spirit and letter of that Constitution, as construed by the decisions of this Court, it would be necessary to create it out of natural persons whose citizenship of the State creating it would be imputed to the corporation itself.”

.The. evident intention of the framers of the Constitution was to require compliance with this principle, by providing that “in all cases where a railroad is to be built or operated, or is now being operated in this State, and the same shall be partly in this State and partly in another State, the owners or projectors thereof, shall first become incorporated under the laws of this State.”

And by the further provision that “no grant of any right or privilege,' and no exemption from any burden shall be made to any such foreign corporation, except upon the con dition that the owners or stockholders thereof shall first organize a corporation in this State, under the laws thereof, and shall thereafter operate and manage the same and the business thereof under said domestic charter.”

It will thus be seen that the intention that'the corporation should be “created out of natural persons, whose citizenship of the State creating it would be imputed to the corporation itself,” is not only shown by the use of the words “projectors,” “owners” and “stockholders,” but by the word “said,” before the words “domestic corporation,” which refer to a corporation composed of “owners” or “stockholders.”

There are no words in the section of the Constitution hereinbefore mentioned, showing that the provision as to the incorporation of the projectors, owners or stockholders, was intended otherwise than in an exclusive sense.

When we turn to the act of 1909, we find that it not only provides for the incorporation of natural persons, but likewise of artificial bodies created by other States.' If the act provided alone for the incorporation of artificial bodies, citizenship of the States creating the foreign corporations would be imputed to them. Calvert v. Ry., 64 S. C., 139, 36 S. E., 750; Wilson v. Ry., 64 S. C., 162, 36 S. E., 701; R. R. v. Allison, 23 Sup. Ct. Rep., 713.

We do not feel called upon to determine whether citizenship of the State creating the corporation would be imputed to it when incorporated along with natural persons, for the reason that the Constitution prohibits the granting of a charter to any except natural persons, and such question would be merely speculative.

It may be a great hardship to the petitioners to refuse the writ, but this Court can only construe the Constitution and statutes as it finds them.

It is the judgment of this Court, that the wit of mandamus be refused, and that the petition be dismissed, with costs.

Messrs. Associate Justices Woods, and Hydrick and Circuit Judges, Gary, Keugh, Gage, Dantzrer and Wieson concur in this opinion. Judge Watts concurs in this opinion and also in the separate opinion of Mr. Justice Hydrick. Judge DeVore concurs in the result.