Combes v. Keyes

27 L.R.A. 369, 62 N.W. 89, 89 Wis. 297, 1895 Wisc. LEXIS 165

• Court: Wisconsin Supreme Court
• Decided: February 5, 1895
• Status: Published

Opinion

Cassoday, J.

The Milwaukee & Minnesota Kailroad Company was organized, under the general statutes, May 23, 1859. It. thereupon acquired, by conveyance from Barnes,, through a foreclosure of the Barnes mortgage and a sale thereon to Barnes, all the rights, property, and franchises-of tbe La Crosse & Milwaukee Railroad Company, subject, however, to three mortgages on the eastern division and two mortgages on the western division and several judgments on the respective divisions,, including "one in favor of New-combe Cleveland. Prior to April 18, 1866, the Milwaukee •& St. Paul Railroad Company acquired the title and possession of the western division, through the foreclosure of the first mortgage thereon and a sale thereunder. The La Crosse & Milwaukee Railroad- Company was expressly authorized by its charter, and the amendments thereto, to mortgage all of its estate, real, personal, or mixed, “ together with the functions appertaining to said railroad, and all corporate and other franchises, rights, and privileges ” of said company; and hence, by that foreclosure and sale, the same were vested in the Milwaukee & St. Paul Railroad Company. .March 2,1867, the Milwaukee & St. Paul Railroad Company' acquired the title and possession of the eastern division, under and by virtue of a marshal’s sale and conveyance to it on a decree entered in the federal court, January 11,1867, as- mentioned, in a suit in equity in favor of the assignee of the Cleveland judgment, and against the Milwaukee & Minnesota Railroad Company, to enforce that judgment as alien thereon. Since March 2, 1867, the name of the Milwaukee & St. Paul Railroad Company has been changed to the Chicago, Milwaukee & St. Paul Railway Company, and the same has ever since been in possession and operated said railroad a*s owner thereof.

Prior to the marshal’s sale and conveyance mentioned, the Milwaukee & Minnesota Railroad Company had a board of directors, who had severally been elected at the time and place and in the maimer prescribed by the statutes of this state, and such board had elected a president, secretary, and treasurer of that company, who had respectively acted as such officers down to the time of the marshal’s sale and conveyance. mentioned. Independently of statute, it was .the duty of that company, during its existence, to have an office and officers within this state. State ex rel. Att'y Gen. v. M., L. S. & W. R. Co. 45 Wis. 519. It appears that no notice of the election of any such directors for that company was ever given and no appointment of any inspectors of any such election was ever made as prescribed by statutes after 1866, and that after April, 1867, there never was any meeting in Wisconsin of the stockholders or directors of said company for any purpose; that since that time said •company has neither owned, possessed, nor had any property in this state, nor been engaged in any business therein, •and at the time of the commencement of this action it had no agent or officer therein.

The question recurs whether the Milwaukee & Minnesota Railroad Company has any legal existence in this state, so as to entitle it to sue and be sued. That company was incorporated and organized under and by virtue of the laws of this state over thirty-five years ago, and existed only by force of the laws of this state. Since such laws, of themselves, had no extra-territorial force, that corporation could not migrate to some other state or country, but during its existence was bound to dwell in this, the state of its creation. Seamans v. Knapp-Stout & Co. Company, ante, p. 171; Larson v. Aultman & Taylor Co. 86 Wis. 283-284; Bank of Augusta v. Earle, 13 Pet. 588; Shaw v. Quincy Mining Co. 145 U. S. 449. While it could only live and have its being in this state, yet its residence here created no insuperable objection to its power to contract and be contracted with in other states, and having its legal existence recognized in such other states. Hid. But any exercise •of its corporate franchises in such other states was merely .permissible by virtue of the comity of such states. Ibid.; Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566.

Such being thp law, it is very manifest that, if the Milwaukee & Minnesota Railroad Company had any legal existence at the time of the commencement of this action, such.-, existence was confined within the limits of this state. And yet the sheriff’s return is to the effect “ that, after due diligence, search, and inquiry,” he could not find that company within his county, nor any officer or agent of the same-within the state. The same condition of things, as to that-company in this state, had existed ever since April, 1867. If, during those twenty-six years, it existed in this state at-all, such existence was without any definite location, intangible, and unascertainable. The case is not one of a defendant whose “residence is unknown,” or who “keeps, himself concealed” Avithin the state, with the intent to- “ avoid the sendee of a summons,” within the meaning of the statute. R. S. sec. 2639. The service of the summons, by publication in this case is sought to be justified upon the-sole ground that the defendant is a “ private corporation organized under the laws of the state, and the proper officers on whom to make service . . . cannot be found.” Ilid.

The statute declares, in effect, that whenever any corporation shall have neglected or refused to pay and discharge its debts, “ or shall have suspended its ordinary and lawful business for one whole yecur, it shall be deemed to have surrendered the rights, privileges, and franchises granted or acquired under any law, cmd shall he adjudged to he dissolved.” Sec. 1163. But this court has repeatedly held that, such neglect, refusal, or suspension “ for one whole year does not ipso faoto operate as a dissolution of such corporation, but simply declares an efficient cause for adjudging a, dissolution in a proper action. Strong v. McCagg, 55 Wis. 624; Sleeper v. Goodwin, 67 Wis. 577. The statute also prescribes, in effect, that where the existence of a corporation expires by its own limitation, or is voluntarily dissolved in the manner provided by law or by its articles of association,, or is annulled by forfeiture or otherwise, nevertheless it. shall- continue to exist for -three years for certain purposes. Sec. 1164. Sleeper v. Goodwin, 61 Wis. 584. So the statute authorizes the dissolution of a corporation by a written resolution in certain cases. Sec. 1189.

It must be remembered that the Milwaukee & Minnesota Railroad Company acquired the rights, property, and franchises of the La Crosse & Milwaukee Railroad Company by ■virtue of the foreclosure and sale of the Barnes mortgage; that it took such rights, property, and franchises subject to the prior mortgages and prior judgments mentioned; that the purpose of its incorporation and organization was to operate the railroad thus acquired between the points mentioned; that prior to April, 186'T, it had been completely ousted and dispossessed of the entire railroad, and every part thereof, under and by virtue of the foreclosure and sale and the decree in equity and sale mentioned; that all such rights, property, and franchises thereby and thereupon became vested in the St. Paul Company, which for more than twenty-six years prior to the commencement of this action, and since, has had the possession and control of the entire line of railroad and every part thereof, and during all that time operated the same as a railroad, with the repeated express or implied sanctions of the legislature of this state; that during the same time the Milwaukee & Minnesota Railroad Company has not owned nor possessed any railroad, nor does it appear that it has attempted to construct any. The contention of counsel for the plaintiff seems to be to the effect that while the Milwaukee & Minnesota Railroad Company had, by virtue of the sales and conveyances mentioned, been deprived of the entire railroad and its property and its franchises, as a corporation, to maintain and operate the same, yet that it still possesses a franchise to Toe a corporation, and hence may still sue and be sued. Conceding that a franchise to be a corporation may, under certain circumstances and for certain purposes and for a limited time, exist •without any franchise to maintain and operate such corporation, still the question here presented is whether any such franchise to be a corporation survived to the Milwaukee & Minnesota Railroad Company after the transfers made under the circumstances mentioned, and for the length of time named.

Undoubtedly, a private corporation may dissolve itself .and terminate its corporate existence by a voluntary surrender of its franchises to the state. To make the surrender complete, however, it must be accepted by the state. 4 Am. & Eng. Ency. of Law, 296, and cases there cited. It would seem that after such corporation had been stripped of all its property, and for twenty-six years had failed to exercise any corporate franchise or elect any officer in this state or keep any office therein, such surrender would be presumed. Brandon Iron Co. v. Gleason, 24 Vt. 228. And so it would seem that, where a corporation suffers acts to be done which destroy the end and object for which it was instituted, it is ■equivalent to a surrender of its rights. Slee v. Bloom, 19 Johns. 456, 10 Am. Dec. 273; Briggs v. Penniman, 8 Cow. 387, 18 Am. Dec. 454. It has been held that a seizure and sale of the franchises of a corporation effect its dissolution. State Bank v. State, 1 Blackf. 267, 12 Am. Dec. 234. So it has frequently been held that the consolidation of two or more railway companies, in pursuance of a statute, operates .as a dissolution of the old corporations and the merger of the franchises and privileges of each of them into the new corporation. Shields v. Ohio, 95 U. S. 319; Green Co. v. Conness, 109 U. S. 104; Pullman's Palace Car Co. v. Mo. Pac. R. Co. 115 U. S. 587; Keokuk & W. R. Co. v. Missouri, 152 U. S. 301. It is certainly within the power of a legislature which creates a corporation and grants franchises to it, to authorize it to sell or mortgage those franchises. Willamette Mfg. Co. v. Bank of British Columbia, 119 U. S. . Here the franchises were mortgaged by express legislative authority, and hence were transferred through the foreclosure and sale pursuant to law.

Resides, the statute in this state declares, in effect, that any person or association of persons which shall have or may hereafter become the owner or assignee of the rights, powers, privileges, and franchises of any corporation created or organized by or under any law of this state, by purchase under a mortgage sale, sale in bankrupt proceedings, or sale under any judgment, order, decree, or proceedings in any court in this state, including the courts of the United States sitting herein, “may, at any time within íajjo yea/rs after such purchase or assignment,” organize anew, as provided by the statutes, and shall thereupon have the same rights, privileges, and franchises which such corporation had, or was-entitled to have, at the time of such purchase and sale, and such as are provided by the statutes applicable thereto; R. S. sec. 1788. That section is in effect the same as ch. 115, Laws of 1872. The Milwaukee & St. Paul Railroad Company became such purchaser, and so organized anew, within two years after such purchase and assignment, although about five years prior to that enactment." The manifest intention of the act was to ratify and confirm all such prior transfers, and to accept all such prior surrenders of corporate rights» The two years mentioned was merely to limit the time within which any purchasers or assignees, subsequently to the enactment, might so organize anew.

After careful consideration, we are constrained to hold, upon the showings made, that, prior to the commencement of this action, the Milwaukee & Minnesota Railroad Company had voluntarily surrendered all of its corporate franchises, and that the same had been accepted by the state.

After the dissolution of a corporation, the power to proceed judicially against it in an action is wholly divested,. except as specially authorized by statute. “A defunct corporation, like a natural person who dies, cannot be brought into court by process served upon persons who were officers- or agents when the corporation was in existence.” Waterman, Corp. § 434. “ Where, during the pendency of a suit, a corporation surrenders its charter, which is accepted by the legislature, it becomes, defunct, and the suit abates, unless the legislature, by some act, saves the right of action against the corporation.” Greeley v. Smith, 3 Story, 657. In Mumma v. Potomac Co. 8 Pet. 281, it was held that “ there is no pretense to say that a scire facias can be maintained and a judgment had thereon against a dead corporation, any more than against a dead man.” In that case the attorneys of record for the corporation at the time of the rendition of the original judgment appeared and suggested the death of the corporation after the rendition of such judgment, and alleged the same by way of a plea in abatement. The facts being admitted, the trial court gave judgment that the plaintiff take nothing by his writ of scire facias, and' that judgment was affirmed by the supreme court of the-United States.

Prom the very nature of things, the dissolution or death of a corporation defendant, like the death of a party to a pending action, can only be brought to the attention of the court by some one other than the defunct corporation. This-is obvious from the authorities cited. See, also, Welch v. Ste. Genevieve, 1 Dill. 130; Nat. Bank v. Colby, 21 Wall. 609, 611, 614; State v. Jefferson Iron Co. 60 Tex. 312. We think it was competent for Pwiyht W. Keyes, who had been the secretary of the defunct corporation, to intervene and inform the court of the facts which had worked a dissolution and death of the corporation.

By the Court.— The order of the circuit court is reversed, and the cause is remanded with direction to set aside the order of publication and the service of the summons; but,. as indicated in Mumma v. Potomac Co. 8 Pet. 281, as there is no such corporation in esse as the Milwaukee & Minnesota Railroad Company, there can be no costs awarded in its favor.