People v. Atlantic Ave. Railroad

26 N.E. 622, 125 N.Y. 513, 35 N.Y. St. Rep. 872, 1891 N.Y. LEXIS 1511
CourtNew York Court of Appeals
DecidedFebruary 24, 1891
StatusPublished

This text of 26 N.E. 622 (People v. Atlantic Ave. Railroad) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Atlantic Ave. Railroad, 26 N.E. 622, 125 N.Y. 513, 35 N.Y. St. Rep. 872, 1891 N.Y. LEXIS 1511 (N.Y. 1891).

Opinion

Finch, J.

The relief demanded by the complaint in this action is the dissolution of the defendant company and the forfeiture of its charter. A demurrer was interposed upon the ground that the complaint did not state a cause of action and has been sustained and judgment rendered in favor of the defendant dismissing the complaint. The sufficiency or insufficiency of that pleading is the sole question involved in this appeal.

The first ground of action alleged is that the defendant corporation, which is a railroad company, organized as such for the transportation of passengers and freight, omitted and neglected for five days to run its trains. The averment is one of a mere non-user, not even alleged to have been voluntary, for that brief period of time. The statute furnishes an answer. It explicitly determines *873 what period of non-user shall serve to produce a right of forfeiture, and fixing it at one year, makes a mere non-user for a less period no ground for a dissolution. The language of § 1785 of the Code, which permits an actipn in equity for a forfeiture, is that the action may be maintained against the corporation “ where it has suspended its ordinary and lawful business for at least one year.” The plaintiff claims, however, that the present action is brought under § 1798 and that it furnishes a different rule. That section contains no rule of liability whatever, but simply points out a mode of procedure to enforce duties or punish misconduct, elsewhere and otherwise settled and determined. The terms of the section show that clearly. The attorney general, with leave of the court obtained, may sue for a forfeiture in five enumerated cases. First, where the corporation 'has “ offended against” the law of its creation. What constitutes such an offense the section does not declare or affirm but leaves us to look elsewhere for the proper and lawful test. Second, when the corporation “ has violated any_ provision of law whereby it has forfeited its charter or be-' come liable to be dissolved by an abuse of its powers.” Here again the violation must be one whereby forfeiture follows, and we must go outside of the section to ascertain what violation will produce the result and what acts constitute an abuse of powers conferred. Third, “ where it has forfeited its privileges or franchise by a failure to exercise its powers.” When such failure works a liability to forfeiture the section does not undertake to determine. Fourth, where the corporation has “ done or omitted any act which amounts to a surrender of its corporate rights, privileges and franchises,” but what acts do amount to such a surrender we must go beyond the section itself to ascertain. Fifth, where the corporation has “ exercised a privilege or franchise not'conferred upon it by law.” Here again, what acts, or how long continued, or how material or important, shall bring the penalty of dissolution we are not told, I think it beyond question, therefore, that the section does not establish, or pretend to establish, any rule of liability, but simply to fix and enumerate the classes of cases in which, if liability does exist, the attorney-general may move, having first obtained the assent of the court. That section relates, therefore, merely to procedure, and does not determine, much less enlarge, existing rules of corporate liability. It accomplishes nothing, therefore, to say that the action is brought under § 1798. The vital inquiry still remains, what has the corporation done or omitted which brings down upon it the penalty of dissolution. The answer given by the complaint is that for five days it suspended its ordinary business of transporting passengers and freight. But § 1785 does give a rule of liability where such suspension of business is made the ground of action, and provides that it must continue “for at least one year.” Other remedies may be applied for a non-user of less extent, but the remedy of forfeiture follows the persistent and continued suspension of business for the fixed period.

But the learned counsel representing the People say that a cor *874 poration may incur the penalty of forfeiture by the “"abuse of its powers.” Undoubtedly it may, but the complaint contains no such allegation, nor any averment of fact from which such abuse of power could be inferred. That the defendant company did not run its trains for five days shows merely an omission to use its powers, not an abuse of them. An omission to run its trains might be an incident in the conduct of a railroad company engaged in an abuse of its powers, but does not alone constitute such abuse; and where that is not alleged either in form or substance the complaint cannot be sustained upon that ground.

The appellant, however, avers that it alleges in terms the violation of a statutory duty imposed upon the corporation by the law of its creation. The general railroad act has a section, chap. 140, Laws of 1850, § 36, which requires that “ every such corporation shall start and run their cars for the transportation of passengers and property at regular times to be fixed by public notice,” and the complaint alleges that on the 25th day of January, 1889, and for five days following the company did not so start and run its trains. It may be doubted whether this is anything more than the allegation of non- user in a different form. But it was claimed on the' argument that anv violation of a statutory duty makes a prima facie case for a decree of dissolution, and throws the burden of explanation and excuse upon the corporation assailed. We do not assent to that doctrine in such unguarded terms. If it be sound every railroad corporation in the state is prima facie liable to dissolution. Suppose this complaint had read that on the 25th day of January, 1889, the defendant company did not start- a train advertised to leave at eight o’clock until nine o’clock, whereby the public were delayed and injured. Nobody believes that on a demurrer admitting the facts a judgment of dissolution would follow, although a distinct statutory duty had been violated. The complaint must show on its face corporate acts or omissions such as not only put the company in the wrong but such as were either voluntary or negligent, and so material a disobedience of the public law as within established rules to warrant a judgment of dissolution. This complaint does neither. It does not charge that the omission to run trains for a few days was either voluntary or negligent, and the omission itself may have been involuntary and not. negligent, and in that event the coporation was guilty of no wrong and could not be dissolved. Every word of the complaint may be true and yet the defendant not be in fault or in the wrong, and it is not too much to require that such misconduct should be alleged when the remedy sought is corporate death.

It may be conceded, as the appellants claim, that where some act or omission is made a cause of forfeiture by the statute it is not necessary to aver that it was intentional or negligent, for it has been so decided. People v. Hillsdale & Chatham Turnpike Co., 23 Wend., 256. But the decision implies that the allegation is necessary where the act or omission relied on is not made by the statute a cause of dissolution. In that case it was said that the finding of neglect would be material as to a single act of non-feasance. *875 In People v. Bristol & Rensselaerville Turnpike Co.,

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26 N.E. 622, 125 N.Y. 513, 35 N.Y. St. Rep. 872, 1891 N.Y. LEXIS 1511, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-atlantic-ave-railroad-ny-1891.