People v. Atlantic Avenue Railroad

125 N.Y. 513
New York Court of Appeals·Decided February 24, 1891·Published

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 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 [516] answer. It explicitly determines 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 section 1785 of the Code which permits an action 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 section 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 become liable to be dissolved by an abuse of its powers.” Here again the violation must he one whereby forfeiture follows, and we must go outside of the section to ascertain what violations 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 “doné or omitted any act which amounts to a surrender of its corporate rights, privileges and franchises,” but whát 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 [517] 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 section 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 section 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 corporation 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.

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People v. Atlantic Avenue Railroad, 125 N.Y. 513 (N.Y. 1891).

125 N.Y. 513 (People v. Atlantic Avenue Railroad) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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