People v. Union Elevated Railroad

269 Ill. 212

Opinion

Mr. Justice Craig

delivered the opinion of the court:

The sufficiency of the petition .originally filed by the State’s attorney to show probable cause for the institution of the proceedings, and of the counter-affidavits filed ■ in support of the motion to vacate such order for the purpose of showing that such leave was improvidently granted, are the only questions presented by the assignment of errors for decision by this court.

The statute of this State commonly known as the Quo Warranto statute (Hurd’s Stat. 1913, p. 1921,) provides in section 1 that upon certain conditions therein named the Attorney General or the State’s attorney of the proper county, either of his own accord or at the instance of any individual relator, may present a petition to any court of competent jurisdiction, or any judge thereof in vacation, for leave to file an information in the nature of quo tva-rranto in the name of the People of the State of Illinois, and if such court or judge shall be satisfied that there is probable ground for the proceeding the court or judge may grant the petition and order the information to be filed and process to issue. This was the procedure followed in this case. A petition was presented, leave was granted to1 file the information, and the information was filed and process ordered issued. It is now insisted that no probable grounds were shown for so granting leave; that such leave was improvidently granted, and for that reason the order granting such leave was properly vacated and the proceedings abated upon the motion of respondent.

Where the preliminary proceedings on the hearing on the petition for leave to file the information are ex parte, the rule is well established in this State that whenever it is made to appear that leave to file such information has been inadvertently or improvidently granted or allowed under a misapprehension of the law or the facts, the court may, at any time during the term at which leave was granted, vacate and set aside the order granting such leave. (People v. Union Consolidated Elevated Railway Co. supra; People v. Golden Rule, 114 Ill. 34; People v. People’s Gas Light Co. 205 id. 482; People v. Darrough, 266 id. 506.) And it is equally well settled that the discretion with which a court is vested in such matters is not a personal or arbitrary one but is a sound judicial discretion, resting upon well established principles of law and subject to review. (People v. Town of Thornton, 186 Ill. 162; People v. Mackey, 255 id. 144.) With these settled principles in view, it is now the duty of this court to review the record of the lower court to ascertain, first, whether or not the petition showed probable ground for filing the information; and second, whether, after granting leave to file the information, the court abused its discretion in subsequently setting aside the previous order granting such leave.

At common law a writ of quo warranto was a writ of right for the crown and no leave was required for the Attorney General to file such information where only public rights were involved, but by section 1 of the Quo Warranto act of this State the common law rule has been abrogated, and now leave to file the information is required in all cases where the remedy is by an information in the nature of quo warranto. (People v. Union Consolidated, Elevated Railway Co. supra.) Under our statute the application for leave to file the information is based upon a petition by the Attorney General or State’s attorney of the proper county setting forth probable ground for the institution of the proceedings, but so far as we have been advised no case in this State has attempted to define or point out what will. constitute “probable ground” for the proceeding, as those words are used in the present statute. This is undoubtedly due to the fact that a decision of the question rests largely upon the facts and circumstances of each particular case. The statute only requires that “the judge shall be satisfied that there is probable ground for the proceeding” before granting leave to file the information and ordering process to issue. Webster, in his International Dictionary, defines the word “probable” as meaning “capable of being proved,” and says that the words “probable cause,” in law, mean “a reasonable ground of presumption that a charge is or may be well founded.” We think it was in this sense that the words were used in the present statute. When the words are taken in this broad sense it will be seen that the petition need do no more than set up a state of facts, apparently true, sufficient to induce a reasonable belief that rights, privileges, franchises or offices are being usurped, intruded upon or unlawfully exercised by a person or corporation in violation of law, to the detriment of the public in the manner alleged. When such a condition is. set forth it may well be said that probable ground for the institution of the proceedings is shown and that leave was properly granted and process ordered issued.

Without re-stating the more essential allegations of the petition filed in this case, we think it sufficient to say that the petition presented by the State’s attorney clearly set forth probable ground for the institution of the proceedings. It alleges with all the certainty that could reasonably be expected under the circumstances, a violation of section 13 of article 11 of the constitution and of section 21 of chapter 114 of the Revised Statutes of this State by the issuance and delivery by the Union Elevated Company of $5,000,000 in par value of its stock to the Loop Company without any consideration whatever, and by the issuance and delivery to the same corporation of $4,387,000 of its bonds for the construction of a railroad which did not cost more than $2,277,551 when fully constructed and equipped, and that these transactions were resorted to as a part of a fraudulent scheme or device to evade those constitutional and statutory provisions in making a dishonest and fictitious issue and increase of its capital stock and corporate indebtedness, and that after the transactions had been consummated the Union Elevated Company sold all of its property, rights, privileges and franchises to another corporation, and used substantially all of the purchase price of such property and franchises in redeeming at above par, or for $125 per share,' ninety per cent of the stock previously issued to the Loop Company without any consideration whatever, and that this corporation has ever since that time, and for more than the last ten years, not exercised any of its corporate functions, powers, privileges or rights. Failure to exercise its corporate powers alone constituted sufficient ground to authorize the institution of the proceedings. As said in Edgar Collegiate Institute v. People, 142 Ill. 363: “The rule is, that it is a tacit condition of the grant to be a corporation that the grantees shall act up to the end or design for which they were incorporated, and that hence, through neglect or abuse of its franchise, a corporation may forfeit its charter as for condition broken or for a breach of trust. (Angell & Ames on Corp. sec. 774, and cases cited in note 1; High on Extraordinary Remedies, sec. 666.) And our statute provides that proceedings in the nature of quo warranto may be prosecuted against a corporation where it ‘does or omits any act which amounts to a surrender or forfeiture of its rights and privileges as a corporation.’ (Rev. Stat. 1874, sec. 1, chap. 112; 2 Starr & Curtiss, 1871.) It is true that ‘where a misuser is relied upon as the foundation for proceedings to procure a forfeiture of the corporate franchise it must appear that there has been such a neglect or disregard of the corporate trust, or such a perversion of it to private purposes, as in some manner to lessen the utility of the corporation to'those for whose benefit it was instituted or to work some public injury.’ — High on Extraordinary- Remedies, sec. 666.”

If the allegations of the petition are true, — and they must be accepted as true for the purpose of determining the sufficiency of the petition, — we think it sets forth facts sufficient to show that there was reasonable ground for believing that the Union Elevated Company had neglected and abused its corporate rights, franchises and privileges, not only by making a fraudulent and fictitious issue of its capital stock and bonds and increasing its indebtedness with the intent of evading the constitution and laws of this State, but also by its failure to exercise and carry out the objects and purposes for which it was chartered and created, and that the court did not err in granting leave to file the information.

As to the sufficiency of the showing that leave was improvidently granted, the counter-affidavits filed by respondent are in many respects merely contradictory of the allegations of the petition with respect to the consideration for which the stock of the Union Elevated Company to the amount of $5,000,000 and bonds to the amount of $4,387,-000 were issued and delivered to the Loop Company and of the fraudulent intent of evading the statute and constitutional provisions of the State. Counter-affidavits simply denying the allegations of the petition are not sufficient to show that the leave was improvidently granted. They merely show that an issue should be made up for trial. In Attorney General v. Chicago and Evanston Railroad Co. 112 Ill. 520, a petition for leave to file an information in the nature of quo zmrranto was filed and a rule was entered on the respondent to show cause why leave should not be granted to file the information prayed for. The respondent showed cause by its answer and motion to discharge said rule. As stated in the opinion in that case (p. 535) : “If the facts relied upon by the respondent in answer to the rule to show cause were disputed or if new and doubtful questions of law were presented that would require more time for their satisfactory solution than could reasonably be given to them on such an application, then, under the authorities referred to by the relator, (Buller’s Nisi Prius, 210, Angeli & Ames on Corp. secs. 740, 741, and King v. Meiss, 3 T. R. 596,) it would doubtless be the duty of the court to make the rule for an information absolute, 'that the questions might receive a full and final determination.’ But the relator concedes that the facts relied upon by the respondent in his answer to the rule to show cause are not disputed, and we are of opinion that the questions of law presented may receive as full and careful consideration on this application as could be given them were the rule to show cause made absolute.” The affidavit of A. L. Drum, the engineering expert, as to what should be taken into consideration in fixing the value of the respondent’s properties and the value of the same was largely a matter of opinion and concerned matters on which hardly any two witnesses would agree.

The other matters set up in the affidavits filed on behalf of respondent tended to show the People were guilty of laches in instituting this proceeding, and for that reason the order granting leave was properly vacated. This was not made one of the points in the motion to vacate the order granting leave, nor would it have constituted good ground for so doing had such question been raised. ' The rule is fundamental in this State that the Statute of Limitations does not run against the State, and by analogy that laches cannot be imputed to it. The rule in this respect is stated by Mr. Justice Breese in People v. Brown, 67 Ill. 435, as follows: “It is a familiar doctrine that the State is not embraced within the Statute of Limitations unless specially named, and by analogy would not fall within the doctrine of estoppel. Its rights, revenues and property would be at fearful hazard should this doctrine be applicable to a State. A great' and overshadowing public policy of preserving these rights, revenues and property from injury and loss by the negligence of public officers forbids the application of the doctrine. If it can be applied in 'this case, where a comparatively small amount is involved., it must be applied where millions are involved, thus threatening the very existence of the government. The doctrine is well settled that no laches can be imputed to the government, and by the same reasoning which excuses it from laches, and on the same grounds, it should not be affected by the negligence, or even willfulness, of any one of its officials.” This doctrine was affirmed in People v. Pullman Car Co. 175 Ill. 125, where in the majority opinion it is said: “We have examined the various cases cited by counsel for appellee as in support of the defense of waiver and acquiescence in the case at bar, and do not find that in any of them the defense has been deemed available, as against the sovereign or State, except in case where the right and title of a corporation to corporate existence was questioned because of some defect in the original charter, irregularity in the proceedings for the organization of the corporation, or its failure to perform or fulfill some condition precedent to its legal organization. * * * In the case at bar the appellee is conceded to be a corporation de jure, and the complaint is, it had assumed and exercised, and is assuming and exercising, powers not granted by its charter or implied by law.” And to the same effect are the cases of People v. Gary, 196 Ill. 310, People v. Burns, 212 id. 227, People v. Anderson, 239 id. 266, People v. Shedd, 241 id. 155, People v. Mackey, supra, and People v. Keigwin, 256 Ill. 264.

To the above general rule, as pointed out by appellant, there are the three following exceptions, viz.: where there is a defect in the formal organization of a corporation, acquiesced in by the State; where the proceeding is for the benefit of a private relator; and where the legality of the organization of a municipality is questioned and injury to the public may result from assertion of the rights of the State. (People v. Schnepp, 179 Ill. 305; People v. Rendleman, 250 id. 289; People v. Pullman Car Co. supra.) The respondent is brought within neither exception by its counter-affidavits. In People v. Golden Rule, supra, it is said, on page 44 of the opinion: “We now hold that the court or judge may, under the present statute, act upon the petition of the relator without first laying a rule upon the respondents to show cause, and- if satisfied that there are probable grounds for the filing of the petition, allow it to be filed. No hardship can result from this, when it is reflected that the summons, if ordered in vacation, must- be returnable on the first day of the next succeeding term; and if ordered in term time, it must be returnable on any day of the same term, not less than five days after the date of the writ, as shall be directed by the order of the court, (see Quo Warranto act, sec. 2,) and that the respondents, upon the return to the writ, may demur to the information and thus test its sufficiency, or, if it be sufficient, by plea set up any defense why judgment should not be pronounced upon it against the respondents. (See Quo Warranto act, sec. 4.) When the court had here allowed the information to be filed and ordered the summons to be issued, its discretionary powers were exhausted, and the issues of fact and of law presented by the pleadings must then have been tried and determined ‘in accordance with the strict rules of law, in the same manner and with the same degree of strictness as in ordinary cases.’ (High on Extraordinary Legal Remedies, latter part of sec. 606.) It is not denied that if the order to issue the summons had been made under a misapprehension of some fact material to be known by the court before making such order and but for which it would not have been made, it would have been competent for the court to vacate the order at any time during the term: But the court here acted upon no such mistake. It simply allowed that which should have been interposed as a defense on the final hearing to be urged as a ground for vacating the order.” The opinion in Golden Rule case was by Mr. Chief Justice Scholfield, who also delivered the opinion of the court in Attorney General v. Chicago and Evanston Railroad Co. supra, and the two cases are important as showing the proper practice in cases like the one at bar. In People v. Heidelberg Garden Co. 233 Ill. 290, it is,said: “It needs no citation of authorities to show that, except as where changed by statute, common law pleadings govern in this State in civil actions, and section 10 of the Practice act (Hurd’s Stat. 1905, p. 1532,) shows clearly that it was intended therein that the pleadings in matters of this kind should be in accordance with the common law. See, also, on this point, 17 Ency. of Pl. & Pr. 457; People v. Healy, 230 Ill. 280; Bishop v. People, 200 id. 33; Hepler v. People, 226 id. 275.”

We think that according to the weight of authority the proper practice in the case at bar would have been to overrule the motion of the respondent to set aside the order granting leave to file the information and permit respondent to demur or plead to the information as it saw fit, so that the cause could be heard and determined according to the established rules of practice and as provided in the Quo Warranto statute.

It is further insisted by respondent in argument that the information filed is based upon matters not set up in the petition as grounds for the granting leave to file the information. Section 4 of the Quo Warranto act points out the manner in which defects or imperfections in an information may be taken advantage of, and until that method has been pursued and the sufficiency of the information passed upon by the lower court that question is not before us for review. We will therefore not pass upon it at this time.

For the reasons given, the judgment of the circuit court of Cook county will be reversed and the cause remanded, with directions to deny the motion to vacate the order granting leave to file the information and for further proceedings not inconsistent with the views herein ex-piessed.

Reversed and remanded.

Note. — The same order will be entered in People v. Union Consolidated Elevated Railway Co. (No. 9690,) submitted with this cause. .