Manning v. Atlantic & Yadkin Railway Co.

Adams, J. Tbe Attorney-General is authorized to bring an action in the name of the State against a corporation for the purpose of annulling its charter on the ground that it was procured by fraud or the concealment of a material fact by the persons incorporated, or by some of them, or by others witb their knowledge or consent. He may bring such action for the purpose of annulling the existence of a corporation, other than municipal, when such corporation offends against the act creating, altering, or renewing it, or violates any law by which it has forfeited its charter by abuse of its power, or has forfeited its jorivileges or franchises by failure to exercise its powers, or has done or omitted any act which amounts to a surrender of its corporate rights, privileges, and franchises, or has exercised a franchise or privilege not conferred upon it by law, or when it has done certain other acts not germane to the present investigation. C. S., 1187. The plaintiff’s argument, at least in part, is predicated on the theory that the action is prosecuted under this section to procure a forfeiture of the charter granted by the General Assembly to the Atlantic and Yadkin Railway Company; but the defendants combat this position. They contend, as alleged in the complaint, that the action was instituted pursuant to the resolution adopted by the General Assembly of 1923; that the object therein contemplated is merely to set aside the alleged illegal sale of a part of this company’s property; that the allegations of the complaint are addressed to this purpose, and that the relief prayed is the cancellation of the deed executed on 13 May, 1899, by the Atlantic and Yadkin Railway Company to the "Wilmington and Weldon Railroad Company. The defendants urge the further argument that the action is not in the nature of quo warranto; that it does not relate to the usurpation or unlawful exercise of a franchise; and that neither — 657 — tbe plaintiff nor tbe State bas a legal or justiciable interest in tbe cause of action set up in tbe complaint. All these divergent contentions need not now be considered, for tbe defendants take certain positions wbicb, if sound, will render unnecessary our determination of any question relating to tbe parties in interest or to tbe form of tbe action. Two of tbe propositions wbicb tbe defendants undertake to maintain are these: (1) Tbe sale of a part of tbe Atlantic and Yadkin Eailway Company to tbe Wilmington and Weldon Eailroad Company was authorized by law and is therefore valid. (2) Tbe plaintiff bas not shown good faith and reasonable diligence, and is estopped by laches from maintaining this action. Each proposition will be considered in its order. Tbe act incorporating tbe Atlantic and Yadkin Eailway Company is made a part of tbe complaint. So likewise is tbe resolution adopted both by this company, as seller, and by tbe Wilmington and Weldon Eailroad Company, as purchaser, in reference to tbe sale of that part of tbe system lying to tbe east of Sanford. Tbe charter of tbe Atlantic and Yadkin Eailway Company bas this section: “Tbe said company shall have tbe right to consolidate with any other railroad company organized under tbe laws of this State with wbicb it may connect, directly or indirectly, on such terms and' conditions as may be. agreed upon by and between tbe stockholders of this and any other such company: Provided, that any corporation or . company consolidated under tbe provisions of this act shall be a domestic corporation and subject to tbe laws and jurisdiction of North Carolina.” Private Laws 1899, cb. 98, sec. 6. Tbe resolution referred to, hereinafter set out, embodies a part of tbe act of 1899 (Private Laws, cb. 105) amending a former act (Private Laws 1893, cb. 284), wbicb authorized tbe consolidation of tbe Wilmington and Weldon Eailroad Company with any other railroad company with wbicb it was directly or indirectly connected. It is obvious, then, that tbe immediate question is whether tbe General Assembly, by tbe passage of these several acts, authorized tbe Atlantic and Yadkin Eailway Company to sell and tbe Wilmington and Weldon Eailroad Company to purchase tbe property described in tbe resolution and in tbe deed wbicb was executed in pursuance of it. On several grounds tbe plaintiff denies that tbe Legislature conferred such authority, or at any rate denies tbe efficacy of such alleged grant of power. His first position is that these private acts are void, because they purport to authorize a single railroad company to purchase, in whole or in part, all tbe connecting lines within tbe State, or any of them; that such pretended grant of power is against public policy, contrary to tbe common law and tbe bill of rights, and invalid as an unlawful attempt to suppress competition. — 658 — Pretermitting tbe question whether an act of the General Assembly should be construed as against public policy or the common law, we are not disposed to controvert the force of an argument based as a general rule on the grounds assigned by the plaintiff; but we do not understand that the Legislature granted to the Wilmington and Weldon Railroad Company the extensive and sweeping powers attributed to it in the plaintiff’s brief. The right to consolidate or merge its railroads with others and to buy or lease other railroads may not be exercised by the company in its unrestrained discretion 3 for such consolidation or merger and such sale or lease may be made with or by those railroads only which are authorized by the Legislature to make such consolidation, merger, sale, or lease. It may reasonably be presumed in these circumstances that the General Assembly, which has the power to grant or withhold the right, will neither permit the creation of a monopoly nor authorize nor approve an act which would be illegal or against public policy; for the Legislature, out of due regard for the public welfare, may declare that the charter of' a corporation shall not be used for the purpose of stifling competition and. building up monopolies. Pearsall v. Great Northern Railway Co., 161 U. S., 646; 40 Law Ed., 839, 848. In any event, we think such apprehended danger is not inherent in the act under which the sale is alleged to have been made, or that the act is reasonably susceptible of the construction insisted on by the appellant. The plaintiff further contends that in the enactment of chapter 105 of the Private Laws of 1899 it was not the purpose of the Legislature to sever the Atlantic and Yadkin Railway, but to authorize the Wilmington and Weldon Railroad Company to purchase connecting lines within the State in order to establish an unbroken system between Virginia and South Carolina. On the hearing before the Corporation Commission, H. Walters, one of the purchasers at the commissioners’ sale, testified substantially that the bill was originally intended by the purchasers to accomplish this purpose. It is contended, therefore, that the act should be given only such meaning as the purchasers, who procured its passage, had in mind — that is, authority to purchase the Norfolk connection, a part of the Petersburg Railroad, a part of the Wilmington, Columbia and Augusta Railroad, and a part of the Cheraw and Salisbury Railroad, but no others. It is elementary learning that neither the purpose nor the opinions of those who are not members of a legislative body can be regarded as an appropriate source from which to discover the meaning of a legislative act. In United States v. Freight Association, 166 U. S., 290; 47 Law Ed., 1007, 1020, it was held that even debates in Congress may not- be resorted to for this purpose, the reason being that it is impossible to determine with certainty what construction was put upon an act by the — 659 — members of the legislative body that passed it by resorting to the speeches of- the individual members. Those who do not speak may not agree with those who do, the result being that the only proper way to construe a legislative act is to construe the language used in the act. The statute must be regarded, not as the creature of the purchasers, but as the will of the Legislature, and its meaning must be ascertained by applying the ordinary principles of statutory construction. The object of judicial interpretation is to determine the legislative intent, and, to this end, words should generally be given their popular meaning if they have not acquired a meaning which is technical. It is only when the terms of a statute are ambiguous or of doubtful construction that the courts may exercise the power of controlling the language in order to give effect to what they suppose to have been the real intention of the lawmakers. If the language is not ambiguous and the intent is plain, there is no reason for resorting to external circumstances as an aid to interpretation, for in such case there is really no ground for construction. We must therefore ascertain the intention of the General Assembly from the language of the acts, and not from the wish or intention of the purchasers who were interested in the legislation. End-lich Interpretation of Sts., chs. 1 and 2; Lewis’ Sutherland St. Con., sec. 363 et seq.; United States v. Freight Assn., supra; Standard Oil Co. v. United States, 121 U. S., 1; 55 Law Ed., 619; Whitford v. Ins. Co., 163 N. C., 223; Highway Com. v. Varner, 181 N. C., 42. That part of the statute which is incorporated in the resolution referred to and made a part of the complaint follows: “Authority is hereby given to the Wilmington and Weldon Eailroad Company to consolidate or to merge its railroads with, or to buy or lease the railroad or railroads of any other railroad company with which it may connect, either directly or indirectly, organized under the laws of this State or of any adjoining State which, under the laws of this or such other State, may have power to consolidate, merge, sell or lease its road; and any such other company shall have the right to consolidate, merge, sell or lease its railroad, in whole or in part, with or to the Wilmington and Weldon Eailroad Company; and such consolidation, merger, sale or lease may be made between the Wilmington and Weldon Eailroad Company and any other such company upon such terms and conditions as may be agreed upon by a majority of the stockholders of each corporation entitled to vote at all stockholders’ meetings.” Private Laws 1899, ch. 105, sec. 1. This amendatory act was ratified on 24 February, 1899, the day after the Atlantic and Yadkin Eailway Company was incorporated and authorized to consolidate with any other railroad company organized under the laws of this State with which it was directly .or indirectly — 660 — connected. The Wilmington and Raleigh Railroad Company, after-wards the Wilmington and Weldon Railroad Company, was organized under the laws of North Carolina. Laws 1833-34, ch. 78; Private Laws 1893, ch. 100. The Legislature is presumed to have had knowledge of the direct physical connection of the selling and purchasing roads, of the purpose and scope of these acts, and of the legal effect of the ¡provisions authorizing a sale, lease, merger or consolidation by or with the connecting lines; and if it authorized the sale in question, its intention to do so must be conclusively ¡iresumed. Did these statutes authorize a sale of the property to the Wilmington and Weldon Railroad Company? The plaintiff contends they did not; that to support the sale the defendants must show, not only that the purchasing company was authorized to buy, but that the selling company was also expressly vested with power to sell. This proposition is upheld in Arkansas v. Choctaw & M. R. Co., 134 Fed., 106, cited by the plaintiff, but the case does not decide the point before us, because the act of Congress there reviewed related exclusively to the right of purchase, not of sale, and the State law authorizing the sale presented no Federal question and was not considered. Nor do we construe the remaining cases cited by the plaintiff as conclusive upon this question. It may be deemed the established doctrine, however, that these corporations at the time of the sale had a right to exercise only such powers as had been expressly conferred upon them by the General Assembly, either in the acts creating them or in subsequent legislation, and such implied powers as were necessary to enable them to use the powers expressly granted. Oregon Railway v. Oregonian Railway, 130 U. S., 1; 32 Law Ed., 837; Thomas v. Railroad Co., 101 U. S., 71; 25 Law Ed., 950; Victor v. Mills, 148 N. C., 107; Barcello v. Hapgood, 118 N. C., 712; Wiswall v. Plank Road Co., 56 N. C., 183. The meaning is, they had the power by implication to do whatever was necessary to carry into effect the purposes of their organization, unless the particular act was expressly prohibited; but as the contested sale was not essential to the original purposes of either organization, we must ascertain whether it was consummated by virtue of authority expressly conferred. Conceding that such authority was necessary, we are of opinion it need not have been conferred exclusively by an express amendment of the charter of the selling corporation. It is sufficient if the power was granted, though not by way of amending the charter. The important thing is the grant of power, not the mode in which the power is granted. Ferguson v. Meredith, 1 Wall., 25; 17 Law Ed., 604; Ashley v. Ryan, 153 U. S., 436; 38 Law Ed., 773; Vicksburg v. Vicksburg Waterworks, 202 U. S., 453; 50 Law Ed., 1102; Spencer v. R. R., 137 N. C., 107. — 661 — We concede further that a grant of power by the State is ordinarily to be construed strictly against the grantee, and that nothing will be presumed to pass unless it be expressed in clear and unambiguous language; but it should not be so construed as to defeat the manifest intention of the Legislature. Pearsall v. Great Northern Ry. Co., supra; Black v. Canal Co., 22 N. J. Eq., 130. The Legislature, as we interpret the statute, not only gave to the purchasing corporation the right to buy, but vested in the selling corporation the power to make the sale. A statute similar to the one under consideration was construed by this Court in Spencer v. R. R., supra. There it appeared that the Legislature had granted the Seaboard Air Line Railway the right to exercise the following powers: “With the approval of two-thirds in amount of its stockholders, given at any annual meeting or a meeting specially called for that purpose, or a meeting at which all the shares of capital stock are represented, in person or by proxy, it may from time to time lease, use, operate, consolidate with, or purchase, or otherwise acquire, or be leased, used, operated by or consolidated with the Seaboard and Roanoke Railroad Company and any railroad or transportation company now or hereafter incorporated by the laws of the United States or any of the States thereof, whether such company be formed by the consolidation of other companies or not; and from time to time it may consolidate its capital stock, property and franchises, by change of name or otherwise, with the capital stock, property and franchises of any other such railroad or transportation company, upon such terms as may be agreed upon by the respective companies, power being hereby granted to any railroad or transportation company or companies now or hereafter incorporated by or under any act or acts of the General Assembly of the State of North Carolina, with the approval of a majority in amount of its shareholders, respectively, given at a meeting specially called for such purpose, or at which all the shares of capital stock are represented, in person or by proxy, to make and carry out such contracts of consolidation or lease, sale, or other method of acquisition or disposition.” Private Laws 1901, ch. 168. One of the questions for decision was whether this act conferred any authority upon the Seaboard Air Line Railway Company to consolidate, merge with, or purchase from any railroad other than the Seaboard and Roanoke Railroad Company, which was the only other company specifically named in the act. Speaking to this question, Mr. Justice Connor said: “The plaintiff says that a careful analysis of chapter 168, Private Laws 1901, fails to show that any authority is conferred upon the Seaboard Air Line Railway Company to consolidate, merge with, or purchase from any other — 662 — railroad than tbe Seaboard and Roanoke Railroad Company; that the statute conferring such extraordinary power upon railroad corporations should be clear and explicit, leaving nothing to construction and doubt. "Why that single corporation should have been named in conferring the power, and other railroad companies referred to in general terms, does not very clearly appear. We think, however, that by a fair and reasonable interpretation of the language of the act the Raleigh and Gaston Railroad Company is included among those companies with which the Seaboard Air Line Company is empowered to consolidate — ‘and any railroad or transportation company now or hereafter incorporated by the laws of the United States or any of the States thereof.’ In conferring power upon other companies to consolidate, the language is equally comprehensive — ‘power being hereby granted to any railroad or transportation company or companies now or hereafter incorporated by or under any act or acts of the General Assembly of the State of North Carolina,’ etc. The Raleigh and Gaston Railroad Company certainly comes within this classification. It would seem to follow that the other provisions of the act, unless otherwise expressed, must be construed as referring to all companies thus included in the class upon which the power is conferred to consolidate. Any other construction would render nugatory the power conferred. The plaintiff next insists that no consolidation can take place unless the power to so consolidate is expressly conferred upon both consolidating corporations. This proposition is sustained by the "authority cited. The reasons therefor are manifest. 10 Cyc., 293. We think that such power is conferred upon both corporations. Chapter 168, section 1, expressly confers upon the Seaboard Air Line Railway Company the power, ‘with the approval of two-thirds in amount of its stockholders,’ etc., ‘to lease, operate, consolidate with, or otherwise acquire,’ etc. As we have seen, the power is conferred upon the Raleigh and Gaston Railroad Company to enter into the contract of consolidation,” etc. See, also, Camden & Atlantic Railroad v. May’s Landing, 7 At., 523, and Matter Prospect Park Railroad, 67 N. Y., 377. While not contesting the correctness of this decision, the plaintiff says that it does not apply to the instant case, because the purpose of the act therein considered was to establish a trunk system through the State, and the question of public policy was not discussed. Whether the purpose was to establish a trunk-line system does not clearly appear; but, however that may be, the statute was given a judicial construction, and that is the matter with which we are now concerned — not the alleged unlawful conspiracy, to which we shall hereafter advert. By the express terms of the act of 1899, authority was given the Wilmington and Weldon Railroad Company to buy the railroad or railroads — 663 — of any other railroad company with which it was directly or indirectly connected, if the latter was organized under the laws of this State and authorized either to consolidate, or merge, or sell, or lease its road; and upon such other company was conferred the power to sell its road, in whole or in part, to the Wilmington and Weldon Railroad Company. It would seem not to admit of doubt that this language is broad enough to embrace both the power to sell and the power to buy. The suggestion that the charter of the Atlantic and Yadkin Railway authorized its consolidation with another railroad only as an entirety is without force, for the power to consolidate, in whole or in part, was given by the General Assembly in the amended charter of the Wilmington and Weldon Railway Company; and if the power was conferred, we cannot approve the proposition that the deed for the part of the road to the east of Sanford should be canceled on the ground that its execution was ultra vires. On behalf of the plaintiff it is also urged that the defendants, by demurring, have admitted all the allegations of the complaint, one of which is that the sale of the railroad was the result of a fraudulent conspiracy to evade the State and Federal statutes and the decree of the Federal court, and to deceive the Legislature of North Carolina. The paragraph containing this allegation appears in the foregoing statement of facts. A demurrer is the formal mode of disputing the sufficiency in law of the pleading to which it pertains. It admits only such averments as are well pleaded and such inferences as may be drawn therefrom, but it does not admit any legal inferences or conclusions of law. that may be alleged. We must therefore refer to the complaint in order to determine the scope and effect of the defendants’ admissions. Bliss on Code Pleadings, sec. 418, et seq.; C. S., 511; Prichard v. Comrs., 126 N. C., 908; Wood v. Kincaid, 144 N. C., 393; Ollis v. Furniture Co., 173 N. C., 542; Hipp v. Dupont, 182 N. C., 9; Bank v. Bank, 183 N. C., 463; Sandlin v. Wilmington, 185 N. C., 257. The decree rendered by Judge Simonton applied exclusively to the foreclosure sale under the deeds of trust executed by the Cape Fear and Yadkin Yalley Railway Company to the Farmers Loan and Trust Company, of New York, and the Mercantile Trust and Deposit Company, of Baltimore. Farmers Loan and Trust Co. v. C. F. & Y. V. Ry. Co., 82 Fed. R., 344, 350; Low v. Blackford, 87 Fed. R., 392. The decree directed a sale in its entirety of the property described in these deeds of trust. The terms of this decree were complied with. Indeed, the plaintiff alleges that the property was sold as an entirety, that the sale was confirmed, 'and that the property was conveyed by deed to the Atlantic and Yadkin Railway Company. — 664 — As we discover no sufficient allegation of fraud up to this point, we are next to inquire into the transactions between the Atlantic and Yad-kin Railway Company and the Wilmington and Weldon Railroad Company. The plaintiff alleges that in the early part of May, 1899, the directors of the former company, contrary to the provisions of its charter, and in violation of the decree of the Federal court, undertook by resolution to dismember its property by making the sale to the other company. In what way the decree of the Federal court was violated is not specifically alleged. Judge Simonton held that the mode of sale was wholly within the discretion of the court, but his decree, as we have seen, was confined to the matters in litigation in the foreclosure suit and did not purport in any way to control or regulate the exercise of powers by the purchasing company. If the allegation should be construed to mean that the purchasers at the foreclosure sale contemplated the severance of the property acquired by the Atlantic and Yadkin Railway Company, the answer is that the'property was conveyed to this company in its entirety, as the decree required; and if the deed of the Atlantic and Yadkin Railway Company was executed in pursuance of legislative authority, it cannot be deemed to have been executed fraudulently or in breach of the provisions contained in its charter. That such authority was conferred we have already pointed out. As we understand the record, the allegation that the Legislature was deceived is not sustained by the apparent facts. In Merrimon v. Paving Co., 142 N. C., 539, 552, the Court said: “It is a fundamental rule of pleading that when a plaintiff intends to charge fraud he must do so clearly and directly, by either setting forth facts which in law constitute fraud or by charging that conduct not fraudulent in law is rendered so in fact by the corrupt or dishonest intent with which it is done.”. Lanier v. Lumber Co., 177 N. C., 200; Galloway v. Goolsby, 176 N. C., 635; Mottu v. Davis, 151 N. C., 237; Beaman v. Ward, 132 N. C., 66. We are assured that the learned counsel who prepared the complaint had in mind this familiar principle, and set forth the allegations relating to fraud with all the certainty and particularity that the sources of their information justified, and that the want of more definite allegations cannot be attributed to oversight on their part; but, after an analytical examination of the record, the exhibits and the briefs, we are satisfied that the complaint does not contain such definite allegations of fraud as demand the intervention of a jury. The demurrers do not in this respect admit a cause of action. See Private Laws 1899, ch. 98, see. 2, ratifying the action of the purchasers and their associates; Reid v. R. R., 162 N. C., 355; Satterfield v. Kindley, 144 N. C., 455; Bailey — 665 — v. Morgan, 44 N. C., 353; Goode v. Hawkins, 17 N. C., 393; Smith v. Greenlee, 13 N. C., 126; Hyer v. Richmond Traction Co., 168 U. S., 471; 42 Law Ed., 547. Tbe second proposition is that the plaintiff is estopped by laches to prosecute this action. Whatever the rule in other jurisdictions, it seems to be established that the doctrine embodied in the ancient maxim, “Nullum tempus occurrit regi " obtains with us only in exceptional cases. “The limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties.” C. S., 420. The Court has construed this section to mean that the maxim has been abrogated and is not in force in this State unless the statute applicable to or controlling the subject otherwise provides. Furman v. Timberlake, 93 N. C., 66; Threadgill v. Wadesboro, 170 N. C., 641. True, in the two cases of Wilmington v. Cronly, 122 N. C., 383, 388, there is apparently a contrary ruling. Whether a distinction may not be found in the public policy of preserving the public revenues (in Cronly’s cases the collection of delinquent taxes), or in the statute controlling the subject, we need not decide; but it is worthy of note that in neither of the cases last cited is section 420, supra, referred to, and that the contrary doctrine is expressly adhered to in Threadgill’s case, citing Wilmington v. Cronly. See, also, Tillery v. Lumber Co., 172 N. C., 296. With respect to this question the plaintiff’s position is that courts of equity, in applying the doctrine of laches, follow by analogy the statute of limitations, and that the defendant’s alleged misuser, nonuser, and usurpation of corporate powers constitute a continuing cause of action, to which no statute of limitations can apply. Independently of the statute of limitations, the doctrine of laches has existed since the beginning of equity jurisdiction. It rests upon the principle that nothing can call into exercise the powers of a court of chancery but conscience, good faith, and reasonable diligence. Vigilantibus, non dormientibus, leges subveniunt. While the staleness of a demand is a valid defense to the enforcement of a neglected right, there is yet no absolute rule as to what constitutes laches, and in the strict sense no one decision constitutes a precedent for another. “Each case is to be determined according to its own peculiar circumstances. In other words, the question of laches is addressed to the sound discretion of the chancellor.” 21 C. J., 217; 1 Story’s Eq. Jurisprudence, 71, 3 ibid., 1972. The final decision in the foreclosure suit was • rendered on 3 May, 1898; the sale of the Cape Fear and Yadkin Yalley Eailway Company was made on 29 December, 1898; the sale was confirmed, and the deed to the Atlantic and Yadkin Eailway was executed on 31 January, 1899; — 666 — tbe act incorporating tbis company and authorizing its consolidation with connecting railroads organized under the laws of this State was ratified on 23 February, 1899; the act conferring upon this road and the Wilmington and Weldon Bailroad Company power to consolidate, in whole or in part, was passed 24 February, 1899; and in the early part of May, 1899, the resolution authorizing the sale of the property in question was adopted. It will be noted that a period of twenty-four years passed by before this action was brought. It is true that, by virtue of a resolution adopted by the General Assembly in 1913, the Corporation Commission was directed to investigate any matters pertaining to a sale of any part of the Atlantic and Yadkin Bail way, and the Attorney-General was authorized to bring suit if in his opinion “an action could likely be maintained,” or to request the Attorney-General of the United States to bring suit on behalf of the Government for the purpose of setting aside the sale; and, though an investigation was made, no suit was brought by the State or the Federal Government. Ten years elaj>sed before the second resolution was adopted by the General Assembly of 1923, authorizing the present action. The sale of the property to the Wilmington and Weldon Bailroad Company and the purchase of stock by the Southern Bailway Company are matters which were known to the agencies of the State. The defendants’ position that the prosecution of the action is barred by undue delay would therefore seem to be fortified by strong reasoning; but if the conclusion we have reached upon the first proposition is correct — the conclusion that the sale of the line east of Sanford was authorized by law — there was no unlawful misuser, nonuser, or usurpation on the part of the defendants constituting a cause of action to which the doctrine of laches should be held to apply. If it were otherwise, 'the prosecution of the action after such long delay should not commend itself to the favorable consideration of the Court. Spencer v. R. R., supra; Attorney-General v. R. R., 28 N. C., 456; Hill v. R. R., 143 N. C., 539; Arndt v. Ins. Co., 176 N. C., 652; Brockenbrough v. Ins. Co., 145 N. C., 354; Noyes on Intercorporate Belations (2 ed.), sec. 49. Our disposition of the propositions we have discussed renders it unnecessary to consider any of the Federal questions presented by the complaint and argued at length in the briefs of counsel. A careful and critical examination of the record convinces us that the judgment of the lower court should be Affirmed.