Stratton v. European & North American Railway

Danforth, J. Here are two actions for the same cause, and the question is presented upon a statement of facts, whether either of them can be maintained. They are founded upon B. S., c. 51, § 32, which provides that, "When a building or other property is injured by fire communicated by a locomotive engine, the corporation using it is responsible for such injury.” The facts agreed show that the European and North American Bail-way Company was incorporated in 1850 and organized in 1853 ; that March 1, 1869, it mortgaged its railway, appurtenances and rolling- stock to T. Edgar Thompson and Hannibal Hamlin as trustees, to secure bonds issued by the company to the amount of two million dollars. Subsequently Thompson died, and William P. Hayford was legally. appointed in his ■ place. Hamlin and Hayford took possession of the road for a breach of the condition of' the mortgage, October 1, 1876, and operated it until October, 1880. On October 3,1877, they commenced proceedings for the foreclosure of the mortgage, which was legally foreclosed,October 3, 1880 ; and on October 13, 1880, the bondholders under the provisions of the statute organized a new corporation, adopting the name of the European and North American Bailway, and immediately took possession of the road and have ever since managed it as owner. This corporation is the defendant in the first named action. The fire which caused the injury for which the plaintiff claims to [425] recover began June 16, 1880, and continued several days. Thus it appears that the injury complained of happened while the trustees were in possession, before the mortgage was foreclosed and before the defendant corporation had any existence as such. It would seem to be quite evident that a non-existing corporation cannot be the owner or in possession of a railway, or be in the use of an engine, so as to make it liable after it comes into existence for injuries previously accruing. A non-existing body can neither make a contract or be guilty of a tort. Nor is this claimed ; but it is said that the trustees who, in fact, were using the engine, wore acting for, and were the agents of the bondholders who afterwards became the corporation. This, however, does not diminish the difficulty. They could not thus be the agents of the corporation, for that implies a principal and a contract. The corporation could neither ho a principal nor make a contract until it was organized. The bondholders were individuals and if they were liable either individually or collectively, that liability would not be changed by a subsequent organization into a corporation. That could have no effect of itself upon previous individual indebtedness. It might be that not a single bondholder at the time the injury accrued would become a member of the corporation. That, by the law, is composed of those who w;ere bondholders when the right of redemption was foreclosed, or as many of them as chose to come in. The bonds were negotiable and each of them might have and many of them probably did change hands after the injury and before the foreclosure. But those who were bondholders at the time of the injury could not he held liable. They were not using the engine either by themselves, servants or agents. There was no such relationship existing between them and the trustees as would render them liable for their contracts or torts, no tests to show that the relationship of principal and agent existed. The trustees were not appointed by the bondholders, hut by the original corporation before the bonds were issued. They could not discharge them, they could not fill vacancies, except by the sanction of the court, nor could they control their action except so far as such control shall he consistent with the terms of the trust. B. S., c. 51, § 47, as [426] amended in 1876, c. 105 ; and § 52 ; and yet these are tests to be applied to show the liability of a principal for the acts of a supposed agent. Ballou v. Farnum, 9 Allen, 47. True, the trustees act for the bondholders, but they act for the original corporation as well, and are liable to account to it for their doings. K,. S., c. 51, § 51. The legal title to the road is in them and when in their possession, is operated upon their own responsibility as trustees indeed, but controlled only by the terms of the trust as found in the mortgage and the statutes in relation thereto. Even after the foreclosure the new corporation obtains title only by a conveyance from the trustees. K>. S., c. 51,.§55. They are principals rather than agents, operating the road as an independent body, as trustees, accountable to all persons interested for the faithful discharge of their trust, but not accountable to third persons for their doings in that respect. State v. E. and N. A. R. Co. 67 Maine, 479; Daniels v. Hart, 118 Mass. 543. Another ground on which it is claimed to sustain this action against the new corporation is, that it takes the road subject to all the duties and obligations resting upon it, as well as the rights attached to it. E. S., c. 51, § 55. But these duties and obligations are by the express terms of the statute, such as arise from the charter and relate to the future and not the past management of road, or of paying any debts or damages which may have accrued by virtue of any contract or wrong doing by its predecessors. The new corporation takes its title from the conveyance of the trustees as of the date of the foreclosure, and necessarily subject to all prior incumbrances and liens upon the road, but clear of all debts or obligations which rest upon former owners and are not legally liens upon the property. Thus in any view we can take of the case, the new corporation is not liable. Are the trustees, the defendants in the second action, liable ? This question must also be answered in the negative. It is true they, through their - servants, were using the engine which is said to have caused the injury, and for any negligence of those servants would have been liable. Ballou v. Farnum, supra. But in this case no negligence, or wrong doing, is alleged. The [427] trustees, though having the legal title to the road and using the engine not as agents but as principals, were still using it as trustees, liable to all the duties and obligations resting upon them as such, and no other, unless arising from personal contract or tort. These duties and obligations are defined by the mortgage and by the statutes applicable thereto. It is not pretended that there is any foundation for this suit by reason of anything contained in the mortgage. In It. S., c. 51, § 50, it is provided that after taking possession of the road and all property covered by the mortgage, they shall "have all the rights and powers and be subject to all the obligations of the directors and corporation of such road.” If this were all, they would be liable in this suit, for such an obligation is imposed upon the corporation, as held in Daniels v. Hart, 118 Mass. 543. But in the next section we find their duties more fully defined. In this section, as amended by the statutes of 1876, c. 123, they are required to " keep an accurate account of the receipts and expenditures of such road, and exhibit it, on request, to any officer of the corporation, or other person interested. They shall, from the receipts, keep the road, buildings and equipments in repair, furnish such new rolling stock as is necessary, and the balance, after paying running expenses, shall be applied to the payment of any damages arising from misfeasance in the management of the road, and after that according to the rights of the parties under the mortgage. They shall not be personally liable except for malfeasance or fraud.” Thus their liability as trustees is limited by the amount of money received, and their personal liability to " malfeasance or fraud.” It is possible that in the proper process, under an allegation of receipts beyond what is necessary to liquidate prior claims, the trustees might be required to appropriate enough to pay this claim, either as an incident to and a part of the running expenses, or as " damages arising from misfeasance in the management of the road.” But in this process there is no such allegation, nor any of "malfeasance or fraud.” The suit therefore does not rest upon any liability of the defendants, personally or as trustees. [428] But, says the counsel, it is a "legal maxim that for every right there is a remedy,” and therefore one of these actions must be maintainable. The maxim we admit in its full force, but the conclusion does not follow. In the legal sense there is no difficulty about the remedy, which is a "judicial means of enforcing a right or redressing a -wrong.” The trouble here is in establishing the right. The right to redress for such an injury as is here complained of, is given by the statute and by that alone. A railroad corporation in the exercise of its chartered and legal rights, without negligence, is not responsible for consequential damages except so far as they are given by statute, and when given it must necessarily include some agent who is accountable; otherwise the injury is one which must be borne whore it falls. Here the statute gives the right against a specified corporation. What the statute gives it may take away. If then, the corporation which by the statute would be liable, has withdrawn and the road, as in this case, is operated by parties whom the legislature says shall not be liable, then what would have been a right but for the withdrawal, is not so now. It is not the.remedy alone which fails, but the right also. The principle involved here is the same as that in State v. E. and N. A. R. Co. supra, in which at'the close of the opinion it is said, "This corporation cannot be held, and, for the act alleged, as the statute now stands, we do not see how any person or party can be.” In each case, plaintiff nonsuit. ■AfpletoN, C. J., Virgin and Symonds, JJ., concurred. WaltoN, Bareows and Peters, JJ., did not sit.