Duke v. Cahawba Nav. Co.

COLLIER, C. J. By an act of the Legislature of 1827, the plaintiff below is made a body corporate, and provision is made for the subscription of stock and the election of directors, that the enterprise contemplated may be carried out. The 10th, 11th and 12th sections, authorise the directors to make regulations for “ the receiving of toll,” upon the governor’s making the certificate which was given in evidence at the trial; and the 13th section suspends the right “ to collect toll” upon a report being made to the governor by a person appointed by him that the river is not in the condition contemplated by the act. 1. The first question arising upon this bill of exceptions is, whether it was allowable to resist a recovery in the present suit by proving that the certificate of the governor was obtained by “ misrepresentation and fraud.” It is certainly true, that a person sued by an association assuming to be a corporation, may throw upon the plaintiff the burden of proving a corporate existence, yet it is equally clear that a charter cannot be adjudged void in an indirect proceeding. Thus in the President & Co. of the K. & C. Turnp. Road Com. v. McConaby, 16 Serg. & R. Rep. 145, an act of the legislature provided that when six hundred shares had been subscribed, the commissioners should certify that fact to the governor, who should incorporate the subscribers, &c. The certificate was made, and charter granted; whereupon the government subscribed twenty thousand dollars. Three hundred of the shares required to make up the number, were fictitious, subscribed for the purpose of deceiving the governor,^and thus procuring the charter. The court said, “if this charter was deceptively obtained — obtained by false representations, it could not in a collateral action, in an action brought by the company to compel the performance of contracts entered into with it, be declared void. But if this had been fraudulently obtained, on which I am not called upon to give any opinion, still until that question had been directly decided, in a proceeding instituted in this court, which alone has jurisdiction, either by scire facias to repeal the charter, or declare it forfeited, or by writ of quo toarranto at the suit of the State, in which the State must be a party, and a party to the judgment for the seizure of the franchise, there is no instance of calling in question the [375] right of a corporation for the purpose of declaring its charter void, but at the instance and on behalf of the government, and never on the relation of any individual. The State v. Carr, 5 N. Hamp. Rep. 371, lays down the law in equivalent terms; and it is added, “ in cases of this kind, it is enough to show that, there was a charter under which the corporation was acting, and that it was wholly immaterial whether the coporation had complied with the requisitions of the charter or not. That is a matter to be settled in a suit between tbe government, which created the corporation and the corporators, and not collaterally in a prosecution by another State against a stranger to the corporation.” So in the Tar River Navigation Company v. Neil, 3 Hawkes Rep. 520, it was decided, that where by a charter, commissioners are directed to ascertain the performance of a condition precedent to incorporation, and they declare it though falsely, to have been performed, it shall be deemed true, until the soverign power interposes. A wrong doer sued by the corporation cannot show the falsity of such a declaration. In the Charles River Bridge v. Warren Bridge, 7 Pick. Rep. 344, the Legislature passed an act granting additional privileges to a bridge corporation, and providing, “ that in consideration of the privileges so granted the corporation shall relinquish the additional toll on the Lord’s day, from and after the passing of this act.” It was held, that this relinquishment was a condition subsequent, the non performance of vkhich, was a matter between the government and corporation only, and could not be taken advantage of by a stranger, to invalidate the grant: Further, if a corporation obtain an extension of its charter by false and colorable representations to the Legislature, it may be made the ground of a quo warranto, but a stranger cannot take advantage of the fraud to deny the validity of such extension. See also S. & T. Rail Road Co. v. Tipton, 5 Ala. Rep. 787, and cases there cited. The principle decided by the cases we have noticed is too firmly settled, to be now overturned by a judicial decision ; they are directly in point and some of them strikingly analogous in their facts. It is abundantly shown by them that in a controversy between a corporation and an individual, the question of fraud in obtaining the charier could not be inquir [376] ed into; that this rule applies whether the corporate functions are consummated by a legislative enactment, or there is some condition precedent, which an official act of the governor or some other officer must affirm has been performed. If the State acquiesces in the fraud practised, either upon the legislature or officer to whom the power was delegated to act in the matter, an inquiry will not be made whether a corporation defacto is entitled de jure to the privilges claimed by it. Such an inquiry can only be made at the instance of the public in a proceeding appropriate, and in which the judgment would be definitive of further controversy upon the point. It was then not permissible to show that the certificate of the governor in the present case was obtained by fraud. 2. The report made to the governor subsequent to the institution of this suit, did not divest the corporate character of the plaintiff, but merely took from it the right to demand toll for the time being. It might sue upon any cause of action which previously accrued in the same manner as if the report had not been made. This is an obvious conclusion, unless the report operated retrospectively, or was sufficiently potent to annul the act of incorporation, or the subsequent proceedings. 3. It was not indispensable to the plaintiff’s right to demand toll, that it should have given notice either actually or constructively, that the certificate of the governor had been obtained. The certificate itself was a public act, the evidence of which must have remained in the office of the Secretary of , State, and all persons must be supposed to have been cognizant of it. Publication in a newspaper or otherwise was not required by the act of the Legislature, and it is not competent for the courts to add another condition than that imposed as an indispensable prerequite to the right to collect toll. 4. It was not .imperative upon the plaintiff to make a personal demand of the defendant, previous to the commencement of the suit. The defendant we have seen, was bound to take notiee at his peril, that the certificate of the governor, which entitled the plaintiff to toll, had been furnished; on this the plaintiff’s right depended to require compensation of the defendant for the passage of his boat down the river. The failure to pay made the right of action complete, and there was [377] no more necessity for a request previous to the institution of the action than in any other case in which a debt is sought to be recovered or a duty enforced. It will be seen from the slightest examination, that the case of Carlisle v. The C. & M. Rail Road Co. 4 Ala. Rep. 70, bears no analogy to the present, but is sustained by reasoning and principles that cannot be here applied. We have but to add that the judgment of the Circuit Court is affirmed.