Denver & Santa Fe Railway Co. v. Hannegan

Mr. Justice Helm delivered the opinion of the court: No proofs were offered tending to show that the fee tó Clark street was in plaintiffs. The stipulation touching ownership of the lots mentioned did not reach or include title to the street. On the contrary, under the dedication the fee thereto was vested in the city in trust for the use of the public. A discussion of this subject is rendered unnecessary by the decision in Denver, S. F. R. Co. v. Domke, 11 Colo. 254, wherein the status in this regard of Clark street was considered and affirmatively declared. It follows from the foregoing fact, coupled with the authority vested by the constitution and statutes •in the city council, that that body had plenary control over the street. The city authorities could authorize the occupancy and use thereof for railway purposes, although it is a servitude not strictly within the ordinary uses of a public street. And the effect ' of the grant to The Denver Circle Railroad Company by the ordinance of January 28th, 1881, was to render legal such occupancy and use and avoid any claim by the city for damages through the resulting inconvenience to the general public. Moreover, so long as the grantee or its successors limited such occupancy and use to proper and legitimate railway purposes, conducting the same in accordance with the provisions of the ordinance, no action could be maintained by any one upon the ground that such occupancy and use constituted a nuisance. The only relief to which plaintiffs were entitled • was for injuries suffered by them as abutting lot owners; they could not recover for such annoyances or inconveniences as were common to the general public. They could claim indemnity for permanent interference with ingress or egress to and from their lots, and for loss in the value thereof otherwise. The — 127 — measure of their compensation was the actual diminution in market value of their premises 'for uses to which they might reasonably be put, occasioned by the construction and operation of the railroad through Clark street. Upon this view of the law the complaint was evidently drawn and the trial was manifestly conducted; although both the printed and oral arguments before us contain suggestions based upon the theory of a continuing trespass or nuisance. Under the authorities in eases of this kind the abutting lot owner sues for and recovers the total amount of his injury in a single action. This action is usually brought at or about the time- of the occupancy of the street by the railway. And the right to maintain the same may be lost by delay and barred by statutes of limitation; which statutes begin to run from the first occupancy of the street for railway purpose's. The foregoing interpretation of the law and statement of principles touching the subject in hand have been heretofore fully adopted by this court: City of Denver v. Bayer, 7 Colo. 113; Denver & S. F. R. Co. v. Domke, 11 Colo. 247; Railway. Co. v. Foley, 19 Colo. 280; Denver Circle R. Co. v. Nestor, 10 Colo. 403; Colo. M. Ry. Co. v. Trevarthen, 1 Colo. App. 152; Frankle v. Jackson, 30 Fed. 398. Plaintiffs were entitled to recover from The Denver Circle Railroad Company compensation for the injuries, if any, suffered by them as such abutting lot owners, under the rules above stated. And although the evidence is somewhat doubtful and unsatisfactory, yet had the action been brought and recovery been had against that company, the judgment would not be disturbed. This brings us to a question not hitherto squarely determined in Colorado, viz.: Did plaintiffs ’ right of — 128 — action in the premises against The Denver Circle Railroad Company extend to the present defendants ? Or, stating the proposition in another way, Did the liability of The Denver Circle Railroad Company to plaintiffs pass by means of the sale and lease to defendants? The complaint, after detailing the construction and operation of the line through Clark street by The Denver Circle Railroad Company, alleges that The Denver and Santa Fe Railway Company “purchased said railroad with all its rights, privileges and franchises, appurtenances and property, and became the owner thereof and took possession of the same.” The answer admits such purchase and possession. But neither in the pleadings nor in the evidence is there anything showing or tending to show a want of adequate consideration for the purchase or in any manner tending to establish bad faith in connection therewith. The two defendant corporations were, so far as we are advised by the record, wholly separate and distinct from The Denver Circle Railroad Company. Nor is there anything in the record bringing home to the purchasing or leasing-company knowledge of plaintiffs’ claim for damages against the Circle Company. Some authorities hold that where one corporation transfers all its assets to another and practically ceases to exist, leaving- debts unpaid, the latter corporation takes title subject to an equitable lien or charge in favor of the vendor’s creditors. But upon careful examination it will be found that all or nearly all of the. cases cited in support of this rule deal with transfers not in the ordinary' course of business and where peculiar circumstances require its application in the interest of equity and justice. For instance: where the purchasing company ex — 129 — pressly assumes the debts of the seller; where the purchasing company is organized by the officers, directors or stockholders of the vendor and is practically the same company under a different name; where the consideration for the sale is nominal or grossly inadequate; where two old companies, by reason of consolidation, become extinct and all their assets are taken over by a new company organized for the purpose; in short, where either the purchasing company assumes payment of the debts of the vendor, or the transaction is of such a nature as that the element of actual or constructive fraud fairly enters therein. And in all cases where a corporation disposes of its entire assets, and practically goes out of business, leaving unpaid obligations, the sale will, especially in equity, be scrutinized with unusual care, and a strict rule of accountability for any bad faith discovered will be applied against the purchasing company. But, on the other hand, where, as in the case at bar, nothing appears in the record either by pleadings or proofs tending to show that the sale was made upon inadequate consideration of that it was characterized by bad faith in any manner, the purchaser takes the property without liability for payment of the vendor’s unsecured debts. “Where a corporation transfers all its assets to another corporation which does not agree to assume the liabilities of the selling corporation, and both corporations maintain a separate existence, then, in the absence of fraud, the purchasing corporation will not be answerable for any debts of the selling corporation.” — 10 Cyc. 1268; Goldmark v. Magnolia Metal Co., 44 N. Y. App. Div. 39; Brundred et al. v. Rice, 49 Ohio St. 650; Montgomery Web Co. v. Dienelt, 133 Pa,. St. 596. — 130 — Such being the rule as to “debts” of the vendor, it is unnecessary to comment upon the purchaser’s liability for unasserted and undetermined claims against the former growing out of an alleged trespass. As already observed, no proofs are offered showing that The Denver and Santa Fe Bailway Company, when it purchased the property in question, had notice or knowledge that plaintiffs claimed compensation from The 'Denver Circle Bailroad Company for damages to their abutting lots. Nor, so far as the record discloses, did defendants have reason to suspect the existence of any such claim. In fact, the commencement of this action, more than a year subsequent to the purchase and more than six years after construction of the railway line in Clark street, appears to have been the first intimation of such claim given to either defendant. The laying of a third rail and operation of the line upon a standard-gauge basis was at one time contemplated by defendants. But this project was given up, no third rail was laid in front of plaintiffs ’ lots and no attempt appears to have been made to operate standard-gauge trains through the street even by the use of narrow-gauge trucks; nor is it shown that defendants permitted cars to- stand in front of plaintiffs’ lots or otherwise improperly obstructed the street. So that the possession and control by defendants as successors to the Circle Company did not constitute in law a different or additional burden; the mere increase of traffic and operation of a larger number of narrow-gauge trains, if such increase and operation took place, were fairly within the original servitude. It follows, therefore, that plaintiffs could assert no claim against defendants based upon any new burden different from or in addition to the burden — 131 — imposed by Tbe Denver Circle Railroad Company in the first instance. It is clear that upon tbe record before us, neither of the defendants could be held responsible for damages to plaintiffs growing out of the original construction of the line in Clark street and use of said street for railway purposes. Ami as it does not appear that after the purchase the street was subjected to any other or different servitude or that plaintiffs suffered any added injury by reason of an unreasonable, improper or wrongful use of the railway track, no new cause of action arose in their favor and against defendants. The judgment must be reversed. Reversed. Chief Justice Steele and Mr. Justice Maxwell concur.