Carey v. Cincinnati & Chicago Railroad

Wright, C. J. Without considering in their order, the several causes of demurrer to complainant’s bill, we shall present generally the views which we entertain of the cause. The general reference in the bill, to the laws of the state of Indiana, is not sufficient. If complainant would rely upon the fact, that the Cincinnati, New Castle and Michigan Bailroad Company, had failed to organize according to the laws of that state; or that it had conducted in such a manner, as that under, and by virtue of those laws, it had forfeited its charter, or ceased to have a corporate existence — the particular statute or statutes relied upon, should be set out, that the courts of this state, may be able to judge of their provisions, and of the duties thereunder devolving upon this company. Our courts do not take judicial notice of the statutes of ap.oth.er state. And if a party relies upon such statutes, he must set them out-plead them as he does any other fact, and it will not do to refer to them by their title, and date of approval, nor by stating what in the opinion and judgment of the pleader, are their general provisions and requirements. Bean v. Briggs & Felthouser, 4 Iowa, 494 and cases there cited; Walker et al v. Maxwell, 1 Mass., 103; Legg v. Legg, 8 Ib. 99; Collett v. Keith, 2 East, 261. We next consider the charge of fraud, as contained in the bill. This charge relates to certain representations made by the company receiving the deed, which are alleged to have been false and fraudulent, and known to be — 365 — so, at the time, by tbe party making them, which false representations were relied upon by complainant, and relying upon which, he was induced to make the conveyance. These averments are urged by respondents, to be insufficient to sustain the charge of fraud; in the first place, because corporations, like natural bodies, are only bound by the acts of their agents, done within the scope of their authority; and it is not shown that the persons making the representations, acted for, or under, the authority of the corporation. This objection is evidently based upon a misapprehension of the averments of the bill. The bill avers that these misrepresentations'were made, and the frauds practiced, by the company, and there is nothing tending to show that it acted by agents. It may be, and'is probably true, that the corporation did act through its officers or agents, but when it is alleged, as in this case, that the company itself made the false representations, we will not presume that those through whom it may have acted, exceeded their authority, or made the representations -without sufficient authority. Again, it is urged, that some of. the representations alleged to have been fraudulent, were of facts not exclusively within the knowledge of the company, and that it is not shown that there was such suggestion of falsehood, or suppression of truth, as should have misled complainant, or prevented him from ascertaining the truth in the-premises. To this, it may be said, that there are some of the circumstances which would seem to have been equally within the knowledge of both parties, and no reason is, perhaps, disclosed, why complainant did or should have been misled, or justly induced to repose upon the statements made ; and yet, we cannot say that this is true, as to all such representations. Complainant states, for instance, that the company represented that it was in good standing, and able to prosecute its purposes with vigor— that he relied upon these statements — and in view of these, and various other representations which are set out, he was induced to make the conveyance; that they were false — 366 — and fraudulent; that he was deceived thereby; and that the road has not been constructed, but, on the contrary, has been abandoned. It would not do to say, in the face of these allegations, that the company had no advantage of complainant, nor that he had the same means of knowledge, on these subjects, as those possessed by the corporation. It is true that he may have had, or might, by the use of proper diligence, have had this knowledge, but that depends upon the actual circumstances of the case, and cannot be said to be manifest from the face of the bill. And the same remark applies to most of the averments on this subject. "We think the charge of fraud is sufficiently made, taking the bill as true, and that this cause of demurrer is not well taken. Story’s Eq. Jur., 191; Laidlow v. Organ, 2 Wheat., 179. It is next objected, that the complainant does not attach to his petition, a copy of the certificates of stock issued to him. He avers that he brings them into court, and offers to deliver them up. These certificates are not the instruments in writing upon which the complainant’s bill is founded, within the meaning of section 1750 of the Code, so far as to make the failure to annex them to the pleading as an exhibit, a cause of demurrer. If he brings them into court, and offers to surrender the same, it is sufficient. Another ground of demurrer, presents various questions relating to the power of the courts of this State, to inquire into the existence and acts of a corporation under the laws of Indiana, and particularly the power to determine that such corporation has forfeited its charter, until it is dissolved or terminated by the sentence or decree of the courts of the State where organized. In the first place, we may remark, that if this company never had any corporate existence, so as to enable it, in its corporate name, to take and hold property, as is averred in this bill, we see no reason why that fact may not be inquired into in a collateral proceeding like the one before us. If it never had such existence, then we can conceive of no direct proceeding which could test that question. And so, — 367 — if professing such existence, it acquires, for a particular purpose, in its corporate name, the property of another, then, as it had no power, as such, to take, neither could it transfer, and the sufficiency of such transfer may be inquired into collaterally. And, again, if it be true, as charged, that said corporation has, by its own acts, ceased to exist; or that it has suffered acts which destroys its end, it is as fully and entirely dissolved, as if declared so to be by the sentence of a competent court. If, as a legal and necessary consequence of certain acts, it has ceased to have a corporate existence, and any individual should claim that he thereby has been injured, or that certain benefits result to him, he may, by averring these facts, have his remedy, and need not, in the first instance, institute a proceeding and have it declared, that its existence has ceased. This, of course, may involve an inquiry into the character of the acts suffered — the burthen being upon the party alleging them — but the fact that its existence has ceased, being established, it becomes dissolved, and may be so treated. See Philips v. Wickham, 1 Paige, 595, and cases there cited; Briggs v. Penniman, 8 Cow., 387; Canal Co. v. Rairoad Co., 4 Gill. & Johns., 1. And, therefore, if, as stated in the bill, the original company has lost its identity and existence, by becoming merged into the new organization, then it may be treated as at an end, for it is in no position to necessarily require a judicial inquiry to - determine its existence. It is true, that it may not, and cannot, thus relieve itself, or perhajts the corporators individually, from responsibility to those to whom it or they may be indebted, but it may, by the act, become so situated as to be estopped from claiming that it remains undissolved. Slee v. Bloom, 19 Johns., 456; 2 Kyd on Corp., 467; King v. Passmore, 3 Term R., 244; 1 Rolle Abr., 514; 4 Com. Dig., 273. If, on the other hand, it had an existence, and has suffered no act which, jper se, works a forfeiture or dissolution ; if the inquiry is, whether there have been such irregularities in its proceedings, or such failure to comply — 368 — with the terms of its charter, or the law under which it was organized, as to work a forfeiture — or if it has not surrendered its franchises, — then we do not think that the courts of this state can determine the question, either in a direct or collateral proceeding. A judgment of forfeiture must first be obtained, in a state conferring or granting the corporate powers. Canal Co. v. Railroad Co., 1 Gill & Johns. 1; Angelll & Ames on Corp., sec 777; Trustees of Vernon v. Hills, 6 Cowen, 23; The People v. The Society, &c., 1 Paine, 653. Again : it is argued that if dissolved, the assets of the company must first go to the payment of its debts, and the residue only can revert to the donors or stockholders. Grant this, and yet, in our opinion, the rule can have no application to the present case. If the conveyance was obtained by fraud, then, in equity, it is to be treated, as between the parties thereto, as if never made. The grantor may have parted with the legal title, but equity treats the property as belonging to him, and it cannot, under such circumstances, be said that it becomes part of the assets of the company, or that the grantor’s right thereto, is' dependent upon the ability of the company to meet its liabilities. A fraudulent purchaser will be held as a mere trustee for 'the vendor, who may have been deluded and cheated. Story’s Equity Jur., sec. 1265,191. What may be the effect of the consolidation of the two companies referred to, upon the rights of the complainant —how far this was pennissable under the law governing the organizations — how far, as one of the stockholders, he may be bound thereby, — it is not necessary that we should now determine; nor, indeed, could we, with safety to the rights of the parties, determine the questions, until the laws referred to are properly before us. If it be true, however, as averred, that the consolidation could not legally take place, or was not, in fact, consummated, then it seems to us that the company receiving the deed would become a necessary party. The charges of fraud relate alone to that organization, and if its corporate existence has not become — 369 — merged into that of the new company, it would seem to be necessary that, before it should be concluded by any decree, it should have its day in court, and that, strictly, no proper decree could be rendered in the premises. ~We conclude that complainant’s bill, taken as true, is sufficient to entitle him to relief, and that the court erred in dismissing the same for want of equity. Decree reversed.