Yazoo & M. V. R. Co. v. Sunflower County

Ethridge, J., delivered the opinion of the court. Sunflower county brought a suit to cancel a claim of the appellant to section 16, township 23 north, range 3 west, alleging that said lands were school lands donated by the state of Georgia for the benefit of the inhabitants of the several townships, and, when Mississippi was admitted as a state, that the title and control of the section vested in the state in trust for the inhabitants of the townships for the support of schools Avithin the township; that the railroad, company was in possession of a strip of land one hun — 101 — dred feet wide through the said section, being fifty feet on each side of its track extending entirely through the section in a northerly and southerly direction, and that the railroad company claims title in fee simple to the said land, and that such possession and claim casts a cloud upon the title to said land, and prayed for the rents on said strip, it being alleged that the railroad company had been in possession for several years, and for the cancellation of the title and for an accounting. The railroad company filed an answer denying the right of cancellation and asserting title, as an easement over said land, by reason of a grant contained in the charter granted by the legislature on February IT, 1882, to the Yazoo & Mississippi Yallev Eailroad Company. It also pleaded that it had been in possession of the said land more than twenty-five years prior to the filing of the suit and pleaded the statute of limitations in support of its right and in bar of the county’s right; and asserts that by reason of the act of the legislature of 1882, Laws of Mississippi of 1882, section 7, p. 845, it was granted a title to the land in controversy. The complainant, the county, introduced in evidence an order of the board of supervisors directing the suit to be brought and also a minute of the board of supervisors of said county at the July 1898 term, in the following words: “Upon the application of the Yazoo & Mississippi Valley Railroad Company for a right of way one hundred feet wide, across section 16, township 23, range 3 west, in Sunflower county, Miss., and the board having considered the same, it is therefore ordered that the said application be and the same is hereby granted, and the president of this board is hereby authorized and directed to execute to said railroad a deed conveying to said railroad a right of way across said land one hundred feet wide, for a term of seven years from this date, but no longer.” It also introduced a lease dated July 4, 1898, signed' by John R. Baird, president of the board of supervisors, which reads as follows: — 102 — “In consideration of one dollar in band paid and the benefits of having a railroad built across the hereinafter described land, within one year from, date, I convey and warrant to the Yazoo & Mississippi Yalley Railroad Company, its successors and assigns, for a term of seven years from this date, for the purpose of a railroad right of way, the land described as follows: “A strip of land one hundred feet wide (100), being fifty (50) feet on each side of the center line of the railroad as surveyed and located across the land in said county and state, to wit: “Section 16, township 23, range 3 west, Sunflower county, Miss., hereby releasing and waiving all rights under and by v-irtue of the homestead exemption laws of this state in or to any part of the land above conveyed and all rights of dower therein.” The railroad track across the land in question was constructed in 1898, and after the expiration of the seven years stipulated for in the lease the railroad company continued in possession without paying further rents or securing further rights, and afterwards set up claim as presented in the present suit. The present Yazoo & Mississippi Yalley Railroad Company came into being as a corporation on the 24th day of October, 1892, by the consolidation of the Louisville, New Orleans & Texas Railroad Company and the Yazoo & Mississippi Yalley Railroad Company, which latter company was incorporated by the Act of 1882 herein referred to. It/was held by this court in the suit of Adams, State Revenue Agent, v. Y. & M. V. Railroad Co., 77 Miss. 194, 24 So. 200, 60 L. R. A. 33, that the effect of the consolidation of the two railroad companies was to create a new corporation whose powers and rights were measured by the articles of consolidation and the laws in force at the time of the consolidation. In the beginning of the opinion in that case the court said: “The question which lies at the foundation of this case is this: Conceding for argument’s sake that the L., N. O. — 103 — & T. R. R. Co. bad an exemption from taxation, did tbe consolidation of tliat railroad with the Yazoo & Mississippi Valley Eailroad Company on October 24, 1892, create a new corporation, as of that date, and thns result in the tutting off of said exemption by section 180 of the Constitution of 1890? If this question be answered in the affirmative, then, obviously, the contention of the state must prevail throughout, without regard to any other questions in the case. The power to consolidate must be granted by the state, and permission to consolidate, so granted, is not a contract, but a mere license. 6 Am. & Eng. Enc. L. (2 Ed.), p. 802; Pearsall v. G. N. Ry. Co., 161 U. S. 667; Louisville, etc., Railroad Co. v. Kentucky, 161 U. S. 695; Keokuk, etc., Railroad Co. v. Missouri, 152 U. S. 312. . . “Let us inquire, then, what the effect of this consolidation was; and, first, what railroads entered into this consolidation? The L., N. O. & T. R. R. Co. and the Y. & M. V. R. R. Co. What was the L., N. O. & T. R. R. Co.? It is described in the ‘Articles of Consolidation’ as the ‘Louisville, New Orleans & Texas Eailway Company, a corporation of the states of Tennessee, Mississippi, and Louisiana of the first part;’ and it is further expressly declared in said articles that the consolidation is effected ‘under and by virtue of the charters of the-respective states of Tennessee, Mississippi, and Louisiana, in such case made and provided,’ etc. The tAVo ends of this railroad are in Louisiana and Tennessee. Now, what are the laws touching consolidation in these states, ‘in such case made and provided?’ Of course Ave deal here exclusively with the Mississippi corporation under our laws; but the laAvs of Louisiana and Tennessee are expressly referred to as having been held in mind in effecting this consolidation, and they will materially aid us in solving this' question. The road, with all its property, was a unit in the three states. If the effect of the consolidation in Tennessee and Louisiana was known necessarily to be the creation of a new corporation, it hardly comports with reason to suppose that any different consolidation would have been sought at the — 104 — hands of the Mississippi legislature or granted by it, if sought; and so Are shall find it to be.” The court then proceeded in an elaborate opinion to consider the provisions of the articles of consolidation and the latv bearing upon the consolidation, and reached the conclusion that the articles of consolidation created a new charter subject to the provisions of the Constitution of 1890 and other laws of the state in force at the time of the consolidation. An appeal Avas taken from the judgment of this court to the United States supreme court in which it Avas contended that the construction placed upon the charters of the railroad companies, to the effect that the “Articles of Consolidation” constituted a neiv corporation subject to existing laws, was an impairment of the obligations of the contract Avithin the prohibition of the federal Constitution, and that court‘entertained jurisdiction, and upheld the view of the Mississippi supreme court that the effect of the consolidation was to create a neAv corporation. In discussing this feature of the case the United States supreme court said: “At the foundation of the right to a reversal of this case is the question whether, conceding the validity of the exemption or commutation provision contained in the tAventy-first section of the Mobile Company’s charter of July 21, 1870, such exemption enured to the plaintiffs in error under their successive consolidations. It will be borne in mind that the existing Constitution of Mississippi Avas adopted November 1, 1890; that the present Yazoo Company was formed October 24, 1892 (nearly two years after the adoption of the Constitution), by the consolidation of the original Yazoo Company with the Louisville Company. By the act of August 8, 1870, the exemption contained in the tAventy-first section of the Mobile charter was extended to the Memphis & Vicksburg Railroad, Avhich was chartered the same day. This charter gave it power to consolidate its stock, property, and franchise with any other road upon such terms as might be consistent Avith the powers — 105 — conferred upon the company. Twelve years thereafter, March 9, 1882, the Baton Rouge Company was incorporated 'with power to consolidate with any other company, and on March 3, 1882, the Memphis & Vicksburg Company was also authorized to consolidate. The same power had already been extended, February 17,1882, to the Yazoo Company. “It is unnecessary to discuss the terms of the first consolidation of August 12, 1884, between the Tennessee Southern, the Memphis Company, the Baton Rouge Company, and the New Orleans Company, forming the fiouis-ville, New Orleans & Texas Company, since this was made prior to the adoption’ of the New Constitution of 1890. We are specially concerned with the articles of consolidation between the Louisville Company so organized, and the Yazoo Company, which were adopted October 24,1892, and subsequent to the New Constitution. The question in that connection is whether such consolidation created a neiv corporation, or, in the language of section 180 of the Constitution of 1890, Avhether it was.a ‘grant of. corporate franchises,’ in which case, by the express language of that section, such new corporation became subject to the provision of the new Constitution. In their articles of consolidation these companies agreed ‘to and with each other, to unite, merge, and consolidate their several capital stocks, corporate rights, franchises., immunities, and privileges, and properties of every kind, real, personal, and mixed.’ The first article provided that ‘such consolidation shall be effected by uniting or merging the stock, property, and franchises of the party of the first part (the Louisville Company) with and into the stock, property, and franchises of the said the Yazoo & Mississippi Valley Railroad Company, without disturbing the corporate existence of the last-named company, or the formation of any new, distinct corporation, unless such result shall be necessary to give legal effect to this agreement; but, whatever may be the legal consequence of the consolidation herein provided for, this agreement is to stand and be effective.' — 106 — This article ivas evidently drawn in view of the decisions of this court upon the subject of merger and consolidation, and evinces a desire to avoid' the legal results following from a consolidation of the two constituent companies into a new corporation, but, at the same time, expresses a doubt whether the agreement would not after all be construed to create a new corporation. These doubts were unquestionably well founded, and, if the effect of the agreement be in law the creation of a new corporation, the expression of a wish that it should not be so construed is of course entitled to no weight. The final clause, that in any event the agreement shall stand and be effective, shows that effect should be given to all its stipulations, whatever be its legal consequences. “Subsequent articles provided that the corporate name should be the Yazoo & Mississippi Valley Railway Company ; that the capital stock should be fifteen million dollars; that the stockholders of either of the constituent companies should Nave all the ‘rights of a stockholder of the consolidated company, as fully as if new shares of the consolidated company had been issued and exchanged therefor; and, in case the consolidated company shall de-tennine to issue nenv shares, such shares shall be exchangeable at par for the new outstanding shares of each of the constituent companies;’ that all the rights, powers, privileges, immunities, and franchises of the constituent companies should pass to the consolidated company, which should be managed by a board of directors, whose names, for the purpose of the organization, were given. “Reading this agreement in connection with the charters of the several companies, and especially with that of the Memphis & Vicksburg Railroad Company of March 3,1882, providing that Nil of the companies so consolidating shall be merged into and become one company, and the company so formed by such consolidation shall be deemed and held to be a corporation created by the laws of this state,’ it is impossible to escape the conclusion that a new corporation was created with a capital stock of fifteen million — 107 — dollars, and that the stockholders of the constituent companies were to become stockholders of the new company, share for share, ‘as fully as if new shares of the consolidated company had been issued and exchanged therefor.’ Some question was made in the state courts Avhether the shares were actually issued in the neAV company. But the supreme court having found that they were, we accept th'at finding as conclusive. PoAver Avas expressly given to issue new shares, and the usual course of business AA7ould justify us in inferring that that was the method adopted. A new name Avas taken, which was none the less a neAV one by reason of the fact that it was the name of one of the constituent companies. “It cannot be doubted that under this agreement that it Avas contemplated that the constituent companies should go out of existence, and that their officers should resign their trusts in favor of the officers of the new company; that their boards of directors should be supplanted by another board, the names of whose members were contained in the agreement; that the stock of the constituent companies should be surrendered and neAV stock taken therefor, or, in lieu of that, that the old stock should be recognized as the stock of the new company; that the road should be operated by men holding their commissions from the new company., and that the entire administration of the functions of the constituent companies should be surrendered to the neiv corporation. In short, nothing Avas left of the constituent companies but the memory of their existence — the mere shadow of a name. But the neAV company which took its place suddenly sprang into life Avith a neAV corps of officers and a full equipment for the successful operation of the road.” 180 U. S. 16, 21 Sup. Ct. 245, 45 L. Ed. 405. It folloAvs from these decisions that the question now presented for consideration is whether section 7, chapter 541, Laws of 1882, granted to the railroad' company in 'presentí full title to the land involved here, or Avhether under the provisions of that section the title only passed — 108 — from the state to the railroad, company when the right of way was laid out, located, or construed over the land. The pertinent part of this section reads as follows: “That the right of way is hereby granted said company to pass in and through the state of Mississippi, with said railroads, branches, spurs and laterals aforesaid, and to enter upon and use all lands, rocks, timber, earth, sand, gravel, water or other materials, which may be found on the routes selected, and which may belong to the state of Mississippi, and be convenient or necessary for the use of said railroads; and wherever said railroads or the branches, spurs or laterals aforesaid are located, over any lands belonging to this state, the title in fee simple, to one hundred feet on each side of the center of said railroad track or tracks shall vest in said company, its successors and assigns,” etc. It will be noted that this language provides that the title in fee simple is to vest wherever said railroad or the branches, spurs, or laterals aforesaid are located over any lands belonging to this state. The act does not describe any particular lands, nor does it give any description of the lands which are granted, but merely undertakes to grant a right of way through any lands belonging to the state, and to grant the right to use the material upon such land for the use of the railroad on the route selected by the railroad company over lands which belonged to the state of Mississippi. Necessarily the right of way had to be located in order for the title to vest in the grantee under the peculiar phraseology of this act, otherwise the state would have granted to this one railroad company title in fee to any and all public land which the state may have owned, or else the grant would have been void for uncertainty of description. We think it was the purpose of the legislature to grant the right of way only when the right of way was located and until that was done the railroad company did not acquire any title to the land. ' — 109 — Inasmuch as the right of way was not located prior to the consolidation (which consolidation created a new corporation subject to all the laws in force at the time of the consolidation), the title did not pass because two provisions of the state Constitution operated to prohibit a grant of lands belonging to the state at that time. Section 211 of the Constitution of Mississippi of 1890 prohibits the sale of these particular lands. This section in full reads as follows: “The legislature shall enact such laws as may be necessary to ascertain the true condition of the title to the sixteenth section lands in this state, or lands granted in lieu thereof, in the Choctaw purchase, and shall provide that the sixteenth section lands reserved for the support of township schools shall not be sold, nor shall they be leased for a longer term than ten years for a gross sum; but the legislature may provide for the lease-of any of said lands for a term not exceeding twenty-five years for a ground rental, payable annually; and, in case of uncleared lands, may lease them for such short term as may be deemed proper in consideration of the improvement thereof, with right thereafter to lease for a term or to hold on payment of ground rent.” Section 95 of the Constitution of 1890 reads as follows : “Lands belonging t.o, or under the control of the state,, shall never be donated, directly or indirectly, to private corporations or individuals, or to railroad companies. Nor shall such land be sold to corporations or associations for a less price than that for which it is subject to sale to individuals. This, however, shall not prevent the legislature from granting a right of way, not exceeding one hundred feet in width, as a mere easement, to railroads across state land, and the legislature shall never dispose of the land covered by said right of way so long as such easement exists.” So that the legislature at the time could not have conferred upon a railroad corporation a grant in fee simple — 110 — of tbe right of way over the land. It is unnecessary here to decide whether the act of 1882 would apply to sixteenth section lands held in trust, or whether it would be limited to lands owned outright. The railroad company at the time it entered this section of land did not understand the laws to be what it now contends it is, because it applied to the .board of supervisors for a right of way and, in consideration for a lease for seven years, built its tracks through the said section. Under the law in force at that time all that it could acquire was a leasehold right of way for a definite limited term, and upon this lease it entered the land and laid out its right of way and constructed its roadbed and track. Under this lease the county could not disturb it or prevent the' construction of a- track or take any proceeding to cause it to be removed until the expiration of the term of the lease. It is contended by the appellant that it is not estopped from setting up title in contravention of this lease under the decision of Jones v. Madison County, 72 Miss. 777, 18 So. 87. The court in discussing this principle in that case said: “The principle is that, when the lessee has paid for the term, he owes no duty to his landlord, except not to dispute his title to the reversion. The term then becomes the property of the tenant, and, in defense of that, he. may fight the landlord Tooth and nail,’ as he may a stranger. He may use any weapon he may find in his arsenal in defense of his term. If the statute of limitations is available, he may shelter behind that; if it is not, he may resort to any defense which does not controvert the rever-sionary right of the landlord nor violate the terms of his own contract. It is true the statute of limitations, as against the county’s title, cannot now be invoked; but when the law was that it could be, its effect was that the defendant had acquired that title by adverse possession. Title of the county derived from the statute is not pleaded by the defendant. He shows that the county had — 111 — no title, but that it was in the heirs of Hill, and that this title he has acquired by limitation.” In this case the county is not seeking to repudiate the lease, and it cannot repudiate the lease because it had the power to make the lease and acting upon the lease the railroad company constructed its property across the land. Haying continued in possession after its lease expired, it is subject to the claim by the county for the reasonable value for the use of the right of way for the years subsequent to the expiration of the lease, and the chancellor’s finding as to the value of the use of the right of way is supported by the evidence, and his judgment will be affirmed. Affirmed.