Opinion
(June Term, 1846.)
1. An information filed by the Attorney-General for the purpose of having the charter of an incorporation declared to be forfeited, though it need not be expressed in technical language, yet it must set out the substance of a good cause of forfeiture in its essential circumstances of time, place, and overt acts.
2. When the Legislature required "the grounds" to be set forth on which the forfeiture is alleged to be incurred, nothing less could be meant than that the information, like an indictment or declaration, should state with certainty to a common intent those facts and circumstances which constitute the offense in its substance, whether of misfeasance or nonfeasance, so that, on its face, if true, it may be seen that there is a specific ground in fact, and not by conjectural inference, on which a forfeiture ought to be adjudged.
3. When a charter expressly imposes a duty which the corporation is to perform, not merely to the citizen, but towards the sovereign itself, although it may not declare that performance shall work a forfeiture, yet it must be taken to have been required by the State as a material stipulation, for the nonperformance of which by the corporation the State may put an end to the contract.
4. But if the sovereign, with us the lawmaking power, with a distinct knowledge of the breach of duty by the corporation, a knowledge declared by the Legislature, or so clearly to be inferred from its own archives that the contrary cannot be, thinks proper by an act to remit the penalty, or to continue the corporate existence, or to deal with the corporation as lawfully and rightfully existing, notwithstanding such known default, such conduct must be taken, as in other cases of breaches of conditions, to be intended as a declaration that the forfeiture is not insisted on, and, therefore, as a waiver of the previous defaults.
INFORMATION filed in this Court on 19 January, 1846, by the Attorney-General, charging a forfeiture of the charter of the corporation. The information states "that by an act of the General Assembly passed in 1830, entitled An act," etc., it is enacted, "that books be opened for the purpose of receiving subscriptions to the amount of $400,000, to constitute a joint capital stock for the purpose of making a railroad from some point within the corporation of Petersburg, in Virginia, to some convenient point on the north bank of Roanoke River between the towns of Weldon and Halifax"; and that by the said act "the said Petersburg Railroad Company is invested with all the rights and (457) powers necessary for the construction, repair, and maintaining of the said railroad to be located as aforesaid, and to make and construct all works whatever which may be necessary and expedient in order to the proper completion of the said road, and also power to contract with any person or persons for making the said road and performing all other works respecting the same which they shall judge necessary and proper, and to purchase with the funds of the said company, and place on the railroad constructed by them under the said act, all machines, wagons, vehicles and teams of any description whatever which they may deem necessary and proper for the purpose of transportation"; and that by the said act it is further enacted, "that it shall be the duty of the president and directors of the said company to render to the Legislature of this State annually a fair account of the expense in constructing and keeping in repair that part of the said railroad within this State, and the amount of tolls received on the same; and that whenever the amount of tolls so received shall equal the sum expended in constructing that part of the road, with 6 per centum per annum on that sum from the time it was so expended, then it shall be in the power of the Legislature of so to regulate the rate of toll that the net amount annually collected shall not exceed 6 per centum per annum on the sum originally expended." The information then states further, "that the said Petersburg Railroad Company, under the provisions of the said act of the General Assembly, have now for many years had their said railroad completed, and have placed the terminus thereof in North Carolina, at Blakely, on the north bank of the Roanoke River, in the county of Northampton, and since the completion thereof have had the said railroad in constant operation; and that by the provisions of the said act of the General Assembly the said Petersburg Railroad Company ought to have returned, and are bound to return, unto the said (458) General Assembly annual reports of the tolls, freights, and receipts of that part of the said railroad in North Carolina, as well as to make returns of the original cost of the construction of the same, in order to enable the said General Assembly to regulate the tolls on the said railroad; but that the said president and directors, in behalf of the said Petersburg Railroad Company, have failed to make the said returns."
The Attorney-General, with whom was Iredell, for plaintiff,
Badger for defendants.
The information then further states the acts of Assembly of 1832 and 1833, whereby the Portsmouth and Roanoke Railroad Company was made a body politic and corporate for the purpose of making a railroad from Portsmouth in the State of Virginia to the south bank of the canal in Weldon in this State; and that the said road was completed in the manner directed by the said acts. And the information then proceeds further: "That by the proper construction of the said act of the General Assembly passed in 1830, the said Petersburg Railroad Company can only apply the moneys raised by the subscription aforesaid, and the moneys arising from the tolls, freights, and other sources for the transportation of produce and passengers, to the making and preserving of the said railroad and repairing the same, and can only contract with other persons for the like purposes, and that all moneys received by the said company are and ought to be applied to the said purposes, and, should any remain, the same is by the said act of the General Assembly to be paid to the subscribers holding stock in the said Petersburg Railroad Company." The information then proceeds further: "That that part of the said Portsmouth and Roanoke Railroad which lies in the county of Northampton, including the bridge across the Roanoke River at Weldon, hath heretofore been sold under executions issuing from the counties of Northampton and Halifax, and that Francis E. Rives was the purchaser under the said executions"; but the Attorney-General (459) says that the franchise granted to the said Portsmouth and Roanoke Railroad Company does not pass by the said purchase and conveyance from the sheriff of Northampton under the said executions to the said Francis E. Rives, but remains and is now in the said Portsmouth and Roanoke Railroad Company; and that the said Petersburg Railroad Company, on 14 June now last past, entered into the following contract with the said Francis E. Rives, to wit: "Whereas the said Rives is the proprietor of the Weldon bridge, constructed over the Roanoke River in North Carolina, subject to a mortgage thereupon to secure a debt of $8,000 to the State of North Carolina, and of that portion of the railroad constructed by the Portsmouth and Roanoke Railroad Company which extends from the town of Weldon to the Margarettsville depot in that State, and he has offered to sell the same to the said Portsmouth and Roanoke Railroad Company for $50,000, which offer the said company has rejected; and whereas the said company obtained from the Legislature of North Carolina the passage of an act to authorize the sale of the whole railroad and other property belonging thereto, unto a new company, which act will go into operation if ratified by the General Assembly of Virginia; and whereas, from the present condition of the said company, it is believed that its means are not adequate to the purchase of the said Rives' interest and to the continuing of railroad business, unless the whole road and stock can be sold out to a new company, which must necessarily be effected at a very low price, so that the large pecuniary interest of the State of Virginia in said road must in any event be almost wholly lost; and if such a new company be organized, it will most probably be by nonresidents of this State, and her interests in the upper railroads will be greatly impaired in value; and whereas it is of great importance to the stockholders in the Petersburg Railroad Company, of whom the State of Virginia is one to the extent of $323,500, to prevent the competition of (460) any such plan as is above specified, and the said Rives is willing for a reasonable compensation to prevent his portion of the said road from being used, with his consent, for the purpose aforesaid, the following stipulations have been agreed upon by the parties to these presents: The Petersburg Railroad Company hereby agree to pay to Francis E. Rives the sum of $60,000 in the following manner, namely, $2,500 on 1 September next, and the same sum every three months thereafter until the sum of $20,000 shall have been paid to him; then $1,250 every three months after that time until the whole sum of $60,000 shall be fully paid: Provided, that during the whole period aforesaid that part of the Portsmouth and Roanoke Railroad which was purchased by him, from Weldon to Margarettsville, and the Weldon bridge, shall remain unused as a railroad for the transportation of persons or produce, and in case the said road or bridge shall be so used for railroad purposes the payment aforesaid shall cease." The information then sets out the residue of the agreement, to the effect that if there should be any legal proceedings taken for putting the road in operation, the payments should be suspended until a decision should be given in favor of Rives' rights; that if any other railroad should be constructed to connect the Portsmouth and Roanoke Railroad with any point on Roanoke, then the payments should cease altogether; that if Rives should sell the road (excepting the iron on it), or it should be by any legal means condemned for the purposes of a railroad, that the price or damage allowed to Rives shall be applied to satisfy to Rives so much of the said price of $60,000 as shall then remain unpaid; and after that shall be done, then to reimburse to the company what it may have advanced under this contract; and that the surplus, if any, shall be divided equally between Rives and the company. The information then charges (461) further: "That in pursuance of the said contract and agreement the said Petersburg Railroad Company has already paid unto the said Francis E. Rives a large amount of the price stipulated to be paid to him by the said contract — the said agreement having been ratified by the stockholders in general meeting, which the said Attorney-General says is not only not granted to be done by the said act of the General Assembly passed in 1830 incorporating the said Petersburg Railroad Company, but is directly against the provisions of the said act of incorporation, wherefore the said Attorney General says that the charter granted is forfeited, and that the said company ought not further to exercise the privileges granted to them by the said act of the General Assembly passed in 1830."
The defendants pleaded, as to the failure of the president and directors to make returns to the General Assembly, that by an act of General Assembly of this State passed in 1833, entitled "An act to amend an act," etc., it was amongst other things, enacted "that the Petersburg Railroad Company be and they are hereby authorized to construct a lateral railroad from the point at which their present line of railroad may be crossed by the Portsmouth and Roanoke Railroad, or from such point in the neighborhood of the same as they may deem most advisable, to the basin at Weldon, anything in the act to which this is an amendment to the contrary, notwithstanding," as by the record of the said act remaining amongst the rolls, etc.; and that afterwards, to wit, at the session of the General Assembly which commenced on Monday, 18 November, 1844, and ended on 10 January, 1845, a certain other act was passed, entitled "An act to provide," etc., whereby, after enacting (amongst other things) "that complaint had been make to the General Assembly that the bridge erected across Roanoke River, below the town of Weldon, by the (462) Petersburg Railroad Company obstructed the passage of masted vessels going to the wharf near the said town of Weldon," it is enacted "that it shall be the duty of the said Petersburg Railroad Company to construct a draw of sufficient capacity, at the most suitable point in the said bridge, so as to admit of the easy and convenient passage of such steamboats and masted vessels as navigate Roanoke River below the falls thereof, and to complete the same within nine months from and after 1 January, 1845: Provided, however, that the said company shall, from the time of ratifying this act, take all produce passing in vessels or boats up or down the river and intended to pass said bridge from the bridge to Weldon, and from Weldon to the bridge, as the case may be, until the draw in said bridge shall be completed as provided for by the act, in such manner as not to hinder or delay the transportation of such produce, and to take the same free of toll; and that it shall moreover be the duty of the said railroad company, so long as they shall keep the said bridge across Roanoke River, or permit the center pier of said bridge to stand, to keep a good and sufficient draw in the same, so as not to obstruct the passage of such steamboats and masted vessels as navigate the said river below, and, furthermore, to keep a suitable person at the said bridge to open the draw thereof, so as to occasion no delay to the passage of vessels as aforesaid; and that if the said Petersburg Railroad Company shall refuse, neglect, or omit to perform the duty required by this act, it shall be the duty of the Attorney-General, and he is hereby directed, to institute legal proceedings against the said Petersburg Railroad Company, by way of indictment or otherwise, to cause the obstruction created by the erection of the said bridge to be removed, as by the record of the said last mentioned act of the General Assembly remaining among the rolls," etc., whereby all and every forfeiture of these defendants of their corporate rights and privileges or franchises in the said information supposed, by reason of the (463) failure of their president and directors to make the said returns, is waived and remitted; and this the said defendants are ready to verify by the said records. And, as to the making by the defendants of the said contract with the said Francis E. Rives and the payment by them of the said sums of money to the said Francis in pursuance of the said contract, the defendants plead that since 1 January, 1841, the moneys necessarily laid out and expended by them in repairing and keeping in repair the part of the said railroad lying in this State, between the southern boundary line of the State of Virginia and the said town of Blakely on the said Roanoke River and in defraying the necessary expenses incurred for maintaining transportation on the same, have greatly exceeded in amount all the sums of money, income, and receipts by them had or received by way of toll or otherwise, for transportation of persons or property on the same, and that these defendants, at the time of the said contract with the said Rives, had not nor at any time since had or now have any sum or sums of money received or accrued for the transportation on the said part of the said road, to be divided, as profit, to and amongst the several stockholders; and these defendants further say that by another part of the said act of the General Assembly passed in 1830 the said information mentioned, these defendants are incorporated into a company by the name and style of the Petersburg Railroad Company, and it is enacted that "in that name they may sue and be sued, plead and be impleaded, and shall possess and enjoy all the rights, privileges, and immunities of a corporation or body politic in law, and may make all such by-laws, rules and regulations, not inconsistent with the Constitution and laws of this State or of the United States, as shall be necessary for the well ordering and conducting the affairs of the company." And these defendants say that, because the said contract was manifestly beneficial to them and would enable them to make (464) large profits to be divided amongst the several stockholders, they, by their president and directors and by the assent of the stockholders in general meeting, did make the said contract, and did afterwards, out of the profits accrued upon that part of their said road lying in Virginia, pay the said sums of money to the said Rives in pursuance of the said contract, as they lawfully might for the cause aforesaid; all of which they are ready to verify, etc. Wherefore, forasmuch as the said defendants at the time of exhibiting of the said information were not, nor at any time since have been, liable to any forfeiture of any of their rights, privileges, and franchises within this State, they pray judgment, etc.
The Attorney-General demurred generally and the defendants joined in demurrer.
The act of 1831, Rev. Stat., ch. 26, authorizes two modes of proceeding at the instance of the public against corporations. The one is by bill of the Attorney-General in the court of equity, to restrain them by injunction from assuming or exercising any franchise or transacting any business not allowed by the charter. This part of the act is applicable only when the purpose is not to dissolve the corporation by a judicial decision, but to preserve it, in order that its useful functions may be performed, and, at the same time, that it may not be able to abuse its powers or transcend them. The object of the other mode is to have a forfeiture of the charter or a dissolution of the corporation judicially declared, and a judgment of ouster thereon; and that is to be effected by an information by the Attorney-General in a Superior Court of law or in this Court, "setting forth, briefly and without technical terms, the grounds on which such forfeiture or dissolution (465) is alleged to have been incurred or to have taken place." Of this latter kind is the present proceeding. It is in the nature of a quo warranto, and although the act dispenses with technical formalities, yet it is clear that the information must set out the substance of a good cause of forfeiture in its essential circumstances of time, place, and overt acts. That rule belongs to all pleading, and especially is it proper in reference to a proceeding in its nature criminatory, to insist upon a forfeiture of valuable franchises which cost a great outlay of capital. The demurrer by the Attorney-General to the defendants' pleas necessarily opens the way to objections to the information, upon the principle that, as against the party demurring, we are to go back to the first fault in the pleading; for it is manifest, for example, that here it is immaterial whether the matter pleaded be a good bar or not, if the charge itself be so radically defective that no judgment of forfeiture can be pronounced on it. In a quo warranto, properly speaking, the charge is general, that the defendants, without lawful warrant, use the franchise of being a body politic and doing certain acts as a corporation. The plea brings forward the charter as the warrant for acting as a corporation, and states such parts of it and other acts as authorize the defendants to exercise the corporate franchise specified up to the time of the writ brought; and then the replication specifies any number of particular overt acts or omissions on which it is intended to insist the forfeiture has been incurred, and thereto the defendants may either demur or take issue. Under the statute, however, it was intended to simplify the proceedings by having the whole matter of accusation set forth at once in the information, or, at least, some sufficient matter to entitle the State against an admitted corporation to judgment of ouster. These observations have been made because, as this is the first proceeding under the act, as far as is known to the Court, it has been deemed (466) proper to give some intimation that the inartificial and extremely loose statements of this information are not approved by the Court as sanctioned by the act. For example, it does not charge the subscribing of the stock or the organization of the company under the charter as a subsisting corporation at any time, but only an authority in the charter for certain subscriptions for making a railroad from, etc., to, etc., without giving any names, and then says that "the said Petersburg Railroad Company" is invested with the rights and powers necessary to make the said railroad to be located as aforesaid. Again, while it charges that it was the duty of the president and directors to render to the Legislature, annually, a fair account of the expenses in constructing and keeping in repair that portion of the road within this State, it does not show any part of the act giving power to the stockholders or imposing the duty of appointing a president and directors, nor that any were appointed — a thing indispensable to render the stockholders amenable in this most penal manner for the omissions of the president and directors. Again, it states that the company have now "for many years had their said road completed, and since the completion thereof" have of the completion or of the operation of the road, or stating in what the operation consisted, as conveying persons or things for hire and the like; and while it states that "the said Petersburg Railroad Company" ought to have [not "rendered annually a fair account"] "returned unto the General Assembly annual reports of the tolls, etc., of that part of the road in North Carolina, as well as to make returns of the original cost," etc., it proceeds to charge "that the said president and directors in behalf of the said Petersburg Railroad Company have failed to make the said returns." without showing any time when it became a duty to render such account or an omission of it at any particular time or place, and without showing any sum expended or any profits received or accrued. The other part of the information which respects the (467) transaction with Rives is equally vague and defective. It states that, by the charter, the company can only apply money, subscribed or received for tolls, to making or repairing the road and the payment of dividends of profit to the stockholders, and, after setting out the purchase of Rives of a part of the Portsmouth and Roanoke Railroad, without the franchise of using it as a railroad, it proceeds to state that on 14 June, 1845, the company entered into a contract with Rives, which is set out in the information, where by the company binds themselves to pay Rives certain sums on certain days on certain conditions; and that, "in pursuance of the agreement, the company has already paid to Rives a large amount of the price stipulated to be paid him," without affixing any time or place to either of the facts alleged, except the date of the contract, and without mentioning any sum or sums in particular as paid to Rives, or averring that the same had either been subscribed by the stockholders or received for tolls, or how otherwise raised, as by borrowing or in some other manner. When the legislature required "the grounds" to be set forth "on which a forfeiture is alleged to be incurred," nothing less could be meant than that the information, like an indictment or declaration, should state with certainty to a common intent those facts and circumstances which constitute the offense in its substance, whether of misfeasance or nonfeasance, so that, on its face, if true, it may be seen that there is a specific ground in fact, and not by conjectural inference, on which a forfeiture ought to be adjudged. But the Court does not think it necessary to decide the case upon formal defects in the information of these kinds, because, taking it properly to charge the matters which, as we suppose, it was meant to charge, the Court is of opinion either that it is substantially insufficient or (468) that the facts alleged by the defendants and admitted by the demurrer sufficiently answer it.
There are two grounds on which it is alleged that the forfeiture has been incurred. The one is that the charter as set forth makes it the duty of the president and directors to render to the Legislature annually a fair account of the expense of making the road in this State and the amount of tolls received on it; and that the president and directors have failed to "make any returns," as it is called. Now, it may be supposed to charge the period when the road was made, the cost of it, the period of using it up to the last session of the Assembly, and the annual profit received or accrued, and that the General Assembly had, during that period, divers sessions at such and such days, and that the company omitted to render an account of the cost of the tolls to the Assembly at any one or more of those sessions; and yet we think, upon the ground taken in the plea in answer to that part of the information, that there cannot be judgment against the defendant. A question might, indeed, have been made as to an omission — if it be so — to render an account during the year that elapsed between the rising of the Assembly on 12 January, 1845, and the filing the information on 19 January, 1846, since the charter requires the account to be rendered annually, and it may, perhaps, be still proper to render the account at the period prescribed, although the Assembly does not constitutionally have annual sessions, as it had when the charter was passed. But we do not understand the information as raising that question, and, therefore, do not consider it, for the information clearly makes the gravamen on this part of the case to consist in not making a return which would have enabled the General Assembly to regulate the tolls, as provided for in the charter, and, therefore, has in view only such returns as ought to have been made before or at the last session of the Assembly, which may be supposed to be stated to have been in November, 1844, according to the fact. We entertain no doubt that the omission of an express duty prescribed by a charter to a corporation is cause of (469) forfeiture. Its performance is in the nature of a condition, and the sovereign may insist on resuming his grant for the breach of the condition. With respect to the duties arising by implication from the nature of the franchise granted, and the interest of the public in their due and continued performance, we should be inclined to hold that only such acts or omissions would be destructive of the charter as concern matters which are of the essence of the contract between the State and the corporation, when the corporation fails to do that which it must be seen it was intended and expected it would do, or does that which it is certain it was intended and expected it would not do. But when a charter, as here, expressly imposes a duty which the company is to perform, not merely to the citizen, but towards the sovereign itself, although it may not declare that nonperformance shall make a forfeiture, yet, by no latitude of equitable interpretation can it be regarded as a hard bargain, and, as such, relieved against in a court of law: but it must be taken to have been required by the State as a material stipulation, for the nonperformance of which by the corporation the State may put an end to the contract. But, on the other hand, if the sovereign — with us, the lawmaking power — with a distinct knowledge of the breach of duty by the corporation, a knowledge declared by the Legislature, or so clearly to be inferred from its own archives that the contrary cannot be, thinks proper by an act to remit the penalty or to continue the corporate existence, or to deal with the corporation as lawfully and rightfully existing, notwithstanding such known default: such conduct must be taken, as in other cases of breaches of conditions, to be intended as a declaration that the forfeiture is not insisted on, and, therefore, as a waiver of the previous defaults. It must be so in the nature of things; for while the State insists on these stipulations in a charter, as conditions express or implied, in a contract the citizen has a (470) right that they shall be dealt with as other conditions, and that a breach shall not be insisted on when, after it, the parties acted and dealt as if there had been no breach; for example, when a landlord receives rent after he might have entered for nonpayment of it. We do not mean that an omission by the Legislature to take immediate legal steps to enforce a forfeiture, for even a cause most notoriously existing, or that even in such a case, a statute recognizing the the actual exercise of the corporate functions would necessarily receive that construction, as, for instance, borrowing money from or keeping account with a bank that had violated its charter. But in the case before us the duty imposed on the company is that of making their president and directors render accounts to the General Assembly itself, so that it could not but be certainly known to the Assembly of 1844 that no return had been made to it; and in that state of things the Legislature passed an act on the day before the adjournment which not only recognizes this corporation as then existing, but authorizes and requires it to perform acts which imply that it is to exist for nine months afterwards, at least, and such acts as impose on the corporation the immediate expenditure of a considerable sum of money and continued outlay for an indefinite period, apparently expected to be coextensive with the charter. The amended charter allowed the company to extend the road to the canal of Weldon, which is a point on the south side of Roanoke, without expressly directing or authorizing a bridge over the river, though apparently indispensable. After the company had built a bridge, the Legislature requires them to make alterations at their own expense, within nine months, in a work on this new part of their road, and to keep attendants to open the draw as long as the bridge shall be kept up. Surely, it would not comport with the good faith that should actuate every government if the State were to turn around (471) immediately after inducing this further expenditure by the company, and getting the work done, and insist upon a forfeiture for a default that had occurred and was absolutely known to the Legislature to have occurred prior to or contemporaneously with the passing of the act. The necessary inference from such provisions in a statute, whether depending on the general principles for the construction of statutes or regarding them as the acts of a party to a contract with conditions, must be, we think, that the Legislature intended the corporation to continue until there should be a further breach; and the executive officers of the State cannot counteract the legislative intention by insisting on the prior default. Happily, we have not had occasion in this State to become familiar with the defaults of corporations, committed or punished; and we should feel the more hesitation in adopting the conclusion we have if we did not find it sustained by the authority of decisions by courts in which these doctrines have been frequently discussed. In the great case of the Manhattan Company in New York, 9 Wend., 361, the judgment was rendered for the defendant principally on this ground.
The other alleged ground is that the company paid some money to Rives which they ought to have expended on the road or divided among themselves. There is no allegation that the expenditure on the road would have been necessary or useful. There is no complaint of this transaction upon the ground that its object was contrary to the interest or policy of North Carolina in any other respect, as, for instance, to prevent the use by the public of the road as a highway, or to obstruct any steps that might legally be taken by the State, or by any under her authority, to appropriate Rives's part of the Portsmouth and Roanoke Railroad to public uses. Indeed, it is plain that the agreement had nothing of the kind in view; but, on the contrary, it provides for the contingency that the proper authorities, whose action the parties could in no way defeat or bind, should have the road condemned (472) for a railroad. The information then supposes nothing wrong — save only that money, which it assumes but does not aver, was part of the capital subscribed, or of the profits of the road, was paid to Rives, instead of being kept by the corporation themselves. To this part of the information, after stating by way of inducement that there were no profits of that part of the road which lies in North Carolina received or accrued at the time of making the contract with Rives, nor since, to be divided among the stockholders, the plea in substance is that the payments to Rives were made with money which accrued as profits on that part of the road which is situate in Virginia. The plea thus raises an interesting question, which may some day prove embarrassing, with respect to charters granted by two States to the same corporation, constituted to conduct a work situate partly in each State — whether or not it be amenable to each State exclusively for everything touching so much of the work as may be in it, and for the application of the profits arising on each part. The plea supposed that to North Carolina the company is not to account for not constructing the Virginia portion of the road, or not repairing it, or misapplying the profits made on it. This may be true in respect of punishing the officers by indictment for a default in Virginia, or in respect of adjudging a forfeiture of the charter or the franchise in Virginia, which things clearly depend on territorial jurisdiction. But we are not prepared to say where by the charters of the two States the work is executed as one whole, by subscriptions of stock applicable alike to the parts in each State, that one of the States could not insist, as the ground of forfeiture of so much of the franchise as is used within it, that the corporation had not fulfilled its duties in the other State, but violated them to the prejudice of the complaining State. For example, if the charter required that the whole work should (473) be completed by a day limited, and the company made the road in North Carolina, but did not make that in Virginia, would it not be a forfeiture of the part in this State, both because the omission was against the letter of the act and because it impaired the utility of the part here, by the interruption of the intended line of transportation and travel? Suppose the company were to charge on the road in Virginia double the tolls allowed by law, so as to extort from citizens of North Carolina, passing on the same, excessive fees and prevent others wishing to use the road from doing so, would it not form just cause of complaint on the part of this State, and though not expressly declared in the charter to be in itself a dissolution, ought it not to be considered a breach of duty arising out of an implied condition of the charter for so much of the work as is within our jurisdiction? For, as implied powers of a corporation are as much protected by the law against the unjust resumption by the State as those expressly granted, so the duties of a corporation arising by reasonable implication are as obligatory on the corporation as those expressly imposed, and their breach visited by the same consequences. It may be, in this case, that the profits arising from the different parts of the road form distinct funds, as the charter requires an account of those in this State only to be rendered, though, no doubt, that is with a particular view to the regulation of the tolls in this State. But we do not find it necessary to decide either that question or the more general one raised by the pleas, as before mentioned, because, let the statements in the information be taken as they may, the facts constitute no offense, that we can perceive. The information does not state out of what funds the payments to Rives were made, except that it may be collected by argument, from the statements of certain parts of the charter that it was out of the capital or out of the profits of the road in this State, or out of them and the profits of the road in Virginia. Take it in any one of those cases, and still there cannot be (474) judgment for the State; for such an appropriation of the money of the corporation produces no prejudice to the State or the public, and is against no stipulation of the corporation to the public, express or implied. There is, indeed, a provision in the charter that the president and directors shall semiannually declare such dividends of the net profits from the tolls as they may deem advisable. This we know from reading the charter, and use for illustration; for that part of the charter is not set forth in the information, but it is only said that by the proper construction of the act "the company can only apply their money to certain purposes mentioned, namely, making and repairing the road and dividing the surplus." But it is clear that part of the charter is not inserted for the advantage of the State or to protect the State from detriment, either from an accumulation of capital or a misapplication of profits, but solely for the benefit of the stockholders. Bank charters sometimes require periodical dividends of the bonus, as it is called, besides the stated dividends of profits at shorter intervals. That is to prevent the bank from hoarding its profits so as, in effect, to enlarge the capital beyond the sum fixed by the Legislature by compounding the profits with it; therefore, the public has an interest in the observance of such provision, and may insist on it. But the provision in this charter has no such view and is not of that sort, for it leaves the dividends to the discretion of the president and directors, controlled only by their responsibility to the stockholders, who can turn them out, and are excepted to do so, for improperly withholding dividends or misapplying the funds. There is no policy of the State in this case to be subserved by the declarations of dividends, when not demanded or desired by the stockholders. The provision is exclusively for the benefit of the shareholders; and it would, indeed, be an unheard-of measure of penal justice upon the stockholders if they were to be deprived of their franchise because their servants, the president and directors, wrongfully withheld from them their money and gave it to some one else. But we may (475) take it that it was not, in this case, the act of the president and directors, as the contract was approved in a general meeting of the stockholders, and, therefore, what was done under it may be considered as done by their orders or by them. Suppose it so, then we own that we see nothing in the charter nor in any duty which the stockholders as a corporation or as natural persons owe to the public which makes it criminal in them to dedicate their profits to the use of any person whatever. The profits are theirs, and they have a right to dispose of them to any purpose to which they might lawfully devote their money derived from any other source. If what has been done amounts to an assumption of a franchise in that part of the Portsmouth and Roanoke Railroad, let the proper steps be taken to restrain them from the exercise thereof or to oust them therefrom; but, certainly, the giving Rives their money, whether for a consideration or without, is no forfeiture by the stockholders of their own charter, much less when the purpose was to make their road more useful to the public and more profitable to themselves, by drawing travel and freight to it.
The opinion of the Court, therefore, is that there must be judgment on the demurrer for the defendants.
PER CURIAM. Demurrer sustained.
Cited: Asheville Division v. Aston, 92 N.C. 586; Simmons v. Steamboat Co., 113 N.C. 151; Hurst v. R. R., 162 N.C. 380.
(476)