Opinion
10-01-1887
BELL and others v. PENNSYLVANIA, S. & N. E. R. R. and others.
Win. E. Potter, for the motion. John H. Fort, contra.
On motion to strike out bill for relief.
Win. E. Potter, for the motion. John H. Fort, contra.
BIRD, V. C. This bill sets up that certain railroads, one of which it says had no legal existence, were fraudulently consolidated, and that after such consolidation it issued bonds to the extent of $1,200,000 to the Metropolitan Trust Company of New York, as trustees; and to secure their payment executed to said trust company a mortgage upon all the roads so consolidated. The bill shows default in the payment of interest, a foreclosure of the mortgage, a decree of sale of the mortgaged premises, and a time fixed by the officer for the sale. The complainants show that they are stockholders, and aver that they are injured by the said fraudulent consolidation. The relief they ask is that said sale may be postponed until after a hearing in this case; and that it may be decreed that the said consolidation was void; and that all proceedings thereunder are null; and that the stockholders of the one road be declared to hold and enjoy their rights free from the others; and that the said mortgage be decreed to be discharged of record.
Whether this be an attack upon the said mortgage simply, or upon both it and the said alleged fraudulent consolidation, I think, under the circumstances, it is made at a late day, since the complainants made no resistance to the proceedings to foreclose the said mortgage, nor to have it declared void, nor to have the said consolidation declared a nullity, until after the decree for sale in the foreclosure proceedings. The consolidation took place on July 1, 1882, but this bill was not filed until April 14, 1887. But, if the question still is whether the new railroad formed out of the old ones has a legal existence or not, it seems to me that I am precluded by all precedent from inquiring into or determining that point. Individuals cannot institute proceedings to establish the invalidity or non-existence of an alleged corporation. This seems to be the peculiar prerogative of the state itself. The state, by the attorney general, must say whether or not there is such a corporation as the Pennsylvania, Slatington & New England Railroad Company, before any court can declare its bonds and mortgages void, because there is, in fact and in law, no such body corporate. The court may pronounce judgment upon this or that transaction of such a body, but it cannot decree that the charter or certificate of such a being is a myth, or was conceived in fraud. Railway Co. v. Railway Co., 32 N. J. Eq. 755; Owen v. Whitaker, 20 N. J. Eq. 122.In the case of Terhune v. Potts, 47 N. J. Law, 218, this principle was most distinctly announced and enforced. See, also, Ang. & A. Corp. § 734.
I think the bill should be dismissed, with costs.