Opinion
[Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] Rehearing (Denied, Granted) 40 Cal. 83 at 91.
Appeal from the District Court of the Twelfth District, City and County of San Francisco.
Judgment was for plaintiff, defendant moved for a new trial, which was denied; and, from the judgment and the order denying the motion for a new trial, defendant appeals.
COUNSEL:
The objects of the company, as declared in the articles of incorporation, are " to buy, improve, sell, lease and otherwise dispose of real estate," that is: to traffic in real estate in the same manner as a corporation formed to traffic in personal property, goods or chattels. Any project, therefore, that tends to increase the value of its real estate, is within the legitimate powers of the corporation; and the same principles which govern the powers of corporations dealing simply in personal property, would apply to this case. To improve the value of the property so as to increase its price on a sale, is a power necessary to carry into effect the powers expressly granted to the corporation, and being so, it possesses the power sought to be exercised inherently from the grant. (15 Johns. 358; 3 Comstock, 430.)
Every corporation, as such, has the capacity to take and grant property and to contract obligations in the same manner as an individual, so far as necessary to enable it to effect the object of incorporation, unless expressly prohibited by law, or its charter, and, with this limitation, it may deal precisely as if it were an individual, to attain its legitimate objects. (1 Sandford's Chancery Rep. 280; Spear v. Campbell, 14 Wend. 20.)
Sharp & Lloyd, for Appellant.
J. M. Seawell, for Respondents.
The objects for which the defendant was incorporated are, to buy, sell and improve real estate. The transaction between the defendant and the railroad company is certainly not a purchase or sale of real estate. Neither is it an improvement of the real estate of the defendant. When we speak of real property as improved, we mean that there are erections or improvements on the land itself. When we speak of it as unimproved, we mean that there is nothing on the land; and we should equally apply the term " unimproved" to the land if there was a railroad in the neighborhood.
It is an elementary principle of law, that the charter of a corporation is to be strictly construed againstthe corporation. If there be any doubt as to whether a given power exists in the corporation, such doubt is resolved against the corporation. (Charles R. Bridge v. Warren Bridge, 11 Peters, 544.)
If the railroad is not authorized to be constructed by the defendant as a principal thing, it cannot be claimed as an incidental power; that is to say, if the defendant could not itself build a railroad on land not its own, as a principal business, neither can it do so under the pretence that it will incidentally promote some other corporate purpose. (Sumner v. Marcy, 3 Woodbury & Minot, 112; Waldo v. Chicago etc. R. R. Co., 14 Wis. 580; Coleman v. Eastern Counties R. R. Co. 10 Beav. ch. R. 1; Dodge v. Woolsey, 18 How. U.S. 341-2; Pearce v. Madison & Ind. R. R. Co. 62 U.S. 441, 21 How. 441, 16 L.Ed. 184.)
If the defendant can give $ 20,000 to this railroad, under the pretence that it is for an improvement, then the defendant may engage in any business which, in the opinion of the directors, will tend to increase the value or price of the defendant's property. On this theory, the defendant would be authorized to give away its money to the owners of adjoining property for the purpose ofsettling it up--provided in the opinion of the directors the value of defendant's property would be increased thereby. There is, in fact, no useful occupation or transaction which does not tend to increase the value of land in the neighborhood. If this incidental benefit to the landholder be sufficient to authorize the expenditure in question, there is no business whatever in which the defendant may not engage. It is not necessary to incorporate as a railroad or navigation company. Under the power to buy, sell and improve land, the corporation can engage in any business, which, in the opinion of the directors, will tend to increase the value of the land.
The further question arises, whether a corporation can give its property away to any other person, under the pretence that by means of such gift the corporation will be incidentally benefited. We think that the corporation has no such power.
It has been held in a recent case in Wisconsin, which will probably become a leading case on the subject, that a municipal corporation cannot tax its citizens for the purpose of donating money to a railroad company, in which the corporation is not a stockholder. The incidental benefitto the public at large is not a public use or purpose sufficient to justify the tax. A fortiori, a private corporation cannot give away its property. (Whiting v. Sheboygan R. R. Co., Am. Law Register for March, 1870, p. 156.)
JUDGES: Crockett, J., delivered the opinion of the Court, Rhodes, C. J., and Wallace, J., concurring. Sprague, J., and Temple, J., expressed no opinion.
OPINION
CROCKETT, Judge
Upon petition for rehearing in the nature of a prayer for a modification of the foregoing opinion, so that a new trial could be had in the Court below, Crockett, J., delivered the opinion of the Court: Wallace, J., and Rhodes, C. J., concurring: The petition for a rehearing discloses no sufficient reason for modifying the opinion recently delivered in this case. It appears from the agreed statement that " the plaintiff's counsel, although not denying the general effect on the value of the defendant's property by the agreement with the railroad company in question, denied that the defendant had a right to make any such improvement unless the same was immediately upon the defendant's property in question, and insisted that any such indirect improvement, by which the price of the property might be increased, would not come within the authority conferred by the articles of incorporation upon the Trustees."
The plaintiff rested his case in the Court below solely on the proposition that the Trustees had not the power in law to bind the corporation by the contract entered into with the railroad company, but admitted on the trial, as we have seen, that the effect of the agreement was greatly to enhance the value of the property, and he now asks that a new trial be awarded to afford him an opportunity to prove that the agreement did not have that effect. Such a practice is wholly inadmissible. The plaintiff is bound by his admissions made on the trial, and should not now be allowed to controvert their truth.
Nor do I discover any reason to doubt the correctness of the conclusion which we arrived at, as to the power of the Trustees to enter into the contract with the railroad company.