Rochester v. Barnes , 26 Barb. 657 ( 1858 )

By the Court, Johnsor, J.

The important question upon the merits, in this case, is whether the act of 1845, (Sess. Laws of 1845, p. 257,) under which this action is brought, was, before its express repeal in 1854, applicable to corporations formed under the general rail road acts of 1848 and 1850.

The corporation, of which the defendants were officers and stockholders, was created under the provisions of the general rail road act of 1848, (Sess. Laws of 1848, p. 221,) and the indebtedness, for which this action is brought, was contracted in August, 1853. The referee who tried the action held that the acts of 1848 and 1850 did not repeal, or in any respect limit the operation of the act of 1845, but that the latter act remained in full force until its express repeal in 1854, and was applicable to the corporation in question, and to the defendants as officers, agents and stockholders thereof. If the learned referee, whose opinions are certainly entitled to great respect and consideration, is right in this, the judgment is, I think, correct, and should be affirmed.

But after a careful and deliberate examination of all these statutes and of the authorities, I have come to the conclusion that the act of 1845 has no application to rail road corporations, formed under the general statutes, since the adoption of the present constitution. There may, perhaps, he some difficulty in establishing the proposition that the act of 1845 was repealed entirely, by implication, by the act of 1848,- upon the ground that the two acts are so utterly repugnant that both cannot possibly stand for any purpose. Nor is it necessary to go this length. It is enough if it can be shown, satisfactorily, that it Was intended that corporations created under these general statutes, and the stockholders therein, should be governed and rendered individually liable, by such statutes exclusively, and not by acts for the regulation of corporations previously existing, and differently created, and the payment and security of their indebtedness.

It appears perfectly clear and certain, to my mind, that it became not only the duty, under the constitution of 1846, but that it was the design and intention of the legislature, in enacting the statutes of 1848 and of 1850, to prescribe the only rule which should govern, on the subject of the individual liability of corporators of corporations formed under the provisions of those acts. And that consequently, if the act of 1845 was not wholly repealed, its application and operation were, by plain and necessary implication, restricted and limited to corporations previously existing. It was in effect repealed, as to corporations formed under the general law. This will be rendered quite apparent, I think:, by reference to the provisions of the constitution of 1846, and of the two acts referred to. The constitution plainly designed to abolish the former mode, or system, of creating corporations^ and to adopt an entire new system, under which, by general and uniform rules, the individual liability of corporators, for all debts of their respective corporations, should be regulated and prescribed. Hence article 8 of the constitution provides, that “ corporations may be formed under general laws, but shall not be created by special act,” except in certain specified eases. And by section 2 of this article it is provided, that “ dues from corporations shall be secured by such individual liability of the corporators, and other means as may be prescribed by law.” Thus it will be seen that the whole subject of the act of 1845 is embraced in the provisions of the organic law, and a positive duty in reference to it enjoined upon the legislature. It evidently contemplates, and in effect directs, an entire revision of the laws, on the subject of the creation of corporations, and of the individual liability of stockholders for the dues of such corporations. It was in the discharge of this duty that the statutes of 1848 and of 1850 were enacted by the legislature. These acts create, and establish a new, entire and independent system, for the formation, action and government of the corporations formed under them. They confer and prescribe the powers such corporations shall possess and exercise, and the liabilities and forfeitures to which they shall be subject, and declare under what circumstances, and to what extent, stockholders therein shall be individually liable for all dues of such corporation, and for all labor and services performed for it, or upon its property. Under these circumstances, the fair and reasonable inference is, that the legislature intended to prescribe the only rule which should govern, as to these corporations, and the individual liability of their respective corporators, But this will appear still more clear and decisive, by referring to the language of these acts.

Section 12 of the act of 1848 declares that “ all the stockholders of any such company that shall be hereafter incorporated under this act, shall be severally individually liable, to the creditors of such company,” and prescribes under what circumstances, and to what extent, they shall be so liable. In like manner section 10 of the act of 1850 confines the individual liability of the stockholder to the creditors of the company, when it attaches to “ the stockholders of any company formed under this act.” The referee in his opinion treats these acts as though they had only made stockholders liable personally to workmen and employees of the company. It will he seen, however, that the provisions "are much more extensive, and embrace all debts and dues, of every description, contracted by the company. As a general rule, I think, when the legislature pass a particular act, and declare under what circumstances, and in what manner, and to what extent individuals shall be liable under that act, the intendment is, that they are liable under those provisions only, and do not fall within the provisions of former general acts. So subsequent general acts, although their language is sufficiently broad and comprehensive for such purpose, will not control the provisions of prior special statutes, unless the legislature so intended. (Williams v. Pritchard, 4 D. & E. 2. Dwarris, 514.) The individual liability of stockholders, imposed by these acts, is not made applicable, at all, to corporations then existing. Section 49 of the act of 1850 makes several sections of the act applicable to all existing rail road corporations, but does not make sections 10 and 12, which relate to the subject of individual liability, so applicable; showing, as it seems to me, still more conclusively, the intention to make the individual liability provided for, apply exclusively to the new system, and to be the only rule of liability. Had these sections been made applicable to all rail road corporations then existing, I should have regarded the intent to repeal the act of 1845 entirely, as perfectly clear; especially when considered in connection with the constitutional provision before referred to.-

, Again; the grants of power in the acts of 1848 and 1850, are entirely inconsistent with, and repugnant to, the act of 1845. In addition to the general powers conferred upon corporations by title 3, chapter 18 of the first part of the revised statutes, the express power is conferred upon all corporations formed under these acts, to borrow money from time to time as may be necessary, for the purpose of constructing the road and operating it afterwards, without any of the restrictions, or any of the pains and penalties, prescribed in the act of 1845. (Act of 1848, § 19, sub. 10. Act of 1850, § 28, sub. 10.) Here is a general power granted to these corporations to contract debts by borrowing money upon their obligations respectively, for the purpose of completing their tracks and fixtures, and purchasing all the stock and materials necessary for their equipment and operation. This necessarily includes the power to turn out their obligations directly to contractors who construct the roads, and to the manufacturers of engines and cars, who are willing to receive them in payment. To hold the contrary would he mere trifling with the enactments of the legislature. It would be absurd to suppose the legislature intended to compel such corporations to go through the process of borrowing money, and paying that only, in the construction of their roads and the purchase of their stock, if they could use their obligations directly for the same purpose, and to the same advantage. Such a distinction would be one of form merely, without sense or substance. It is true that the total or partial repeal of statutes, by implication, is not favored by courts. But it is also true that the doctrine of repeal by implication is as well settled and as firmly established as any known to the law. Mr. Sedgwick, in his recent valuable treatise on statute and constitutional law, states the rule very clearly as follows: “ A subsequent statute which is clearly repugnant to a prior one, necessarily repeals the former, although it do not do so in terms; and even if the subsequent statute be not repugnant in all its provisions to a prior one; yet if the later statute was clearly intended to prescribe the only rule which should govern, in the case provided for, it repeals the original act.” (Sedg. on Stat. and Const. Law, 124.) This rule is founded in good sense, and is not without the sanction of authority. (Davis v. Fairbairn, 3 How. 636. Dexter and Limerick Plank Road Co. v. Allen, 16 Barb. 15.) In Pierce v. Delamater, (1 Comst. 17,) it was held by the court of appeals that the abrogation of the constitution of 1821, and the adoption of the present constitution, repealed the statute which forbade the judge of any appellate court taking part in the decision of any cause which had been determined by him while sitting as a judge of any other court. (2 R. S. 275, § 3.) It has also been held, that a statute is impliedly repealed, by a subsequent statute revising the whole subject matter of the first. (Bartlett v. King, 12 Mass. Rep. 537.) Nichols v. Squire, 5 Pick. 168.) The same rule also prevails where a statute revises the common law.

[Monroe General Term, March 1, 1858.

Applying these general principles to the case before us, I can entertain no doubt that the act of 1845 under which this action has been brought, was never operative against the corporation of which these defendants were stockholders, and officers, and imposed no obligations upon them, personally, to the plaintiffs or their assignors. The fact that the act of 1845 was expressly repealed by the legislature, in 1854, after the debt in question was contracted, furnishes, in my judgment, no argument in favor of the plaintiff’s claim, and no evidence that such act was regarded by the legislature, even as being in force against corporations, and stockholders of corporations, under the general law. It may have been in force for some purposes as against prior corporations, and it may have been repealed expressly, for more abundant caution. Had the act of 1845 been in force against this corporation when the indebtedness in question was contracted, it is quite clear that its subsequent repeal would have formed no bar to the plaintiff’s right of action. In that case the law would have imposed the obligation to pay upon the defendants, the moment the debt was contracted. It would have become their contract, and their obligation, immediately, by force of the statute. It would have been in no sense an inchoate obligation, but a complete and perfect one, to all intents and purposes, and the repeal of the statute afterwards could not have impaired it. But as the act was of no force against the defendants, no cause of action is established against them. The judgment must therefore be reversed and a.new trial granted, with costs to abide the event.

Welles, Johnson and Smith, Justices.]