author: Mr. Justice Mulkey

text:
    James A. McAnnulty et al. v. Samuel R. McAnnulty et al.

      Filed at Springfield March 23, 1887.

    1. Will—revocation by subsequent marriage. Under the act of 1872, a marriage since its adoption, whether of a man or woman, operates, per se, as a revocation of a prior will.
    2. Statute oe Frauds—verbal ante-nuptial agreement. A mere verbal agreement, made before marriage, whereby the intended wife releases and renounces all interest in the proposed husband’s estate after his death, is obnoxious to the first section of the Statute of Frauds.
    3. Same—effect of signing after the marriage. Nor will the signing of an ante-nuptial agreement in form, after marriage, although purporting to have been executed before the marriage, have the effect to take a verbal agreement of the same effect, made before the marriage, out of the statute. The execution of such agreement can be regarded no further than a mere acknowledgment, in writing, of the terms of the previous verbal agreement, which fails to meet the requirements of the statute.
    4. Same—effect of the marriage itself. The subsequent marriage of the parties, after making a verbal ante-nuptial agreement, will not take the same out of the operation of the Statute of Frauds.
    5. Same—estoppel by fraud from pleading the statute. Doubtless a verbal ante-nuptial agreement might, under special circumstances, be enforced in equity, to prevent the perpetration of a fraud, as, when the wife has, by some artifice or trick, prevented the contract from being reduced to writing, and has received a substantial benefit from it, so that it would operate as a fraud upon the husband.
    Appeal from the Circuit Court of Adams county; the Hon. William Marsh, Judge, presiding.
    Mr. George A. Anderson, and Messrs. Bonney & Woods, for the appellants:
    Our Statute of Frauds, (Rev. Stat. 1874, chap. 59, sec. 1,) upon the subject of contracts made in consideration of marriage, is identical with the fourth section of the English statute upon the same subject, and this particular clause of the English statute has not been generally adopted in the United States. 2 Parsons on Contracts, (5th ed.) 63, 64.
    An agreement made before marriage, but not reduced to writing, is within the statute; nor will a recognition, after the marriage, of an oral promise made before marriage, take the case out of the statute.. Marriage is not considered such a part performance as will avoid the operation of the statute. 1 Madd. Ch. 373; 2 Parsons on Contracts, 72; Bump on Fraud. Con. 312.
    Neither marriage, nor a written acknowledgment after marriage, nor a representation at the time of the marriage, that a post-nuptial settlement will be valid, can give it validity when otherwise void. Bump on Fraud. Con. 312; 1 Madd. Ch. 373.
    A party seeking to have a written agreement, made after marriage, relate back to an oral ante-nuptial agreement, which was void by the Statute of Frauds, must prove that the omission to reduce it to writing was caused, not by his own negligence, but by the fraud or deceit of the party against whom it is sought to be enforced, for that is the very evil against which the statute is aimed. Mountacue v. Maxwell, 1 Str. 236; 2 Pomeroy’s Eq. Jur. sec. 921; 2 Story’s Eq. Jur. sec. 768, note 2; Pomeroy’s Spe. Per. sec. 139, note 5; Fonblanque’s Eq. 186.
    A marrige shall be deemed a revocation of a will. Lant’s Appeal, 95 Pa. St. 279; Rev. Stat. chap. 39, sec. 10, p. 419.
    Whatever may be the court’s opinion as to the policy of a statute, it is its duty to carry out its provisions so as to effectuate the intention of the law makers. If found to operate with inconvenience, or to produce hardship, it is for the legislature to apply the corrective. The court can only give effect to the law as it is adopted. Boyd v. Cudderbach, 31 Ill. 119; Beardstown v. Virginia, 76 id. 34; Richmond v. Moore, 107 id. 433.
    In the absence of a statute expressly declaring a will revoked, the court held that marriage without issue, where the statute made the wife heir to the husband, effected as radical a change in his condition as did the marriage and birth of a child, and that there were, therefore, the same reasons for the presumed revocation in the one case as in the other, and accordingly treated the will as revoked. Tyler v. Tyler, 19 Ill. 154; American Board v. Nelson, 72 id. 565; Duryea v. Duryea, 85 id. 41.
    Mr. J. N. Sprigg, for the appellees:
    Whatever limitations exist against testamentary power as to the wife or child by later marriage, as to all the world beside, the power is unlimited. Sheath v. York, 1 Ves. & Beam. 390; Murphy v. Boyles, 49 Ill. 111.
    The Statute of Frauds, as applied to contracts in consideration of marriage, does not influence a court of equity, except where the rights of creditors are involved. Reade v. Livingston, 3 Johns. Ch. 481, illustrates this proposition.
    The Statute of Frauds does not require that a promise in consideration of marriage shall he in writing, signed before marriage. Rev. Stat. chap. 59, sec. 1.
    Any fair ante-nuptial agreement, though not in writing, signed before marriage, will he upheld in equity. Grackenback v. Brouse, 4 W. & S. 546; Satterthwaite v. Emley, 3 Green, (N. J.) Ch. 489; Mountacue v. Maxwell, 1 Str. 236; 1 P. Wms. 618; Dundas v. Dutens, 2 Cox’s Ch. 235; Lant’s Appeal, 95 Pa. St. 279; Barnes v. Irwin, 2 Dallas, 199.
    If it was intended by the parties that the agreement should be in writing, what equity would decree done equity courts will consider as having been done. Lant’.s Appeal, 95 Pa. St. 279.
    In such case, equity proceeds, if necessary, on the doctrine of enforcing specific performance. Sullings v. Richmond, 5 Allen, 192.
    The doctrine of specific performance applies upon the facts of the case at bar. Story’s Eq. Jur. sec. 759; Lowry v. Tew, 3 Barb. Ch. 413.

      The common law of prima facie revocation of a former will by marriage and the birth of a child, so construed in Tyler v. Tyler, 19 Ill. 151, that marriage simply was given like effect, has become statute law in this State. (American Board v. Nelson, 72 Ill. 566.) And the prima facie presumption may he rebutted as at common law.
   Mr. Justice Mulkey

delivered the opinion of the Court:

Samuel McAnnulty, a widower, well advanced in life, on the 19th of September, 1882, made his last will and testament, by which he disposed of all his estate, real and personal, among his children and grandchildren. The dispositions of the will were much more favorable to some of the devisees than to others standing in the same relation to the testator, but for the purposes of the questions to be considered this general reference to the inequalities of the will is all that is necessary. On the 18th of October of the following year, the testator intermarried with Margaret Thompson, who had a farm and other property of her own, and a number of grown children by a former husband. On the 26th of October, 1885, McAnnulty died, leaving his widow, Margaret McAnnulty, and the devisees under the will, him surviving. The will having been admitted to probate, James A. McAnnulty, a grandson of the testator, and one of the appellants herein, filed a bill in the circuit court of Adams county to contest the will, and praying for a partition of the real estate of which the testator died seized, according to the Statute of Descents. To this bill, the widow, and all the devisees under the will except the complainant, were made defendants. After the answers were in and replications filed, the court ordered an issue at law to be made up, as required by the statute, which, by agreement of parties, was tried by the court without a jury. The court, upon hearing the proofs, sustained the will, and entered a decree dismissing the bill, from which the complainant and widow have appealed to this court.

The contention of appellants is, that the marriage of the testator subsequent to the making of the will, operated as an absolute revocation of it, to the same extent as if the testator had deliberately revoked it by cancellation. On the other hand, as we understand counsel, it is claimed that a subsequent marriage revokes a will as to the party marrying the testator or testatrix, and as to the issue of such marriage, only. If the latter position is the correct one, it is quite clear the complainant has no such interest in the subject matter of the suit, particularly the land sought to be partitioned, as will enable him to maintain the bill. The will gives him $500 in money, but no interest whatever in real estate. The right of complainant to have it partitioned is rested solely upon the hypothesis that the marriage of his grandfather operated as an absolute revocation of the will, and that by reason thereof the land in question became intestate property.

If section 10, chapter 39, of the Be vised Statutes, which has been in force since 1872, is to be given effect according to the letter of the act, "and what would seem to be its manifest import, it is difficult to escape the conclusion which appellants draw from it. That section, after providing for the case of a child being born to a testator after the making of a will, which has no bearing at all upon the question now und^r consideration, then concludes in these words : “And a marriage shall he deemed a revocation of a prior ivill. ” We have not been able to find, nor have we been referred to, any provision in the statute which modifies or limits this plain and unequivocal declaration of the legislature. The only case cited where this question was raised, since the act of 1872, is In re Tuller, 79 Ill. 99. In that case the execution of the will, and subsequent marriage, both occurred before the act of 1872 went into effect, though the testatrix did not die till afterwards. It being insisted there, as it is here, that under the act of 1872 the subsequent marriage operated as an absolute revocation of the will, this court, in disposing of the question, said: “It is finally insisted, that there is, here, a statutory revocation of the will, by force of the statute of 1872; * * * that ‘a marriage shall be deemed a revocation of a prior will;’ that as the will did not take effect, nor were any rights acquired under it, until the testatrix’s death, its validity depends upon the law as it then stood at the time of her death; that the statute, though passed after the making of the will, takes effect upon it precisely as though the law had been passed before its execution. ” The court, after discussing at some length the question whether the act cited should be extended to a will executed before its passage, finally held that it did not. Now, if the construction then contended for, and at present contended for by appellants, is not the true one, much time and labor might have been saved in that case by simply saying so, instead of entering into an extended argument to show the statute of 1872 did not apply.

The 18th section of chapter 26, 1 Viet., passed in 1837, provides, “that every will made by a man or woman shall be revoked by his or her marriage, except a will made in exercise of a power of appointment, when the real or personal estate thereby appointed would not, in default of such appointment, pass to his or her heir, customary heir, executor or administrator, or the person entitled as his or her next of kin, under the statute of distribution.” While we have found no English case construing this provision, which we can account for only on the ground that the language is so plain that no one has ever questioned the plain import of the language used, yet Jarman, in his work on Wills, (vol. 1, star page 129,) in referring to this provision, expressly declares, “that, unless in the expressly excepted cases, marriage alone will produce absolute and complete revocation as to both real and personal estate,” etc. A like statute was passed in 1850, by the Virginia legislature; and Lomax, in his Digest, (vol. 3, p. 148,) says of it, in substance, what is said by Jarman in respect to the British act. (See, also, Phaup v. Woodbridge, 19 Gratt. 332.) The adoption of this provision in England, and in some of the States of this country, doubtless had its origin, in part, in the diversity of the rulings of the courts and the conflict of opinion with respect to the revocation of wills by implication, on account of marriage, birth of issue, etc.

With certain exceptions and limitations, the general rule at common law undoubtedly is, that marriage, alone, of a feme sole, revokes, by implication, a prior will, except when it operates as an appointment under a power, and except, also, in those States, including our own, where the property rights of a married woman are put upon the same footing as those of married men. This rule is rested on the distinct ground that marriage, in the case of a woman, destroyed the ambulatory nature of the will, and left it no longer subject to the wife’s control, which is contrary to the very nature of a will. These consequences necessarily resulted from the common law doctrine that the legal existence of the wife, during coverture, was' merged in that of her husband. As to a man, marriage alone would not revoke a prior will. It required both marriage and birth of issue. The revocation, even from these circumstances, by the common law, does not universally follow. Presumptively, it does,- and in the absence of anything to the contrary they will be held to have that effect. The reason of the rule is, by the earlier authorities, based upon a presumed change in the testator’s intentions, caused by the complete change of his situation, resulting from marriage and birth of issue. This logically led to the practice of receiving evidence tending to rebut the presumption, which necessarily involved the subject in more or less uncertainty. (Brady v. Cubet, Dougl. 31; Goodtitle v. Otway, 2 H. Bl. 522.) But the receiving of such evidence was never fully concurred in by the profession, and was finally rejected by the courts. (Marston v. Roe, 8 Ad. & El. 14.) In this state of the law, the provision in the British statute, above cited, was adopted, and quite a number of the States of the Union, including our own, have enacted, with some diversity, similar provisions. The decisions of this court, based upon the law as it stood before the act of 1872, will be found to have taken the most advanced ground in favor of implied revocation of wills from marriage, as will fully appear from the cases of Tyler v. Tyler, 19 Ill. 151, American Board v. Nelson, 72 id. 564, and Duryea v. Duryea, 85 id. 41. The most accurate presentation of the law on the subject as it existed before the act of 1872, is found in the opinion in the Tuller case, 79 Ill. 99, above cited.

In view of the advanced position taken by this court upon the subject, if the statute of 1872 is to have any effect at all, a marriage since its adoption, whether of a man or woman, must operate, per se, as a revocation of a prior will, and so we hold.

As respects the appellant, Mrs. McAnnulty, it is claimed by appellees that there was an ante-nuptial agreement between her and the testator, wherein, for a valuable consideration, she released and relinquished all interest in said claim to the testator’s estate, in the event of her surviving him, and that, consequently, she now has no interest in the estate. On the hearing, an agreement, bearing' date the — day of October, 1883, and purporting to have been signed by both the parties, was put in evidence, which, if executed by her before the marriage, we think fully sustains the claim of appellees. It is not pretended, however, that it was executed by either of the parties before the marriage; but appellees insist, that although the written contract was not signed until after that time, yet the terms of it are identical with those of the verbal agreement made before the marriage, and that it should therefore be given the same effect as if it had been signed before the marriage. Appellants deny that any such agreement as that embodied in the instrument was in fact made. They also deny that the instrument in question was ever signed by Mrs. McAnnulty, or by any one for her, authorized to do so.

The instrument, by its very terms, implies an execution of it before the marriage, such terms not being applicable to a post-nuptial contract, even if that kind of a contract could be of any avail,—a question which does not arise here. The defence of appellees rests upon an alleged ante-nuptial written agreement. As this instrument was not executed until about a month after the marriage, it is clear that if any agreement existed before or at the time of the marriage, it was a mere verbal agreement, and, as such, it is obnoxious to the Statute of Frauds. The first section of chapter 59 of the Revised Statutes, among other things, declares, “that no action shall be brought whereby to charge * * * any person upon any agreement made .upon consideration of marriage. ” This alleged ante-nuptial agreement clearly comes within the provision of this section, and the statute must be given effect unless something has occurred to take the case out of its operation. The signing of the written instrument after the ■marriage, can be regarded, at the very farthest, as nothing more than a mere acknowledgment, in writing, of the terms of the previous verbal agreement, and this certainly does not meet the requirements of the statute, for the simple reason the statute requires the contract itself to be in writing. The case is unlike that of an express trust, which is only required to be “manifested and proved” by some writing. Doubtless, a verbal ante-nuptial agreement might, under special circumstances, be enforced in equity, in order to prevent the party invoking the statute from perpetrating a fraud upon the other party. Thus, if, in this case, Mrs. McAnnulty had by some artifice, trick or device prevented the contract from being reduced to writing, and had received any substantial benefits from it, so that it would have operated as a fraud upon the testator, we have no doubt of the power of a court of equity in such case to afford the proper relief, notwithstanding the statute, on the general principle that the statute is never to be so expounded as to make it a mere instrument in consummating a fraud upon the party against whom it is invoked. Jenkins v. Eldridge, 3 Story, 181; 2 Pomeroy’s Eq. sec. 921.

That marriage is not sufficient to take such an agreement out of the statute, is clearly established by an unbroken current of authority. Crane v. Gough, 4 Md. 316; Henry v. Henry, 27 Ohio St. 121; Flourier v. Flourier, 29 Ind. 564; Brown v. Conger, 8 Hun, 625; Finch v. Finch, 10 Ohio St. 501; Hackney v. Hackney, 8 Humph. 452; Wood v. Savage, 2 Dough 316; Lloycl v. Fulton, 91 U, S. 479.

With respect to the written instrument, there is a sharp conflict in the testimony as to whether Mrs. McAnnulty ever signed it. The evidence in support of the hypothesis that she did, consists mainly of alleged admissions on her part, testified to, in the main, by persons interested in sustaining the will. She swears positively that she never either signed it herself, or authorized any one else to sign it for her. No one swears to having seen her sign it, nor is her name to it shown to be in her handwriting. Indeed, in our judgment, the decided weight of evidence shows she could neither read nor write, and consequently could have no handwriting. She not only swears this herself, but it is testified to by her grown daughters, and her neighbors who had had occasion to do business with or for her. Besides this, a number of documents and instruments executed by her, and extending back to a period long before her marriage with McAnnulty, were put in evidence, from which it appears she uniformly executed such instruments by making a cross mark between her Christian and surnames, as is usually done by those who can not write.

There are other features in the evidence favorable to appellants which are worthy of notice, but we do not feel at liberty to extend the discussion further, as it sufficiently appears, from what we have already said, the law is with appellants.

The decree of the court below is reversed, and the cause remanded for further proceedings in conformity with the views here expressed.

Decree reversed.


source: Caselaw Access Project

author: Mr. Justice Shore

license: Public Domain

text:
    The Mutual Fire Insurance Company of New York v. Charles P. Swigert, Auditor.

      Filed at Springfield March 25, 1887.

    1. Insubanoe companies — of the different forms of organization known to the laws. Under the various legislation of this State, every kind of ordinary insurance may be attained under three forms of organization, viz., stock companies, mutual companies, and companies formed on the assessment plan. These three are the only kinds of insurance companies known to our laws.
    2. Same—foreign companies—of the conditions upon which they may transact business in this State. Every insurance company of any other State must comply with the laws of this State before it shall be lawful for it to take any risks in this State, and when such foreign company complies with our laws on the subject, it may receive a license to carry on the business of insurance here.
    3. Under the legislation in this State, provision is made for the organization of only two kinds of fire insurance companies, viz., joint stock companies, and companies organized on the mutual plan; and a foreign company must be one or the other of these, before it can be authorized to transact business in this State.
    4. A fire insurance company organized under the laws of another State, which has not complied with the requirements of the general insurance laws of this State, in its organization and mode of transacting business, and w'hich is not possessed of the actual capital required of a similar company formed under the provisions of our laws, is not entitled to receive a license to enable it to transact the business of fire insurance in this State.
    5. SAME'—whether a company is organized on the mutual plan. The charter of the “Mutual Eire Insurance Company,” a corporation organized under the laws of the State of New York, contained the following: “In lieu of the notes and of the agreements for insurance with four hundred applicants, as provided in chapter 466, section 6, of Laws of 1853, the said company is authorized to receive from any number of persons subscriptions payable in cash, and give therefor receipts bearing interest, which receipts shall severally set forth that they are given for money received in advance for premiums of insurance, and the amounts of the same, and every part thereof, are liable for the expenses and losses of said company; and the said receipts shall be received by said company only in payment for premiums of insurance, or on account thereof; and the company may commence business on the mutual plan as soon as the whole amount so subscribed and paid in cash shall reach the sum of $200,000.” The charter provided for dividing the profits among the insured, the dividends to be made in scrip, bearing interest, redeemable and transferable, subject to be reduced to pay losses and expenses, but not to be redeemable until it should exceed $200,000, and then to the extent of the excess only. The rule for ascertaining the profits was as follows: All moneys received for interest, and premiums earned during the year, to be considered gross receipts; after deducting general expenses, taxes, losses, interest paid and payable, and all other contingent expenses, charges and liabilities, the balance to be considered the profits of the business.
    6. In considering the application of this foreign company for a license to transact the business of fire insurance in this State, the company did not assume to be organized upon the “stock" plan, and it was held, it was not organized on the mutual plan, and so, not having the elements of either kind, it could not, under the law, be given license to transact business in this State.
    7. The objection taken to the charter of the company, as depriving it of the proper element of mutuality, was the feature which permits the so-called “capital” of the company to consist in outstanding interest bearing obligations in the hands of strangers, to pay the interest on which the policyholders must contribute out of the earnings of the company, before they can participate in the profits of the business.
    This' is an original petition, filed in this court by the Mutual Fire Insurance Company of New York, for a mandamus,' compelling the Auditor of Public Accounts to issue to the petitioner a license to carry on the business of fire insurance in this State. The material facts of the case appear in the opinion of the court.
    Messrs. Grant & Brady, for the petitioners.
    Mr. George Hunt, Attorney General, for the respondent.
   Mr. Justice Shore

delivered the opinion of the Court:

This is an original proceeding in this court, to compel, by mandamus, the Auditor of Public Accounts to issue a license . 9 to relator for the transaction of the business of fire insurance in this State.

The relator, the Mutual Fire Insurance Company of New York, shows, by its petition filed herein, that it is a corporation organized under the laws of the State of New York, and makes exhibit of its charter and by-laws; that it made formal application to the Auditor of this State for license to do business in this State, and offered to accept such license therefor in accordance with the laws of this State; that with its application it presented to the Auditor a statement of its affairs and condition for six months next preceding such application, and a copy of an examination of its condition by the insurance department of the State of Minnesota, and evidence of the appointment of an attorney in this State, upon whom service of process might be had; and averring that it had complied with all the requirements of section 1 of the act of the General Assembly of this State, of June 4, 1879, and with all other requirements of the laws of this State relating to the admission of relator, as a foreign insurance company, to do business in this State, and that it thereupon became the duty of the Auditor to issue to it a license for that purpose, by law, but that he refused to do so, etc. To this petition, the respondent, by the Attorney General, interposed a general and special demurrer.

The laws of this State authorize the formation and organization of insurance companies in this State for various purposes, among which purposes is that of insuring against loss by fire. An examination of the various insurance acts upon the statute books of this State, whether spoken of as fire, township fire, as life or life indemnity, or accident or permanent disability, upon the assessment plan, shows, that all these different purposes are to be attained under three forms or kinds of organization, viz: stock companies, mutual companies, and companies formed on the assessment plan. When, therefore, the citizens of this State desire to enter upon the O business of insurance, and to avail themselves of the benefits of corporate organization under the laws of this State, they can do so only in the form and subject to the restrictions and regulations prescribed by law, — and the only kinds of companies known to our laws are the three just mentioned.

By the act of May 31, 1879, (Starr & Curtis, p. 1330,) it is declared, “that every insurance company or association incorporated by or organized under the laws of any other State * * * must comply with the requirements of the general insurance laws of this State governing fire, marine and inland navigation insurance companies doing business in- the State of Illinois, before it shall be lawful for such company or association to take risks or transact any kind of insurance business in this State.” By the act of June 4, 1879, (Starr & Curtis, p. 1331,) it is declared unlawful for any insurance company organized under the laws of another State, for the purpose of insuring against loss or damage by fire, to take risks, or transact any business whatever authorized by its charter, within this State, until it shall have made application to the Auditor for a license, declaring in such application that it desires to transact the business of insurance in this State; that it will accept a license therefor, according to the laws of this State, which shall be revoked "on its removing or making application to remove a cause arising out of the business it may transact in this State, from a State to a United States court; and on its complying with these requirements, “together with all other requirements now imposed by existing laws, ” the Auditor shall issue a license, etc.; but “no such license shall be issued until all of said requirements shall have been complied with, ” nor shall any company “carry on the business for which it may have been incorporated, within this State, until it shall have obtained such license. ”

The general Insurance law of March 11, 1869, (with its amendments,) “to incorporate and govern fire * * * insurance companies doing business in the State of Illinois, ” (Starr & Curtis, p. 1310, et seq., sec. 22,) declares it unlawful for any insurance company “organized under the laws of any other State of the United States, * * * for any of the purposes specified in this act, directly or indirectly to take risks or transact any business of insurance in this State unless possessed of the amount of actual capital required of similar companies formed under the provisions of this act; * * * and shall appoint a resident attorney, on whom service of process may be made; file with the Auditor a certified copy of its charter and a verified statement of its chief officer, showing its name, place of business, amount of capital stock, and a detailed statement of its assets and liabilities of every kind. ” The sixth section of said act prohibits- the formation of any “joint stock company” in Chicago, or with an established agency in that city, for the purpose of insurance, “with a smaller capital than $150,000 actually paid in, in cash; ” or in any other county in the State with a smaller capital than $100,000 actually paid in, in cash; and no fire insurance company, organized on the mutual plan, can be incorporated and do business in Chicago, or with an established agency in that city, “until agreements for insurance have been entered into with at least four hundred applicants, the premiums on which shall amount to not less than $200,-000, of which $40,000 at least shall have been paid in, in cash, and notes of solvent parties, founded on actual and bona fide applications for insurance, shall have been received for the remainder; ” nor in any other part of the State “until agreements have been entered into for insurance with at least one hundred applicants, the premium on which shall amount to not less than $50,000, of which $10,000 at least shall have been paid in cash, and notes of solvent parties, founded on actual and bona fide applications for insurance, shall have been received for the remainder. ” None of the notes referred to shall exceed $1000, and two notes.shall not be given for the same risk, or made by the same person or firm, unless the whole amount is less than $1000, “nor shall any such note be represented as capital stock unless a policy be issued upon the same, ” etc. “Each of the notes is required to be made payable, in whole or in part, at any time when the directors shall deem the same requisite for the payment of losses by fire, * * * and such incidental expenses as may be necessary.” The act requires a certificate of a local justice of the peace, of the solvency of the maker of the notes, and prohibits surrender of any note during the life of the policy for which it is given. Section 14 of the act provides, that notes taken by a mutual company at the time of its organization, “shall remain as security for all losses and claims, until the accumulation of premium notes and assets invested, etc., shall equal the amount of cash capital required to be possessed by stock companies organized under this act. ” Every person effecting insurance in any mutual company is made a member of the corporation, during the period of insurance, “and shall be bound to pay for losses and such necessary expenses * * * accruing in and to said company, in proportion to the amount of his deposit, note or notes.”

It will be seen that in respect of fire insurance companies provision is made for the organization of only two kinds, viz: joint stock companies and companies organized on the mutual plan. If the relator is either a joint stock company or organized as a mutual company, and in either case is possessed of the capital required by the laws of this State to be possessed by like companies organized thereunder, and has in other respects complied with the prerequisites provided in the statute, the license should have been granted, otherwise the Auditor properly refused to grant the same.

It is shown by the petition, and exhibits made part thereof, that the relator was first organized in 1869, under the general Insurance law of. New York, (chap. 466, Laws 1853,) as a joint stock company, under the name of “Insurers’ Own Insurance Company. ” The second section of its charter provides that its capital stock should be $200,000, divided into shares of $25 each, and the whole capital should be employed in its business. April 13, 1870, a special act was passed by-the legislature of New York, changing the name of the company to “Mutual Fire Insurance Company, ” and amending the second section of its charter so as to read as follows:

“Section 2. In lieu of the notes and of the agreements for insurance with four hundred applicants, as provided in chapter 466, section 6, of Laws of 1853, the said company is authorized to receive from any number of persons subscriptions payable in cash, and give therefor receipts bearing interest, which receipts shall severally set forth that they are given for money, received in advance for premiums, of insurance, and that the amounts of the same, and every part thereof, are liable for the expenses and losses of said company; and the said receipts shall be received by said company only in payment for premiums of insurance, or on account thereof; and the company may commence business on the mutual plan as soon as the whole amount so subscribed and paid in cash' shall reach the sum of $200,000.”

—Thereby doing away with the provision requiring capital stock, and authorizing thq company to do “business on the mutual plan, as soon as the whole amount so subscribed and paid in cash shall reach the sum of $200,000.” By the sixth section of its charter, the board of trustees of the company are authorized to divide among the insured the whole or any part of the profits of the business, such dividends to be made in scrip, which scrip may be issued in such form and for such amounts, and bear such rate of interest, and be redeemable and transferable, and be subject to be reduced to pay losses and expenses, in such manner, as may be determined by the by-laws of the company, but none of said scrip to be “redeemable until it exceed $200,000, and then to the extent of the excess only.” Section 7 provides that the profits of the company shall be determined as follows: “All moneys received for interest, and premiums earned during the year, shall be considered gross receipts. After deducting general expenses, taxes, losses, interest paid and payable, and all other contingent expenses, charges and liabilities, the balance shall be considered the profits of the business. ” By article 12 of the by-laws of the company, the profits that may' be declared by the trustees are to be divided in scrip of the company, and which is to bear interest not exceeding six per centum per annum.

Again, in 1878, by another special act of the legislature of New York, the company was authorized to unite with its mutual plan a cash capital of $30,000, to be divided into shares of $50 each, the shareholders to be entitled to interest on their shares, without incurring any liability as shareholders for the liabilities of the company, but with a right, in certain cases, to participation in the profits of the company, not in excess, however, of one-fourth thereof. This stock capital, if paid in, would not, as we have seen, be sufficient in amount to authorize-relator to do business in this State as a stock company, and it appears by the statement of the company, filed with the Auditor, that it has no “joint stock” capital. It appears that the company has never availed itself of the provisions of this amendment to its charter. By the statement of relator company exhibited, it also appears that its “whole amount of contribution, forming capital actually paid up in cash, is $338,248.22.” It is also shown, by the certificate of the superintendent of the insurance department of New York, that relator company is “authorized (in that State) to issue policies and transact business as a mutual fire insurance company, with a premium capital of $200,000, contributed.”

Originally, the relator company was organized as a joint stock company, with sufficient authorized capital to have enabled it to do business in this State. It is manifest, however, that the special act of April 13, 1870, amending the second section of its charter, essentially changed its character, and it is now recognized by the insurance authorities of its own State, not as a stock company, but as a mutual company. This amendment did more than to take away from the corporation its character of a joint stock company, and thereby bring the corporation within the operation of the general insurance laws of New York, in respect of mutual insurance companies. Had that been the only effect, it is obvipus, from the language of the amendment itself, that before the corporation could have engaged in business it must have secured “notes and the agreement for insurance of four hundred applicants, ”—substantially as required in that respect of companies organized in this State on the mutual plan. But by this amendment it is provided, that in “lieu” of such notes and applications for insurance, the corporation might incur an interest-bearing indebtedness of $200,000, and call that its paid-in capital. It can not change the essential character of this power of the corporation, that the receipts or obligations of the company given for this borrowed capital, stipulate that it is “for money received in advance for premiums of insurance, ” for it is nowhere provided, either in the charter or by-laws, that the persons thus subscribing or loaning money to the company, ostensibly for premiums for insurance, should take policies of insurance the premiums on which should amount to such advance or contribution at the time of making the same, or at any time, and thus furnish the means of taking up and getting out of the way this' $200,000 of interest-bearing obligations of the company. Indeed, so far as we can see, there is no provision for removing this burthen from the company, and the policy of the company would indicate that it was intended to be permanent, .for it appears that the interest-bearing contribution to relator’s so-called capital has been extended to $338,248.22,—greatly in excess of the amount stipulated as necessary by its charter, as amended; and within the six months next preceding the application to the Auditor, it is shown by the verified exhibit of the condition of the company, that carried into the “income” account is an item of “contributions forming additional capital for which the company’s certificates had been issued for premiums on policies not yet issued, $86,079.70.”

There seems to be no limit to the expansion of the “contributed capital” of the company, nor is it stipulated in the by-laws or charter of the company what rate of interest shall be paid on such contributions. As we understand, the interest on scrip given for dividends of profits is limited by the by-laws to not exceeding six per cent per annum, but no such limitation is fixed upon contributions to capital. It seems, also, that the company treats this indebtedness of the company as stock, for it is shown by said exhibit that the “total amount of the company’s stock owned by the directors, at par value, (is) $67,902.50.” The directors are holders, to that amount, of the interest-bearing, receipts for premiums on policies of insurance “not yet issued, ” as may be fairly inferred. If.it should be contended that this interest-bearing “capital” can be paid off by the accumulations of profit, (scrip,) it can not, as we have seen, be reduced below $200,000. Thus it will be seen, that as a mutual company the relator must remain burdened with the payment of interest upon this large sum of money, and which may be increased practically without limit. The persons making these contributions or advances are not required to be or become members of the corporation, bearing its burdens in common with its policyholders. Before the policyholders can participate in the earnings of the company, the contributors must receive their interest, which, as we have seen, is to be paid before the profits are ascertained or declared, and which are a' fixed charge on the revenues of the company. The policyholder, in addition to the cost of carrying his risk upon the ordinary mutual plan, as contemplated in the organization of mutual insurance companies in this. State, must pay such interest.

The conclusion seems irresistible, that, whatever else this corporation may be, it can not be said to be a corporation for insurance, organized and doing business on the mutual plan, as known and contemplated by the laws of this State, or having any resemblance thereto. By the laws of this State, there is, in any event, contemplated the union of at least one hundred policyholders, and if the company is organized in or has an established agency in Chicago, not less than four hundred policyholders, in each mutual insurance company organized thereunder. The premiums, as we have seen in the former case, upon actual and bona fide applications for insurance in the company, must amount to $50,000, and in the latter, to $200,000, twenty per cent of which must be paid in, in cash, and the residue, in either case, represented by notes of solvent parties who are actual and bona fide applicants for insurance to an amount equaling the premiums represented by the cash paid in, and notes given to the company. The fund thus formed represents the capital of the company. The makers of these notes, representing the insurance under the policies of the company issued therefor, are members of the corporation, and mutually liable, to the amount represented by their notes, for the contracts and liabilities of the company. The aggregate of the policyholders are therefore, in a sense, the insurers of each policyholder. When a company thus organ-' ized begins business, it has a capital of $10,000 cash, paid in, and $40,000 in obligations of solvent members of the company, in one case, and $40,000 cash, paid in, and $160,000 in notes of solvent policyholders, or applicants for the same, in the other. Its capital is represented by actual insurance. It is free from debt, incapable of contracting liabilities such as that assumed by relator or any other, except in the legitimate business for which it is organized, and may, at any time, realize upon its unpaid capital. The premiums must be applied to the payment of legitimate expenses and losses, or accumulation of capital.

It is clearly apparent the relator company has not complied “with the requirements of the general insurance laws of this State governing fire * * * insurance companies,” nor is it “possessed of the amount of actual capital required of similar companies formed under the provisions” of the insurance laws of this State. It is manifest that no domestic company-organized upon the plan and basis of the relator company could be permitted to do business under the laws of this State. The policy of the State toward insurance companies organized under the laws of other States is neither narrow nor illiberal. They are placed upon the same footing and’granted the same rights and privileges accorded those formed by citizens of the State, under its laws. The statutes of the State provide for the organization of companies upon each of the leading and recognized plans of insurance, and providing only such safeguards as in the legislative wisdom are necessary to promote the best interests of the company itself, and furnish adequate guaranties of safety and indemnity to policyholders. That this is clearly within the power and control of the legislature, as here exercised, is so manifest that no citation of authority is needful to sustain the position.

Where we hold, as we do, that before relator company is entitled to a license to do business in this State, it must, in respect of its organization and the security and indemnity it offers its policyholders, have complied with the general laws of the State, we are applying the same rule that would, of necessity, be applied to domestic corporations for like purposes. If the rule thus applied results in denying relator company the license it desires, it is because it has failed to comply with the law, and has, by its organization, mode of acquiring its capital, and failure to provide the capital required by laws of this State for a like company organized here, put itself outside of the domain of legitimate insurance companies, as recognized by the laws of this State.

We are of opinion that the application of the relator company for license to do business in this State was properly refused by the Auditor. The demurrer to the petition will therefore be sustained, and the petition dismissed.

Writ denied.


text:
    The People ex rel. Leonidas Walker v. The Louisville and Nashville Railroad Company.

      Filed at Mt. Vernon January 25, 1887.

    1. Railroads—general power to malte contracts. While it is true that railway corporations can only make such contracts as the legislature may authorize, yet when made within their powers, their contracts, in legal effect, are the same as like contracts made by natural persons under similar circumstances.
    2. Same—consolidated companies—to what rights, duties and obligations of the original companies they succeed. Where two railway companies consolidate, the original companies become extinct, and the new company thus formed succeeds to the ownership of the two roads, together with all other property, effects, rights and franchises held or enjoyed by either of the old companies, and also becomes subject to all the liabilities and burdens of such ol d companies, and each of them, which are imposed by law on such old companies.
    3. So where a railroad company accepts a subscription or donation from a county upon certain conditions imposed by the vote of the people, and by its contract with the county board, made in pursuance of law, and afterwards consolidates with other railway companies under articles requiring the new company to perform such conditions, such original company, and each of the new companies, which, by means of the consolidation, succeed to the ownership of the original road, will thereby become bound to perform all the conditions so imposed by the contract with the county and by the vote of the people.
    4. Same—of a contract to furnish passenger facilities at a particular point—obligation of consolidated company. Where a railway company, under a legal obligation to maintain a depot for passengers and freight within the limits of a town, and to stop all its passenger trains at such depot, whether express or otherwise, for the purpose of letting off and taking on passengers, consolidates with another railway company owing no such duty, the new company thereby formed becomes liable, and bound to assume and discharge such duty.
    5. Same—contract by railroad company, whether a covenant running with the land—obligation resting upon purchasers. A contract of a railway company to perform certain conditions with a county making a subscription or donation in its aid in consideration thereof, is, however, merely a personal undertaking, and is not in the nature of a covenant running with land; and a purchaser of such company’s road and property is under no personal obligation to perform such contract.

      6. So a railway corporation which succeeds to the ownership of the property and franchises of another company by purchase under a decree of foreclosure against it and its lessee, will owe the county no duty not imposed by law, and will take the road and its property absolutely discharged from the contract between the county and the original railway company, as well as the conditions imposed by the vote of the people.
    7. Same— of the right of a company to withhold proper facilities, or to abandon part of its road. A railway company is bound to construct its road to and from the several points named in its charter, and, when built, to run its trains over its entire line, in such a manner as to afford reasonable facilities for the prompt and efficient transaction of such legitimate business as' may be offered to it on any and every part of its road; and this obligation is equally binding on its successors. No part of the road can be abandoned without rendering its franchises liable to forfeiture.
    8. Same—change of terminal points, or location of depot. After linvieg once fixed the terminal points of its road, and located its depot in a town or city, a railway company has no power afterward t„~. change the same without legislative authority, but it will be held to ihs-eleetion.
    9. Same—duty to stop all passenger trains at county seat. Where a railroad is built to a town, as required by its charter, and a depot is established at the end of its line within such town, which is a county seat, the company operating such road will have mo discretion as to which of its passenger trains shall stop there and which shall not, as it would have, within certain reasonable limitations, if such tovn was not a county seat, but all its passenger trains must stop at such place. It is not sufficient that all its trains may stop at a new depot located at a junction with another road, a quarter of a mile beyond the corporate limits of such town.
    This is a petition filed in this court by the People, on the relation of the State’s attorney of Hamilton county, against .the Louisville and Nashville Eailroad Company, for a mandamus, to compel such company to run all its passenger trains to the town of McLeansboro, and to stop there for the receiving and discharging of passengers. The facts of the case are sufficiently stated in the opinion of the court.
    Mr. William Hamill, Mr. T. M. Eckley, and Mr. Leonidas Walker, for the petitioner:
    As the charter of the St. Louis road calls for a line running to McLeansboro, and the charter of the Evansville road calls for a line running from McLeansboro, the consolidated road can have no charter except on a line running through McLeansboro; and as the charters themselves provided that subscriptions and donations to the roads, respectively, should be upon such conditions as might be agreed upon, those conditions, to be effective, must necessarily run with the charter, and be obligatory upon any company operating under it.
    A consolidated company and its lessee must, in all things, conform, to the charter of the company whose road is being used. Chicago v. Evans, 24 Ill. 55; 2 Redfield on Railways, (4th ed.) 277.
    As a common carrier, a railway company will be held to a full and complete performance of the duties imposed upon it by the law. Railway Co. v. People, 56 Ill. 365; Vincent v. Railroad Co. 49 id. 33.
    Corporations may be compelled to perform public duties and obligations which are imposed on them by their charters, and also those duties which necessarily arise from the nature of the privileges and obligations of their charters. Moses on Mandamus, 155-157; Regina v. Railway Co. 16 Eng. L. and Eq. 299; 18 id. 199; Blakeman v. Canal Co. 1 M. & R. 154; Building Society v. Crowell, 65 Ill. 459; Railroad Co. v. Hall, 1 Otto, 343.
    The foreclosure of the mortgage against the St. Louis and Southeastern Eailway Company and the Evansville and Southern Illinois Eailroad Company could not affect the rights of Hamilton county, for the reasons its rights were a matter of record when the mortgage was given, and it was not made a party to the suit. Scates v. King, 110 Ill. 456.
    A corporation purchasing the property and franchises of another assumes the same obligations imposed on that other. Taylor on Law of Private Corp. 416, 418; Beardstown v. Railroad Co. 1 Metc. 200.
    Where a railroad is sold under a foreclosure of a mortgage, and the purchasers organize another company, they will still be compelled to run the road on the line, and according to the terms of the original charter, and can not abandon any part thereof. People v. Railroad Co. 24 N. Y. 261.
    McLeansboro being a county seat, the defendant is bound by the statute to stop all its regular passenger trains at that place. Rev. Stat. chap. 114, sec. 74; Railroad Co. v. People, 105 Ill. 657.
    Where a railway company has once exercised its power of election by locating its line and depots, its power is exhausted, and can not again be exercised except by legislative authority. State v. Turnpike Co. 10 Conn. 157; Mason v. Railroad Co. 35 Barb. 381; Griffin v. House, 18 Johns. 396; Railroad Co. v. Railroad Co. 2 Vroom, 208; Moorehead v. Railroad Co. 17 Ohio, 340.
    Mr. J. M. Hamill, for the defendant:
    The charters of the original roads did not definitely fix the termini, but these and the intermediate points were left to the election of the companies, in the exercise of their discretion. The exact point at which the one road was to approach McLeansboro and the other was to depart from it, was left entirely, by the legislature, to these corporations. The very vague and indefinite language used in these charters on this subject, is conclusive that it was the intention of the legislature to leave to the discretion of these corporations the precise location of their respective lines of railway at McLeansboro. Iron Works Co. v. Railroad Co. 5 Allen, 221; Railroad Co. v. Railroad Co. 1 Gray, 340; Hentz v. Railroad Co. 13 Barb. 646; Railroad Co. v. Speer, 56 Pa. St. 325; Struthers v. Railway Co. 87 Pa. St. 282; Moses v. Railroad Co, 21 Ill. 522.
    It has been held, that where a railway company was authorized to construct its railway “from Charleston, ” etc., the company had no authority to enter the city, but that the boundary of the city was the terminus a quo. Railroad Co. v. Payne, 8 Rich. 177.

      The effect of the transfer, at the foreclosure sale, of the property and franchises of the St. Louis and Southeastern railway, to a new corporation organized under the general laws of the State, was not the reviving of the old one under the original charter, nor the creation of a new one in lieu of the original. It was the creation of a new, separate and distinct corporation, in no manner dependent upon the original corporation or its charter.
    The franchise to be a corporation is not a subject of sale and transfer, unless the law has, by some positive provision, made it so. But the franchise to build, own and manage a railroad, and to take tolls thereon, are not necessarily corporate rights. They are capable of existing in and being exercised by natural persons, and there is nothing in their nature inconsistent with their being assignable. Commonwealth v. Smith, 10 Allen, 448; Hall v. Railway Co. 2 Redf. Am. Ry. Cases, 621; Ragan v. Aiken, 9 Lea, 610; Meyer v. Johnson, 53 Ala. 237; Wilson v. Gaines, 3 Tenn. Ch. 602; Coe v. Railroad Co. 10 Ohio St. 386; Railroad Co. v. Railroad Comrs. 112 U. S. 609.
    As Hamilton county conveyed no real estate to the railway company, either for right of way or depot purposes, the contract between the company and the county could not attach to the real estate of the company, and constitute a covenant running with the land, which would be binding on all succeeding purchasers of the railway. Ferry Co. v. Railway Co. 94 Ill. 83:
    The Southeast and St. Louis Eailway Company is not a re-organization of the St. Louis and Southeastern Eailway Company, but a new and wholly independent company, and the former company is not in any manner bound by any of the contracts made by the latter, save such as were paramount to the deed of trust under which the road was sold. 107 Mass. 1; 12 Bush, 673; Morgan County v. Thomas, supra; Railway Co. v. County Clerk, 74 Ill. 27; Bruffett v.
      Railway Co. 25 id. 353; People ex rel. v. Railway Co. 57 id. 440; Stewart’s Appeal, 72 Pa. St. 291; Vilas v. Railway Co. 17 Wis. 497; Smith v. Railivay Co. 18 id. 17; Wright v. Railway Co. 25 id. 46; Gilman v. Railroad Co. 37 id. 317; Commonwealth v. Railway Co. 52 Pa. St. 506; Jones on Railroad Securities, secs. 653-659.
   Mr. Justice Mulkey

delivered the opinion of the Court:

This is a proceeding by mandamus, commenced in this court by the' State’s attorney of Hamilton county, in his official character, against the Louisville and Nashville Railroad Company, to compel it to stop its trains at what is known as the “old depot, ” in McLeansboro, the county seat of Hamilton county. The depot in question is located on the branch of the defendant’s road, about a quarter of a mile due west of the court house and public square.

There is no ground for controversy as to the facts. As admitted by the pleadings, they are, in substance, as follows: On the 3d of November, 1868, a majority of the electors of Hamilton county voted to subscribe $200,000 to the capital stock of the Shawneetown branch of the Illinois Central Railroad Company. The line of road contemplated by the charter of that company extended from Tonti, on the Chicago branch of the Illinois Central railroad, to Shawneetown, the intermediate points being Salem, Mt. Vernon and McLeansboro. (2 Private Laws, 1865, 211-220.) The proposition to subscribe the $200,000, above mentioned, was voted for upon the express condition that McLeansboro was to be a point with a station on the road. In pursuance of a provision in the charter of the St. Louis and Southeastern Railway Company, approved March 10, 1869, the county court of Hamilton county, on the 11th day of June, 1869, subscribed to the capital stock of the latter-company the $200,000 which had been voted to the former company. The St. Louis and Southeastern Railway Company, by the terms of its charter, was authorized to construct, maintain and operate a railway from a point on the Mississippi river opposite St. Louis, to Sliawneetown, on the Ohio river, by way of Mt. Vernon, McLeansboro and Equality.

On the 26th of March, 1869, the legislature passed an act incorporating the Evansville and Southern Illinois Eailroad Company, by the terms of which that company was authorized to construct and operate a railway from McLeansboro, Hamilton county, through the towns of Enfield and Carmi, to the State line, on the Big Wabash river. The charter of this company authorized the counties through which the road should run, to make donations to it, upon such terms as might be agreed upon between it and the said counties. (3 Private Laws, 10.) The corporate authorities of Plamilton county, on the 7th day of June, 1870, in pursuance of the provisions of said act, and in conformity with an affirmative vote of a majority of the electors of the county, cast on the 2d day of November, 1869, entered into a contract with the Evansville and Southern Illinois Eailroad Company, whereby the county agreed to donate to the company, upon the completion of the road and the running of trains thereon, the sum of $74,000 in interest bearing bonds of the county. This donation, by the terms of the contract, was made upon the following express condition: “That the said railroad company should erect and forever maintain a depot for passengers and freight at McLeansboro, within the corporate limits thereof, and not exceeding one-half mile from the court house in said town, and that all passenger trains running upon said road, whether express or otherwise, should stop at said depot to receive and put off passengers, and that no discrimination should ever be made against said town of McLeansboro, or any person or persons shipping to or from said town, in favor of any other point, in the relative charges for carrying either freight or passengers thereto or therefrom. ” The same conditions were imposed by the vote of the people in favor of the donation. It was also stipulated in this contract, that the company might, without forfeiture of the contract, consolidate with other companies, on condition that the rights of the county in the respects stated should he fully protected.

On the 21st day .of February, 1871, the said company was consolidated with the St. Louis and Southeastern Railway Company, under the name of the latter company.. On the 12th of May following, the county court entered an order of record, approving the consolidation. of the two companies, upon the express stipulation and understanding, as set forth in said order, “that nothing therein contained should, in any wise, affect or invalidate any of the duties, obligations and promises to the county, made by any of said railroad companies prior to. said consolidation, ” or by the new company since the consolidation. The roads of the two companies thus consolidated were built as contemplated by.their respective charters, and the $200,000 subscription was paid to the consolidated company in installments, of $100,000 each, on the 23d day of October, and the 28th day of November, 1871, respectively. On the 1st day of January, 1872, the county delivered to the consolidated company its bonds, amounting to $37,000, in full payment and satisfaction of the donation of $74,000 to the Evansville and Southern Illinois Railroad Company, the remaining $37,000 having been already otherwise settled and discharged by the county, to the satisfaction of the company.

It thus appears that the entire subscription and donation to the two companies were fully paid and discharged by the county. Both lines of the consolidated road were completed in 1872, and the o'ld depot in question was located, as heretofore stated, within a quarter of a mile of the court house, and otherwise in strict conformity -with the conditions upon which the subscription and donation were made by the county to these companies. It further appears, that on the 1st day of December, 1869, (which, it will be remembered, was prior to any of the foregoing transactions, except the subscription of $200,000,) the St. Louis and Southeastern Railway Company issued its bonds to the amount of $2,250,000, secured by a deed of trust to George Opdyke and Philo C. Calhoun, upon the company’s road and its appurtenances, together with all its rights and franchises. After its consolidation with the Evansville and Southern Illinois Railroad Company, to-wit, on the 1st of March, 1871, the consolidated company issued another series of bonds, amounting to $1,000,000, secured by a second trust deed to the same trustees, upon the road, its appurtenances, etc.

On the 28th of February, 1871, the company consolidated with the Evansville, Carmi and Paducah Railroad Company, whose line of road extended from Evansville, and formed a junction with the St. Louis and Southeastern railway at its eastern terminus on the Wabash. Consolidations were subsequently made with other companies owning lines of road extending into the States of Kentucky and Tennessee. On each consolidation, a new series of bonds was issued, and secured, like the others, by deeds of trust upon the road. Upon a bill filed by the bondholders, the Circuit Court of the United States for the Southern District of Illinois, on the 30th of August, 1880, rendered a decree foreclosing all of the above mentioned deeds of trust. By virtue of that decree, the St. Louis and Southeastern railway consolidated, together with all the company’s property rights and franchises, was, on the 16th day of November, 1880, sold, at public outcry, to William F. Whitehouse and Charles W. Opdyke, as representatives of the bondholders.

On the 12th of November, 1880, the Southeast and St. Louis Railway Company was organized, under the general laws of this State, for the purpose of purchasing and operating said railway, which purchase was consummated on the 27th of January, 1881. On that day, Whitehouse and Opdyke, purchasers under the decree, conveyed the entire road, with everything pertaining to it, to the said Southeast and St. Louis Bailway Company, and the latter company thereupon leased the same to the Louisville and Nashville Bailroad Company, the present defendant. The defendant is now operating the road under its lease, in violation of the contracts between the county and the original companies.

The first question to be considered is, to what extent, if any, is the defendant company bound by the stipulations and agreements between the county and the original companies to whom the subscription and donation were respectively made. That the Evansville and Southern Illinois Bailway Company, and each of the companies which, by means of consolidation, respectively succeeded to the ownership of the two roads,' became bound to maintain a depot in McLeansboro, and to stop thereat all passenger trains, in conformity with the vote of the people and the contract between the county and the original companies, there can be no reasonable ground for doubt. But the Southeast and St. Louis Bailway Company, through which the defendant claims, did not succeed to the ownership of these roads by means of consolidation. It, as we have seen, claims through Whitehouse and Opdyke, purchasers at the foreclosure sale. Whatever title they acquired it still has, subject to the defendant’s lease, and the lessee owes the county no duties which were not imposed, by operation of law, upon the purchasers at the foreclosure sale. The defendant contends that the purchasers at that sale took the property free and absolutely discharged from the contracts between the county and the original companies, as well as the conditions imposed by the vote of the people themselves. We fully concur in this conclusion. It is not contended, nor, indeed, is there any ground for such contention, that the promises and stipulations of the original companies with the county are covenants, or in the nature of covenants, running with the land. This is manifestly so, for the reason that the contracts and stipulations in question have not the slightest reference to the purchase or sale of land. They are in no sense a contract about land, or any interest therein.

The petitioner, however, contends, in substance, first, that the depot having been established in pursuance of the contracts and stipulations in question, which were a part of the public records of the county, the purchasers of the property at the foreclosure sale, and their assignees, including the defendant, must be presumed to have purchased with notice of the county’s-rights; second, that these contracts and stipulations with the county having been expressly authorized by the charter of the original companies, became, in some way or other not very clearly defined, obligatory and binding upon all subsequent owners of the property. As we are clearly of opinion that the last branch of the contention is unsound, it is unnecessary to consider the first.

We do not understand, that because a corporation is specially empowered to make a particular contract, by reason thereof the contract, when made, will differ, in its legal consequences, from a like contract entered into by a natural person without any such special authority. The making of all contracts, to be valid, must be authorized by law, and there is no difference in this respect between the contracts of corporations and of natural persons, and it is a matter of no legal significance whether the making of a particular contract is authorized by statute, or by the common law. Natural persons, sui juris, are authorized by the common law to make any and all contracts which.are not expressly forbidden, or impliedly so, by reason of ‘being in contravention of some known rule of law, of good morals, or of public policy. On the other hand, corporations, of whatever class or type, being artificial persons, merely, can only make such contracts as the legislature giving them being has authorized them to make. Their contracts, however, when made, are, as already stated, in legal effect, the same as like contracts made by natural persons under similar circumstances.

Looking at the contracts with the county in the light of these well recognized principles, we can not regard them as anything more than the personal undertakings of the companies that entered into them.. All persons dealing with corporations must be presumed to know that their continued existence and solvency are, in the nature of things, more or less uncertain. In this respect, corporations do not differ from natural persons. When, from any cause, they become extinct, or, in other words, die a civil death, those who have trusted them without security of any kind, have nothing to look to for indemnity, but their assets. But, as in the case of natural persons, it is often found, when their assets are looked to for such purpose, they are exhausted by the claims of those who had business foresight enough to have them secured by mortgages, or other liens upon such assets. Such was the case here. The county, in this case, might doubtless have exacted security for the faithful performance of the companies’ undertaking; but it did not do so, and hence it finds itself without any indemnity for the companies’ broken covenants. So long as the two roads were in the hands of the original companies, or in the hands of either of the several companies to which they passed by consolidation, they would clearly have been liable, in due course of legal proceedings, for any breach of said contracts, and doubtless a court of equity would have compelled a specific performance of them at the suit of the county, had there been any disposition to disregard them; but there was not. The contracts being a matter personal to the parties that entered into them, any suit for their breach in the respects stated, should, on principle, be brought in the name of the county, and we are quite clear, if there were nothing to support the present action but the contracts relied on, it could not be maintained.

This brings us to the more important and controlling question in the ease, namely, whether this suit can be maintained on general common law principles. In order to pass upon this question intelligently, it is important to have a clear understanding of the location of the two branches of the road with respect to the town of McLeansboro and the depot in question.

The two branches of the road leading towards St. Louis gradually approach each other, until they converge into a single line at a point one mile and a quarter, or thereabouts, north-west of the old depot. The connection thus made is generally called the main junction of the two roads. In making this junction, the Shawneetown branch, as already seen, passes through the corporate limits of McLeansboro in a north-westerly direction. The Evansville line of the road, however, passing north of the town, and extending directly to the main junction, leaves the principal part of McLeansboro about a mile to the south, and does not, at any point, come nearer than a quarter of a mile of the corporate limits of the town. Such being the case, in order to comply with the requirements of the charter of the Evansville and Southern Illinois Eailroad Company, making McLeansboro a terminal point, and also with that company’s contract with the county to stop all its trains at the depot to be established and maintained within the corporate limits of the town, it became necessary to build an extension from the so-called main line, down to the depot in the town. This was in part done by putting in a so-called “Y” track, connecting both branches of the road. This “Y” track, commencing on the Evansville branch at a point nearly due north of the.old depot, by gradually bearing to the south, circles around from a westerly to a south-easterly direction, until it reaches and connects with the Shawneetown branch of the road, about a half mile above the depot. From this point the company has but one line or track down to the depot, for both branches of its road.

It will be borne in mind, when these connections were made and a common depot established, the two old companies had, by reason of their consolidation, become extinct, and the new company thereby created had succeeded to the ownership of both roads and all the assets of the old companies. Such new company not only succeeded to the ownership of the two roads, together with all other property, effects, rights and franchises held or enjoyed by either of the old companies, but it also became subject to all the liabilities and burdens of said old companies, and each of them. Ridgeway Township v. Griswold,, 1 McC. 291; Davenport v. Dawes, 18 Wall. 626; New Orleans Gaslight Co. v. Louisiana Light and Heat Producing Manufacturing Co. 11 Fed. Rep. 277; Shields v. Ohio, 5 Otto, 319; Railroad Co. v. Maine, 6 id. 499; Tomlinson v. Branch, 15 Wall. 460. Among the obligations then resting upon the Evansville and Southern Illinois Eailroad Company, which were assumed by the new company, was its contract with the county to establish and forever maintain a depot for passengers and freight within the corporate limits of McLeansboro, and to stop all its passenger trains at such depot, whether express or otherwise, for the purpose of letting off and taking on passengers. Under the charter of the original company, it would have been sufficient to have built its line of road to the corporate limits of the town, but nothing less would have met its requirements. This contract, however, required more. Under it, the company was bound to establish and maintain a depot in the town, within the prescribed limits from the court house, and having stipulated to stop all its passenger trains at such depot, it, by implication, contracted to build its road to the depot. The consolidated company did, as already shown, establish a depot in the town, within the required distance of the court house. This was done about the first of January, 1872, when both lines of the road were completed.

As we view the facts, while this depot was placed on the Shawmeetown branch, it was also, at the same time, located at the western terminus of the Evansville branch of the road. It is no objection to this view, that trains coming down to the depot, after leaving the so-called “Y” extension, pass over what is generally known as the track of the Shawneetown branch. That portion of the track, as already indicated, we regard as a part of each line of road. "While, for mere convenience of speech and of exposition, we call the curve in the Evansville line, commencing a quarter of a mile north of the town limits, the “Y” extension, it is, in truth and in fact, a part of the main line itself; and the same is true, as we have just seen, of that part of the Shawneetown branch which lies between its connection with the “Y” extension and the depot. That part of the Evansville branch of the road running west from the commencement of the curve on the north side of the town, extends entirely beyond McLeansboro, while the charter only authorizes a road to be built from the town, in the very opposite direction. Keeping this in view, it would therefore seem much more reasonable to regard so much of the road as lies west of the curve, aS a mere spur or extension from the main line, to give an additional and more direct connection with the other branch of the road.-

In 1872, there was built on the Evansville line north of the town, and a short distance east of the commencement of the curve leading down to the depot, a small box-house, which was used, for the time being, as a stopping place or way-station, without any conveniences or accommodations for passengers getting on or off there, nor was any station agent kept there. This building was burnt down some time in 1875, after which the place was abandoned as a station or stopping place altogether, during which time all passenger trains on the Evansville line ran down to the depot. The defendant itself operated the road in this manner for about four years. In 1885, however, it built another depot, now known as the •“new depot,” on the site of the little box-building which was burnt down in 1875, as above stated. Since the completion of this depot, the defendant has ceased to run any of its passenger trains on the Evansville line to McLeansboro at all. It runs four passenger trains over the line daily,—two going east, and two west. Two of these trains pass the town in daylight, and the other two after night. The company, hy way of compensation for having ceased to run its passenger trains to McLeansboro, as formerly, has made an arrangement by which an accommodation train is run morning and evening from McLeansboro, to connect with its day trains at the new depot. Under this arrangement, when connections do not fail, as they often do, passengers at McLeansboro desiring to travel on the day trains, are enabled to make connections at the new depot, and passengers on those trains desiring to go to McLeansboro, can do so by the return accommodation. This special or connecting train, running from McLeansboro to the new depot, is a mixed or an accommodation train, that comes out from Shawneetown in the morning and returns there in the afternoon of the same day. It is admitted, however, upon the record, that this train frequently fails to reach McLeansboro in the morning in time to connect with the morning train on the Evansville line, which must necessarily result in great inconvenience and more or less positive injury to the public. It is also admitted by the pleadings, that the company has made no provision whatever for connecting Mc-Leansboro with the other two daily trains which pass over the line in the night, and that “as great or greater number of passengers get on and off the night trains * * * as on the day trains.” Furthermore, it is expressly charged in petitioner’s replication, “that the defendant does not run a sufficient number of trains upon the Shawneetown branch of said railroad, as now run, to accommodate the public, ” and the truth of this allegation is admitted by the defendant’s demurrer to the replication. Such, in substance, are the facts presented by the record before us.

' When the vast amount of money paid by the people of Hamilton county to secure the stopping of all trains on the road at the established depot within the corporate limits of the town is considered, it presents a cáse of peculiar hardship ; and while, as we have seen, this feature of the case can not be made an independent ground of relief, yet it is nevertheless a makeweight in it of such persuasive character as to call for a strict enforcement of whatever legal rights the people have in the premises. The company, as just seen, has already stopped running any of its passenger trains on the Evansville line to the town. As to one-half of these trains it has provided an indifferent, inefficient and unsatisfactory substitute. As to the other half, no provision is made at all to connect them with the town. The passengers on or for the latter trains are left to get to and from the town, at their own expense, as best they can. Thus, the citizens of McLeansboro, and those having occasion to go to or from there, are deprived of the conveniences and advantages resulting from the stopping of the company’s trains at the town depot. To them, these conveniences and advantages are valuable rights,— rights which cost the people of the county dearly at the outset,—rights which, as we have seen, were enjoyed by them under the management of other companies for some nine years, and which the defendant itself, by its own acts and conduct, has conceded and extended to the public for some four years more, making altogether a period of thirteen years during which they have been enjoyed by the public and fully recognized by the successive owners and operators of the road. 'We are of opinion the company, under the circumstances shown, is now estopped from raising any question as to its duty to stop its passenger trains at the town depot.

The Evansville and Southern Illinois Railroad Company was authorized to build a road from McLeansboro to the State line, on the Big Wabash river, and nowhere else. After having built the road, it was bound to run its trains over its entire line, in such a manner as to afford reasonable facilities for the prompt and efficient transaction of such legitimate business as should be offered it on any and every part of its road. The duty to thus operate the road is just as binding upon the defendant 'as it was on the original company. The fact that through business may be more remunerative than way business, affords no justification for neglecting the way business. Mor can the company abandon its road, or any part of it, without renderiilg its franchises liable to forfeiture. These obligations and duties which attached to the company that built the road, as just observed, apply with equal force and stringency to the defendant. The former had a large discretion in locating the road; yet, as MeLeansboro' is made a terminal point by its charter, it was imperative that the road should extend to that town. Whether some distance in the town or merely to it, whether the approach or entry was to be made from the north or south side, or from some other point, were questions purely within the discretion of the company. That discretion has been exercised, and those questions finally and irrevocably settled. " This the company did by the erection of a depot in the town, the building of its tracks to it, and the stopping of all its trains there, with a trifling exception, for a period of some thirteen years. ■ During this time, business interests have doubtless grown up and shaped themselves with reference to the location as originally fixed by the company. Property has, no doubt, been bought and sold upon the faith of the company’s action, and it may well be assumed its value is affected more or less by it.

That a railway company, after having fixed the terminal point of its road in a town or city, has no power to afterwards change the location, is fully settled by the authorities. In Pierce on Railroads, (pp. 254, 255,) the author states the law very clearly on this subject. It is there said: “The power of the company to determine its location, when once exercised, is exhausted. It may have a discretion as to its termini, or the selection of its .intermediate points, or its route between certain fixed points; but, having "exercised the discretion, it can not change the location without legislative authority. This is in accordance with the ancient rule of the common law, that ‘if a man once determine his election,- it shall be determined forever.’”

As the charter required the road to be built to McLeansboro, and that having been done and a depot established at the end of its line in the town, the defendant has no discretion as to which of its passenger trains it will stop there and which it will not, as it would have, within- certain reasonable limitations, if McLeansboro were not a county seat. As it is, it is the imperative duty of the company to stop all of its regular passenger trains there. This is expressly enjoined by the 88th section of chapter 114 of the Revised Statutes. (Starr & Curtis’ ed.)

That the four trains in question which daily pass- over the Evansville line are “regular passenger trains,” within the meaning of the statute, is conclusively settled by the case of Chicago and Alton Railroad Co. v. The People, use of Pierson, 105 Ill. 657. The fact that all these trains may stop at the new depot, a quarter of a mile beyond the corporate limits of the town, does not relieve the company either from its common 'law or statutory duties in this respect. For this purpose the stopping of its trains miles distant from the town would be equally available, unless it can be said, as matter of lawj that the stopping of a train a quarter of a mile from a place is stopping' it at the place, which, of course, it can not be. The very statement of' the proposition involves an absurdity so gross in its character as to forbid serious consideration. But outside of this statutory duty, we think the defendant is bound, on general common law principles, to stop a sufficient number of its trains at the. depot to meet the demands of public convenience and business necessities, and it is admitted upon the .record, as already seen, that under the present arrangement this is not done.

A peremptory writ of mandamus will therefore be awarded, in conformity with the prayer of the petition.

Writ awarded.

Scott, C. J., and Sheldon and Craig, JJ., dissenting.


author: Mr. Justice Sheldon

text:
    The Decatur Gaslight and Coke Company v. The City of Decatur.

      Filed at Springfield March 23, 1887.

    1. City ordinance—construed, as to determining the price of gas. An ordinance of a city giving a gas company the right to lay down and maintain gas pipes in the streets, etc., provided, that in consideration of such grant the gas company should furnish “gas of a quality at least equal to and at rates as favorable as that furnished by the Springfield Gaslight Company, in the city of Springfield. ” In 1867, when the ordinance was passed, the Springfield company charged and received $3.25 per one thousand cubic feet of gas, but since 1884 charged only $1.50 per thousand cubic feet. In a suit by the first named company, it claimed $2 per thousand cubic feet from May 1, 1885, to September 1, 1885: Held, that the rate charged by the Springfield company in 1885 was to be taken as fixing the rate, and not its rate at the time of the passage of the ordinance.
    2. The provision in the ordinance, to furnish the city with gas at rates as favorable as the Springfield rates, means no more than that gas shall be furnished at “prices as low” as the current rates, from time to time, charged by the Springfield company, irrespective of any circumstances or conditions.
    Appeal from the Appellate Court for the Third District;— heard in that court on appeal from the Circuit Court of Macon county; the Hon. C. B. Smith, Judge, presiding.
    Messrs Crea & Ewing, for the appellant.
    Mr. I. R. Mills, for the appellee.
   Mr. Justice Sheldon

delivered the opinion of the Court:

This suit was brought by the Decatur Gaslight and Coke Company, against the city of Decatur, to recover for gas furnished to the city. The cause was submitted to and tried by the court without the intervention of a jury, on a written stipulation of facts.

As appears by the stipulation, the Decatur Gaslight and Coke Company was created by a special act of the legislature, in 1865, as “a body politic and corporate, with perpetual succession.” On March 29, 1867, the city-council of Decatur passed an ordinance giving the gas company authority to lay down and maintain gas pipes in the streets, alleys and public grounds of the city, and regulating the manner in which it should be done. The third section of said ordinance is as follows:

“That in consideration of the privilege herein granted, the said Decatur Gaslight and Coke Company, their assignee or assignees, shall furnish gas of a quality at least equal to and at rates as favorable as that furnished by the Springfield Gaslight Company, in the city of Springfield, Illinois. And they are to have the exclusive right to lay down and maintain their own pipes in said streets, lanes, alleys or other public grounds, from the taking effect of this ordinance, during and until the expiration of the charter of said company as now established. ”

The price charged for gas by the Springfield company mentioned in said section, at the time of the passage of the ordinance, was $3.25 per one thousand cubic feet. The Decatur Gaslight and Coke Company completed its works and commenced selling gas in 1868, and from that time the city of Decatur has used gas furnished by said company. The Springfield Gaslight Company, since February 4, 1884, has charged and received for gas furnished the city of Springfield and its inhabitants, the price of $1.50 per thousand cubic feet. This suit is for gas furnished between May 1, 1885, and September 1, 1885, at the price charged, of $2 per one thousand cubic feet.

It was agreed that in ease the court should find that the plaintiff was limited in its charges for gas to the price charged by the Springfield Gaslight Company since February 4,'1884, viz., $1.50 per thousand cubic feet, then the judgment should be for the plaintiff, for the sum of $3427.20, and costs; that if the court should find the plaintiff was not thus limited in its charges, then the judgment should be for the plaintiff, for $4569.60, and costs. Judgment was rendered for the plaintiff for $3427.20, and costs, which was affirmed on appeal to the Appellate Court for the Third District, and an appeal to this court was taken by the plaintiff.

The sole question is upon the construction of this language of the ordinance: “Gas of a quality at least equal to and at rates as favorable as that furnished by the Springfield company. ” In fixing the maximum price, what rate of the Springfield company is to be the standard,—the rate of $3.25 per thousand, the charge by that company March 29, 1867, the date of the passage of the ordinance, or the rate of $1.50 per thousand, the charge during the summer of 1885, the time the gas in controversy was furnished ? There is, no doubt, some obscurity. The word “furnished,” is used simply, without qualification. Had the words “now, ” or “which shall be, ” been inserted before it, so as to read, “now furnished, ” or “which shall be furnished, ” the meaning would have been more explicit. We are satisfied with the construction adopted by the courts below, as being the correct one,—that the rate of the Springfield company at the time of the furnishing of the gas should be taken, and not its rate at the time of the passage of the ordinance. We think that to be the more natural and reasonable construction: that it was the intention of the ordinance that the citizens of Decatur, in respect to the quality and cheapness of their gas, should be as well dealt by as were the citizens of Springfield by their company,—that the former should have their gas as cheap and of as good quality as the Springfield people have theirs; and not only as good and cheap as the latter were then having theirs, but as good and as cheap as they should be having it at any time in the future. The price of gas in Springfield at the time was doubtless known to the parties, and if it had been intended to fix as the maximum rate the price at that time, we must think the price would have been inserted in the ordinance.

If the rates mentioned are not to be taken as the then existing rates, but as the current rates at the time of furnishing the gas, it is then insisted by appellant’s counsel that the proper construction to be put upon the words, “at rates as favorable, ” is, that the Decatur company shall furnish gas at rates as favorable as- the Springfield company shall furnish gas to Springfield under like circumstances or conditions. Under such a reading, how would the rates be determined ? The circumstances and conditions would differ, of course. What would be the things which would have to be considered, how would they be ascertained, and how would it be determined to what extent their difference should affect the price ? This would render, the rates uncertain, and, it may be said, incapable of any definite ascertainment. The ordinance undertook to fix a standard of rates that was certain, practicable, and easily to be ascertained, and it did so in declaring the gas should be furnished at rates as favorable as the Springfield rates. “Bates as favorable, ” mean, no more than “prices as low, ”—and that simply, irrespective of any circumstances or conditions. The interpolation of the words, “under like circumstances or conditions, ” which appellant’s counsel would make in the ordinance, we regard as entirely unjustifiable.

The judgment will be affirmed.

Judgment affirmed.