Nashua and Lowell R. Corp. v. Boston and Lowell R. Corp. - 136 U.S. 356 (1890)
U.S. Supreme Court
Nashua and Lowell R. Corp. v. Boston and Lowell R. Corp., 136 U.S. 356 (1890)
Nashua and Lowell Railroad Corporation v.
Boston and Lowell Railroad Corporation
Argued December, 16-17, 1889; March 31, 1890
Decided May 19, 1890
136 U.S. 356
Railroad corporations created by two or more states, though joined in their interests, in the operation of their roads, in the issue of their stock and in the division of their profits, so as practically to be a single corporation, do not lose their identity, but each has its existence and its standing in the courts of the country only by virtue of the legislation of the state by which it was created, and the union of name, of officers, of business, and of property does not change their distinctive character as separate corporations.
The Nashua and Lowell Railroad Corporation was incorporated by the State of New Hampshire June 23, 1835, "to locate, construct, and keep in repair a railroad from any point in the southern line of the state to some convenient place in or near Nashua," seven persons being named as incorporators. The Nashua and Lowell Railroad Corporation (three out of the seven being named as incorporators), was incorporated by the State of Massachusetts on the 16th of April, 1836,
"to locate, construct, and finally complete a railroad from Lowell . . . to form a junction with the portion of said Nashua and Lowell Railroad lying within the State of New Hampshire."
The Legislature of Massachusetts, on the 10th of April, 1838, enacted that "the stockholders" of the New Hampshire Company "are hereby constituted stockholders" of the Massachusetts Company, "and the said two corporations are hereby united into one corporation," and further provided that the act should
"not take effect until the Legislature of . . . New Hampshire shall have passed an act similar to this uniting the said stockholders into one corporation, nor until the said acts have been accepted by the said stockholders."
The Legislature of New Hampshire, on the 26th of June, 1838, enacted
"that the two corporations . . . are hereby authorized, from and after the
time when this act shall take effect, to unite said corporations, and from and after the time said corporations shall be united, all property owned, acquired or enjoyed by either shall be taken and accounted to be the joint property of the stockholders, for the time being, of the two corporations."
A common stock was issued for the whole line, and for the forty-five years which intervened, the two properties were under the management of one board of directors; but there was no other evidence that the stockholders had acted on these statutes. Held that the New Hampshire corporation, being a citizen of that state, was entitled to go into the circuit court of Massachusetts and bring its bill there against a citizen of Massachusetts, and that its union or consolidation with another corporation of the same name, organized under the laws of Massachusetts, did not extinguish or modify its character as a citizen of New Hampshire, or give it any such additional citizenship in Massachusetts, as to defeat its right to go into that court.
While, as a general rule, the directors of a railroad company cannot, without the previous approval of their stockholders, authorize the construction of a passenger station in a city situated in a state foreign to that in which the company was created, and to which its own road does not extend, and cannot make the company responsible for any portion of the cost of such construction, yet the fact that such increased facilities at Boston were necessary to enable the joint management under the contract between the Boston and Lowell and the Nashua and Lowell Companies to retain the extended business, common to both, justified the directors of the Nashua Company in incurring obligations on account of such expenditures, and brought them within the general scope of directors' powers.
A contract between two railroad companies, situated in different states, for the management of the business common to both by one of them, with an agreed division of receipts and expenses, does not warrant the managing company in purchasing, at the common expense, the control of a rival line without the assent of the stockholders of the other company.
In equity. Decree dismissing the bill. Plaintiff appealed. The cause being reached on the calendar, it was argued on the merits on the 16th and 17th of December, 1889. Subsequently, the court having expressed a desire to have the views of counsel, either orally or by brief, upon the jurisdiction of the circuit court, the counsel for the plaintiff moved, on the 17th March, 1890, for leave to argue that question, and, leave being granted, it was argued on the 31st March, 1890.
The questions at issue on the merits, as well as the question of jurisdiction, will be found fully stated in the opinion of the Court. For convenience in understanding the points made
by the counsel for the defendant in error on the point of jurisdiction, a brief statement of that question is here made, referring to the opinion for more full details.
The State of New Hampshire, on the 23d day of June, 1835, incorporated seven persons as the Nashua and Lowell Railroad Corporation, with power to construct a railroad from Nashua to the boundary line of the State of Massachusetts. The State of Massachusetts, on the 16th of April, 1836, incorporated three of those seven persons as the Nashua and Lowell Railroad Corporation, with power to construct a railroad from Lowell to form a junction with the portion of the railroad of that company lying within the State of New Hampshire. The State of Massachusetts, on the 10th of April, 1838, enacted that the stockholders of the New Hampshire company were thereby constituted stockholders of the Massachusetts company, and that the two corporations were thereby united into one corporation of the same name, the act to take effect when the Legislature of New Hampshire should have passed a similar act and the stockholders should have accepted those acts. The Legislature of New Hampshire, on the 26th day of June, 1835, enacted that the two corporations were empowered to unite and that, after the union, the property should be the joint property of the stockholders of the two corporations. The material parts of these several statutes are printed in the margin. *
This suit was brought in the Circuit Court of the United states for the District of Massachusetts by the Nashua and
Lowell Company as a corporation created by and a citizen of New Hampshire, and the jurisdictional question was whether it was entitled to sue in that character.