The decision by the highest court of a state that the conveyance
by a corporation existing under the laws of the state (and acting
in this respect under a statute of the State) to an individual, his
heirs, executors, administrators, and assigns, of "all the property
of said company,
Page 152 U. S. 192
consisting of the charter and its amendments and franchises,"
and other enumerated property, and "all the property, goods, and
chattels of said company of whatsoever nature or description,"
passed to him only a life estate in the franchises of the
corporation, and that these did not pass to his heirs, presents no
question of a federal nature, but only one as to the extent of an
authority given by statute to a corporation to dispose of its
franchises.
This case is before us on error to the Supreme Court of the
State of Illinois. The record discloses these facts: on December
21, 1888, the plaintiffs in error, as plaintiffs, filed in the
office of the clerk of the Superior Court, of Cook County their
bill of complaint seeking to enjoin the defendants, their officers,
agents, and servants, from removing or attempting to remove a
certain toll gate on Milwaukee Avenue in the City of Chicago, and
from interfering with the plaintiffs' collection of tolls thereat.
The bill sets forth that on February 10, 1849, the General Assembly
of the State of Illinois passed an act to incorporate the Chicago
Northwestern Plank Road Company, certain sections of which were
quoted. It is unnecessary to refer to these sections in detail; it
is enough to say that they provided for the incorporation of a
company to construct a plank road, and described the various powers
and privileges given to such corporation. The bill then refers to
an act of the General Assembly dated February 12, 1849, entitled
"An act to construct a plank road," etc., the twenty-first and
twenty-second sections of which, quoted in the bill, purport to
incorporate the Northwestern Plank Road Company, the incorporators
of which, as appears from section 21, had a license from the County
Commissioners' Court of Cook County to construct a plank road from
the City of Chicago to Oak Ridge, and from thence to Wheeling and
the north line of said county. It then quotes the act of the
General Assembly of the State of Illinois of date March 1, 1854,
entitled "An act to incorporate the Northwestern Plank Road
Company." This act commences with a preamble which, referring to
the Act of February 12, 1849, says that doubts exist as to whether,
by the twenty-first, twenty-second,
Page 152 U. S. 193
and twenty-third sections of said act, the Northwestern Plank
Road Company was duly incorporated, and therefore, in the first
section, in terms incorporates the Northwestern Plank Road Company,
and by the second section grants to it the powers and privileges,
rights, and duties contained in the sections quoted from the
earlier act of 1849. The allegation is that by virtue of these
several acts, the Northwestern Plank Road Company became duly
incorporated and organized as a corporation, and proceeded to, and
did, prosecute and complete the construction of the road under the
powers and franchises granted. The bill further sets forth that on
February 15, 1865, another act was passed by the General Assembly
of the State of Illinois, which act is set forth in full, and the
material sections of which are as follows:
"SEC. 3. The president, by the advice and direction of a
majority of the stockholders, may sell to the County of Cook the
franchise, the property, and immunities of said company, or to any
other party or parties, and thus dissolve said company, and divide
the avails amongst the stockholders."
"SEC. 4. That the Board of Supervisors of Cook County may
purchase such franchise, property, and immunities, and, upon the
order of said board, the clerk of said county shall proceed to
purchase and receive the deed of title to the same, and should said
county fail to purchase the same, any person or persons may
purchase the same, and thereby make the same private property."
"SEC. 5. The deed of the president of said company to the said
County of Cook, or to any other party purchasing, shall be a good
and lawful title to the same
provided always that all the
debts and liabilities of said company shall be paid;
provided
further that the purchaser or purchasers of said franchise and
road shall be bound by all the obligations said Northwestern Plank
Road Company is by its charter, and shall enjoy all the rights and
privileges enjoyed by said company, and no more."
On August 5, 1870, the Northwestern Plank Road Company made a
deed to Amos J. Snell. This deed, after reciting the
Page 152 U. S. 194
incorporation under the Act of March 1, 1854, quoting sections 3
and 5 of the Act of February 15, 1865, and reciting a meeting of
the stockholders on January 5, 1866, closes with this resolution,
passed at such meeting, and this granting clause:
"
Resolved, by the stockholders of this company, that
Thomas Richmond, president, be authorized to sell the plank road,
tollhouses, and other property belonging to the company, with the
franchise and all its rights and privileges, and give a deed of the
same to the purchaser for such sum, and upon such conditions, as he
shall deem advisable."
"And whereas the said plank road company is entirely free from
debt, now therefore I, Thomas Richmond, president of the
Northwestern Plank Road Company, for and in consideration of the
sum of twenty thousand dollars ($20,000) to me in hand paid by Amos
J. Snell, of Jefferson, in the County of Cook and State of
Illinois, do hereby sell, transfer, convey, and set over to the
said Amos J. Snell, his heirs, executors, administrators, and
assigns,"
"all the property of said company, consisting of the charter and
its amendments and franchises, the right of way, the grading, the
planking, ditches, bridges, and drainages, the tollhouses, gates,
teams, implements of work, and being the plank from the old city
limits of Chicago aforesaid to the nine-mile post together with all
the property, goods, and chattels of said company, of whatsoever
nature or description."
"To have and to hold unto the said Amos J. Snell, his heirs,
executors, administrators, and assigns, forever."
"In witness whereof the said Thomas Richmond, as president, has
hereunto signed his name and affixed the seal of the said
Northwestern Plank Road Company this fifth day of August, A.D.
1870."
"[Corporate seal of the Northw. P.R.R. Co.]"
"Thomas Richmond"
"
Pres't N.W.P.R.R. Co."
This deed was duly recorded. The bill also alleges that from
that time until his death, Snell continued in the ownership
Page 152 U. S. 195
of said property, and in the actual and exclusive possession,
control, and enjoyment thereof and the undisturbed exercise of all
the franchises, rights, and powers which were conferred upon the
corporation by said enactments. At this time, the plank road, or so
much thereof as was constructed, was outside of the corporate
limits of the City of Chicago, and during such time Snell erected a
toll gate and tollhouse on the southeast corner of Milwaukee Avenue
and Fullerton Avenue at which place the tolls were collected. It is
further averred that on February 8, 1888, Snell died; that the
present plaintiffs are his personal representatives and heirs; that
on December 10, 1888, the defendants commenced proceedings for the
purpose of removing such toll gate, the territorial limits of the
city having been duly extended so as to include a part at least of
the toll road, and the part on which the toll gate was
situated.
To this bill a demurrer was filed, which on February 6, 1890,
was sustained, and, the plaintiffs electing to stand by the bill, a
decree of dismissal was entered. On appeal to the supreme court of
the state, the decision of the superior court was, on the 14th day
of May, 1890, sustained, and the decree of dismissal affirmed. 133
Ill. 413.
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
By this writ of error we are called upon to review the decision
of the Supreme Court of the State of Illinois, and it is insisted
that that decision is in conflict with the clause of the first
section of the Fourteenth Amendment to the national Constitution,
which declares that "no state shall deprive any person of life,
liberty, or property without due process of law," and of the tenth
section of the first article of that Constitution,
Page 152 U. S. 196
which prohibits a state from passing any law impairing the
obligations of contracts.
It is the settled law of this Court that to give it jurisdiction
of a writ of error to a state court, it must appear affirmatively,
not only that a federal question was presented to that court for
decision, but also that the decision of the question was necessary
to the determination of the cause and that it was actually decided
adversely to the party claiming a right under the federal laws or
Constitution, or that the judgment, as rendered, could not have
been given without such decision.
Miller's Executors v.
Swann, 150 U. S. 132;
Eustis v. Bolles, 150 U. S. 361, and
cases cited therein.
Guided by the rule thus laid down and long established, we turn
to the record, including therein the opinion of the supreme court
of the state, to see what in fact was decided. From such inspection
it is obvious that there was no decision adverse to the rights
vested in the Northwestern Plank Road Company by its charter. On
the contrary, the clear concession in the opinion of the supreme
court was that that company had, by its charter, a valid and
exclusive franchise in respect to the toll road, including therein
the right to take tolls, and to erect and maintain a toll gate
therefor. All the contract rights which it can be claimed passed by
the charter to the plank road company were conceded to have passed
to it, and the matter which was determined by that court, and upon
which its decision rested, was that the franchises thus vested in
the corporation did not pass, by the deed made under the authority
of the act of 1865, to Snell and his heirs in perpetuity. It was
not denied that those franchises passed to Snell by the deed of
August 5, 1870; but the ruling was that such conveyance did not
vest in the grantee the franchises as a matter of private property,
to pass by inheritance to his heirs.
In order that there may be no misunderstanding of the rulings of
the supreme court, we quote at length from its opinion:
"By the act of 1854, Gray, Filkins, Richmond, and their
associates became a corporate body, with the right of perpetual
succession, etc. This was the franchise of the corporators.
Page 152 U. S. 197
By the same act, the corporate body received the right to
construct and maintain a toll road and to build tollhouses, and
collect tolls. These were the franchises of the corporation. The
former franchise -- that is to say, the franchise to be a
corporation -- cannot be transferred without express provision of
law pointing out the mode in which the transfer is to be made.
Coe v. Columbus P. & I. R. Co., 10 Ohio St. 372;
Memphis R. Co.. v. Commissioners, 112 U. S.
609. The act of 1865 authorizes the sale of 'the
franchise, the property, and immunities' of the plank road company,
and specifies that such transfer is to be made by deed of the
president. If the word 'franchise,' as here used, is broad enough
to include the franchise to be a corporation, with the power of
perpetual succession, even then Snell was not thereby made a
corporation under the old charter. He was merely vested with the
'right to organize as a corporation,' (
Memphis R. Co. v.
Commissioners, supra), but such organization never took place.
Neither he nor his heirs or representatives are claiming as the
corporate successors of the plank road company. The appellants are
claiming as the heirs of Snell, the individual."
"'The franchise of becoming and being a corporation, in its
nature, is incommunicable by the act of the parties and incapable
of passing by assignment.' (
Memphis R. Co. v. Commissioners,
supra.) If Snell, in his lifetime, was the owner of such
franchise by express legislative grant, he could not assign it, and
it could not descend to his heirs. He failed to use it for the
purpose of effecting any corporate organization, and it died with
him. Even if this were not so, his failure to effect said
organization within ten days after the Constitution of 1870 went
into effect rendered it impossible, under section 2 of article 11
of that Constitution, to give any validity to an organization made
after the lapse of such period of ten days."
"If the franchises designated as those which belong to the
corporation, as distinguished from the corporators, passed to Snell
by the transfer, and if he had the right to maintain the toll
houses transferred to him and to collect the tolls therefrom, did
such franchises and right pass to the appellants at his death? The
second proviso of section 5 of the act of 1865
Page 152 U. S. 198
is as follows:"
"Provided further that the purchaser or purchasers of said
franchise and road shall be bound by all the obligations said
Northwestern Plank Road Company is by its charter, and shall enjoy
all the rights and privileges enjoyed by said company and no
more."
"This provision is to be strictly construed in favor of the
public, and against the grantee of the privileges in question.
Angell on Highways, section 357; 1 Morawetz on Priv.Corp. sec. 323;
Stormfeltz v. Manor Turnpike Co., 13 Penn.St. 555. The
person who is to 'enjoy all the rights and privileges enjoyed by
said company' is stated to be the purchaser of the franchise and
road. It is not stated that the purchaser
and his heirs and
assigns shall enjoy such rights and privileges. If it had been
the intention of the legislature that the
heirs of the
purchaser should succeed to the privilege of collecting tolls and
maintaining toll gates, it would have been so specified."
"The dissolution of the corporation did away with the right of
perpetual succession which attached to the corporate body.
By neglecting to organize a corporation with such privilege of
perpetual succession, if the power to do so passed to him, Snell
failed to preserve the element of perpetuity; but if the right to
collect tolls and maintain tollhouses descended to his heirs, and
by consequence became inheritable by the heirs of such heirs, then
there was a continuation of the perpetuity, which has been
abrogated by the dissolution of the corporation. It is true that
the deed made by the president of the corporation to Snell conveys
to him, 'his heirs, executors, administrators, and assigns;' but
the question is not what the language of the deed was, but what the
legislature authorized to be put into the deed."
There can be no mistake as to the scope of this decision. It is
that the franchises vested in the plank road corporation, though
passing to Snell by the deed, passed to him, and not to him and his
heirs, and that he took by such deed only a life estate. But in
this is presented no question of a federal nature, but only of the
extent of an authority to dispose of its franchises given by a
statute to a corporation. It is assumed that the charter was a
valid and binding contract, and
Page 152 U. S. 199
that by it certain franchises were vested in the Northwestern
Plank Road Company as its absolute property, beyond the power of
the state to arbitrarily retake. After the grant of this charter,
and after the full investiture of the corporation with these
franchises, an act was passed giving it authority to dispose of
them, and the matter which was determined by the supreme court was
as to the extent of the authority thus conferred. But in this there
is no matter of contract. The state never contracted with the plank
road company that it should have the power to transfer its
franchises, nor with these plaintiffs that their intestate and
ancestor should acquire an absolute title to these franchises, with
an indefeasible estate of inheritance. The mere grant of franchises
to a corporation carries with it no power of alienation; on the
contrary, the general rule is that in the absence of express
authority, they are incapable of alienation, and many cases have
arisen in which an attempted alienation by the corporation has been
declared by the courts to be void as divesting it of the power to
discharge the duties imposed by the charter.
Thomas v. Railroad
Co., 101 U. S. 71;
Pennsylvania Railroad Co. v. St. Louis, Alton &c. Railroad
Co., 118 U. S. 290;
Oregon Railway v. Oregonian Railway, 130 U. S.
1;
Central Transportation Co. v. Pullman's Car
Co., 139 U. S. 24. In
the original act of incorporation, no power of alienation was given
to the plank road company. The only authority is found in the act
of 1865, and that is a mere grant of a permission to sell.
Determining the extent of that permission determines no question of
contract, and presents no other matter of a federal nature. If it
be true, as decided by the supreme court, that only a life estate
passed to Snell, then the plaintiffs have no interest in the
franchises, and the demurrer to the bill was properly sustained.
This therefore is a pivotal question, and having been decided
adversely to the plaintiffs, and in it there being no matter of a
federal nature, it follows that this Court has no jurisdiction, and
the case must be
Dismissed.
