York & Maryland Line Railroad Company v. Winans, 58 U.S. 30 (1854)

U.S. Supreme Court

York & Maryland Line Railroad Company v. Winans, 58 U.S. 17 How. 30 30 (1854) York & Maryland Line Railroad Company v. Winans

58 U.S. (17 How.) 30

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Syllabus

A railroad company organized under a charter from Pennsylvania is responsible for the infraction of a patent right respecting cars, although the entire capital stock of the company was held by a connecting railroad company in Maryland, which latter company also worked the road by the instrumentality of its agents, and motive power, and cars.

The obligations to the community which the Pennsylvania company is placed under by its charter cannot be evaded by any transfer of its rights and powers to another company, and in this case, the Pennsylvania company contributes to the expense of working the road, and of paying the officers and agents who are employed.

Courts will not allow corporations to escape from their proper responsibility, by means of any disguise.

Page 58 U. S. 31

Where the patent was signed by an acting commissioner of patents, it was not necessary to aver or prove that he was legally entitled to act in that capacity. The court will judicially take notice of the persons who preside over the patent office, whether they do so permanently or transiently.

The case is stated in the opinion of the Court.

Page 58 U. S. 38

MR. JUSTICE CAMPBELL delivered the opinion of the Court.

The plaintiff is a corporation existing under a charter from the State of Pennsylvania, and authorized to construct a railroad from the Town of York to the Maryland line. Its stock was subscribed for by the Baltimore & Susquehanna Railroad Company, a Maryland corporation, and their joint capital is vested in a continuous railroad from the City of Baltimore to York. The management of the road is committed to the Maryland company, which appoints the officers and agents upon it, and furnishes the rolling stock necessary for its operation. The president and secretary of the two companies are the same. The directors of the Pennsylvania corporation plaintiff are selected by the Maryland company, and are qualified by a transfer of one or more shares of its stock to them, shortly before an election, and which they return on vacating their office. This nominal organization is made necessary by the charter, which requires that the majority of the officers shall be citizens of Pennsylvania, and that annual reports of the condition and business of the company shall be rendered to the legislature. To preserve appearances with the legislature, an annual statement is made.

Page 58 U. S. 39

In this, the gross receipts of the entire road for the year are ascertained, and the expenses deducted; the balance is then divided, one third being assigned to the plaintiff, but no money passes between the corporations. In these expense accounts, the salaries of officers, conductors, and engineers, the cost of locomotives and fuel, of the repairs and insurance of cars, and the losses of business, enter as constituent items. It was admitted upon the trial of the cause, that a number of cars made according to the specification of the patent of the defendant, had been used upon the road without his license, and for which he brought this suit. A verdict was rendered in his favor, and the judgment thereon is brought to this Court, upon exceptions to the instructions of the circuit court, to the jury.

The court charged the jury, that the road on which the infraction was committed was held under a Pennsylvania charter to the defendant in that court; that the transportation on the road was carried on by the Maryland corporation; and that the profits accruing from the use of the cars upon the road, that is, the profits of the infraction, are nominally divided between the two companies. That upon these facts the plaintiff is entitled to recover against the present defendants, whether they are to be regarded as partners, or as principal, or agent of the Maryland corporation.

The plaintiff complains here of this charge, for that the cars employed were not built by, and did not belong to the company; that they were the exclusive property of the Maryland corporation; and that the agreement to divide the profits did not constitute a partnership, nor evince a relation of principal or agent to impose a liability. This conclusion implies, that the duties imposed upon the plaintiff by the charter, are fulfilled by the construction of the road, and that by alienating its right to use, and its powers of control and supervision, it may avoid further responsibility. But those acts involve an overturn of the relations which the charter has arranged between the corporation and the community. Important franchises were conferred upon the corporation to enable it to provide the facilities to communication and intercourse, required for the public convenience. Corporate management and control over these were prescribed, and corporate responsibility for their insufficiency provided, as a remuneration to the community for their grant. The corporation cannot absolve itself from the performance of its obligations, without the consent of the legislature. Beman v. Rufford, 1 Simon N.S. 550. Winch v. B. & L. Railway Company, 13 L. & E. 506.

If, then, the case had terminated with the facts that the infringement of the defendant's patent had taken place, by the

Page 58 U. S. 40

acts of persons using the corporate name of the plaintiff, with the assent of the corporate authorities, their liability would have been fixed.

But the case before us is that the motive power on the road partly belongs to the plaintiff; that the agents and officers employed are in its service and are paid by it; and that the cars are fitted and repaired at the common expense of the two corporations. It follows, therefore, that the plaintiff is a principal, cooperating with another corporation, in the infliction of a wrong, and is directly responsible for the resulting damage.

Nor will the plea that the corporation has no independent nor responsible existence, as regards the Maryland company, and that its display of a president and directors, of conductors, engineers, and agents, of annual elections and annual statements, import only a formal and illusive representation before the Legislature of Pennsylvania, or their constituents, of a compliance with the conditions of the charter, avail the plaintiff. It is certainly true that the law will strip a corporation or individual of every disguise, and enforce a responsibility according to the very right, in despite of their artifices. And it is equally certain that, in favor of the right, it will hold them to maintain the truth of the representations to which the public has trusted, and estop them from using their simulation as a covering or defense. Walland Canal Co. v. Hathaway, 8 Wend. 480.

The Supreme Court of Pennsylvania, in Peters v. Ryland, 8 Harris 497, has announced principles decisive of this case.

The court held that the owner of a passenger car employed on a railroad belonging to the state, and the motive power and superintendence of which is furnished by the state, is responsible for the misconduct of the public agents. It says:

"The case before them is sui generis, but it comes much nearer to that class of decisions in which it has been held, that several parties engaged in carrying over different portions of the same line of conveyance, each sharing in the profits of the whole route, and of course of each section of it, are all responsible for the faithful discharge of their duty, and liable to respond in damages for any injury which results from the negligence or unskillfulness of any of the proprietors and servants."

11 Wend. 571; 18 id. 175; 19 id. 534.

"The state as well as the carrier is paid for every passenger transported on this railroad, which shows their community of interest, and if there be a common liability, that of the state cannot be enforced by action; and this circumstance does not diminish that of the carrier; because they have a common interest, however, and share the business of transportation, it is apparent that in holding the party before us to answer for the

Page 58 U. S. 41

negligence of the state's agents, we do not punish one man for the misfeasance of another's servants."

The objection taken to the patent, that it is signed by "an acting commissioner of patents," and that the record contains no averment nor proof of his title to the office, is not tenable. The court will take notice judicially of the persons who from time to time preside over the patent office, whether permanently or transiently, and the production of their commission is not necessary to support their official acts. Wilson v. Rousseau, 4 How. 686.

The judgment of the circuit court is affirmed.

Order

This cause came on to be heard, on the transcript of the record, from the Circuit Court of the United States for the Eastern District of Pennsylvania, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this Court, that the judgment of the said circuit court in this cause be, and the same is hereby, affirmed with costs, and interest until paid, at the same rate per annum that similar judgments bear in the State of Pennsylvania.