The thirteenth section of the Act of Virginia of January, 1824,
incorporating the Chesapeake & Ohio Canal Company, declares
that upon such surrender and acceptance,
"the charter of the Potomac Company shall be, and the same is
hereby vacated and annulled, and all the powers and rights thereby
granted to the Potomac Company shall be vested in the company
hereby incorporated."
By this provision, the Potomac Company ceased to exist, and a
scire facias on a judgment obtained against the company
before it was so determined cannot be maintained.
There is no pretense to say that a
scire facias can be
maintained and a judgment had thereon against a dead corporation,
any more than against a dead man.
The dissolution of the corporation under the acts of Virginia
and Maryland (even supposing the act of confirmation of Congress
out of the way) cannot in any just sense be considered, within the
clause of the Constitution of the United States on this subject, an
impairing of the obligation of the contracts of the company by
those states, any more than the death of a private person may be
said to impair the obligation of his contracts. The obligation of
those contracts survives, and the creditors may enforce their
claims against any property belonging to the corporation which has
not passed into the hands of
bona fide purchasers, but is
still held in trust for the company, or for the stockholders
thereof, at the time of its dissolution in any mode permitted by
the local laws.
A corporation, by the very terms and nature of its political
existence, is subject to dissolution by a surrender of its
corporate franchise and by a forfeiture of them for willful misuser
and nonuser. Every creditor must be presumed to understand the
nature and incidents of such a body politic and to contract with
reference to them. And it would be a doctrine new in the law that
the existence of a private contract of the corporation should force
upon it a perpetuity of existence contrary to public policy and the
nature and objects of its charter.
At a Circuit Court of the District of Columbia held at
Washington City, on the first Monday of June, 1818, Jacob Mumma,
the plaintiff in error, recovered a judgment against the Potomac
Company, the defendants in error, for the sum of $5,000. No steps
were taken to enforce the payment of the judgment, nor any further
proceedings had in relation thereto, until 18 April, 1828, on
which
Page 33 U. S. 282
day a writ of
scire facias was issued from the clerk's
office of said court against the said Potomac Company to revive
said judgment, which case was continued by consent of parties from
term to term until December term of said court in the year 1830, at
which term the following plea and statement were filed by the
consent of parties.
"The attorneys, upon the record of the said defendants, now here
suggest and show to the court that since the rendition and record
of said judgment, the said Potomac Company, in due pursuance and
execution of the provisions of the charter of the Chesapeake &
Ohio Canal Company, enacted by the States of Maryland and Virginia
and by the Congress of the United States, has duly signified its
assent to said charter, &c., and has duly surrendered its
charter and conveyed in due form of law to the said Chesapeake
& Ohio Canal Company all the property, rights, and privileges
by it owned, possessed, and enjoyed under the same, which surrender
and transfer from said Potomac Company have been duly accepted by
the Chesapeake & Ohio Canal Company, as appears by the
corporate acts and proceedings of said company, and final deed of
surrender from the said Potomac Company, dated 15 August, 1828,
duly executed and recorded in the several counties of the States of
Virginia and Maryland and the District of Columbia wherein said
Potomac Company held any lands and wherein the canals and works of
said company were situated, which said corporate acts and
proceedings the said attorneys here bring into court, &c.,
whereby the said attorneys say the charter of said Potomac Company
became and is vacated and annulled, and the company and the
corporate franchises of the same are extinct,"
&c.
Whereupon the following statement and agreement were entered
into and signed by the counsel for both parties and made a part of
the record.
"The truth of the above suggestion is admitted, and it is agreed
to be submitted to the Court whether, under such circumstances, any
judgment can be rendered against the Potomac Company upon this
scire facias reviving the judgment in said writ mentioned,
and that reference for the said corporate acts and proceedings, and
the deed in the above suggestion
Page 33 U. S. 283
mentioned, be had to the printed collection of acts, &c.,
printed and published by authority of the president and directors
of the Chesapeake & Ohio Canal Company in 1828."
The circuit court gave judgment for the defendants, and the
plaintiff prosecuted this writ of error.
Page 33 U. S. 284
MR. JUSTICE STORY delivered the opinion of the Court.
The case presented on the record is shortly this.
The plaintiff in error, Mumma, in June, 1818, recovered a
judgment against the Potomac Company for the sum of $5,000. No
steps were taken to enforce the payment of the judgment, nor any
further proceedings had in relation thereto, until 18 April, 1828,
on which day a writ of
scire facias was issued from the
clerk's office of said court against the said Potomac Company to
revive said judgment, which case was continued by consent of
parties from term to term until December term of said court in the
year 1830, at which term the following plea and statement were
filed by consent of parties.
"The attorneys upon the record of the said defendants now here
suggest and show to the court that since the rendition and record
of said judgment, the said Potomac Company, in due pursuance and
execution of the provisions of the charter of the Chesapeake &
Ohio Canal Company, enacted by the states of Maryland and Virginia
and by the Congress of the United States, have duly signified their
assent to said charter, &c., and has duly surrendered its
charter and conveyed in due form of law to the said Chesapeake
& Ohio Canal Company all the property, rights, and privileges
by it owned, possessed and enjoyed under the same, which
Page 33 U. S. 285
surrender and transfer from said Potomac Company have been duly
accepted by the Chesapeake & Ohio Canal Company, as appears by
the corporate acts and proceedings of said company and final deed
of surrender from the said Potomac Company, dated on 15 August,
1828, duly executed and recorded in the several counties of the
States of Virginia and Maryland and the District of Columbia
wherein said Potomac Company held any lands and wherein the canals
and works of said company were situated, which said corporate acts
and proceedings the said attorneys here bring into court, &c.,
whereby the said attorneys say the charter of the said Potomac
Company became and is vacated and annulled, and the company and the
corporate franchises of the same are extinct,"
&c.
Whereupon the following statement and agreement were entered
into and signed by the counsel for both parties and made a part of
the record.
"
The truth of the above suggestion is admitted, and it
is agreed to be submitted to the court whether, under such
circumstances, any judgment can be rendered against the Potomac
Company upon this
scire facias reviving the judgment in
said writ mentioned, and that reference for the said corporate acts
and proceedings, and the deed in the above suggestion mentioned, be
had to the printed collection of acts, &c., printed and
published by authority of the president and directors of the
Chesapeake & Ohio Canal Company in 1828."
Upon this statement and agreement, the circuit court gave
judgment that the plaintiff take nothing by his writ, and the
question now is whether this judgment is warranted by law.
Two points have been made at the bar. 1. That the corporate
existence of the Potomac Company was not so totally destroyed by
the operation of the deed of surrender as to defeat the rights and
remedies of the creditors of the company. 2. That the deed of
surrender violates the obligation of the contracts of the company,
and that the legislative acts of Virginia and Maryland, though
confirmed by the Congress of the United States, are on this account
void and can have no legal effect.
We think that the agreement of the parties completely covers the
first point and precludes any examination of it. That
Page 33 U. S. 286
agreement admits the truth of the suggestions in the plea of the
attorneys for the Potomac Company, and by that it is averred that
the charter of the Potomac Company was duly surrendered to the
Chesapeake & Ohio Canal Company and was duly accepted by the
latter, and that thereby the charter of the Potomac Company became
and is vacated and annulled. And if we were at liberty to consider
the last averment not as an averment of a fact, but of a conclusion
of law, the same result would follow, for the thirteenth section of
the Act of Virginia of January, 1824, incorporating the Chesapeake
& Ohio Canal Company, declares that upon such surrender and
acceptance,
"the charter of the Potomac Company shall be and the same is
hereby vacated and annulled, and all the powers and rights thereby
granted to the Potomac Company shall be vested in the company
hereby incorporated."
Unless, then, the second point can be maintained, there is an
end of the cause, for there is no pretense to say that a
scire
facias can be maintained and a judgment had thereon against a
dead corporation any more than against a dead man. We are of
opinion that the dissolution of the corporation, under the acts of
Virginia and Maryland (even supposing the act of confirmation of
Congress out of the way) cannot in any just sense be considered,
within the clause of the Constitution of the United States on this
subject, an impairing of the obligation of the contracts of the
company by those states any more than the death of a private person
can be said to impair the obligation of his contracts. The
obligation of those contracts survives, and the creditors may
enforce their claims against any property belonging to the
corporation which has not passed into the hands of
bona
fide purchasers, but is still held in trust for the company or
for the stockholders thereof at the time of its dissolution in any
mode permitted by the local laws. Besides, the twelfth section of
the act incorporating the Chesapeake & Ohio Canal Company makes
it the duty of the president and directors of that company, so long
as there shall be and remain any creditor of the Potomac Company
who shall not have vested his demand against the same in the stock
of the Chesapeake & Ohio Canal Company (which the act enables
him to do), to pay to such creditor or creditors annually such
dividend or proportion of the net amount of
Page 33 U. S. 287
the revenues of the Potomac Company, on an average of the last
five years preceding the organization of the said Chesapeake &
Ohio Canal Company, as the demand of the said creditor or creditors
at that time may bear to the whole debt of $175,800 (the supposed
aggregate amount of the debts of the Potomac Company). So that here
is provided an equitable mode of distributing the assets of the
company among its creditors, by an apportionment of its revenues,
in the only mode in which it could be practically done upon its
dissolution -- a mode analogous to the distribution of the assets
of a deceased insolvent debtor.
Independent of this view of the matter, it would be extremely
difficult to maintain the doctrine contended for by the plaintiff
in error upon general principles. A corporation, by the very terms
and nature of its political existence, is subject to dissolution by
a surrender of its corporate franchises and by a forfeiture of them
for willful misuser and nonuser. Every creditor must be presumed to
understand the nature and incidents of such a body politic and to
contract with reference to them. And it would be a doctrine new in
the law that the existence of a private contract of the corporation
should force upon it a perpetuity of existence contrary to public
policy and the nature and objects of its charter.
Without going more at large into the subject, we are of opinion
that the judgment of the circuit court ought to be affirmed. But as
there is no such corporation
in esse as the Potomac
Company, there can be no costs awarded to it.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Columbia holden in and for the County of Washington and was argued
by counsel, on consideration whereof it is ordered and adjudged by
this Court that the judgment of the said circuit court in this
cause be and the same is hereby affirmed without costs.
