Oregon Railway & Navigation Company v. Oregonian Railway Company

This is a writ of error to the circuit court of the United States for the district of Oregon. The Oregonian Railway Company, Limited, recovered a judgment against the Oregon Railway & Navigation Company for the sum of $68,131, on a contract for the lease of a railroad owned by the plaintiff in the suit, which had been leased to, and used by, the defendant. This sum was for the semi-annual payment of rent, in advance, for the half-year beginning May 15, 1884. The Oregonian Railway Company, Limited, was organized in Scotland, under what are called 'The Companies' Acts' of parliament of 1862, 1867, and 1877, and in the memorandum of association it is declared that its principal office and place of business is at Dundee. The defendant in the action, the Oregon Railway & Navigation Company, was organized under articles of incorporation filed June 13, 1879, according to the statutes of Oregon on that subject, and its principal office is declared in those articles to be at Portland, Or. After many amendments to the original petition, and still more numerous amended answers, the case came to a hearing before the court on a demurrer to the answer and a motion to strike it out. This motion was denied, but the demurrer was sustained, and, as the pleadings were supposed to present all the issues that could arise in the case, a judgment was rendered for the plaintiff, to review which this writ of error is prosecuted. 22 Fed. Rep. 245, and 23 Fed. Rep. 232.

The amended petition of the plaintiff sets out the acts of parliament under which it was organized as a corporation, or so much thereof as is necessary to an understanding of the questions presented by this record, and gives in full its 'Memorandum of Association,' and also what are called its 'Articles of Association.' This memorandum, after stating the name of the company as above given, and that its registered office will be situated in Scotland, proceeds to give the objects for which it is established, as follows:

'First. The building, constructing, reconstructing, equipping, owning, operating, leasing, or selling, transferring, or disposing of, or purchasing, or otherwise acquiring, holding, and operating, or otherwise using, working, or dealing in all or any such railway or railways, railroad or railroads, in the state of Oregon and the territory of Washington, in the United States of America, or in either of them, or between such points in said state or territory or elsewhere in North America as may from time to time be resolved or determined upon by said company, and the carrying of passengers, goods, and minerals, and all other traffic and freight on, and the doing and performing of all other acts, deeds, and other operations connected with, railways and railroads in the said state and territory, or either of them, or elsewhere in North America.

'Second. The building, constructing, equipping, owning, and operating, or the leasing, selling, transferring, holding, or acquiring, by purchase or otherwise, and the working and using of one or more lines or portions of lines of railroad or railway, or parts thereof from (first) the city of Portland, or the city of Astoria, in the state of Oregon, United States of America, or from either or both of said cities, or from some other point or place on the Willamette or Columbia rivers, in said state of Oregon, through any part or portion of the said state of Oregon lying west or south of the Cascade range of mountains, in said state, to some point at or near, in or upon said Cascade range of mountains; (second) from thence, or from any part or portion of the western or south western part of said state of Oregon, to and across and to the east side of said Cascade range of mountains, through a pass in said mountains at or near that fork or branch of the Willamette river in said state of Oregon, known as the 'middle' fork or branch of said river, or through some other pass in said mountains, within one hundred miles north or south of said middle fork or branch of said river, where shall be found to be, on actual survey, the easiest and most practicable route across the Cascade range of mountains; (third,) thence through that portion of said state of Oregon lying east of said Cascade range of mountains, and on through the territories of Washington or Idaho, or the states of Nevada and California, in the United States of America, or through all or any one or more of said states and territories, to a connection with, or without making any connection with, any other railway or railways in either of said states of Oregon, California, or Nevada, or territories of Washington or Idaho, and with or without one or more branch lines (a) running north, south, east, or west from said main line on the east side of said Cascade range of mountains, or (b) running from said main line on the west side of said Cascade range, in said state of Oregon, forming a junction, or one or more junctions, with said main line, at one or more points, to a terminus in said portion of the state of Oregon west of said Cascade range of mountains, or to a junction with said main line, or to a terminus or termini at one or more seaports on the shores of the Pacific ocean, all as may from time to time be determined by actual surveys; as also to purchase, build, construct, own, equip, and operate, or to enter into agreements to run over or to lease (1) any line or lines, branch or branches, of railway or railways, railroad or railroads, that may connect with or become attached to, or meet or become a part of, the said main line or its main branch, or any of its branches hereinbefore designated; or (2) such other main or branch line or lines, or extensions of any railway or railways, railroad or railroads, made in connection with this company's main line, or of any of its branches, or separate and distinct therefrom, all in such manner of way or form, and on such terms, as said company shall from time to time deem advisable and for its interests, and the doing and performing of all other operations connected with said designated railway or railways, railroad or railroads, or branches thereof, or in connection with other railways of a similar or different nature, the doing and performing of which this said company shall at any time deem advisable and for its interests in the carrying out of its business.

'Third. The building, constructing, purchasing, or otherwise acquiring, holding, equipping, owning, and operating, or the leasing and operating, or the leasing, equipping, and operating, or the selling, transferring, or otherwise disposing of, and the working and using of any other railway or railroad, or of any wharves, jetties, steam-boat, or steam-ship, stage, or of any canals, locks, bridge, clay-road, plank-road, turnpike, hack, truck, or express lines, or any other line, lines, or means for the transportation of freight or passengers, or either or both, now constructed or operated in whole or in part, or which may be hereafter constructed or operated in whole or in part, in either of the said states of Oregon, California, or Nevada, or said territories of Washington or Idaho, and that whether in connection with or separate and distinct from, and as line or means independent of, said railway or railways, railroad or railroads, so to be built, constructed, purchased, owned, equipped, or operated as aforesaid by this company.'

The petition also avers that the company has complied with the statute of Oregon, which authorizes corporations of foreign countries to do business in that state upon complying with certain requirements. On this averment no issue is raised. It also alleges that on August 1, 1881, the plaintiff, by an indenture of lease, demised to the defendant a certain railway or railroad owned by the plaintiff, in the state of Oregon, with its stations, depots, and other property connected therewith, for a term of 96 years from the date of the lease; and that the defendant, by the terms of said indenture, covenanted and agreed to pay the plaintiff therefor the yearly rental of 28,000, in equal half-yearly payments, on the 15th of May and the 11th of November in each year, in advance. It then proceeds to allege 'that upon the execution of said indenture of lease the said defendant entered into possession of said demised property, and has continued in the enjoyment of the same to the present time, but that on the 15th of May, 1884, the defendant, pretending that neither it nor the plaintiff was authorized or empowered by law to enter into said indenture of lease, tendered and offered to restore possession of said demised property to plaintiff in its then condition,' and, disavowing the obligation of the lease, refused to pay any further rent, wherefore the plaintiff prays judgment for the sum of $68,131.

The substance of the numerous answers and amended answers is that the defendant denies that the plaintiff has any corporate existence; avers that it had no power or authority to make the contract or lease, as stated in the petition; and that the contract, although signed by the president of the defendant company, with the seal of that company attached, and the signature of the secretary, by order of its board of directors, is also without legal authority, and is not binding upon the defendant. In fact, the essence of the defense and of the whole controversy is whether these companies had power under their organization as corporations to make the contract of lease which is the foundation of this action.

The defendant avers that it has fully paid the rent due under the lease for the term ending May 15, 1881, from which

[Statutes in reference to case on pages 7-13 intentionally omitted] time it disavowed the obligatory force of the contract, and offered to return and deliver up to the plaintiff all the property it held under the lease. It appears also by the pleadings, both on the part of the plaintiff and defendant, that they entered into an agreement by which the defendant company was to continue to use the road for the time being, in order to prevent serious loss arising from the disruption of the relations of the two railroads, but that such use was not to be construed as being under the lease, nor as binding either party beyond what the law would imply if this arrangement had not been made. There is also an averment in the petition that the property was not in the same condition when the offer to return it was made as it was when it was received; but this is denied in the answer, and, as no proof was taken in regard to that fact, it can make no figure in the case as presented to this court.

J. N. Dolph, James C. Carter, and Sidney Bartlett, for plaintiff in error.

''Geo. F. Edmunds and A. H. Garland'', for defendant in error.

[Argument of Counsel from pages 14-19 intentionally omitted]

MILLER, J.