Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/142

 § 155.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VH. § 154. It is evident that no reason heretofore stated for the rule against allowing collateral attacks on corporate franchises applies where the corporation is seeking to enforce against a person affected by no estoppel some right which the corpora- tion possesses only by virtue of its regular and legal organiza- tion ; for in such cases the legal, not the de facto, organization of the corporation forms the basis of its rights, and there is no hardship in putting the corporation to the proof of the validity of its franchises, when it is itself in the same proceeding basing its right directly on them. Thus, in a Michigan case, a subscription had been made to the stock of a certain railroad company, and subsequently from this company and others a consolidated compan}^ was formed. The consolidated company then brought suit to recover the subscription, basing its action on its succession, under the stat- ute authorizing the consolidation, to the rights of the former companies ; and the court allowed the plea, that the consoli- dated company had not complied with the terms of the statute under which it had been formed. 1 § 155. Again, on the regular incorporation and continuing validity of the franchise of a railroad company depends its right by the delegated power of eminent domain to take prop- erty for its use. Accordingly, if by non-fulfillment of condi- tions in its charter, the corporation has forfeited its franchises, Jersey Southern R. R. Co. v. Long Branch Commissioners, 39 N. J. L. 28 ; Truckee, etc., Turnpike Co. v. Campbell, 44 Cal. 89 ; Freeland v. Pennsylvania Central Ins. Co., 94 Pa. St. 504, 513; Keene v. Van Reuth, 48 Md. 184; Denver and Swansea R'y Co. v. Denver City R'y Co., 2 Col. 673; Montgomery v. Merrill, 18 Mich. 339, 343 ; Hackensack Water Co. o. De Kay, 36 N. J. Eq. 548; Asso- ciation v. Fenner, 13 Phila. 107; Pix- ley v. Roanoke Nav. Co., 75 Va. 320; Lagrange, etc., R. R. Co. v. Rainey, 7 Coldw. (Tenn.) 420; and compare Schulenberg v. Harriman, 21 Wall. 44; Van Wyck v. Knevals, 106 U. S. 360. A plea to an action brought by a 122 corporation, that it has forfeited its charter, is demurrable, unless a judi- cial declaration of the forfeiture is alleged. West v. Carolina Life Ins. Co., 31 Ark. 476; Logan v. Vernon, etc., R. R. Co., 90 Ind. 552 ; see § 432. 1 Mansfield, etc., R. R. Co. v. Drinker, 30 Mich. 124. The subscrib- er had done no acts recognizing the consolidated company, and so was affected by no estoppel. See, also, New Orleans Gas Light Co. v. Lou- isiana Light, etc., Co., 11 Fed. Rep. 277. Compare Deaderick v. Wilson, 8 Bax. (Tenn.) 108, 128; Maryland Tube Works v. West End Imp. Co., 87 Md. 207.