Page:Portland, Oregon, its History and Builders volume 1.djvu/404

 e, Holladay

continued to push construction work with all his available means until in De- cember, 1868, he had in a very cheap and imperfect manner completed and put in operation, with one engine and a car or two, twenty miles of railroad, and was thereby recognized as entitled to the land grant.

But notwithstanding this hard earned success, Holladay was now face to face with a state of facts that would have paralyzed a less reckless and unscrupulous operator. It had become everywhere understood and admitted that the Salem Oregon Central Railroad Company was not a corporation and had no legal ex- istence, and for that reason could not appropriate the right of way in any case where the landholder refused it; or enforce any other rights of a corporation. The supreme court of Oregon afterwards decided that the Salem company was not a corporation, but a mere nullity and fraud, that it had no legal rights and could not take the land grant, and that the act of the legislature of 1868 could not heal its defects. (In the case of Elliott v. Holladay, et al, p. 91, vol. 8' of Oregon Reports.)

The court says: "On the 226. day of April, 1867, I. R. Moores, George L. Woods, S. A. Clarke, and others filed articles of incorporation to incorporate the Oregon Central Railroad Company. The capital was fixed at seven million, two hundred and fifty thousand dollars, divided into seventy-two thousand, five hun- dred shares of one hundred dollars each. On the same day stock books were opened, when six shares of stock were subscribed by six different persons; then follows this subscription : 'Oregon Central Railroad Company, by George L. Woods, chairman, seventy thousand shares, seven million dollars.' On the same day directors and others officers were elected. . . . The attempt to subscribe seventy thousand shares of stock of the O. C. R. R. Co., by the corporation itself through a person styling himself chairman, was done simply to evade the liabil- ity the law imposes on all persons who subscribe to the capital stock of cor- porations. This was a mere nullity, and added nothing to the amount of stock subscribed which was then only six shares of one hundred dollars each. Those who subscribed the six shares proceeded to elect the directors of the corporation. The corporation was not organized according to law, but in direct violation of the statute which provides that "it shall be lawful in the organization of any cor- poration to elect a board of directors as soon as one-half the capital stock has been subscribed." This attempted organization of the Salem O. C. R. R. Co., amounted to nothing. It was absolutely void. It had no power to legally trans- act any business, or to accept or hold the lands granted by congress.

And besides this the west side company had finally forced the Salem company to stand trial before Justice M. P. Deady, of the United States district court as to its right to its corporate name, and the court had held that one corporation could not take and use the name of a prior organized company. This of itself was a death blow to the Salem company. (See Deady's Reports, p. 609.) In this crisis of his Oregon venture Holladay turned the whole matter over to the great lawyer, W. M. Evarts, who was secretary of state to President Hayes. After many months of study Mr. Evarts decided that the franchise to exercise corporate rights was a grant from the state and could be questioned only by the state, and not having been so questioned the Salem company was at liberty to transfer any and all rights and franchises it was assuming to own. And that as the land grant was a concession from the federal government the right thereto could be disputed only by the grantor, and not having been so questioned the franchise to take such grant could be also assigned and transferred by the Salem company; and that the next step for Mr. Holladay was to lawfully organize a new Oregon corporation to take over all the rights, property, and franchises of the Salem company, and have the Salem company make such transfer. For this opinion Holladay paid Evarts $25,000; and immediately thereafter (1870) incorporated and organized The Oregon and California Railroad Company, to which all the assets of the Salem company were conveyed. After thus clearing