INTERNAT'L & GN RY. CO. v. Anderson Co., 246 U.S. 424 (1918)
INTERNAT'L & GN RY. CO. v. Anderson Co., 246 U.S. 424 (1918)
424
38 S.Ct. 370
62 L.Ed. 807
The facts begin with the predecessors of the plaintiffs in error. The Houston &
Great Northern Railroad Company, a local road, was chartered by a special Act
on October 26, 1866. About March 15, 1872, it contracted with the citizens of
Palestine in the County of Anderson in consideration of the issue of bonds by
the county to maintain its general offices, machine shops and round houses at
that place. The International Railroad Company was chartered in like manner
on August 5, 1870. In 1872 the two companies agreed to consolidate and this
agreement was ratified by the stockholders of each in 1873. A special Act of
April 24, 1874, authorized the consolidated company, known as the
International & Great Northern Railroad Company, to issue bonds secured by
mortgage and provided that all acts theretofore done in the name of either of the
companies should be of the same binding effect upon the new one that they
were upon the old. In 1875 the new company in consideration of the erection of
houses for its employes renewed the contract of the Houston & Great Northern
and at about the same time it resolved that its general offices should be
removed to Palestine. We see no reason for reopening the findings below that
the alleged contracts were made. The offices were removed and there they
remained, subject to some immaterial interruption, until 1911. The machine
shops and roundhouses are still there. Each of the two constituent companies
had executed mortgages before the date of the original agreement of the
Houston & Great Northern and each executed another before the contract of the
consolidated company in 1875. These mortgages were all foreclosed in 1879
and the property conveyed to a corporation, still called the International &
Great Northern Railroad Company, by a deed that conveyed all the franchises
and chartered powers of the original roads. The foreclosure is one fact relied
upon for the defence.
county that had aided such railroad by an issue of bonds in consideration of the
location being made, then such location should not be changed; 'and this shall
apply as well to a railroad that may have been consolidated with another as to
those which have maintained their original organization.' A violation of the Act
entails forfeiture of the charter, with a penalty of $5,000 a day for every day of
violation. Rev. St. art. 6425. An Act approved two days later, March 29, 1889
(Acts 21st Leg. c. 24), with provisos that no rights should be acquired
inconsistent with the present Constitution, that the main track once constructed
and operated should not be removed, etc., authorized purchasers of soldout
railroads to form a new corporation, whereas previously the purchaser had
continued the franchises of the old under the original grant. A law of September
1, 1910, (Acts 4th Called Sess. c. 4), further emphasized the change of policy
by excluding a succession to the old charter unless coupled with an acceptance
of certain liabilities, and providing that the charter should pass subject to the
provisions and limitations imposed and to be imposed by law. Rev. St. art.
6625.
4
The railway company denies the jurisdiction of the State Court and sets up that
the court of the last foreclosure is the only proper forum. But a decree of
foreclosure does not render the purchaser and property foreclosed sacrosanct.
The Circuit Court had finished the case and had given up possession and
control before this suit was brought. Shields v. Coleman, 157 U. S. 168, 178,
179, 15 Sup. Ct. 570, 39 L. Ed. 660; Wabash R. R. Co. v. Adelbert College,
208 U. S. 38, 55, 28 Sup. Ct. 182, 52 L. Ed. 379. Even if it were true that the
foreclosure sale and order carried an immunity from the present demand that
the railway was entitled to set up, in the absence of action on the part of the
Court of the United States, it would not take away the power of the State Court
to decide as to the existence of an alleged public duty on the part of a railroad
within the territory where th court sat. Ricaud v. American Metal Co. (March
But the foreclosures did not have the supposed effect. They no more removed
all human restrictions than they excluded the authority of ordinary courts.
Suppose that a special act incorporating the mortgagor had provided in terms
evidently intended to reach beyond foreclosure that the general offices were to
remain forever at Palestine, it hardly would be argued, and certainly would not
be argued here or in Texas with success, that the requirement could be touched
by a decree. But if the law made that requirement, it hardly matters whether the
restriction was imposed by charter or otherwise or whether the remote reason
for it was a contract or a general notion of public policy. The State Courts hold
that when the law on any ground fixes the place of the offices and shops the
obligation is indelible by foreclosure. We see no reason why their decision
should not prevail.
It is contended that the Office-Shops Act of 1889 does not touch the plaintiff in
error by its term and that if it be construed to do so it is unconstitutional. On the
construction of the Act it seems to us that there can be no doubt. It is true that
the provision requiring the general offices to be maintained at the place where
the railroad had contracted to keep them is conditioned on no place being
named in the charter, but of course this does not mean that articles framed under
a general law can get rid of contracts that otherwise would bind, and in our
opinion it is equally plain that no distinction was intended between the contract
by the present road and one by its predecessor, if the office and shops 'are
located on the line of a railroad in a county which has aided said railroad by an
issue of bonds in consideration of such location being made.' 'Then,' the statute
says, 'said location shall not be changed.' The construction of the Act by the
State Court is beyond criticism upon this point.
It is said that the Act so construed would infringe the constitutional rights of
the parties to the mortgage of 1881, which the plaintiff in error took by
foreclosure. But it will be remembered that the mortgagor under the law then in
force merely had succeeded to the original contractors, freed from their
unsecured debts, no doubt, but, it well might be held, not freed from the
obligation in question. Also it was found by the Courts below that the sale
under which the mortgagor took in 1879 was not a bona fide sale, and so was
not a sale that put the purchaser in a position other than that of mortgagor.
Apart from these considerations we should be slow to say that it was not within
the power of a state legislature dealing with a corporation of the state to fix the
place of its domicile and principal offices, in the absence of other facts than
those appearing in this case. But furthermore when the Office-Shops Act was
on the statute book the plaintiff in error took out a charter under general laws
that expressly subjected it to the limitations imposed by law. It is said that this
does not make the plaintiff in error adopt an otherwise unconstitutional statute.
But even if, contrary to what we have intimated, the Act could not otherwise
have affected those particular corporations, it was a law upon the statute books
and was far from a mere nullity, and if it was made a condition of incorporation
that this restriction should be accepted, the plaintiff in error cannot complain.
Interstate Consolidated Street Ry. Co. v. Massachusetts, 207 U. S. 79, 28 Sup.
Ct. 26, 52 L. Ed. 111, 12 Ann. Cas. 555. We agree with the State Courts that
the condition was imposed.
9
10
Judgment affirmed.