Irving Browne Isaac Grant Thompson.

The American reports: containing all decisions of general ..., Volume 36 online

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of the Supreme Court of Iowa it liad decided in favor of the right
of the legislature to authorize municipal corporations to subscribe
for stock to railroads, and to issue bonds accordingly, the fact that
the court held these decisions to be erroneous could not affect trans-
actions in the past, however it might affect those in the future ; and
that the United States Supreme Court will not necessarily follow
these decisions. It will be seen that the court of Iowa had already
settled the law by numerous adjudications, and the case was an
exceptional one which authorized a departure from the general rule,
that in giving construction to the laws and the Constitutions of
States, the court will follow the decisions of the State courts. In
CIncago v. SJieldon, 9 Wall. 50, the case was decided upon the ground
that a contract having been entered into between the parties, valid
at the time by the laws of the State, no decision of the courts of the
State can impair its obligation. City v. Lamson, 9 Wall. 477, affirms
the doctrine laid down in Gelpcke v. Ciiy of Dubuque, supra, and
holds that where bonds, issued to bona fide holders for value, are
valid by the judicial decisions of a State when issued, subsequent
decisions in the same State cannot destroy their validity in such
hands. Lee County v. Rogers, 7 Wall. 181, also involved the principle
decided in Oelpcke v. City of Dubuque, and wae disposed of mainly
upon the authority of the latter case.
It will be observed that none of the cases relied upon are at till



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APRIL TEEM, 1880. 649

Jessap V. Carnegie.

in conflict with the decisions which have been cited to establish the
principle that where the courts of a State have placed a judicial con-
struction upon a statute passed by the legislature of such State, it
is the bounden duty of the courts of another State, unless in excep-
tional cases, to follow such decision, and it would be a direct vio-
lation of this well-settled rule to reconsider the question and ignore
such decision. So far as the subject has been considered in this
State, the same rule has been sanctioned and upheld. In Hoyt v.
Tliompson, 3 Sandf. 421, Mr. Justice Duer, after refemng to the
construction placed upon a statute by the courts of New Jersey,
remarks: " In each State it is the province of its courts of justice
to determine the construction of its statutes, and as the construc-
tion which they adopt becomes the law of the State, it must be re-
garded and followed as such by all foreign tribunals." The late
Judge Woodruff, in Hoyt v. Skelden, 3 Bosw. 302, says: '' But we
are not without aid of interpretation given to this statute by the
courts of New Jersey. I need hardly say that the exposition of her
courts is to be taken by us as conclusive, * * * and their inter-
pretation is, we apprehend, to be received with the same force as
if that interpretation was incorporated in the statute in terms." In
Hunt v. Hunt, 72 N. Y. 236 ; 8. c, 28 Am. Eep. 129, Folger, J.,
says: ^^The decisions of the tribunal of a State as to the true con-
struction of the laws of their own sovereignty are binding upon the
Federal courts, and why not on the judiciary of other States, in all
matters within the jurisdiction of the tribunals first named?"

Assuming, as we think must be done, that the decision of the
courts of the State of Iowa are controlling in regard to the inter-
pretation to be placed upon the statute involved iu this controversy,
it becomes important to inquire and determine whether any rule
has been adopted as to the liability of the defendants as corporators
or stockholders of the Davenport Kailway Construction Company,
or of others who are similarly situated. In First Nat. Bafik of
Davenport v. Davies, 43 Iowa, 424, it appears that the distinct ques-
tion was raised and decided by the Supreme Court of that State, in
an action brought against one of the stockholders of the same com-
pany, and it was held, upon the first hearing of the case, that a stock-
holder was not personally liable for the debts of the company. All of
the judges composing the court, with one exception, also held, that
the company was a railway corporation, within the meaning of the
statute of March 20, 1858 (§ 1338 of the Bevision), which declares
YoL. XXXVI— 82



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660 NEW YORK,



Jessap ▼. Carnegie.



•that section 1166 shall uot be applicable to railroad corporations, and
corporators and stockholders, and they shall bo liable only for the
amount of stock held by them. A rehearing was had in the case
last cited, and it was again held that there was no liability of the
persons who were stockholders of this company for the payment
of its debts. The last decision rests upon two grounds, in each of
which a majority of the judges concurred. First. That the filing
of the articles of incorporation in the office of the secretary of
State was not essential to the validity of the corporation, nor would
a failure to file them render the private property of the stockhold-
ers liable for the payment of its debts. Second. That the Daven-
port Railway Construction Company, being organized for the
purpose of furnishing materials for building and equipping railways,
is a railway corporation within the meaning of the statute exempt-
ing stockholders from liability beyond the amount of their stock.
The decisiop in the case cited must be considered, we think, as
conclusive in regard to the construction to bo placed upon the stat-
utes of Iowa, and no suflBcient reason is given why it should not be
followed by this court. The fact, that the judges differed in arriv-
ing at a conclusion as to the question presented, is not material,
and does not impair the force of the decision. It is sufficient that
a majority of the court determined what interpretation should be
placed upon the statutes in question, and thus settled the law
to render the conclusion arrived at obligatory and effective in the
State of Iowa, and in the courts of other States and of the United
States, where a construction of the same statute may have become
the subject of consideration. This decision has been accepted and
followed as the law in a case involving the same question, in the
United States Circuit Court of Iowa, in Meyer v. D, £ Si. Paul B.
R, Oo,, not reported, where it was sought to charge these defend-
ants as stockholders for the acts of The Davenport Railway Con-
struction Company, and it was there held that under the decision
in First Nat, Bank v. Davies, supra, there can be no question
that the construction company was a corporation, and that the
stockholders cannot be made liable upon the ground that they were
partners merely.

The learned counsel for the respondents insists that the courts of
the State of Iowa in prior decisions have held that similar provisions
of the statutes of Iowa are mandatory and not directory, and have
declared that a failure to comply with the requisitions mentioned



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APRIL TERM, 1880. 651

Jessup V. Carnegie.

ia section 1166 of the Code rendered the stockholders liable for the
corporate debts, and several cases are cited to sustain this position.
We think that none of them hold a doctrine in conflict with First-
Nat, Bank v. Davies, supra^ or involve the precise qaestion pre-
sented upon this appeal, as will bo seen by an e3camination of the
decisions.

[Omitting this examination.]

There is then, we think, no valid ground for claiming that either
of the cases cited places an interpretation upon the statutes of the
State of Iowa, which establishes the doctrine that at the time the
notes in question were made, a failure to record the articles in the
office of the secretary of State rendered the defendants individually
liable for the debts of the Davenport Railway Construction Com-
pany. Even although the decision in 43 Iowa was not made until
after the commencement of this action, it does not render it any
less effective as an authority, as there was no decision to the con-
trary, and no other or different rule established in that State appli-
cable to such a case; and the law was the same when the corpora-
tion was first organized, as when the court placed their construction
upon the statutes relating to the subject. It was not retrospective
in its operation, but a true interpretation of the law as it was when
enacted, and as it continued up to the time the decision was an-
nounced.

The case of State of Iowa v. County of Wapello, 13 Iowa, 388, is
also cited to show the distinction between a railroad corporation
and other corporations ; but there is no rule laid down in the
opinion which can be regarded as establishing the doctrine that the
Davenport Railway Construction Company, did not come within
that definition, or that was inconsistent with the decision in 43 Iowa.
The question presented was the constitutionality of the law au-
thorizing county subscriptions to railroads, and the validity of the
defendants' subscription, and the point now considered did not
arise.

We are not called upon in this case to determine whether the
court of Iowa was right in the construction given to the various
provisions of the statute relating to the subject, and it is too late
to renew a discussion of that question in the case now presented.
The decision must therefore be accepted as a correct determination
of the question involved, and as an exposition of the law as it ex-
isted in that State at the time it was made. Its authority is bind-



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652 NEW YOBK,



Jessap V. Carnegie.



ing and oonclusiye, and as we have seen, we cannot disregard it or
hold that it is not in pointy without overruling principles which
have long been settled and acquiesced in.

The proposition being fairly established that the Davenport
Railway Construction Company was regularly organized according-
to the laws of the State of Iowa, and that no law has been violated
which renders the defendants personally liable in this action, there
is an end of this case, and under the rules which have been laid
down in the cases cited no action can be maintained in this State
to enforce such liability.

There is another ground which is fatal to a recovery in this ac-
tion, and that is that the liability of stockholders under the stat-
utes of Iowa is confined to the remedy given thereby ; and it is
expressly provided in the laws relating to that subject: ''In none
of the cases contemplated in this chapter can the private property
of the stockholders be levied upon for the payment of corporate
debts while corporate property can be found with which to satisfy
the same." Code of Iowa, § 1174. It is also essential that a judg-
ment be obtained against the corporation, an execution issued on
the judgment against corporate property, a demand made for the
same, and a neglect to point it out It is only in such a case that
the stockholder is liable, and he has still the right, in any stage of
a suit against him, to point out corporate property, and to a stay
until a levy and sale can be made, and the proceeds realized, if any,
are to be applied to the payment of the claim, and execution can be
issued only for the balance. § 1173, supra, and § 1174. These re-
quirements have not been complied with, in proceeding against the
defendants, no judgment has been obtained against the company
for the demand, to recover which this action is brought, or against
the defendants in this action as stockholders or otherwise, nor for
dissolution of the corporation. In Lowryy. Inmaiiy 46 N. Y. 120,
this charter of the Bank of Georgia, of which the defendant was a
stockholder, provided that the individual property of the stock-
holders should be liable ; and it was held that the liability was
modified and limited by the statute creating the corporation, that
the charter created no right and imposed no obligation discon-
nected with the prescribed remedy which was local in its character
and could not be enforced without the State, and that a foreign
tribunal could not enforce it. The rule is no doubt well under-
stood that where the remedy is a statutory one, and a new right



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APRIL TERM, 1880. 665



Jessup V. Carnegie.



given and specific relief prescribed for a violation of such right, the
remedy is confined to that which the statute gives. Having this
principle in view, it is by no means apparent upon what ground
the action can be upheld.

It is insisted that the liability is an original one, as of partners,
and that the obligation was incurred upon the credit of the com-
pany, and also upon the individual liability of tlie stockholders,
which was assumed by them voluntarily. This position, we think,
is not tenable. The creation of such a liability was under a stat-
ute and subject to all its conditions and requirements, and hence
there is no valid reason for the claim made, that it can be enforced
without these limitations. The remedy given is modified and re-
stricted in its operation, and cannot be extended by the latitudi-
narian construction, embracing a more extended liability than was
originally contemplated by the legislature. Statutes of this char-
acter must be confined in their interpretation to their real meaning,
and cannot be enlarged so as to include cases which are not within
their spirit or intent.

The case of Coming v. McCuUough 1 N. Y. 47, is not, we think,
in conflict with the views expressed ; nor do we think that there
is any thing in the opinion in Wiles v. Suydam^ 64 N". Y. 173, and
Douglass v. Ireland^ 73 id. 100 — both of which involved a question
of liability for a failure to comply with the provisions of a statu-
tory enactment — which sustains the doctrine that the statute is
not to be pursued in suits against stockholders, or that the liability
may be extended to stockholders as copartners, where the organ-
ization of the company is made according to law, and without any
such departure from the statute as renders the stockholder person-
ally liable by reason thereof. There is no ground for holding the
stockholder liable as a partner under the circumstances of this
case ; and no reported case holds that a stockholder is liable under
the statute until the remedy provided by law against the corpo-
ration has been pursued. The liability of a stockholder is not
primary, but a conditional liability; and until that condition has
been fulfilled, the stockholder cannot be called upon to respond and
pay the debt out of his individual property.

Other questions are raised, but those already discussed dis-
pose of the case, and therefore an examination of them is not
required.



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654 NEW YORK,



Heeg V. Licht



The judgment was wrong, for the reason stated^ and must be re-
versed and a new trial granted, with costs to abide the event

Judgment reversed.

All concur, Andrews, J., concurring on second ground



Hreg v. Ltcht.

(SON. Y. 579.)

J M io n M — keeping gunpowder — tflh4m a ntUeanee.

The keeping of gunpowder upon private premiBes maj be a nuisanoe when in
case of explosion it would be liable to injure the persons or property of
those residing in the neigh lK>rhood, although it should be carefully stored
or kept. (See note, p. 658. )

ACTION of damages for injuries to buildings by explosion of a
powder magazine on defendant's premises. The opinion states
the case. The defendant had judgment below.

Philip S. Crooke^ for appellant.

Benjamin K Downing, for respondent

M1LLER9 J. This action is sought to be maintained upon the
ground that the manufacturing and storing of fire-works, and the
use and keeping of materials of a dangerous and explosive character
for that purpose, constituted a private nuisance for which the
defendant was liable to respond in damages, without rqgard to
the question whether he was chargeable with carelessness or negli-
gence. The defendant had constructed a powder magazine upon
his premises, with the usual safeguards, in which he kept stored a
quantity of powder, which, without any apparent cause, exploded
and caused the injury complained of. The judge upon the trial
charged the jury that they must find for the defendant, unless they
foui\d that the defendant carelessly and negligently kept the gun-
powder upon his premises. The judge refused to charge that the
powder magazine was dangerous in itself to plaintiff and his prop*
erty, and was a private nuisance, and the defendant was liable to



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APRIL TERM, 1880. 6S6

Heeg ▼. Licht.

the plaintiff whether it was carelessly kept or not; and the plaint^
iff duly excepted to the charge and the refusal to charge.

We think that the charge made was en'oneous and not warranted
by the facts presented upon the trial. The defendant had erected
a bnilding and stored materials therein, which from their character
were liable to and actually did explode, causing iujury to the
plaintiff. The fact that the explosion took place tends to establish
that the magazine was dangerous and liable to cause damage to the
property of persons residing in the vicinity. The locality of
works of this description must depend upon the neighborhood in
which they arc situated. In a city, with buildings immediately
contiguous and persons constantly passing, tliere could be no ques-
tion that such an erection would be unlawful and unauthorized.
An explosion under such circumstances, independent of any
municipal regulations, would render the owner amenable for all
damages arising therefrom. Tliat the defendant's establishment
w^ outside of the territorial limits of a* city does not relieve the
owner from responsibility or alter the case, if the dangerous ^mor
tiou was in close contiguity with dwelling-houses or buijdinga
which might be injured or destroyed in case of an explosion. Th«
fact that the magazine was liable to such a contingency, whioh
could not be guarded against or averted by the greatest degree of
care and vigilance, evinces its dangerous character, and might in
some localities render it a private nuisance. In such a case the
rule which exonerates a party engaged in a lawful business, when
free from negligence, has no application. The keeping or manu-
facturing of gunpowder or of fire- works does not necessarily con-
stitute a nuisance per se. That depends upon the locality, the
quantity, and the surrounding circumstances, and not entirely upon
the degree of care used. In the case at bar it should have been left
for the jury to determine whether from the dangerous character of
the defendant's business, the proximity to other buildings, and all
the facts proved upon the trial, the defendant was chargeable with
maintaining a private nuisance and answerable for the damages
prising from the explosion.

A private nuisance is defined to be any thing done to the hurt
or annoyance of the lands, tenements or hereditaments of another.
3 Bl. Com. 216. Any unwarrantable, unreasonable or unlawful
use by a person of his own property, real or personal, to the injury
of another, comes within the definition stated, and renders the



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656 NEW YORK,



Heeir ^- Ldcht



owner or possessor liable for all damages arising from such ad<e.
Wood*8 Law of Nuis., § 1, and authorities cited. The cases which
are regarded as private nuisances are numerous, and the books are
full of decisions holding the parties answerable for the injuries
which result from their being maintained. The rule is of universal
application that while a man may prosecute such business as he
chooses on his own premises, he has no right to erect and maintain
a nuisance to the injury of an adjoining proprietor or of his neigh-
bors, even in the pureuit of a lawful trade. AJdrecTs case, 9 Coke,
58 ; Brady v. Weeks^ 3 Barb. 159 ; Dubois v. Budlang, 15 Abb. 445;
Wier's Appeal, 74 Penn. St. 230.

While a class of the reported cases relates to the prosecution of a
legitimate business, which of itself produces inconvenience and
injury to others, another class refers to acts done on the premises
of the owner which are of themselves dangerous to the property and
the persons of others who may reside in the vicinity, or who may b}'
chance be passing along or in the neighborhood of the same. Of the
former class are cases of slaughter-houses, fat and offal boiling estab-
lishments, hog-styes or tallow manufactories, in or near a city, which
are offensive to the senses and render the enjoyment of life and prop-
erty uncomfortable. Oailin v, Valentine, 9 Pai. 575; Brady v. Weehs,
3 Barb. 157; Dubois v. Budlnuij, 15 Abb. 445; Rex v. Whitey 1 Burr.
337; 2 Bl. Com. 215; Farramt v. Marslwll, 21 Barb. 421. It is
not necessary in these cases that the noxions trade or business
should endanger the health of the neighborhood. So also the
use of premises in a manner which causes a noise so continuous
and excessive as to produce serious annoyance, or vapors or noxious
smells; Tipping v. St. Helen's Smelting Co., 4 B.& S. (Q. B.), 608;
Brill \\ Flagler, 23 Wend. 354; Fickard y. Collins, 2Z Barb. 444;
Wood's Law^f Nuis., § 5, or the burning of a brickkiln, from which
gases escape which injure the trees of persons in the neighborhood ;
Campbell v. Seaman, G3 N. Y. 568 ; s. c, 20 Am. Rep. 567. Of the
lattet" class also are those where the owner blasts rocks with gun-
powder, and the fragments are liable to be thrown on the premises
and injure the adjoining dwelling-houses, or the owner or persons
there being, or where persons travelling may be injured by such use.
Hay V. Coho^ Co., 3 Barb. 42 ; 8. c, 2 N. Y. 159 ; Tremain v. Cohoes
Co., 2 N. Y. 163 ; Fixley v. Clark, 35 id. 523.

Most of the cases cited rest upon the maxim *^ sic utere ttto,'*
etOi, and where the right to the undisturbed possession and enjoys



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APRIL TERM, 1880. (557

Heeg V. Licht.

meDt of property comes in conflict with the rights of others, that
it is better, as a matter of public policy, that a single individual
should surrender the use of his land for especial purposes injurious
to his neighbor or to others, than that the latter should be deprived
of the use of their property altogether, or be subjected to great,
danger, loss and injury, which might result if the rights of the for-
mer wen; without any restriction or restraint

The keeping of gunpowder or other materials in a place, or under
circumstances, where it would be liable, in case of explosion, to
injure the dwelling-houses or the persons of those residing in close
proximity, we think, rests upon the same principle, and is governed
by the same general rules. An individual has no more right to
keep a magazine of powder upon his premises, which is dangerous,
to the detriment of his neighbor, than he is authorized to engage
in any other business which may occasion serious consequences.

The counsel for the defendant relies upon the case of People v.
SandSy 1 Johns. 78; 3 Am. Dec. 296, to sustain the position that the
defendant's business was neither a public nor a private nuisance. That
was an indictment for keeping a quantity of gunpowder near dwelling
houses and near a public street ; and it was held (Spencer, J., dis-
senting), that the fact as charged did not amount to a nuisance, and
that it should have been alleged to have been negligently and im-
providently kept. It will be seen that the case was disposed of upon
the form of the indictment, and while it may well be that an alle-
gation of negligence is necessary where an indictment is for a pub-
lic nuisance, it by no means follows that negligence is essential in
a private action to recover damages for an alleged nuisance. In
Myers v. Malcolm, 6 Hill, 292, it was held that the act of keeping
a large quantity of gunpowder insufficiently secured near other
buildings, thereby endangering the lives of persons residing in the
vicinity, amounted to a public nuisance, and an action would lie
for damages where an explosion occurred causing injury. Nelson,
C. J., citing People v. Sands, supra, says : " Upon the principle that
nothing will be intended or inferred to support an indictment, the
court said, for aught they could see, the house may have been one
built and secured for the purpose of keeping powder in such a way
as not to expose the neighborhood ; " and he cites several authori-
ties which uphold the doctrine that where gunpowder is kept in
such a place as is dangerous to the inhabitants or passengers, it
Vol. XXXVT — 83



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658 NEW YORK.



Heeg V. Licht.



will be regarded as a nuisance. The case of People v. Sands is not



Online LibraryIrving Browne Isaac Grant ThompsonThe American reports: containing all decisions of general ..., Volume 36 → online text (page 73 of 123)