to enforce it. Laches and the intervention of other equities may prevent stockholders from obtaining any relief from an ultra vires leasing of the property of the company as in the case of other ultra vires acts.2

§ 364. Lease of franchises.-A railroad, and probably every other company having public duties to perform, can not lease its franchises, without the special sanction of the legislature. The matter is thus authoritatively stated by Justice Miller, in the latest decided case in the federal court of last resort: Unless specially authorized by its charter, or aided by some other legislative action, a railroad company can not, by lease or any other contract, turn over to another company, for a long period of time, its road and all its appurtenances, the use of its franchises, and the exercise of its powers, nor can any other railroad company without similar

1 So held where a railroad company built a branch railroad, upon the promise of another company to lease it for 999 years at a certain yearly rental, and where, after using the completed road for years without objection, payment of the stipulated rental was refused upon the ground that the acceptance of the lease was ultra vires. Camden &c. R. Co. v. May's Landing &c. R. Co., (1887) 48 N. J. L. 530.

2 The Hartford, Providence & Fishkill R. Co., a Rhode Island corporation, in 1863 executed an agreement transferring all its property, in perpetuum, to the Boston, Hartford & Erie R. Co., the stockholders of the former company to be remunerated by stock in the latter, or by payment of a fixed price per share. The latter company afterwards mortgaged its road, became bankrupt, and was dissolved by a Connecticut decree. The mortgagees afterwards foreclosed in Rhode Island and formed the New York & New England E. R. Co. The road and property

passed into the possession of this latter company by deeds from the mortgage trustees, and from the assignees of the bankrupt company. In 1875 certain stockholders of the H. P. & F. R. Co. brought a suit in equity in Rhode Island to set aside the agreement and lease; and it was held that the agreement and lease were ultra vires, but that plaintiffs, by laches and by the intervention of other equities, were precluded from relief. Boston & Providence R. Co. v. New York & N. E. R. Co., 13 R. I. 260. Potter, J., dissenting.

3 Thomas v. The Railroad, 101 U. S. 71; Abbott v. Johnstown &c. R. Co., 80 N. Y. 27; 36 Am. Rep. 572; Troy &c. R. Co. v. Boston &c. R. Co., 86 N. Y. 107; Woodruff v. Erie R. Co., 25 Hun, 246; Pittsburg &c. R. Co. v. Bedford &c. R. Co., 81 Pa. St. Supl. 104; Archer v. Terre Haute &c. R. Co., 102 Ill. 493; Hinckley v. Gildersleeve, 19 Grant, (U. C.) 212; Attorney-General v. Niagara Falls &c. Co., 20 Grant, (U. C.) 34.

authority make a contract to receive and operate such road, franchises, and property of the first corporation, and such a contract is not among the ordinary powers of a railroad company, and is not to be presumed from the usual grant of powers in a railroad charter. This statement of the law does not seem to accord with the fact that railroads almost without exception are either leased or hold leases of other roads. So frequently has the power of the legislature been exercised to avoid the common law rule. In New York, for example, whatever may be the rule in other States or in England, the public policy of the State, as manifested by numerous acts of the legislature, has always been, not only to afford the fullest scope for the consolidation and reorganization of non-compet ing railroads and railroad corporations, but also for the transfer of the use of such roads and their franchises by one corporation to another. And in other States general laws regarding leases of railways would seem to have been desirable, and have long existed. A lease of a railroad for ten years to two individuals, the superintendent and general manager of the road, with authority to operate the road and to charge for carrying upon it, while not involving the essential franchise of the company to be a corporation, comes within the meaning of a prohibition to make a contract involving the franchise of the road except in a certain way. A lease or sale of franchises unauthorized by charter or statute, is not only an ultra vires act with respect to dissenting shareholders of the company, but it is also such an excess of its corporate powers as

1 Pennsylvania R. Co. v. St. Louis &c. R. Co., 118 U. S. 290, 309. Similar language was used in State v. Atchison &c. R. Co., (1888) 24 Neb. 143; s. c. 4 Ry. & Corp. L. J. 86, 91, citing Pennsylvania R. Co. v. St. Louis, A. & T. H. R. Co., 118 U. S. 290, and Thomas v. The Railroad, 101 U. S. 71. Acc. East Anglian Ry. Cos. v. Eastern Counties Ry. Co., 11 C. B. 775; s. c. 21 L. J. C. P. 23; Great Northern Ry. Co. v. EastCounties Ry. Co., 9 Hare,

ern

306; Beman v. Rufford, 1 Sim. N. S. 550.

2 Woodruff v. Erie Ry. Co., 93 N. Y. 609, 618. See § 369, infra.

3 See Vermont &c. R. Co. v. Vermont Cent. R. Co., 34 Vt. 2, 49. In England it is enacted that no railway company shall grant or accept a lease or transfer of any railway unless under a distinct provision of an act specifying the parties. 8 & 9 Vic. ch. 96.

4 Stevens v. Davison, (1868) 18 Grat. 827.

renders the company liable to forfeiture of charter at the instance of the State.1

§ 365. Construction of statutory authority to lease.- A statute authorizing the lease of a railroad will not by implication authorize such lease by the directors against a minority of dissenting stockholders, so far as their interests are affected thereby. An act providing that railroads may consolidate does not authorize a lease by one company to another. The section of the constitution of Texas which provides that no railroad corporation, nor the lessees of such portion, shall consolidate with any other parallel or competing line, is a restriction upon the power of such corporations and is not to be construed as a grant of authority to lease. Power to consolidate is power to take in a partner or to go in as a partner, while power to lease is power to dispose of the whole concern to a stranger. In a consolidation the stockholders of the respective companies retain, to a certain extent, control of their corporate property, but, by a lease, the stockholders of the leasing company part with this control of their corporate property, hand it over to others and abandon their enterprise. Statutes authorizing railway companies to lease their roads must be strictly complied with, or the lease will be invalid after all. Where the power to make a lease is vested

1 Pennsylvania R. Co. v. St. Louis &c. Ry. Co., 118 U. S. 290; Thomas v. The Railroad, 101 U. S. 71; Troy &c. R. Co. v. Boston &c. Ry. Co., 86 N. Y. 107; Abbott v. Johnstown &c. R. Co., 80 N. Y. 27; s. c. 36 Am. Rep. 572; People v. Albany &c. R. Co., 77 N. Y. 232.

6 Wood's Ry. Law, 1686; Peters v. Lincoln &c. R. R. Co., 14 Fed. Rep. 319, where a two-thirds vote of the stockholders was required; Kent Coast Ry. Co. v. London &c. Ry. Co., L. R. 3 Ch. App. Cas. 656, where it was held that where an act authorizes a lease of the company's property to

2 Mills v. Central R. Co., (1886) 41 another company upon the certifiN. J. Eq. 1.

3 Mills v. Central R. Co., (1886) 41 N. J. Eq. 1, 7. See Archer v. Terre Haute &c. R. Co., 102 Ill. 493; s. c. 7 Am. & Eng. R. Cas. 249.

Central &c. R. Co. v. Morris, (1887) 68 Tex. 49, 59; Abbott v. Horse Car Co., 80 N. Y. 27.

5 Mills v. Central R. Co., (1886) 41 N. J. Eq. 1, 7.

cate of the board of trade being obtained, no lease can be valid before the certificate has been obtained, and mere reference in subsequent acts of parliament to an agreement for a lease which has been entered into, will not make the agreement valid.

in the shareholders of the company, the directors can not radically modify its terms and conditions. Although a statutory provision requires the written consent of the stockholders to a lease of a road, the stockholders may be estopped by laches from pleading the illegality of the proceedings. Dissenting shareholders may restrain an unauthorized lease as they may other ultra vires acts. But a delay of three months is not laches. Where there is no legislative authority for ascertaining the damage inflicted upon the dissenting stockholders by the majority diverting their vested rights by an illegal lease, and for awarding them compensation therefor, the court will not assume that function, but will annul the lease and restore complainants to their position before those rights were invaded, regardless of the effects of such action upon the lessee."

§ 366. Liability of the lessor.- A railway company can not lease the right to use its road so as to absolve itself from its duties to the public. It is the accepted doctrine in this country that a railroad corporation can not escape the performance of any duty or obligation imposed by its charter or the general laws of the State by a voluntary surrender of its

1 Metropolitan Elevated Ry. Co. v. Manhattan Elevated Ry. Co., (N. Y. 1884) 14 Abb. N. Cas. 103, 235; s. c. 15 Am. & Eng. Ry. Cas., 51. See also Harkness v. Manhattan Elevated Ry. Co., N. Y. Daily Reg. Oct. 8, 1886. Cf. People v. Metropolitan Elevated Ry. Co., 26 Hun, 84. 2 St. Louis &c. R. Co. v. Terre Haute R. Co., 33 Fed. Rep. 440.

3 Pond v. Vermont &c. R. Co., 12 Blatchf. 280; Tippecanoe County v. Lafayette &c. R. Co., 50 Ind. 85.

4 Mills v. Central R. Co., (1886) 41 N. J. Eq. 1.

ing Railroad Co. v. Morris, (1888) 68 Tex. 59; Freeman v. Minneapolis &c. R. Co., (1881) 28 Minn. 443; Lakin v. Willamette &c. R. Co., (1886) 13 Oregon, 436; Ricketts v. Chesapeake &c. R. Co., (W. Va. 1890), 7 Ry. & Corp. L. J. 357, citing Pennsylvania R. Co. v. St. Louis &c. R. Co., 118 U. S. 309; Thomas v. The Railroad, 101 U. S. 71; Transportation Co. v. Ullman, 89 Ill. 244; Illinois Central R. Co. v. Barron, 5 Wall. 90; Abbott v. Johnstown &c. R. Co., 80 N. Y. 27; s. c. 36 Am. Rep. 572; Nelson v. Vermont &c. R. Co., 26 Vt. 717; s. c.

5 Mills v. Central R. Co., (1886) 41 62 Am. Dec. 614; Chicago &c. R. Co.

N. J. Eq. 1.

6 As to make remuneration for personal injuries to a passenger on the road. International &c. R. Co. v. Eckford, (1888) 71 Tex. 274, follow

v. Whipple, 22 Ill. 105; Chicago &c. R. Co. v. McCarthy, 20 Ill. 385; s. c. 71 Am. Dec. 285; Ohio &c. R. Co. v. Dunbar, 20 Ill. 623; s. c. 71 Am. Dec. 291.

road into the hands of lessees. Further, a railroad company, chartered under the laws of Virginia, can not, by the voluntary surrender of the possession, control and operation of its road, by deed of trust to trustees of its own selection, shift the responsibilities imposed upon it by law; nor relieve itself from liability for wrongs or injuries subsequently done to persons or to property in the negligent operation of its road. The lessor continues to be liable for all acts done by the lessee in operating the road, whether the cause of action be ex delicto or ex contractu, and therefore is liable for goods received by its line for carriage and not delivered. And this is so although the charter of the former authorizes it to lease its road.