People ex rel. New York Central & Hudson River Railroad v. Public Service Commission

required by section 59 of the Railroad'Law, and that such certificate shall not be granted by the Board of Railroad Commissioners until it is furnished with the receipt for the tax from the State Treasurer. And section 59 of the Railroad Law provides that no railroad company shall exercise the powers conferred by law upon it, or begin the construction of its road, until the Railroad Commissioners shall have certified, among -other things, that public convenience and a necessity require the construction of said railroad. The tax required by said section 180 of the Tax Law was not paid by the company until August 11, 1905, and the certificate remained in the possession of the Railroad Commissioners until the 14th day of August, 1905, when it was first delivered by the board to the receiver of the railroad company. Prior to the payment of this tax no one was capable of delivering or receiving the certificate, and the certificate did not become final and binding upon the relator until its delivery after the payment of such tax. The writ was served November 21,1905, less than four months after the certificate was in fact issued by the Railroad Commission, and the relator is, therefore, properly in court.

The conclusion in the return that the relator is not aggrieved by the determination sought to be reviewed here is overcome by the evidence returned, and the return read as a whole shows that the relator is aggrieved.

Section 2 of the Railroad Law (as amd. by Laws of 1892, chap. 676) provides that at the time of filing, a certificate of incorporation of a railroad company shall have indorsed upon it or annexed to it an affidavit of at least three directors, that at least ten per cent of the minimum amount of capital stock has been subscribed thereto and paid in good faith in cash to the directors named in the certificate, and that the filing of every certificate where the amount of stock so required has not been in good faith subscribed and paid in cash shall be void.

The relator contended before the Railroad Commissioners, and contends here, that the respondent railroad company has never complied with this provision, and, therefore, that it was not entitled to receive the certificate as to public convenience and necessity. The issue was tried and the Railroad Commissioners determined that the section had been duly complied with. Such finding is

■ against the law and. the evidence; there was no payment in cash of the ten per cent, and at most there was only a paper transaction apparently designed to evade this provision of the law, or to comply with the letter of the law .and evade its spirit. The material facts constituting the alleged payment, are that upon Saturday, April 14, 1900, the- three directors named in the certificate and one Castle, an attorney, appeared at a trust company in Eochester and made their demand note to the trust company for $125,000, which was ten per cent of the minimum amount. of capital stock. One Tone had in a box certain consents of property holders, maps and other papers relating to the proposed railway, in which the acting directors were interested. This box was delivered over to the bank ostensibly as collateral for the note. Immediately the four makers of the note drew a check for the same amount to three of the directors, and they indorsed the check to Tone, who immediately indorsed the check, and it was handed back to tiie bank in payment of the' note. The whole transaction took place within from twenty minutes to an hour. It was understood that the proceeds of the note were not to be drawn from the bank for any purpose except for the payment of the note, and' it fairly appears that the note and the chebk with the various indorsements were handed over to the bank at the same time. In fact the bank never became a debtor to the makers of the note and they had iio money deposited with it. The company never received the payment of any sum in . cash ; the directors never received any cash for' the co'mpany. The whole transaction was a mere form by which the directors interested in the consents, maps and papers, in the box, intended to make the stock to be issued to them and Tone “ paid up ” and to lay some foundation for the affidavit to be filed with the ¡certificate two days later. . The affidavit that the ten per cent had been paid in cash was attached to and filed with the certificate, but it was not true, and the provisión of law as to the payment of the tén per cent in cash never, was complied with. April 17, 1900, the day ■ after the certificate was filed, the officers of the company were elected and the directors adopted a resolution reciting that the three directors reported that they had received the subscription money to the amount of the par value of stock subscribed, and had purchased for the railroad company of Tone the rights óf way, maps, etc., for

$125,000 cash and $85,000 of the capital stock of the company and approving and ratifying the action of the'three incorporators.

, But we have seen that in default of payment of the tax and before the certificate of “ convenience and a necessity ” was granted thé company could not buy property or do any corporate act; therefore, the attempted ratification was without effect. The recital in the resolution that cash was paid, when cash was not paid, does not meet the requirement that the amount must in good, faith be paid in cash. The determination appealed from, therefore, should be annulled upon the law and the facts, with fifty dollars costs and disbursements to be paid by the respondent railroad company.

All concurred.

Determination annulled upon the law and facts, with fifty dollars costs and disbursements to be paid by the respondent railroad.