Miller v. New-York & Erie Railroad — 18 How. Pr. 374

Majority

p. 374

SUPREME COURT.

Edmund S. Miller agt. The New-York & Erie Railroad Company.

Headnote

A corporation having the right to contract an obligation for a specific purpose, have also the right to issue any instrument which either party may consider convenient in acknowledgment of it.

The act of 1848 having conferred on the defendants the power to borrow money to be applied to the construction of thoir railroad and fixtures, they have also the power to give them bonds in payment thereof, independent of the act of 1850, which gives to the defendants a right to issue their bonds for money borrowed, and the power to confer on any holder of such bond the right to convert the principal due into stock of the company.

New- York Special Term, June, 1859.

Demíurrer to complaint.

P. B. Eaton, for defendants.

Ira 0. Miller, for plaintiff,'.

The act of 1848, relative to railroad companies, enacts that all existing railroad companies in this state shall possess all the powers contained in this act (Laws of 1848, § 46.) That act (section 17, subdivision 10), allows them to borrow money to be applied to the construction of their railroad and fixtures.

The bond upon which this action is brought, was made on the 1st day of March, 1849, and the complaint alleges that it was issued by the defendants for the extension of their road west of Binghamton. This sufficiently shows that it was for the purpose stated in the act, nor are we to presume that it was for the purpose of extending it beyond its limits in this state. But it is maintained that no authority is expressly given, by any act previous to that of 1850, “ to issue bonds.” This was not necessary. If the company were allowed “ to borrow money ” it is of little consequence in what manner or by what

p. 375

description of instrument they acknowledged the indebtedness and promised payment. The counsel for the defendants, however, argues because the act of 1850 giyes the power to issue bonds, the legislature must have understood that in 1849 no right to issue bonds existed. This would not, by any means, , be a legitimate inference. The power to borrow, given by the act of 1848, was not accompanied, as we have seen, by any restriction as to the manner of evidencing the debt. On examing the act of 1850, where the powers of the act of 1848 are enumerated in an extended form (Laws of 1850, p. 225, § 10), it will be found that the right to issue bonds is indeed given, but it seems to be introduced rather for the purpose of an additional power, which it was deemed expressly to provide for, namely, giving the directors the power to confer on any holder of a bond, issued for money borrowed, the right to convert the principal due into stock of the company.

There is nothing in this act, or in any act, ignoring the idea that a corporation, having' the right to contract an obligation for a specific purpose, has also the right to issue any instrument which either party may consider convenient in acknowledgment of it.

The complaint is in every respect sufficient; at least, it contains no defects which can be taken advantage of by demurrer. The plaintiff is not obliged to allege that it was necessary to issue the bond, or that the money was borrowed for “the completion, furnishing or operating of the road.” If the money was borrowed after 1850, this language may be requisite; but the money in question was borrowed under the power given by the act of 1848.

The demurrer must be overruled with costs, with liberty to defendants to answer within twenty days.