Chapter 3


Page 5

That on the 20th day of March, 1868, the defendants, M. Tranor and Creed Haymond, each subscribed 364 shares to the capital stock of said company, whereby the said J. D. Goodwin, Creed Haymond and M. Tranor became shareholders in said corporation. That afterwards, to wit: on the 23d day of March, 1868, C. T. Kaulback, Samuel Goodwin and F. B. Whiting, having resigned their offices as Directors of said company, Creed Haymond, J. D. Goodwin and M. Tranor were elected in their stead, and immediately entered upon the discharge of the duties of and acted as Directors of said corporation; that afterwards, to wit: on the — day of May, 1868, Creed Haymond was elected Treasurer and R. C. Chambers, Secretary, of said company.

The answer closes by alleging the company to be legitimate, its acts lawful, its ownership of the franchise perfect, the levying of assessments, the expenditure of $66,366.70 on construction of the road; that the State ought not have its action, because it passed the act of March 30, 1868, and thereby waived every act and condition precedent to the due incorporation of the road, if any act precedent had been omitted; and, also, that on the 26th of March, 1868, the Legislature passed a resolution, approved March 30, 1868, requesting Congress to aid in the building of the road.

Second District Judge, W. T. Sexton, on the trial, found for the defendants. The plaintiffs excepted Judge Sexton’s ruling and a notice of appeal and bond on appeal was filed January 6, 1869 signed by Jo Hamilton, Attorney-General, and by Van Clief & Gear, counsel for plaintiffs. The briefs filed were signed by Van Clief & Gear for Plumas county, and by Haymond & Stratton for the respondents.

In the meanwhile, Keddie with his party, completed the surveys of the railroad between Quincy and Beckwourth Pass. In July 1868, Major Flint, an engineer connected with the Union Pacific Railroad, went over the Oroville & Virginia City line with Messrs. Bolinger, Keddie and Edwards, and expressed himself as highly pleased with the route.

On October 31, 1868 the Quo Warranto suit brought against the Oroville and Virginia City Railroad by the Feather River & Beckwourth Pass Railroad was decided in favor of the Oroville and Virginia City, they would not have to give up the route, surveys, and maps.

The matter of Plumas County purchasing the railroads stock had first appeared in the Supreme Court in an application by the railroad company, Oroville & V. R. Co. v. Plumas County Supers, for a writ of mandate to compel Plumas county to make the subscription. The full text of the decision is as follows;

37 Cal. 354 April, 1869

Denial of Incorporation in Pleading.– The proviso to the sixth section of the general Incorporation Act, concerning a collateral inquiry into the existence of a corporation, does not preclude a private person, in an action brought against him by a corporation, from denying the existence de jure or de facto of an alleged corporation.

Idem. – The mere allegation in a pleading that a party is a corporation does not put its existence as a corporation beyond the reach of inquiry.

Proof that Company is a Corporation.- When the right to act as a corporation is denied, the company claiming to be such must show that it claims in good faith to be a corporation under the laws of this state, and is doing business as such corporation.

Compliance with Corporation Act.- An attempt to comply with the statute concerning corporations, and a substantial compliance with its provisions, renders a company claiming in good faith to be a corporation a corporation de jure.

Creating Corporations.- A corporation not a municipal one cannot be created by an Act of the Legislature recognizing its existence. Such corporations can only be created by general laws.

Issuing Writ of Mandate.- If a county is compelled by law to subscribe to the stock of a corporation, the corporation must tender its books to the officers of the county and demand the subscription before it can apply for a writ of mandate.

Motion to Strike Out Parts of Pleading.- A motion to strike out portions of a pleading admits only those averments contained in said portions which are well pleaded.

Plea of Fraud.- A plea of fraud should aver the acts constituting the fraud.

Fraud in Passing a Law.- An Act of the Legislature cannot be attacked on the ground of fraud.

Plea of Another Action Pending.- The pendency of proceedings in quo warranto against the persons claiming to compose a corporation, to try their right to exercise corporate powers, is no defense to an action for a writ of mandate brought by the corporation to compel a county to subscribe to its capital stock and issue its bonds therefor. Such proceedings have no place in an answer as grounds to procure a stay of proceedings of the mandate suit.

This was an application to this Court for a writ of mandate to compel the Board of Supervisors of the  County of Plumas to subscribe to the capital stock of the Oroville and Virginia City Railroad Company the sum of two hundred and thirty thousand dollars, and to issue to said corporation the bonds of the  county  in payment of the subscription.

The Legislature passed an Act, approved March 30th, 1868, the first three sections of which are as follows:

"Section 1. The Board of Supervisors of Plumas County, California, are hereby directed to meet at the county seat of said county on the second Monday in April, eighteen hundred and sixty-eight, and then and there are authorized and directed to take and subscribe to the capital stock of the Oroville and Virginia City Railroad Company the sum of two hundred and thirty thousand dollars.

"Sec. 2. Said subscription shall be made substantially in the following form: 'The County of Plumas does hereby take and subscribe two hundred and thirty thousand dollars to the capital stock of the Oroville and Virginia City Railroad Company, this subscription to be paid in the bonds of said  County  of  Plumas, bearing interest at the rate of ten per cent per annum, payable annually--principle payable in twenty years from date of issuance--both principle and interest in United States gold coin. Which said subscription shall be entered on the records of the said Board of Supervisors and on the books of said company, and shall be signed by the acting Chairman of said Board of Supervisors.”

"Sec. 3. Eighty thousand dollars of said subscription shall be at once paid in bonds of said county to the Secretary and Treasurer of said railroad company, who shall then and there receipt to the said Board of Supervisors of said county for the same, and shall also issue and deliver to the said Board of Supervisors of said county certificates of paid up stock in said company for the amount of said bonds."

The remaining sections of the Act are not material to the points decided.

On the 21st of December, 1868, the plaintiff petitioned the Supreme Court for a writ of mandate to compel the defendant to issue the bonds and make the subscription, as required by the Act. The petition averred that the plaintiff was a corporation, and that the plaintiff had demanded of the defendant to make the subscription and issue the bonds, but that the defendant had failed and neglected so to do. The answer contained the following averment:

"Respondent further avers, that on the 20th day of June, 1868, an action of quo warranto was duly instituted in the District Court of the Second Judicial District of the State of California, in and for the County of Plumas, by the Attorney General of said State, in the name of the People of said State, upon the relation of said County of Plumas, against said persons so claiming to compose said Oroville and Virginia City Railroad Company, charging that said persons had wrongfully and fraudulently usurped and intruded into a corporate franchise within this State, under said name, in which said action the right of said Oroville and Virginia City Railroad Company to be a corporation, or to exercise corporate powers under the laws of this State, was put in issue; that said action is and was at the time of the commencement of this proceeding still pending and undetermined, and is now before this Court upon appeal."

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