Chapter 3


Page 8

The rules were suspended and the bill was passed. It was signed into law on February 26, 1870, thereby repealing the obnoxious statue; and thus, after a hard and expensive contest, this incubus of fraud was shaken off, and the county relieved from an overwhelming load of debt, for which they would have received no benefit whatever, as it was well understood that the railroad was but a speculative venture - a two-edged sword to force money from the county on the one hand and the opposing railroad interests on the other. The leading items of expense to Plumas county in the contest were: Fees of county officers, $486.50; Legal expenses, $6,544; commissioners to Sacramento, $750. The total expense was $8,621.50.

The decision on appeal of the ruling by Judge Sexton in the quo warranto case “The People of the State of California upon the relation of the county of Plumas, plaintiff, vs. R. C. Chambers, W. A. Bolinger, F. B. Whiting, Samuel Goodwin, W. C. Fairchild, P. D. Shaw, N. C. Cunningham, C. O. Bolinger, C. T. Kaulbeck, Austin Chambers, Creed Haymond, M. Tranor and J.D. Goodwin, claiming to compose the Oroville and Virginia City Railroad Company, Defendants” is as follows;

42 California, 201. Supreme Court of California; October Term, 1871.

Incorporation. Subscriptions. Under a statute providing for the incorporation of railway companies, - which requires at least one thousand dollars stock to be subscribed for each mile of the proposed railroad, and ten per cent thereof, in cash, to be actually and in good faith paid in before incorporation (Cal. Stat. 1861, 607), - such requirements are not merely directive, but are conditions precedent, the performance of which is essential to the validity of the act of incorporation.

A payment of the ten per cent, required, in a check upon a bank, drawn by a person who has not on deposit in such bank funds sufficient to meet the check, is not a payment in cash, as required by the statute, even though such check would have been Paid by the bank if presented; and an incorporation founded on such payment is invalid, and will be so declared on quo warranto.

Appeal to the supreme court of California from the district court of the second judicial district, Plumas county.

This was an action of quo warranto, brought on the relation of Plumas County against Chambers and others, claiming to compose the Oroville & Virginia City Railroad Company, on the ground that the defendants were usurping the functions of a railroad company. The facts are stated in the opinion. Upon trial, judgment was rendered for the defendants. A motion by the plaintiff for a new trial was denied. From the judgment and the order denying his motion for a new trial, the plaintiff appealed.

Van Clief & Geer, for the appellant.

Haymond & Stratton, for the respondents.

Crockett, J.—This is an action of quo warranto against the defendants, claiming to compose the Oroville & Virginia City Railroad Company, in which the defendants are charged with usurping the functions of a railroad company, without having been duly and properly incorporated as such. The answer sets up the several acts which were performed by the corporators to effect an organization under the general corporation act of this state, and avers that the statute was complied with, and the company duly organized. Judgment was entered for the defendants, and the plaintiff appeals, both from the judgment and from the order denying a motion for new trial.

Written findings were filed, which were excepted to by the plaintiff as defective; but the exceptions were overruled, to which ruling the plaintiff excepted. This ruling is assigned as error on the appeal from the judgment; and it is further claimed that the judgment is inconsistent with the findings as they were made. The last point will be first considered.

The findings are certainly obnoxious to the objection (so repeatedly adverted to by this court) that the findings of fact and conclusions of law are not separately and distinctly stated. Nevertheless, the facts intended to be found can be sufficiently eviscerated to from the mere argument and inferences of the court to render it apparent what facts were considered proved. Among other facts the court finds that before the certificate of incorporation was signed, ten per cent of the amount previously subscribed "was paid in in cash and bankable checks." In a subsequent portion of the findings the particular manner in which this payment was made is thus explained: "The sum of ten thousand nine hundred dollars was paid by Bolinger for himself and Chambers (being the ten per cent upon the stock subscribed by them), by check drawn upon the Bank of California. The good faith of Chambers is shown by the evidence that in a short time after gold bullion was paid by him to Bolinger for his moiety of that check. The evidence of Bolinger shows that be had, prior to March 27, 1867, a large bank account with the Bank of California; that oftentimes he overdrew his account, under arrangements with the bank, the bank charging him a certain interest on the overdrawn day's balance. Other witnesses testified that his checks upon the Bank of California had been taken by them as cash, and cash paid for them, and had never been dishonored. Bolinger says he could not now tell what the status of his account was at the bank, at the time he drew this check; whether the balance then was two thousand dollars or three thousand dollars for him or against - but says absolutely and positively that the check would have been cashed on presentation. That it never was presented amounts to nothing. It, as all other checks drawn upon responsible parties in good faith and with money in the hands of the drawee to meet them, was only a representative of that much money, was paid by the subscribers and received by the company as money, was used by the company as cash assets, and the company could have received the money upon it any time it had been demanded. It was, then, an actual payment of money, and in good faith."

It further appears from the findings, that ten per cent of the whole amount subscribed, amounted to the sum of eleven thousand dollars, of which ten thousand nine hundred dollars was paid in the above named check. It is obvious that the court intended to find as facts:
First. That the check would have been paid on presentation, whether Bolinger had funds on deposit to meet it or not.

Second. That the company received it as cash, but never presented it for payment.

Third. That when the check was drawn, Bolinger had not to his credit in bank sufficient funds to meet it.

Fourth. That the check was paid to and received by the company in good faith as cash.

Assuming these to have been the facts, the question for consideration is, whether the delivery of the check was a compliance with section 1 of the act of May 20, 1861, providing for the incorporation of railroad companies. Cal. Stat. 1861, 607.

That section requires, as a preliminary to the organization of the company, that stock to the amount of at least one thousand dollars per mile of the proposed road shall be subscribed, " and ten per cent in cash so required to be subscribed shall be actually and in good faith paid to a treasurer to be named and appointed by said subscribers from among their number."

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