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CHAPTER II.

RAILROAD CORPORATIONS.

I. CORPORATE ORGANIZATION.

II. CORPORATE RIGHTS AND LIABILITIES.

III. THE DUTIES OF DIRECTORS.

IV. RAILWAY INJUNCTIONS.

V. TRANSPORTATION COMPANIES.

I. CORPORATE ORGANIZATION.

25. Railways, highways.

26. Once a highway, always a highway.

27. A corporation defined.

28. Authority for creating corporations.

29. Variety in the exercise of this authority

30. Theory and practice under the old constitutic 31. Old charters and the new constitution.

32. Railway companies classified.

33. Uniformity of rights and liabilities.

34. General railway corporation act, 1849.

35. Supplemental charters; test railway case of 1854.

36. Its present pertinence.

37. Reorganization under present law.

38. General railway corporation law in force.

39. Dates of such legislation.

40. Number of corporators.

41. Articles of incorporation.

42. Filing and recording the same.

43. Powers of the corporation.

44. Prima facie evidence of existence.

45. Corporate life limited; conditions of renewal.

46. Recording by-laws.

47. Transfers of stock; corporate secrets.

48. Amendatory statute, 1873.

49 Complete organization.

25. A railroad is defined as "a road on which iron rails are laid for wheels to run on for the conveyance of heavy loads in vehicles." This definition has reference to the practical working of railway business. The legal definition of the term, as given by the constitution of Illinois, is simply: "a railway is a highway," and," a highway is a road open to the public." No railroad is a strictly private enterprise. The right to construct the same is not obtained in the usual methods of property transfers. The right of private way is secured only by the consent of the original owner or owners of the ground; while the right of way for a railroad must be secured, to a greater or less extent, by condemnation, or the exercise of the sovereign power of eminent domain.

§ 26. The enterprise having started as a public project, and been given special privileges on that account, the contract thus entered into cannot be set aside at the option of one of the parties thereto. The perversion of a highway into a private road would justly forfeit the original franchise. We have herein the explanation of the fact that railroads which are highways are always corporate property.

27. A corporation has been defined as an artificial being created by law, and composed of individuals subsisting as a body politic under a special denomination, with capacity to succeed each other in perpetual succession, and to act in many respects as a natural person. The privilege of being a corporation is conferred on individuals by grant from the sovereign power, and is a franchise. A private corporation is one founded by private individuals, the stock

1 Nesbit v. Trumbo, 39 III. 110; Crear v. Crossly, 40 Ill. 175.

of which is owned, at least in part, by private persons; and is distinguished from a public corporation, which is created by the government for political purposes, or whose stock is owned exclusively by the government.1

§ 28. The right of a government to vest in a corporation certain functions of its own authority, for the public interest and with certain restrictions, expressed or implied, has never been in dispute. This right rests upon a foundation essential to the very existence of the state, and in its exercise dates back to the earliest conception of political economy. However it may be perverted, it is absolutely essential to the well-being of society. Under the code of Solon Athens granted corporate charters, and the Eighth of the Twelve Tables of Rome was in effect a recognition of the corporate system as an economic necessity.

§ 29. While the corporate principle is common to all civilized governments, there is wide range and great variety in the methods of its application. Until a relatively recent date, in England the granting of charters was a royal prerogative. All corporations formed in that country at the present time must organize under a general incorporation act. In this country not only has each state its own mode of procedure, but the same state often has more than one way. Such was the case in Illinois from its existence as a state until the adoption of its present constitution. Since then, all railway organizations have been formed on one general plan.

$30. It has always been competent for the general assembly of Illinois to require corporations to organize

1 Chief Justice Marshall, in Dartmouth College v. Woodward, 4 Wheaton, 543.

under general law. The organic law has always, in theory, contemplated the issuance of special charters only in special cases. Practically, the charter system was in use to the almost entire exclusion of the general system, until absolutely forbidden.

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§ 31. The present constitution provided that "all existing charters or grants of special or exclusive privileges, under which organization shall not have taken place, or which shall not have been in organization within ten days from the time this constitution takes effect, shall thereafter have no validity or effect whatever."1 The evident intention was to forbid the entering upon new corporate enterprises on the strength of old charters; or at least to prevent "sleeping" upon vested rights. Such has not been its effect. Organization deemed sufficient to comply with the constitution was easy and inexpensive. The mere election of officers, adoption of by-laws, and the like preliminary work, has been deemed compliance with the constitution. The greater part of the railway schemes put in operation in Illinois during the current decade rest upon old charters, rather than upon the general law. It would be quite impossible to estimate how long it will take to exhaust this "reerve fund" of special charters. The validity of some of these charters will doubtless be called in question, eventually, on a writ of quo warranto, based

1 Illinois Constitution, art. xi, sec. 2.

2 A great many charters were procured under the old constitution without any expectation on the part of the corporators of making any legitimate use of the same. Franchises were secured with a view to selling them. This hawking about of charters is not wholly at an end in this state even yet.

on the constitutional limitation quoted; but no such case has yet reached the docket of the Supreme Court.

8 32. Classified from the standpoint of organization the railroads of Illinois are: First, those organized and existing under specific charters; and, second, those organized and existing under the general incorporation act.1 It should be borne in mind that the organization of a company is a vital part of its continuous existence. It is liable at any time to be obliged to show the title to its franchises, and its right to acquire and hold property.

§ 33. The railway charters granted in Illinois differ in some of their details, but agree in their general characteristics. They quite uniformly lay special stress upon the rights of the corporation, while passing lightly over its liabilities. This is not, however, a matter of real importance, a charter being declatory of rights, rather than creative of them. Subjected to the actual test of law, railway corporations existing under the general act of the state have essentially the same rights as those existing under special charters, and, conversely, those existing under special charters are subject to the same control, judicial and legislative, as those existing under general law.* 834. A general law for the organization of railroad companies was passed in 1849. In a subsequent railway case it was claimed that a charter granted after the passage of that act would not be valid unless it was expressly declared that special reasons existed for

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1For a complete list of the railway companies of the state, arranged according to this classification, see Appendix.

2 For a discussion of this subject and authorities for this statement, see chapter on the Doctrine of Uniformity.

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