duty imposed upon the railroad company is being performed and the laws of the State observed. The suit has relation to the performance by the construction company on behalf of the railroad company of the chief functions of the latter as a corporate entity, the building and operation of its railway in Kansas. As to such a series of acts as are thus involved, this court could certainly exercise no jurisdiction. It cannot assume to direct how, when, or where the railway shall be constructed, nor give any direction in relation thereto, nor enforce the obligations which the construction company has undertaken to perform in regard to it. Were this possible, the difficulty would then be presented which arises from the fact that the construction company is a foreign corporation, having of right no existence here. Its organization is not subject to our supervision, nor are its officers, its place of business or its property within our jurisdiction. Its own rights, in making contracts like that here presented, must depend on the local laws which govern its creation, and, whatever these may be, we have no such control over it that we could enforce any decree against it. This consideration presents also a decisive reason why, as against the railroad company, the contract cannot be specifically enforced, even if the enforcement of it, with justice to both parties, could be limited simply to a decree for the specific delivery of the certificates of the capital stock. The subject-matter of such a claim has no analogy to one that might be made upon a demand as for a debt due according to the generally recognized principles of laws, where satisfaction is sought out of property or rights within our jurisdiction, by reason of the authority which the State has over that which is within its limits. A judgment against a foreign corporation in another State can be operative only to the extent of the property and rights which are there found. Smith v. New York Ins. Co., 14 Allen, 336. The railroad company has no property which has been attached in this proceeding, nor, so far as appears, any in this State. It has no office for the general transaction of its business, nor any officers for that purpose, except that it has established an office for the transfer of shares of its capital stock. Whether in a controversy between two persons as to which was entitled to certificates of stock, or to their transfer from one to another, this matter could be subjected to the jurisdiction of this court, need not be discussed. This inquiry is whether it is within the power, or a part of the duty, of this court to order this foreign corporation to issue certificates of stock, so that the construction company, or those to whom it assigns the certificates, may thus become members of the railroad corporation. Because this railroad corporation has appeared here by attorney, it has not given this court any right to exercise authority over its organization, its corporate functions, or the relations between the corporation and its members, nor the right to determine who shall be its

members; and this court is not invested with any power by which its decree in such matters can be enforced. The determination of the question who shall be entitled to receive from the corporation certificates of its stock, so that they shall thereby become members of it, is one which does not alone affect the external relations of the corporation, but involves its organic laws, which are necessarily local and require local administration. Smith v. New York Ins. Co., ubi supra.

In the case last cited it was held that this court would not entertain jurisdiction of a suit in equity brought by a citizen of Alabama, who had never lived here, against an incorporated mutual life insurance company of New York, to restore him to his rights under a policy upon his life issued by the defendant in New York, he having failed to pay the premiums required by the terms of the policy, although the defendant transacted business in this commonwealth, and had appointed an agent resident here upon whom all lawful processes against the company might be served, under the Gen Sts. c. 58, § 68; and this upon the ground that the bill sought to establish, by a judgment of this court, the artificial relation of membership in a foreign corporation involving necessarily the peculiar local statute laws of another State. From the nature of corporate stock, which is created by and under the authority of a State, the right or duty to issue it, like the other attributes of the corporation, is governed by the local law of the State from which it derives its existence, and not by that of any other State.

The construction company, for the reasons we have heretofore stated, is not entitled to a decree against the railroad corporation, ordering the certificates of stock to be issued to its trustee. But the construction company further seeks a decree, which shall forbid the railroad company from issuing its shares of stock or its bonds to the defendant Patterson, shall enjoin the railroad company from carrying out the contract with him, and shall compel Patterson to reconvey any property he may have received from the railroad company. None of the acts which the construction company desires thus to enjoin are, so far as is shown by the bill, to be done in this State, nor is any of the property here which is thus sought to be ordered to be reconveyed. It is averred, however, that Patterson is preparing to sell the shares of stock in this State; and the construction company contends that this question arises in this State, as this wrongful act thus sought to be prevented is to be done here. But the considerations to which we have heretofore adverted directly apply. If we cannot determine to whom this railroad company shall issue its shares of stock, we, on the other hand, cannot forbid its issuing them to those whom it chooses. If it issues shares of stock by authority of the local law which governs it, the sale of such shares in the ordinary mode should not be interfered with. As we cannot establish and enforce

the first contract by any decree that we may make for its specific performance, nor indeed pronounce authoritatively whether it is one which should be established and enforced, as it concerns so largely a matter of local law, and as it may be administered by the local tribunals in the place where it was to be performed, we ought not to interfere with the sale of the shares of stock, should any be issued to the defendant Patterson.

Bill dismissed.

WOODRUFF

V.

ERIE RY. Co. et al.

(93 New York Reports, 609.)

While a railroad corporation organized under the General Railroad Act of this State has no express authority, under the said act, to lease its road and franchises to an individual, such a lease is neither malum in se nor malum prohibitum, nor is it void as contrary to public policy.

A lessee, who has under such a lease had the possession and use of the property, is estopped from questioning its validity in an action to recover the stipulated rent.

The estoppel which thus binds the lessee also binds all who claim through or under him; and one to whom he has transferred his interest in the demised property, and who has had the use and occupation thereof, may not question the validity of his lease.

One who has placed the means for paying a debt in the hands of another, upon his covenant to pay the same, may maintain an action in equity to compel a performance of the covenant, without first paying the debt; he is not limited to his action on the covenant.

The E. & G. V. R. R. Co. leased its road, properties and franchises to plaintiff, for the unexpired term of its charter, he covenanting to pay as rent a specified sum, by paying and taking up interest coupons, to the amount specified, upon bonds issued by the company. Plaintiff entered into the use and occupation of the property and subsequently leased the same to the E. R. Co. By various orders of the Supreme Court, granted in actions to which the company last named and all interested in its property, as incumbrances or otherwise, were parties, defendant J. was appointed receiver of said property, with authority to continue the operation of the road of the company, and also, in his discretion, all roads leased by it, including that so leased to it by plaintiff, and to pay any rent then due and thereafter becoming due under the leases. J. took pook possession of the E. & G. V. road, and continued to hold and operate it in connection with the other lines placed under his control as such receiver. In an action to compel J. to pay, out of funds in his hands applicable thereto, the coupons falling due on the bonds while he acted as receiver, held, that he was estopped from denying the validity of the lease to plaintiff, or of that from him to the E. R. Co.; that as none of the parties had appealed from the orders appointing J. and defining his powers, they could not dispute or question said powers; that the court had full authority to direct how the property should be managed while in the

possession of the receiver; that whatever might be the rights of the various parties, as between themselves, to priority in the distribution of the assets of the insolvent corporation, such rights could affect only the property remaining after the liabilities created by the receivership had been fully paid; that the receiver, by taking possession of and occupying the leased property, manifested his election to continue the lease, and incurred a liability to pay the rent according to its terms; that plaintiff, by his contract with the E. R. Co., became, so far as the latter was concerned, a mere surety for the payment of the debt and had the right to call upon it and upon the receiver, for the period of his occupancy, to indemnify and protect him; and so, that the plaintiff was entitled to the relief sought.

Also held, that the court had power to authorize an action to determine the rights of the parties, instead of determining them upon a motion.

APPEAL from order of the General Term of the Supreme Court, in the fourth judicial department, made October 28, 1881, which reversed a judgment in favor of plaintiff, entered upon a decision of the court on trial at Special Term.

The nature of the action and the material facts are stated in the

RUGER, C. J.-By leave of court, the plaintiff has brought this action against the defendants, upon a claim accruing upon a lease of the property of the Erie and Genesee Valley R. R. Co. executed by him in 1871 to the defendant, the Erie Ry. Co., to require its receiver to pay out of funds in his hands applicable to such purposes, for the use of the leased property, during its occupancy and enjoyment by such receiver in the years 1875, '6, '7 and '8.

The receiver, upon being requested by the plaintiff to pay rent, first claimed that the conveyance by which the plaintiff acquired possession of and an interest in the Erie and Genesee Valley road was ultra vires, and that the title thereby claimed by the plaintiff as well as that attempted to be conveyed by him to the Erie Ry. Co. was invalid and imposed no legal obligation upon him.

This fact, instead of leading, as would be supposed, to a surrender, by the receiver, of the property thus claimed to be illegally held by him, merely led to a refusal to pay the rent reserved in the lease to the Erie Ry. Co.

For upwards of three years the defendant Jewett, as such receiver, continued in possession of the property acquired under such lease, and continued to use and operate it as a railroad in connection with the main, and subsidiary lines of the original Erie Ry. Co.

Upon the trial of the action the defendants urged not only the original objection to the plaintiff's claim, but also several additional grounds of defence, all of which were overruled by the Special Term and judgment was ordered for the plaintiff.

Upon an appeal therefrom by the defendants the General Term reversed the judgment of the Special Term, and ordered a new trial, upon the ground that the conveyance by which the plaintiff acquired his interest in the property of the Erie and Genesee Valley R. R. Co. was ultra vires, and he, therefore, was under no legal obligation to that company and took no interest in its property, by the conveyance to him. The court further held that, considering the lease to have been a valid obligation, the plaintiff, being under no legal obligation to pay such rent, and not having paid it to the persons thereby entitled, did not occupy such a position or have such an interest as entitled him to maintain an action to enforce the specific performance of his contract with the Erie Ry. Co.

The plaintiff, having appealed to this court upon the usual stipulation from the order of the General Term, is met with these and other objections to his right to recover.

The instrument by which the plaintiff acquired an interest in the property of the Erie and Genesee Valley Ry. Co., which was a corporation duly organized to build and operate the railroad in question, must be regarded for the purposes of this action as a simple lease of the property for an agreed annual rental of $8400, which the plaintiff Woodruff expressly covenanted to pay therefor. The manner of payment agreed upon was, that the plaintiff should pay the interest to whomsoever due upon a certain mortgage for $120,000, given by the Erie and Genesee Valley R. R. Co. to certain parties to secure the payment to the holders of bonds for that amount, which had been negotiated by the company; although other stipulations between the parties were contained in the agreement produced in evidence, their consideration was waived on the trial, and they do not affect the questions presented on this appeal.

The annual rent reserved by the contract was fixed, and that sum was never to be increased, and could be decreased only by the payment in gross by the plaintiff to the parties therein appointed to receive it, of the sum of $120,000, being a principal, which, at the then legal rate of interest, would produce annually the amount agreed upon as rent. In the event of such payment, the obligation to pay rent was to be reduced to a nominal sum, and the lessees would become entitled to retain possession of the property described to the end of the term. Provision was also made for a surrender of the property by the lessee to the lessors upon the expiration of the term, or the annulment of the lease for other

causes.

Immediately after the execution of this agreement by the parties, and its ratification by the stockholders of the lessors, the plaintiff entered into possession of the property demised. On November 8, 1871, the plaintiff, by a written instrument, mutually executed by the parties thereto, leased to the Erie Ry. Co. all of the property