CHAPTER IV PRESENT GENERAL RAILWAY LEGISLATION 1 - Terms applicable to Later Charters. In a technical sense the term "charter" can scarcely be applied to the instruments issued to railway corporations under contemporary general laws. The word "charter," through long usage, has come to signify a special grant of authority and power. In the constitutions of twenty-one states, as was noticed in the preceding chapter, the incorporation of railway companies under special or local acts is prohibited; in other states this prohibition is found in general laws, and in some states in both the constitution and general laws. The statutes of South Carolina mention the organization of railway companies "under charters," and in the Kansas statutes the term "charter". is also used. But these are exceptions. Terms like "articles of association," "certificate of incorporation," "articles of incorporation," "articles of agreement," and "letters patent" have come into use, and 1 This chapter is based on the latest Revised Statutes of the several states, and General Laws enacted since the publication of such statutes when the Revised Statutes were not up to date. To specify references to statutes in detail would unduly burden this book with foot-notes. carry with them the significance of earlier special charters. Articles, certificates, etc., are charters only in a loose and general sense, because the contents of the franchise itself are expressed in the general law relating to railways and the constitutional limitations under which these have been exacted. The grant of a charter involves a distinct legislative act authorizing the company receiving the same to exercise, in a measure, the rights of sovereignty, and to do the things for which the organization was accomplished. A certificate of incorporation, on the other hand, is issued in pursuance of law by administrative and not by direct legislative authority. Formerly a separate act of the legislature was necessary. Under general laws an administrative act for each such grant of power is all that is requisite for the organization of a railway company. To be sure, there is a very direct connection between the earlier charters and the later general laws, for many of the latter embody not only the essential features of the former, but frequently they are expressed in similar and even identical language. The change of name to article or certificate did not carry with it any radical change in the nature of the franchise. In this respect there exists continuity of development. The greatest change brought about by the transition from special charters to incorporation under general laws consisted in uniformity. Almost infinite variety in charter provisions was common during the earlier period of special legislation. Under general laws, even when compliance therewith was not enforced or enforceable, a certain degree of uniformity was brought about from the very first. Conditions under which Railway Companies may be organized. There are features of railway legislation in the United States which reveal many elements of uniformity as to the conditions under which railway companies may be organized; and yet, after admitting this much, we are compelled to recognize the fact that railway laws are very far from being uniform, and that numerous variations and differences are noticeable. The number of persons who may associate themselves for the purpose of incorporating railway companies varies from two or more in Washington to any number in Iowa. Between these extremes there exist ten different numerical groups which may effect an organization: 3 or more in Florida, Oregon, Montana, and Wyoming; 5 or more in Illinois, Indiana, Kansas, Nebraska, Wisconsin, Montana, etc.; 6 in Louisiana; 7 in Michigan, Kentucky, Alabama, New Jersey (for roads less than 10 miles in length); 10 in Maine, Georgia, Arkansas, Texas, etc.; 13 in New Jersey (for roads more than 10 miles in length); 15 in New York, Indiana, etc.; 20 in Vermont; 25 in Massachusetts, New Hampshire, etc. These numbers, or more, may in some states be composed of any persons whatsoever; in others a certain proportion must be citizens, and in a few all of them must be citizens. Certain restrictions are occasionally made with respect to residence, both on the part of the stockholders and on the part of the board of directors and officers. The object of restrictive provisions relating to residence was evidently to prevent the projected road from being controlled by "foreign influence." During the early history of railways in the United States the possibility of foreign control, on the assumption that such control would result in the neglect of local interests, was used as a weapon to encourage local subscriptions to the stock of railway companies. Contents of the Articles. The nature of the contents of the articles of association, or certificates of incorporation, can best be indicated by presenting the salient features of such articles in a few of the leading states, which may be considered typical of analogous provisions from the laws of other states, understanding by the term "typical,” not identity, but essential similarity, leaving room for modifications of one kind or another in particular cases. The law of Illinois requires a statement of the name of the corporation to be organized, the states from and to which the railway is to be constructed, the location of the principal offices, the time of beginning and completing construction of the railway, the amount of capital stock, and the number and size of the shares, the names and residences of the persons who contemplate effecting an organization, and the names of the first board of directors. According to the statutes of Maine, the articles must contain the name of the corporation, the gauge of the projected railway, the names of the places from and to which the same is to be constructed, the amount of the capital stock, which shall be not less than $3000 per mile for narrow-gauge and $6000 for standard-gauge railways, the number of shares of stock, and the names and residences of five directors. Since, on this point, the laws of Maine1 are in many respects much better than those of most of the states, a full quotation is here inserted: "Said directors shall present to the board of railroad commissioners a petition for the privilege of said articles of association, accompanied with a map of the proposed road, on a proper scale. The board of railroad commissioners shall, on presentation of such petition, appoint a day for a hearing thereon, and the petitioners shall give such notice thereof as the said board the said board deems reasonable and proper, in order that all persons interested may have an opportunity to appear and be heard therein. If the board of directors, after notice and hearing parties, finds that all the provisions (of law) have been complied with and that public convenience requires the construction of said railroad, said board shall indorse upon said articles a certificate of such facts and the approval of the board in writing. The secretary of state shall, upon payment of $20 to the state, cause the same, with the 1 General Laws, 1899, p. 117, sec. I. |