Branin v. Connecticut & Passumpsic Rivers Railroad , 31 Vt. 214 ( 1858 )

Aldis, J.

The general railroad act, sec. 60, provides that “ every railroad company in this State shall require sufficient security from the contractors, for the payment of all labor performed in constructing the road of such company by persons in their employ ; and such company shaE be Hable to the day laborers employed by the contractors, for labor actually performed on their road, but such liability shall not exist unless the person having such claim shall in writing, within forty days after the performance of the labor, notify the engineer in charge of the section on which the labor was performed, that he has not been paid by the contractors.”

The railroad company contracted with A. P. Balch to build the road. Balch contracted with Fife & Wadleigh to build a part of it. Fife & Wadleigh hired the plaintiff as a day laborer to work with his horse and cart upon the road. They failed. The plaintiff sued the railroad company under the section above recited, for his work done for Fife & Wadleigh. The railroad company objects:

I. That the act is unconstitutional as “ impairing the obligation of contracts.”

The clause in the U. S. Constitution: “ No State shall pass any law impairing the obligation of contracts,” is held to prohibit the taking away or impairing any of the essential franchises of a corporation.

These franchise's exist only when they are expressly conferred by charter, or when they are implied as being necessary to the existence or beneficial operation of the corporation. The principle, as expressed by Ch. J. Marshall, in the Dartmouth College case, would perhaps restrict the implying of corporate franchises to still narrower Emits. His language is: “A corporation possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.”

In determining upon the existence and extent of these essential franchises thus put beyond legislative control, and especiaHy in cases where they are raised by implication, the ride of construction is strict, in favor of the public and against the corporation. If the power is claimeE to be an express one, it must be clearly given by the charter. If claimed as an implied one, the necessity which gives rise to it must he strong and unquestionable.

The franchises essential to the existence and just operation of this company are set forth in its charter. They are to. be a corporation, to build a road, to transport freight and passengers on it, and to collect tolls. These are its chief franchises and show the main purposes for which it was created. To secure these great objects of the charter, other powers are expressly granted. The use and enjoyment of these privileges are regulated by many provisions both of the charter and the general railroad act. It is not Claimed that this company is exempt from the operation of this statute by any express provision of its charter. The only essential franchise, with which the statute can be supposed to come in conflict, is the right to build a road. The act substantially provides that if the company employs contractors to build its road, it must be liable to the day laborers employed by the contractors for labor actually performed on the road, within forty days before notice in writing to the engineer, of such claim of the laborer. Does this provision impair the right to build the road ? Is the corporation deprived of any necessary means of building the road by being subjected to the liabilities of this law ?

II. It does not appear but that the railroad company could build their road by the action of their own officers and agents, the use of their own funds and the direct employment of laborers, without the intervention of contractors. Clearly this could be done. It is not manifest that the letting and-sub-letting of the construction of the road to contractors and sub-contractors is either necessary or even profitable. If the company can build the road without the intervention of contractors, the statute can not be said to conflict with the privilege of building- the road. It would be simply inoperative upon the power granted for that purpose. In some of the States, where great public works have been undertaken, the law has forbidden the sub-letting of contracts, in order to prevent among others the evils which, in this State,' this statute was intended to remedy. The power to let out the construction of the road to contractors is a power not expressed in the charter, but implied from the ordinary modes of transacting business, and the supposed necessities or convenience of the company. If the existence of such a right may be reasonably implied, still its exercise can not be considered as being put beyond legislative control.

III. Even if the intervention of contractors was a necessary means to the building of the road, we can not consider that the act would be such an obstacle to the making of contracts as would hinder the company in the successful construction of their work. Both the company and'the contractors must expect to pay the day laborers. The fund from which they are to be paid comes from the corporation. The supervisory power so amply retained by such corporations in ordinary railroad contracts for construction, and their rights, as usually specified, to retain funds to await the final completion of the work by contractors, show that provisions similar to those required by the statute would not have been held objectionable in the making of such contracts. On the contrary, when incorporated in such contracts they would doubtless be decidedly beneficial in the successful prosecution of such works. It is needless to say, that as the statute only looks to the future, to regulate only the liability of the railroad companies upon works contracted for after the passage of the act, the railroad companies can not, without their own neglect, be subjected to pecuniary loss. They can take “ sufficient security” as the statute contemplates; they can retain funds ; they can provide for the payment of the laborers under such supervision and subject to such regulations as will not fail to apply their funds to that object.

If a partnership of capitalists were to undertake the building of a railroad without corporate powers, who could doubt that legislative control over them would be held to extend to the regulation, by general laws, of their relations and liabilities to all in their employment. The right to exercise the power in the case of natural persons would not be questioned. Corporations are subject to precisely the same legislative control as natural persons, except where they are exempt by express provisions of their charters. The statutory enactment in regard to mechanics’ liens is in substance the application of the principle as between natural persons. It creates a security for indebtedness by a general law and without the agreement of the parties interested. In the construction of our statute that lien has been confined to the first contractor, not because the State had not the constitutional power, but because it did not intend, to extend the lien further.

The objection to making the company liable for work done by the laborers is, that the company contract only with the contractors, not with the laborers ; and that to hold them liable to the laborers, is to bind them by contracts to which they have not assented. In weighing this objection, it is to be considered, 1st, that the statute does not bind the corporation to past contracts. It applies only to contracts made and work performed after the passage of the act. 2d, that the legislature, by the act, does not make any contract for the corporation, or authorize any one to bind the corporation without its assent. It merely imposes a restriction in regard to its making contracts for building the road. It establishes by general law, a privity and liability between the corporation and the laborers, which the corporation is bound to have in vieiu in maJcmg contracts, which does not in the least impair their power to build their road, and in regard to which they can secure themselves from loss. The exercise of this power, so far as it is intended as a security to the laborer, grows out of the peculiar nature of these railroad enterprises, of the employment of large numbers of poor and ignorant laborers, generally foreigners, of their liability to be deprived of the means of subsistence by the failure of contractors, and their ignorance and inability to secure themselves. It would seem to be clearly within the appropriate duties of government to protect those who are so little able to protect themselves, and by a general law, to provide securities for them according to the equity of their claims and the necessities of their situation. It is upon this principle, that domestic servants and others in relations of dependence and confidence, are often made preferred creditors in statutes which provide for distributing the property of insolvents. If we were to regard the law, therefore, merely as imposing a liability for the security of laborers, we should hold it constitutional.

But when we consider the circumstances which gave rise to the act, and the mischiefs it was intended to prevent, we can have no doubt that its enactment was clearly within the power of the legislature.

The power of the legislature to pass all laws required by the public welfare, and to subject corporations like natural persons to their operation is unquestionable. This power is sometimes called the general police power of the State. The right and duty of the legislature to exercise it, and its extent and application, have recently been so fully considered and vindicated in the case of Thorpe v. The Rutland and Burlington Railroad Company, 27 Vt. 140, that it is needless to discuss the subject at this time. It is sufficient to say, that laws required by the public good are constitutional, though they may impose new obligations and restrictions, and may materially increase the expenses and diminish the profits of corporationsj, 27 Vt. 140; 8 Barbour 358, 390; Redfield on Railways, p. 537. The object of such laws is the public welfare. Their effects upon the pecuniary interests of corporations are merely incidental, and do not give character to them, or determine their validity.

Laws to prevent pauperism and breaches of the peace clearly come within the range of this legislative power. In applying this doctrine to the present question, we should consider the causes in which this statute had its origin.

Large numbers of poor day laborers, generally foreigners, were employed in building the railroads. By the failure of contractors they were often deprived of their earnings, of employment and of all means of subsistence for themselves and their families. The towns along the lines of the railroads became chargeable for their support as paupers, and thus were subjected to heavy burdens. Applications were made to the legislature to modify the poor laws so that the State should bear these unusual expenses. Thus, the prevention of the pauperism, growing out of the prosecution of these railroad enterprises, became a subject of legislative action. Nor was pauperism the only evil. The laborers, feeling that they had been wronged, ignorant of all means of redress, sought to retaliate for their wrongs upon the contractors, the railroad companies, and even upon the community. Riots and breaches of the peace ensued, attended with danger to life and property. These evils seemed to flow directly from the necessary employment of such laborers upon these great works. The remedy was simple, to secure to the laborers pay for their work. Hence the enactment of this statute. It was made to prevent pauperism and breaches of the peace, evils which no person, natural or artificial, can by contract acquire a right to inflict upon the community without restraint from legislative control. And where, as in this case, the exercise of this control subjects the corporations to no pecuniary expense, and rather aids, than hinders, the prosecution of their enterprises and the enjoyment of their privileges, there seems to be no ground whatever, for questioning its legality. Nor is the question entirely without precedent. In'New York a statute similar to ours exists, has been brought before their courts, and its constitutionality has not been questioned; Kent v. N. Y. Central R. R. Co., 2 Kern. 628.

In Missouri, upon a like statute, the question has arisen in a case where the charter expressly exempted the corporation from legislative control; yet the statute was sustained. The court say, “ The corporation is not exempted from obedience to the general law of the land, by the exemption of its charter from legislative alteration. Here is no attempt to deprive them of their property, or to encroach upon their chartered privileges;” Peters v. The St. L. and Iron Mountain R. R. Co., 23 Missouri 107. The doctrine of these cases is recognised in Redfield on Railways, 559, and in Pearce on Railroads, 10.

IV. Holding the law to be constitutional, the next inquiry is whether the statute applies to day laborers employed by contractors, who contract with other contractors, and not directly with the company, and who are sometimes called sub-contractors. In determining this, the rules applicable to the interpretation of statutes, and of which the great object is, to ascertain the real intent of the legislature, must be regarded.

The word “ contractors” clearly includes all who contract for the construction of the road, whether they contract directly with the company, or with others who have so contracted. The general term “ contractors ” includes all sub-contractors. ’In popular parlance, Fife & Wadleigh would be called contractors, as much as Balch. It would be only when occasion for the^ distinction should arise, that the term “ sub-contractor ” would be used.

The intent of the legislature is apparent from the whole tenor of the act, as well as from its language. When it speaks of day laborers employed by contractors, does it mean to include one set of hands employed on one section by a contractor with the company, and exclude another set on an adjoining section, because employed by one who may be called a sub-contractor ? No one can believe that this was the real intent of the legislature. Consider the mischievous consequences of a contrary construction, that the whole beneficial operation of the statute might be frustrated, and the law completely and easily evaded by the company’s contracting with some one who should let out the whole work to sub-contractors. Nor can we doubt the intent of the statute when we consider the well known mischiefs which gave rise to the law, and which it was intended to remedy.

If it should be urged that the company is to take sufficient security from the contractors, and that this tends to show that only contractors with the company were intended, the reply is, 1st, the act does not say contractors with the company, but only contractors, generally: 2d, the company having the power to frame all their contracts, so as perfectly to comply with the statute and secure themselves, can provide that no person, contractor or sub-contractor, shall be allowed to enter upon the construction of the work till he has given the company the sufficient security required by the act: 3d, the company may, if they see fit, omit the taking of the security. The statute is merely directory; there is no penalty for the omission. Their liability under the second clause of the statute, “ the company shall be liable to the day laborers,” etc., is a direct and positive liability to the day laborers, and does not depend upon their compliance with the first clause, in taking the security.

The letter of the statute, its spirit, the mischiefs it was intended to remedy, and the bad consequences of a contrary interpretation, all clearly show that it was intended to include all who by contract, whether directly with the corporation or with others under it, employed day laborers in the construction of the road.

The case of McClusky v. Cromwell, 1 Kern. 593, has been cited as authority for a contrary construction. That was a suit on a bond given by Cromwell and another as surety, to the State of New York, pursuant to an act to secure the payment of wages to laborers on the canals. The condition of the bond was, in the terms of their statute, “ said Cromwell shall pay in full, the wages agreed to be paid to each and every laborer employed by him, or his agent, or agents, in the construction of the work.” He sublet a part of the work to one Shippey, and Shippey employed laborers. The laborers, upon the failure of Shippey, pursuant to the statute, brought a suit on the bond against Cromwell. The court held, Ruggles & Edwards dissenting, that the language of the bond, “ laborers employed by him, or his agents,” etc., limited the benefits of the bond, so that laborers not employed by him, but by Shippey, could not have the benefit of it. The decision turns upon the words “ employed by him.” The court say “we can not strike out of the bond the words “by him, or his agent, or agents,” so that it shall read “ laborers employed in the construction of the work,” without reference to the employer. The contract thus modified, would be entirely different from that made by the parties.” So too, if it had been modified so as to read like our statute, thus : “ laborers employed by contractors in the construction of the work,” it would have received a very different construction. To make that case applicable to our statute, a suit should be brought by the company on a bond against one contractor, for work done by laborers for another.

But in Kent v. The N. Y. Central R. R. Co., 2 Kern. 628, the construction of the New York statute, which is very similar to ours, was settled. The words of their act are, “ as often as any contractor for the construction of any part of a railroad shall be indebted to a laborer for thirty days’ labor performed in constructing the road, such laborer may give notice, etc., and thereupon the company shall be liable to pay such laborer,” etc.

If the term “ the contractors” in our statute, does not include “ sub-contractors,” then the term “ any contractor,” can not include any sub-contractor. Again, the New York statute says “ as often as any contractor, etc., shall be indebted to a laborer.” How can this be unless it is a'laborer “employed by the contractor ?” A critical comparison of the two statutes will show that though their forms of phraseology are different, there is nothing in their language, or their context, to give to one a meaning different from the other. In the case above cited, the Court of Appeals of New York, held that the statute intended to include all laborers, whether hired by contractors or- sub-contractors ; that the term contractors included all sub-contractors. The case of McCluskey v. Cromwell was carefully reviewed, and shown to be inapplicable to the construction of the statute upon the grounds above indicated. The case of Kent v. The N. Y. Central R. R. Co., being a case precisely like the one at bar, and upon a statute so like our own, and having so fully reviewed all former decisions in that State, is entitled to much weight in the decision of the present case.

It is also claimed that “the work actually performed in the construction of the road,” as mentioned in the statute, can only include work done by the laborers personally, and not the use of their horses and carts when employed by them. We see no just ground for making so nice a distinction, and think the intent of the act was to include both.

The judgment of the county court is affirmed.