Commonwealth Ex Rel. Margiotti v. Union Traction Co.

The Commonwealth of Pennsylvania, by quo warranto proceedings, is endeavoring to forfeit the charters of a number of so-called underliers of the Philadelphia Rapid Transit Company, commonly known as P. R. T. The object it hopes to obtain by this proceeding, as stated at the argument, is to force a reduction in the rentals paid by P. R. T., a reduction in fare to the car riders, and a more advantageous basis for the city to receive adequate return for the use of its subways.

The reasons assigned by the State appear from the suggestion filed for the writ. Specifically it is alleged that by acts of usurpation, misuser and nonuser of corporate franchises defendants have forfeited their right to live. Its charges, in brief, are that about 1895 the owners of three or four of the then operating systems, by an illegal agreement, conspired to bring all of the trolley lines of Philadelphia into one system, operated by the Union Traction Company; that the purpose and object of this conspiracy was the fraudulent issuance of illegal securities on inflated values to the investing public, and the illegal leasing for a long period of time of the franchises and property at exorbitant rentals based upon inflated values, which rentals have a prejudicial influence on the service rendered by the operating lessee and the car riders of Philadelphia; that many of the lessor defendants were without lines of railway, or property, the lease neverthless requiring a large rental to be paid for the use of the franchises only, which transactions were contrary to law, these companies or the lessees never having constructed any roads in accordance with the requirements of their charters; that many of the defendants have duplicating lines and franchises on each of which the same value has been placed and securities fraudulently issued. Other acts complained of are the illegal issuance of bonds and other securities in violation of the law and without adequate security, and the disposition of property without provisions for the retirement of the bonds issued thereon. It is also urged that the only business and function of the principal defendants, those who leased directly to the Union Traction Company, though chartered only as operating railways, was that of holding companies dealing in the securities of other corporations, thereby usurping an authority of law never granted; that these defendants conspired to charge excessive rates and to defraud the investing public and taxpayers by means of the illegal agreements heretofore mentioned procured through a system of interlocking directorates of the parties to the agreement; that part of the consideration for some of the leases was dividends fixed on fictitious values; that defendants inflated the market value of securities to the prejudice of the public, paid dividends from capital, made inflated values of properties part of the rate base on which rates are now charged, and to mislead the State, filed false reports with the Commonwealth's officers as to values, the amount of the securities that had been issued thereon, the financial condition of the companies and their corporate activities, which reports were issued and filed for the purpose of inducing innocent investors to part with their money and to defraud the investing public generally, as well as to deceive the Commonwealth's officers as to the defendants' actual standing.

The State further charges that this plan of pyramiding values had for its object and purpose the enrichment of the stockholders at the expense of the public, under the pretext of creating a coordinated system; that items of cost of road and equipment, which have never been paid for by the underlier companies but which have been paid for by the lessees, are carried on the books of both companies as their major items of value, thus deceiving the State as to the true condition of the companies.

The writ was issued as of course. No answer was filed by defendants but each separately filed a motion to quash. After a hearing before the court below, the writ was quashed; the reasons therefor were that there had been a misjoinder of parties, a nonjoinder of parties affected by the action, and that the Commonwealth was barred by law from attacking defendants' charters and franchises. It was conceded that the suggestion disclosed possible grounds for forfeiture of the charters of many of the defendant companies, but it was contended that in a suit brought against all, only matters which are common to all could be considered. This appeal followed, and the majority opinion sustains the action of the court below holding that the State is estopped from claiming forfeiture.

The action of the court below in quashing the writ, and the majority opinion, do not give proper weight to the fact that it was and is the government itself, through its constituted officers, that is proceeding against its own creatures in a matter which is, if the statements and suggestion are found to be true, of great public interest and importance. The court below should have opened the case so that all the facts surrounding what the State declares to be a conspiracy might be brought out.

While the attorney general may demand the writ as of right, nevertheless it may be attacked under a motion to quash. I do not apprehend that it could seriously be contended under our decisions today that the questions which a court may properly consider under a rule to show cause may not also be considered under a motion to quash after the writ is issued. The same discretionary power must be exercised by the court in quashing a writ as in granting it, but in both instances the exercise of discretion is reviewable by the appellate court.

The cases in this State disclose that the scope of a motion to quash is restricted to questions of jurisdiction, capacity of relator or formal irregularities in the suggestion; such a motion does not permit an inquiry into the merits of the case, though in exceptional instances the court may consider a clear absence of any averment of legal grounds for ouster. Discretion in quashing the writ must be limited to these matters. To undertake to pass on the merits upon a motion to quash is a clear abuse of discretion. Where doubt exists as to the right to forfeit, the companies cannot avoid the burden of coming forward with facts in answer to the Commonwealth's charge. The nature of a motion to quash was early set forth inCommonwealth ex rel. Palmer, Atty. Genl., v. Steelton Mut.Relief Ass'n, 2 Dauph. 200, where the court stated: "[A motion to quash a writ of quo warranto] is equivalent to a rule to show cause why the writ should not issue and will be sustained only for some defect in the suggestion, which goes to the foundation of the proceeding, as want of jurisdiction in the court, or right in the relator."

The words "right in the relator" mean the capacity of the relator, and the motion is not equivalent to a demurrer¹⁵; it does not bring in issue the merits of the suggestion. As stated in Com. ex rel. Gordon v. Graham, 64 Pa. 339, at 342: "Upon a motion to quash, it must be for some defect in the suggestion itself, and not for any matter outside of it." In Com. v.Commercial Bank of Pa., 28 Pa. 383, it was pointed out that on a motion to quash the broad legal questions are not finally determined, but "whether the acts complained of amount to a forfeiture of the charter, will be open to further investigation in the final decision of the cause."

Cases have been cited where the court considered some incidental questions bearing on the merits in connection with the motion to quash. These cases do not support the position assumed that the motion to quash tests the entire proceeding, nor in any of them was the question raised as to the scope of the motion. In Com. ex rel. Atty. Genl. v. Walter, 83 Pa. 105, this court in refusing a motion to quash merely held that it was not necessary to allege a prior conviction of the defendant in order to remove him from office for bribery, and no question of the scope of the motion was raised; in Com. v. CommercialBank of Pa., supra, the ground for forfeiture was that the bank had unlawfully discounted notes at usurious rates and the court overruled the motion to quash, holding this was a valid ground. In both cases the motions were overruled and the writs were not quashed; the charges were legally sufficient to sustain the granting of the writ. They cannot be considered as authority for the proposition that the motion to quash raises broad issues, the determination of which necessarily depends on the proof of facts that are not before the court on such a motion as here involved.

Much reliance is placed on Com. ex rel. Atty. Genl. v.Dillon, 81* Pa. 41, 46, where Justice SHARSWOOD laid down the broad dictum that on a motion to quash the court will consider not merely the legal questions presented but the broad question of justice and propriety of the quo warranto proceeding; but an examination of this case will show how utterly useless it is as an authority. There was no motion to quash involved, and the decision was only that the name of the relator could not beamended. Com. ex rel. v. Jones, 12 Pa. 365, was cited, but that case is not authority for such a legal proposition. In that case the court quashed the writ because no prior rule to show cause had been obtained (a procedural defect), and also stressed the fact that the proceedings were in behalf of a private relator rather than the attorney general. It did not discuss the propriety of inquiring into the full merits of the case.

Heavily relied on was Commonwealth v. West Chester R. R. Co., 3 Grant 200, where the Commonwealth's legal officer instituted the proceeding. There the ground of forfeiture alleged was the failure of subscribers to shares of preferred stock to pay for them as required by law. The court held that this was not a legal basis for forfeiture. While the scope of a motion to quash was not discussed, the case goes no further than to determine whether the Commonwealth had presented any legal ground for ouster. But where the State's highest law officer makes a positive allegation of wilful usurpation of a franchise right, or nonuser, or misuser, which without question constitutes a basis for forfeiture, the court should not quash the proceeding. If any doubt exists as to whether any valid ground for ouster has been presented, the court should not undertake to decide the case on its merits and hold that the public interest does not require an ouster, but should postpone such determination until all the evidence is presented.

There can be no question that some of the charges set forth in the suggestion constitute grounds for forfeiture. If these charges do not warrant forfeiture of the franchises of the offenders, no case can be presented by the State which would contain charges serious enough. The court below did not dispute this. It admitted that serious grounds were alleged. Though it is possible that the State may not be able to prove them, the door should not be closed on its effort to do so.

We cannot overlook, as a matter of importance in the question of the legal sufficiency of the suggestion, the position of the State in this proceeding. The attitude that a court should assume when the State in its sovereign capacity requests ouster is clearly outlined by the authorities. We should not permit an unwarranted or an arbitrary, capricious abuse of the State's power in attacking franchises. Nor, on the other hand, should we deny to it the right to proceed when it alleges circumstances which justify the action. The State should not be placed in the same position as a private relator. Heretofore courts have recognized this distinction and have given greater latitude to proceedings instituted by the State on behalf of the public. In several ways it is favored over private relators in quo warranto proceedings. A rule to show cause why the writ should not issue is not necessary with the State as it ordinarily is in the case of a private relator: Com. v. Jones, supra. This court said in Com. ex rel. Atty. Genl. v. Walter, supra, at p. 107: ". . . when the Commonwealth through her attorney-general applies for a writ of quo warranto, she is entitled to it without a previous rule to show cause. It is not to be presumedthat the law officer of the Commonwealth would apply for thishigh prerogative writ for personal or private ends. He issupposed to be impartial, and to seek only the vindication ofthe rights of the state. It is not so in the case of a private relator, who is usually put to this rule to show cause. It might not be so where the attorney-general merely allows private counsel to use his name, as is sometimes done to procure the writ. But when the attorney-general or his recognized deputy assumes the responsibility the writ should issue in the first instance."

Furthermore the Commonwealth is permitted more liberality in pleadings. When the State alleges that a company has usurped franchises or power, it is held sufficient to plead generally that the franchise has been improperly exercised and to call on the defendant to show its authority. In Com. v. CommercialBank, supra, it is stated: "The attorney-general may disclose in his information the specific ground of forfeiture, or he may merely set forth the franchises alleged to have been illegally exercised, and call upon the defendant to show by what authority they are held." See also Com. v. Steelton Mut. ReliefAss'n, supra; Com. v. Keystone Pipe Line Co., 24 Pa. D. C. 400; Com. v. Hargest, 2 Dauph. 409.

In the present case the court below, in disposing of the motion to quash, went into the full merits of the charges of usurpation, nonuser and misuser. It discussed at length the validity of the leases; counsel for both sides argued this point fully, and the court asserted that their validity has been passed on several times by appellate courts and authorized by legislation. But before this issue can be decided it must appear by proof that the lessors have brought themselves within these decisions and acts of assembly. All of this is a matter of proof, and when the case is presented, a different light may be thrown on the entire transaction.

Whether the cases that are relied on to sustain the leases actually so held, and whether in any of them these leases were squarely adjudicated to be valid is a matter for subsequent consideration. I do not here express any opinion as to the legality of the leases for it may be that, when the facts are of record, the State cannot legally dispute them.

The suggestion has asserted that these leases are unlawful not only as abuses or misuses, but as usurpations of rights not granted lessors or assignors, and the court below should not have attempted to decide that issue on the pleadings or go at present behind this averment. The word "usurpation" is not used but the substance of the acts charged being ultra vires, it is usurpation. The State has contended that the leases are void because they were executed as a part of an unlawful conspiracy by which the public was deeply affected, and that, if so, their apparent authority would not shield them; that they were made through interlocking directorates and are void as against public policy. Many factual and legal situations revolve about these issues and they should not have been summarily disposed of. The same is true of the averments that defendants inflated values and conspired to defraud the public.

In a proceeding of this type, such matters are not concluded by orders of the Public Service Commission. This legal power to adjudicate the legality of charters, leases and franchises, has not been, nor do I believe it could be, given to the Public Service Commission; its function is to determine rates and services alone. Furthermore, the State has asserted that the defendants combined to deceive and defraud the Commission and other State agencies.

The State has alleged a conspiracy to defraud the investing public and to obtain excessive rates from the car-riding public to its injury. Whether that conspiracy succeeded or could succeed is a matter for the Court of Common Pleas to hear in this proceeding, and not any other body. The State charges a conspiracy to falsify and fabricate books and property values, to make false reports to the various departments of the State to further the unlawful purposes as charged. The fact that the Public Service Commission has approved or disapproved rates is no defense to these charges.

The court below held that laches may be imputed to the Commonwealth in allcases. This I conceive to be a very great and serious error and in my opinion is not supported by the authorities. If there were any such decision, I would overrule it. I do not deny that on a hearing in this case it might appear the Commonwealth had so far participated in or received benefits with knowledge from the usurpers or misusers that in all equity it could not demand the death of the offending corporations but merely a cessation of the unlawful acts. However, this is vastly different from holding that in all cases laches may be imputed to the Commonwealth regardless of the factual situation as proved at trial.

In discussing the broad question of laches as it relates to the State, we are here dealing with its creatures clothed with an apparent power but who, in its exercise, usurp other powers or fail to exercise the powers given them within the time allowed, or subject them to abuse. I concede that in questions of irregularity in the organization of a corporation, or the failure to observe details of procedure in its financial structure, or some error in law associated with a power which is of no consequence to the State, laches may prevent action. It may well be that many of the charges in the suggestion fall in this class, but we are met here with the question of laches applied to the State where there are serious charges of usurpation of authority, misuser and nonuser of powers. The court below, in spite of the gravity and explicitness of some of the charges, held on the bare pleading alone that laches would bar the State. In other words, the State's delay in bringing action prevents it not only from ousting but from stopping the usurpation of powers by a corporation and causes a title without any pretext of right to ripen into a perfect one; laches prevents the State from ending abuses by a corporation, and where there has been nonuser of powers, the corporation cannot be stopped from a sudden revival of their exercise though the corporation has been dormant for fifty years. Laches does not estop the State in all cases where it would an individual. A review of our decisions shows they are absolutely not authority for the broad assertion that in every case the Commonwealth may be estopped, particularly where the charges are misuser, usurpation and nonuser, on the pleadings, without proof of facts or circumstances to warrant such action.

The majority opinion holds that in all cases laches may be imputed to the State on the pleadings alone. The following cases have been cited in the briefs for this proposition:Com. v. Bala Bryn Mawr Turnpike Co., 153 Pa. 47; Bradford v.New York Pa. T. T. Co., 206 Pa. 582; Pittsburgh Rwys. Co.v. Borough of Carrick, 259 Pa. 333; Pittsburgh v. Pittsburgh West Virginia Ry., 283 Pa. 196; Com. v. Philadelphia, H. P.R. R. Co., 23 Pa. Super. 235; Com. v. Keystone Pipe Line Co., 39 Dauph. 1. These cases show that the courts have never adopted the extreme view that laches is as freely imputable to the sovereign as to individuals. I will review these authorities, not for the purpose of determining the issue of laches involved in this case, but to demonstrate the fallacy of the majority opinion on this legal proposition.

The almost universal rule is that laches cannot be asserted against a sovereign power where it seeks to set up a public right or act in the protection of the public interest: see 5 Fletcher on Corporations, section 2339, p. 826; United Statesv. Dalles Military Road Co., 140 U.S. 599; San Pedro etc. Co.v. United States, 146 U.S. 120; Utah Power Light Co. v.United States, 243 U.S. 389. The reason for the rule is obvious. Public interest and welfare must rise above any conflicting private interests and must not suffer through the failure of a government, through its agents, promptly to assert public rights. In United States v. Kirkpatrick, 9 Wheaton 720, 735, 22 U.S. 318, 325, Justice STORY said, at p. 735: "The general principle is, that laches is not imputable to the government; and this maxim is founded, not in the notion of extraordinary prerogative, but upon a great public policy. The government can transact its business only through its agents; and its fiscal operations are so various, and its agencies so numerous and scattered, that the utmost vigilance would not save the public from the most serious losses, if the doctrine of laches can be applied to its transactions."

The rule that laches cannot be set up against a state has been held to apply in cases involving the forfeiture of corporate franchises. In People v. Mackey, 255 Ill. 144, 159,99 N.E. 370, 375, the court stated: "This proceeding being against the defendants for usurping the franchise of a private corporation, neither lapse of time nor circumstances out of which an estoppel might arise as against an individual can have application."

See also State v. Light Dev. Co. of St. Louis, 246 Mo. 618,152 S.W. 67; State v. Webb, 97 Ala., 111, 12 So. 377. This rule is not applied to proceedings instituted in the name of the State on behalf of private individuals or with a purpose of protecting private interests, in which event laches may bar the nominal claim of the Commonwealth: Curtner v. United States,149 U.S. 662; United States v. American Bell Tel. Co.,167 U.S. 224, 264-265; French Republic v. Saratoga Vichy Spring Co.,191 U.S. 427, 438; People v. Union Elevated R. Co., 269 Ill. 212,110 N.E. 1. However, this distinction is sometimes lost sight of, and the rule is in rare instances carelessly made to cover all situations. We have on some occasions stated obiter, that the Commonwealth may be precluded from asserting a right by virtue of its laches notwithstanding the flat statement of Chief Justice BLACK in Commonwealth v. Erie North-East R. R.Co., 27 Pa. 339, 360, that "No laches can legally be imputed to the Commonwealth . . ." But a review of these cases reveals that they do not uphold the rule laid down by way of dictum. It has become a trite statement to say that general expressions in an opinion must be considered with respect to the facts before the court. See Commonwealth v. Shawell, 325 Pa. 497, 503-504. And, it is to be noted that in no Pennsylvania case where the Commonwealth instituted quo warranto proceedings to forfeit a franchise was laches imputed to the Commonwealth, except wherethe cause of forfeiture averred was irregularity in the manneror form of creation of the corporation which was acquiesced in or ratified by the State through subsequent action, or where the court expressly found that the reasons assigned as warranting forfeiture were invalid to support forfeiture.

The distinction or legal difference between an attack on the validity of a corporate franchise and an attack on the ground of usurpation, abuse or nonuser of an admittedly valid franchise, is expressly recognized in Fletcher, op. cit. supra, at p. 827. There may be an imputation of laches in formal defects in organization acquiesced in by the State. Thus, in Commonwealth v. West Chester R. R. Co., supra, the charge was irregularities in corporate organization. We held that after five years had elapsed before the proceeding was instituted, and the company had functioned continuously as a lawful body, it was too late to attack such formal defects of incorporation. The writ was quashed as the suggestion charged matters of minor importance; failure of a sufficient number of pre-incorporation subscribers was not a defect of sufficient gravity to warrant the severe penalty of forfeiture. This case falls directly within the exception pointed out above. In Com.v. Bala Bryn Mawr Turnpike Co., supra, the turnpike company, in reliance on an amendment to its charter granted by the common pleas court, extended its road. Five years later the Commonwealth, at the instance of private citizens, brought quo warranto proceedings to declare void the amendment as being beyond the jurisdiction of the court, and to prohibit the operation of the extended road. The company was acting under color of authority. Under such circumstances laches may be imputed to the Commonwealth as well as to an individual, but the opinion points out that the action was brought on behalf of private individuals.

Commonwealth v. Philadelphia, H. P. R. R. Co., supra, falls into the same category, although it does not relate to the forfeiture of a corporate franchise. The railroad company was indicted for maintenance of a nuisance arising from the operation of a line pursuant to a statute which was alleged to be invalid because not in conformity with the constitutional requirements regarding titles. Again the validity of its authority to act at all was questioned, and President Judge RICE expressly recognized that, as a general rule, laches does not operate against the Commonwealth.

Appellees especially rely on three cases: first, Com. v.Hulings, 129 Pa. 317, where quo warranto proceedings were instituted by the Commonwealth to forfeit the charter of a ferry company on the grounds of nonuser. The court found that the sole ground of nonuser alleged was not such as to warrant forfeiture of the ferry company's charter and quashed the writ. It cannot be said under any view of the law that where the pleadings fail to disclose any ground of forfeiture at all the court is in error in taking it upon itself to discuss the question of laches and considering it as a reënforcing factor, but by no stretch of the imagination can this case be said to hold that laches may be attributed to the Commonwealth.

Second, Com. v. Reading Traction Co., 204 Pa. 151, was a bill in equity to declare void an alleged fictitious issue of capital stock which had reached the hands of bona fide purchasers at the time of the institution of the proceeding. Thereafter prosecution was delayed for four or five years. The bill was dismissed on the ground that the only persons who would be affected by a decision in favor of the Commonwealth would be the security holders who were not before the court and who had had no opportunity to be heard. Attention is directed to the fact that the Commonwealth did not attempt to forfeit the charter of the corporation but merely to declare void the shares of stock in the hands of innocent investors who were not parties to the case. The effect of granting the prayer of the Commonwealth would have been to strip the shareholders of their interest in the corporation without any apparent relief of injury to the public at large.

Third, Bailey's Estate, 241 Pa. 230, is possibly the weakest of all, and stands on its own facts. This case involves no question of laches against the Commonwealth, but only one of res adjudicata, since the Commonwealth was a party to the earlier proceedings and had taken no appeal, and the subsequent attack was properly barred on established rules of estoppel by judgment.

Slight notice need be taken of the cases cited by appellees which do not involve proceedings instituted by the Commonwealth, either for itself or for a private relator, but rather relate to actions commenced in the name of political subdivisions of the State. It cannot be argued that because laches may be imputed to a borough or township that it likewise runs against the Commonwealth. For this very reason these cases are distinguishable and of no aid to appellees. Furthermore, a careful analysis of their facts reveals that for other reasons they fail to sustain appellees' contention. In Pittsburgh v.Pittsburgh West Va. Ry., supra, not only was the suit brought by a municipality but, furthermore, the attack made was not based upon an improper user of the valid authority but upon the validity of the authority itself. Likewise in Pittsburgh Rys.Co. v. Borough of Carrick, supra, a borough was not permitted to enjoin the occupation of a road which had been opened pursuant to the authority of township supervisors with the acquiescence of borough authorities for a period of 26 years. Here again the same two distinguishing elements are present. The last case, Bradford v. New York Pa. T. T. Co., supra, again involves a suit by a political subdivision, a county, to compel the taking up of telegraph poles erected by the defendant, and the court found that the county had by acquiescence ratified the installation of these poles, although reference is made to laches.

These decisions certainly provide no basis for a rule of stare decisis to settle once and for all that laches may be imputed to the Commonwealth in all cases, especially, as here, on the pleadings alone. The general statements loosely made in them cannot rise to the dignity of foreclosing the Commonwealth and estopping it in one of its most vital attributes of government. Public policy strongly militates against the rule permitting the assertion of laches against a sovereign State. To hold as the majority and the court below do makes possible the continuance of unlawful acts to the prejudice of the public at large, without any possibility of relief at the instance of the State or anyone else. Where there is a conflict between the rights of private individuals as against the welfare and public interest of the citizens at large, the interests of the public must be valued above all else. The public must not be penalized for the failings or mistakes of their governmental officials. The State must have unrestrained freedom in making inquiry into the manner in which the corporation exercises its powers. It must be kept in mind that the remedy of quo warranto when used to forfeit a corporate charter lies only where there has been injury to the public and this must appear through evidence. The plain answer is that in all cases where the basis of forfeiture is nonuser, misuser or other abuse of the corporate franchise, the right of the State to challenge the continued existence of the corporation cannot be barred by laches unless it appear that the State has committed itself to the acts so that it can be said to have ratified and approved them. This is an evidential matter.

But even were it to be conceded for the moment that laches in the present case might, under given circumstances, be imputed to the Commonwealth, the court below erred in considering it at this stage of the proceeding. It is fundamental that lapse of time alone does not control laches. Even in an equity action instituted by a private individual, laches depends not merely on lapse of time, but on all the circumstances of the case. Laches considers as well the position of the parties involved, the opportunity afforded them to act, their acquiescence, or change in position, the availability of evidence, rights of intervening third parties, the character of the claim, and of the parties enforcing it, the relief sought and, in general, any other matters bearing on the equities of the case: See Cohen v. DeCicco, 90 Pa. Super. 51,57; Stecko v. Salak, 114 Pa. Super. 483;Hammond v. Hopkins, 143 U.S. 224, 273; Patton v. Com. Tr. Co.,276 Pa. 95, 100; Kinter v. Com. Tr. Co., 274 Pa. 436, 440.

The many factors which must be considered when applying the doctrine of laches, based on the balancing of equities, make it practically impossible to decide that issue in the absence of all the facts and circumstances surrounding the case. On the basis of the suggestion alone the court is not in a position to find that laches barred the Commonwealth.

The Commonwealth charges that great injury is being suffered by the public. The court was not in a position to determine the degree of knowledge of the Commonwealth, the extent to which it acquiesced in the multifarious, unlawful acts attributed to appellees, the injury to the public as compared to the effect of forfeiture upon private interests, and many of the other factors which should guide its determination of this vital phase of the case. The gravity of the charges and the great public interest at stake require a full hearing on the merits before such a drastic bar is set up against the Commonwealth.

As to the questions of misjoinder and nonjoinder, which of course are amendable, I assume the majority so consider them as they do not discuss the questions.

The suggestion alleges various acts of usurpation. As stated, if the word "usurpation" is not used, the failure to employ it is certainly unobjectionable. If the companies as alleged are operating under illegal leases they of course have been usurping powers not granted by the State. Other acts of usurpation are charged which, with the allegations of misuser and nonuser if shown to exist by testimony, certainly give the State the right to halt these efforts forthwith and, where the conduct constitutes a flagrant abuse of corporate powers, the charters of those guilty should be forfeited. It is charged that some of the defendant companies have been guilty of duplication of routes, and that the duplicating companies have listed the same items of value, issuing corporate securities fraudulently thereon. If this is true, which only a hearing can develop, under the majority rule such pyramiding of assets cannot be prevented. It has been established in this State that, where a corporation is given an exclusive franchise and has done nothing to cause its loss or forfeiture, a similar franchise conferred upon another company is invalid and may be forfeited in quo warranto proceedings: Commonwealth v. Uwchlan St. Rwy.Co., 203 Pa. 608.

The Commonwealth charges that certain of appellees have altogether failed to exercise the francises granted them. Others have sought to do so through lessee companies under leases which the Attorney General asserts are unlawful. These alone are sufficient to place such companies on defense if every other averment were out. These wholly dead companies are said to have issued securities which the public have bought, in the face of statutory violations of requirements that all companies start and complete construction of lines within fixed periods.

If the matters contained in the suggestion are brought to a full hearing and the validity of the leases and other franchise rights established, and the acts complained of do not exist, or have not existed, then, of course, the effort of the Commonwealth should fail. My objection to the entire proceeding is that the court should not decide the case on a mere motion to quash, but should send the parties to a hearing on the merits so that at least the most serious charges could be investigated.

I would overrule the motion to quash.

Justice STERN and Justice BARNES concur in this dissent.

¹⁵ It is to be noted that the Act of June 14, 1836, P. L. 621, section 9, gives to the defendant in quo warranto the right to demur, which suggests a distinction.