Quinlan v. Houston & Texas Central Railway Co.

The defendant in error, the H. T. C. Ry. Co., brought this suit to recover of the plaintiff in error, Quinlan, five sections of land which had been located and surveyed by virtue of certificates issued to the Waco and Northwestern Railroad Company. The defendant in the trial court claimed title to five other sections which had been located and patented by virtue of other certificates and disclaimed as to any land sued for by plaintiff that was not embraced in such patented surveys. The trial developed a question of the legality of the survey as well as a question of boundary and of a conflict between the defendant's surveys and those claimed by the plaintiff, both of which were resolved by the trial court in favor of the plaintiff. It was agreed between the parties, that the certificates under which the plaintiff claimed were valid; but before going to trial this agreement was so far modified as to permit the defendant to show that they were invalid. This left the case as if no agreement had been made. The certificates were prima facie valid, and the burden was upon the defendant to show their invalidity, in order to maintain that ground of defense. The title of the plaintiff to the certificates, by virtue of which the lands claimed by it were located, was also contested. All these questions were determined by the trial court in favor of the plaintiff and judgment was rendered for it.

The Court of Civil Appeals affirmed the judgment and this writ of error is prosecuted from the judgment of affirmance.

The questions presented by the petition for a writ of error are two:

1. Are the certificates which were issued to the Waco N.W. R. R. Co. valid? and

2. If valid, did the plaintiff company have title to such certificates?

We will dispose of these questions in the order in which we have stated them.

By a special act of the Legislature, passed August 6, 1870, the charter of the Waco Tap Railroad Company was amended and its name changed to that of the Waco North Western Railroad Company. (Special Laws 1870, p. 112.) The Waco Tap Railroad Company was incorporated by virtue of a special act approved November 5, 1866. Section 18 of that act reads as follows:

"That there be extended to this Company all the grants, provisions, immunities and privileges of an act entitled an Act to encourage the construction of railroads in Texas, by donations of lands, approved January 30, 1854; that this charter is granted subject to all the provisions of the general railroad laws as they now exist, or as they may hereafter be altered or amended." (Special Laws 1866, p. 257.)

The defendant in error claims that the certificates issued to the Waco and Northwestern Railroad Company are valid, both by virtue of the provision quoted, as well as by the inherent force of General Law of January 30, 1854. The plaintiff in error, however, claims not only that section 18 is inoperative, because it is in conflict with section 25 of article 7 of the Constitution then in force, but also that the Act of 1854 applied only to railroad companies then chartered. The latter question comes first in logical order; but in the view we take of the case its determination is probably not necessary to a decision. However, the construction of the Act of 1854 tends, we think, to throw light upon the subsequent legislation in regard to grants of lands to railroad companies, and we therefore express our views upon the question. It is sufficient for our purpose to quote only certain parts of the statute. Section I reads as follows: "Be it enacted by the Legislature of the State of Texas, that any railroad company chartered by the Legislature of this State, heretofore or hereafter, constructing within the limits of Texas a section of twenty-five miles or more of railroad, shall be entitled to receive from the State a grant of sixteen sections of land for every mile of road so constructed and put in running order." (Laws 1853-4, p. 11.)

The following is a copy of section 12: "That the provisions of this act shall not extend to any company receiving from the State a grant of more than sixteen sections of land, nor to any company for more than a single track road, with the necessary turnouts; and any company now entitled by law to receive a grant of eight sections of land per mile for the construction of any railroad, accepting the provisions of this act, shall not be entitled to receive any grant of land for any branch road; provided, this act shall not be so construed as to give to any company now entitled by law to receive eight sections of land, more than eight additional sections; provided, that no person or company shall receive any donation or benefit under the provisions of this act, unless they shall construct and complete at least twenty-five miles of the road contemplated by their charter within two years after the passage of this act; and such donations shall be discontinued in every case where the company or companies shall not construct and complete at least twenty-five miles of the road contemplated by their charter each year after the construction of said first mentioned twenty-five miles of road; and further provided, that the proviso herein contained shall not extend to any railroad the terminus of which is not fixed on the Gulf coast, the bays thereof, or on Buffalo Bayou, and that nothing in this section shall be so construed as to extend the duration of any existing charter; and further provided, that the certificates for land issued under the provisions of this act shall not be located upon any land surveyed or titled previous to the passage of this act; and further provided, that this act shall continue in force for the term of ten years from the time it shall take effect and no longer."

The word "chartered," in the absence of other words indicating that it was used in the future-perfect tense, applies to past transactions. It is true that the language of statutes is frequently elliptical and that the context may constrain the courts to insert words that are obviously intended to be supplied. But we find nothing in the act which tends to show that it was the purpose of the legislation to confer the privileges therein granted upon companies thereafter to be chartered. On the contrary, the proviso contained in the twelfth section, that no company should receive any benefits of the act unless it should complete twenty-five miles of its road "within two years after the passage of the act," is inconsistent with the idea that it was intended to apply to future companies. There was the no general law for the incorporation of railroad companies, and it would have been practically impossible for any company chartered even by the next Legislature to comply with that proviso. If it had been intended that the act should apply to companies thereafter to be chartered, the proviso would have been made expressly applicable to existing companies only, and a provision would have been made that as to new companies the two years' limitation should commence to run from the grant of their charters. The legislation of that era for the encouragement of the construction of railroads makes it manifest, we think, that the legislative policy was, as to companies then chartered, to confer by general laws the privilege of earning lands, and in granting new charters to make such provisions for the companies thereby created as should be demanded by such special conditions as should exist at the time of the grant. That such was the policy of the Legislature which passed the statute in question is shown by the subsequent legislation at the same session. There were seven special charters granted in 1854, in all of which special provisions were made for land grants. The same policy and practice were pursued by subsequent Legislatures while the act of 1854 continued in force. We are aware that in Railroad Co. v. Kuechler, 36 Tex. 382, it was held that the statute applied to companies thereafter to be chartered as well as to those previously chartered, but we think that ruling clearly erroneous and cannot assent to it.

Since we hold that the general law of 1854 applied only to companies in existence at the date of its passage, it must be held that whatever rights the Waco Northwestern Railroad Company acquired under it were derived from that section of the special charter of the Waco Tap Railroad Company which attempted to confer upon the latter company the benefits of that law. But it is insisted that the law of 1866 was in conflict with section 25 of article 7 of the Constitution then in force. That section is as follows: "No law shall be revised or amended by reference to its title; but in such case the act revised, or section amended, shall be re-enacted and published at length." (Const. 1845, art. 7, sec. 25.)

It is quite clear that section 12 quoted above from the special charter is in no sense a revision of the act of 1854. It extends the operation of that act so as to make it apply to a company to which it did not apply before. If this may be deemed an amendment in any sense of that word, it is evident that it was not such an amendment as was contemplated by the section of the Constitution just quoted. There are many statutes that do not purport to be amendments, that have the effect to enlarge or to restrict the operation of others. In the absence of some constitutional restriction of like effect to that of section 25 of article 7 of the Constitution of 1845, it was the usual practice of legislative bodies to amend a law simply by providing that certain words should be added, or that others should be stricken out, or that in place of certain language certain other language should be substituted. Such an amendment frequently presented a problem in construction that it was difficult for the average mind to solve. This practice afforded a means of imposing upon unwary members of the legislative bodies and of procuring the passage of amendments which would never have passed had their effect been fully understood. So also the amendment when passed did not admit of that ready understanding which is desirable in all written laws. These were the evils which it was the purpose of section 25 to suppress. That provision and other similar constitutional restrictions upon the form of legislation have never in construction been given a rigid effect. They have been held applicable to such statutes only as come within their terms, when construed according to the spirit of such restrictions and in the light of the evils to be suppressed. Any other rule as applied to he particular inhibition under consideration would work great if not intolerable inconvenience and would render the statutes unnecessarily voluminous. The People v. Mahaney,13 Mich. 481, is a leading case upon this subject. The opinion in that case was rendered by Judge Cooley and has been frequently quoted with approval. Evernham v. Hulit, 45 N.J.L. 53; Home Ins. Co. v. Taxing District, 4 Lea. (Tenn.), 644; State v. Cross, 38 Kan. 696; Timm v. Harrison, 109 Ill. 593. The same doctrine is announced in many other cases, some of which we cite: Ex parte Pollard, 40 Ala. 77; Shields v. Bennett, 8 W. Va. 74; State v. Yardley (Tenn.), 32 S.W. Rep., 481; Anderson v. The Commonwealth, 18 Gratt., 295; Fleischner v. Chadwick, 5 Or. 152; Davis v. The State, 7 Md. 152.

Section 12 of its charter extends to the Waco Tap Railroad Company, in express terms, the privileges of earning lands which were granted to other railroad companies by the general law of January 30, 1854. The meaning of the section is as clear as if the provisions of the general law had been repeated in the act. It incorporates the privileges of that law, and makes them a part of the special charter. By reference to the act we know what the privileges were which were intended to be granted. The practice of making the provisions of one statute applicable to another by a reference to the former law in the new act is of frequent occurrence in legislation both in England and in this country, and such legislation has been uniformly recognized as valid, so far as we have been able to discover. Warrenton W. W. Co. v. Longshaw, L. R., 9 Q. B. D., 145; Attorney General v. Gas L. C. Co., L. R., 7, Ch. Div., 217; Sika v. Railway Co., 21 Wis. 375; Wood v. Hustis,17 Wis. 429; Crosby v. Smith, 19 Wis. 472; Turney v. Wilton,36 Ill. 385; Jones v. Dexter, 8 Fla. 276; Spring Valley W. W. v. San Francisco, 22 Cal. 434; Schwenke v. Railway, 7 Col., 512.

In the case of the Chenango Bridge Company v. The Binghampton Bridge Company, 70 U.S. 51, the Supreme Court of the United States held a similar provision good and in construing it said: "The form adopted in making the grants has weight in arriving at the true legislative intention; and it is worthy of consideration that it is not unusual in the legislation of this country to grant vast powers in a short act by referring to and adopting the provisions of other corporations of like purposes. In fact, some of the great enterprises of the day have sprung into existence and distributed their blessings by virtue of legislation similar to that which created the Susquehanna Bridge Company. The object is apparent not to incumber the statute book by useless repetition and unnecessary verbiage."

But it is also urged that the act of January 30, 1854, had expired by its own limitation, and that for that reason section 18 of the special act was inoperative. We are of opinion, however, that the general law had not expired for all purposes. According to its terms that act was to continue in force for the term of ten years — that is to say, until January 30, 1864. But on the 11th day of January, 1862, the Legislature passed an act, the first section of which reads as follows: "The failure of any chartered railroad company in this State to complete any section or fraction of a section of its road, as required by the existing laws, shall not operate as a forfeiture of its charter or of the lands to which said company would be entitled under the provisions of an act entitled, 'An Act to encourage the construction of railroads in Texas, by donations of land,' approved January 30, 1854, and the several acts supplementary thereto: Provided, said company shall complete such section or fraction of a section as would entitle it to donations of land under existing laws, within two years after the close of the present war between the Confederate States and the United States of America." (Pas. Dig., art. 4961.)

As we construe this statute, it was merely an act for the relief of such companies as had been constructing their lines under the law of 1854 with a view to secure the benefits of that act. But its effect was to continue the operation of the original law as to such companies until two years after the close of the war.

But if the law of 1854 had ceased to operate when the special charter of the Waco Tap Railroad Company was granted, does it follow that section 18 of that charter would have been of no effect? The Constitution of 1845 contained no inhibition against the revival of statutes by reference to their title. The present Constitution has a provision which corresponds to section 25 of article 7 of the Constitution of 1845; but that provision uses the word "revive," instead of "revise." If it had been in force when the act of 1866 was passed, and if the law of 1854 had then expired, it would have presented the question, whether the older law could have been revived and made applicable to the Waco Tap Railroad Company by a mere reference to its title. But under the Constitution in force when the special charter was granted, the question does not arise.

In the absence of any constitutional restriction, we are of opinion that one statute by a proper reference to another may incorporate in it the provisions of the former law, although the former may have expired or may have been repealed. A law so referred to in another and made a part of it, does not operate by its inherent force, but takes effect from the statute in which it is incorporated. In case of a written contract which refers to another writing, we look to that which is referred to, for the purpose of determining the intention of the parties in regard to the subject matter of the contract. So where one statute adopts the provisions of another, we look to the provisions of the other merely for the purpose of discovering the legislative intent; and no reason is seen why, in such a case, the will of the Legislature should not be given effect. If the statute referred to be an existing law, the legislative purpose is to apply its provisions to the subject matter of the new act. If it has expired or has been repealed, the purpose is to revive it and make it applicable in the same manner. So it has been expressly held that the provisions of a repealed law may be made a part of a new statute by referring to it in general terms without incorporating such provisions at length. Flanders v. Merrimack, 48 Wis. 567. This accords with the rule which is generally recognized, that the repeal of an act the provisions of which have been incorporated into another by reference to its title does not repeal so much of the later act as so incorporates it. Sika v. Railway Co., 21 Wis. 370; Spring Valley W. W. v. San Francisco, 22 Cal. 434; Nunes v. Wellisch, 12 Bush. (Ky.), 363; Schwenke v. Railway Co., 7 Col., 512.

On the 13th day of November, 1866, the same Legislature which granted the special charter to the Waco Tap Company passed a general law, which contained, among others, the following provisions:

"Be it enacted by the Legislature of the State of Texas: That the grant of sixteen sections of land to the mile to railroad companies, heretofore or hereafter constructing railroads in Texas, shall be extended, under the same restrictions and limitations heretofore provided by law, for ten years after the passage of this act."

"That it is not intended by the preceding section to interfere with or impair the rights which have been heretofore acquired by companies under laws heretofore in force, but to preclude companies from hereafter taking advantage of the provisions of sections 2, 3, 4 and 5 of the Act of January 30th, 1854, and the supplementary Act thereto of 16th February, 1858: Provided, that all tap roads over twenty-five miles long shall be entitled to the benefits of this act." (Laws 1866, p. 212.)

The name of the company indicates that it was a tap road and the evidence shows beyond controversy that its proposed line was more than twenty-five miles in length. This makes it clear, we think, that it was entitled to the extension granted by the law just quoted and renders it unnecessary for us to determine the length of time allowed it for the construction of its road, in order to earn the lands under its original charter. It is to be noted, that provision of the law of 1854 which required certain companies to complete twenty-five miles of their respective roads within two years after the passage of the act and at least twenty-five miles every year thereafter, applied only to those companies whose lines had their initial point upon Buffalo Bayou or upon the coast. Railway Co. v. Kuechler,36 Tex. 382. The Waco Tap Railroad Company was not one of those.

We conclude, therefore, that the general Act of November 13, 1866, was intended to confer upon the proposed corporation, the Waco Tap Railroad Company, the privilege of acquiring lands from the State, and that it would have been effective for that purpose had the company organized, accepted the charter and complied with its provisions. A charter is held to be a contract, and before an offer becomes a contract there must be an acceptance. And therefore a charter granted by a special act, until there has been an acceptance, does not constitute a contract. In the act in question, the right to become a corporation is not conferred upon any particular persons. The offer is to any persons who may take stock and organize the company; and commissioners are named for the purpose of effecting the organization. No formal acceptance is required by the act. In such a case an organization is an acceptance, but without an organization there can be no acceptance.

Had the company ever organized when the special act which amended its charter was passed? Did it have any existence, or even the right to organize at that time? If an organization was previously effected there is no direct evidence of the fact.

The certificates, it is true, are prima facie valid; and from their issue the presumption arises, that the Commissioner of the General Land Office inquired into and found the existence of all the facts requisite to justify his action. In the absence of countervailing proof, this presumption for the purpose of this suit would have been deemed conclusive. But the defendant introduced in evidence the Act of August, 1870, which purports to amend the original charter, and we think that that act itself affords strong evidence that at the time of its passage the Waco Tap Railroad Company had never been organized. So much of that act as is necessary for the purposes of this opinion reads as follows:

"That section first of the above entitled act, approved November 5, 1866, shall be so amended as to read as follows: That a corporation and body politic be and the same is hereby created, to consist of the president, directors and stockholders of a company, to be styled 'The Waco Tap Railroad Company,' and J.B. Earle, James E. Harrison, George E. Burney, Richard Coke, E.J. Gurley, L.F. Puckett, J.M. Steiner, John Shackleford, William Dunklin and H.W. Hood be and they are hereby commissioners to organize said company; and the name of said company shall be, and is hereby now changed from the Waco Tap Railroad Company, to be called hereafter 'The Waco and Northwestern Railroad Company,' and said company shall have power in their corporate capacity under the name and style of the 'Waco and Northwestern Railroad Company,' to have succession and a common seal; to make contracts; to sue and be sued; to plead and be impleaded; to grant and receive; to make by-laws, and generally to do and perform such acts and things proper and necessary to be done to carry into effect the objects and consummate the ends of this incorporation, and the maintenance of the rights accruing under or connected with it, if not inconsistent with the laws of the State, and shall succeed to all the rights of the 'Waco Tap Railroad Company': Provided, that nothing in this act contained shall be considered as reviving any land grant to said railroad company."

"Section second shall hereafter read as follows: Said corporation is hereby invested with the right to locate, construct, operate, own and maintain a railway and telegraph line, commencing at a convenient point on the Houston and Texas Central Railroad, within or below the County of Falls, and running thence in a northwesterly direction, by the most eligible route, to or near the town of Waco, crossing or recrossing the Brazos River whenever the company may deem it necessary; and thence up the general course of the Brazos River northwestwardly to the vicinity of the copper and coal mining regions on the waters of the Brazos River; and thence to the north line of the State of Texas, on Red River; and the said company shall have the right to cross the line of any other railroad on its line, and may form a junction with any other railroad company running in the same general direction, with full power to unite and consolidate with the same upon such terms as may be agreed upon by said company, with the power and right to change the name thereof upon such consolidation."

"Sec. 4. Section fifth shall hereafter read as follows: "The immediate government and direction of the affairs of said company shall be vested in a board of not more than eleven directors, who shall elect one of their number president. No person shall be eligible to the office of director unless he be the owner of at least ten shares of the stock of said company. The directors shall be elected annually by the stockholders, each being entitled to one vote for every share he may own, the first election to take place within two years of the passage of this act, at such time and place as the persons named in the first section of this act, or a majority of them, may determine * * *."

"Sec. 8. Section thirteen shall hereafter read as follows: Said company shall commence the construction of said road within twelve months after the organization of their company, and shall complete and have in running order twenty miles of said road on or before the first day of December, 1871, and shall complete fifteen miles yearly thereafter, until said road be completed to or near the city of Waco, say to the Waco depot; and fifty other miles shall be completed within three years thereafter; and twenty miles a year thereafter, until the road is completed to its northwestern terminus in the copper or coal mining regions, or to the State line." (Special Laws 1870, p. 112.)

The first section of this act indicates that the company had never been organized. If organized, why name the same commissioners who were appointed in the original act and provide that they should organize it? If any work had ever been done in constructing the road, why provide, in section 13, as amended, that the company should commence the construction within twelve months after the organization of the company? The only expression in the act which tends to another conclusion is the provision that the company "shall succeed to the rights" of the original company, which indicates that the latter had acquired some rights to be preserved. This was probably intended, however, to continue in effect certain legislation authorizing a tax to aid in the construction of the road, of which we shall speak more fully hereafter. Viewing the whole of the amended act, we think that it evinces that the original company had never been organized and that it was the intention to revive it and give it a new lease of life. While the statute conferred some additional powers, its language tends strongly to show that the main purpose was to give the proposed company a new start.

Now, we think that the recitals in the charter of the Waco and Northwestern Railroad Company are evidence against the plaintiff, but we do not hold that they should be deemed conclusive. There is no direct recital that the Waco Tap Company had never been organized, but as we have intimated, the implication to that effect, from its provisions, is very cogent. It was competent for the plaintiff to have shown, if it could have done so, that an organization had in fact been effected, and that the rights proposed in that charter had been acquired and preserved when the amendatory act of 1870 was passed. But the statement of facts in the record before us leaves the period between the passage of the original charter and of the amendment a blank. If anything was done under the charter during that time the evidence does not show it. The very meager testimony upon the question of construction tends at most to show that the work was begun in the early part of the year 1871 and was not completed until about the first day of December, 1872.

But it is claimed in argument that the existence of the Waco Tap Railroad Company was recognized in legislation previous to the passage of the amended charter. On the 11th day of December, 1868, the convention then in session passed a declaration or ordinance providing for the levy of a tax upon the people of Falls and McLennan Counties to aid in the construction of the Waco Tap Railroad. The ordinance provided, that the question of the tax should be submitted to a vote of the people; that in case a majority should vote in favor of the tax, that the assessor and collector of taxes of the county so voting should give a bond "payable to the president and directors of the Waco Tap Railroad Company" for the faithful performance of his duties under the ordinance. There is also a provision for the payment of the money to be collected to the treasurer of the company and for an issue of stock under certain conditions by the president and directors to the taxpayers. This ordinance, if valid for any purpose, was probably sufficient to waive any ground of forfeiture that may have accrued and to revive the corporate existence if it had been lost. But that it is proof that the company had been organized is not clear. We are of opinion, however, that the ordinance was not valid. The convention which met on June 1, 1868, was assembled in pursuance of an Act of Congress passed March 23, 1867. It was called for the purpose of framing a Constitution for the State with a view to its restoration to the Union. The Constitution to be framed by it was to be submitted for ratification to a vote of the people. See Act of Congress of March 23, 1867, secs. 3 and 4, 2 Pas. Dig., p. 1093. The Act of Congress did not invest the convention with the power of independent legislation. It is true that the question of the propriety of incorporating any specific provision into the fundamental law was for the sole determination of the convention. But we are of opinion that when a convention is called to frame a Constitution which is to be submitted to a popular vote for adoption, it cannot pass ordinances and give them validity without submitting them to the people for ratification as a part of the Constitution. The delegates to such a convention are but agents of the people and are restricted to the exercise of the powers conferred upon them by the law which authorizes their election and assemblage. The ordinance of the convention in question, which divided the State into congressional districts, and that which provided for a submission of the proposed Constitution to a vote of the people, are appended to the Constitution as framed and the whole are signed by the president and members as one instrument. 2 Pas. Dig., p. 1134-5. Section 1 of the latter ordinance contains the provision, "that the Constitution adopted by this convention be submitted for ratification or rejection to the voters of this State," etc. There is no provision for a submission of the independent ordinances. In Stewart v. Crosby, 15 Tex. 546, an ordinance attached to the Constitution of 1845 was held valid. In that case the court say: "For the present, then, it may suffice to say we think it free from doubt that the ordinance appended to the Constitution is a part of the fundamental law of the land. Having been framed by the convention that framed the Constitution of the State, and adopted by the convention and the people along with the Constitution, it is of equal authority and binding force upon the executive, legislative and judicial departments of the government of the State as if it had been incorporated in the Constitution, forming a component part of it."

This decision was followed without comment in Grigsby v. Peak, 57 Tex. 142, in passing upon the validity of an ordinance of the convention of 1866. From what has been quoted from the opinion in Stewart v. Crosby, supra, it appears that the ordinance then in question was submitted with the Constitution and voted upon by the people. The convention which passed the ordinance which was held valid in Grigsby v. Peak was called by virtue of the proclamation of President Johnson. This proclamation did not require any part of the work of the convention to be submitted to the vote of the people, and in our opinion that convention therefore had the power to pass ordinances without submitting them for adoption to a popular vote. The ordinance now under consideration was not submitted to a vote, though two others, which were added to, incorporated into and signed as a part of the Constitution, were so submitted. Since the convention could not finally legislate, and since a vote of the people was necessary to make its action effective, we conclude that the ordinance in question was invalid and not effective for any purpose.

We are therefore of the opinion that the evidence in the record before us authorized no other conclusion save that, at the time the special Act of August 6, 1870, was passed, the Waco Tap Railroad Company had not been organized. The charter of the company did not expressly fix the time in which it should organize; but when no time is fixed, in such a case the organization should be effected within a reasonable time. State v. Bull, 16 Conn. 179. The thirteenth section of the charter required the company to commence the construction of its road within twelve months from its organization and to have at least twenty-five miles graded within two years from the passage of the act. It necessarily follows that it should have organized before the expiration of two years from the date of its charter. Nearly four years had elapsed when the amended charter was granted. Its position therefore when the amendment was made was the same as if no charter had ever been granted. The company authorized by the original charter never came into being and it could have acquired no rights. The amendatory Act of August 6, 1870, revived the right to form a corporation, but provided that nothing in the act should be construed to revive the land grant.

Besides, when the amendatory act was passed, the following section of the Constitution of 1869 was in force: "The Legislature shall not hereafter grant lands to any person or persons, nor shall any certificates for land be sold at the Land Office, except to actual settlers upon the same, and in lots not exceeding one hundred and sixty acres." (Const. 1869, art. 10, sec. 6.) Whether that section repealed all existing laws for the grant of lands to railroad companies, in so far as they could be repealed, is a question which does not arise in this case. Undoubtedly it prohibited future grants. If the Waco Tap Railroad Company had never organized, the law for its creation had become a nullity, and it had no existing right to pass to the new company as its successor.

But it is also claimed that the Act of June 18, 1870, which purposes to make legal the void ordinance of the convention of 1868, was a recognition of the corporate existence of the company. If it stood alone, it should probably be deemed conclusive evidence that the corporation had been organized and had a corporate existence at the time the act was passed. But was it evidence that it had been organized when the Constitution of 1869 took effect and the Legislature had been prohibited from making land grants? But this act was passed by the same Legislature which passed the act amending the original charter and is to be construed in connection with it, and when so construed we think it can have no such effect as is claimed for it. The amendments to the charter clearly indicate that the company had not then been organized and that the corporation had then no actual existence. The Act of June 18, 1870, does recognize the existence of the corporation — but this may have been a mere potential existence. That construction is in harmony with the provisions of the special amendatory act passed by the same Legislature and therefore should prevail.

It follows from what we have said that the judgment must be reversed, and the cause will be remanded. If upon another trial it shall be shown that the proposed original company organized so as to save its charter and had not forfeited its rights to earn lands when the Constitution of 1869 went into effect, the question will be presented, whether section 6 of article 10 of that Constitution had the effect to repeal the law which conferred upon the Waco Tap Railroad Company the privilege of acquiring lands by the construction of its road. The further question may arise, whether a failure to comply with section 13 of the original charter, ipso facto, forfeited the company's privilege of acquiring lands. That section has not been before quoted, but reads as follows: "That said company shall commence the construction of said road within twelve months after the organization of their company, and shall have completely graded at least twenty-five miles of said road within two years from the passage of this act, and twenty-five miles shall be graded every year thereafter." (Special Laws 1866, p. 256.)

Those questions involve important and valuable rights not involved in this case, and we do not deem it proper to determine them in advance. It will be time to decide them when a case comes before us in which the facts call for their determination.

The second question presented by the assignments of error in this court is whether or not the plaintiff showed title to the certificates, if valid, upon which the surveys were made. It appears by the statement of facts in this case, that on the 6th day of July, 1871, the Waco and Northwestern Railway Company executed to two trustees a deed in trust upon its property to secure the Houston Texas Central Railway Company in the payment of $600,000, and that in pursuance of the power therein conferred the trustees sold the property to the Houston Texas Central Railway Company and on the 31st day of March, 1873, made a conveyance to the purchaser. The description of the property given in the mortgage and in the conveyance by the trustees contained the following: "And also all and singular the chartered rights, privileges and franchises of every kind granted to the Waco Northwestern Railway Company by acts of the Legislature of the State of Texas which are now possessed by it or to which it may hereafter become entitled under said acts and the laws of Texas relating to railroads." In Shirley v. Railway Company,78 Tex. 131, it is said that these conveyances did not pass the title to the lands earned by the Waco Northwestern Railway Company by construction of its road. That was a suit by a creditor of that company, in which, among other things, he sought to subject these lands to the payment of his debt. It was held in that case that in so far as the plaintiff sought to reach the lands his suit was barred by limitation. The holding that the deed in trust and the deed of the trustees did not pass the title to the Houston Texas Central Railway Company was placed upon the ground that the deed in trust did not embrace the lands. But the questions suggest themselves: Do not the words or description in the mortgage above quoted include the right of the company to acquire lands? and is not the deed of the trustees sufficient to pass the title to all lands, if any, acquired by the company after the mortgage was executed? It seems to us that these questions were not involved in the case referred to, and that they are still open questions in this court.

But it is insisted on behalf of the defendant in error, the plaintiff in the trial court, that after the sale of the franchises and property of the Waco Northwestern Railroad Company under the deed of trust to the Houston Texas Central Railroad Company, the directors of the "sold out" company ordered a conveyance of the lands to the latter company in payment of a balance of $200,000 still due it, and that in accordance therewith the president and secretary of the "sold out" corporation executed a deed thereto to the plaintiff. It seems to have been held in Shirley v. Railroad Company, supra, that such action conveyed the title. But while the record before us shows the deed mentioned, it contains no evidence, so far as we have found, of any action on the part of the directors of the Waco Northwestern Railroad Company which authorized its execution. Whether the deed above is sufficient to show prima facie, that the title passed, is a more difficult question.

Under the statute then in force the effect of the sale of the Waco Northwestern Railroad Company under the deed of trust was to pass to the purchaser the railroad and all the property and franchises of the company appropriate to its operation; and also the right of corporate existence. Pas. Dig., art. 4912. But that statute provides also in effect, that the directors of the "sold out" company shall, as to all property of such company that may not pass by the sale, act as trustees for the purpose of paying the outstanding debts and distributing the surplus, if any, among the stockholders. Pas. Dig., art. 4916. But for the fact that the previous section of the statute had provided that the sale should pass the right to exist and act as a corporation (Pas. Dig., art. 4912, supra), we apprehend that section 9 (Pas. Dig., art. 4916, supra) would have been simply declaratory of the common law. So long as the corporate existence of an insolvent corporation remains, it is the duty of its directors to dispose of its property and to distribute the proceeds equitably among its creditors. Since the statute directed that the sale should transfer the corporate franchise, it was probably necessary to provide that the powers of the directors as to the assets not sold should continue, in order to enable them to administer such assets and to distribute their proceeds among those equitably entitled thereto. Such we think the purpose of the statute and nothing more. Whether they call themselves directors or trustees we deem unimportant. Hence if we had a deed which purported to be executed by the president in behalf of the directors of the "sold out" corporation, we incline to think it should be treated as prima facie evidence of title in the grantee. As was said in Witherspoon v. Railway Co., 48 Tex. 309, they remained a quasi-corporation, and we think they were empowered to convey the remaining property of the corporation in the same form as if no sale had been made. In Thompson on Corporations, sec. 5016, it is said: "Where the instrument is formally executed by the proper officers, generally the president and secretary, the seal of the corporation, formally affixed, carries with it prima facie evidence of an antecedent authorization. This being so, it is not necessary for the instrument to recite such authorization, but if it is challenged, it is to be determined upon proof aliunde." The text is supported by the cases cited. Schallard v. Ell Run, etc., Co., 70 Cal. 144; Hart v. Stone, 30 Conn. 94; Eureka Iron Works v. Bresnahan, 60 Mich. 332. The conveyance of the certificates in question is executed by the president and secretary and is attested by the seal of the corporation. If the corporation had not been "sold out," there can be no doubt but this deed would be prima facie evidence of a conveyance of the title to the certificates; and we incline to think that since we have to deal here with the legal title only, since the defendant cannot set up outstanding equities in another, the deed in question should be deemed to have the same effect, provided it appeared that Flint acted as president of the board of directors existing at the time the company was "sold out." In any event, if there be others who are equitably entitled to the lands located by virtue of the certificates under which the plaintiff claims, they may show in a proper case, if not too late, that the deed was executed without consideration or without authority from the directors of the "sold out" corporation. But the testimony does not make it clear that after the sale a new directory was not elected. We apprehend that there was no power to choose a new directory and that any action by persons so chosen would have been simply void — unless, perchance, the old and new directory were composed of the same persons. In that event the rule adopted in this court, that when one having a valid power conveys property, the conveyance is good, although he purports to act under another power which is invalid, should probably apply.

But since the case must be reversed, we do not feel inclined to enter into the field of speculation to determine any of these questions in advance.

For the reasons given the judgment is reversed and the cause remanded.

Reversed and remanded.

March 19, 1896.