Manning v. Railway Co.

There is a marked distinction between the case of Richmond & Irving Construction Company v. R. N. I. & B. R. R. Co., in the Federal Circuit Court of Appeals for this Circuit, referred to in the brief of learned counsel for defendants, and the case at bar. No one will contend, I apprehend, that because the stockholders in two corporations are the same persons and one corporation dominates the other, that the dominating corporation is liable for the torts of the dominated corporation. The identity of the stockholders in two separate corporations does not destroy, suspend or in any wise affect the legal corporate identity of the two, nor does the bare fact that one corporation exercises a controlling influence over another, through the ownership of its stock or the identity of stockholders, operate to make either the agent of the other or merge the two into one. It is equally true that the stockholders of neither corporation are liable for corporate debts or corporate torts of the other, or of either.

For the same reason the case of Atchison R. R. Co. v. Davis, 34 Kansas, 209, referred to by learned counsel for the defendants, is not authority for the contention made for the defendant gas company in this action of non-liability for the tort, if such tort exists, on account of negligence of those operating the boiler which exploded and caused the damage coinplained of. In the case at bar the gas company had the power conferred upon it by statute to manufacture, distribute and sell electricity for illumination, and in order to exercise this power and carry on this business it is anthorized by the statute to buy stock in other companies. The statute says:

"And to this end the gas company is authorized and given the power to purchase, hold and sell stock in other companies necessary

or convenient to the conduct of such business."

To what end does that statute refer? Why, manifestly, to the end of manufacturing, distributing and selling electricity for illumination. To what business does the statute refer to the necessary and convenient conduct of which the gas company is given the power of purchasing stock in other companies? Clearly to the business of mauufacturing, distributing and selling electricity for illumination. Here we have the statute itself authorizing the gas company by purchasing stock in other companies, to make them its instrumentalities and agencies for carrying on the business which the statute authorized it to carry on. And in sustaining this proposition, dictated by the reason and common sense of the statute, it can not be said that the principle of law that stockholders are not liable for the torts of the corporation, is infracted. In Louisville Banking Company v. Eisenman, 94 Kentucky, our Court of Appeals said: "While we recognize the general rule on the subject sustained by the authority referred to, it must be held that the purchase by one of all the shares in a corporation under a statute is a dissolution of the corporation to the extent that it suspends the exercise of the rights under the franchise until the owner transfers the stock in good faith, so as to maintain an organization under the statute. The Louisville Gas Company purchased all the stock, as we have seen, in the electric light company and is to-day

Manning v. Railway Co.

the owner of all of its stock; and in doing this it purchased its franchise, plant and machinery, and consolidated it with its own, united the offices in one, removed the plant, and incorporated it with its own, and the only transfer of stock which it has made, as far as the record discloses, is the voluntary gratuitous transfer of one share of stock each to certain directors of its own in order to make them eligible as directors in the electric light company. Under the last decision above referred to, the electric light company as a corporation is dissolved to the extent that its power to exercise its rights under its franchise is suspended until and except the owner has transferred the stock in good faith so as to maintain the organization under the statute. The gratuitous transfer of stock by the gas company to members of its own directory in order to make them eligible as directors in the electric light company, which belongs to the gas company, is manifestly not such a transfer of stock as Judge Pryor referred to and had in mind as being necessary to maintain the organization under the statute. But even if the organization of the electric light company is maintained under the statute, then under the statute enlarging the powers of the gas company and enabling it to buy the stock of the electric light company in order to carry on its new business of manufacturing, distributing and selling electricity for illumination, the undisputed facts show that the Louisville Gas Company itself is carrying on the business under the statute referred to of manufacturing, distributing and selling electricity for illumination, and that it is accomplishing this end by and through the means and agency of the electric light company which it owns. I do not for a moment consider or hold that the Louisville Gas Company in purchasing the stock of the Louisville Electric Light Company in order to use that company and its machinery as a means to the end of manufacturing. distributing and selling electricity for illumination in accordance with the power conferred upon it by the act referred to, has committed any fraud upon the public, or is guilty in the least of any bad faith. It has done nothing but what it had the statutory and moral right to do, to-wit, to buy the stock of another company in order to enable it to carry on the new business of manufacturing, distributing and selling electricity for illumination in the city of Louisville. As an independent corporation, solely responsible for its torts while being thus used, the electric light company has no legal existence. It is either merged or suspended as to its corporate existence by reason of the gas company owning it "body and soul," or it is a mere agent of the gas company in manufacturing, distributing and selling electricity; and if those theoretically the servants or employes of the electric light company in the line of the general business of the gas company conducted by it should commit a tort, the law will hold the principal responsible according to the very right and in despite of the legal fiction of a separate artif cial existence of the electric light company. The Louisville Gas Company, since it purchased and became the owner of all the stock of the electric light company, its plant, machinery and franchise, since it took VOL. VI-22.

Telegraph Co. v. McMullen.

control and management of the same for the purpose of manufacturing, distributing and selling electricity for illumination to the citizens of Louisville, has been held out to and been regarded by the public to be, as indeed it is in fact, the principal and owner in the manufacture, distribution and sale of electricity for illuminating purposes by the use of the plant and machinery which formerly belonged to the electric light company; and the law will hold it to maintain the truth of the situation, and estop it from using the fictitious theoretic existence of the electric light company as a shield and defense against liability for the torts committed by employes in its business. See York & Maryland Line Railroad Co. v. Ross Winans, 17 Howard, p. 30.

From the foregoing it follows if the electric light company's corporate existence is suspended, the gas company is directly liable, if liability there be, for the explosion of the boiler in question; if the electric light com. pany's existence is not suspended, but it exists as a corporation, then upon the facts heretofore stated at length, it is and was the agent for the Louisville gas company, which is liable for its torts.

WESTERN UNION TELEGRAPH COMPANY, Plaintiff in Error,

V. EDWARD MCMULLEN, Defendant in Error.

New Jersey Court of Errors and Appeals, Nov. 19, 1895.

(58 N. J. 155.)

INJURY TO LINEMAN BY SHOCK.

(Head-note in part by the court):

A servant assumes the ordinary risks incident to his employment, and also risks arising in consequence of special features of danger known to him, or which he could have discovered by the exercise of reasonable care, or which should have been observed by one ordinarily skilled in the employment in which he engages.

The employer is bound to use reasonable care to protect the servant from unnecessary risk, and is liable for damages occasioned to him through some latent danger of which he should have warned him.

The above instructions held to have been properly given the jury in an action for damages for injuries to a lineman of a telegraph company, by shock, in which it appeared that the ordinary telegraph current was insufficient to injure persons handling the wires; that electric light wires were attached to telegraph poles near the one where plaintiff was injured, so near the telegraph wires as to be dangerous, of which plaintiff, a new employe, had no warning from the company; and judgment for plaintiff sustained.

Telegraph Co. v. McMullen.

APPEAL by defendant from judgment of Circuit Court, Essex county.

William P. Douglass and Rush Taggart, for plaintiff in

error.

Samuel Kalisch, for defendant in error.

The opinion of the Court was delivered by

VAN SYCKEL, J.: In June, 1893, McMullen, who was plaintiff below, was in the employment of the Western Union Telegraph Company, engaged in helping to set poles, string wires, put up cross arms, and connect wires. While in the performance of his duty, and as he was about to attach a new wire, he received such a strong current of electricity from the Western Union wire that he was knocked insensible, and received most painful injuries.

The writ of error in this case is prosecuted to review the judgment recovered by McMullen below in compensation for the injuries received by him.

The pole upon which McMullen was working at the time he was injured was the property of the telegraph company It appeared in the case that, in the ordinary use of the telegraph wires, the current of electricity was not sufficient to do injury to the person handling the wires.

It further appeared that in various parts of Jersey City, and not far from where McMullen was injured, there were poles of the telegraph company to which were attached electric light wires, heavily and dangerously charged with electricity, and that such electric light wires were in such close proximity to the wires of the telegraph company as to be dangerous, but no electric light wire was attached to the pole on which McMullen was injured. He had been in the employ of the company but one month and five days

Telegraph Co. v. McMullen.

when he was injured, and had never worked in Jersey City before.

It did not appear that the company gave any warning to McMullen of the danger in stringing its wires by reason of their close proximity to electric light wires at other points.

The trial court charged the jury that McMullen, when he entered the service of the company, assumed the ordinary risks incident to the employment, and he also assumed risks arising in consequence of special features of danger known to him, or which he could have discovered by the exercise of reasonable care. He left it to the jury to say whether the placing of electric light wires upon some of the poles of the company, near to the telegraph wires, was a special feature of danger known to McMullen, or which should have been observed by one ordinarily skilled in the employment in which he was engaged. If the jury found in favor of McMullen upon these questions, then it was instructed to inquire whether the company had been guilty of actionable negligence. On this part of the case the jury was instructed that the duty imposed on the company by the contract of hiring was not to subject McMullen, without his knowledge or consent, to risks not assumed by him; that an employer contracts with his employe to use reasonable care to protect him from unnecessary risks, and is responsible to the employe for damages resulting to him by reason of the want of such care. The jury was directed to charge the company with negligence if it found that McMullen was injured through some latent danger, of which he should have been warned, and that the injury resulted from the fact that the electric light wires placed on the poles of the company were the proximate cause of the injury.

All these instructions are in accordance with the established rule in this State. Foley v. Jersey City Electric