Case ID: neb_4/html/0258-01.html
Source: Caselaw Access Project
Author: {"author": "Lake, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dwight J. McCann, plaintiff in error, v. American Central Insurance Company of St. Louis, Missouri, defendant in error. Joseph P Metcalf v. The Same.
    Contract: subscription : conditions precedent. Where a subscription is made to the capital stock of an insurance company, upon the condition that the same is not payable until a certain specified amount has been subscribed, such condition is a condition precedent, performance of which is essential before the company can enforce the payment of a note given for such subscription; nor will it avail the company that the condition is complied with after suit brought, but before the trial; the right to recover must exist at the time the action is commenced.
    Error to the district court of Otoe County. The facts are fully set forth in the opinion. The two cases involved the same question and were argued together.
    
      E. F. Warren, for plaintiffs in error.
    A subscription to the stock of a railroad company, conditioned to be paid when $5,000 was raised for a certain purpose, is a conditional contract. Chase v. Sycamore <& Couriland R. R., 38 111., 215. A conditional subscription need not be paid before condition performed. Id. When a party signs a paper to pay any amount towards raising a larger sum, and no further sums are paid, the contract does not become operative unless the contemplated fund is raised. Dodge v. Gardiner, 31 New York, 239. Trustees v. Stewart, 1 Id., 581. Any condition a subscriber sees fit to make must be complied with before he is liable to assessment. Penobscot c& Kennebec R. R., v. Dunn, 39 Maine, 5S7. Great Falls and Conway Railroad, v. Copp, 38 New llam-p., 124. Giving a note is no waiver of condition. Parrker v. Thomas, 19 hid., 213.
    
      S. H. Calhoun and M. L. Hayward, for defendants in error.
    The answer sets up certain fraudulent representations on the part of the plaintiff below, and also sets up a parol agreement between the parties, said to have been made prior to the making of the note. There was no proof of fraud (which cannot be presumed in a law case), and no such parol agreement, changing the contract made in the note can be set up or proven. Specld v. Hoioard, 16 Wall., 564. Wemple v. Knoff, 15 Minn., 440. Wright v. Smyth, 16 Gray, 499. Campbell v. Tate, 7 Lansing, 370. Hill v. Payton, 22 Gratt., 550. The answer of McCann says his subscription was not to be binding unless two hundred and fifty shares were taken; but the answer shows that when sixty-five shares were taken he paid his twenty per cent., and took from the agent a due bill for thirty-five dollars, to be credited not on his subscription to the stock, but on the note sued on; showing clearly that McCann considered his note a complete payment of twenty per cent, on his stock, and that both parties accepted the condition of affairs as they then stood, and settled upon that basis; for, if obtaining future additions to the subscriptions for stock was a condition precedent to the payment of the note, why did McCann accept a due bill for thirty-five dollars only? The plaintiff in error seems to be laboring under the hallucination that the subscription list is the contract sued on. This is not the case. We sue on the note, which is the last written contract, and if it was true (which is not the case) that there were any terms or conditions to the payment of said note, such terms and conditions should have been clearly expressed therein. Evansville R. R. Go. v. Dunn, 17 Incl., 608.
   Lake, Ch. J.

The action in the court below was upon a promissory note, given by McCann to the defendant in error, for twenty per cent, of his subscription of one thousand dollars to its capital stock. The case was tried to the court without the aid of a jury, and the entire testimony is preserved by a proper bill of exceptions. The only question of importance presented in the record, is whether the finding and judgment of the court are warranted by the evidence. As to all of the material facts of the case there is no dispute. It is shown that McCann’s subscription to said capital stock, apd his giving of the note were contemporaneous acts, respecting one and the same transaction, and they must therefore be considered together.

The contract of subscription, which was in writing, contains among numerous other provisions, the following important condition, viz: “The terms of subscription are as follows: §20 per share of $100 each, is to be paid when the list is completed, as per apportionment above, and the remaining 80 per cent., unpaid on stock account, is to be assessed only in the event of the 20 per cent, cash fund becoming impaired by losses.” The “apportionment” here referred to was in these words, viz: “American Central Insurance Company. The amount of stock apportioned to Nebraska City is $10,000.”

It is very clear that if we give to this condition the effect which its language plainly imports, it must be held to be a precedent condition to the payment of the twenty per cent, for which the note was given, and that, at least as between the maker and the payee, payment could not be enforced until the whole amount of the $10,000 had been subscribed. That a conditional subscription need not be paid until the condition is performed, is a proposition which needs the citation of no authorities in its support.

It is true that the subscription list shows at least a nominal compliance with this condition. That is, there appears to have been subscribed the sum of $10,300, but it was very clearly shown that as to $2,800 thereof, taken by Gerhard, Crook, and McLennan, the subscriptions were not made until long after the action was commenced; indeed as to the subscriptions of Crook and McLennan, amounting to $2,000, not until a very few days before the trial, and quite evidently with the intention of avoiding the objection urged in the answer, that the whole amount of capital stock, which the condition called for, had not been taken.

The question of the good faith with which these three subscriptions were made, does not properly arise at this time. Conceding that they were genuine, which from the testimony may well be doubted, still they cannot avail the defendant here. A right of recovery must exist when the action is commenced, or it cannot be maintained.

Judging from the testimony, the most favorable view for the company is, that the action was prematurely brought. The evidence is far from sufficient to sustain the judgment. It must therefore be reversed and a new trial awarded.

Reversed and remanded.

The other judges concurred.