Case ID: nc_8/html/0274-01.html
Source: Caselaw Access Project
Author: {"author": "Tat non, Chief-Justice. \n      Haxi, Judge. HeNdersoN, Judge.-", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Delacy v. Neuse River Navigation Company.
    From Wake.
    'When a corporate body strikes off the name of one of its members without giving him previous notice of their intention so to do, and affording him an opportunity of being heard in his defence, a mandamus to restore will be granted.
    This was an application for a mandamus, originally made to the Superior Court of Wake, and. upon its refusal to grant the writ, brought by the appeal of the petitioner to this Court.
    
      The petitioner stated on affidavit, that he subscribed for 250 shares in the Neuse River Navigation Company, established by acts of the Legislature passed in 1812, ch. 89, and in 1816, ch. 16. That for the, purpose of paying his first instalments on the 1st ox,May, 1818, he tered into a contract with the President and Directors of the Company, whereby he engaged on his part, within six months to afford a passage between Stone’s' Mills and Fort Barnwell, on the river Neuse, for boats car-lying 7 tons, and within three years for boats of 14 tons. The President and Directors on théir part contracted, at the end of six months, or sooner, if the stipulated work were sooner completed, to pay to hiin Si000 in addition to what he might be indebted for his' Stock, including the first'payment of glO, and all further sums which the Directors might have called for; and at the end of three years or earlier, on completion of the work, to pay as much as wrould, with what he should have received, make up §530,000. If at the end of three months from the date, the petitioner should, not have begun and made proportionate progress, the President and Directors were at liberty to annul the contract, and claim of petitioned a penalty of glOOO, and so at any other time in the progress of the business, if the work should be unnecessarily delayed, a like power was reserved to them to annul the contract and claim the penalty. The petitioner further stated that, in pursuance of this contract he immediately commenced his labours, and effected the object as far as time would permit, but was stopped by order of the Directors, who, on the 4th of February, 1819, put an end to the contract, declaring it null. That the President and Directors (without authority) and without giving the petitioner notice of their intention, had stricken his name from the list of subscribers, in consequence of which he had been denied his franchise of voting at a general meeting of the Company. He therefore prayed a mandamus to be restored to his franchise 0f a corporator from which he had been wrongfully removed-
    A notice issued from the Court below to the President and Directors by name, to shew cause wiiy a manda-owns should not be granted, on the return of which, the application of the petitioner was refused.
    
      Gaston, in support of the onandamus,
    
    took the following grounds : 1st. The petitioner was a' member of the Company entitled to all the franchises attached to his number of shares, and by the Constitution he can be disseised only by the law of the land; it is no good objection to say, he does not become a corporator until he has paid the first instalment; for the 4th section of the act of 1812, ch. 88, makes them all corporators, gives to them the power of appointing officers, and provides that the corporate body may make a rule for immediate forfeiture of the shares of those who do not pay. The words too, of the act are express, that the subscribers shall be incorporated from the time of their subscription. 1812, ch. 89.
    2d. The President and Directors had no authority to strike petitioner’s name from the list of stockholders. The only power given is expressed in the act of 1812, ch. 89, sec. 7, and ch. 88, sec. 4 : the first instalment is to be paid at the first general meeting to be held for choosing President and Directors, and on failure of payment, the names of those who fail may then and there be struck off the books, and others paying may be substituted. Now every subscriber having a freehold in his franchise, cannot be divested thereof but by the general law of the land, except in the precise mode indicated by the acts of incorporation: that mode permits it to be done on one occasion only, viz. at the first general meeting, and by those incorporated, the subscribers ; and should this authority not be exercised at the first meeting, another mode is pointed out for securing payments. — See latter part of the 4th section of the act of 1812, ch. 88.
    
      Sd. If the President and Directors had power to strike from the roll the name of one not paying, it cannot be in a case where the payment has-been dispensed with, and a contract between them and the corporator' substituted, and there exists a dispute between them and him as to its performance. The power of the President and Directors to declare the contract a nullity, is specially given at the end of three months, provided it be not then begun or properly done; the power at any .other time is only in cáse of unnecessary delay, and here unnecessary delay is not pretended. It is not any part of the stipulation between the parties that if Delacy shall not perform these covenants on his part that he shall forfeit Ms shares; and can these Directors say that he shall incur a forfeiture not contained in the contract ? As to the general doctrine of mandamus, he referred to the following authorities — (Bacon “ mandamus”') Bagg’s Case, (11 Rep. 93 — S Burr 1267 — 2 Ibid. 999, 1043 — Cowp. 378 — 3 Bl. Com. 110.) And to shew that in this case the notice was properly directed, were cited (2 S'alk. 433, 699, 701 — 3 Salk. 231 — 1 LA. Bay. 559.)
    
      Seawell, contra,
    
    insisted, that it appeared by the charter that the subscribers should, at the first general meeting, when the President and Directors were chosen, pay the first instalment to the Treasurer, or their names should bo stricken from the list. The charter is silent as to who shall strike off, but it is a fair inference that the President and Directors are to act in all cases where the power to be exercised is not specially delegated to the stockholders or subscribers. In this case petitioner admits that he has never paid, and it does not appear from his case that he has ever performed his contract, the performance of which was substituted for payment. The rule moved for on the President and Directors, is to show cause why a mandamus should not issue to admit. The President and Directors cannot admit, and the v.i'it cannot issue to the corporators, for they are not named, and there must be persons capable of doing the r.ot required, to whom the writ is directed.
    tint if this be deemed an application for a mandamus /,; restore, tlie applicant should have shewn a prima facie title, which he has not done — (3 Term Rep. 577.) An equitable title is not sufficient — (3 Ibid. 651.) The rule in the Court below, which was discharged, being, that the writ should issue to the President and Directors, this Court having only appellate jurisdiction, cannot change it, and the writ must conform to the rule, or it is super - ¡¡«¡cable — (2 SLra. 879.)
   Tat non, Chief-Justice.

This is amotion for a notice to issue to the Defendants, to shew cause why a mandamus should not issue against the Defendants, to restore Hie relator to his franchise as a corporator in the Company. It appears from the affidavit that Delacy became a subscriber on the 13th of April, 1818, and was admitted as a corporator from thenceforth until after ho made, ;; contract with the President and Directors, by which ho was to pay for the stock he had subscribed to. If after this contract had been put an end to, Delacy had been called upon to pay his subscription, and upon neglecting to do so, or on not shewing a satisfactory reason for the neglect, he had been ejected from his place as a corporator, it would have been incumbent on the. Court to inquire into, and give an opinion on the right of the stockholders so to proceed. What he could have shewn on such a notice, either as payment, or excusing the neglect, cannot be told j but prima fade we must take it to be the undoubted right of every man to receive notice of any proceeding against him by which be is to he deprived of acknowledged rights j and for want of such notice in the present case, the rule ought to issue as prayed for in the petition.

Haxi, Judge.

By the fourth section of the act of 1812, ch. 88, which by the act of 1816, ch. 16, as well as many other sections of the act of 1812, are adopted as part of the charter of the Neuse River Navigation Company, it is declared, “ That each subscriber shall pay .for every share by-him or her subscribed, at the first general meeting, the sum of ten dollars to the Treasurer of the Company — and the names of those who fail to pay, then and there may be struck off the books, and others complying with this regulation may take such shares.” The name of Delacy was not struck off at the first meeting, nor did he make any payments . on account of the shares subscribed for by him. But he states, that in lieu thereof he contracted with the President and Directors to do certain work on the river Neuse. He admits that the work was not completed, and that the President and Director's declared the contract to be at an end, according to the power reserved to them in the contract to' do so if they thought proper.

When this declaration was made, the parties stood in the same situation they were in at the first meeting, except that that meeting had passed away and it was too late to pay the first instalment at that meeting. But when it shall be kept in view, that it was by the consent, and no doubt at the request of Delacy that payment had not been made, and that he had failed to do that which was a substitute for it, I think the equity and justice of the case, and the fair construction of the act of. Assembly, would place the parties in the same situation at a subsequent meeting as they stood in at the first, so far at b ast as that Delacy then had the power and privilege of making payment, and if he did not, that the stockholders had the right of striking his name from the list of subscribers for shares. But it seems that his name was struck off by the President and Directors, and not by thé stockholders at one of their meetings. I think the President and Directors, in doing this, transcended the limits of their authority; but this entry, by which the name of Delacy was stricken off, was afterwards virtually adopted by the stockholders as their act; for they refused to receive Delacy’s vote at an election for President and Directors, and had he had due notice of such procedure before it took place, I think from that time he would have ceased to be a member of the corporation. Nor do I think the case would have been altered from the consideration that he had been a member from their first meeting- up to that time — for every person who had subscribed for shares, before he paid his first instalment, was a member to many purposes. He might, perhaps, have voted for President and Directors — for passing bye-laws for the government of tlie corporation — he liad, perhaps, to the last moment of the meeting to pay his first instalment. And for the same reason, Mr. Delacy might have exercised the right of a corporator at any subsequent meeting before his name was struck off for failing to make payment. But I suppose he possessed no more rights at auy subsequent meeting before his name was struck off, than he did at the first meeting. It has beer said that Delacy possessed more shares than the stockholders who struck off his name from the books, and that there were not a majority of course at that meeting. If those who were present, were qualified by having paid up their instalments, and were a majority of those that had done so, I think they were authorised to act as they did ; for Delacy* owing to his delinquency, might by them be stricken off, as he might at the first meeting have been. But what is to be done if Delacy refuses to pay any thing due on his shares ? I cannot think the law contemplated a sale of them — for besides the positive words in the act that directs the names of delinquents to be stricken off, the_4th section of the act of 1816, speaking of sales, (not, to be sure, with a view to this question,) speaks of sales of balancesjiae, meaning no doubt balances due after payments had been made. To purchase a,share when nothing had been paid, would he to subscribe for a share. But another circumstance ought not to pass unnoticed, and that is, that Delacy had not notice that the corporation was about to strike off his name from their books. If he had had notice he might have shewn, for aught that appears, that he had paid his instalments, or that he was ready to do so. For this reason, and for this reason only, I am willing that a mandamus should issue.

HeNdersoN, Judge.-

The applicant was once a cor-porator, for it was not imperative on the stockholders at their first meeting to strike oif those, who failed to pay. They did not do it, they received him and others without requiring payment; he voted with them as a corpo-rator; in fact, their order of removal shews that he was, before the removal, one of their body. I shall pass over every other point made in the case but one ; that is, that the applicant was removed by the stockholders at some meeting subsequent to the first, for failing to make payment, and this without any notice to him; for it may be considered as a removal by the stockholders — they recog-nise the act of the directory. It is a fundamental principle of our Lawr, and recognised in every Court of Justice, (and this corporation was a Court when passing on the lights of its members,) that no man shall be condemned or prejudiced in his rights, without an opportunity of being heard. No matter how desperate his case may appear to be, the humanity of the law says, perchance he may have something to say in his defence ; we will, therefore, not forestall him by saying he can allege nothing ; but after having heard liim, will pass upon his case. For this reason I think the mandamus should go 5 for without prejudging the case, we do not know but that the applicant might have paid, or shewn some satisfactory reason for not paying, or that he then might have paid, for it was not even then too late. As to some cases which are to be found in Term Reports, that no notice is required when it appears clearly that the applicant has nothing to offer in his defence ; for the present ^ -g a <|ufpcjen(- answcr to say, that it does not appear that Delacyhad nothing to offer, or cotild not, by paying the money, avert the forfeiture. When a Case of that kind arises, it will then be time enough to examine the soundness of the doctrine. I am therefore of opinion, that the Superior Court of Wake should issue a mandamus to the corporation, commanding it to restore the applicant to the rights of a corporator, or shew cause to the contrary. '