Case ID: serg-rawl_10/html/0269-01.html
Source: Caselaw Access Project
Author: {"author": "Duncan, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Chambersburg,
    October 17, 1823.]
    GRAYBLE against The York and Gettysburg Turnpike Road Company.
    IN ERROR,
    ©ne who acts as eomimsskmer to receive the subscriptions under an act to incorporate a turnpike road company,-cannot when sued by the company, for the amount of his subscription, object that the five dollars per share payable at the time of subscription, was not actually paid by him.
    The recital in a charter granted under an act of assembly, that certain commissioners appointed by the act to take subscriptions, had done so, and of their certificate to that effect, is, when accompanied with proof that defendant subscribed for three shares in the books of the comp any,’ prima facie evidence of such certificate having been forwarded to the governor.
    One who had been a stockholder in a company, and had transferred his nine shares of stock therein to the company, with a guarantee that they should sell at par, is not a competent witness for the company, in a suit brought by them to recover the amount due by a person who subscribed to their stock, if such shares are still held by the company, and the market price is under par.
    By the bill of exceptions returned with this writ of error, by the Court of Common Pleas of Jldams county, it appeared, that this was an action, brought by the York and Gettysburg Turnpike Hoad Company, plaintiffs below, against Samuel Gray ble the deffendant below, to recover the sum of 300 dollars, the amount of his subscription to the York and Gettysburg Turnpike Road. The statement filed alleged, that the defendant on the 1st May, 1817, had signed three promissory notes, in pursuance of the act of assembly of the 11th March, 1815, each promising to pay the plaintiffs the sum of 100 dollars for three shares of stock in said company, to be paid in such manner and proportions, and at such times, as the president and managers thereof should determine: that the defendant was a commissioner under the act, and acted as such when the books were opened, and that the amounts and times of payment had been fixed on and were past. The defendant pleaded non assumpsit, and payment, and that he never acted as commissioner in taking subscriptions, for the said turnpike road, nor for any other purpose. The plaintiff replied, non solvit, and that defendant did actas commissioner in pursuance of his appointment. And issues were joined.
    On the trial, the case appeared to be thus.
    By an act of assembly passed the 11th March, 1815, (Pamplu 
      
      Laws, 120,) commissioners were appointed of whom the defendant below, and plaintiff in error, Samuel Grayble, was one, to perform certain services, with a view to the making of a turnpike road from the borough of York to the borough of Gettysburg, Among other things, the said commissioners were to open books to receive subscriptions, in which they were to enter as follows: s‘ We, whose names are hereunto subscribed, do promise to pay to the president, managers and company of the York and Gettysburg turnpike road, the sum of 100 dollars, for every share of stock, in said company, set opposite to our respective names, in such manner and proportions, and at such times, as shall be determined by the president and managers of the said company, in pursuance of an act of the general assembly of this commonwealth, entitled, ‘ An act to enable the governor to incorporate a company to make an artificial road by the best and nearest route from the west end of the borough of York, to the borough of Gettysburg in the county of Jldams? ” Such books were prepared, and the entry in the above words was made therein, to which Grayble subscribed his name for three shares.
    By the second section of the same act, it is provided, that when 50 or more persons shall have subscribed 250 shares of the said stock, the commissioners or a majority of them, shall certify under their hands and seals, the names of the subscribers, and the number of shares subscribed by each, to the governor, whereupon it shall be lawful for the governor, by letters patent under his hand and the seal of the state, to create and erect the subscribers into a body politic and corporate, in deed and in law, by the name style and title of the President and Managers of the York and Gettysburg Turnpike Road, and the same section confers a variety of privileges on the corporation so erected. By the IXth section of the act, provision is made for the organization of the company by the election of the officers, and the company, so organized, is authorised to go on and construct the road, and to make all such by-laws, (not inconsistent with the constitution of this commonwealth, as might be necessary to carry into effect the subject of the said act.
    On the trial the plaintiffs offered as a witness, George Lashells, when, (as the bill of exceptions stated) it appeared to the court that Lashells, had been a stockholder in the said company, and had owned nine shares of stock, which he had prior to the day of the trial, transferred to the Gettysburg Bank, in payment of a debt due by him to said bank, by the following assignment in writing.
    October, 20th 1821.
    For value received, I do assign nine shares of stock in the York and Gettysburg Turnpike road to the Bank of Gettysburg, and agree to guarantee the sale of said stock at par, and if sold unde)1 par, I, the said George Lashells, agree to make up the deficiency.
    George Lashei.es,
    
      Being examined on his voir dire, before this assignment was produced, hé stated, that he was formerly a stockholder, in the company, that before the last court he sold out his interest to the bank by an absolute sale, but he agreed that if by a certain day not yet arrived, the stock would not sell for a sum at which the bank and he estimated it, he would make up the deficiency. The bank took the stock at par. He supposed it would be dull sale now at 50 dollars per share. Whereupon the defendant objected to the admission of the said George Las hells as a witness on the part of the plaintiffs, which objection the court overruled and admitted the said George Lashells to testify on behalf of the plaintiffs.
    The court gave the following charge to the jury:
    If by the subscription of the defendant, and others similarly situated, (and Mr. Cobean, testified that, that was the usual way-of taking subscriptions,) the commissioners were enabled to certify to the governor the number of persons, and the number of shares required to authorise him to grant letters of incorporation to the company: if by the subscription of Samuel Grayble, other subscribers were induced to go on, to get their charter, and to undertake the expenditure of large sums of money in constructing the road: if by the subscription of the defendant, others were induced to subscribe to effect a common object: now, when the road has been completed, to suffer one or another to withdraw his name, and to refuse to contribute to the general expense, would seem to be a fraud upon the governor in procuring him to grant the charter; it would be a fraud on the other subscribers, by having induced them to use unfair means in obtaining the charter; it would be a fraud on the company; which, on the faith of the general subscriptions, expended its money in the construction of the road. Unless, therefore,some positive rule of law prohibits the plaintiffs from recovering,equity and fair dealing would seem to require a verdict in their favour.
    It is objected, that because the plaintiffs have not shown in evidence, that the commissioners did every thing which was required to be done by the act of assembly in relation to the obtaining of subscriptions, particularly, the giving notice of the time and place' of taking subscriptions, and the demanding payment of five dollars on every share, at the time of subscribing — that such subscriptions are not binding on the party — and it is further contended, that by the pleading in the cause, it is put in issue, whether Samuel Grayble was a commissioner or not, and if you believe that he' was not a commissioner, your verdict must be for the defendant.
    It is certainly true, that corporate bodies are the mere creatures of their charter, and that they derive all their rights and all their powers from the same instrument, and it is true that public policy forbids the granting them any implied or constructive powers.
    At the time the defendant’s subscription was made, the corporation did not exist, the commissioners were required to do certain things in order to obtain a charter. Although these things may not have been done precisely in form, and according to the literal directions of the act, if the defendant acquiesced in them, and stood by, affording the assistance of his signature to procure the charter of incorporation, it is too late, after it has been obtained, and after the company has expended their funds in completing the road, to make the objections to the payment, which he now makes.
    Our opinion is asked of the efficacy of the recital in the charter, of a certificate being signed by the defendant to procure it. The recital in the charter of itself* may not be evidence to establish the fact, or any act alleged to be done by the defendant. But by the law, the commissioners were required to certify to the governor the names of the subscribers, with the amount of their respective subscriptions. Samuel Grayble was a subscriber: the presumption is, that his name was certified with the others. If Mr. Grayble was a commissioner, and acted as such, it would make the case stronger against him. It will be for you to find such verdict, as the evidence and the justice of the case will justify.
    This charge was excepted to by the defendant.
    
      Stephens, for the plaintiff in error.
    1. G. Lashells was incompetent on the ground of interest. He had guaranteed that the stock he had sold the plaintiffs should sell at par: and it was proved to be worth only 30 per cent. If the plaintiffs recovered in this cause, it would raise the price of stock in proportion to the sum recovered.
    2. If the plaintiff did not pay 5 dollars a share at the time of subscription, he was not liable for any part of his subscription. The act of 11th March, 1S15, contains a proviso, that every person offering to subscribe in the books, shall previously pay to the attending commissioners the sum of 5 dollars for every share to be subscribed. The payment of this sum is a-condition, the performance of which, must be proved before the defendant can be made liable. Hibernia Turnpike v. Henderson, S Serg fy Eawle, 219. On this point there was error in the judge’s charge. He said it was a fraud to stand by and encourage others to subscribe by the defendant’s own subscription.
    3. The court did not charge as they were required on the effect of a recital in the charter. The charge was vague, and tended to mislead the jury.
    
      M‘Conaughy, contra.
    1. The witness objected to, had no' fixed and certain interest in the event of this cause. A dubious, contingent interest, is not sufficient to disqualify a witness. Peake’s Evid. 144. Thus, a taxable inhabitant of a city is a competent witness on the trial of an indictment for a penalty, though one actually taxed is not. Commonwealth v. Baird, 4 Serg. Eawle, 141. The effect of the verdict on the price of stock was not certain. There was no time fixed for the sale of the stock. If the bank chose to keep it, it might never be sold.
    2. Could the suit be sustained because the 5 dollars were not paid on subscribing? If the defendant was a commissioner, the 5 dollars were in fact paid, the moment he subscribed. In the Highland Turnpike Company v. M'Kean, 11 Johns. 98, it was held, that if a commissioner subscribe, the first payment in judgment of law, is in his hands for the use of the company.
    3. The court did, in substance, charge, that the recital in the charter was not evidence against the defendant. It is enough if the judge’s opinion is expressed in such a manner as to be understood by the jury. Galbraith v. Black, 4 Serg. & Rawle, 211.
   The opinion of the court was delivered by

Duncan, J.

There was an objection, which if it'is support ed, cuts up this action by the roots. It is. that the 5 dollars required by the act of incorporation to be paid on each share, not being paid at the -fime of subscription, vitiates the subscription in to-to, and for this the Hibernia Turnpike Company v. Henderson, decided by this court, is relied on. But that case is distinguishable from the present in this most important feature, that here the plaintiff in error was one of the commissioners, who had authority to receive the 5 dollars when he made the subscription. It would be a ridiculous ceremony for him to take his money out of one pocket and put it in the other. Wherever the hand which is to pay, is the hand which is to receive, that is payment and satisfaction, as between the parties, even at law. Griffith v. Chew’s Excutors, 8 Serg. & Rawle, 71. And in the case Highland Turnpike v. M'Kean, 11 Johns. 98, this very point was decided. The first payment of a commissioner subscribing was held, in judgment of law, in-his own hands for the use of the company, from the moment of his subscription. I am, therefore, of opinion, that the plaintiff in error was accountable to the company for the amount of his subscription.

The exception to the charge, on account of its vagueness, as to the effect of the recital in the act of incorporation, is altogether groundless. The plaintiff in error has no just reason to complain. The law should have been stated more strongly against him than it was. The recital in the charter was prima facie evidence, accompanied by the evidence that Grayble subscribed 3 shares in the books prepared according to the direction of the act.

But the admission of George Lashells as a witness was erroneous. He had an immediate and direct interest in the funds of the company. These funds would have been increased by the recovery in this aetion. It was a certain benefit. There was a legal, fixed interest at the time of the trial. G. Lashells was a stock holder when the action was brought. He was then clearly interested. Had the transfer of his stock to the Gettysburg Bank, been absolute and unconditional, his interest would have been divested! But it appears he sold it to the bank, and guaranteed its par value. If it did not sell at par he was to make up the deficiency. Now, the deficiency, when he was received as a witness, was 50 per cent. 5 it is chimerical to say, that at some 'future day it might rise again to par. How did he then stand ? At the mercy of the bank, who might have sold instantly, and then received from him by his express stipulation the deficiency. Did not then the the subscription of Grayble add to the funds of the company, and would not the value of the stock be increased by the recovery in this action as far as it went? The quantity of interest can make no difference. A grain of mustard seed would exclude, and it is a general rule of evidence, that if the effect of the witness’s testimony would be to create or increase a fund in which he would be entitled to participate, he is incompetent. 1 Phillips Evid. 50. A grantor warranting the title to land is incompetent on the trial of an ejectment for the land, A stock holder in' a public company transferring his stock with a guarantee of its par value at all times, retains still an interest in every fund which would tend to keep up its value. This subscription of Grayble formed a part of the fund* When he transferred it, if that was not recovered, by so much as its proportion would bear to his stock, would its real value be less,. My opinion, without perplexing the case with numerous references, and nice distinctions between bias and interest, is bottomed on the broad and inflexible rule of evidence, that here was an immediate interest in the witness when he gave his evidence to increase the fund of the company, and that a recovery in this action would have increased that fund, and consequently, that he was interested and incompetent.

Judgment reversed and venire facias de novo awarded.