Case ID: ohio-st_26/html/0241-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Mansfield, Coldwater and Lake Michigan Railroad Company v. Joseph A. Stout.
    1. A subscription to the capital stock of a railroad company on the condition that its railroad shall pass through a certain place becomes absolute on the location of the road through the place named.
    2. "Whore railroad companies consolidate under the act of 1856, the new corporation thereby created may perform the conditions named in subscriptions to the capital stock of the original companies, and it may also, by performance of the conditions, accept a continuing conditional offer to subscribe such stock.
    8. Where a general requisition is duly made by a railroad company during the pendency of consolidation proceedings, under the above-named act, for the payment of subscriptions to its capital stock in monthly installments, and the consolidation becomes complete before all the installments are due, such requisition will continue in force for the benefit of the consolidated company, provided .an officer authorized to recen e such payments be continued at the place named in the call.
    
      4. Such requisition applies to conditional subscriptions as soon as the condition is performed, and to subsequent subscriptions made before consolidation is complete, as well as to subscriptions absolute at the date of ther call.
    
      6. Under the first section of said act as amended May 6, 1869, it is a condition precedent to the right to enter into a joint agreement for consolidation that the lines of road of the contracting corporations be first made, or be in process of construction; and a conditional subscriber, who had no knowledge of the progress of consolidation and in no way contributed thereto, may, in an action by the new company as successor to the old, to recover the amount of his subscription, dispute the corporate existence of the plaintiff, on the ground that, at the date of the agreement to consolidate, the road of the company, to whose stock he so subscribed, was neither made nor in process of construction.
    Error to the District Court of Henry county.
    The original action was brought, in the Court of Common Pleas of Henry county, by the plaintiff in error to recover^ as successor to the Mansfield, Coldwater and Lake Michigan Railway Company, on an alleged subscription to the capital stock of the latter company.
    The jury, to whom the issues of fact were submitted, returned a special verdict, as follows: “ That the defendant, Stout, executed the contract of subscription sued upon, a copy of which is set.forth in the petition; which contract of subscription was delivered to the Mansfield, Coldwater and Lake Michigan Railway Company, on or about the 14th of April, 1871; that the plaintiff, the Mansfield, Cold-water and Lake Michigan Railroad Company, has located its railway so that the same passes through Henry county, Ohio, and through the town of Napoleon; that the directors of said Mansfield, Coldwater and Lake Michigan Railroad Company (plaintiff), by resolution passed December 5, 1871, established their depot at .Napoleon, within the town plat of said town; that the directors of the Mansfield, Cold-water and Lake Michigan Railway Company, by resolution passed April 15, 1871, provided a method by which its ■stock subscriptions to that company should he paid, and the manner in which notices of the same should be given; that the notice was given as required by the directors; that the defendant, Stout, was not an absolute stockholder in the Mansfield, Coldwater and Lake Michigan Railway Company at the time of the meeting of the stockholders ■of that company to vote on the question of consolidation; that steps had been taken by the Mansfield, Coldwater and Lake Michigan Railway Company toward getting a contract for the construction of its road before the eonsolidation of the two companies was approved by the stockholders of those companies; that on the 28th day of December, 1870, the directors of the Mansfield, Coldwater and Lake Michigan Railway Company, a corporation of the State of Ohio, having a projected line of railway between Mansfield, Ohio, and the state line between Ohio and Michigan, and the directors of the Ohio and Michigan Railway Company, a corporation of the State of Michigan, having a projected line of railway from the same point on the state line between Ohio and Michigan to the town of Allegan, in the State of Michigan, the proposed railroads of said companies, when constructed, forming a continuous line for the passage of cars between Mansfield, Ohio, and Allegan, Michigan, did enter into an agreement, under the corporate seals of said several companies, for the consolidation -of the capital stock of said companies, so as to form one consolidated company, under the name of the Mansfield, Coldwater and Lake Michigan Railroad Company; that said agreement of consolidation was subsequently—to wit, on the 13th day of April, 1871, at a special meeting called for that purpose—approved by more than two-thirds majority of all the votes of all stockholders of said Mansfield, Coldwater and Lake Michigan Railway Company, and also on the 9th day of May, a. d. 1871, at a special meeting called for that purpose, approved by more than two-thirds majority of all the votes of all the stockholders of the Ohio and Michigan Railway Company, the votes at each of said meetings having been cast by ballot; that the ratifications of said agreement of consolidation of said companies were exchanged, and an election of directors of said consolidated company was had on the 10th day of May, a. d. 1871; that said agreement of consolidation, executed as aforesaid, together with the record of the action therein by the stockholders of said respective companies, duly certified by the secretaries thereof, was filed in the office of the secretary of state of the State of Ohio, on the 1st day of June, 1871;-that the consolidated company so formed is the plaintiff in this action. We further find and say, that the resolution of the directors of said Mansfield, Coldwater and Lake-Michigan Railway Company, April 15, 1871, required the-stock subscriptions to that company to be paid as follows: Eive dollars on each share at once, and five dollars on each share monthly after said date; no notice of said resolution or requirement was given to the defendant, except a notice-published in the newspapers of Mansfield and Henry county, on or after April 15,1871. The l’oad of the said Mansfield, Coldwater and Lake Michigan Railway Company was not in process of construction either on the 28th of December, 1870, or on the 10th of May, 1871; work was commenced on the same on the 8th of June, 1871, but the contract for-said work was let by said company on the 9th of May, 1871. The Mansfield, Coldwater and Lake Michigan Railway Company never located its road through the county of Henry, Ohio, or through the town of Napoleon, in said county, except as it was located by the letting of said contract; the said Mansfield, Coldwater and Lake Michigan Railway Company never established a depot at Napoleon, or within eighty rods of the town plat of said town; but the consolidated company established their depot in the-town of Napoleon, on the 5th of December, 1871. No action was taken, either by the Mansfield, Coldwater and Lake Michigan Railway Company, or by the consolidated company, after the location of the road through Henry county, or the establishment of the depot as aforesaid, requiring the defendant to pay his subscription, except that notice, as required by the resolution of the directors of April 15, 1871, was published in the newspapers of Mansfield, Ohio, and of Henry county, Ohio, for six months, commencing with April 15, 1871.
    “We further find and say that the defendant had no knowledge at the time he made his said subscription of the contract of consolidation between the Mansfield, Cold-water and Lake Michigan Railway Company and the Ohio and Michigan Railway Company. He had no knowledge of the said contract of consolidation, or of the fact that a consolidation had been made prior to the commencement of this suit. He has not in any manner consented to said consolidation. No notice in any form was ever given the defendant that it was proposed to make such consolidation, or that a meeting of the stockholders of said Mansfield, Coldwater and Lake Michigan Railway Company was to be held to determine whether such consolidation should be made.
    “If, upon the facts so as aforesaid found by us, the plaintiff is in law entitled to recover from the defendant the amount of his said subscription, then we find and say that the plaintiff is entitled to recover of the defendant the sum of five thousand five hundred and four dollars and ten cents ($5,504.10).”
    The pleadings, so far as they are necessary to understand the points decided, are sufficiently stated in the opinion.
    Judgment was rendered on this verdict for the defendant, and on error to the District Court the judgment of the Common Pleas was affirmed.
    The only errors assigned are that on the pleadings and special verdict the Court of Common Pleas erred in rendering judgment for the defendant, and the District Court erred in affirming the judgment below.
    
      Laubie § Brooks, for plaintiff’ in error:
    I. All the steps necessary to be taken to effect consolidation, under the provisions of the act of May 1, 1856 (S. & C. 327), were consummated.
    1. The petition in the original case alleges distinctly that the line of the road of the Ohio company was in process of construction to the boundary line of the State of Ohio. This allegation is nowhere in the answer denied, and, if a material allegation, is therefore admitted to be true.
    2. If the allegation was put in issue by the answer, and a material part of the plaintiff’s ease, it is clear enough by the findings of the jury that the Ohio road, was in process of construction at the time of the consolidation.
    By the findings of the jury it appears that the agreement was not perfected by the two companies until the 10th of May, 1871, and the same was not filed with the secretary of state until June 1,1871, while the contract for the building of its road was let on May 9, 1871, by the said Ohio company. We all understand what is meant by the letting' of such a contract. It means that the road has been theretofore surveyed, located, plans and specifications made, and bids advertised for and accepted. It would be the height of technicality and subversive of all spirit of public improvement to hold that, under these circumstances, and' after the company had gone on in good faith and built the road, such road was not in process of construction at the time of its consolidation, or that it will not be sufficient to' show that it was in the process of construction at the time the agreement was perfected and filed with the secretary of state, but that it must also appear that it was in the process of construction at the time the directors of the company entered into the agreement. Under such a state of facts, we apprehend this court would be slow in a direct proceeding in quo warranto to oust this company of its-corporate rights, and much less to do so in a collateral proceeding like this.
    3. The defendant is not in a position to raise this question. It can only be done by the State of Ohio in a direct proceeding for that purpose. Bartholomew v. Bentley, 1 Ohio St. 38; Frost v. Frostburg, etc., Co., 24 How. 278 y 22 Oal. 434; Cochran v. Arnold, 58 Penn. St. 399; 26 N. Y. 77 ; 2 Greenl. 404; 7 Pick. 344.
    If the defendant, Stout, may be regarded as assisting in the organization of the plaintiff company, or as a stockholder thereof, or subscriber to its capital stock, the case is still stronger against him, as he would then be estopped' from controverting the validity of its organization, and we* contend that he may be so regarded.
    
      The act of 1856 being in force at the time he subscribed to the capital stock of the Mansfield, Coldwater and Lake Michigan Railway Company, the provisions of that act, as we shall hereafter show, became a part of his contract, as much so as if written in the contract itself.
    II. The defendant’s subscription to the capital stock of the Mansfield, Coldwater and Lake Michigan Railway Company was transferred and vested in the consolidated company plaintiff, by virtue of the provisions of section 5 of said act of May 1, 1856.
    Whether the subscription be called a conditional one or a continuing offer to take stock, it was equally transferred to and vested in the new corporation by the terms of the act. It is immaterial whether the conditions were performed by the original company or by the new company, its legal successor.
    The possibility that it might devolve upon such a successor to perform the conditions of the contract was one of the elements of that contract, and therefore when such successor is created, and does perform the conditions, it is just what the defendant agreed might be done.
    The statute authorizing consolidation was, and had been previously for years, in force at the time he entered into the contract, and bound him by its terms as much so as if written in the contract itself. Sparrow v. E. fr C. R. R. Go., 7 Ind. 369 ; lb. 407 ; 21 lb. 299 ; 2 Met. (Ky.) 321; 17 Wis. 13; 28 Conn. 2'89; 20 Ind. 30; Sprague v. I. R. R. Co., 19 111. 174; JD.fr A. R. R. v. Trick, 3 Zab. (N. J.) 321; B.fr N. Y. R. R. Co. v. Dudley, 14 N. Y. 336. See also Rice v. R. 1. fr A. R. R. Co., 21 111. 93; T. H..fr A. R. R. Co. v. Earp, lb. 291; D. R. R. Co. v. Tharp, 1 IIous. (Del.) 149 ; P. R. R. Co. v. Renshaw, 18 Mo. 210; Same v. Hughes, 22 Mo. 291 ; N. R. R. Co. v. Miller, 10 Barb. 260; S. fr S. Blank-road Co. v. Thatcher, 11 N. Y. 102.
    The defendant having entered into a contract with the M., C. & L. M. Railway Company by name, purporting on its face to be a subscription to the capital stock of that company, he is estopped from asserting that there was no such company in existence. Nothing is better settled than that a party who contracts with a company in its corporate name is estopped, when sued upon the contract, from denying the legal existence of such corporation in the absence of fraud.
    III. The conditions of the subscription of Stout necessary to be performed to make the subscription absolute, have been performed.
    The original suit was commenced April 12, 1872. The contract to build the railroad through Henry county and the town of Napoleon, was let May 9, 1871; work was commenced on the road June 8, 1871, and the depot was, by resolution of the directors of plaintiff company, established in the town of Napoleon, December 5, 1871. A. § W. W. R. R. Co. v. Smith, 15 Ohio St. 328; Chamberlain v. The P. § A. P. R. Co., Ib. 225 ; Warner v. Callender, 20 Ohio St. 190.
    Notice to defendant of the performance of the conditions is not necessary. Breedlove v. M. $ F. R. R. Co., 12 Ind. 114; N. A. &¡ S. R. R. Co. v. McCormick, 10 Ib. 499.
    IY. «The calls were legally made, and the installments on Stout’s subscriptions were due.
    Notice was made by publication. Actual notice to Stout of calls was not necessary; his agreement was to pay in accordance with the statute. S. & C. 276, sec. 6 ; Healston v. C. $ Ft. W. R. R. Co., 16 Ind. 275 ; R. $ B. R. R. Co. v. Thrall, 35 Yt. 536; Ross v. L. F. $ 1. R. R. Co., 6 Ind. 297 ; Smith v. I. $ I. R. R. Co., 12 Ind. 61; Peake v. W. R. R. Co., 18 111. 88; Wilson v. W. V. R. R. Co., 33 Ga. 466.
    
      Scribner 8¡ Hurd, for defendant in error:
    I. Until accepted and acted upon, a conditional subscription is a mere offer to subscribe, and may be withdrawn. 1 Redfield on Railways, 204 (3 ed.), 216 (5 ed.); B. M. R. R. v. Bartlett, 3 Gush. 224.
    
      We shall see, further on, that the effect of the consolidation was to extinguish the Ohio company. The verdict finds, that down to the date of the consolidation, the conditions contained in the subscription of Stout were unperformed. The offer to subscribe, therefore, was never accepted by the company to which the offer was made, and as that company ceased to exist by the act of consolidation, from that time forward the offer can not be regarded as a continuing one. The special verdict further finds, that the defendant had no knowledge that the consolidation was contemplated or perfected; and from this it follows, that there can be no presumption against him of any offer on his part to subscribe to the stock of the consolidated company.
    II. So long as the conditions upon which the defendant subscribed to the stock of the Ohio company Avere unperformed he Avas not a stock subscriber. This results logically from the proposition first presented, and seems very clearly established by the authorities. A. &¡ N. L. JR. JR. Go. v. Smith, 15 Ohio St. 336; • Evansville, etc., R. R. Co. v. Shearer, 10 Ind. 244; Jewett v. Lawrenceburg, etc., R. R. Go., 10 Ind. 539; Shearer v. Railroad Co., 12 Ind. 452; JMJcMillan v. Maysville, etc.,- R. R. Go., 15 B. Mon. 218, 235; 0. § L. R. R. Go. v. Veazie, 39 Maine, 571; Pierce on Bailways, 70; Chase v. Railroad Go., 38 111. 215.
    At the time, then, of the consolidation, the defendant was not a shareholder in the stock of the Ohio corporation. He had merely offered to become a shareholder upon the performance of certain conditions by that company. They were unperformed at that date.
    The effect of the consolidation was to dissolve or extinguish the Ohio corporation and create a new company. Cleanoater v. Meredith, 1 Wallace, 25; McMahan v. Morrison, 16 Ind. 172.
    The stock subscribed for, of the corporation with Avhich the contract is made, constitutes the consideration for the promise to pay. Kennebec, etc., R. R. Go. v. Jarvis, 34 Maine, 360; East Tennessee, etc., R. R. Co. v. Gammon, 5 Sneed, 567; Lake Ontario, etc., R. R. Co. v. Mason, 16 N. Y. 451; Danbury, etc., R. R. Go. v. Wilson, 22 Conn. 435.
    The defendant subscribed and promised to pay for the .stock of an Ohio corporation. He never proposed to buy tñe stock of an Ohio company and a Michigan company conjoined, even upon the perfórame of the conditions named in his subscription. If the consolidated company is permitted to force its stock upon him, and to compel Mm to pay for it, then a new contract is made for him; he is coerced into the purchase of stock he never contracted for, and to take upon himself a liability he never agreed to-assume.
    It is a familiar doctrine that there can be no material change in the powers and responsibilities of a corporation against the consent of any stockholder therein. He has a right to stand upon the terms of his contract. He can not be compelled to embark his capital in a new enterprise. Marietta Gin. JR. R. Co. v. Elliott, 10 Ohio St. 57, 62; Chapman v. Mad River, etc., R. R. Co., 6 Ohio St. 119; Kean v. Johnson, 1 Stock. Oh. 401, where there is a very full and learned discussion of the subject; Kenosha, etc., R. R. Co. v. Marsh, 17 Wis. 13; Everhart v. West Chester R. R. Co., 28 Penn. St. 339; Oldtown, etc., R. R. Co. v. Veazie, 39 Maine, 571. And this doctrine, in the absence of legislative authority to consolidate, existing at the time of the stock subscription, or of a constitutional provision permitting an amendment of the charter, applies to projects for the consolidation of corporations. 2 Redf. on Railw. (5 ed.) 587-589, see. 252, and notes; Chapman v. Mad River, etc.,. Railway Co., 6 Ohio St. 119; Kean v. Johnson, 1 Stock. Oh. 405-424; Fisher v. Evansville, etc., R. R. Co., 7 Porter (Ind.), 407; McCray v. Junction R. R. Co., 9 Ind. 358; Broe v. Junction R. JR. Co., 10 Ind. 93; Martin v. The Same, 12 Ind. 605; Marks v. The Same, 13 Ind. 387; The State v. Bailey, 16 Ind. 46.
    It may be that under the power of amendment and appeal conferred by the present constitution, the legislature, by enactment, might compel a stockholder to become a member of the consolidated company, upon the principle that the statute in force when the subscription is made becomes a part of the contract; but even this is questioned in some of the states. Zabriskie v. Hackensack, etc., R. R. 
      
      Co., 8 0. E. Greene, 178; Oldtown, etc., R. R. Co. v. Veazie, 39 Maine, 571.
    However this may be, our legislature has seen proper to provide that stockholders in a railroad corporation shall not be carried into a new or consolidated company against their consent. Act of April 10,1856, secs. 10,11, 1 S. & 0. 327. And this has been the policy of the state since the-adoption of the present constitution. Act of March 3, 1851, sec. 1,1 S. & C. 275.
    From this provision it is plain that a stockholder not only can not be compelled to become a member of the consolidated corporation, but the consolidation can not proceed until he is paid the fair value of his stock. It is impossible to force upon him the liabilities and responsibilities attaching to the new corporation; it is impossible to change the character of the enterprise in which he agreed to embark his money, until he has been paid the fair value of his investment.
    Now, if this is the situation as to an actual stockholder, or stock subscriber, what shall be said as to a party who has merely proposed to subscribe, and whose proposition has not been accepted or acted upon down to the time of the completion of the consolidation? Pittsburg, etc., R. R. Co. v. Gazzam, 32 Penn. St. 340.
    III. The foregoing reasoning proceeds upon the assumption that a consolidation was duly had, and that the plaintiff thereby had a legal existence. The jury, however, found by their special verdict, that, at the time of the alleged consolidation, the road of the Ohio company was not in process of construction; that work was not commenced upon it until June 8, 1871.
    This is fatal to the corporate existence of the plaintiff; there was no power under the statute for the Ohio company to consolidate. Act of April 10,1856, sec. 1,1 S. & C. 327; act of May 6, 1869, 66 Ohio L. 127. The question made is not as to any irregularity in the proceedings, hut it is a question of power.
    
    To this objection it is replied that the defendant is estopped from questioning the corporate existence of the plaintiff. The doctrine of estoppel would undoubtedly apply if it appeared that the defendant had contracted with, or in any manner recognized, the plaintiff' as a subsisting corporation. But all pretense of this kind is negatived by the express finding of the jury, that the defendant had no knowledge of the alleged consolidation until after the commencement of the action against him. There is no ground, therefore,upon which to predicate an estoppel.
    The doctrine claimed by us is stated by Chief Justice Redfield, in his work on Railways, in the following terms: “ But where the amalgamation is illegal, calls can not be enforced, or, if the provisions for the amalgamation had not been fully carried into effect, no suits for calls in the name of the new company can be sustained.” 2 Redf. Railw. (5 ed.) 591, par. 2. He cites, and is sustained by, the case of Midland G. W. Railway of Ireland v. Leech, 3 House L. Cases, 872. We also refer to Bank of Hindustan v. Alison, Law Rep., 6 C. P. 54; S. C. in Exchequer Chamber, Law Rep., 6 C. P. 222.
    
      J. R. Tyler, also for defendant in error.
   McIlvaine, J.

This case has been considered with several others, all of which were actions by the plaintiff' in error to recover on account of subscriptions to the capital stock of the Mansfield, Coldwater and Lake Michigan Railway Company. The plaintiff’s right to recover is based on an alleged consolidation of the Mansfield, Coldwater and Lake Michigan Railway Company and the Ohio and Michigan Railway Company; under the consolidation act of 1856, whereby it is alleged the plaintiff corporation was formed and succeeded to the rights of the consolidating companies. The decision of questions in common is reported in Brown’s case, ante 223. Only such questions as are peculiar to this case will be disposed of in this opinion.

1. The original petition was based on an instrument, de« livered by the defendant to the railway company on the 14th of April, 1871, of which the following is a copy:

“ SUBSCRIPTIONS

“ To the capital stock of the Mansfield, Coldwater and Lake

“ Michigan Railway Company.

“ Books opened at Mansfield, Richland county, Ohio,

“June 25, A. d. 1870.

“ By order of

“ J. Purdy,

“ S. B. Stursess,.

“ E. H. Reese,

“ L. B. Matison,

“ D. Duelan, and

“ H. H. Stursess,

Incorporators.

“We and each of us do hereby subscribe the No. of shares set opposite our names, to the capital stock of the-Mansfield, Coldwater and Lake Michigan Railway Company. Said shares to be $50 each, and payable in accordance with the statute in such cases made and provided, on this condition, to wit: That said railway shall pass through Henry county and the town of Napoleon, and establish its depot within eighty rods of the town plat of said town.

“NO. 0E SHARES.

(Signed,) “ J. A. Stout........................100.”

By the answer, an issue was made as to the performance of the conditions named in the instrument.

The special findings on this issue were as follows: Work was commenced on the same” (the road of the Mansfield, Coldwater and Lake Michigan Railway Company) “ on the-8th day of June, 1871; but the contract for said work was let by said company on the 9th of May, 1871. The Mansfield, Coldwater and Lake Michigan Railway Company never located its road through the county of Henry, Ohio, or through the town of Napoleon, in said county, except as it was located by the letting of said contract; the said Mansfield, Coldwater and Lake Michigan Railway Company never established a depot at Napoleon, or within eighty rods of the town plat of said town; but the consolidated company established their depot in the town of Napoleon, on the 5th of December, 1871.”

Although this finding lacks that definiteness which should characterize a special verdict, yet it is plainly inferable therefrom that the road was located through Henry county and the town of Napoleon, on the 9th day of May, 1871.

There has been some contention whether the instrument sued on, is to be regarded as a subscription of stock, subject to a condition precedent, or as a mere offer to subscribe, when the conditions named might be performed. This question we deem to be immaterial in this case, as there is no pretense that the offer, if a mere offer it be, was at any time withdrawn. The important question is, Have the conditions been performed ?

The condition “that said railroad shall pass through Henry county and the town of Napoleon,” we think was performed by the railway company locating its road through the places named, on the 9th of May, as above stated. This would be clearly so under the authority of Chamberlain’s •case, 15 Ohio St. 225, and A. & N. W. R. R. Co. v. Smith, Ib. 328.

And if the provision, that the railway company shall establish its depot within eighty rods of the town plat of Napoleon, can not, under the authority of the same case, be regarded as a mere stipulation or condition subsequent, the fact that it was performed by the plaintiff, on the 5th of December, 1871, long before the commencement of this suit, is clearly found in the special verdict.

But it is here objected, on part of defendant, that this •condition could be performed only by the railway company. It is true, that by the strict letter of the condition, it was the depot of the railway company that was to be established, etc.; but when this provision is construed with reference to the consolidation act then in force, we are of opinion that it was within the contemplation of the defendant that the railway company might become merged in a consolidated -company, which would succeed to all its rights, and might perform the conditions of their subscriptions to its capital stock.

This construction of the contract is objected to on the ground that the defendant is thereby brought into relations with the new or consolidated company without his consent. The answer to this objection is: Iiis status in relation to the consolidated company, is fixed by his contract of which the consolidation act is to be considered a part, and whatever that status may be, it must be regarded in law as voluntary.

2. The special verdict contains the following finding: “No action was taken, either by the Mansfield, Coldwater and Lake Michigan Railway Company, or by the consolidated company, after the location of' the road through Henry county, or the establishment of the depot as aforesaid, requiring the defendant to pay his subscription, except that notice, as required by the resolution of the directors, of April 15,1871, was published in the newspapers of Mansfield, Ohio, and of Henry county, Ohio, for six months, .commencing with April 15, 1871.”

The resolution referred to, was passed by the directors of the railway company, and “ required the stock subscription to that company to be paid as follows : Five dollars on each share at once, and five dollars on each month, after that date,” at the office of the company at Mansfield, Ohio, and to Henry H. Sturgess, assistant treasurer of the company. Did this call apply to defendant’s subscription, and did it inure to the benefit of the plaintiffs?

The statute in relation to the payment of subscriptions to stock in corporations (sec. 6 of the act of May 1, 1852, S. & 0. 276), pi’O vides: “An installment of five dollars on each share of stock shall be payable at the time of making the subscription, and the residue thereof shall be paid in such installments, and at such times and places, and to such pei’sons as may be required by the directors of such company.”

The defendant’s subscription being subject to a condition precedent, of course there was nothing payable at the time It was delivered, nor was it liable to calls until the condition was performed; yet we think that after it became absolute by performance of the condition, it became the duty of the defendant to pay installments at the rate, and at the time and place, and to the officer of the company named in the resolution. And further, if after consolidation the new company kept its office at Mansfield, and an officer there charged with the duty of receiving payment on account of subscriptions to the stock of the original company, we see no substantial reason for holding that the' call of April 15th should not continue to operate for the benefit of the new company, as successor to all the rights of the old companies.

3. The petition, in the action below, alleged that on the 10th of May, 1871, the Mansfield, Coldwater and Lake Michigan Railway Company, whose line of road was in process of construction, consolidated with the Ohio and Michigan Railway Company; that on the 20th of December, 1870, the directors of said companies duly entered into an agreement to consolidate, in accordance with the statute of Ohio; that said agreement was duly ratified and adopted by the stockholders of said companies respectively, and that said agreement, duly certified, was filed with the secretary of state of the State of Ohio. The answer denies that the directors of the Mansfield, Coldwater and Lake Michigan Railway Company had, at that time or any other time, any legal right or authority to enter into said agreement.

We understand that the question, whether the Mansfield, Coldwater and Lake Michigan Railway Company was within the description of corporations authorized to enter into an agreement of consolidation, was thus fairly put in issue.

The statute under which this consolidation was attempted to be made (66 Ohio L. 127) provides, “that it shall be lawful for any railroad company in this state, . . . whose line of road shall be made, or in progress of construction, . . . to consolidate its capital stock with the capital stock of any railroad in an adjoining state,” etc. Section 2 of the act (53 Ohio L. 143) provides “ that said consolidation shall be made under the conditions and restrictions following—that is to say: First. The directors of the several corporations may enter into a joint agreement, under the corporate seal of each company, for the consolidation of’ said companies,” etc. Under these provisions it is quite clear to our minds that any step or movement, by any company, toward consolidation is wholly unauthorized unless the line of its road be made or be in process of construction.

By the special verdict in this case, it was found that the joint agreement of consolidation between the consolidating companies, each of which had a projected line of railway, was entered into on the 28th of December, 1870. It appears, indeed, that the contract for constructing the road was let by the company on the 9th of May, 1871, and that work was commenced on the 8th of June following; but it is expressly found, that “ the road of the Mansfield, Coldwater and Lake Michigan Railway Company was not in process of construction either on the 28th of December,, 1870, or on the 10th of May, 1871.” Undoubtedly it was the opinion of the jury, that the road was not put in process of construction by the letting of the work; and though they may have been wrong in this, the fact, nevertheless, that the road was not made, or in process of construction, on the 28th of December, 1870, clearly appears in the verdict.

From this state of the case, it is clear that the consolidation of these companies was without authority of law, and' upon direct inquiry would be declared void. But the question here is, can the defendant in this case insist upon the' illegality of the consolidation ?

Let it be conceded that the defendant is estopped from denying at least the de facto existence of the Mansfield, Coldwater and Lake Michigan Railway Company, as a corporation, by delivering to it his conditional contract of subscription, or by making and continuing his offer to subscribe upon the performance of the conditions named, and let it be further conceded that he thereby assented to all previous as well as subsequent acts done or to be done toward consolidation in accordance with the laws then in force, still it by no means follows that he must be regarded as consenting to a consolidation which the law did not authorize. It is found by the special verdict that he had no knowledge of the progress of consolidation from first to last. He can not, therefore, be held to have acquiesced in or promoted an illegal consolidation.

Instead of this being a ease in which the defendant by reason of something he has done is estopped from setting up the illegality of the consolidation, it is a case in which the plaintiff’ who claims under a contract with another corporation, must show that he has succeeded to an interest in that contract in a way and by means prescribed by the law.

While it is the duty of the defendant to perform his contract, when construed, as it must be, in the light of the consolidation act, it is also his right to defend himself against any claim made against him on account of it, which it does not warrant. And there is no warrant in the contract or in the statute for compelling him to take the stock, or to pay for the stock, of any corporation other than the Mansfield, Coldwater and Lake Michigan Railway Company or its legal successor. And it is quite certain that the defendant could have contemplated no other corporation as successor to the company for whose stock he subscribed than one which might be created under and by virtue of the act of 1856.

Our conclusions, therefore, are, that the defendant, who had no direct contract relation with the plaintiff’, and who had not otherwise recognized its legal corporate existence, was entitled to dispute such existence, and having done so, •and having made it appear that the line of road of the Mansfield, Coldwater and Lake Michigan R’y Company was not made or in process of construction on the 28th day of December, 1870, tbe date of the agreement to consolidate, the plaintiff had no legal right to recover in the action.

Judgment affirmed.

Welch:, C. J., White, Rex, and Gilmore, JJ., concurred.