Case ID: ohio-st_47/html/0276-01.html
Source: Caselaw Access Project
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Date Created: 2024-08-24T03:29:51.129683

Armstrong v. Karshner.
    Railroad Companies — Subscriptions to Capital Stock of — When pay able— Sections 3275, 3276 and 3298, Revised Statutes, Construed.
    
    1: While false statements, made by an authorized agent of a corporation, in regard to the past or present status of the corporate enterprise, or of material matters connected therewith, whereby a subscription is obtained to its capital stock, may be fraudulent, and defeat a recovery thereon, representations concerning the future intention, purpose or expectation of the corporation, will not have that effect, especially when it is not shown they were fraudulently made for the purpose of deceiving.
    2. A subscription to the capital stock of a railroad company, the payment of which is made dependent upon the completion of a part of its road, may be enforced against the subscriber after the company has fully complied with the condition, although, when the subscription was made, the company had not expended ten per centum of its authorized capital in the construction of its road, nor obtained actual bona fide subscriptions to its capital stock to the amount of twenty per centum thereof. Though, such subscription when made, was, under the provisions of section 3298 of the Revised Statutes, unauthorized, it nevertheless constituted a continuing offer of the subscriber to pay the company the amount subscribed, upon the performance by it of the conditions therein contained, ■ which, when not withdrawn before the conditions were fully complied with, became an absolute subscription, and payment thereof cannot be defeated on the ground that the company was without corporate capacity to receive it.
    3. Railroad companies incorporated under the laws of this state, are not required to construct first-class railroads before they can collect subscriptions to their capital stock, unless the subscription contains a stipulation to that effect.
    4. A statute, authorizing a railroad company to sell the whole or any part 1 of its road, in force at the time a subscription is made to Its stock, becomes a part of the contract of subscription, and a sale thereafter made by the company of a part of its road under the authority of such statute, does not release the subscriber, except when, and as, provision is made therefor in the statute.
    5. It is no defence to an action on a subscription to the stock of a railroad corporation, that the company has not completed the road in its entirety, nor, that it has abandoned a part of the enterprise, when no condition to that effect is expressed in the subscription.
    6. Subscribers to the capital stock of a railroad company, are not released from the obligations of their subscriptions, by a change afterward made in the line of the road under section 3275 of the Revised Statutes, so as to pass through a county not named in its articles of incorporation. It is only when the line of the road is diverted from a county named in the articles of incorporation, that persons who subscribed to the capital stock of the company on the line of that part of the road so changed, are released from the obligations of their subscriptions. Revised Statutes, section 3276.
    (Decided April 29, 1890.)
    Error to the Circuit Court of Ross county.
    The original action was brought by John Karshner against Milton Armstrong in the Court of Common Pleas of Ross county, by filing therein the following petition:
    “ The plaintiff, John Karshner, says: That on the 26th day of April, A. D. 1877, The Cincinnati & Fayetteville Railroad Company was duly incorporated as a corporation under the laws of Ohio, for the purpose of building and operating a railroad from the city of Cincinnati, in the county of Hamilton, through the counties of Hamilton, Clermont and Brown, to the village of Fayetteville, in said last named county — all in this state.
    “ That the capital stock of said company was $120,000, divided into two thousand four hundred shares of $50 each; and that, shortly after the incorporation of said company, the amount of such capital stock required by statute for the purpose, having been duly subscribed and paid, said company duly organized by electing according to law a board of directors, who duly qualified as such.
    “ That on or about the 81st day of May,.A. D. 1878, said company, a large amount of its capital stock, to wit, more than twenty per centum of its authorized capital stock in bona fide subscriptions having been subscribed, and a large amount of money, to wit, more than ten per centum of its authorized capital having been expended by it in the construction of its said railroad, duly and legally ohanged the eastern terminus of said railroad, and extended the line of the same from said village of Fayetteville eastward through the counties of Brown, Clinton, Highland, Ross, Hocking and Athens, to the town of Nelsonville, in said last named county — all in this state.
    
      “ That, afterwards, on the 9th day of March, A. c. 1880, the name of said company was, by proceedings had for the purpose in the court of common pleas within and for said county of Brown, duly and legally changed to The Cincinnati, Fayetteville, Hillsboro & Huntington Railway Company, and that, afterwards, on the 7th day of March, A. D. 1881, the name of said company was, by like proceedings in said court of common pleas within and for said county of Brown, again duly and legally changed from The Cincinnati, Fayetteville, Plillsboro & Huntington Railway Company to The Cincinnati, Hocking Valley & Huntington Railway Company, which said last name it still retains.
    , “ That, on or about the 14th day of October, A. D. 1880, The Cincinnati, Fayetteville, Hillsboro & Huntington Railway Company made and entered into a contract in writing with one Henry T. Niles under the firm name and style of Henry T. Niles & Co., for the building and completing of said company’s line of railroad, and the said Henry T. Niles & Co., under said contract, and certain contracts supplemental thereto, made and entered into between said firm and said railway company after its name had been changed, as aforesaid, to The Cincinnati, Hocking Valley & Huntington Railway Company, to wit: on the 5th day of September, A. D. 1881, and the 19th day of December, A. D. 1881, respectively, agreed to build and complete the line of said company’s railroad from its junction with The Cincinnati & Eastern railroad, in said county of Clermont, to said town of Nelson-ville, in said county of Athens, in consideration of which among other things said railway company authorized and empowered said Henry T. Niles & Co., to procure stock subscriptions and donations to and for said company to the amount of $5,000 per mile for all that part of its said line of railroad between the Scioto river in said county of Ross and said town of Nelsonville, in said county of Athens, and to collect, hold, have and use the same as their own, in and about the construction of said railroad.
    “ That on the-— day of October, A. D. 1881, the defendant, Milton Armstrong, for the purpose of aiding in the construction of said railroad, and in consideration of the advantages. and benefits to accrue to him therefrom, and especially from the building of that part of said railroad from The Scioto Valle}r railroad in said county of Ross, to a point at or near the village of Adelphi, in said county, as well as in consideration of like subscriptions and agreements by others for said purpose, became a subscriber to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company by executing and delivering to said company an agreement in writing in the words and figures following, which was duly accepted by it, to wit.
    “We, the undersigned, agree to pay the number of shares annexed to our respective names, of fifty dollars each, to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, and we hereby bind ourselves, our heirs, executors or administrators to pay the same to the authorized agent of said company; but it is expressly provided as follows : That no part of said subscription shall be due until a railroad track shall .be laid ready for the running of ears from some point on the Scioto Valley railroad to a point at or near Adelphi in Ross county, and when said railroad track is so laid we the Undersigned mutually agree that we will each, on demand, pay the amounts set opposite our respective names to such authorized agent of said company in full payment for such shares of capital stock.
    “ Names. — Oct. 1881. — No. of shares. Amount.
    “ It is distinctly agreed and understood that all the within stock subscriptions are binding, providing the road is built on the north of Adelphi, otherwise they are void.
    “ Ten shares $50 each. $500.
    Milton Armstrong.”
    “ That said defendant thereby agreed to take ten shares of the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, each share being of the par value of $50, and agreed to pay therefor the sum of $500 to the authorized agent of said company on demand, so soon as a railroad track should be laid ready for the running of cars from some point on said Scioto Valley railroad to a point at or near said village of Adelphi, in said county of Ross, provided said railroad should be built north of said village of Adelphi.
    “ That, afterwards, on or about the 20th day of October, 1882, the said Henry T. Niles & Co., who had in compliance with the terms of their said contracts with said railway company, and in consideration of said subscription of said defendant, and induced thereby, partly built a portion of the railroad of the said company, including a part thereof between the village of Kingston, in said county of Ross, situate on the said Scioto Valley railroad, and said village of Adelphi, and were still engaged in the construction of the same, made and entered into a contract in writing with the plaintiff, which was duly approved by The Cincinnati, Hocking Valley & Huntington Railway Company, under and by virtue of which he, the said plaintiff, agreed to build and complete that portion of the railroad of said company from said village of Kingston, at and on said Scioto Valley railroad, to said village of Adelphi,.on the west side of the Circleville and Adelphi turnpike, and, also, agreed conditionally, to build that portion of said railroad of said company between said last named point and Daniel Davis’, at or near the mouth of Big Pine creek, in said county of Hocking, upon certain terms and conditions in said contract set forth, in consideration of which among other things, the said Henry T. Niles & Co., with the approval and assent of said railway company duly given, agreed to assign and transfer, and did duly assign and transfer to him, the said plaintiff, all stock subscriptions and subscriptions for donations held and acquired by them under their said contracts with said railway company, including said subscription of said defendant, from the city of Chillicothe, in said county of Ross, to said Daniel Davis’.
    “ That he, the said plaintiff, under his said contract, which he was induced to make by said subscription of said defendant, and like subscriptions of other persons, built that part of said railroad between said village of Kingston, at and on said Scioto Valley railroad, and said village of Adelphi; and that the last rail on that part of said railroad and of the track thereof between said points was laid on the 28th day of September, 1885, and said part of said railroad was then ready for the running of cars thereon; and that since the 21st day of December, 1885, he, the said plaintiff, has been operating said part of said railroad by running trains for carrying both freight and passengers over the same between said village of Kingston, at said Scioto Valley railroad and said village of Adelphi.
    “That said railroad was built north of said village of Adelphi, as mentioned in, and required by the subscription agreement of said defendant, and all conditions in said subscription' agreement have been fully performed by said railway company, and by him, the said plaintiff.
    “ That the full amount of said subscription of said defendant became and was due and payable to the plaintiff, from him, when said railroad track was laid ready for the running of cars thereon, from said village of Kingston, at and upon said Scioto Valley railroad, to said village of Adelphi, to wit, on said 28th day of September, 1885, but no part of said sum has been paid by said defendant, although the plaintiff, at or about that time, demanded payment of the same; and he, the said defendant, has since been requested by the plaintiff to pay the same.
    “ That said railway company and the plaintiff were, at said time, and have been at all times since, ready and willing, and still are ready and willing, to issue and deliver to said defendant, upon the payment of said subscription, certificates of stock in said company, for the number of shares so subscribed for by said defendant, and have repeatedly offered to deliver such certificates to him.
    “ Wherefore the plaintiff asks judgment against the defendant for the sum of $500 with interest thereon from the . 28th day of September, 1885.”
    A general demurrer to the petition was overruled, and thereupon the defendant filed the following answer and amendment thereto.
    “And now comes the defendant and answers the petition of the plaintiff against him, and for his first defense he says: that his alleged subscription in said petition mentioned was a conditional subscription made to The Cincinnati, Hocking Valley & Huntington Railway Company in said petition mentioned, based upon the completion of such parts of said proposed railroad as lies between the Scioto Valley railroad and the town of Adelphi in Ross county, Ohio. That The Cincinnati, Hocking Valley & Huntington Railway Company was, by the terms of its charter, authorized to build a railroad leading and extending from Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of Athens, Ohio, and the officers and agents of The Cincinnati, Hocking Valley & Huntington Railway Company, who obtained said conditional subscription, at the time said conditional subscription was obtained, and gave out in speeches, and said to the defendant that said railway company intended to, and would build said railroad from said city of Cincinnati, Ohio, to said town of Nelsonville, Ohio, and this defendant, relying on said representations . and said charter, and believing said railroad, if built from Cincinnati to Nelsonville, would be beneficial to the public generally along the line of said proposed railroad, and advantageous to the defendant, and knowing that a railroad from the Scioto Valley railroad to Adelphi, a distance of only about ten and one third miles, would be of no benefit to this defendant, he made said conditional subscription; but since said conditional subscription was made by defendant to The Cincinnati, Hocking Valley & Huntington Railway Company, the said company has sold, conveyed and abandoned all that part of said proposed railroad as lies southwest of the town of Hillsboro, and do not intend to build the same, or any part thereof, and so this defendant says, that he is released from his said conditional subscription, and the same has been rendered, by the action of The Cincinnati, Hocking Valley & Huntington Railway Company aforesaid, null and void.
    “ This defendant further answering the petition of the plaintiff against him, and for his second defense thereto, he says: That the authorized capital stock of The Cincinnati & Fayetteville Railroad Company was, on the 81st day of May, 1878, duly and legally increased from $120,000 to $750,000, and that on the 7th day of July, 1880, the authorized capital stock of said ‘ The Cincinnati, Fayetteville, Hillsboro & Huntington Railroad Company,’ was duly and legally increased from $750,000 to $5,250,000; that at the time the alleged subscription of this defendant was made to the capital stock of said ‘The Cincinnati, Hocking Yalley & Huntington Railway Company,’ the duly authorized capital stock of said company was $5,250,000; and this defendant further answering, says: that at the time the alleged subscription of this defendant was made, twenty per cent., to wit: $1,050,000 of actual bona fide subscriptions to the capital stock of said railway company had not been obtained, nor had said company expended ten per cent., viz.: $525,000 of its authorized capital stock, in the construction of its said proposed railroad. This defendant therefore says : that said alleged subscription of this defendant to the capital stock of said railway company in said petition mentioned, was unauthorized by law, and is absolutely void.
    “ And further answering, and for his third defense this defendant says: that the said ‘ The Cincinnati, Hocking Yalley & Huntington Railway Company,’ on or about the 30th day of November, 1882, sold, transferred and conveyed all that part of its proposed road southwest of the town of Hillsboro, in Highland county, Ohio, to The Atlantic & Columbus Railroad Company at private sale, without the knowledge or consent of this defendant.
    “ This defendant therefore says : that the railroad, the line thereof, and its termini to which the alleged subscription of this defendant was made, has been so altered and changed by the action of said company that the said railroad as now existing, and authorized by its charter, and by the action of said company, to be constructed and operated, is not the same railroad for which said alleged subscription was made, and by reason thereof, the said alleged subscription of this defendant has been rendered nugatory and void.
    “ This defendant further answering, and for his fourth defense he says: that the charter of The Cincinnati, Hocking Valley & Huntington Railway Company called for and authorized the building of a railroad from, the city of Cincinnati, Ohio, through the counties of Hamilton, Brown, Highland, Clinton, Pike, Jackson, Ross, Vinton, Hocking and Athens (which was afterwards changed to also include, and pass through, the county of Pickaway) into the heart of a very rich and valuable and extensive coal region in which is found immense beds of bituminous coal, and said company obtained all the subscriptions ever obtained by it, to its capital stock, upon the promises, and inducements held out by the said company, that it would build a railroad from said city of Cincinnati, to said town of Nelsonville, and this defendant made the alleged subscription in said petition mentioned, to the said The Cincinnati, Hocking Valley & Huntington Railway Company, upon said promises and inducements, and for the purpose of building a railroad from the said city of Cincinnati, a city of over 300,000 inhabitants, through the said counties of Hamilton, Brown, Highland, Clinton, Pike, Jackson, Ross, Vinton, Hocking and Athens, (and which was afterwards changed to also pass through the county of Pickaway) into the heart of said rich, valuable and extensive coal region, where is found said immense beds of bituminous coal, which could be mined and shipped over said proposed railroad to market, and thus make the said railroad a profitable investment for its stockholders. That said proposed railroad was never in fact located between the town of Hillsboro and the Scioto river, nor did said railway company ever acquire the right of way for said railroad between said points; that that portion of said proposed railroad, from said town of Plillsboro southwest to said city of Cincinnati, the western terminus of proposed railroad was, since said alleged conditional subscription was made, sold, assigned and transferred by The Cincinnati, Hocking Valley & Huntington Railway Company, to a railway company known as The Cincinnati, Atlantic & Columbus Railway Company, without the knowledge or consent of this defendant, and has been wholly abandoned by The Cincinnati, Flocking Valley & Fluntington- Railway Company, and that that part of said proposed railroad from the said town of Hillsboro east to the Scioto Valley railroad has been practically abandoned by The Cincinnati, Hocking Valley & Huntington Railway Company, and by reason of said sale, transfer and abandonment, the said railway company released all its conditional subscriptions, and released the alleged conditional subscription of this defendant, and lost the right to transfer the same to any third party, or to the plaintiff . herein. This defendant therefore says: that by reason of said sale, transfer and abandonment, by said railway company as aforesaid* the said alleged conditional subscription of this defendant in the petition mentioned, has become of no avail, nugatory and void.
    “This defendant further answering, and for his fifth defense, says: that the said The Cincinnati, Hocking Valley & Huntington Railway Company in its said contract with said Henry T. Niles & Co. in said petition mentioned, to build said railroad, authorized the said Henry T. Niles & Co. to obtain subscriptions to the capital stock of said railway company for the benefit of them, the said Henry T. Niles & Co., and that the alleged conditional subscription in said petition mentioned, was obtained by the said Henry T. Niles & Co. for the benefit of them, the said Henry T. Niles & Co., and not for the benefit of said railway company; and that they, the said Henry T. Niles & Co., assigned and transferred the said alleged conditional subscription, and the right to obtain the same to the plaintiff herein, he, the said plaintiff, having full knowledge of all said facts at the time of said transfer. This defendant therefore avers and .says: that said conditional subscription so obtained for the benefit of said contractors, for building said railroad, is against public policy, and is of no validity, and void.
    “ And further answering, and for his sixth defense, this defendant says: that since the signing of said paper in said petition mentioned, aud the making of said conditional sub scription to the said capital stock of the said The Cincinnati, Hocking Valley & Huntington Railway Company, the said railway company did on or about the 15th day of March, 1888, take the necessary legal steps to, and did alter its charter by providing for the extension of its said railroad through the county of Pickaway.
    “ And this defendant avers, and says: that the charter under and by virtue of which the said railway company is now acting, is not the same charter, under and by virtue of which said railway company was acting, at the time said alleged conditional subscription in said petition set forth was made. And said conditional promise, in said petition mentioned, was not made to the said The Cincinnati, Hocking Valley & Huntington Railway Company, as the same existed at the time the said conditional promise was transferred to the plaintiff herein, or as the same now exists.
    “ And the said defendant further answering, and for his seventh defense, he says: that he admits that he signed the writing, a copy of which is in said petition set forth, and designated conditional subscription to The Cincinnati, Hocking Valley & Huntington Railway Company in said petition mentioned. That said railway company was a company chartered and organized for the purpose of building a railroad from Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of 'Athens, Ohio. This defendant further says: that said paper writing so signed by this defendant, is in the words and figures following, viz.:
    “The Cincinnati, Hocking Valley & Huntington Railway Company.
    We, the undersigned, agree to pay the number of shares annexed to our respective names of fifty dollars each to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, and we hereby bind ourselves, our heirs, executors or administrators to pay the same to the authorized agent of the said company; but it is expressly provided as follows: that no part of said subscription shall be due until a railroad track shall be laid ready for the running of cars from some point on the Scioto Valley railroad to a point at, or near, Adelphi, in Ross county, and when said railroad track is so laid, we, the undersigned, mutually agree that we will each, on demand, pay the amount set opposite our respective names, to such authorized agent of said company, in full payment for such shares of capital stock.
    Names. Oct. 1881. No. of Shares. Amount.
    It is distinctly agreed and understood, that all the within stock subscriptions are binding, provided the road is built north of Adelphi, otherwise they are void. Ten' shares of $50.00 each, $500.
    Milton Armstrong.”
    “This defendant denies that he became a subscriber to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, by executing and delivering to said company, said paper writing. He denies that he signed the same for the special purpose of building a road from the Scioto Valley railroad to Adelphi, on the contrary, he avers and says: that said railway company was by the terms of its charter, authorized to build a railroad leading from the city of Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of Athens, Ohio, and the officers and agents of said The Cincinnati, Hocking Valley & Huntington Railway Company who obtained the signature of this defendant to said conditional subscription, at the time the same was obtained, gave out in speeches, and said' to this defendant, that said railway company intended to, and would build said railroad from said city of Cincinnati, to said town of Nelsonville, Ohio, and this defendant relying upon said representations, signed said paper, and without said representations, he would not have signed the same, as this defendant then, and still believes, that a railroad from Cincinnati to Nelsonville, would be beneficial to the public, along the line of said railroad, and would be profitable to the stockholders; while he believed then and still believes, that a railroad from Kingston to Adelphi, a distance of only ten and one third miles, would be of no benefit to this defendant, nor is the same any benefit to the public at large.
    “ And further answering, and for his eighth defense, this defendant sajrs: That the charter of the said The Cincinnati, Hocking Valley & Huntington Railway Company called for a good, substantial, first-class railroad, and when this defendant made Ms conditional subscription to said railway company he made it for the purpose of building a good, substantial, first-class railroad as aforesaid, such a railroad as would be called a good, substantial, first-class railroad by men experienced in railroad matters, and in building railroads ; and no other. And this defendant avers, and says : That the said conditional subscription does not become absolute and binding, until such good, substantial, first-class railroad is built, arid is built of first-class material. And this defendant avers, and says: That such good, substantial, first-class railroad has not been built, nor has such good, substantial, first-class railroad been built from Kingston to Adelphi, nor has it been built of first-class material. This defendant therefore says, that said railway company has not complied with all its conditions, and that said conditional subscription is not binding.”
    Amended Answer.
    “ And now coinés the defendant and amends his answer herein, and by way of amendment to be inserted at the end of the first defense in said original answer, he says, that the sale, conveyance and abandonment of all that part of said proposed railroad as lies southwest of the town of Hillsboro as aforesaid, works and will work a great and lasting injury to this defendant, and is prejudicial to the stockholders in said railroad company east of the Scioto Valley railroad.
    “ And he further amends his answer herein and by way of amendment to be inserted at the end of the third defense, he says : that the sale, transfer and conveyance of that part of said proposed railroad southwest of Plillsboro as aforesaid, by said company, works and will work a great and lasting injury to this defendant, and is prejudicial to a large number of the stockholders in said railroad company and particularly to this defendant.
    “ And he further amends his answer herein and by way of amendment thereto to be inserted at the end of the fourth defense in said original answer he says that the sale, assignment and transfer and abandonment of that part of said railroad west of Hillsboro and the abandonment of that part of said proposed railroad east of said town of Hillsboro to the Scioto river, works and will work a great and lasting injury to this defendant, and is prejudicial to a large number of the stockholders in said railroad company and particularly so to this defendant.
    [The following abstract of arguments contains the points made by counsel in the case of Lesher v. Karshner, immediately following this case. Reporter.]
    “ And further answering, he amends his original answer herein, and by way of amendment thereto to be inserted at the end of the seventh defense, he says: that since the signing of said conditional paper by this defendant, the said railroad company has sold, transferred, assigned and conveyed all of its proposed said railroad west of Hillsboro, and that said sale, transfer, assignment and conveyance of its said road, works and will work-a great and lasting injury to this defendant, and is prejudicial to nearly all the stockholders, and is particularly prejudicial to this defendant.”
    To each defense set forth in the answer the plaintiff demurred. The court sustained the demurrer, and, as the record shows, the defendant not desiring to further plead, judgment was rendered against him for the amount claimed in the petition. This judgment was affirmed by the circuit court, and the present proceeding is prosecuted here to reverse those judgments.
    
      P. O. Smith and Milt Morris, for plaintiff in error.
    1. A conditional subscription can only be received by a railroad company, in Ohio, when it has obtained- 20 per cent, of bona fide subscriptions to its capital stock, and has expended 10 per cent, of its capital stock in its construction. Sec. 8298, Revised Statutes.
    2. Corporations have only such powers as the act creating them confers, and are confined to those expressly granted, and such incidental powers as are necessary for the purpose of carrying into effect powers specifically conferred. Strauss v. Ins. Co., 5 Ohio St. 59; Railroad Co. v. Curtis, 80 N. Y. 219; Morning Star v. Selby, 15 Ohio 345; Thomas v. Railway Co., 101 U. S. 71.
    
      3. The sale rendered the' conditional subscription of the plaintiff in error, void. Railroad Co. v. Croswell, 5 Hill 583; 40 Am. Dec. 354, and note; Nugent v. Supervisors, 19 Wall, 248; Thompson v. Guion, 5 Jones (N. C.), 113; 3 U S. Dig. 636, sec. 403.
    4. The company having sold a part of its road, and having thus lost its identity, neither the company nor the plaintiff can deliver the stock subscribed, and hence the conditional subscription is not payable. James v. Railway Co., 2 Disney 261; Bridge Co. v. Sargent, 1 C. S. C. Rep. 354; Railway Co. v. Hinsdale, 45 Ohio St. 556; Clearwater v. Meridith, 1 Wall. 40; Dorris v. Sweeney, 60 N. Y. 463; Cook on Stockholders, secs. 493, 500.
    5. The promise was to make a gift, when the road was completed, and a gift cannot be enforced. Simons v. Savings Society, 31 Ohio St. 461; Carter v. Buckingham, 1 Handy 395; 1 Wait’s A. & D. 104.
    6. An alteration in the charter of a railroad company, releases the subscribers to the capital stock of such company, who do not consent to such change, and an abandonment of a portion of the line of said railroad will also release such subscribers to the capital stock of said company, and especially conditional subscribers. Cook on S. & S., sec. 501 ; Zabriskie v. Ry. Co., 18 N. J. Eq. 178; Railway Co. v. Crosswell, 5 Hill 383; Railway v. Hinsdale, 45 Ohio St. 556; Bank v. City of Charlotte, 85 N. C. 433; Rev. Stats., secs. 3272-3298; Railway Co. v. Fisher, 39 Ohio St. 330; Supervisors v. Railway Co., 21 Ills. 338; 3 U. S. Dig., 634; Bool v. Railway, 10 Ind. 93; Burrows v. Smith, 10 N. Y. 550; Plank Road Co. v. Arndt, 31 Pa. St. 317; Railway Co. v. Ellliott, 10 Ohio St. 57; Turnpike Co. v. Locke, 8 Mass. 384.
    
      Lawrence T. Neal and John O. FJntrekin, for defendant in error.
    1. The declarations, and representations, made, in a general way, to the public, by the officers and agents of the company, cannot affect the liability of Armstrong to pay his subscription according to his agreement. Such speeches and representations were, at most, mere expressions of an existing intention, which was liable to be changed, and could-constitute no defense. McAllister v. Railway Co., 15 Ind. 11.
    2. The sale of a part of its road, by the company, does not release ' Armstrong from the payment of his subscription. The failure to complete the entire line, does not defeat the right of recovery. Cook on Stockholders, sees. 189, 190; Dorman v. Railway Co., 7 Fla. 265-281; Railway Co. v. Gifford, 87 N. Y. 294; 14 Ind., 205; Bish v. Bradford, 17 Ind. 490. Morgan County v. Thomas, 76 Ill. 120, 141; Railway Co. v. Bailey, 18 Ohio St. 208; McMillen v. Railroad Co., 15 B. Mon. 235. The sale was authorized by the statute, Secs. 3409 to 3412, Rev. Stats.
    3. The subscription is not affected by the assignment of it, by the company, in part payment for the construction of the road. Downie v. Hoover, 12 Wis. 174; Same v. White, Id. 176; Bank v. Heirs, Id. 512; Morris v. Cheney, 51 Ills. 452; Smith v. Hollette, 34 Ind. 519.
    4. The change of route, as shown, does not release the subscription. Rev. Stats., secs. 3272, 3275; Jewett v. Railway, 34 Ohio St. 601; Railway Co. v. Winchester, 13 Allen 29; Railway Co. v. Dudley, 14 N. Y. 336; Redfield on Railroads, 198; Waterman on Corporations, sec. 190; Turnpike Co. v. Brush, 10 Ohio 115; Canal Co. v. Webb, 9 Ohio 136; Barnet v. Railway Co., 13 Ills. 504; Railway Co. v. Wilson, 22 Conn. 435.
    5. Conditional subscriptions to the stock of a railroad are valid, by the common law of all of the states. Cook on Stockholders, sec. 82; Pierce on Railroads, 56 to 64; Potter on Corporations, sec. 240; Waterman on Corporations, secs. 175, 179; Railway Co. v. Dunn, 39 Me. 587; Chamberlain v. Railway Co., 15 Ohio St. 225-247; Railway Co. v. Smith, 15 Ohio St. 328; Railway Co. v. Stout, 26 Ohio St. 241-257; Emmitt v. Railway Co., 31 Ohio St. 23; sec. 3298 Rev. Stat.; Potter’s Dwarris on Statutes, 68; 1 Kent’s Com., 505; Shaw v. Railroad, 101 U. S. 557; Cook on Stockholders, see. 78; Railroad Co. v. Leavell, 16 B. Mon. 365.
    6. Armstrong is estopped to deny the validity of his subscription. The company has fully performed the agreement ■on its part; he has had the benefit of such performance, and will not be permitted to repudiate his contract and retain and enjoy such benefit. Hays v. Gas Co., 29 Ohio St. 340; Larwell v. H. F. S. Society, 49 Ohio St. 285; Whitney Arms Co. v. Barlow, 63 N. Y. 62; Bank v. Mathews, 98 U. S. 629; Pierce on Railroads, 516-517; Sedgwick on Stat. and Const. Construction, 73; Pollock on Contracts, 97 note ; Morawetz on Corporations, secs. 100 to 108,1 ed.; Same, 2d ed., secs. 689 to 699; Hagerman v. Building Association, 25 Ohio St. 200; Hydraulic Co. v. Railway Co., 29 Ohio St. 341; Goff v. Flesher, 33 Ohio St. 107.
    7. Armstrong did not stipulate in his agreement for “ a good, substantial, first class railroad,” one “built of first class material.” He cannot, therefore, avail himself of the fact that such a road has not been built, as a defense. Pierce on Railroads, 63; Waterman on Corporations, 22; O'Neal v. King, 3 Jones (N. C.), 517; Freeman v. Matlock, 67 Ind. 99; Ogden v. Kirby, 79 Ills. 555.
    8. The agreement of Lesher was made.in consideration of the advantages and benefits to accrue to him from the building of a certain part of the road, and in consideration of like subscriptions of other persons, for the same purpose. It was accepted by the company, and Karshner, in consideration of, and induced by it, made his contract and performed it; and having performed it on the faith of the subscription of Lesher, we have the common case of a promise to pay, on one side, and work done in consideration thereof on the other. “ The consideration for a promise may well be contingent, that is, it may consist in the doing of something by the promisee which he need not do unless he chooses, but, which being done by him, the contract is complete and the promise binding.” Pollock on Contracts, 160, 180, and notes; 3 Apr. & Eng. Ency. of Law, 847, and cases cited: Turnpike Co. v. Coy, 13 Ohio St. 92; Sperry v. Johnson, 11 Ohio 452; Gilmore v. Lewis, 12 Ohio 281; Miller v. McKenzie, 95 N. Y. 575; Morse v. Bellows, 7 N. H. 549; Cummings v. Gann, 52 Pa St. 484: Perkins v. Hadsell, 50 Ill. 216; Mathews v. Fitch, 22 Cal. 86; Train v. Gould, 5 Pick. 380; M. E. Church v. Kendall, 121 Mass. 528. Mutual interest of subscribers is a valid consideration. Trustees v. Stetson, 5 Pick. 508; George v. Harris, 4 N. H. 533; Society v. Perry, 6 N. H. 164; Watkins v. Eames, 9 Cush. 537; Underwood v. Waldron, 12 Mich. 73; Comstock v. Howd, 15 Mich. 237; Lathrop v. Knapp, 27 Wis. 214; Pierce v. Ruley, 5 Ind. 69; Stewart v. Hamilton College, 1 Comst. 581.
    9. Lesher, not having subscribed to. the capital stock of the company, but having made his as a donation, must rest his case on the question of consideration, or no consideration, for his promise and agreement. He cannot avail himself of the defenses of a subscriber to the capital stock.
   Williams J.

It is not urged here, that the petition does not state a cause of action. The complaint is, that the demurrer to the answer was sustained. The allegations of the petition are not controverted; but the plaintiff in error contends, that upon each of the following grounds, the averments of the answer are a sufficient defense to the action, viz.: 1. The instrument sued on, was procured by misrepresentation ; 2. The subscription was a conditional one which the railroad company was without corporate authority to receive ; 3. That it was an implied condition of the subscription, that a first-class road should be constructed between the termini called for in the charter, which condition was not performed ; 4. By the sale and abandonment by the company of parts of its road, the obligation of the subscription, if it were otherwise binding, was discharged, and 5. That the company so changed its charter as to divert the line of the road from one of the counties called for in its articles of incorporation, which operated to release the subscription.

The allegations of the answer on the subject of the misrepresentations, are contained in that paragraph numbered as the first defense, and are to the effect, that the agents of the company who obtained the subscription, gave it out in speeches, that the company intended to build the road it was incorporated to build, between the termini named in its articles of incorporation, and that it did not do so, but thereafter sold, conveyed and abandoned parts of the proposed road. It is not alleged that these speeches, or any representations, were fraudulently made; nor, that when made, there was not a bona fide intention to build the road as stated. The fact that the company was incorporated for the purpose of building the road, would naturally give rise to the presumption that it intended in good faith to build it according to the articles of incorporation, and, if any part of it was thereafter sold or abandoned, that subsequent exigencies or circumstances made it necessary, or advisable to do so. Then, these speeches related entirely to the future purpose and intention of the company. That false statements made by an authorized agent of a corporation in regard to the past or present status of the corporate enterprise, or of material matters connected therewith, whereby subscriptions are obtained, may be fraudulent, and defeat a recovery thereon, is not disputed. But representations which are matters of opinion in regard to the future prospects or purposes of the corporation, are not such fraudulent representations as constitute a defense to an action on a subscription, though the subscriber believed and relied on them. It is said by Mr. Cook, in his work on stock and stockholders, that the essential allegations in a defense to a subscription on the ground that it was obtained by fraud, are, “ that a material misrepresentation of a question of fact was made, setting out fully the fact misrepresented; that the person making the misrepresentation thereby bound the corporation ; that the subscriber was thereby induced to make his subscription ; and that upon discovery of the fraud, he immediately disaffirmed the contract.” Cook on Stock and Stockholders, Section 165.

The established rule in this state is, that “ One seeking to be relieved from a contract, on the ground of alleged false representations, must show that there were, in fact, false representations of a material fact, upon which he relied, and upon which, from the circumstances of the case, he had a right to rely, and, in doing - so, was misled to his injury.” Insurance Co. v. Reed, 38 Ohio St. 283. Representations in regard to a future intention, purpose or expectation, do not come within the rule, or afford ground for relief from a contract induced by them, especially where it is not shown, that the representations were fraudulently made for the purpose of deceiving.

The principal question in the case, arises upon the second defense, the substance of which is, that the defendant’s subscription is a conditional one, and, at the time it was made, the capital stock of the company had been increased, and actual bona fide subscriptions to the amount of twenty per centum of the capital stock, so increased, had not then been obtained, nor had ten per centum of such capital stock been expended in the construction of the road.

The claim is, that the railroad company had no corporate power to receive the defendant’s subscription, because it had not then obtained unconditional subscriptions to the amount of twenty per centum of its capital stock, or expended ten per centum of its authorized capital in the construction of its road. This claim is based upon section 8298 of the Revised Statutes which provides: “ The directors of a company which has expended in the construction of its road ten per centum of its authorized capital, and has obtained actual bona fide subscriptions to its capital stock to the amount of at least twenty per centum thereof, may receive subscriptions to its capital stock, payable in such instalments, dependent upon the completion of the whole or any part of its road so that cars may pass over the same, as its directors may deem expedient, and upon full payment thereof may issue certificates of stock therefor.”

Unless restrained by statute, corporations may receive conditional subscriptions to their stock at any time after their actual incorporation. “A conditional subscription to stock, taken and accepted by a corporation after its incorporation, is legal by the common law of all the states.” Cook on Stock and Stockholders, section 82. And it is said by White, J., in Ashtabula and New Lisbon R. R. Co. v. Smith, 15 Ohio St. 336, that, “Except in New York, conditional subscriptions, in the absence of a special prohibition so far as we have observed, have been sustained, as authorized, and not in conflict with public policy.”

No special prohibition is found in section 3298, against a railroad corporation receiving conditional subscriptions. The most that can be claimed from the section is, that, it having specified the eases in which such conditional subscriptions may be received, there is a want of authority to receive them otherwise than as therein provided. If this be admitted, does it necessarily follow that a subscription not in all respects in conformity to the statute may not be enforced ? “ The rule seems well established,” says Boynton, J., in Hays v. Galena Gaslight and Coal Co., 29 Ohio St. 340, “ that where a contract has been executedand fully performed, on the part either of the corporation or of the other contracting party, neither will be permitted to insist that the contract and such performance by one party were not within the cdrporate power of the company.”

Generally, after the acceptance by the corporation, of a conditional subscription which it is authorized to take, the subscriber is bound until performance of the condition, to await such performance; he cannot withdraw the subscription unless the performance is unreasonably delayed. Cook on Stock and Stockholders, section 84. But a conditional subscription, which is not a present valid contract, may be a continuing offer to subscribe upon the specified conditions, and when those conditions are performed, if the offer be not before withdrawn, it may then become an absolute and unconditional subscription. The difference between the two classes of subscriptions is, that the former, becomes binding when accepted, and the latter, only when the condition is performed, and it may, at any time before then, be withdrawn. If not so withdrawn, it becomes an absolute subscription. In Ashtabula & New Lisbon R. R. Co. v. Smith, supra, White, J., speaking of the conditional subscription to the capital stock cif the railroad company involved in that ease, and the effect of the performance of the conditions by the company, said: “ The subscription was designed as, and was in fact, a standing or continuing proposition, upon which'the plaintiff was not expected to act, until the time arrived for the final location of its road. Having been delivered for' this purpose, and acted on by the plaintiff, after the condition has been complied with, it became an absolute subscription.” In the case óf The Mansfield Coldwater & Lake Michigan R. R. Co. v. Stout, 26 Ohio St. 254, it is said by McIlvaine, J., “ 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 conditions expressed in the defendant’s subscription, it is alleged in the petition, were fully performed, and upon this, no issue is raised by the answer. If it be conceded, therefore, that the instrument executed by the defendant, was not, by reason of the provisions of the statute, a valid and binding subscription to the capital stock when subscribed and delivered to the company, it was, at least, a continuing offer to pay the amount stipulated, upon the performance of the conditions therein specified; and, while the defendant, at any time before such performance, might have withdrawn his offer, he did not, and the conditions having been fully complied with by the railroad company, he cannot now, we think, defend against the payment of the subscription on the ground that the company was without corporate authority to receive it. It is not important, whether the subscription is enforced on the ground that on the performance of the conditions it became an unconditional subscription, or on the ground of estoppel. The legal result is the same.

'Was it one of the conditions of defendant’s subscription that the company should build a first class railroad?

In that part of the answer, numbered as the eighth defense, it is alleged that the charter of the company called for a “ first class railroad,” and the defendant made his subscription for the purpose of building “ a good, substantial, first class railroad,” and that his subscription “ does not become absolute and binding until such good, substantial, first class railroad is built of first class material; ” and, such road not having been built, the company has, he claims, failed to comply with all the conditions of hjs subscription.

It is not contended that any such condition is expressed in the subscription. In fact it is not. Nor, do we think it is implied. It appears from the petition, that the company was incorporated under the laws of Ohio, in 1877. It therefore had no special charter, but became a corporation under the general laws of the state, on the subject. Our attention has not been called to any provision of those laws making it obligatory upon a railroad company incorporated thereunder, to make its road conform to the standard contended for by the defendant, before it can enforce subscriptions to its capital stock. We do not question, but that the defendant might have expressly stipulated in his subscription that it should be payable only upon the construction of such road, but he has not done so.

The further claim is made, that the railroad company by the sale and abandonment of parts of its road, discharged the defendant from the obligation of the subscription.

The allegations of the answer upon this subject, are, in-substance, that after the defendant’s subscription was obtained, the company sold and conveyed to another railroad company that part of its road west of Hillsboro; and that another portion of the road, east of Hillsboro, has been practically abandoned. It is not alleged that the sale was illegal or irregular; and, in the absence of any averment to the contrary, it will be presumed that the sale was in conformity to law.

Section 3409, of the Revised Statutes, authorizes a railroad “company, owning in whole or in part any road-bed and right of way for a railroad within this state, including those acquired by purchase at judicial sale, which, from lack of means, or other cause, is unable to complete the construction of its proposed line of road thereon,” to “sell, assign, and transfer the same, or any part thereof, to any other company incorporated under the laws of this state, with authority to construct and operate a railroad over the same route, or any part thereof, which transfer shall include all work done upon such line of road, together with all material furnished therefor, not exempted by the terms of the grant, with all rights, privileges, and easements, as fully as the same are or may be possessed by the company making the same, and shall to the same extent, vest the title of and the right to enjoy the same in such grantee.” And section 3412 provides, “ No transfer shall be made against the dissent of any stockholder, expressly declared and filed in writing at such meeting, with out the guaranty of the company grantee that it will cause to be issued to him certificates of its capital stock, equal in amount to his pro rata interest as a stockholder of the grantor, in the amount for which the property is sold.”

, These statutes were in force when the defendant executed the instrument which is the subject of the suit, and when its conditions were performed by the company, and, according to the decisions of this court, they entered into and became part of the agreement. Jewett v. Railway Co., 34 Ohio St. 601. That the company might exercise its right under the statute to sell all or part of its road, must be held to have been within the contemplation of the parties at the time the subscription was made. Mansfield, Coldwater & Lake Michigan R. R. Co. v. Stout, 26 Ohio St. 241.

It is not averred that the defendant objected to the sale or transfer, or that he filed any writing, expressing his dissent therefrom. If the sale occurred before the liability of the defendant became fixed by the performance of the conditions of his subscription, so that he could not, as a stockholder, file in writing his dissent as provided by the statute, he might, for that reason, or without assigning any reason, have withdrawn his offer to make the payment he promised, and thus avoided all liability. He chose, however, not to withdraw it on that, or any other account; but waited until the company fully complied with the conditions of his promise, and he must be regarded as acquiescing in such sale; as much so, as if he were a stockholder and entered no dissent.

In regard to the abandonment, it is well settled, that neither the failure of a railroad company to complete its road, or the non-user of a part of it, constitutes ■ a defense to a suit on a subscription to its capital stock, unless such failure or non-user, violates some condition to that effect, expressed in the subscription. It is laid down in Cook on Stock and Stockholders, section 189, as the settled doctrine, that, “a subscriber cannot defeat the subscription by the fact that the corporation has not completed and has no intention of completing the road in its entirety;” and, “an abandonment of part of the enterprise,” the same author says, “ is no defense.” Neither the sale nor the abandonment effected a change in the identity of the company to which the defendant subscribed. The case is unlike Railway Co. v. Hinsdale, 45 Ohio St. 556, where it was held, that a conditional subscription made to one railroad company, could not be enforced bjr another to which the defendant did not subscribe. The latter company could not make the subscriber its debtor, by performing the conditions of the subscription.

The only remaining question in the case, which we deem it necessary to notice is, whether the change, which the answer alleges the railroad company made in the line of its road, released the defendant from the obligation of his subscription. It was held in Nugent v. The Supervisors, 19 Wall. 241, that “ although a subscriber for stock in a company is released from his subscription by a subsequent alteration of the organization, or purpose of the company, this is only where such alteration is a fundamental one, and when, in addition, it is not provided for, or contemplated by either the charter itself or the general laws of the state.”

Section 3275, of the Revised Statutes of this state, which was in force when the defendant subscribed to the stock of the company, and which thus became a part of the contract, expressly authorizes a railroad company, the line of whose road has not been finally located in whole or in part, when found necessary by it in order to avoid dangerous or difficult curves or grades, or dangerous or unsubstantial grounds.or foundations or for other reasonable cause,'to pass through a county not named in the articles of incorporation, or to avoid passing into or through a county named therein, other than a county in which a terminus of- the road has been-fixed by the articles of incorporation, by making and 'filing with the secretary of state a certificate declaring such necessity and the cause thereof. The next section, 3276, provides that “when the line of any road is, under the preceding section, diverted from a county named in the, articles of incorporation, the company shall be liable in damages, if any be caused by such change or diversion, to any person owning land in such county, and all persons who subscribed' to the capital stock of the company on the line of that part of the road so changed shall be released from all obligations to pay their subscriptions.”

It will be noticed, that by this section, which defines the rights of subscribers to the capital stock of a railroad company which under the provisions of the preceding section has changed the line of its road, such subscribers are released from the obligations of their subscriptions, only when the road is diverted from a county named in the articles of incorporation. The allegations of the answer upon this subject are, that the “ company did on or about the 15th day of March, 1883, take the necessary legal steps to, and did alter its charter by providing for the extension of its railroad through the county of Pickaway.” It thus appears from these allegations, that the only change made by the company in the line of its road, was to extend it through a county not named in the articles of incorporation, and that the steps by which the change was effected, were legal. The answer contains no averment that the line of the road was diverted from any county named in the articles of incorporation, and in this, it fails to state a defense. *

The answer is also defective, if .the change was made under section 3272, of the Revised Statutes. That section provides, “ A company may, by a resolution adopted by a majority of its board of directors, at a meeting thereof duly called for the purpose, with the written consent of three fourths in interest of its stockholders, change the line, or any part thereof, and either of the proposed termini, of its road; but no change shall be made which will involve the abandonment of any part of the road, either partly or completely constructed; and any subscription of stock made upon the faith of the location of such road, or a part thereof, upon any line abandoned by such change, shall be canceled at the written request of the subscriber not having consented thereto, filed with the secretary or other chief officer of the companjq within six months after such change.” It is no where alleged in the answer, that the defendant requested the cancellation of his subcription, as provided in this section of the statutes, nor that his subscription was made upon the faith of the location of any part of the road on any line abandoned by the change. On the contrary, it is averred in the first paragraph of the answer, that the subscription was “based upon the completion of such parts of said proposed road as lie between the Scioto Valley railroad and the town of Adelphi in Ross county, Ohio,” which parts of the road, it is admitted, were completed. We are of opinion there was no error in sustaining the demurrer to the answer, and

The judgment is affirmed<