Case ID: ohio-st_26/html/0259-01.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. David Pettis.
    .A subscription to the capital stock of a railroad corporation made and accepted on the express condition, “ that not more than ten per cent, shall he required (to be paid) at any one call, nor shall calls be made more frequently than once in sixty days,” is not embraced in a previous resolution of the directors requiring the installment of five dollars due upon each share of stock at the time of making the subscription to be paid at once, and ten per centum or five dollars on each share subscribed to be paid on the 15th of each month following until the whole amount shall be paid.
    Error reserved in the District Court of Wood county.
    The alleged error was in rendering judgment by the Court of Common Pleas against the plaintiff' in error, upon the original pleadings and a special finding of facts.
    This cause was submitted to the court with Brown’s ease and Stout’s ease, reported at pages 223 and 241 of this volume.
    This differs from each of those cases in the terms of the contract of subscription sued on; and it differs from Brown’s case as to the fact of an election of a board of directors of the plaintiff in error. In both cases it was shown that the corporate existence of the plaintiff commenced on the 1st day of June, 1871. In this case it was found that a board of directors of the plaintiff was afterward, to wit, on the 4th. of January, 1872, duly elected, while in Brown’s case it did not appear that any such election was held, after consolidation was consummated—an event, upon the occurrence of which alone the right of the-plaintiff to sue on the cause of action stated in the petition could accrue. And in this case it was found that the roads of the consolidating companies were in actual process of construction before the date of the joint agreement to consolidate, while in Stout’s case it was found that the road of one of the consolidating companies, to wit, the Mansfield, Coldwater and Lake Michigan Railway Company, to whose stock the defendant afterward subscribed, was neither made nor in process of construction when the-agreement was entered into.
    [This case was decisive of the cases, The Mansfield, Cold-water and Lake Michigan B. B. Co. v. John E. Clark; Same v. Elizabeth Atkins; Same v. Beverstook, in which J. R.. Tyler represented the defendants, and his argument in those cases is here presented.—Rep.]
    Eor a decision on all questions in this case, in common with either of those, reference will be had to the reports of those cases; and for a statement of facts in relation to the consolidation of the Mansfield, Coldwater and Lake Michigan Railway Company and the Ohio and Michigan Railway Company, which resulted in the formation of the plaintiff in error, reference is made to the statement of Brown’s case, supra, 228.
    The only question peculiar to this ease which it is deemed necessary to decide arises on the terms of £he contract of subscription sued on, and of the requisition on subscribers for payment. The facts in relation to this question are sufficiently stated in the opinion.
    
      G. E. Seney, for plaintiff in error,
    submitted this case upon his argument in Brown’s case, supra, 228.
    J. B. Tyler, for defendant in error:
    The Mansfield, Coldwater and Lake Michigan Railway Company, before consolidation, had acquired no rights against these defendants which they could have enforced themselves at the date of consolidation, and none which •they could transfer to the consolidation under the statute. I refer to the act of April 10, 1856, which took effect May 1,1856. S. & C. 327, as amended May 6, 1869, 66 Ohio L. 127.
    The subscriptions under consideration were all conditional, as is shown before, and the conditions were that the •road of the Mansfield, Coldwater and Lake Michigan Railway Company should be located and depot erected within one hundred and sixty feet of the Dayton and Michigan Railroad depot, at Weston, Wood county; Ohio.
    The findings of the court below show that this eondi•tional contract of subscription was made' and delivered to some person acting in his own and on behalf of the citizens of Weston, soliciting subscriptions, but not authorized to act for said company, and on or about December 5,1870.
    They also show that these subscriptions were not delivered to or accepted by the Mansfield, Coldwater and Lake Michigan Railway until the 28th day of May, 1871; that the Mansfield, Coldwater and Lake Michigan Railway located its line of road through the town of Weston, in Wood county, Ohio, within eighty rods of the Dayton and Michigan Railroad depot at Weston, May 10, 1871, and afterward, at a date not given, constructed their road-bed •thereon.
    But it nowhere appears that said railway company, before the consolidation, or said rail road company, since the consolidation, have ever erected or even located a depot within one hundred and sixty feet of the Dayton and Michigan Railroad depot at Weston, Wood county, Ohio, as by their contract, when they accepted said subscriptions, they bound themselves to do before said subscriptions could be -enforced against any of the signers thereto.
    A subscription conditioned that the railway shall be located over a certain route can not be collected if the condition is not complied with. Nashville and Northwestern B. JR,. Co. v. Baker, 2 Caldwell (Tenn.), 574.
    And I take it this rule holds good as to location of depots and erection of depot buildings. Chase v. Sycamore, etc., R. R., 38 111. 215; Jewett v. Lawrencéburg, etc., R. R. Co., 10 Ind. 539; Evansville, etc., R. R. Co. v. Shearer, lb. 244; 12 lb. 452; North Missouri R. R. Co. v. Miller, 30 Mo. 19 ; Spear v. Crawford, 14 Wend. 20.
    Hence, I say, we were never stockholders to either company ; we were simply conditional subscribers to the old organization. That this condition has never been performed in spirit or in letter by either the old or the new company clearly appears ; therefore, in no event can we be held liable on these conditional subscriptions.
    The Mansfield, Coldwater and Lake Michigan Rail road' Company, after consolidation, certainly had no rights as against these conditional subscribers.
    I ask the court, under findings of fact and these principles of law I have just given, what right, privilege, or franchise ; what property, real, personal, or mixed ,v what debts-due on account of subscription of stock, or what other things in action, had the Mansfield, Coldwater and Lake Michigan Railway Company acquired, or became entitled to enforce,, against these defendants at the time of the making and perfecting of the agreement and act of consolidation, and the filing of the same with the secretary of state.
    The agreement of consolidation was, as appears in the findings, adopted and ratified by the stockholders of the • Mansfield, Coldwater and Lake Michigan Railway Company, April 13, 1871, and calls were made April 15, 1871, for payment to the capital stock, of five dollars on each share, to H. H. Sturgess, at Mansfield, Ohio, the principal, and in fact only office of the Mansfield, Coldwater and Lake Michigan Railway Company. This company was then in a state of transition out of the old and into the new organization. It had even then done all that it could do to end its corporate existence. 16 Ind. 172; 1 Wall. 25.
   McIlvaine, J.

The original action was brought in the-Court of Common Pleas of Wood county by the plaintiff [in. error, a consolidated railroad corporation, to recover, as successor to the rights of the Mansfield, Ooldwater and Lake Michigan Railway Company, the amount alleged to he due on the defendant’s subscription to the capital stock of the latter company.

The general history of the consolidation, whereby the plaintiff in error became a corporation, will be found in the case of the Mansfield, Coldwater and Lake Michigan Railroad Company v. William Brown et al., ante, 223.

The contract of subscription sued on was delivered and accepted on the 23d of May, 1871, and was in these words:

“ "We, the undersigned, each for himself, agree to take the shares of stock iu the Mansfield, Ooldwater and Lake Michigan Railway, of fifty dollars each, set opposite our respective names, and pay therefor as required by law or by the order of the board of directors, so that not more than ten per cent, shall be required at any one call, nor shall calls be made more frequently than once in sixty days; the demand to be by notice in a newspaper, published and in circulation in the county; the money so paid to be applied in the construction of the road from the D. & M. Railroad east. The road to be located and depot erected within one hundred and sixty rods of the D. & M. Railroad depot, at Weston, Wood county, Ohio.

(Signed,) “David Pettis, 4 shares.”

Previous to the delivery and acceptance of this subscription, the railway company—to wit, on the 15th of April, 1871—by resolution of its board of directors, required the subscriptions to its capital stock to be paid to the assistant treasurer of the company, at its office, in Mansfield, Ohio, in installments, as follows: “ The five dollars due upon each share of the stock, at the time of making the subscription, to be paid at once, April 15, 1871, and ten per centum thereof, or five 'dollars upon each share subscribed, on the 15th day of May, 1871, and ten per centum thereof, or five dollars on each share subscribed, on the 15th day of each month following, until the whole of such subscription should be paid.”

It does not appear in this record that any other call was ever made. Under the statute, an installment of five dollars on each share of unconditional subscription is made payable at the time of making the subscription, and the residue is to be paid in such installments, and at such times and places and to such persons, as may be required by the. directors of such company. But, by the terms and conditions of this subscription, the rule of the statute is waived, and that of the contract substituted, whereby installments become due only on call, and not more than ten per centum on any call, and calls not to be made more frequently than once in sixty days. By the very terms of this contract, the requisition of the 15th of April previous could not apply to the defendant’s subscription.

The plaintiff’s claim is, that, under this requisition, an installment of ten per centum of defendant’s subscription became due and payable each alternate month. We do not think that such effect can be given to the call. We would not doubt its application to subsequent subscriptions made without condition as to calls, but are entirely satisfied that neither the company nor the defendant intended or understood that the requisition of April 15th should apply to the subscription of the defendant. The original action was prematurely commenced.

Judgment affirmed.

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