Case ID: ohio-st_12/html/0073-01.html
Source: Caselaw Access Project
Author: {"author": "Gholson, J. Sutliee, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Daniel S. Owen v. James Purdy et al.
    The act of 15th February, 1844, relating to the Bank of Wooster (2 Curwen 1012), provides, that upon the assent of each and all of the stockholders, by a written declaration filed with the auditor of state, to the individual liability mentioned in the second section of the act, then the bank should enjoy all the rights and privileges originally granted, free from certain restrictive laws which would otherwise apply; Held, that the act is to be regarded as •an amendment to the charter of the Bank of Wooster, offered to the stockholders for their acceptance in a prescribed mode, and that, although the prescribed mode be not pursued, some of the stockholders not uniting in the written declaration, yet if the bank proceeds to exercise and enjoy the privileges and immunities secured by the amendment, neither it, nor such of its stockholders as are consenting thereto, can deny the acceptance of such •amendment, as against the claims of third.persons.
    Reserved in the district court of Richland county.
    The action was brought to charge the defendants with individual liability, as stockholders, upon certain notes of the Bank of Wooster, held by the plaintiff. The liability is alleged to have been imposed by statute. A statement of the legislation necessary to be considered.in determining the question of' such liability, is as follows :
    The Bank of Wooster was incorporated February 14,1834. 32 Local Laws, 76.
    Sec. 1 provides, that “those who shall become stockholders in said bank, in the manner hereinafter prescribed, their successors and assigns, shall be, and they hereby are created a body politic and corporate, by the name of the President, Directors, and Company of the Bank of Wooster, and shall so continue until the first day of June one thousand eight hundred and fifty.”
    Sec. 24 provides, “ That every subsequent legislature, after the year 1842, may make such amendment to this act as they shall deem expedient in order to place the institution hereby incorporated, under the same restrictions and regulations as now are, or hereafter may be, imposed on other hanks chartered under the authority of this state.”
    By this act no stockholder was individually liable for any debt of the corporation, except those who failed to pay the full amount of the shares owned by them, and who were made liable to creditors for such amount as remained unpaid on their shares. Sec. 23.
    On the 7th of March, 1842, the act, entitled “ An act to regulate banking in Ohio,” was passed. 2 Curwen, 882.
    Sec. 25 provides, “The directors and stockholders of such bank shall not be exempted from liability, in their natural and individual capacity; but for all acts done, or liabilities incurred by, or on behalf of such banks, the stockholders and directors thereof shall be held jointly and severally liable in their individual and natural capacity; provided, that for all acts done, or liabilities incurred by, or on behalf of such banks, suit shall first be brought, judgment recovered, and execution issued against such bank.”
    Further provisions are made, pointing out the mode of procedure against the stockholders, which is by scire facias, etc. This act was passed before the expiration of the year 1842, and therefore did not operate to modify the charter of the Bank of Wooster.
    The act, entitled “ An act to amend the act, entitled an act to regulate banking in Ohio,” was passed February 21,1843. 2 Curwen, 937.
    Sec. 5 provides, that “ The stockholders of such bank shall be severally liable in their individual and private capacity, for each and every valid claim against the bank of which they are stockholders, except in cases where depositors and the bank otherwise agree in relation to the liability for deposits; and such individual liability shall be enforced as follows:” etc.
    The proceeding was by scire facias in the name of the state of Ohio.
    Sec. 19 provides, that the “ act incorporating the Bank of Wooster, passed February fourteen, one thousand eight hundred and thirty-four,” and certain other acts therein named, “ shall be, and the same are hereby altered, changed and modified by the substitution of the provisions of this act and the act to which this is an amendment, in lieu thereof, so far, that the said banks, now doing business under the said acts of incorporation, shall, after the first day of March,Anno Domini one thousand eight hundred and forty-four, conform their business to the general regulations, and be subject to all the restrictions and liabilities of this act and the act to which this is an amendment.”
    The charter of the bank was thus modified, and the individual liability of its stockholders established, to commence on 1st of March, 1844.
    On the 15th February,'1844, however, further legislation was had in reference to the bank. 2 Curwen, 1012. And it is the liability supposed to be imposed by this last act, which the plaintiff seeks to enforce in this action. The preamble to that act is as follows : “ Whereas the stockholders of the Bank of Wooster have presented their petition to this general assembly, setting forth their inability to transact business under the present restrictive laws relating to banking in this state, and praying to be restored to their original rights and privileges under their charter, subject, nevertheless, to the condition of individual and personal liability of the stockholders. And whereas the said stockholders would be greatly injured in the settlement of the affairs of said bank, if the time for the settlement thereof is not extended.”
    The provisions necessary to be considered are contained in the 1st, 2d and 5th sections, which are as follows:
    “ Sec. 1. That from and after the first day of March, in the year one thousand eight hundred and forty-four, and until the first day of June, in the year one thousand eight hundred and fifty, the president, directors and company of the Bank of Wooster, shall be entitled to use, exercise and enjoy, all the rights, privileges and immunities granted to them, by the act entitled ‘ an act to incorporate the Bank of Wooster, passed February fourteen, one thousand eight hundred and thirty-four provided, that each and all stockholders of said bank do signify their assent to the liability mentioned in the second section of this act, by filing their written declaration thereof, with the auditor of state, on or before the first day of March, one thousand eight hundred and forty-four; and provided, also, that said bank shall be subject to the other qualifications and restrictions hereinafter contained.
    “ Sec. 2. That from and after the first day of March, in the year one thousand eight hundred and forty-four, the stockholders of said Bank of Wooster, shall be severally liable in their individual and private capacity for each and every valid claim against said bank, except in cases where depositors and said bank shall otherwise agree.
    “ Sec. 5. That whenever the stockholders of the Bank of Wooster shall have complied with the provisions of the first section of this act, then so much of the nineteenth section of the act entitled ‘an act to amend the act entitled ‘ an act to regulate banking in Ohio, passed February twenty-one, one thousand eight hundred and forty-three,’ as relates to the Bank of Wooster, shall be deemed as hereby repealed.”
    The plain tiff, to show that individual liability had attached to the defendants under the terms of the act, alleged in his petition that “prior to the first day of March, 1844, to-wit, on the 23d day of February, A.D. 1844, the said defendants being then and there stockholders of and in said company, and so continuing until the commencement of this suit, did then and there, in connection with others, claiming to be and acting as stockholders of said bank, signify their assent to the liability mentioned in the second clause of said act, by then and there filing their written declaration thereof with the auditor. of state, which written declaration of assent was filed by said defendants as aforesaid as and for a full compliance on their part, with the provisions of said act, and as and for their assent to the liabilities imposed by, and the rights, privileges and exemptions conferred by said act, and especially of the second section thereof, and was so received and filed by the auditor of state.”
    “ And the plaintiff represents that the said banking company, after the filing of the said written declaration with the auditor of state,exercised and enjoyed all its corporate privileges, and exercised and enjoyed all the privileges and immunities and exemptions secured to them by said amendatory act, so accepted by them, and under said laws paid, received, issued, and put into circulation its bills and notes as money, by and with the knowledge and consent of said defendant, and so continued until the 28th day of February, A.D., 1848.”
    The defendants demurred to the petition on the ground that it did not sufficiently aver a compliance on the part of the stockholders, to entitle them to the benefits, or subject them to the liabilities provided in the act of February 15, 1844.
    The questions arising upon this demurrer, were reserved in the district court of Richland county, to this court.
    
      T. W. Bartley and Henry Stanbery, for plaintiff.
    
      B. 0, Hurd, for defendants.
   Gholson, J.

The determination of the questions presented in this case, requires an examination of the act of 15th February, 1844.

That act purports, from its preamble, to have been enacted in answer to a petition of the stockholders of the Bank of Wooster, praying to be restored to certain rights and privileges, once enjoyed, but which restrictive laws had taken away, or rendered unavailable, and at the same time expressing a willingness to be subjected to individual and personal liability. The act may be properly regarded as an amendment of the charter of the Bank of Wooster, offered to the stockholders for their acceptance. The most material amendment was contained in the second section; it personally affected the stockholders, and the assent required of them had special reference to that section. The section, however, was not confined in its operation to the stockholders,'but when the then stockholders should signify the required assent, it became a part of the charter, and applied to all future stockholders. The result would be, that, the amendment to the charter being accepted, any person who, after the 1st of March, 1844, became a stockholder in the bank, became liable, in his individual and private capacity, for every valid claim against the bank.

If the question be, whether the act of 15th February, 1844, was accepted by the Bank of Wooster, as an amendment to its charter, then such an acceptance may be presumed from the acts of those interested, although the prescribed form of acceptance was not pursued. And such acts may constitute an estoppel conclusive upon those who participate in them. This principle was recognized as to the acceptance of an original charter, in the case of Callender v. Painesville and Hudson R. R. Co., 11 Ohio St. Rep. 516, 526, and on principle and authority it equally applies to the acceptance of an amendment to a charter. In the case of Commonwealth v. Cullen, 13 Pa. St. Rep. 133-140, it is said : “ In this country, where private corporations, are very numerous, and constant use of their privileges naturally engenders indolence in the creation of regular evidence of corporate acts, and negligence in its preservation, the recognition of presumptions, as legitimate sources of proof, was a legal necessity; while", therefore, a charter granted to' persons who have not solicited it, is said to be in fieri until after acceptance, yet it is not indispensable to show a written instrument, or even a vote acceding to the grant, for, unless the charter expressly prohibits it, every formality will be presumed, from a continual exercise of the corporate powers. This is also true of an assent to a new oi; additional charter by an existing corporation, which may, in like manner, be inferred from acts or omissions inconsistent with any other hypothesis.” And numerous authorities are cited.

A strong illustration of the wisdom of this rule may be drawn from the present case. Assuming that a written declaration of assent was filed as the assent of the stockholders, though some of them did not in fact assent,.or unite in the declaration, and thereupon the bank, under directors chosen by the stockholders who did assent, proceeded with its business, using and enjoying the rights and privileges which the amended charter conferred, and obtaining credit and circulation for its notes on the faith of the security which a provision of that charter afforded, is it to be supposed that the legislature intended, that those stockholders should escape liability to the holders of those notes, by showing that assent was not given by each and all of the stockholders ? We can not agree that such was the intention of the legislature, but on the contrary, we think, as has been intimated, that the act was an amendment of-the charter of the bank, offered to the stockholders for their acceptance, but that such acceptance though required in a prescribed mode, must be governed by the rule applicable in like case — a rule, under the operation of which the stockholders, who do assent and through their directors carry on the business of the bank under the amended charter, are estopped from denying that the prescribed form was adopted, or that each and all of the stockholders did not assent.

The law protects any stockholder who, his assent being requisite to the amendment of a charter, has not assented. If a personal charge is sought to be fixed upon him by virtue of such amended charter, he may deny that he assented — he is not concluded by any presumption arising from the acts of the other corporators or the corporate body. If his interest in the corporation, or rights as a stockholder will be affected by acting under the amended charter before it is accepted in the prescribed mode, he may invoke the aid of the state in a quo warranto, or, in an action by himself, the power of a court to restrain. But it can not be permitted that a corporator, though his assent be in the first instance required, shall stand by and consenting to the progress of a corporation under a charter, and then when his interest may so require, set up either as a claim or a defense, that, for want of his direct assent, the grant of the charter was not effective,, and the acts done were illegal.

Such being our view of the act of 15th February, 1844, we have to consider, whether the petition states facts sufficient to show that a liability under it has attached to the defendants? We do not think that the petition states an acceptance of the amendment in the mode prescribed by the statute. It can not by any fair construction be held as averring that each and all of the stockholders united in a written declaration of assent. But the averment that a written declaration was filed by the defendants and others claiming to be stockholders' which was accepted and filed, taken in connection with the succeeding averment, that the corporation after such filing “ exercised and enjoyed all the privileges and immunities and • exemptions secured to them by said amendatory act, so accepted by them, and under- said laws paid, received, issued, and put into circulation its bills and notes as money, by and with the knowledge and consent of said defendants, and so ■ continued until the 28th day of February, A. D. 1848,” we regard as sufficient to charge the defendants. The averments sufficiently show that a declaration of assent was filed, and, whether perfect or not, was regarded as an acceptance, and acted upon as such, by the bank and those who managed and controlled its business, including stockholders and directors. This, in view of the principles we have stated, must suffice to charge those stockholders who consented to such action on the part of the bank.

It is objected, that the averment should show the particular acts the bank did, so that the court might decide as a question of law under which statute they were acting. But, we think, in such a case, a general averment as to the course of its business will suffice. The course of business pursued by the bank would show whether it was acting under the amended charter, and it would be neither proper nor.necessary that the various details, showing what the course of business was, should be stated in the pleadings. We do not think it can be supposed, that the business would have progressed in the same manner, whether the amendment had been accepted or not, as is suggested by the counsel for the defendant, in view of the admission of the stockholders in their petition to the legislature, that, without relief from -restrictive laws the bank would be unable to transact business.

It might be claimed that the averment of knowledge and consent on the part of the defendants was confined to the immediate antecedent — the issuing of bills and notes as money — but we think the intention and object of introducing the averment sufficiently shows that it ought not to be so limited. It has been said, that “ every corporator must be presumed to be conversant of that which has recently taken place-in the corporation of which he is a- member, unless he shows-the contrary.” The King v. Slythe, 6 B. & C. 240-243. If this be a correct rule, it would authorize us to construe liberally any averment of such knowledge.

Eor the reasons which have been given, we think the petition sufficient and that the demurrer must be overruled.

Demurrer to petition overruled and case remanded for further proceedings.

Scott, O.J., and Peck and Brinkerhoee, JJ., concurred.

Sutliee, J.,

dissenting. This case comes before us upon special demurrer to the third amended petition of the plaintiff, and presents the single question — does the petition, as finally amended, contain a sufficient statement of facts to constitute a cause of action ? I think it does not; and will here state the reasons of my dissent from the opinion pronounced. in the case.

In the first place, I will premise, that inasmuch as the record shows that to each of the two preceding petitions in-this case a demurrer has been offered and sustained for like ■ cause, to-wit, that the petition did not state sufficient facts to constitute a cause of action, it is to be presumed that all the existing facts in the case that can in truth be stated, are expressed in this petition. It is, therefore, but reasonable, in passing upon this third demurrer, for the same cause for which the preceding demurrers have been sustained, that we take it for granted that counsel have stated all the facts necessary to constitute their cause of action, which they can. state consistently with truth, leaving no existing facts to be implied.

Do the facts stated in the petition as thus amended, then, constitute a cause of action ?

It is required by section 85 of the code of civil procedure that the petition shall contain “ a statement of facts, constituting the cause of action, in ordinary and concise languageand a statement of the facts constituting a cause of action is no more dispensed with in the petition, than it was at common law in a declaration. I do not say the same regard to form or manner of statement should be required, upon demurrer; but it is equally necessary that there should be a statement of the substantive facts constituting the cause of action; and such, I understand to be the holding of courts in other states upon similar provisions of their codes. Wintersmith v. Burritt, 14 B. Mon. 84; Buddington v. Davis, 7 Howard, 402.

The original petition and each of the amended petitions show that the defendants were not liable at common law, upon the bank-notes, copies of which are set forth, and upon which a recovery is sought against the defendants.

The petition shows that the banking company was incorporated, and has ever since been in operation as a banking company, under its charter of February, 1834; that the act of February 21,1843, amendatory of its charter, was enacted and went into operation, and is still in force, unless superseded by the act of February, 1844. But the plaintiff’s only right of action claimed in this case, arises by force of this last mentioned statute. It is, therefore, incumbent upon the plaintiff, claiming such new right or remedy by virtue of a statute of 1844, to show that that statute is in force, and to state all the facts required by the statute to constitute the right of action, thereby given, or the remedy thereby afforded ; or, in other words, to state such facts as constitute a title or right to recover by force of the statute.

But the act of February, 1844, relied upon by the plaintiff, was only to take effect, as stated in the petition, when each and all the stockholders, parties to be affected thereby, should signify their assent to the liability mentioned in the act, and now claimed in the petition. The act could only take effect upon the happening of the condition prescribed. The plaintiff, must, however, state such facts as make the statute operative. Has he done it? His petition shows that the act was to be of no force or effect until each and all stockholders of said bank signify their assent to the liability, by filing their written declaration thereof, with the auditor of state, on or before the 1st of March” (1844), etc. But the plaintiff does not aver that “ each and all the stockholders,” or that even a majority of them, by themselves, or their agent, ever gave their assent thereto, as prescribed, or otherwise. The petition avers that the said defendants being then and there stockholders of and in said company,, and so continuing, did then and there “ in connection with others, claiming to be and acting as stockholders of said bank, signify their assent to the liability,” etc., “ by then and there filing their written declaration thereof with the auditor of state, which written declaration of assent was filed by said defendants,” “ as and for a full compliance on their part with the provisions of said act, and as and for the liabilities imposed by * * * Said act,” etc. But the petition avers that the statute was to be operative upon each and all the stockholders so signifying their assent, and filing their written declaration as prescribed; and the event which is thus shown to be a condition precedent, it is not averred in the petition, has ever occurred. Nor is it stated that these defendants so filed thejr declaration as a compliance on the part of the stockholders generally; but it is expressly stated to have been merely as a compliance “ on their part with the provisions of the act.”

The object of the act is apparent. It was, not to make any one or two of the stockholders liable, but to make all liable by their all giving their express written consent thereto. This is the plain and obvious meaning of the act.-

The stockholder who was willing, in common with all other stockholders, to assume individual responsibility, might, with safety, file his written declaration; and, in case all the stockholders should concur with him, and respectively file their declaration of like assent, as prescribed, individual responsibility would be incurred — not by part of the stockholders, but by all; and such responsibility would have to be borne by all equally.

But the amended petition assumes a forced and unnatural construction for the act, and one utterly inconsistent with its language. It is assumed by the plaintiff that if one or more of the stockholders filed his or their declaration of assent to-individual liability upon all the stockholders, even if no others assented, he or they thus assenting on his or their part to become liable in common with all the stockholders, would himself, or themselves, alone be held personally responsible for the entire liabilities of the bank.

There is nothing in any of the statutes mentioned in the-petition and relied upon, expressing or contemplating any such result. Nor is there even any averment in the amended petition that such is the meaning or intent of the statutes.

The following is the .statement of facts contained in the amended petition, constituting the only title of plaintiff, or right of action in the case: After setting forth the statute which was only to become operative, “provided that each and all stockholders of said bank do signify their assent,” etc.; the plaintiff alleges, that “ prior to the first day of March, 1844, to:wit, on the 23d day of February, A.D. 1844, the said defendants being then and there stockholders of and in said company, and so continuing until the commencement of this suit, did then and there, in connection with others, claiming to be and acting as stockholders of said bank, signify their assent to the liability mentioned in the second clause of said act, by then and there filing their written declaration thereof with the auditor of state, which written declaration of assent was filed by said defendants as aforesaid as and for a full compliance on their part, with the provisions of said act, and as and for their assent to the liabilities imposed by, and the rights, privileges and exemptions conferred by said act, and especially of the second section thereof, and was so received and filed by the auditor of state.”

The averments of the petition then amount to simply this— that by force of the statute the defendants became liable to pay the amount of said bank notes; and that the statute was to take effect upon each and all of the stockholders filing their declaration of assent, etc.; but the petition does not state that each and all the stockholders filed their written declaration of assent, or anything equivalent thereto. The plaintiff does not, therefore, show that the statute, under the operation of which he claims his right of action, ever took effect, or became operative.

The petition, however, proceeds with the following additional statement of facts, upon which reliance is placed to show a right of action arising from the preceding statements, taken in connection therewith: “ And the plaintiff represents that the said banking company, after the filing of the said written declaration with the auditor of state, exercised and enjoyed all its corporate privileges, and exercised and enjoyed all the privileges and immunities and exemptions secured to them by said amendatory act, so accepted by them, and under said laws paid, received, issued, and put into circulation its bills and notes as money, by and with the knowledge and consent of said defendants, and so continued until the 28th day of Eebruary, A.D. 1845.”

The demurrer, it is said, admits the facts stated in this paragraph; and that those facts, tl}e acts and doings of the said banking company, may be regarded as constituting an estoppel, conclusive upon those who participated in them; and that, therefore, the defendants are estopped or precluded from denying that the Bank of Wooster accepted, as an amendment of its charter, the act of Eebruary 15, 1844.

But how can it possibly be shown that an estoppel arises against these defendants by force of any or all the averments so made by the plaintiff? The averment is that not these defendants, but the “ banking company,” that is, the makers' of the notes, who are not sued, “ exercised and enjoyed all; its corporate privileges and immunities and exemptions se cured to them by said amendatory act,” etc. If, then, these-facts constitute an estoppel upon the banking company, the-makers of the notes, it would be a sufficient answer that the-company, the party so estopped, is not a party in this action nor do the -averments, as made, show the plaintiff or defendants in any other relation than that of strangers to the acts so stated_; and a stranger can neither take advantage of, nor be bound by, an estoppel.

In.the case of Callender v. Painesville and Hudson R. R. Co., the defendants had held themselves out to the public as-an incorporated company, had entered into a written contract with the plaintiff as an incorporated company by their corporate name, and when sued upon the contract, as such corporate company, this court held that the defendants, having contracted as an incorporated company, were estopped to deny their, corporate character, when sued as a corporation by the person with whom they had so contracted as a corporation. “ Under such circumstances the members of the company, and especially the officers of the company, are estopped to deny its existence as a corporation.” Such was the language of the court in that case, in an action between the parties to the contract. But to make this case at all analogous to that, the action should be against the banking company, and the additional fact stated, that at the time of issuing said notes, to the plaintiff, they represented themselves as acting under the statute of February, 1844, and that the plaintiff received the notes in confidence of such representation being true.

Again, it is not averred or shown that the banking company -ever exercised a single franchise, other, or in a more ample manner, under the act of February, 1844, than it had all along exercised, and had a right to exercise, under its original charter, or the act of 1843. Nor is it stated, in the petition, that said plaintiff received said notes of the banking company in confidence that the defendants were liable therefor; or that each and all of the stockholders of said bank had signified their acceptance of the said liability clause of the act of February, 1844.

Indeed, I can not perceive how the doctrine of estoppel has any application in this case. An estoppel only arises where one has done some act, or executed some deed which, upon principles of common honesty and fair dealing, would seem reasonably to preclude him from afterward averring anything to the contrary, and to the prejudice of those giving credit to such act or deed.

In the case of Pickard v. Seers, 6 Adol. & Ell. 475, the doctrine of estoppel in pais was very clearly stated, “ that where one by his words or conduct willfully causes another to believe in tbe existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time.” The case is simply this. The plaintiff has brought an action upon certain promissory notes made by a body corporate, a banking company. The action is brought not against the makers of the notes, the corporation, the banking company, but against these defendants, and a right to recover can only arise by force of the statute of February, 1844. It is therefore indispensable that the operation of the statute, and such facts as clearly bring the case within the statute be shown. And the only question is, do these facts, indispensable to a right of recovery, appear from the statements contained in the petition? The demurrer admits everything stated.in the petition ; and I can not perceive how the case is at all affected by the doctrine of estoppel. But while it is evident that the plaintiff can only recover, if at all, by showing or setting forth a statutory cause of action, the petition neither avers nor states facts which show that the statute relied upon ever went into operation. Nor does the petition contain a statement of facts constituting a case within the statute. I think, therefore, the demurrer should be sustained.