#### JOHN McRAE *vs.*WINFIELD S RUSSEL.

Where one of the subscribers to the Wilmington and Manchester Rail Road Company, under the charter granted by the legislature in 184(5, gave his note for the first instalment to one of the Commissioners, appointed to take subscriptions, for the use of the Company, instead of paying the cash ; Held, Pearson. J *dissent.,*that the subscription was not void, and that tlio payee could recover on the note.

Appeal from the Superior Court of Law of New Hanover County, at the Spring Term 1851, his Honor Judge Manly presiding. •

This is an action of debt on a bond, commenced by warrant before a single Justice, and brought by successive appeals to the Superior Court. The pleas are general issue, consideration of the bond unlawful, consideration fraudulent as against the policy of the law. The following facts are agreed.

The Legislature of this State, at its session of 1846-7, passed an act to incorporate the Wilmington and Manchester Rail Road Company. Books of subscription for stock in said Company were opened by the Commissioners named in the act, of whom the plaintiff was one; and the defendant signed an agreement in the said book in the following words:

“ Wilmington N. C., March 1st, 1847.

“ We, the undersigned, agree to take the number of shares opposite our names in the capital stock of the Wilmington and Manchester Rail Road Company, to be paid as follows : The first instalment to be paid on the formation of the Company ; the second and other subsequent instalments to be paid whenever it shall appear that seventy-five hundred *225shares in ail have been taken in the capital stock of said Company. But it is understood and agreed, that the second and other- instalments may be made and paid up in work, or materials, or money at the option of the subscribers ; and whenever materials or labor shall be so subscribed they shall be valued by engineers, hereafter to be appointed to superintend the Wilmington and Manchester Rail Road.”

And the defendant, at the lime of signing the above, wrote the words, *"five shares,”*opposite to his name, so signed, but did not pay the cash instalment of five per cent, on the amount of said subscription, at the time of making the same, as required by the third section of the said act.

Afterwards, to wit, on the 1st day of May 1847, the defendant executed and delivered to the plaintiff the bond declared on, which is in the words and figures following:

"On demand I promise to pay to John McRae, or order, Twenty Fve Dollars for value received, being the first in-stalment of five per cent, on five shares of stock, subscribed by me to the Wilmington and Manchester Rail Road.

W. S. RUSSELL. (Seal.)

*“*May 1st, 1847.”

On the foregoing case the Court, being of opinion for the plaintiff, gave judgment accordingly for the amount of the bond, with interest from the date of the warrant, from which, judgment the defendant appealed to the Supreme Court.

*J. H. Bryan,*for the plaintiff,

*J). Reid*and *Noj’wood,*for the defendant.

Ruffin, C. J.

The opinion of the Court is, that the judgment ought .to be affirmed. As the suit was comment ced by warrant before a Justice of the Peace, on which, the' ■proceedings are summary, the question arises without any special plea on the facts agreed. In them, there is nothing, we think, rendering this bond void, as being founded On an *226illegal and vicious consideration. It is not stated, whether the corporation has been organised or not. If it has not, then clearly the plaintiff must recover on a voluntary bond, executed to him by the defendant, as there is no statute declaring it void. But it is the same if the charter took effect, by the requisite amount, including the defendant’s stock, having been subscribed and a due election of a President and Directors. For, giving the defendant the benefit of presuming all the facts he can ask, which are that the bond was taken for the first instalment on five shares of stock subscribed by him and was made payable to the plaintiff in trust for the corporation, still that would not vitiate the bond. The provisions of the charter, material to the question, are, that the subscriptions are to be received for $1,600,000 in> shares of $100, as the capital stock of the Wilmington and Manchester Rail Road Company; and certain commissioners, of whom the plaintiff was one, are appointed to receive the subscriptions; and upon each share of stock subscribed, the subscriber is to pay to the commissioners taking the same, $5, and on non payment of said instalment, the subscription shall be void. Then it provides, that, upon the subscription of $300,000, in manner aforesaid, the company is declared to be incorporated, and a general meeting of the proprietors of the stock shall be called, and the President and Directors elected, and in such meeting and others, afterwards, each share of stock shall be entitled to a vote; and, in a subsequent part, it author-ises a sale of the stock of delinquent stockholders, and also suits against such delinquents for their instalments. We see nothing in any or all of those provisions to avoid this deed of the defendant. It is true, the act says his subscription was void unless he paid the first instalment. That only proves, that no recovery could be had on the subscription. But it does not show, that if, instead of paying cash, he got a'receipt for it by giving his'bond, the bond would be also void. To invalidate the bond it is not sufficient *227that it is without consideration; but there must be an unlawful and vicious consideration. No one would impute such a consideration to this bond, were it not for the words in the Statute, that on non payment of the first instalment' the subscription shall be void. But they cannot have that effect. The provision was intended manifestly to prevent persons who were nominal subscribers merely and had paid nothing, from coming forward at the general meeting for the organization of the Company, and claiming to have a vote for every share standing in their names. The purpose was to protect real stockholders from such men of straw. It was, moreover, meant to protect men from the consequences of making such subscriptions under the influence of momentary excitements, which they could not fulfil. It gave them a *locus penitentiae,*until they deliberately chose to confirm the subscription by making the requisite payment on it. The meaning was, that, until such payment, the one party should have no voice in the concerns of the Company, and the other party should not be able to recover the charter price of the share. That, it seems to the Court, was the whole scope and purpose of the provision. It is a shield to the one class of subscribers against another, and that merely. It involves no matter of public policy or morals, more than any other contract between private or corporate bodies. The law, for example, says, that a parol contract for the sale of land is void. It says so, no doubt, as a matter of policy; but it is a policy affecting private rights, and does not involve the interest of the community, as such. But, although such a contract be void, yet if the purchaser give his bond for the price, that bond is not void. Nor, if the other party, though not bound, give a deed for the land, will that be void. So, in this case, the defendant could not have been compelled to pay the *$5*a share by foroe of the subscription, yet if he and the other subscribers chose to waive the provisions thus made for their benefit respectively, and agreed, that,, upon his giving bond for the *228same, it should be taken as cash, and he admitted into the Company, and he deliberately does so, it is not seen that any principle of law or justice is violated, or that there is any reason why he should not pay this as much as any voluntary bond. The State has no concern in the question as now presented, which simply involves the enquiry, whether this or that man is one of these corporators, and not any breach of good morals or public weal. The bond, therefore, is not impeached, and the plaintiff is entitled to .judgment on it.

Peakbon, J.

*dissentientc.*The Statute, which provides for taking subscriptions to the stock of the Wilmington and Manchester Rail Road Company, appoints certain Com • missioners, makes it their duty to require *payment in cash*of five dollars in the hundred, and to pay over the amount to the Company upon its organization; and declares all subscriptions void, if this cash instalment is not paid to the commissioner at the time he takes the subscription.

The plaintiff was one of the Commissioners; and undertook to act in that capacity, and in violence of his duty accepted from the defendant, at the time he made a subscription, the note now sued on, instead; of the cash, and reported him a subscriber entitled to five shares of stock. This was not true, the cash not having been paid and the subscription on that account being void.

The question is, will this Court countenance a breach of duty in a public agent by giving its aid in the collection of a note, which it was a violation of his duty to take ? How is the case distinguished from that of compounding a felony —where, on account of the breach of duty to the public in taking a note, the Courts refused to aid in its collection ?

. I cannot bring my mind to the conclusion, that the judicial branch of the government ought thus to encourage a departure from plain words pf instruction, given by the legislative branch to one of its agents.

*229The validity of the charter of the Company is not involved in this case. That cannot be drawn in question in this collateral1 manner. When the sovereign has cause of complaint against *the*Company, it must institute a direct proceeding, in order to vacate the grant: and the difficulties and many grave objections,avh'ich, in almost every instance, present themselves to this direct proceeding, argue strongly in favor of watching with jealousy all dereliction of duty on the part of those, whose instrumentality is relied on to give to the Company its corporate existence. Because, when all th,e conditions, precedent to its coming into existence, are faithfully performed, there is apt to be but Jittle cause of complaint growing out of its future action.

It is the duty of our Public Treasurer to borrow money upon State bonds. Suppose he issues a bond, and, instead of receiving the cash, takes the note of the individual, trust-' ing to his assurance, that the cash will be paid the very instant it is needed for public use. No one would call in question the validity of the State boud ; but, I imagine, few would be found to insist, that the Courts ought fo aid the Treasurer in the collection of the note, which he has taken in violation ofhis duty, although it happened, that no direct harm resulted from the arrangement.

What was the object of the Legislature in requiring, that there should be this *cash payment*upon every share of stock, it is not for us to enquire. It may be, it was to guard against “bubble corporations,” which sometimes do much harm ; or to give the Company a fair start, and prevent the necessity of contracting debts. Whatever the object may have been, it is certain, that the Legislature, in *express terms,*and as a condition to the subscription, directed the plaintiff to require the *cash,*and it was a breach of duty to take a *note.*

Pee Ccjkxam. Judgment affirmed.