Case Name: Downie vs. Hoover
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1860-06
Citations: 12 Wis. 174
Docket Number: 
Parties: Downie vs. Hoover.
Judges: 
Reporter: Wisconsin Reports
Volume: 12
Pages: 174–176

Head Matter:
June Term, 1860.
Downie vs. Hoover.
A railroad company whose charter gives it the general power to make all contracts which its convenience or interest may require, has power, in carrying out the enterprise authorized by its charter, to assign its stock subscriptions, there being nothing in the charter imposing any restriction in that respect.
APPEAL from the Circuit Court for Milwaulcee County.
The complaint in this case stated, that in May, 1856, the defendant, Hoover, made a subscription for five shares of $100 each, of the capital stock of the Milwaukee and Beloit Eailroad Company, to be paid at 'such times as the directors of said company should prescribe, &e., with a condition that the subscription should not be binding until the sum of $100,000 should be subscribed to the capital stock of said company, in the city of Milwaukee, independent of corporate aid; and after alleging the subscription of that amount to the stock of said company, in the city of Milwaukee, as required by said condition, and the making of various calls by the directors, for the payment of instalments upon stock subscriptions, under which the whole sum subscribed by the defendant had become due and payable, averred, that before the commencement of this action, the said railroad company, by an instrument in writing, duly executed, for a valuable consideration, and for purposes connected with the business of the company, assigned and transferred to the plaintiff, the said subscription of the defendant to the capital stock of said company, and all claim and demand of said company against the defendant, arising by means thereof. It alleged, also, demand of payment from the defendant, nonpayment, &c. The defendant demurred to the complaint, upon the grounds, that it appeared upon the face of the complaint, that the plaintiff had no legal capacity to sue, and that the .complaint did not state facts sufficient to constitute a cause of action.
The circuit court sustained the demurrer, and from the order sustaining the same the plaintiff appealed.
Adams & Pitldns, for appellant:
A corporation can make all contracts which are necessary and. usual in tbe course of tbe business it transacts, as means to enable it to effect tbe objects of its institution, unless ex-. pressly prohibited by law or its charter. Barry vs. Merchants' Mcchange Oh, 1 Sandf. Ob., 280; Angelí & Ames on Corp., 153, § 187; Pierce on Am. Railroad Law, 513, 515; 1 Kyd on Corp., 108; Hoyt vs. Thompson,, 3 Sandf., Ch. R, 416; 1 Selden, 320; 19 N. Y., 207; 32 N. EL, 504, 507; 5 Ohio State, 59. They cited, also, as to tbe power of tbe company to. make tbe assignment. Farmers' Loan & Trust Go. vs. Perry, 3 Sandf. Ob., 339; Gurtis vs. Leavitt, 1 Smith (N. Y.), 62-66, 169, 219-222, 262; Madison, &c., PI B. Go. vs. Watertown PI B. Go., 5 Wis., 173; Bex vs. Mayor and Aldermen of London, 3 B. & A., 255, 271.
Goon & Cotton, for respondent,
argued that tbe assignment by tbe railroad company, of money due on a stock subscription, was unauthorized and void, as against public policy, and cited McGullough vs. Moss, 5 Denio, 518.
July 10.

Opinion:
By the Gourt,
Paise, J.
Tbe single question presented on this appeal is, whether a railroad company, in carrying out tbe enterprise authorized by its charter, has any power to assign its stock subscriptions. We think it has tbe power. A stock subscription is nothing but a contract, by which tbe subscriber is bound to pay tbe company certain amounts. It would clearly be assignable as between indi-viduáis, and we can see no reason why it should not, in tbe case of a corporation, acting in execution of tbe powers conferred by its charter.
Tbe fact that a company may abuse its power, and make contracts ruinous to itself, and to tbe value of its stock, does not seem to be a sufficient reason for denying tbe power. For they may, undoubtedly, do this whether this power of assignment exists or not. They may make extravagant contracts for materials, for land, and for labor in building tbe road, and thus make their stock worthless, as often happens. They become insolvent, receivers' are appointed, who may compel tbe payment of unpaid stock subscriptions for tbe benefit of creditors, created by these extravagant and ruinous contracts.
The fact, therefore, that a company may ruin itself by indiscreet contracts, if such an assignment is allowed, is no reason against tbe power; for it may ruin itself by sucb contracts without such a power.
At all events, even though it might be a reason for the legislature to impose a restriction, it is no reason for the court, where the charter contains no such restriction, but gives the general power to make all contracts which the convenience or interest of the company may require, to deny the power to make this particular contract. The reasoning in the case of Clark vs. Farrington, decided at this term (11 Wis., 306), is appEcable to the question. The order of the court below sustaining the demurrer, is reversed, with costs, and the cause remanded for further proceedings.