Case Name: The Greenville and Col. R. R. Co. vs. D. M. Smith
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1852-12
Citations: 6 Rich. 91
Docket Number: 
Parties: The Greenville and Col. R. R. Co. vs. D. M. Smith.
Judges: Wardlaw, and Frost, JJ., concurred.
Reporter: South Carolina Law Reports
Volume: 40
Pages: 91–95

Head Matter:
The Greenville and Col. R. R. Co. vs. D. M. Smith.
In an action by a rail-road company against a stockholder for instalments, a prosy which the defendant with others had signed “ as stockholders,” designating the number of shares opposite their names, respectively, held, to be prima fade evidence that defendant was a stockholder.
The charter of the Company gave the stockholders the right to select the route of the road, and to any stockholder, dissatisfied with the route selected, the right to withdraw his subscription, “.provided such stockholder shall have designated, at the time of subscribing, the route he desires to be selected” : defendant was told, at the time he subscribed, by one who was urging persons to subscribe, that he could subscribe, pay $5 a • hundred, forfeit, and be free from liability as to the residue: defendant said he was willing to pay $10 to secure the routo he desired, subscribed for ten shares at $20 a share, but made no designation of the route he desired to be selected: — Held, that defendant was a stockholder without right to withdraw his subscription.
Before Withers, J., at Edgefield, Fall Term, 1852.
The report of his Honor, the presiding Judge, is as follows:
“ This action was in assumpsit for all the instalments, except the first, upon ten shares, at $20 each, (in the whole $200,) in the Greenville and Columbia Railroad. It was admitted that regular notice to pay the several instalments now demanded had been published by the plaintiffs.
“ To prove the subscription a proxy was introduced which had been signed by sundry persons, among the rest this defendant, who described themselves as “ being stockholders, and holding the several shares opposite our names.” Opposite the signature of defendant was placed ten shares. The proxy authorized some person to vote at a certain meeting specified, and at all others, &c., until the power should be revoked. The defendant called for the original books of subscription, which were, not produced, and therefore moved for a non-suit; which motion I refused, on the ground that the proxy was prima facie evidence of subscription, and therefore of liability to pay the sum now demanded.
“ The defendant introduced evidence to the effect, that in 1847, at a barbecue in Abbeville District, while a contest was going on as to the location of the road east or west of Saluda, one Dr. Thomas Garey appeared and urged subscriptions on people then and there assembled, that their influence might be felt in securing the location of the road west of Saluda. The defendant refused to subscribe until Garey asserted and “promised” (as the witness said) that he could subscribe and pay $>5 on the hundred, forfeit, and be free from liability as to the residue ; that Garey announced his object to be to get proxies from as many as he could, to secure the location on the west of the Saluda. Defendant said that he was willing to pay $>10 to secure that location ; and therefore executed the proxy, in which he is described as holding ten shares.
“ Upon this case I held that the defendant was no stockholder ; that the prima facie evidence derived from the proxy was rebutted ; that to hold him to be a subscriber would be to enforce on him a deception, perpetrated by one who assumed to represent the corporation, out of which deception grew the only evidence that he had ever subscribed, or was ever a stockholder. The jury were told that there was no difference in this case and one parallel, arising between two individuals in any other kind of contract, wherein one party represented himself to be the agent of another, and deluded the party defendant into a contract, with a sort of condition of defeasance, that he had no authority to make; that I regarded the whole transaction developed by the case as an imposition upon the rival interest, touching the location of the road, in which Garey and the defendant were participant; that the public, however, had an interest in having genuine subscribers, according to the charter which the public had granted; and I advised the jury to find for the defendant, which the};- did.”
The plaintiffs appealed and now moved for a new trial, on the following grounds:
1. Because it is respectfully submitted his Honor erred in charging the jury that the subscription of the defendant, under the circumstances shown in the case, was contrary to the terms of the charter, and fraudulent in its nature.
2. Because, from the terms of his Honor’s charge, the jury were led to believe that the defendant was in reality not a subscriber or stockholder in said company.
3. Because his Honor charged the jury, that in the absence of the original subscription book, the contract of the defendant must be limited and controlled by the opinion expressed at the time by Dr. Garey, that the defendant, under the charter, would have a right to forfeit at any time.
4. Because his Honor erred when he told the jury that Dr. Garey deceived the defendant. The charter was public, and of which the defendant had knowledge; and Dr. Garey did no more than express an, opinion upon a question arising under that charter.
McGowen, for the motion,
cited R. R. Company vs. Wood-sides, 5 Rich. 148 ; JR. R. Company vs. Cathcart, 4 Rich. 89 ; R. R. Company vs. Coleman, 5 Rich. 118.

Opinion:
The opinion of the Court was delivered by
Glover, J.
The finding of the jury in this case, can be supported only on one of two grounds: 1st. That the defendant was not a stockholder'; or 2d. If a stockholder, he was deceived by the representations of Dr. Garey respecting his right of forfeiture under the terms of the charter.
The proof of subscription, or rather the evidence which fastened upon the defendant the character of a stockholder and made him liable in that character, was the proxy which he, with others, had signed as "stockholders," designating the number of shares opposite their names respectively. The original books of subscription would have furnished higher evidence; yet the presiding Judge, under the proof furnished by the proxy, very properly refused the motion for a non-suit.
But the evidence for the defence, added to the prima facie evidence which the execution of a proxy furnished, removes all doubt respecting the liabilities of the defendant as a stockholder. The payment of the first instalment, coupled with the execution of the proxy by which his stock was represented in all the meetings of the company, would have authorized the jury to find for the plaintiffs : and, unless the force of this evidence be rebutted by the deception which is said to have been perpetrated by Dr. Garey, the verdict cannot be supported.
Dr. Garey, like others (including the defendant) manifested a deep interest and solicitude, that the line of road should be located on the west of the Saluda River, and he believed and asserted, that after the payment of the first instalment on the stock subscribed, the residue of the instalments might be forfeited, provided the road should not be located according to the wishes of the subscribers.
The following are the words of the charter conferring a right on stockholders to withdraw after subscription : — "and after selection of the route, any stockholder who may be dissatisfied with the route selected, shall have the right to withdraw his subscription," &c. 11 provided such stockholder shall have designated, at the time of subscribing, the route which he desires to be selected for the location of the road." (11 Stat. 409.)
There was no evidence, on the trial, that the defendant, at the time of subscribing, made such designation of a route and thereby brought himself within this provision of the charter.
Dr. Garey was not a cofnmissioner, nor' was he the agent of the Greenville and Columbia Railroad Company, nor could he by his acts or opinions, or by his representations, bind the plaintiffs.
The charter provides the only way by which the defendant could have withdrawn, and it cannot avail him, that relying on Dr. Garey's interpretation of an Act of the General Assembly, he was deceived, and, therefore, not liable for the payment of the remaining instalments due on his stock.
Dr. Garey honestly entertained and confidently expressed an opinion which, it seems, was held by others more skilled in the law, and it does not appear that any fraudulent means were used to deceive the defendant.
The defendant was induced to subscribe and aid in this enterprize with the design and hope that the road would be located on the west of the Saluda, and if his local interests and feelings had been consulted, he would have recognized his contract. That he was deceived in the construction put on the charter by others or by himself, places his defence on a mistake of law, which, without proof of fraud practised by the company or by their authorized agent, cannot avail him. If relief may be granted on the bare allegation and proof of' a mistake or ignorance of law, it would lead to endless litigation, and might require the judgment of the highest tribunals before a contract would be obligatory.
Enterprizes of such magnitude and which require the use and employment of such large sums of money would not only be delayed but defeated, if, under the pretext of a misapprehension of the provisions of the charter of incorporation, subscribers to the stock should be permitted to withhold the payment of their instalments. The public as well as the other stockholders, who have invested their money, have rights and interests which should be protected, and which would, otherwise, be sacrificed.
The defendant must, therefore, be held bound by his contract with the company. The declarations and opinions-of Dr. Garey do not release him from the obligations which he has incurred to the company, with his co-stockholders.
It is not perceived that these views conflict with the case of the Charlotte and South-Carolina Railroad Company vs. Blakely. (3 Strob. 246.) In that case, there had been no organization of the company under the charter; nor had Blakely made any payment on the stock for which, it was alleged, he had subscribed; nor had he executed any proxy and thereby recognized his connexion with the corporation as a stockholder. The paper which he had signed was very properly regarded only as an agreement, made with unauthorized persons, to take slock, without having complied with any of the formalities required by the charter, and without the performance by Blakely of any act which could make him liable as a stockholder.
The motion for a new trial is therefore granted.
Wardlaw, and Frost, JJ., concurred.
O'Neall and Whitner, JJ.
the President and a Director of the Company — did not hear the case and gave no opinion.
Motion granted.