Case Name: Harmon Chamberlain v. The Painesville & Hudson Railroad Company
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1864-12
Citations: 15 Ohio St. 225
Docket Number: 
Parties: Harmon Chamberlain v. The Painesville & Hudson Railroad Company
Judges: Brinkerhoee, O.J., and Scott, and Welch, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 15
Pages: 225–251

Head Matter:
Harmon Chamberlain v. The Painesville & Hudson Railroad Company
Where a subscription was made for a given number of shares of stock in a railroad company, payable at such times, and in such installments, as the directors may prescribe, provided the road is “ permanently located” on a given route, and that a “ freight house and depot be built” at a point named. — Held,
1. That on the permanent location of the road, in accordance with the terms proposed, the subscription became absolute.
2. That the provision in relation to the erection of the buildings, was a stipulation merely, and its performance was not a condition precedent to the right to collect the amount of the subscription.
3. The giving, by a subscriber, of his note for the balance of his subscription, and taking, therefor, from the company, a receipt stipulating that, when paid, the amount of the note should be applied on his stock, was prima facie, a waiver of conditions precedent.
4. After the requisite amount of stock has been subscribed to authorize the stockholders to elect directors, it is not indispensable to an election that the notice for it should be given by the persons named in the certificate of incorporation. The validity of the acts of the directors can not be questioned, collaterally, on the grounds of irregularity in giving the notice.
5. Section six of the act for the creation and regulation of incorporated companies (1 S. & C. Stat. 276), does not prescribe the form of making subscriptions, nor does the want of a stipulation for the payment of five dollars on each share of stock, render the subscription invalid.
6. Whore a defendant, by way of defense to a note, pleads, in general terms,, that it is wholly without consideration and void, and the plaintiff, without requiring a statement of the facts on which the defense is based, joins issue,, any evidence is admissible, on the trial, which tends to impeach or sustain the consideration.
Error to the court of common pleas of Geauga county., Reserved in the district court.
On June 29,1860, the Painesville and Hudson Railroad Company filed, in the court of common pleas, its -petition against Harmon Chamberlain, stating:
“ The plaintiff, the Painesville and Hudson Railroad Company says that it is a- corparation and was incorporated and organized on or before the 15th day of February, A. D., 1855, under the act passed by the general assembly of the State of Ohio, May 1, 1852. Therefore, said plaintiff, or such corporation, complains of Harmon Chamberlain, the defendant, for that the said defendant, on the 31st day of July, 1856, at .Painesville, Ohio, made his certain promissory note in writing of that date, and then and there delivered the same to the .said plaintiff, and thereby promised to pay the said plaintiff, ■or bearer, one day after the date thereof, the sum of one hundred and forty dollars, with interest thereon, which period has elapsed; Yet the said defendant hath not paid said sum •of money, nor any part thereof, to the said plaintiff, although often requested so to do. Wherefore, the said plaintiff prays judgment against the said defendant, for the said sum of $140, ■together with interest thereon from said 31st day of July, 1856, and costs of this action.”
Copy of note referred to in petition:
“ One day after date, I promise to pay the Painesville and Hudson Railroad Company, or bearer, one hundred and forty ■dollars, value received, with interest.
“Harmon Chamberlain.”
Chamberlain answered this petition as follows:
“1. He denies that said plaintiff is a corporation, or was -incorporated arid organized on or before the 15th day of February, 1855, or at any other time, under the act passed by the .general assembly of the State of Ohio, May 1, 1852.
“ 2. That said note in said petition mentioned, was, and is wholly without consideration, and void.
“ 3. That on, or about, the 4th day of August, 1852, Timothy Rockwell, Benjamin Bissell, Storm Rosa, Aaron Wilcox, and Seth Marshall, made out a certificate under their hands ¡and seals as -follows.: ‘ To the Honorable Secretary of State, of the State of Ohio: We, the subscribers, citizens of Painesville township, Lake county, Ohio, do associate ourselves together under the act to provide for the creation and regulation of incorporated companies in the State of Ohio, passed at the last session of the legislature, by the name of the Painesville and Hudson Railroad Company, for the purpose of constructing a railroad to commence at some point hereafter to be designated in the township of Hudson, in the county of Summit, passing- through the counties of Portage or Cuyahoga, also through the counties of Geauga and Lake, and to terminate at some point to be designated in the township of Painesville, in the county of Lake, and further certify that the capital stock necessary for the construction of said road, will be one million of dollars. All of which is most respectfully certified and submitted:’ and acknowledged the same before a justice of the peace, procured it to be certified by the clerk of the court of common pleas of Lake county, and forwarded it to the secretary of state of the State of Ohio, who duly recorded and carefully preserved the same in his office. That after this had been done, said plaintiff claimed, and pretended to be and become a corporation by the name of the Painesville. and Hudson Railroad Company, under, and in pursuance of the act of the general assembly of the State of Ohio, entitled, ‘ an act to provide for the creation and regulation of incorporated companies in the State of Ohio,’ passed on the 1st day of May, 1852, and by reason of such certificate as aforesaid, and assumed to take and receive subscriptions to the capital stock of said company, and by and through some person acting as its agent in that behalf, induced and procured this defendant to sign, and he did sign a writing, of which the following is a copy:
“‘We the subscribers promise to pay to the treasurer of the Painesville and Hudson Railroad Company the several sums set against our names for the number of shares, at fifty dollars per share, at such times and in such installments as the president and directors may, under their charter and bylaws, prescribe. Provided that said road is permanently located through the village of Chagrin Falls, or within one hundred and sixty rods of the High Falls, so called, near A. C. Gardner’s mill; and that a freight house and depot be erected or built on the line of said road, within one hundred and sixty rods of said High Falls; the following sums of money subscribed by us are to include a subscription we have heretofore made to the same road;’ and set opposite his name to indicate the number of shares, the figure (8), and also set opposite his name to indicate the amount in dollars, of said shares at fifty dollars per share, the figures, $400.00.
“ That afterward, from time to time, pretended elections of directors of said Painesville and Hudson Railroad Company were made, who, from time to time, made, or pretended to make, assessments against this defendant, on said eight shares of said pretended stock. That as collateral to the llth, 18th, 19th, 20th, 21st, and 22d, of such pretended assessments on said shares and not otherwise, and for no other consideration whatever, said note, in said petition mentioned, was given by this defendant and received by said Painesville and Hudson Railroad Company; and this defendant insists, and says that neither at the time of his signing said writing, and giving said note, and the making of said assessments, nor at any time before or since, was said plaintiff a corporation, nor had it a legal existence, nor was there, nor had there been any directors of said, company legally elected, nor any assessments on said eight shares of said stock, legally made against this defendant, nor had said railroad been, nor was it, nor is it permanently located through the village of Chagrin Falls, or within one hundred and sixty rods of the High Falls, near A. C. .Gardner’s mill; nor had there been, nor were, nor are said freight house and depot erected, or built on the line of said road, within one hundred and sixty rods of said High Falls. And this defendant further says, that at the time of said pretended elections of. directors of said Painesville and Hudson Railroad. Company, and each, and evéry of them, and at the time of said pretended assessments, and each and every of them against this defendant, by said pretended directors on said pretended shares of said stock, ten per centum of the certificate capital stock of said company had not been and was not subscribed, and said elections and.assessments were and are illegal and void. And this defendant further says that said writing so by him signed, as aforesaid, was not and is not a subscription by him to the capital stock of said company, did not constitute him a stockhol&r in said company, or confer on, or vest in him any of the capital stock of said company, or any right to any of the capital stock of said company, or create, or make any contract between him and said plaintiff, or impose upon him any obligation or duty whatever, nor did it authorize or empower said plaintiff to make any assessments against this defendant, on said eight shares of said pretended stock, nor had said plaintiff any power or authority to take or receive ‘such writing, or make any contract upon the terms and conditions of said writings with this defendant. And this defendant further says that before said railroad had been, or was permanently located through the village of Chagrin Falls, or within one hundred and sixty rods of the High Falls, near A. C. Gardner’s mill, and said freight house and depot had been or was erected or built on the line of said road within one hundred and sixty rods of said High Falls, and on or about the-day of--, this defendant did retract and revoke any proposition, 'if any is contained in said writing, to take and pay said company for said eight shares of the capital stock of said company, and did thereupon on the day and year last aforesaid, notify said plaintiff thereof, and has ever since refused to take, subscribe, or pay for said shares of said stock.”
4. In their fourth defense, sundry fraudulent misrepresentations on the part of the agents of the railroad company, who procured the defendant to make the subscription, and to induce him to subscribe, are averred, as to the corporate existence, condition, and prospects of the company, and also a promise of the agents that if the defendant would subscribe, and afterward became dissatisfied, the company would take the stock off his hands, and release him from liability, etc.
5. “ That the certificate capital stock of said Painesville and Hudson Railroad Company is one million of dollars, and the entire amount of said capital stock will be, and is ne cessary for the construction of its said railroad. That much less, at least five hundred thousand dollars less, than the whole amount of said capital stock, has been subscribed for or taken. That the whole amount of said capital stock subscribed for, or taken, with all the other means of said company, is wholly insufficient and inadequate for the construction of said road, and if expended in the construction of said road, will be wholly lost to said company and its stockholders. And this defendant, therefore, insists and claims that he is not bound or liable in law, and has not contracted or agreed to pay any assessments on said shares of stock or said note, inasmuch as said note was given on account of said assessments on said stock and as collateral thereto.”
To this answer th'e railroad company replied:
“ That it is true, and the plaintiff admits the making and acknowledging of the certificate mentioned in the third statement of defense; that the same was duly certified and forwarded to the secretary of state of the State of Ohio, who duly recorded and carefully preserved the same in his said office; that thereupon said plaintiff became, and was a corporation, by the name, and under, and in pursuance of the act mentioned in said statement of defense, and did take and receive subscriptions to the capital stock of said company. Por further reply the plaintiff says, that all, each and singular, the several allegations and statements contained in the second, third, fourth, and fifth statements of defense, as therein alleged, not herein admitted, are untrue, and the plaintiff denies the same.”
At the June term, 1862, of the common pleas, the cause was tried’ to a jury who found a verdict for the company for $189.
Chamberlain moved for a new trial on the ground that the court erred in refusing to charge the jury as requested by him, and in its charge to the jury upon his second, third, fifth, and seventh requests.
This motion^was overruled and judgment entered on the verdict; and Chamberlain excepted.
The bill of exceptions shows :
“ That on the trial of this cause to the jury, the plaintiff, to maintain the issues on its part, gave evidence tending to prove that on the 7th day of August, 1852, it duly became a corporation under the act for the creation and regulation of incorporated companies in the State of Ohio, passed May 1, 1852, by filing with the secretary of state, the certificate required by law, and also gave in evidence, its book of records, and other testimony tending to show that it had used and exercised its corporate powers, as such corporation, from that time to the present, by the election of boards of directors, by making contracts and partially constructing its road, etc. And also tending to show that the defendant gave the note described in the petition, to it as such corporation at the date thereof.
“ Also the plaintiff gave in evidence, the proxy of which the, following is a copy, to-wit: ‘We authorize Mr. A. C. Gardner to vote for us on the number of shares of stock we hold in the Painesville and Hudson Railroad Company, at their annual meeting to be held in Painesville, on the 5th day of February next.
(Signed) ‘Harmon Chamberlain, and others.
Dated, ‘25iA of January, 1856.’
“ The plaintiff also gave evidence tending to prove that on the 11th day of July, 1854, said railroad was permanently located through the village of Chagrin Falls, within one hundred and sixty rods of the High Falls, so called, near A. C. Gardner’s Mill, and that in the fall or winter of 1854, plaintiff procured about three acres of land at the village of Chagrin Falls, within one hundred and sixty rods of said High Falls, on the line of said railroad, and proceeded to grade the same in part, the site of the depot staked out prior to the date of said note, and that afterward in the fall of 1857, said freight house and depot building was constructed in all respects as required in said subscription.”
The plaintiff also gave evidence tending to prove that it had kept np its organization, by annual elections of directors, and other officers of said company. The plaintiff also gave in evidence the records of the proceedings of said company, in which was the following resolutions :
“‘Whereas, The credit and prosperity of the company consist in promptly meeting all obligations against it, as they respectively become due; and,
“‘ Whereas, The delinquent stock if collected, would be entirely sufficient to meet all present and accruing demands against the same for some months to come, even with the current monthly work and estimates; and,
“ ‘ Whereas, The enterprise is peculiarly a work of and undertaking of stockholders, and it would no doubt, be adjudged by them bad financial policy for the company to borrow at a high rate of interest, to carry on the work, while enough is due to pay all current expenses; therefore,
“ ‘ Resolved, That every delinquent stockholder be requested to settle the stock now due, either in cash or by note, at not exceeding sixty days, or failing to do so, that the collection be enforced by law after the first of November, 1855, and after demand and refusal to settle by note or cash.
“ ‘ Resolved, That the collector be armed with this resolution, and call on all stockholders in pursuance of.it, before the first day of November, and the collector upon giving receipts for notes, provided that the amount shall when paid be applied on the said delinquent stock/ •
“ The plaintiff also gave evidence tending to show that it had collected on subscriptions to its capital stock, and expended in the. construction of said railroad prior to the date of said assessments and note, over two hundred thousand dollars, and that it has expended in all in the construction of said road, over three hundred thousand dollars, that there were debts and liabilities due from the company to the amount of forty thousand dollars, or more. That the defendant was repeatedly called upon to. pay his said note, and he refused so to do, and he had joined a combination of a large number of the subscribers t'o the capital stock of said plaintiff, to resist the collection of said note, and other claims of the plaintiff against the members of said combination, for stock individually taken by them in said company. That said note was taken by the collector of said company for the balance due from the defendant, on his said eight shares of stock taken in said company.
“ And the plaintiff gave other and further evidence to the jury in said action, and rested.
“The defendant, to maintain the issues on ms part, then gave evidence tending to prove that in the year 1854, in May, he signed and delivered to the agent of the plaintiff, the written subscription, copied into the third answer of the defendant, upon which the directors of the plaintiff made assessments or calls, as follows, to-wit: August4, 1854, five per cent.; November 10, 1854, four installments of three per cent, each; February 6,1855, three installments of three per cent, each; May 9,1855, two installments of four per cent, each; July 10, 1855, two installments of five per cent, each, and one of six per cent.; September 11,1855, three installments of five per cent, each (all payable prior to January 16, 1856); January 8,1856, one call of five per cent.; February 22,1856, one call of five per cent, cash; and May 13, 1856, one of five per cent., and one of ten per cent.; and all payable prior to July 2, 1856; July 10,1855, one assessment of thirty-four per cent, was made in lieu of, and included the first ten assessments, and that the note in suit was made by the defendant, and delivered to the agent of the plaintiff, for the seventeenth, eighteenth, nineteenth, twentieth, twenty-first and twenty-second of said assessments, and for no other consideration whatever, and that at the time said note was given, and as a part of the same transaction, the defendant took from said agent the following receipt, to-wit:
“ $140. Painesville, July 31,1856.
Received from H. Chamberlain, his note, one hundred and forty dollars, being the amount of the seventeenth, eighteenth, nineteenth, twentieth, twenty-first and twenty-second installments on eight shares • of stock in the Painesville and Hudson Railroad Company. The above amount to apply on his stock when said note is paid.
J. W. Williams, Collector
“ The defendant' further gave evidence tending to prove that at the time said company attempted an organization by the election of directors, and at no time up to the giving of said note, had ten per cent, of the amount named in said certificate been subscribed unconditionally to the stock of the company. And that after said first election of directors, no meeting of the stockholders for the election of directors had been called by the persons named in the original certificate of incorporation. And further, that at the time said assessments were made and said note given, no part of the conditions named in said subscriptions had been performed by said company. That after said note was given, by order of the board of directors in the fall of 1856, all work upon the road had ceased upon that part of the road, and shortly aft^r upon the whole road, and had never been resumed. That afterward, and in the fall of 1857, certain individuals belonging to the company had erected at Chagrin Falls, a depot and freight house on the line of said road, which was insufficient to answer the condition in the subscription, no railroad then or since being constructed, and that it was built for the single purpose of making said conditional subscriptions for stock collectable. And that after said building was erected, and on the 27th day of February, 1858, the board of directors of said company passed the following resolution:
“Whereas, There are certain subscriptions to the stock of this company that are upon condition-that the road is located through the village of Chagrin Falls, and freight house and depot be erected at a point within 160 rods of the High Falls, etc., for a full description of said condition, reference may be had to the original subscription book; and,
“ Whereas, Said road has been located and said depot been built in full compliance of the condition of said several subscriptions ; therefore, be it
‘JResolved, That an assessment of twenty per cent, payable March’ 1, 1858, twenty per cent, payable March 10, 1858, twenty per cent, payable March 20, 1858, twenty per cent, payable March 25, 1858, twenty per cent, payable April 1, 1858, be and the same is hereby levied on all such subscriptions, payable to the treasurer of the company at the office of the company, at the above named times.”
And the defendant gave other and further testimony, and rested his case.
“ The plaintiff then gave evidence tending to show that at and before the time stated in the petition, to-wit: October 30,1852, the company had ten per cent, of its stock unconditionally subscribed, and that the board of directors which made the assessments named in said receipt, was duly elected upon such stock. That said depot was built for the company and belonged to it, and was altogether sufficient to answer the condition in said subscription, and was erected at a point which complied with said condition, and that as early as July 11, 1854, the road through Chagrin Falls was located within the limits in said condition or subscription specified. And also, evidence tending to prove that the defendant had paid the assessments made by said company on said eight shares of stock prior to those named in said receipt. That on the 25th day of January, 1856, the defendant had subscribed a proxy authorizing A. C. Gardner to vote on said shares, and that although said Gardner did not vote for said defendant in pursuance of said authority, another person did, and that he had attended a meeting just prior to February 6,1855, near Chagrin Falls, of those who were interested in the road, and there voted to go ■on with the road. The defendant so voted at said meeting.
And the defendant gave other and further testimony and rested his case.
And thereupon, on motion of the plaintiff, the court charged the jury as follows:
“ This action is brought by the Painesville and Hudson Railroad Company against Harmor^Ohamberlain. The plaintiff in its petition filed in the ease, alleges it is an incorporation duly organized under the statute of this state, passed May 1,1852, and as such brings this 'action to recover upon a promissory note dated July 30, 1856, alleged to have been made by the defendant to the plaintiff, for the payment of one hundred and forty dollars, one day from date, a copy of which note is attached to said petition. The defendant does not here rely upon the fourth and fifth grounds of defense set up in his answer, but relies first upon the defense therein set up, that the plaintiff is not an incorporation, and denies the averment in plaintiff’s petition that it is such incorporation. The burden of this issue is upon the plaintiff, and to maintain the same, the plaintiff has given in evidence, a certified copy of a record from the office of the secretary of state, of the certificate of incorporation. And as matter of law, the court say to you, that under the aforesaid statute, such copy of record is sufficient evidence to warrant you, in the absence of any other evidence relating to this issue, in finding that on the making of the original record in said secretary of state’s office, of which this is a copy, the persons therein mentioned became an incorporation, and there being nothing shown here that any proceedings have been had to annul or recall the powers there invested in said incorporation, you are, therefore, warranted in finding it still continues to be such incorporated institution, and so far as that issue is concerned, is entitled to maintain an action in a court of justice, and is sufficient evidence to warrant you in finding this issue for the plaintiff. The defendant in further defense, does not deny the making and delivery of the note in question, but secondly, avers and sets up that said note was given without consideration ; and thirdly, claims that the plaintiff, by virtue of said proceedings, set out in said copy of said record, never became an incorporation, and that the defendant by signing the pretended subscription mentioned in said third ground of defense, did not become a legal stockholder therein. That the plaintiff never had ten per cent, of its certificate capital stock subscribed before commencing to^lect directors thereof, and that no legal directors were ever elected, and that no legal and va lid assessments were ever made upon said defendant’s subscription, and that the plaintiff never performed the conditions to said subscription before said note was given, which was given for a part of said illegal assessment, and the said note was, and is without legal and valid consideration, and the plaintiff, therefore, not entitled to recover thereon.
“ The court say to you, gentlemen of the jury, as matter of law, that when said original certificate, of which a copy is before you in evidence, was deposited in the office of the secretary of state, and there recorded, it conferred upon the persons therein named, the power to receive subscriptions to its capital stock : that it had the power to receive from-the defendant the written subscription by him set out in his said third ground of defense, and the defendant, also, had the capacity to make the same ; that when so made; and received, it' was not a binding contract, either upon the plaintiff, or the defendant, to comply with any of its terms, or stipulations but at that time, was but a mere written proposition on the part of the plaintiff, to sell the defendant eight shares of its capital stock, for $400, to be paid at such times as should be called for, by a legally elected board of its directors, as set forth in said written proposition, and on the part of the defendant, it was but a written proposition, to purchase of the plaintiff, the same, and pay therefor, upon the considerations therein expressed, to-wit: When so called for, after the plaintiff had located its road through Chagrin Falls, cr within one hundred and sixty rods of the High Falls near A. 0. Gardner’s Mill, and also build and erect a passenger and freight depot building on the line of said road, in said village of Chagrin Falls, and that such condition was a condition precedent to. be performed by the plaintiff unless waived by the defendant, before any valid assessments could be made upon said defendant’s said subscription, and so remained but such mere proposition, until the plaintiff had either performed such conditions precedent, or the same had been waived by the defendant; that when the plaintiff proceeded to elect a board of directors in the fall of 1852, if it had not then obtained ten per cent, of unconditional subscription upon its certificate or capital stock, or had not then one hundred' thousand dollars of unconditional subscription to its said stock, it had not the power, under the laws of the state, to make legal elections of a board of directors, and that any such election, before such amount of unconditional stock had been subscribed would be illegal and void; and any assessments made upon its capital stock by such board of directors, would be invalid, and any assessments made upon the defendant’s said subscription by any board of directors, before the performance by the plaintiff of said conditions precedent, or the waiver thereof by the defendant, would be illegal, and would not constitute a valid consideration for said note; but, if at any subsequent time to the fall of 1852, and before the giving of said note, one hundred thous- and dollars or more, of unconditional stock had been subscribed to said capital stock, and subsequent thereto such stockholders or subscribers proceeded to elect a board of directors, such election would be legal, and such board of directors would have the right to make valid assessments upon such stock, and a stockholder would not, when sued upon his subscription or contract made with such board of directors, have the -right in such action, to attack, or question the validity of such election for want of formality therein, in not following the precise rules prescribed by the statute therefor. That from all the evidence submitted to the jury, they should be clearly satisfied that at any time after the fall of 1852, such amount of unconditional stock had been subscribed, and thereafter, such election of a board of directors was had, and said plaintiff located said road through Chagrin Falls, or within one hundred and sixty rods of the High Falls, near A. C. Gardner's Mill, and subsequently, thereto, the defendant voluntarily paid a part of said assessments on said subscription to the plaintiff, and gave the note in question for the balance, said note would be valid and based upon a sufficient consideration, although said assessments, when made, were illegal, because made before the condition to said subscription had been performed, and the plaintiff had not, at the time of giving said note, erected said depot building; provided, 'if after giving said note and before commencement of this action, the plaintiff proceeded to, and did erect said depot building in substantial compliance with said condition to said subscription, and if said defendant, at the time he so gave said note, had full knowledge said depot building had not then been erected, and if after and while said depot building was so being built, he then had knowledge said plaintiff was so performing and complying with said condition in the erection of said depot building; and also, if from all the evidence in the case, it is proven to the jury that after said road was so located, and before said note was given, the defendant was favorable to the plaintiff going forward with the enterprise of constructing said road, and so expressed himself to members of said company, and signed a paper writing, authorizing a third person or persons to appear at the meeting of stockholders of said company, for the election of directors, and to there represent and vote for him by proxy upon said eight shares of said capital stock, and voluntarily, at different times, paid sums of money to the amount of said sum of two hundred and sixty dollars upon the same, the court would not say to the jury that any part, or all of these would, as a matter of law, constitute an absolute waiver by the defendant of the performance on the part of the plaintiff, with the remainder of said condition precedent as to the erection of said depot building, but such evidence may go to the jury, and be considered by them as tending to show the state of the defendant’s mind, or feeling toward said company, as to his willingness to waive such performance of so much of said condition precedent, as remains unperformed, if any, as to the erection of said depot building; and if thereafter, and with a full knowledge that said depot building had not been erected, he gave said note for the balance remaining unpaid for said eight shares of stock, and at the same time took said receipt; both the note and receipt should be taken together and considered in law as being but one transaction, and the note being an unconditional and an absolute promise to pay said balance on the part of the defendant, and the receipt being an acknowledgment on the part of the plaintiff of the receipt of said note for such balance, the plaintiff would be bound on the payment of said note, to convey the legal title to said eight shares of its stock to the defendant, and the plaintiff, without the express consent of the defendant, would have the right to treat said note as payment of the balance of said subscription for said eight shares of said stock, and rely upon said note as the only evidence thereafter, of said defendant’s indebtedness to said company for said stock; and if the plaintiff did so treat said note as payment, and credit the same to the defendant as such, then said note would no longer be collateral evidence of indebtedness to said subscription; and if there is no evidence before the jury, or in the absence of any evidence, showing or disclosing a contrary intention or purpose on the part of the defendant, then the jury may consider that in law, such would be a legal waiver, or in law be a waiver on the part of the defendant of the non-performance by the plaintiff, of the balance of said condition precedent, as to the erection of said depot building, and if the same was performed, and said building erected after said note was given, and before this suit was commenced, with the knowledge of the defendant, then the plaintiff, so far as said condition precedent is concerned, would have the right to recover upon said note, as the same would be upon sufficient consideration.”
And thereupon the defendant by his counsel requested the court to instruct the jury as follows, to-wit:
“ ‘ 1st Request. — If the jury find from the facts in evidence, under the law as given to them, that the assessments named in the receipt, and for which the note was given, were illegally made, and imposed no obligation on the defendant, the note itself is without consideration, and can not be enforced.
“ ‘ 2d Request. — That the note and receipt taken together, if the jury shall find that they were executed at the same time, and as parts of the same transaction, show prima facie, that the note was given as collateral to the assessments named in the receipt, and if the assessments were illegally made, and could not be enforced, the note itself is without consideration, and can not be enforced.
“ ‘ 3a! Request. — That if the jury find that the conditions named in the subscription, were not performed when the assessments were made, the assessments were made without authority of law, and could not be enforced, and they would constitute no sufficient consideration for the note on which the suit is brought.
“ ‘ 4dh Request. — That the evidence in the case must be confined to the facts put in issue by the pleadings, and that under the pleadings filed in the case, the plaintiff can not insist upon any facts, as a waiver on the part of the defendant, of the conditions contained in the paper signed by him as a subscription.
“ ‘ 5th Request. — That before the company were entitled to accept the subscription signed by the defendant as a contract binding upon him, and to levy assessments upon it, the company must have complied with and performed all the conditions named in the subscription as a condition precedent to their right to assess or collect the amount subscribed by the defendant.
“£ 6th Request. — That in order to entitle the company to organize by the appointment of a board of directors, there must have been subscribed of stock unconditionally payable « upon the requisition of the directors, one tenth part of the amount of the sum named in the certificate, as necessary for the construction of the road, and that any attempted organization by the election of directors before that sum was subscribed, would be without authority of law á&d void, and could confer no right upon such directors to assess the stock of any subscriber.
“£ 7th Request. — That in order to entitle the company to effect such organization, one tenth part of the stock must have been absolutely subscribed, and upon a meeting of such stockholders, called by the persons named in the certificate of organization, or any three of them, for the election of directors.’ ”
Which instructions, as to the second, third, fifth, and seventh of said requests, the court refused to give to the jury. But the court did charge the jury as to said second, third, fifth, and seventh requests as therein requested, subject to the qualifications and instructions previously given in charge to the jury. As to said first and sixth requests, the court did charge as requested. As to said fourth request, the court refused to charge the jury as therein requested, for the reason that the evidence referred to was given without any objection thereto being made by the defendant.
“To which said refusals of the court to charge the jury as requested in said' second, third, fourth, fifth, and seventh requests of the defendant, and to which said charge of the court, so far as given by way of qualification of the said second, third, fifth, and seventh requests of the defendant, the defendant by his counsel, then and there excepted.”
The petition in error, filed in the district court by Chamberlain, avers that the court of common pleas erred:
1. In refusing to instruct the jury as requested by plaintiff in error.
2. In the instructions given to the jury upon the several requests made by the plaintiff in error.
3. In overruling his motion for a new trial.
4. In giving judgment against him and for the railroad company.
5. J. Andrews, S. B. Prentiss, and B. P. Jianney, for plaintiff in error.
Biielieocle Mtep, and L. B. Burfee, for defendant in error.

Opinion:
White, J.
All the charges asked, by the defendant, were given to the jury, either unconditionally, or subject to the explanations and qualifications contained in the general charge, except the fourth, which was refused. The charge is set out in full in the bill of exceptions; but, without referring to it in detail, it is sufficient here to state that the qualifications imposed were more favorable to tbe defendant (now plaintiff in error) than a just exposition of the law, in our opinion, as applied to the case, required.
The case is regarded as the representative of a number of others depending between the plaintiff below and other subscribers. It has been thoroughly and ably argued, and, without specially noticing all the various points submitted to our consideration, we will proceed to a determination, at once, of the material questions arising in the case.
I. The terms in which the defendant's promise to the plaintiff below is expressed, for the payment of the four hundred dollars, the amount of his subscription, indicate an obligation in presentí. The only qualifications are, that the installments and times of performance are to be such as the president and directors, under the charter and by-laws, may prescribe. If the taking effect of the obligation is not immediate, as its terms would imply, but is postponed, and made dependent upon future contingencies, as conditions precedent, such conditions must be found in the terms of the proviso. What, then, is the intention of the parties, as therein expressed, and to be gathered from a fair construction of the language employed ? In answering this question, the situation and relation of the parties to each other, the object sought to be attained, and the subject matter to which the agreement relates, are material, and, in cases like the present, we might say, indispensable aids in guiding us to the correct construction. The plaintiff below was organized for the purpose of constructing a railroad between certain termini, and the places named in the subscription were so situated as that they might, in its location, be made intermediate points. Its means of carrying on the enterprise consisted of subscriptions to its capital stock. The subscribers would be those who favored the enterprise, and for whose benefit it was to be performed. Its capacity to enter upon, and its ability to complete, the work, depended upon its stock-subscriptions. It was,, in a word, to be owned and controlled by the stockholders. If a success, it would be their gain; if a failure, their loss. In con struing the contract in question, it is not to be approached as though the object sought by the parties was the defeat of the enterprise. A strictly literal performance of the terms of the proviso, assuming all therein stipulated to be conditions precedent, would require only the permanent location of the road — not its construction — and the erection of the " freight house and depot." But the building of the latter would be useless without the completion of the former; and, if for any cause the road should fail to be made, or the work should be suspended while in course of construction, it would be for the interest of all concerned that no money should have been expended on the buildings. But a literal construction would be unreasonable, and manifestly against the intention. It must be presumed to have been contemplated by the parties that the road and buildings necessary to its operation for business, when completed, would be constructed in the usual way. That the plaintiff undertook to build the freight house and depot is clear. The question is, was the performance of the undertaking a condition precedent, or, was it not rather a stipulation, which the company undertook to perform at the appropriate time ? It may be said that the road was to be completed, as well as the buildings, before the subscription would become binding. But it is not so written. All that is required to be done, in regard to the road, is that it be " permanently located" so as to make the points named. The " freight house and depot" only are required to be "built." There is no more reason for requiring the plaintiff to do more than permanently locate its road, thus adding to the language of the proviso, than there would be to lessen the expressed obligation in regard to the buildings. If the party intended that the building of both should concur before his rights and liability, as a stockholder, should attach, it seems to us he would have applied the same or similar language to both. It would be a greater departure from the letter to add to the sense of the words " permanently located," and require the road to be completed, than to give to the depot clause the effect of a stipulation or condition subsequent; which would simply post pone the time of its performance. In the meantime the road would be in process of construction on the line desired by the defendant; and, to the extent of his subscription, like other stockholders, he would contribute to the work, and have the right, in common with them, to exercise a corresponding influence in the affairs of the corporation.
The express stipulation that the amount of the subscription is to be paid at times and in installments, upon the requisitions of the directors, like ordinary stock-subscriptions, favors this construction. The design of such requisitions is to lighten the burden of payment on the subscribers as much as may be found, by the directors, consistent with the due prosecution of the work for which the corporation was formed. If it had been the design of this subscriber, by special terms, to entirely exempt himself from all interest and liability until the work should be completed, and thus make every thing which the company was to perform a condition precedent, it is hardly reasonable to suppose, that, with such a purpose in view, he would have further stipulated for payment by future calls, the making of which necessarily involved the exercise, by the directors, of a discretion dependent upon the necessities and financial condition of the company.
But, looking behind the letter, to the object of this subscription, as disclosed by the situation of the parties, and the nature of the enterprise they must have designed to promote, we find others, and, taken in connection with those already noticed, controlling objections to giving to the clause in question the effect of a condition precedent. The end sought was the completion of the proposed railroad, with the depots and buildings necessary to its operation. The object of the defendant was to secure it, with a freight house and one of its depots, at the point named in his subscription. After the location of the road, which would require comparatively but a small expenditure, the first, and known to all as an indispensable requisite to the successful prosecution of the work, was a sufficient amount of available stock-subscriptions. The capital of the plaintiff consisted of its stock. But it could not employ contractors, purchase materials and rights-of-way — in short, build a railroad — upon the credit of its untaken stock. What its situation required was, not subscribers who would agree to take stock when the road should be finished, but present subscriptions, which alone would furnish the means and credit that would enable it to construct its road. At the time this subscription was made the road had not been located. It is to be presumed, from the form of the subscription, that there was another and probably a competing route upon which the road might be located, and that the amount of assistance offered to the company, in the way of stock-subscriptions, by the friends of the respective localities, would and were designed to have, a material influence in the final selection of the route. Did the defendant below and Ms co-subscribers, in making their subscriptions, design, thereby, to give assurance to the company, in case the road should be located according to the condition of their subscriptions, not that they would render any present assistance toward the construction of the road, but simply that, when it should be completed, they would take the amount of their -respective subscriptions in stock ? Is it reasonable to suppose, that the company, under the circumstances, in accepting the subscription, so understood it? It seems to us the answer to both questions must be in the negative. It is a principle of construction, that when the terms of an undertaking admit of more senses than one, the promise should be performed in that sense in which the promisor apprehended, at the time the promisee received it, it was in fact so understood and accepted. 2 Kent's Comm. * p. 557. And it would be manifestly against reason to adopt a construction that would tend to defeat rather than promote the object of the parties.
We are of opinion, therefore, that when the railroad company accepted the subscription, and permanently located its road in accordance with its terms, it took immediate and full effect as a stock-subscription; and, that the provision in relation to building the freight house and depot, remained as an executory contract to be performed by the company.
This is the construction which both parties, by their subsequent conduct, adopted — the plaintiff in error, no less than the company. He paid $260 of assessments upon his subscription, and made the note in suit for the balance. In the proxy which he gave he describes himself as a stockholder, and authorizes Gardner to vote for him at the annual election held by the company the February next preceding the date of the note. It would seem also that he attended a meeting of those interested in the road near Chagrin Falls and voted in favor of prosecuting the work. All this shows, unequivocally, that he regarded himself both as having acquired the rights and incurred the liability of a stockholder.
But it is claimed that the company was not authorized to receive conditional subscriptions, or to bind itself to the performance of conditions as a consideration for their payment.
The conditions referred to may be either precedent, or subsequent. Of the former class we see no objection to the subscriber inserting such as he may choose. Until they are performed the relation of the subscriber to the company as a stockholder does not arise. But, after that relation is established, whether the non-performance of a condition subsequent would work its dissolution is a different question. It may be that all such conditions as these last named, should be viewed, as between- the corporation and the subscriber, in the light of stipulations merely, and that, in case of their non-performance, he should be left for redress to the ordinary remedies for breaches of com tracts.
The provision in question, as we have already stated, is to be regarded as a stipulation on the part of the company, which, in accepting the subscription in the terms proposed, it undertook to perform. The defendant's right to require its performance, though arising out of the same contract as the-stock for which he subscribed, does not attach to him as a stockholder, but as a contractor. And whatever might be the rights of the defendant with regard to this stipulation in a controversy with creditors, or other stockholders, yet as between the parties, we are of opinion that it constitutes a valid executory agreement. (H. & N. R. R. Co. v. Leavitt, 16 Ben-Monroe, 358, 364; McMillen v. M. & L. R. R. Co., 15 Id. 218, 235; Chapman & Harkness v. M. R. & L. E. R. R. Co., 6 Ohio St. Rep. 221.)
II. The first and sixth requests were given without qualification. The second was as follows:
" That the note and receipt taken together, if the jury shall find that they were executed at the same time, and as parts of the same transaction, show prima facie, that the note was given as collateral to the assessments named in the receipt, and if the assessments were illegally made, and could not be enforced, the note itself is without consideration, and can not be enforced."
This might well have been wholly refused. It involves two deductions of law. First, that the effect, prima facie, of the giving of the note and receipt, Avas that they were collateral to the assessments; and, secondly, that the note would be without consideration if the assessments were illegal. The illegality meant, as shown by the third request, was that they Avere made before the supposed conditions of the subscription had been performed. The assessments, of themselves, would be of no validity. They were nothing more than the mode, prescribed by the directors, in which the subscriber was to pay his subscription. If he was not liable upon that, the assessments could not make him so. The statement, therefore, that the note was collateral to. the assessments was the same, in effect, as claiming it to be collateral to the subscription. Assuming that the subscription contained all the conditions, claimed by the defendant below, they would be conditions, either for the benefit of both parties, and Avhich each would have the right to insist should be performed before the subscription should become absolute, or, which Avould probably be the case here, for the sole benefit of the defendant. If of the latter kind, he could waive them, and, at his own option, make his subscription absolute; if of the former, the consent of both would effect the same result. In this case, upon either view, the waiver is complete, and the defendant placed, by the execution of the note and the receipt, upon the footing of other unconditional subscribers. The company, prima facie, would be entitled to the money when the note became due, and, on payment, the defendant would have a right to the stock. This would have been the effect of the note and receipt,' in the absence of any other 'evidence of subscription. Shoemaker v. Goshen Township, 14 Ohio St. Rep. 571.
III. Another objection to the validity of the subscription is thus stated by counsel, in their argument:
"It was such a subscription as the company had no authority to receive. The powers of the company were special, and the form of stock-subscriptions which it was authorized to accept, was prescribed by statute. An installment of five dollars on each share of stock, was required to be made payable at the time of making the subscription, and the residue, in such installments, and at such times and places, and to such . persons as might be required by the directors of the company. S. & C. Stat. vol. 1, 216, sec. 6.
" The act is general, is applicable to all railroad companies organized since its passage, and the section referred to is not discretionary, but imposes, and was designed to impose, a limitation upon the powers of the company."'
The section referred to is designed to fix the time of payment of the first installment, and to provide the mode for determining the time at which the residue should become payable. It does not prescribe the form in which subscriptions are required to be made; nor, does the want of a stipulation for the payment of five dollars on each share of stock invalidate the subscription.
TV. The seventh request asked to be given in charge was as follows:
" That in order to entitle the company to effect such organization, one tenth part of the stock must have been absolutely subscribed, and upon a meeting of such stockholders, called by the persons named in the certificate of organization, or any three of them, for the election of directors."
The jury had already been instructed as to the amount of stock necessary to enable the stockholders to elect directors, in the sixth charge asked, which, as already stated, was given without qualification. The point here sought to be raised was, that the first election of directors, after the requisite amount of stock had been subscribed, must have been at a meeting of the stockholders called by the persons named in the certificate.
The statute provides, that as soon as ten per centum on the capital stock shall be subscribed, the persons named in the certificate of incorporation, or any three of them, may give notice for the stockholders to meet for the purpose of choosing directors. But we do not think it indispensable to an-election, that the notice for it should be given by the persons named. Suppose they should all die before the time arrived for giving the notice, or, any of the many other contingencies should occur which would prevent their action, could no.t an election be had? If the necessary amount of stock has been obtained, and at a meeting of the stockholders for the purpose, they elect'directors, the validity of their acts can not be questioned collaterally, on account of the irregularity in their election. The statute in regard to the notice is directory.
Y. The refusal of the court to give, in charge to the jury, the fourth request, could not have prejudiced the defendant, under the construction we have given to the subscription.
It may be remarked, however, that so far as the evidence may have been deemed inadmissible on the ground of not conforming to the allegations in the pleadings, the objection should have been made when the evidence was offered, or at least, before the close of the testimony, so that, the objection might have been obviated by amendment, if remediable in that way. See Hoffman v. Gordon & Bro., decided at the present term. But in this case, the defendant has set up as his second defense, in general terms, that the note was wholly without' consideration and void. This the plaintiff might have required to be made more definite, by a statement of the facts upon which the defense was based; but he waived this right and joined issue. Under the broad issue thus chosen by the parties, any evidence would have been admissible, which tended to impeach or sustain the consideration of the note; and, it would have been clearly erroneous for the court to have required the jury to disregard all the evidence tending to prove a waiver by the defendant of the supposed conditions contained in the subscription.
The judgment of the common pleas will, therefore, be affirmed.
Brinkerhoee, O.J., and Scott, and Welch, JJ., concurred.
Ante p. 211.