Case Name: The N. E. Railroad Company vs. B. B. Rodrigues
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1857-01
Citations: 10 Rich. 278
Docket Number: 
Parties: The N. E. Railroad Company vs. B. B. Rodrigues.
Judges: O’Neall, Wardlaw, Withers, and Muhro, JJ., concurred.
Reporter: South Carolina Law Reports
Volume: 44
Pages: 278–283

Head Matter:
The N. E. Railroad Company vs. B. B. Rodrigues.
A subscription to a Railroad Company, held valid, tliougli made to one who was not a commissioner to receive subscriptions, but who, taking an interest in the Road, went about soliciting subscriptions in order to secure the charter.
Where the charter of a Railroad Company declares, that the share of a defaulting stockholder, “ shall be liable to forfeiture, and the Company may declare the same forfeited and vested in the Company,” the option to forfeit is with the Company, and not with the stockholders.
A stockholder is bound by his subscription to a Railroad Company, though he subscribed under the mistaken belief that he might forfeit his stock at his pleasure; and it makes no difference that he was assured by the person taking the subscription that he had the right under the terms of the charter to forfeit, such assurance being founded on mistake and not being wilfully false.
BEFORE O’NEALL, J., AT CHARLESTON, SPRING TERM, 1856.
Tbe report of Ms Honor, tbe presiding Judge, is as follows: “ Tbis was an action of assumpsit, brought to recover tbe instalments on ten shares in tbe capital stock of the N. E. Railroad Company, alleged to have been subscribed by tbe defendant.
“ It appeared, that tbe shares were fifty dollars each, and were called for at 60 days; one dollar on each share was paid at subscription.
“ Tbe proof was, that there was great difficulty in making up stock enough to secure tbe charter. Ward committees were appointed to solicit subscriptions. Tbe beading of tbe subscription, in each Committee’s bands, was drawn by tbe Mayor, General Scbnierlie. It simply was an agreement (not under seal) to take as many shares in tbe N. E. Railroad Company as were set down opposite to eacb name. Col. Blum, for tbe Company proved, tbat. be was one of tbe Ward committee .(No. 4,) wbo waited on tbe defendant. He assured tbe defendant be might forfeit bis subscription after be bad subscribed and paid one dollar on eacb share. This was as be understood tbe direction of tbe Mayor. In conse-' quence of this understanding, tbe defendant subscribed and paid one dollar per share. Tbe Commissioners appointed .under tbe charter, gave tbe receipts for tbe payment on tbe subscriptions.
“ These facts were also proved by Horlbeck and Bancroft, tbe other members of tbe Committee from Ward No. 4.
• “ Mr. Middleton tbe Secretary of tbe Company, proved tbe calls for tbe payment of tbe instalments, according to tbe terms of tbe charter. Tbat tbe defendant, as a subscriber for ten shares, having paid one dollar per share at subscribing, was entered upon tbe subscription books by tbe Commissioners under tbe charter: tbe books were regularly opened and closed.
“ Mr. Solomons, in tbe defence, proved, tbat tbe defendant was persuaded to subscribe by being told be could forfeit. He said be would give ten dollars — he did not want tbe stock.
In reply. — Qenl. Schnierlie, Ex-Mayor, proved, tbat be was tbe Mayor, and wrote tbe beading of tbe subscription for tbe W ard committees. He referred to tbe clause of tbe charter providing for a forfeiture. His opinion was, tbat tbe Company would allow a forfeiture, and tbat opinion be gave to tbe Committee-men of tbe Wards.
“Tbe case was submitted to tbe jury on tbe question, whether tbe defendant was induced by misrepresentation to subscribe? If so, they should find for him — otherwise, for tbe Company.
“They found for tbe plaintiffs. Tbe defendant appeals: Tbe grounds I have not in my possession: they were an nexed to tbe report made out and delivered to tbe defendant’s attorney many months ago. He tells me be bas lost tbe report — and at bis instance, from my notes, I bave made up tbis report. Tbe original subscription, tbe charter, and books of tbe N. E. Railroad Company, ought to be produced.”
Tbe defendant appealed and now renewed bis motion for a non-suit; and failing in that, then for a new trial on tbe grounds:
1. Because, tbe plaintiff failed to prove a subscription by tbe defendant in conformity with tbe terms of tbe charter of tbe North Eastern Railroad Company.
2. Because, tbe testimony produced by plaintiff, clearly showed that tbe subscription made by defendant was made upon tbe distinct understanding and condition, that be should bave tbe privilege of forfeiting bis shares.
3. Because, there being no testimony that tbe parties who procured defendant’s signature, were acting under tbe authority of tbe Commissioners of tbe N. E. Railroad Company, tbe said Company in subsequently recognising, and availing themselves of tbe benefit of tbe acts of these parties were bound by tbe representation, upon tbe faith of which it was clearly proved, tbe subscription bad been made.
4. Because, by tbe plaintiff’s own showing, tbe inducement held out, and by which alone tbe subscription could bave been procured, was an express understanding that tbe forfeiture would be allowed by tbe said Company, and tbe party discharged from further liability; and to suffer tbe said Company to violate that understanding is to enable them to profit by a fraud committed on tbe defendant.
5. Because, by the terms of the charter of the N. E. Railroad Company, the defendant was at liberty to forfeit his shares.
6. Because, as the subscription was secured under a mistaken view of the law, caused by the erroneous representations of those who procured it, the said Company should have been required in accepting such subscription to act in conformity with those representations.
Seymour, Memminger, for appellant.
Martin, contra.

Opinion:
The opinion of the Court was delivered by
Whitner, J.
The defendant subscribed to the capital stock of the N. E. Railroad Company in a book which had been prepared, by the mayor, for the time, and subsequently copied in the book of the commissioners appointed by the legislature. The defendant also' paid at the time, the sum of money required by the terms of the charter to render the subscription valid.
The book contained a suitable caption under which the signature was placed, aided if necessary by an exhibition of the charter, a copy of which was attached to the first page of the book. It cannot avail the defendant that the subscription may not have been made in the presence of the commissioners, ' or that it was made at the instance of another taking an especial interest in the enterprise. The fact of such a subscription created an obligation and promise to pay the further sums when required according to the terms of the charter, unless there is found something else in the case to relieve the defendant. G. & C. R. R. Co., vs. Cathcart, 4 Rich. 89.
The eighth section of the charter (Act of Assembly, 1851, p. 132) in reference to unpaid instalments, prescribes that "in case any instalment on any share shall remain unpaid for the space of ninety days after the time appointed for payment thereof, such share shall be liable to forfeiture and the company may declare the sums forfeited and vested in the company, but such forfeiture shall be deemed to discharge the defaulting stockholder from the obligation to pay the amount remaining unpaid on the forfeited share." In the case above cited, and other cases are to be found in our books, it has been held that the right to forfeit is not at the option of the subscriber, but of the company, being a power merely cumulative, to secure and not to defeat the enterprise. The terms of the charter under review in the case cited will be found more favorable to the subscriber desiring to forfeit, than in this charter. In the former charter in case of default, the share, and the money paid on account thereof, it is declared, shall be forfeited to the company ; the latter, prescribes that such share shall be liable to forfeiture and the company may declare the same forfeited.
But it is said in the present case the right to forfeit was one of the terms of the contract promised on the one part, and reserved on the other, at the time of subscription. The circumstances present a case very analogous to the case G. & C. R. R. Company vs. D. M. Smith, 6 Rich. 91. We are warranted in the conclusion as well by the verdict of the jury as the facts in evidence that the defendant was not induced by misrepresentation to subscribe. The facts were spread before the defendant truly. All the means of a correct judgment were afforded. The principles settled and the course of reasoning adopted in Smith's case to hold him to his contract are even more clear and forcible when applied to the case in hand. If it be conceded that the person who presented the book for subscription was the agent of the commissioners appointed by the legislature, it will be seen at once that the commissioners were appointed for a specific object and with limited powers the very precise terms of which were furnished to the defend ant.' They bad no power to stipulate beyond tbe charter. That tbe mayor, or tbe committee-man, or tbe commissioner to receive subscriptions, should entertain and very honestly express tbe opinion, even although in such expression it assume the confident tone of an assurance, that a subscriber would have tbe right under tbe charter to forfeit bis share on bis own motion, cannot vary tbe law of tbe case. Judges and eminent lawyers before them have made tbe same mistake in reference to other charters of like import.
In this case there was no fraud practiced by tbe company or by their authorized agent. Tbe company bad not then an existence. If tbe defendant at tbe time of subscribing bad accompanied bis subscription with this or any other condition ' inconsistent with tbe contract, sending it forward in tbe form' of a written stipulation, then a question may have been presented, whether it was not a void contract upon its face, or tbe further question raised, whether tbe company by its acceptance did not bind themselves to ratify tbe election of tbe defendant. We have no such case to deal with. To allow-such a privilege, or avoid an obligation incurred as this has been, might well be obnoxious to tbe public and certainly to tbe other stockholders who have embarked in a common enter-prize according to tbe provisions of tbe charter. But without any imputation on any of tbe parties, each acting in good faith, it must be held one of those mistakes in ignorance of tbe law against which there is no relief, even although the defendant confided in a judgment deemed better than his own.
The motions for non-suit and new trial are dismissed.
O'Neall, Wardlaw, Withers, and Muhro, JJ., concurred.
Motions dismissed.