Court Opinion

ID: 5465437
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:48:47.800946+00
Date Added: 2024-06-11T08:33:05.212037
License: Public Domain

By the Court, Bronson, Ch. J.
Before examining the pleadings, it may be well to notice the facts of the case as they appeared on the trial, and the legal consequences resulting from those facts. We shall then be better prepared to appreciate the merits of the pleadings.
By the act incorporating the company, all such persons as should thereafter be stockholders were declared to be a body corporate. The capital stock was to be $250,000, divided into shares of $50 each. Nine commissioners were named to receive subscriptions to the capital stock; who were to open books for that purpose, giving notice of the time and place; and two dollars and fifty cents on each share was to be paid to the commissioners at the time of subscribing. (Stat. 1838, p. 110, §§ 2, 3, 8.) There was no express provision for an allotment or distribution of stock, should there be an excess of subscriptions. The company was not to commence business until the whole of the capital stock had been paid in, or secured to be paid, according to the act, and a deposition of that fact had been made by the president and secretary, and filed in the office of the clerk of the city and county of New-York. (§§ 11, 13.) There was no occasion for a distribution or allotment of the stock among the subscribers; for it is quite evident that there was no excess of subscriptions beyond the capital. The great difficulty was in getting the whole of the stock subscribed. The first effort for that purpose, which was made in July, 1838, failed; and it was not until November following that the capital was all taken. It is a matter of doubt upon the evidence, whether the commissioners for receiving subscriptions proceeded in the particular manner pointed out by the charter. But as the defendant offered to prove that they did not so proceed, that fact must be considered as established for all the purposes of this case. But there was evidence that the whole of the stock was taken before the company was organized. *397Directors were then chosen, and officers appointed as the act directs; and the proof prescribed by the charter, (§ 13,) that the company was in a condition to commence business was duly made and filed. The company thereupon commenced its appropriate business, and continued it for about two years; and while so acting, the defendant gave the bond in question. Upon such proof, there could be no doubt but that the plaintiffs were á corporation, so far as third persons are concerned. It would have been enough for the plaintiffs to show the charter, and the user under it. (Utica Ins. Co. v. Tillman, 1 Wend. 555; Fire Department v. Kip, 10 id. 266; U. S. Bank v. Stearns, 15 id. 314.) Going further, and showing that the defendant was himself one of the stockholders, and had received a dividend as such, could do no hurt, if it did no good.
It is unnecessary to inquire what may be the rights of the people in relation to this corporation; or as against the individuals who were concerned in getting it up, and setting it in motion. The defendant does not represent the sovereign power, and has nothing to do with the question whether the company should be dissolved. So long as the state does not interfere, the company may sue, or do any other lawful act, whatever sins may have been committed in bringing the body into existence.
In this view of the case, it is not necessary to consider the evidence which was given on the trial for the purpose of concluding the defendant by an estoppel in pais from denying the corporate existence of the plaintiffs. Nor need the arguments at the bar on that question be noticed. It is enough that the plaintiffs gave the usual proof that they were a corporation; and nothing was either proved, or offered to be proved, which could amount to an answer to that evidence.
On the merits, nothing like a defence, either legal or equitable, was made out. For aught that appears, the bond and mortgage may have been given for borrowed money; and taken by the company as an investment of its funds. But had it been proved that the securities were given for the seventy shares of stock which Nones transferred to the defendant, it would have furnished no reason why the defendant should not *398pay. There is no evidence that he was defrauded, either by Nones or the plaintiffs. Indeed, there was not a shadow of defence, unless some advantage had been gained in preparing the pleadings. This leads to the consideration pf that question.
The second plea was nul tiel corporation ; and nothing else. And although the replication to that plea, and the rejoinder which followed, say something about subscriptions for stock, the point of the issue was, corporation or no corporation. We have already seen that the plaintiffs proved themselves a corporation ; and they were consequently entitled to a verdict on that issue. Their right to a verdict on the issue made by the plea of non est factum has not been questioned.
The third plea is bad in substance. The point of the plea is, that the subscriptions to the capital stock of the company were not taken according to the provisions of the act. From that fact the pleader goes on to draw the inference, that there was no person competent to take the bond, or to sue; and finally, that the bond is void. But these are only matters of argument and inference. The only fact directly alleged in the plea, so that an issue could be taken upon it, is the one which has been mentioned. Now, if it be true that the subscriptions were not taken according to the provisions of the charter, that fact does not disprove the existence of the corporation, nor does it prove that the bond is void. Although the subscriptions were not properly taken, we have already seen that there was a good corporation, so far as third persons are concerned. And if there was a corporation, there is no question but that the bond was well taken, and the suit properly brought. Had subscriptions regularly taken been essential to the existence of the corporation, the plea would have contained a good argument against the capacity of the plaintiffs to take the bond, or to bring this suit. But as the corporation may exist without subscriptions regularly taken, the plea falls far short of a good argument against the action.
As the plea is bad, we need not examine the several replications to the plea. Whether the replications were good or not, *399judgment was properly given against the party who committed the first fault in pleading.
The books of the corporation, in connection with other evidence, were properly received for the purpose of showing how the company was organized, and that it acted under the charter. And in reference to the manner in which the books had been prepared and kept, it is enough to say, that the credit due tc the books was a question for the jury. It was not a ground for rejecting them altogether.
What has been said covers all the questions of any importance which the case presents. We see no error in the proceedings.
Judgment aifirmed.