Court Opinion

ID: 6502087
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:14:49.732964+00
Date Added: 2024-06-11T15:54:38.404143
License: Public Domain

COLLIER, C. J.
1. The act of the 22d December, 1836, “ to incorporate the Selma and Tennessee Rail Road Company,” among other things provides, that there shall be established a company with a capital of twelve hundred thoúsand dollars, in shares of one hundred dollars each; for the purpose of constructing a rail road from, and to, the points mentioned in the first count of the plaintiff’s declaration. That books of subscription to the stock of the company,- shall be opened under the superintendence of certain persons, who are particularly named. That-the subscription for stock, shall be paid as follows, viz: “ five dollars on each share, at the time of subscribing, and the remainder at such time as the directors hereafter mentioned may appoint. Provided, that not more than ten per cent, shall be called in at any one time, and twenty days notice given in some public newspaper for the payment of each instalment.” Further, «that the said commissioners, or a majority of them shall, after the sum of five hundred thousand dollars of said stock has been subscribed, give public netice in some newspaper for the election of nine directors, who shall be stockholders, at such time and place as a majority shall direct; and the stockholders, either in person; or by attorney, shall meet at the time and place designated, and proceed to the election of said directors, to serve for one year, and until their successors shall be elected, &c.” And the subscribers to the capital stock, their successors and assigns are, by the act, created a body corporate, by the name and style of the Selma •"•'d Tennessee Rail Road Company,'land invested with power *797to do all lawful acts incident and pertinent to a corporate body, and which may be necessary and proper for the convenient transaction of its own affairs, &c. It is also enacted, “ that if any stockholder shall fail, or neglect to pay any instalment required to be paid, for the period of ninety days next after the same shall be due and payable, the stock on which it is demanded, shall be forfrited.to the company, together with the instalments which majThave been paid thereon, and a new subscription may be opened to mak up such deficiency as may be caused by the nonpayment aforesaid: Provided, that nothing in this section shall be so construed as to prevent the President and Directors of said rail road company from offering for sale the stock of any defaulting stockholder, or so much thereof as may be necessary to pay such defalcation, after giving twenty days notice of the time and place of said sale, in some newspaper, and out of the proceeds of said sale, after paying the amount of such defalcation, which may be due and unpaid, with all costs, the residue, if any, shall be paid over to the said defaulting stockholder.”
We have recited this much of the charter, because it is material to an examination of the declaration. The questions arising upon the defendant’s demurrer are, 1. Will an action lie upon a subscription for stock, such as that declared on? 2. Conceding that an action -is maintainable in such case, are the three first counts sufficient in law?
1. There can be no question but an action of Assumpsit may be brought upon the defendant’s subscription for stock, unless it is impliedly or expressly inhibited by the act under which the plaintiff claims a corporate existence. Such was held to be the law in Beene v. The C. & M. Rail Road Company, [3 Ala. Rep. N. S. 660.] In that case, the charter of the company provided, that “ on failure of any stockholder to pay the amount due upon his, her or their stock, in pursuance of any call made by the President and Directors as aforesaid, within sixty days after such call, they shall be authorised to sell said stock: Provided, the same can be sold at not less than par value, for the amount so due.” It was insisted that the corporation had no other remedy to coerce the stockholders to pay for their stock than to sell the same as the act prescribed; but this court considered that remedy to be merely cumulative, and not at all affecting the right to sue upon the direct promise to pay. So also in Instone v. The *798Frankfort Bridge Company, [2 Bibb’s Rep. 576.] The charter declared, that if an instalment required on any share should not be paid at the time prescribed, the right or interest of the holder thereof,'should be sold at'public auction, &c. It appeared that the shares, on which instalments were sought tq be recovered, had been offered', but not sold for want of bidders. The court said, that “ the pi’ovision of the act giving to the company the right to sell the shares of a delinquent subscriber .does not amount to a negative of their right to any other remedy, seems equally clear. The provision is in the affirmative, and it is a maxim of the common law, that an affirmative statute does not take away the common law.” Again: “it is further'argued, that as the company have elected to proceed under the act by exhibiting for sale the shares subscribed by the defendant, they are precluded from resorting to a suit at lav/. Had the shares been sold, their right to sue the defendant would without doubt, have been destroyed. But an unsuccessful attempt to sell, must surely be attended with a different effect. ' In that case, his right to the shares and to the immunities and emoluments attached to them remained; and therefore, according to the dictates of law, as well as of common sense, his obligation to pay could not be extinguished.”
And where an action was brought by an incorporated company against a defendant on his subscriptions for stock, it appeared that the company were authorised by the act of incorporation to make calls upon the stockholders for the sums respectively subscribed by them, in such proportions, and at such times as the directors saw fit, under penalties of forfeiture of - the shares subscribed, and of the previous payments made thereon; it was held, 1. That the company, might, in case of non-payment proceed by suit to recover the amount of the calls, or declare a forfeiture of the stock. 2. Even after suit brought, they might declare a forfeiture, and it could not be pleaded in bar of the further maintenance of the suit, where the value of the stock forfeited is not equal to the money due the company; and such plea, to be good, should contain an averment of equality of value. But if the stock forfeited, be less than the sum due, the defendant should be allowed its value in diminution of the recovery against him. The right of forfeiture was regarded as a cumulative remedy, and governed by the same rules, as if it it had been provided for by *799the agreement of the parties. “It is the same as if the defendant, in addition to the promise of payment, agreed that on default, the directors of the company should have power to declare the forfeiture of the stock; in, other words, that the company might resume their title to the stock sold. The effect of such a proceeding is perfectly well settled in every department of business. When the mortgagee of real or personal estate takes the thing pledged and sells it, or finally converts it to his own use, he is paid so much only towards his debt as the thing sold for, or was worth at the time of the conversion, [Globe Ins. Co. v. Lansing, 5 Cow. Rep. 380; Lansing v. Goelet, 9 Id. 346, 352,353; Spencer v. Ex’rs of Harford, 4 Wend. Rep. 381; Case v. Boughton, 11 Id. 106.] And where the equity of redemption is released, or a strict foreclosure resorted to in any form, then so much is paid as the value of the thing moi’tgaged, at the time when the title becomes absolute in the mortgagee amounts to. [Spencer v. Ex’rs of Harford, 4 Wend. Rep. 331; Morgan v. Plumb, 9 Id. 287.”] It was then concluded, that the forfeiture of the stock, which was but another name for forclosure was not necessarily an extinguishment. [Herkimer M. & H. Co. v. Small 21 Wend. Rep. 273.]
But it is insisted that the case at bar is distinguishable from those cited, in the positive and peremptory terms which are employed in the act in respect to a forfeiture of stock; here the language is imperative, and declares, that upon neglect to pay any instalment demanded, the stock « shall be forfeited to the company, &c.” and that the proviso does not impose upon them the necessity of selling, but makes it discretionary with them. This argument cannot be maintained. A subscriber cannot speculate upon the chances of a rise in stocks, and if the enterprise promises to be unprofitable, elect at his pleasure, to avoid a direct promise to pay by failing to meet calls made under the authority of the charter. In legal effect, there is no difference between the provision considered in the case in 21 Wen., and the 17 section of the act before us; under “penalty of forfeiture,” and “ shall be forfeited,” in the connection'in- which they are found, are equivalent expressions. All forfeitures consequent upon the non-performance of some act or duty are regarded as penalties, and if absolute at law, are usually relieved against in equity.
In the cases cited from 3 Ala. Rep. and 2 Bibb, though they *800do not expressly declare a forfeiture of stock to be a consequence of the subscriber’s delinquency, yet the acts of incorporation, which were there examined, authorised a sale of stock upon the failure to pay an instalment. Now as such a sale could only have been made so as to pass a title to the purchaser, upon the supposition that the-legal tittle had revested in the company, the authority to sell, implies a forfeiture, and will be quite as potent in its consequences as if it' was expressed. The provision, notwithstanding its terms, when literally interpreted, may favor such an idea, docs hot authorise the company to appropriate to itself any stock on which calls shall not have been met without accounting to the proprietor to the extent of its fair market value. Such an enactment in Herkimer M. & H. Co. v. Small, was aptly assimilated to a mortgage in its effects; that by the neglect to pay an instalment, there was a forfeiture at law, and a sale might be made of the stock as a means of enforcing payment; if it sold for more than was due, the stockholder should be entitled to the excess, if for less, the company might recover the deficiency. The terms of the 17th section, are substantially those usually employed in a mortgage, and are annexed to the contract by which one becomes a subscriber for stock, quite as directly as if a lien had been given by deed to the company; and in our judgment their legal interpretation and effect must be as a mortgage, and nothing more.
It is however, argued, that the case of the Trustees of the University v. Winston, [5 S. & P. R. 17,] is a direct authority to show that the forfeiture of stock was absolute under the charter, by the election of the subscriber not to pay an instalment, and was exclusive of every other remedy by the company. In order to test the justness of this argument, we will briefly examine the case cited! That was an action of debt upon several bonds, executed by the defendant, for the payment of money at different times, in consideration of the purchase of several tracts of land of the plaintiffs. The lands were a part of those granted to this State by the Federal Government, for fhe establishment of a “ Seminary.of learning.” The act which incorporated the board of trustees, and invested them with the legal title to the lands, among other things provided, that if a purchaser of any tract of land from the trustees, should “ fail to make punctual payment of the amount of rany one of the instalments which may become due on said tract *801of land, the land shall be absolutely forfeited to the said trustees with the money paid thereon;” and the trustees are authorised after the expiration of three months, to dispossess the person in possession, by a writ of unlawful detainer, &c. Provided, that the purchaser or his assignee may, within three months after the first instalment falls due, which is unpaid, execute a bond or bonds with suificient personal security for the payment of each of the remaining instalments by the time they respectively become due; and in such case, the land shall remain in the possession of such purchaser or his assignee. The question was, whether the plaintiffs could maintain their action, and the court held, 1. That the act of the legislature incoi’porating the Trustees of the University, made them a public corporation, and was subject to modification by the authority which enacted it. 2. That the statutes which provided for the sale of'the lands imposed an absolute forfeiture as the consequence of a failure to pay the purchase money with punctuality, and that no suit could be sustained upon a bond, un-. less it was commenced within three months after its maturity. The grounds upon which the conclusion on the second point rests, are these: the legal title to the University lands was-vested in the State; for their sale and every thing connected with it, it was within the competency of the legislature to provide; this being the case, and the acts upon the subject being public laws, they were operative proprio vigore to annul the contract of purchase without any act done on the part of the trustees, where the conditions they prescribed were not complied with. The sameprinciple is perhaps more clearly if not more happily expressed in the subsequent case of Gill v Taylor [3 Por. R. 185] “ There” say the court, “is a distinction between forfeitures at common law and under statutes. The rule of the former requmes the party entitled to the forfeiture, to do an act which the law directs, to derive any benefit from the forfeiture. But a statute prescribes that a forfeiture shall be the consequence of an act, which is prohibited by it, or of an omission to do what is required; any one who may incur a forfeiture will be deprived of all his interest in, and title to the estate upon which the forfeiture operates, at the time the forfeiture accrued, and is disabled by law, from retaining the title or other interest, until the party entitled to the forfeiture, shall assert his right to it. The common law allows a discretion, and gives a forfeiture to the party entitled to it if he choose to take it. But such a *802statute gives no discretion; it determines the will of the party entitled to the forfeiture, and makes the act when it is' done- or omitted an absolute and complete forfeiture.” [See also Kennedy and Moreland v. The heirs of McCartney, 4 Porters Rep. 157; U. S. v. Grundy & Thornbugh, 3 Cranch’s Rep. 350, etposi; U. S. v. 1980 bags of Coffee, 8 Cranch’s Rep. 404; Fontaine v. Phcenix Ins. Co. 11 Johns. Rep. 300; Kennedy v. Strong, 14 Johns. Rep. 131.]
Notwithstanding the generality of the terms in which the court expresses itself arguendo, in the cases cited, it is apprehended that no case can be found where a forfeiture declared by statute in favor of an individual or private corporation, which is but an artificial person, vests a right, or confers a title, unless the party entitled shall so elect. In all the cases cited to this point, it will be found that the legislature had signified in advance, the consequence of a future act or omission, so far as the public were con.cerned; and this was regarded as equivalent to a subsequent election: wherever it is left to the discretion of some public agent to treat the act ,or omission as a forfeiture; in order to give to it that effect, he must make known such an intention. True, there are cases in which it has been held, that a provision in an act chartering a private corporation, authorising the sale of stock for the default of a subscriber in paying the amount of his subscription, is an implied inhibition of the right to sue for calls made by the company. But these cases are not placed upon the ground,- that the stock by themon-payment of calls revests in the company, eo ins stanti; they rest upon the familial- maxim, expressio unius, exclu-sio est alterius, viz: by giving one remedy, the legislature implied-Jy-excluded, every other. . ' .
Without considering at greater length the effect of the 17th section of the charter, we will close the view which we have thought proper to take of this branch of the cause, by adding to the citations already made, several others upon the right of a corporation to maintain an action on a subscription for its stock. — [F. G. Company v. Alexander, 2 N. Hamp Rep. 380; Goshen Turnpike Co. v. Hartin, 9 Johns. Rep. 217; Dutchess Cotton M. Co. v. Davis, 14 Johns. Rep. 238; Taunton & So. Boston Turnpike v. Whiting, 10 Mass. Rep. 327; Middlesex Turnpike Corporation v. Swan, Id. 384; Franklin Glass Co. v. White, 14 Mass. Rep. 286; Chester Glass Co. v. Dewey, 16 Mass. Rep, *80394; New Bedford B. T. Corporation v. Adams, 8 Mass. R. 138; Salem M. D. Corporation v. Ropes, G Pick. Rep. 23; Central T. Corporation v. Valentine, 10 Pick. Rep. 147; Essex B. Co. v. Tuttle, 2 Verm. Rep. 393; Grays v. Turnpike Co. 4 Rand. Rep. 578; Tar River N. Co. v. Neal, 3 Hawks’ Rep. 520; Worcester T. Co. v. Willard, 5 Mass. Rep. 80; The Bear Camp River Co. v. Woodman, 2 Grcenl. Rep. 404; Phillips L. Academy v. Davis, 11 Mass. Rep. 113.]
It is further insisted, that the demurrer was properly sustained; because it does not appear from the declaration that the plaintiff had become a body corporate, authorised to sue, &c.: neither does the defendant’s subscription for stock constitute a valid contract, nor is an express promise to pay alleged. Iri each of the tfiree first counts, it is stated in general terms that the plaintiff is a corporation, in virtue of an act of the Legislature, and an organization thereunder, as required. But this mode of declaring is objected to, and it is said that the manner of organization should be specially alleged, that the court itself may determine whether the law has been complied with.
In the President, &c. of the U. S. Bank v. Haskins, [1 Johns, Cases, 132,] on a demurrer to the plaintiff’s declaration, it was contended that the act incorporating the Bank was a private act, and should have been set out in extenso. But the court were of opinion, whether the plaintiff was a public or private corporation, it was not necessary to set forth the charter, or the names of the individuals composing the company. And in Grays v. Turnpike Co. [4 Rand. Rep. 578,] it was said, that although it is part of the case of a corporation which sues, to make out, under a proper issue, its corporate existence, yet «they need not indeed set forth in their declaration, by way of averment, how they were a corporation.” To the same effect are Angeli & Ames on Corp. 377; Bank of Utica v. Smalley, [2 Cow. Rep. 778.] The case of Harrison v. Wilson, [2 A. K. Marsh. R. 550,] determines no question adverse to the sufficiency of the declaration. It decides, that a plea should not aver matter of law and fact; but it should set out all the facts from which the law is deducible, leaving the law thereon to the court.
, It is laid down in many cases, some of which ai’e included in the citations already made, that the interest acquired by subscribing for shares in the stock of an existing incorporated company, *804is a good consideration to support an action against a subscriber. It might well be inferred from what we have already seen, that where a person who becomes a stockholder of an incorporated company by signing an agreement with other subscribers, by which they promise to pay a specific sum for every share set op. posite their names, he is liable in an action at the suit of the company. In Instone v. The F. B. Co. [2 Bibb, 576,] it was held, that in an action by a corporation against a subscriber of stock, no other consideration need be shewn than the subscription according to the terms of the charter; that imposing a legal liability, the law implies a promise to pay. Chitty says, “ It has been considered, that where the contract is founded upon a legal liability, and implies a promise, it is sufficient to state such liability, without alleging formally that the defendant promised, as in assumpsit on a bill of exchange ; and an agreement between two parties, but omitting the mutual promises, was held sufficient, because the agreement imported a promise.” [l vol. on Plead. 298.] If the authorities cited, as to the allegations of the counts demurred to, are to be recognized as laying down the law correctly, and to us they seem well sustained by principle, the conclusion is perfectly clear that the objections taken by the defendant are not well founded; and that the demurrer should have been overruled.
2. We come now to consider the questions arising upon the bill of exceptions. It is said, that presumptions are applicable as well to corporations as individuals: that persons acting publicly as officers of the corporation are presumed rightfully in office, and all necessary steps presumed, in'order to make a corporate act legally operative. So, a charter, from the long exercise of corporate rights, or the acceptance of a new charter from the acts of the corporate officers, as well as many other things, may be presumed from circumstances. [Bank of the United States v. Dandridge, 12 Wheat. Rep. 70, et post; The State v. Carr, 5 New Hamp. Rep. 367; in Hagerstown T. R. Comp. v. Creager, 5 Har. & J. R. 125. See also, 1 Pick. Rep. 279; Id. 372; 17 Mass. Rep. 1 and 479.] the court say, “ Where a corporation has gone into operation, and rights have been acquired under it, every presumption should be made in favor of the legality of its existence.” [See also, Trott v. Warren, 2 Farf. Rep. 227.] So, in All Saint’s Church v. Lovett, [1 Hall’s Rep. 191,] that where there had been a corporate body defacto *805for a considerable time claiming to be a corporation and holding and enjoying property as such, it will be presumed that all merely formal requisites to the due creation ol a corporation, have been complied with. [See also, U. S. v. Amedy, 11 Wheat. R. 392.]
Although it has been repeatedly held, tha1 a person sued by an association, claiming to be a corporation, inay throw upon the plaintiff the burthen of proving their corporate existence, yet it has been decided whenever the point has open made, that a charter cannot be adjudged void in an indirejt proceeding. Thus, where an act of the legislature provided, fiat when six hundred shares had been subscribed, the commissioiers should certify that fact to the Governor, who should- incorporate the subscribers, &c. The certificate was made, and the chartergranted ; whereupon, the government subscribed twenty thousaid dollars ; when, in truth, three hundred shares of the number required, were fictitious stock, subscribed for the purpose of deceiving the Governor, and thus procuring the charter. On these facts, it was said, If this charter was deceptively obtained — obtained by false representations, it could not, in a collateral action, in an action brought by the company to compel the performance of contracts entered into with it, be declared void. But if this charter had been fraudulently obtained, on which I am not called upon to give any opinion, still until that question had been directly decided, in a proceeding instituted in this court, which alone has jurisdiction, either by scire facias, to repeal the charter, or declare it forfeited, or by a writ of quo warranto at the suit of the State, in which the State must be a party, and a party to the judgment for the seizure of the franchise, there is no instance of calling in question the right of a corporation, for the purpose of declaring its charter void, but at the instance, and on behalf of the government, and never on the relation of any individual.”. [The President, &c. of the K. & C. Turnpike Road Co. v. McConaby, 16 Serg. & R. R. 145.] After laying down the law in terms quite as explicit, in the State v. Carr, [5 N. Hamp. R. 371,] the court say, “ in cases of this kind, it is enough to show that there was a charter under which the corporation was acting; and that it was wholly immaterial whether the corporation had complied with the requisitions of the charter or not. That is a matter to be settled in a suit between the government, which created the corpora-*806lion, and the corpora’ons, and not collaterally, in a prosecution by another State agapsí a stranger to the corporation.”
In the Tar River Nav. Co. v. Neal, [3 Hawks’R. 520] it was decided, that where, bya charier, commissioners arc directed to ascertain the performance of a condition precedent to incorporation, and they declare it, though falsely, to have been performed, it shall' be deemed true, unti the sovereign power interposes. A wrong doer, sued by the corporation, cannot show the falsity of such declaration. [Grays v. Turnpike Co. 4 Rand. Rep. 578; Bear Camp River Co. v. Woodman, 2 Grecnl. Rep. 404; Charles River Bridge v. Warrei Bridge, 7 Pick. Rep. 371; Vernon Society v. Hills, 6 Cow, Rep. 23; Lehigh Bridge Co. v. Lehigh Coal, &c. Co. 4 Ravk’s Rep. 9; Chester Glass Co. v. Dewey, 16 Mass. Rep. 101; sec also, 2 Blackf. Rep. 367; 8 Greenl. R. 372.] The decision; of this court, in Carlisle v. Cahawbaand Marion R. R. Co. at the June. term, 1842, is not opposed to the law as stated in the sos cited. That was an action brought for the recovery of calls' made upon a subscription for stock. The charter did not, per se, consummate the corporate powers of "the company, but authorised the President, &c. to require instak ments to be paid upon the stock, when they should have organize ed agreeably thereto. It was held, that to entitle the plaintiff to maintain their action, it should be shown that the organization had taken place as required; but the court do not say that this may not be inferred from circumstances where there are such as to warrant the inference; nor that an organization de facto is insufficient to authorize a recovery. The charter expressly required, that after the stock was apportioned according to subscrip* tions, then the stockholders should meet at a time and place designated, and elect director’s, &c. This was a condition precedent to the right to require payments, to be made for stock, and was just as much a part of the subscriber’s contract, as if it had been recited therein in totidem verbis: and unless it had been performed by those whose duty it was to act, or in some manner waived by the sub* scribers, it would follow upon principles of reason and justice, that the company could not maintain an action. In the present case it is not denied, that an organization of the company, as provided by the charter, is necessary to the plaintiff’s right to sue, but it is insisted that if this lias been done, though irregularly, and especially with the approbation of the defendant, as manifested by his *807iicts, he is bound to pay for his stock To the consideration of this argument we will now address ou’selves.
We will not inquire whether the payment of five dollars upon each share of stock, at the time of subscription, was indispensable to entitle the subscriber to become !i corporator, or whether the money may be substituted by a note or bill. That there are cases which go the length of affirming the necessity of making such payment, and in cash, has not peen controverted. [See Highland T. Co. v. McKean, 11 Johs. Rep. 100; Goshen T. Co. v. Hurtin, 9 Id. 218; Hibernia TjCo. v. Henderson, 8 Ser. & R. Rep. 219; Ogle v. Somerset, &c. Co. 13 Id. 258; Grayble v. York, &c. Co. 10 Id. 289; Leigit v. Susquehanna, &c. Co. 14 Id. See also Union T. Co. v. Jenkins, 1 Caine’s Rep. 391, dissenting opinion of Lewis, Ch. J. and 1 Caine’s Cases in Error, 86, which was sustained.] The viev which we take of the case before us will relieve us from the necessity of considering what may be the law on this point. The facts embodied in the bill of exceptions we think, place the defencant in a situation which deny to him the right of insisting that his subscription was not made in tSe manner prescribed by the charter. His participation in the organization of the company, his asjentto treat it as a corporation as indicated thereby, and still npre strongly by the payment of his note given for the five per cejit, and the acceptance of a place in the directory, all seem to show that he regarded the plaintiff as a corporation, liable to a} burthens and entitled to all privileges which the charter provided. Under such circumstances, both law and reason concur in faying that the defendant shall not be permitted to object that his jubscription for stock does not oblige him to pay the amount, becaise he had not paid a part of it, at the time lie should, or becaus| the plaintiff should not have organized and assumed the exercise of corporate functions. In Hampshire v. Franks, [16 Mass. ¿ep. 87,] it is said, “ No man can be compelled by the legislature to become a member of a corporation without his consent; yet if he do consent, and even not expressly, but by implication, he cannot afterwards deny his liability to the lawful exactions of the corporation, on the ground, that he did not solicit the privilege, and was no party to it when granted.” [See 2 Mass. Rep. 289; 2 Rawles’ Rep. 359.] And in Commonwealth v. Worcester T. Corporation, [3 Pick. Rep. 327,] the question was, whether the road was part of the turn*808pike of the corporation. It appearing that they had received toll from persons travelling thereon, the court said, “ It is not for them to object that the road as made has never been accepted, for that would be to aver their own wrong or negligence in excuse for the omission of £ duty. The fact of receiving toll, is as to them, conclusive evidence of their liability for repairs.”
Not only estoppels, tecunically so called, but estoppels in pais, operate both for and agaiist corporations ; and it may be laid down generally, that a paity will be concluded from denying his own acts or admissions, wiich were expressly designed to influ-influence the conduct of mother, and did so influence it, and when such denial will ojerate to the injury of the latter.— [Welland Canal Company v. Hathaway, 8 Wend. Rep. 483; Chester Glass Co. v. Dewy, 16 Mass. Rep. 101. See also, Lucas v. The Bank of Georgia, 2 Stew’t Rep. 147.] Under the influence of this rule, it has men held, that a person entering into a contract with a compmy under their corporate name, can not object that they had not been regularly constituted a corporation. [Dutchess C. M. v. Davis, 14 Johns. Rep.] And whe^e an act of the legislature give; to individuals a corporate capacity, upon the performance of cirtain acts, a person conti’acting with these individuals, by their coiporate name, will not be permitted to deny the performance of those acts necessary to constitute them a corporation. [Hamtamck v. Bank of Edwardsville, 2 Missouri Rep. 169.] But tin case of the President, &c of the K. & C. Turnpike Road Co.v. McConaby, [16 Serg. & R. R. 140,] cited to another point, ismore strikingly applicable upon the question of estoppel. There, the court decided, where a charter has been obtained by means of fictitious subscriptions for part of the stock, and a fraud has been committed on a real subscriber, by which he has sustained or might sustain injury, no action can be maintained against hiir. by the corporation, for the amount of his subscription; but where such subscriber has accepted the charter, and by his own acts put it in operation, he cannot avail himself as a defence, of the fact, that part of the stock was fictitious.
Having attained the conclusion, that the facts stated in the record, estop the defendant from insisting that five per cent, was not paid upon the stock for which he subscribed, at the time of subscription, we have to inquire whether it was competent for *809him, by an announcement of his withdrawal, from the company, to absolve himself from liability to pay any further instalment which might be demanded of him. It will result from what has been already said, that such a privilege is not accorded to a subscribe^. This conclusion necessarily follows, if, as we have seen, he is liable to the action of the corporation, and cannot force them to resort to the remedy afforded by the charter, of claiming a forfeiture of stock. Besides, the subscription for stock, as it entitles the subscriber to all the benefits and immunities of a corpo-rator is a valid contract, and of consequence obligatory upon him until it has been rescinded according to law. In the case of Kidwelly Canal Co. v. Raby, [2 Price’s Rep. 93,] "it was held, that one of several, persons who have subscribed an agreement inter se, to promote a joint undertaking, or common purpose, cannot withdraw his name and discharge himself from the engagement, without the consent of the rest of the subscribers. And if an act of Parliament have been passed for effectuating the purpose of the undertaking, by which certain obligations are created, such original subscriber is not exonerated from the liabilities imposed by the act, by having, during the progress of the bill, renounced before the committee, all further connection with the undertaking, and desired that his name might in consequence bo omitted in the act; nor Gan the circumstance of his name being omitted have the effect of disengaging him. [See also Martyn v. Hynd, Doug. Rep. 142; Religious So. v. Stone, 7 Johns. Rep. 112; Pres’t &c. of the B. and South Amboy T. Co. v. Imlay, 1 South. Rep. 285.] And in Marcy v Clark, [17 Mass. Rep. 330,] it was decided that the stockholders being made liable by an act of the legislature to the payment of the debts of the corporation, one of them could not by a fraudulent transfer of his shares avoid such liability. [See also United Society v. Eagle Bank, 7 Conn. Rep. 458.]
We have already drawn this opinion greatly beyond what we had expected; and will decline the consideration of the remaining questions raised by the bill of exceptions, inasmuch as they are embraced by those considered, or will not probably arise in the ulterior progress of the cause. Without undertaking a special application of the points examined, to the bill of exceptions, orto recapitulate to any extent, (as the errors pointed out have beqn *810made sufficiently apparent,) we will only add, that the judgment of the circuit court is reversed, and the cause remanded.