Court Opinion

ID: 6501701
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:14:33.516167+00
Date Added: 2024-06-11T15:54:37.777222
License: Public Domain

GOLDTHWAITE, J.
1. The principal question presented in this case, is one of importance, from the connexion which many individuals have, or have had, with various plans of internal improvement, and other objects of enterprise, through the medium of private acts of incorporations, granted by authority from this State. It requires us to determine whether this corporation can compel payment from the defendant for certain shares said to have been subscribed by him in its stock.
It is apparent, that an examination of the act of incorporation, to some extent, is necessary for the proper answer to this question.
The act was passed in January, 1834, and by its first section, directs and provides that Thomas Moring, as President, and twelve other gentlemen therein named, as directors, and *664their associates and successors in office, shall be, and they thereby were made a body politic and corporate, by the name and style of the Cahawba and Marion Rail Road Company.— Power was given to the corporation to sue and be sued, to purchase, receive, hold, sell and convey real and personal estate, as natural persons; to pass such by-laws, rules and regulations, for the good government of the company, as to them should seem proper, and generally to exercise all powers, and to perform all acts, matters and things which they might deem necessary to carry into full and complete effect, the object of their incorporation. And the only restriction is, that their real and personal estate shall never exceed one million of dollars.
The second section provides that the President and Directors shall continue in office until the 1st January, 1835, and until their successors shall be elected and qualified; that they shall cause books to be opened at Cahawba and Marion, and at such other places as they may deem proper, for the subscription of stock, and shall give thirty days notice previous to opening such books, at the several places at which books are to be opened; and shall also publish the.same in the Selma Free Press; and said books when opened, shall be kept open for the space of ten days, and may be opened from time to time, until a sufficient amount of stock shall be subscribed; which stock so subscribed shall be divided into shares of one hundred dollars each.
The third section, provides for the manner in which the election for President and Directors shall be held, after the subscription of stock; and also, that the stock shall be transferable on the books of the company; and that the holder shall be entitled to all the benefits, and subject to all the liabilities of an original stockholder.
The fourth section provides, that when the company shall have been organized, the President and Directors of the said company shall have power to borrow money, contract debts, and be contracted with upon the credit of the stock thereof, and to pledge real or personal estate, for the payment of their debts; it also provides that the President and Directors may require such instalments to be paid on the stock, as they may think best for the interest of the company; and on failure *665of 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.
The remaining sections declare the-object for which the corporation was created, which is the construction of a Rail Road from Cahawba, in Dallas county, to Marion, in Perry county.
It is urged by the counsel for the defendant, that the legislature intended that this corporation should have no other remedy against delinquent stockholders, than that which is given by the charter; and that they can be bound in no other manner, unless they have subjected themselves to be sued at common law, by an express promise.
We think a careful examination of the act of incorporation, will entirely disprove the first branch of this proposition. We cannot conceive that the legislature intended to confer the franchise contemplated on such as might associate together, without requiring from them something in return. The charter seduously guards the public from the evils which might ensue from a monopoly by individuals, of the whole number of shares, by requiring notice to be given of the times and places for opening the books of subscrition, and by requiring them'to remain open for a certain number of days. On the persons subscribing, and on them alone, are the privileges conferred, and it would be unreasonable to conclude, that the act of subscription, gave to those subscribing, a chance of gain, without the possibility of loss; which would be the case if a subscriber could afterwards withhold the amount of his subscription with impunity. It will be seen from the fourth section, that the corporation has no power to sell the stock of a delinquent subscriber, unless it will bring the par value. Now it seems perfectly clear, that in those cases where nothing had been paid, that a sale could not be made, unless the unpaid share would sell for as much as one entirely clear; therefore, if this is the only remedy which the corporation has against its individual members, it never could be carried into successful operation, without voluntary contributions.
But, independent of the reasons which arise from the circumstance, that the corporation was opened to every one, to *666become a stockholder, we think that several clauses; of the act itself, point directly to a common liability of all the stockholders • Thus, that which provides for the transfer of stock, declares that the holder shall be entitled to all the benefits, and subjected to all the liabilities of an original stockholder.
Again, the company is authorised to borrow money and contract debts on the credit of its stock, and it seems to ns that this power would never have been conferred, unless the stockholders were bound whenever this credit was acted on.
A different construction would leave- the stockholders, who have bona, fide advanced their money in aid of the enterprise, in a condition of great embarrassment, and also, in great danger of actual loss, from the mere refusal of their associates to-proceed according to their engagements.
It may be admitted that no one can be bound to contribute to the expense of making this road in any other manner than by an express promise, and we can view the contract of the defendant in no other aspect. It wilL not be denied,, if the defendant had signed an agreement, which, after reciting the charter, had furthermore contained a stipulation to take and pay for a certain number of shares, according to-its provisions, that he would be thus bound, and' the agreement whieh he has signed, is nothing more or less. It purports to be a book of subscriptions to the capital stock of the corporation,- opened by the order of its President and Directors, and the defendant, by his voluntary act, subscribes for twenty shares. He-acts with-reference to a known, law, which even the Courts are hound to recognize, in the same manner as a public act. Aikin’s Digest 283, § 139. And conforms to the very terms of the charter, whieh prescribes that books of subscription shall be opened. — - The act of subscription thus made, is equivalent in every respect, to an express contract, and the terms prescribed in the charter, attach to it as effectually as if they had been written at length.
The cases cited from Massachusetts, admit that a member of a corporation may become bound by an express contract, to pay assessments, although an agreement to take shares in an incorporated association, will not be- construed as such a contract. We are not aware of the terms contained in the statutes under which these decisions were made,, hut if similar to that *667we have just considered,, we feel constrained to declare the law to be; otherwise. Worcester Turnpike v. Williams, 5 Mass. 80; Andover and Medford Turnpike v. Gould, 6 ib. 40; New-Bedford and Bridgwater Turnpike v. Adams, 8 ib. 138. The principles we have laid down as governing this case, are sustained by numerous decisions, and we may remark, that none have been found, except those of Massachusetts, which held a different rule. Duchess Manufacturing Co. v. Davis, 14 John. 238, Goshen Turnpike v. Hustin, 9 John. 217; Herkimer Manufacturing Co. v. Small, 21 Wend. 273; Instone v. Franklin Bridge Co. 2 Bibb, 577; Hagerstown Turnpike v. Creeger, 5 H. & J. 122; Bond v. Susquehannah Bridge Co. 6 H. & J. 128; Delaware and Schuylkill Co. v. Sansom, 1 Binney, 70.
We proceed then to the application of the law thus ascertained, to the several points made in this- case.
The first count is upon a general contract made by the de. fendant with the corporation to take and pay for a certain number of shares in its stock, at a specified price. We can perceive no fault in point of law in this count, inasmuch as the corporation is not precluded from making such- a disposition, and it is amply warranted by its general powers. If the matter to be decided, was whether the evidence sustained the count, we might and probably should arrive at the conclusion that it was not supported.
The second and third counts are drawn with reference to the act of incorporation, and set out a contract between the parties, which has already been shewn to be properly deducible from the charter, and the subscription of shares by the defendant. The superfluous allegation that the stock could not be sold by the corporation at par value, does not vitiate the count which contains it. Both are free from valid objection, as is also the common count.
There was, therefore, no error in overruling the demurrers to the several counts.
Neither can we consider the declaration as defective in shewing for whoso use the action was instituted. It contains no evidence whatever, that the stock of the defendant had ever been transferred to Snead.
The amendatory act of 1839, authorises the stockholders of *668the corporation to change its name by the insertion of “Greens-borough,” and also to extend the road to the town of that name; but it was entirely unnecessary for the plaintiffs to show that the amendment (if such was the feet) was rejected by the stockholders.
What we have already said with respect to the principal question, necessarily determines that the other charges were properly refused.
There is one matter which we hitherto have omitted to notice, because its decision did not affect the general question.*— We allude to the sustaining of the demurrer to the plea in abatement. A similar question was raised in Findlay v. Pruitt, 9 Porter, 195, and we then held that such a variance as this Would defeat the action, if properly pleaded.
It is true, that Mr Chitty states the rule differently, but the cases to which he refers as authority, are cases in which the defendant was misnamed in the process,
If the narpe of the plaintiff can be thus changed, there is nothing to prevent the introduction of a different party to the record, Willard v. Missani, 1 Cowen, 37.
For this error, the judgment of the County Court must be re? versed and remanded, if desired by the defendant in error.