Court Opinion

ID: 6631292
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:37:38.300696+00
Date Added: 2024-06-11T15:58:56.956855
License: Public Domain

By the Court,
Green, P. J.
The question reserved for our opinion is, whether the plaintiffs can recover the amount of the assessments specified in the notices, or any of them, against the defendant.
Sec. 32 of the act referred to, (Laws 1851, p. 224,) provides as follows : “ The directors of any company incorpora-^ ted under this act, may require payment of the sums subscribed to the capital stock, at such times and in such proportions and on such conditions as they shall see fit, under penalty of the forfeiture of the stock and all previous payments thereon, if payment shall not be made by the stockholders within sixty days after a personal notice, or notice requiring such payment shall have been published for six successive weeks in a newspaper published in every county in which *98any part of said road is situated, if any be so published; and' they shall give notice of the payments thus required, and the place and time when and where the same are to be made, at least thirty days previous to the payment of the same, in one newspaper printed in each county in or through which the said road is located, or by sending such notice to each stockholder by mail, directed to him at his place of residence.”
'This section requires particular attention, as, if rightly understood, it is believed that it will divest the question under consideration of much of the difficulty and embarrassments that have been supposed to encompass it. It is to be observed, then, 1st, that it authorizes the directors to require payment of the sums subscribed to the capital stock, at such times, and in such proportions, and on such conditions, as they shall see fit; 2d, it authorizes them to impose the penalty of forfeiture of the stock, and all previous payments thereon, if payment shall not be made within sixty days after a personal notice, or after notice requiring such payment shall have been published for six successive weeks in a newspaper published in every county in which any part of the road is situated,"if any is so published ; but 3d, when no forfeiture of the stock is sought, the directors are required to give notice' pf the .payments thus required, and of the place and time where and when the same are to be made, at least thirty days previous to the payment of the same, in one newspaper printed in each county in or throiigh which the road is located, or by sending such notice to each stockholder by mail, directed to him at his usual place of residence.
That this is a fair' analysis of that section, will hardly be questioned. "When the object is to enforce payment under the penalty-of forfeiting the stock, either a personal notice of sixty days, or-a published notice for six successive weeks, is required; but when payment is proposed to be enforced only by the ordinary means,.thirty days’ notice by publishing or by mail -is sufficient.
*99The directors representing the corporation may pursue either course, as they judge best for the interest of the Company. They may require payment not under the penalty of' forfeiture,"and if they do so, and give notice accordingly, have they any remedy by which to compel such payment % If they would have such remedy without any provision authorizing a forfeiture, it seems clear that the power to impose such penalty is only cumulative, and that they may pursue any other remedy which the law would afford them in the absence of any such power. "We may proceed therefore to consider this question as if no forfeiture of the stock were authorized.
Do the acts of the defendant in signing the articles of association and subscribing for a portion of the capital stock of the Company, import a promise to joay the amount of such stock at such times, in such proportions, and on such conditions as the directors should require, upon giving the notice provided for by the statute ? The defendant with others became a party to the articles of association for the avowed, purpose of building and owning a plank road from Dexter to Mason. They mutually agree that the capital stock of the Company should be sixty-five thousand dollars, and each one of them severally became the proprietor of such number of shares as he thought proper to subscribe for. When the company was thus organized, all the provisions of the act under which they associated relating to the course of procedure to effect the object in contemplation, became part and parcel of the articles of association as folly and completely as if they had been formally written out and signed by each stock-. holder. Let sec. 32 be read as a portion of the compact between the defendant and each individual subscriber to the capital stock and the corporation, and it contains an express stipulation by each that the directors of the Company may require payment from them respectively, of the amount of capital stock which each has subscribed, as therein expressed;... and requires that such directors shall give thirty days’notice *100previous to tbe time fixed for such payment in one of tbe modes pointed out. Now, what is authorizing the directors to .require payment, but conferring upon them the right to make such requisition effectual ? or, in other words, promising by the stockholders -to make payment at such times, in such proportions, and upon such conditions as the directors may see fit-to require, upon the specified notice being given. If it does not import this — if such is not the true intent and meaning of the language — if the sums so lawfully required to be paid do .not become dme and 'payable from the stockholders to the Corporation, after the proper notice has been given — then the words used, do not possess the force generally attributed to them, but they amount to a mere mockery. The stock, which .is in law deemed to be personal property and may be transferred as the by-laws of the Company shall prescribe, is a sufficient consideration for the undertaking of the stockholder. It entitles him to all the privileges of membership in proportion to the number of shares owned by him, includa just proportion of the profits of the enterprise.
It is conceded by the counsel for the defendant, that if in -addition to his engagement to become a stockholder, he had subscribed an agreement by which he promised to pay for the stock subscribed, assumpsit might have been brought upon such agreement. Now if the view which we have taken of the engagement of the defendant in this case be correct, has subscribed such an agreement. Suppose the defendant had applied to B for the purchasé of a horse, and B had informed him that the price was one hundred dollars, of which he required five per cent, on delivery, and that he should have the right to require payment of the balance at such tines, in such proportions, and on such conditions, as might suit his convenience, upon giving thirty days’ notice to tbe purchaser, to which terms the defendant had assented by signing a wiitten instrument to that effect, taken the horse, and paid down the stipulated five- per cent, of the price. *101Here would be no direct promise to pay tbe balance of tbe' price, but tbe language used would just as certainly' and clearly import a promise or undertaking to pay, as'if it had been expressed in the most direct and positive terms. This is too clear to admit of doubt; and this represents precisely the obligation which the defendant entered, into with the plaintiffs. Indeed the right of -the plaintiffs to maintain this action seems too unquestionable to require any extended notice of adjudged cases in support'of it. '
The opinion of the Court in the case of the Hartford and New Haven Railroad Company vs. Kennedy, (12 Conn. 499,) is very elaborate, and exhibits great research and thorough investigation.
The charter under which the plaintiffs organized contained the following provision: “The directors of the said Company may require the payment of the sum or sums subscribed to the capital stock of said Company, at such times and in such proportions, and upon such conditions, as they may deem fit; and in case any stockholder shall refuse to make payment pursuant to the requisition of the board of directors, the stock of such stockholders, or so much thereof as may be necessary, may be sold by the directors of said corporation, at public auction, aftei the . lapse of six months from the time when the payment became due, and all surplus* money, the avails of such sale, after deducting'the payments due and interest thereof and the necessary expenses of ihe sale, shall be paid over to such negligent stockholders.”
The defendant, Kennedy, subscribed for stock by signing a writing in the following words: “Whereas the' General Assembly of the State of Connecticut, at their session in May, 1833, passed a resolution to incorporate the Hartford & New Haven Railroad Company, with power to construct a Railroad or way from the town of Hartford to the city of New Haven, we do hereby subscribe to the stock of said Railroad, the number of shares annexed to our names respec*102tively, on the terms, conditions and limitations mentioned in said resolution:” and it was held that so subscribing imported a promise to pay the amount of the stock subscribed for, upon which an action of assumpsit could be maintained.
The same doctrine was held in Sagory vs. Dubois, (3 Sandf. R. 466,) and in Small vs.The Herkimer Manf. Co., (2 Comst. R. 330.)
Several Massachusetts cases are referred to by the defendant’s counsel, which, it is claimed, establish a contrary doctrine. Those cases may all. be distinguished from the one now before us. The Court, In the case of New Bedford & Bridgewater Turnpike Corporation, (8 Mass. R. 138,) say: “Several cases of this kind have already been decided in this Court, and each of them on the force and effect of the engagement entered vnio. The general principle upon which they all rest is, that where the party makes an express promise to pay the assessments, he is answerable to the Corporation upon such promise, and may be compelled to the performance of it by action at law. When, on the other hand, k>ne by subscribing the act of association, simply engages to become a proprietor of a certain number of shares, without promising to pay assessments, then the only remedy which the Corporation has, is by sale of the shares to raise the amount assessed on .them.”
In the case then before them, they say: “ There is no express promise to pay, nor is any language used from which the law can raise an implied promise.” Had such language been used in the subscription paper, as amounted in law to a. promise, the defendant would unquestionably have been held liable in assumpsit.
In the case of the Andover & Medford Turnpike Company vs. Gould, (6 Mass. R. 40,) the subscription paper upon which it was claimed the promise arose, was an agreement by the defendant to take one share in the road, and be a proprietor therein. The power tomake assessments on the shares *103of the stockholders was not expressly given by the statute, under which the plaintiffs organized, but was said- to be implied from a provision contained therein-, that whenever any proprietor should neglect or refuse to pay a tax or assessment agreed on by the Corporation to their Treasurer in sixty days after the time set for payment, the Treasurer might sell the share of the delinquent proprietor at public auction, for the payment of the tax and the charges of the sale. It was held that such' subscription did not import a promise to pay the assessments, and the Court was probably correct in its conclusion. Our statute, however, as we have already seen, is widely different, and expressly authorizes the directors to require payment of the sums subscribed. .
But whether or not the decisions in Massachusetts may be regarded as conflicting with those in Connecticut and New York, we cannot but regard the latter as well based upon sound principle and solid reason. If those who subscribe for stock in Plank Eoad Companies could not be compelled to-pay for such stock, the consequences would often be ruinous to men of small means who embark in such enterprises in good faith, and who might be thus hopelessly embarassed by being subjected to the payment of larger debts contracted by the Corporation upon the faith of such subscriptions.
But before an action at law can be maintained for the amount of the stock, notice of the required payment must be given as provided by the statute, and it is claimed that the notices proved to have been published on behalf of the plaintiffs are insufficient. According to the construction given to sec. 32, such notices need have been published only thirty days before the time prescribed for the payment to be made, and all the notices were published more than that length of time.
But they are required to specify the place and time 'where and when the payments are to be made. The notice of February 11, 1853, requiring payment of forty per cent, of the *104stock subscribed, is full and specific in these respects. The one of April 11, 1853, requires payment to be made “ at the office of the Treasurer of said Company,” and that of April 26, requires payment to be made “ to the Treasurer of said Company,” without in either case, naming the- place where such payments are to be made. This defect is fatal to the plaintiffs’ action so far as the payments embraced in the two last mentioned notices are concerned, but they are entitled to recover for the forty per cent., amounting to one hundred dollars with interest from the time when it became payable.
Let it be certified to the Circuit Court for the county of Washtenaw as the opinion of this Court, that the- plaintiffs can recover against the defendant, the assessments mentioned in the notice thereof, bearing date on the 11th day of February, A. D. 1853, amounting to the sum of one hundred dollars, together with the interest thereon, from the time when such assessments were made payable respectively, and that they cannot recover in this action the assessments mentioned in the other two notices referred to in the cáse reserved by said Court, and making a part thereof, for the reason that such notices did not specify the place where the payments • therein mentioned were to be made.
Certified accordingly. ’