Court Opinion

ID: 4929940
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:06:04.116449+00
Date Added: 2024-06-11T08:14:25.962388
License: Public Domain

Shepley, C. J.
—The corporation was created by an Act approved on March 8, 1852, with a capital stock to “consist of not less than eleven thousand nor more than fifteen *577thousand shares.” The charter was accepted on September 8, 1852, when the corporation was organized and a vote, containing a recital that “a subscription has been obtained of shares exceeding the minimum number named in said charter,” was passed, “ that said subscriptions be accepted and made valid between said subscribers and this corporation.” This recital of the amount then subscribed is ascertained to have been incorrect. The capital stock required has not been obtained.
The report of the case states “the subscription on said books was of persons who were responsible for 9476 shares, and amounts in all to $189,520, besides 6000 shares additional which said defendant hereinafter introduces.” The subscription for the 9476 shares appears to have been made under date of August 13, 1852, in these words; — “We the subscribers severally agree to take the number of shares of the capital stock in said corporation which are affixed to our respective names and to pay to the treasurer of said company, when they have one, or to whoever may be entitled to receive the same, all such legal assessments on each of said shares, not exceeding $20 on each share, as shall be made by the future goverment of said corporation after the same has been organized according to said Act.”
The agreement is to take the number of shares of the capital stock, and that must have had reference to the capital stock required by the charter. The engagement was to take such a part of that capital. The shares to be assessed were the shares of that capital. The agreement to pay “ all such legal assessments on each of said shares,” was to pay them on shares of that capital. There must therefore have been such a capital stock obtained before the subscriptions could be binding or any legal assessments could be made. The subscription having been made before the corporation was organized, was necessarily as well as in terms subject to a condition, that the party to accept it should have a legal existence, and should obtain the capital required by its charter and referred to in the subscription, by which it became *578a part of it. That condition, required botli by tbe charter and the contract, has never been performed by the corporation, which has never been in a situation to make a legal assessment on such shares or to enforce payment of the subscriptions, unless the additional subscription of the defendant for six thousand shares can be regarded as binding.
The defendant, on September 17, 1853, after reciting a proposal made by him to build the road, and an acceptance of it by the directors on August 16, 1853, subscribed “for six thousand shares, more or less, intending to embrace all •the rest and residue of the fifteen thousand shares authorized by the Act of incorporation, not subscribed for by others.” This subscription was predicated upon the com-pletioñ of the contract proposed. If that was not so accepted by the corporation, so as to become a valid contract between the parties, it is not contended that this subscription was binding. The corporation does not allege that the deficiency of capital stock was supplied by it. It denies both the acceptance of the proposed contract, and the validity of the subscription for those shares; while the defendant insists that his proposal was accepted, that the contract for building the road was completed, and that he is entitled to those shares.
Upon examination of the defendant’s proposal, it appears to have been so general in its terms, that it could not well be regarded as more than a basis for a contract to be properly drawn and executed, prescribing the manner in which the road should be constructed and the work performed. It appears to have been so regarded by the directors, who in their vote, containing the alleged acceptance of it as a complete contract, “ accept the proposition now made by Samuel Yeazie to build the railroad from Milford to Lincoln, and that-committee be appointed to clos'e the contract for the same.” It is accepted only as a proposition, to form the basis of a contract to be closed thereafter. The defendant appears also to have so regarded it at that time. The committee caused a contract to be drawn and *579submitted to the defendant for his signature, which he alleged was not drawn according to Ms proposal, and ho therefore refused to sign it, and not because the contract bad been already completed. Another unsuccessful attempt appears to have been made to have a contract drawn and signed. The defendant, on September 17, 1853, submitted to the directors a written statement, claiming that his proposal had been accepted and become a binding contract; and in it he assigned as his reason for refusing to sign the contract as presented by the committee, that it was “widely variant from his proposition, and for this reason he objected, and still objects to signing the same.” The directors thereupon resolved, “ that the vote of the directors accepting said proposal of said Yeazie, is hereby reconsidered and made nugatory; and the said Yeazie is thereby to consider his agreement to subscribe for the deficiency of said stock, as null and void.” Those proceedings present only an ineffectual attempt to make a contract for building the road, the basis for one having been agreed upon, and the parties having disagreed, when they attempted to complete a contract containing the details of the work and the manner in which it was to be performed. The foundation upon which the subscription for those shares rested having fallen, the subscription falls with it. The rights of neither party can bo affected by those ineffectual attempts to make a valid subscription and contract.
The difficulty before noticed in the way of a recovery by the corporation will remain, unless it can be otherwise overcome. This has been attempted in different modes.
It is insisted that the general issue having been pleaded, that is an admission of the existence of the corporation with the capacities required by the charter.
A plea of the general issue does, in our practico, admit the existence of the corporation with a capacity to sue and be sued. It cannot be an admission of more than this. There is nothing in the plea authorizing it. The decided cases do not. The plea contains no language, from which *580an inference can be drawn, that the corporation has performed- tbe duties required of it in other respects. Or that it has performed its part of a condition, by which a conditional contract made with it has become binding.
It is also alleged, that the corporation has been relieved from the performance of that condition by the Act approved on September 27, 1853, c. 193, and that the defendant’s subscription thereby became binding.
By that Act the charter was so amended, that the capital stock might consist of not less than eight thousand nor mox-e than twenty-five thousand shares. The Act was accepted by the stockholders on August 7, 1854. The corporation might accept a modification of its charter, by which its rights and obligations were varied and new duties imposed. And the rights and duties of its corporators might thereby be increased or diminished. But those could not thereby be made shareholders in its capital, who were not such before. Nor could any contract' made between the corporation and one of its corporators be thereby altered or affected. When that Act was accepted, the defendant and others by their subscriptions had never become shareholders in its capital stock; they had only agreed to become such upon condition, that the least sum required for its capital should be subscribed. That condition not having been performed, when the additional Act was passed and accepted, they were not then shareholders, and could not thereby be made such. The Legislature did not attempt to make them such. It might as well have attempted to alter a contract made between the corporation and one of its members respecting the construction of the road, as respecting a contract to pay a part of its capital. If the corporation, being a party to a contract with one of its corporators, might by the assistance of the Legislature absolve itself from the performance of any part of the contract, it might from the whole, and require payment of the money subscribed, without allowing the subscriber to derive any benefit from it.
It is the charter only and the rights and liabilities of the *581corporation and of its corporators, as such in consequence thereof, that can be varied by an Act of the Legislature; and not the private contracts made between the corporation as one party and of its corporators as the other. And there can be no distinction between contracts to pay money for its stock, and contracts to pay it for any other purpose.
There is nothing in the case of the Meadow Dam Co. v. Gray, 30 Maine, 547, in the least degree opposed to these positions. That corporation was, by the Act of July 31, 1846, authorized to erect a dam across the south branch of Castine river to exclude the tide waters from the flats above, thereby rendering them capable of cultivation. The charter did not require any amount of capital to be subscribed. The defendant having subscribed and agreed to take one share, thereby became a shareholder without any condition to bo performed by the corporation. By an additional Act, approved on August 10, 1848, the corporation was required to construct a sufficient gate or lock for the passage of vessels or boats through the dam. Objection was made by the defendant to the payment of his subscription, because the liability of the stockholders was increased by the burden imposed by the additional Act. The Court decided, that, as he had become a stockholder, his assent to the additional Act must be considered as given by the acceptance of a charter, in which the Legislature reserved the right to amend or alter it. The question presented was, whether the defendant had thereby been discharged from the performance of an existing legal contract; not whether he should thereby be made a party to one not legally binding. Nor whether, that to which he had assented should be waived without his consent. His contract was not in the least affected by the Act, while the responsibilities of the corporation of which he was a member were increased, and so might his own be as corporator indirectly, but not as a party to a contract.
It is also insisted, that the defendant, by various acts and declarations, has exhibited himself as a stockholder and *582officer of the corporation, and that he is thereby estopped to deny the authority of the corporation to collect the subscriptions to its stock, or that he has waived all objections to it.
The defendant does appear by written documents signed by him, and by acting as an officer and shareholder, and by the payment of money, to have asserted, that the corporation was in a condition to do. many acts, and to proceed to build the road.
These deckrations appear to have been made and the acts to have been performed in the character of an officer or corporator of the corporation, which was allowed until December 31, 1857, to complete the location of the road; and there was no other limitation of the time for obtaining its entire capital stock. Corporators may, unless prohibited by the charter, organize and put the corporation into a condition to sue1 and be sued, to enter into contracts to secure the capital required, to employ agents to do it, and to procure information by surveys or otherwise, and exhibit the same to the public as an inducement to subscribe for shares, without having secured the capital required to authorize proceedings for the accomplishment of the main design. The danger in such cases is, that it may have nothing with which it can pay expenses. If the corporators do many such acts and contribute to pay the expenses, and do it in anticipation of having the amount accounted for when the capital shall be obtained, it would afford no satisfactory proof that they intended to proceed with the main enterprise without the capital required by the charter, or that they had assented to assessments on the shares for that purpose. The defendant and others might have proceeded, as they would seem to have done, upon a misapprehension of the facts, supposing that the capital had been obtained, when it had not been, and without any intention to attempt to have assessments made, or the road built, until the capital had been obtained. No estoppel in pais or waiver can justly be allowed to deprive a person of rights, who has *583been acting under a misapprehension of facts. There is nothing presented in the report of the case necessarily inconsistent with a full determination to require a strict adherence to the charter, and the terms of the subscription.
There is, however, a more perfect answer to this position. It is, that the corporators could not by any acts alleged to operate by way of waiver or estoppel, relieve the corporation from its obligation to have the capital required by its charter. If a vote had been passed by them with entire unanimity, that they would waive all objection on account of a deficiency of capital, and that they would proceed to make assessments on the shares subscribed and to build the road, it would have been but a violation of the charter, and illegal and void. Otherwise they might by vote relieve the corporation and themselves from all obligation to have any capital, and acting upon the same rule, they might relieve themselves and the corporation from any obligation imposed by the government, and make their charter, whatever they desired it to be, however different from that granted to them by the State.
Upon tho testimony presented, the action cannot be maintained j but according to the terms of the report it is to stand for trial.