Court Opinion

ID: 6230720
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:21:20.050385+00
Date Added: 2024-06-11T08:57:51.228209
License: Public Domain

The opinion of the court was delivered by
Woodward, J. —
A subscription by Crossan, in the name of the defendant, though without precedent authority, was an act that was capable of ratification. The letter of attorney to Kelly, of 29th August 1846, constituting him the defendant’s proxy to vote at a meeting of the company on any question that might arise, and the attendance and action of Kelly at a company meeting, were circumstances indicative of ratification, which were proper to be submitted to the jury; and, they having found against the defendant, we are to regard him as a lawful subscriber to the shares of stock, which stand to his credit on the books of the company.
So far, the case is free from all difficulty. But the subscription thus fixed upon the defendant, was made June 9th 1846, and was under an act of incorporation which provided that, if the company did not commence the construction of their road within the term of five years, the charter should be null and void. This act, passed the 3d April 1837, was renewed and extended by an act of 18th April 1843, on the “ same terms, conditions, and limitations” as were contained in the original act.
Now, we have held at the present term, in the case of this same company against Matthew Byers, that under this charter the company were bound, from analogy to the statute of limitations, to call in payments on stock subscriptions within six years after *31their date; or, if the delay was not satisfactorily accounted for, subscribers would be at liberty, after that lapse of time, to consider the enterprise abandoned, and their subscriptions cancelled. The presumptions of abandonment in such cases are very reasonable and necessary. Subscribers to stock are on the same footing as other simple contract-debtors, and equally entitled to protection against stale claims.
But this case is not left to stand on presumptions of abandonment. We have direct and conclusive evidence of it in the testimony of Addison, Kelly, and Robinson. Not only was the project abandoned, but the money of many subscribers was refunded to them, and they released from all further obligations to the company.
True, a contract was made in December 1847, under which work to the amount of a few hundred dollars was done by way of commencing the road; but this was not a bond fide effort at construction, but only an expedient to “ save the charter,” as it was called. And this contract was repudiated in the following month by a formal resolution of the board of directors.
The fact was, that a feeling had sprung up in favour of a western instead of an eastern road, and the company having set their face westward, abandoned necessarily all thought of holding the subscribers of 1846. No calls were made within six years, and no commencement of construction, such as the Act of Assembly contemplated, was made within five years after the act of 1843.
Now, not to say that the charter was forfeited by such inaction, it is very clear that subscribers were released. McCully’s undertaking was not only to the company, but with the other subscribers. His subscription, and theirs, were mutual considerations for each other, and to let them off and hold him, is to enforce a contract he never made. He has a right to insist that the company shall perform its charter duties in the time and manner prescribed, and that other subscriptions shall be enforced in the same manner as his own. And, when the company let off part of its subscribers and returned them their money, without the consent of the defendant, actual or implied, they discharged him from all liability growing out of his original subscription. It was like a dissolution of partnership, or an alteration in the fundamental law of an unincorporated society, or the substitution of new and incongruous objects of a corporation; in all of which cases the responsibilities of an original partner or subscriber cease.
The points submitted on the part of the defendant, especially, the 4th, 5th, and 6th, put the case to the court as an abandonment of the original subscription.
The learned judge refused to affirm the 4th point, on the ground that the charter of incorporation could not be impeached *32collaterally, and relied for that on Irvin v. The Lumbermen’s Bank, 2 W. & S. 203.
It is not only true, as asserted in that case, that the legality of an existing corporation cannot be inquired into collaterally, but, as has been held in many cases, the inquiry, when directly made, can be instituted only by the attorney-general, or some other prosecutor who represents the public; but, the defence here did not go to the plaintiff’s right of existence, but to its right to enforce the defendant’s promise. In the case of the Lumbermen’s Bank, the suit was on a promissory note which recognised the existence of the corporation. Here, it was on a promise which entered into the formation of the company — a preliminary contract, which, made upon the conditions expressed in the incorporating act, could be enforced only after substantial performance of those conditions. Eor the purpose of testing the defendant’s liability, therefore— not for the purpose of declaring the charter forfeited — it was competent to show what the company were required by law to do, and what in point of fact they had done. This was the extent to which the proposed defence went; and we do not think it was .excluded by what was ruled in the cited case. If the 4th point meant that the court should declare the corporation defunct, it was properly refused; but, if it meant, as we suppose it did, that after all the company had done, and had forborne to do, it was no longer entitled to recover on the defendant’s original subscription, it ought to have been affirmed.
The court fully recognised the doctrine of the other points; but submitted the case to the jury to infer the defendant’s assent to the release of subscribers, suspension of the work, &c.
It is not to be questioned, that acquiescence and assent would bind the defendant, or, rather, would estop him from setting up the defence in question. That is to say, if there was evidence that McCully consented to the discharge of other subscribers, and the delay of commencing the road, as matters of corporate policy, which were not to affect his liability as a stock subscriber, he is estopped now from alleging these matters in defence. But what evidence was there to estop him ?
Supplementary legislation having been obtained in 1853, which recognised the existence of the company, and authorized it to receive subscriptions to its stock from certain cities and boroughs, the defendant, and several other original subscribers, set their signatures to a letter of attorney, which authorized W. Larimer, Jr., to vote on their respective shares at a special meeting of stockholders, to be held for taking into consideration the acceptance of the several supplements to the act of incorporation, and any subscription that may be tendered for stock in said road.
This letter of attorney was without date, and had several blanks, *33one of which was filled by General Larimer, who inserted his own name as the attorney in fact, in pencil.
A special meeting AYas held on the 8th June 1853, at which Larimer voted on fifty shares of James McCully, for accepting the Allegheny county subscription, and the Act of Assembly.
This was the evidence from which the jury was instructed to infer McCully’s consent to be bound by his subscription of 1846, notwithstanding all that had occurred to release him.
We think it was incompetent for such a purpose. The letter of attorney was manifestly an incomplete instrument. There was no evidence that the insertion of Larimer’s name was with the knowledge or consent of McCully, or that he was aware that Larimer AYas acting for him.
But at most, it was only an authority to accept legislation that looked exclusively to new subscriptions, and not to the validating of old ones. The Act of 1853 did not cure the consequences of past delay and of the doings of 1847, nor did it affect to bind any subscriber already on the books. It touched none of these subjects. It seems rather to have been designed to enable General Larimer to start the road on municipal subscriptions, thereafter to be obtained. And the defendant, supposing him to have given a valid and formal proxy, was willing, doubtless, that General Larimer should resuscitate the company in this manner. Standing on the books as a stockholder, it was a formal assent on the part of the defendant to the new policy; but did he mean to re-subscribe himself? Is it a fair interpretation of his act that he acknowledged his subscription of 1846 as a subsisting, legal obligation ?
We think not. We think it would be giving extravagant effect to an equivocal and insignificant act to allow it to stand for virtually a new subscription.
The defendant’s original subscription, made by another hand than his OAvn, rested, as we have seen, on an implication from a former letter of attorney to Kelly. After so much delay — more than was necessary for the statute of limitations to attach — and after such decisive acts of abandonment on the part of the company, amounting almost to dissolution, something more should have been proved to hold the defendant, than the unfinished letter of attorney to Larimer. So vague and indefinite an acknoAvledgment of original indebtedness, would be insufficient to take any case out of the statute of limitations. True, the statute is not pleaded here; but, vre have to deal with presumptions that are almost equal as a defence, and the evidence to repel them ought to be like, in nature, if not in extent, to that which alone is competent to avert the statutory bar. How much stock did the defendant acknowledge himself to be responsible for ? The letter of attorney gives no answer, and no evidence in the case answers *34the question. The learned judge said the number of shares on the books, but it was merely a judicial conjecture.
The truth is, undue importance was given to this evidence by the court. It was not merely submitted to the jury for them to infer consent from, but it was put to them as sufficient to estop the defendant from denying his liability for the whole number of shares originally subscribed for.
It ought to have been rejected altogether; or, being admitted, should have been controlled so as not to deprive the defendant of the benefit of the facts on which he relied.
It may be said, that it was evidence of the same nature as that on which the jury were permitted to presume the original subscription ; — that if the letter of attorney to Kelly was sufficient to ground a presumption of subscription, that to Larimer was competent to ground a presumption of renewal. Not so. The two instruments were different in character and circumstances. That to Kelly was complete, and could be accounted for on no other ground than that the subscription standing on the books, to the credit of the defendant, was his subscription; whilst that to Larimer was a defective instrument, and could be referred to another motive on the part of the defendant, than an intention to revive his subscription, to wit, a desire to obtain the municipal subscriptions.
It may often be more difficult to prove an acknowledgment of an outlawed debt, than to prove the execution of the instrument of indebtedness. Where both' conclusions are presumptive, it does not necessarily follow that circumstances which raise one presumption would justify the other.
On the whole, we think the doctrine of the defendant’s points ought to have been affirmed, with no other reference to the jury than that the facts therein assumed might be found.
The judgment is reversed, and a venire facias de novo awarded.