Court Opinion

ID: 8311734
Source: CourtListenerOpinion
Date Created: 2022-10-17 15:50:29.626783+00
Date Added: 2024-06-11T16:44:45.251480
License: Public Domain

DILLON, Circuit Judge.
We hold the following propositions:
1.The plaintiff taking the note in suit directly from the company, long after it was due, and after the change in the charter, and after the action of the company forfeiting the defendants’ stoca therein, stands precisely in the place of the company, and cannot recover on the note unless the company could have recovered, had the action been brought by it.
2. The note being given for an unpaid stock assessment, represents, "for all the purposes of this action, that assessment, and the note not having been paid, it follows that the defendants have not paid the stock assessment for which the pote was given. Under its charter, the company had the power, if any assessment upon stock subscribed was not paid, to forfeit the stock and all previous payments thereon; or, at its election, the company would have the ri<rht to sue for such assessment. But the two courses are inconsistent, and it must elect whether to sue for and recover the stock subscription, or to forfeit the stock. It cannot do both. Having elected, in this case, to forfeit the defendants’ stock, it cannot afterwards recover for a prior unpaid assessment; and this doctrine, which was conceded in argument, is not, in our judgment, varied, as the plaintiff’s counsel contends, by the circumstance that the company, at the time of the forfeiture of the stock, held the defendants’ note for such prior unpaid assessment Small v. Herkimer Manuf’g Co., 2 Comst. [2 N. Y.) 330.
3. The change in the charter, by which a life and accident company was authorized to transact fire, marine, and inland insurance, is an organic change of such a radical character as to discharge previous subscribers to thfe stock of the company from any obligation to pay their subscription, unless the change is expressly or impliedly assented to by them. Here títere was no such assent, and no acquiescence in the structural change made in the charter of the company. The company could not, against such a subscriber, maintain a suit to collect his subscription, and take the money and use it as capital for the transaction of business under the charter as altered. We think, in such a case, the subscriber is not bound to enjoin action under the amended charter, but may, if he elects, defend against an action to recover on his subscription to the stock.
If the company accepted the amended charter, as it did by adopting the new name, it is not essential to such a defense to show that at the time of the trial the corporation had actually exercised the enlarged powers conferred upon it. The defendants are not bound, on their subscription, to pay to the company money which, if paid, may be used as capital to carry on the business authorized by the amended charter.
Judgment for the defendants.
NELSON, District Judge, concurs.