Court Opinion

ID: 6235286
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:06.960711+00
Date Added: 2024-06-11T08:58:01.779061
License: Public Domain

Mr. Justice Gordon
delivered the opinion of the court, May 29th 1876.
The subscription of the defendants, to the stock of the plaintiff’s road, was properly treated as conditional. By their contract they obligated themselves to pay only when the subscriptions amounted to one hundred thousand dollars, and, by the same contract, the moneys so raised were to be applied exclusively to the building and equipping the proposed extension as surveyed by the Philadelphia and Beading Eailroad Co. These subscriptions were made after the approval of the Act of March 28th 1872, by which this company was incorporated, and under which it was organized. It follows, that that class of cases, of which Bavington v. The Pittsburgh and Steubenville Railroad Co., 10 Casey 358, is a representative, does not apply to this controversy, for we have here an existing corporation clothed with sufficient power to make any contract which it may deem proper for its own welfare; hence, the governing cases are those of which The Pittsburgh and Connellsville Railroad Co. v. Stewart, 5 Wright 54, is a type. It is true, the plaintiff was to have its letters patent only when ten per centum of its capital stock had been subscribed, but these letters were not essential preliminaries of the company’s organization, for that had been effected by the act itself, but were rather ancillary and supplemental to it.
. Undoubtedly, even ih this case, these letters could not have been obtained except upon the exhibition of absolute subscriptions to the stock of this company, equal to ten per centum of its capital, and upon which one dollar per share had been paid; but this was done, and the patent obtained; thus this corporation was clothed with all the powers necessary to accomplish the object of its creation. As the company was only in a situation to demand payment, when the conditions in the contract with the defendants had been fulfilled, it was incumbent on it to show, either the accomplishment of these conditions, or a release or waiver of them by the parties in interest. Now, whilst the plaintiff neither did nor proposed to prove a strict fulfilment of that stipulation in the agreement, which provided that the subscription should be paid only when the sum of one hundred thousand dollars had been subscribed, nevertheless, much testimony was given to show that Paris Plaldeman, who subscribed for the firm of which he was a member, by his acts and declarations, did waive *44the performance of the above-named stipulation. This testimony should have been submitted to the jury. From the evidence, it appears, that the company has expended much money upon the very branch road, for the building of which, this subscription, among others, was made, and this would form a consideration sufficient to support a waiver of the condition, if the jury should find such waiver was made. To this end, also, the offers of evidence, as set forth in the plaintiff’s specifications of error, numbered from one to eleven inclusive, should have been admitted, for they were all designed to show that which was pertinent to the plaintiff’s case, to wit, such acts and declarations of Haldeman as would estop him and his firm from setting up the condition to defeat the plaintiff’s claim, and also what, in connection with this, was equally material, the acts and expenditures of the company in the letting and construction of that part of the road, to promote which these conditional subscriptions were made. Upon what theory the court acted, in directing the entry of the judgment of nonsuit, we know not, as no opinion was filed; but we suppose that that theory is embraced in one of the several points made in the argument for the defence as submitted to us. We will review them seriatim. They are, 1. That as the act of incorporation provides for a minimum cajiital of $250,000, and as that amount has not been subscribed, the plaintiff is not qualified to enforce the subscriptions now made.' Much learning and research have been displayed, by the counsel for the defence, in the collection of authorities in order to fortify their case. We are, however, saved the trouble of reviewing'them from the fact that they are not applicable to this controversy, for, as the act of incorporation is the supreme law of the case, we must follow its terms. That instrument provides, that the capital stock of 5000 shares, of fifty dollars each, may be subscribed for or disposed of, “ in whole or in part,” from time to time, as the board of directors may think proper. This, certainly, empowers them to contract for the sale of part of their stock, and, if they may make a contract, surely it must be implied that they may enforce such contract when made, otherwise it would involve the absurdity of the grant of a power that could not be executed. In this connection it may be pertinent to inquire why is this company, by the fourth section of the act, clothed with the full powers of a corporation, upon a subscription of ten per centum of its capital stock, if, notwithstanding, it must remain at a dead lock until the whole of that stock is disposed of? What does this grant of plenary power mean if it cannot be exercised ? To resolve these questions on the theory of the defence is quite impossible. But if we concede that the directors have the power to dispose of and collect the money for so much of the company’s stock as they may find market for, and, from the proceeds, put their road in such a state of forwardness as that they may mortgage it for the money necessary for its completion and equipment, the statute becomes clear and unambiguous and its wisdom apparent.
*452. The argument here presented is, that the plaintiff cannot enforce the payment of this subscription because one dollar per share was not paid thereon at the time it was made. But if this subscription is conditional, as the defendants contend it is, how is it that one dollar per share became payable absolutely ? Certainly nothing of that kind is found in the contract, and the power of the company being ample to make such contract, it follows that neither party can insist upon anything not found in it, and the converse is also true, that either party can insist upon the performance, by the other, of what is found in it. This contract might have been, as was the case in the Railroad v. Stewart, payable in materials to- be delivered at a future period, and then, we may presume, it would not have been contended that one dollar per share was payable in cash. But we cannot see that the principle is altered by the fact that the contract is for money wholly payable on the happening of some future contingency; both are conditional, and pari ratione, if the one be good so is the other. The error consists in the supposition that the company could not receive subscriptions wholly conditional, but that they must be in part absolute '; but as the partial payment was to be made only on the absolute stock taken to secure the patent, it follows that when the stock contract lost its absolute character, it also lost the incident of partial payment, for, under the act, the one is necessarily dependent on the other.
The third point we pass over as involving questions of fact upon which the jury must pass; only saying that if the company cannot show to the satisfaction of that tribunal, that Haldeman agreed that all the subscriptions, absolute and conditional, might be considered in making the sum of one hundred thousand dollars, or that he waived, as already stated, by his acts or declarations, or by both together, that condition annexed to the contract, it will not be entitled to the verdict.
The fourth and fifth points of the argument for the defendants raise the question as to the validity of the plaintiff’s charter. The allegation is, that the charter has lapsed through the malfeasance or misfeasance of the company since the bringing of this suit. To support this, it has been shown that the plaintiff had confined its operations to one of its branches, and that it has done little or nothing upon its main stem, hence, it is argued that as there has been no bond fide commencement of the principal improvement within the period of three years, as prescribed by the Act of 1849, to the provisions of which this corporation was made subject, the charter, by the terms of that statute, has become null and void, and that, therefore, this company is not in a condition to maintain this or any other suit. We are not prepared to adopt this view of the case. Granted that the plaintiff has done that in consequence of which its charter may be forfeited, nevertheless we cannot, in this collateral proceeding, inquire into such matters. As was said by Justice *46Rogers in Irvine v. The Lumbermen’s Bank, 2 W. & S. 204, “.If there be anything settled beyond all cavil or controversy, it is- that the violation of a charter of incorporation cannot be made the subject of judicial investigation in a collateral suit.” McCully v. The Railroad, 8 Casey 25, has been cited as overruling the above-named and cognate cases. If, however, such were the intention, Mr. Justice Woodward, who delivered the opinion in that case, adopted an unfortunate method of expressing himself when he said, “ It is not only true as asserted in that case” (Irvine v. The Bank), “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 only be initiated by the attorney general or some other prosecutor who represents the people.” That case turned upon questions wholly different from those found in the present suit. Not only had the Pittsburgh & Connellsville Railroad Company not commenced operations within the period prescribed, but it had made no calls upon its stock subscriptions within six years; furthermore its project was formally abandoned, and the money of many of the subscribers who had paid was returned to them. On these facts it was held, firstly, that the company was bound, from analogy to the Statute of Limitations, to call in payments on its stock subscriptions within six years after their date or a presumption of abandonment would arise. Secondly, that all the facts taken together warranted the conclusion of an actual abandonment. In the present case it is not pretended that there has been any default of the company plaintiff, except that it has done its work upon the branch, for the making of which the defendants stipulated in their subscription, instead of upon the main line, but this, so far as the present inquiry is concerned, is no default at all.
The judgment is reversed and a venire facias de novo is awarded.