Court Opinion

ID: 4913007
Source: CourtListenerOpinion
Date Created: 2021-09-22 00:04:25.086748+00
Date Added: 2024-06-11T08:13:44.338500
License: Public Domain

DuPont, J.,
delivered the opinion of the Court:
This was an action of assumpsit brought in the Circuit *25Court of Leon county, by “ The Florida & Georgia Plank-Road Company” against the appellant, to recover the amount of a balance alledged to be due upon his subscrip* tion to the capital stock of said Company. The declaration contains only the indebitatus count and alledge as special demand; but there is no proof in the record to support this allegation. It may well be doubted whether, in this state of case, the recovery could be sustained, but understanding from the counsel who closed the argument for the appellant, that it was desirable to obtain an adjudication as to the extent of the liability incurred by the appellant upon his subscription to the capital stock of this Company, we consider the objection to this defect of proof, as having been expressly waived, and have examined the case solely with reference to the legal liability of the party.
It may be proper to premise, that the Act incorporating this Company seems to have been very losely drawn and rather variant from the formula usually adopted in similar cases. In this Act the amount of the capital stock is not prescribed, nor is there any limitation to the same. There is no designation of the number of shares into which the capital stock is to be divided, nor is there any provision made for .dividing the same, although direct reference is made to such shares. No provision is made for the election of Directors, nor is any mode prescribed for the administration of the affairs of the Company, other than what may be found in the grant of “ the usual rights and privileges of such corporations.” There is simply a grant of authority to construct a Plank-Road upon a designated route, and the amount of the capital stock and such other limitations and regulations as are usually prescribed in similar charters seem to have been committed to the discretion of the Company. As unique as are the provisions of this Act, we cannot doubt its operative character, and that *26it confers a franchise which may be rightfully exercised. So long as the Company shall limit its operations to the consummation of-the object contemplated by the Act of incorporation, we think there cali be no doubt of its right to enjoy that franchise.
The terms of the subscription paper which was in evidence on the trial of the cause, and which it was admitted had been duly signed by the defendant, is in the following words: “ We the subscribers bind ourselves hereby to take “ the amounts opposite our names in the stock of the branch “ of the Florida and Georgia Plank-Road, to run from some “ point at or about Tompkins’ Mill to Tallahassee, under a “ penalty of forfeiture of half the amount so subscribed by “ us, if we fail or refuse to pay up our instalments of stock “ as they may be called for.”
Upon this agreement, two points were made and discussed by the counsel for the appellants :
1st. That by the terms of the agreement there was no express promise to pay and that no action can be maintained by the corporation upon an implied promise to pay assessments, where the charter provides the remedy of a forfeiture of the stock.
2nd. That the word “ penalty” contained in the body of the agreement is to be construed as a condition whereby the defendant was to be permitted at his discretion to abandon his subscription upon the payment of one moiety of the amount subscribed.
In the case of “ Barbee vs. The Jacksonville and Alligator Plank-Road Company,” (6 Fla. R. 262.) this Court decided that an action might be maintained for the recovery of assessments where the agreement to subscribe for stock contained an express promise to pay, notwithstanding the Charter provided a further remedy by forfeiture.— The point ráised in the case now at bar, viz: the right to *27maintain an action upon implied promise, was expressly reserved for future consideration.
In proceeding to consider the first point above indicated, we waive the enquiry whether or not the terms of the agreement contain an express promise to pay, and proceed at once to meet the objection precisely as it is made.
The Massachusetts decisions citedat the argument, seem very fully to sustain the distinction contended for, but they are met by adjudications in other States; among them the States of North Carolina and Alabama, in the former of which no such distinction is intimated, and in the latter it is expressly repudiated. (Vide Tar River Navigation Co. vs. Neal, 3 Hawks 520 ; Beene vs. The Cahawba and Marion Railroad Co., 3 Ala. R. 680 ; Carlile vs. The Cahawba and Marion Railroad Co., 4 ib. 70 ; Selma and Tennessee R. R. Co. vs. Tipton, 5 ib. 787.)
In the ease cited from 3 Ala. R., the only evidence adduced upon the trial to support the assumpsit to pay, was the book of subscription, which was as follows:
“ Cahawba, Dallas County, State of Alabama.
“ A book of subscriptions to the capital stock of the Ca- “ hawba and Marion Railroad, opened on the 20th day of “ March, 1837, by order of the Board of Directors assem- “ bled in the town of Cahawba on the 13th day of March, “1837, under the direction of James Craig, Richard C. “ Crocheron, Joseph Babcock and P. Walter Herbert.”
The names were signed thus:
“Date. I Names. I No. of Shares. I Total Stock. “March 29. J Jesse Beene, ] 20 | 2,000.”
Goldthwait, J., delivering the opinion of the Court remarks : “ The act of subscription thus made, is equivalent in every respect to an express contract, and the terms prescribed in the charter attached to it as effectually as if they had been written at length.”
*28He again.says: “The cases cited from Massachusetts admit that a member of a corporation may become bound by an express contract to pay assessments, although an agreement to take shares in an incorporated association will not be construed as such a contract. We are not aware of the terms contained in the statutes under which these decisions were made, but if similar to that we have just considered, we feel constrained to declare the law to be otherwise.— The principles we have laid down as governing this case are sustained by numerous decisions, and we may remark, that none have been found, except those of Massachusetts, which held a different rule.”
To our minds the distinction contended for seems to be singularly arbitrary, and is neither deducible from any established principle of law, nor sustained by any sound reason! C. J. Parsons, for whose character as a jurist we entertain the very highest respect, seems to have based the existence of this assumed distinction upon the fact that an express in contradistinction to an implied promise, always imports a legal consideration. He says: “Where this express agreement has been made, we have decided that it may be enforced by action, there being a legal consideration for the contract." 6 Mass. R. 42. Now with all proper-deference, we would respectfully inquire what there is in the nature of an implied promise, which negatives the idea of a legal consideration ? Indeed every implied promise, presupposes the existence of a sufficient consideration, for it springs only out of a legal liability which never arises but upon a legal consideration as ample as is the extent of the liability. Not so however with respect to an express promise. That may, and not unfrequently is made in the absence of an adequate consideration — the promise is perfect in itself, and is incapable of enforcement only upon the ground of this absence of consideration.
*29The consideration alluded to by the C. J., in the remark •above noted, was evidently the correlative right to enjoy the franchises granted by the act of incorporation and to participate in the benefits which were expected to arise therefrom, and we can conceive of no good reason why the same right of enjoyment and expectancy of benefit might not form the foundation of an implied promise.— The distinction insisted upon involves a refinement which •so far from subserving any beneficial purpose, or promoting the attainment of justice, is well calculated to jeopard the rights growing out of a most extensive and important •class of contracts.
As-enunciated by this Court in the case before alluded to, we repeat that “it is of the highest importance that those who thus associate should be held to the observance of the most perfect good faith and we may pertinently add that the simple act of subscribing to the capital stock creates a mutuality of liability which it would be a fraud upon his associates for a recusant stockholder, at his discretion, to be permitted to escape by the mere abandonment and forfeiture of his shares of stock. If the act of subscribing to the capital stock is to be viewed as creating no legal liability to pay the amount subscribed mnd as imposing no penalty other than this, it would be eminently illusory and wholly defeat the undertaking and successful prosecution of all enterprises tending to the development of the resources of the country and requiring the aid of associated capital. For it is worthy of note that in all our southern States, capital, so far from seeking investment in enterprises of this character, has to be invested wholly by considerations of patriotism. In Massachusetts and other northern States where the doctrine contended for obtains, there is a superabundance of monied capital which makes it a privilege to be permitted to associate for purposes of public enterprises, while .With us every contribution to such a purpose *30is looked upon as a direct tax upon individual means. — • This striking difference in the condition of the two sections would seem to demand a difference in the application of the law, especially when it may be done without the violation of any fundamental principle, and is moreover sustained by precedents of no lesser weight and respectability.
It will not be pretended that in a contract between natural persons, the obligee may not waive the penalty and proceed for general damages for breach of the agreement.— (Comyn on Con. 473.) There is no good reason why the doctrine may not as well apply to an artificial person, (such as the plaintiff in this suit,) when by the very terms of the charter of incorporation the right to sue is expressly given, and there is no restriction as to the enforcement of the penalty.
The second point raised at the argument involves an interpretation of the terms embraced in the articles of subscription. For the appellant it was insisted that the latter clause of the agreement amounted only to a condition, while it was contended on the other side that the agreement was to be interpreted according to the legal and technical import of the words used, viz : as imposing a penalty. To support the former position, great stress was laid upon", the fact that viewed as a penalty, this clause of the agreement was variant from the provision contained in the section of the charter which contemplated a forfeiture of the whole amount of the sum to be subscribed by each stockholder. We are unable to appreciate the force of the argument in this connection, but are rather disposed to view this clause of the agreement as wholly nugatory, or at most as only superadding a penalty to the one stipulated in the charter; and having been voluntarily assumed by the defendant, it does not become him to complain even if it were now sought to inforce it, which however is not the object of this suit. Whatever may have been the real under*31standing of the parties to this agreement, it certainly cannot be expected of us that in the total absence of any evidence tending to vary the obvious and well understood import of the terms used, we should proceed to give it a different interpretation.
Let the judgment of the Circuit Court be affirmed with costs.