Court Opinion

ID: 5649049
Source: CourtListenerOpinion
Date Created: 2022-01-11 21:52:06.802986+00
Date Added: 2024-06-11T08:38:29.707252
License: Public Domain

Weight, J.
In January, 1857, the plaintiff demanded from the defendant nine hundred and seventy-five shares of their scrip stock, claiming a right thereto, according to the terms of “ provisional certificates ” for that amount of stock, then held by him and presented to the defendant. At the same time he offered to pay to the defendant all installments that had been called upon the stock demanded, with all interest due. The defendant refused to issue or deliver the stock to the plaintiff, and this action was brought for ■damages. The plaintiff had a verdict and judgment for *679$26,812.50, being the difference between the par of the stock and its market value at the time of the plaintiff’s demand and the defendant’s refusal. It is not claimed that this measure of damages is objectionable, if the plaintiff could recover at all. The sole question, therefore, is as to the defendant’s liability. If the plaintiff, at the time of the demand, was entitled to nine hundred and seventy-five shares of the defendant’s capital stock at par, which they refused to issue or deliver to him, the judgment is right. On the contrary, if he had no title or right to the stock, the judgment on the special verdict ought to have been given for the defendant.
The case, upon the facts admitted and appearing by the special verdict, seems to me to be a plain one, and that but little more than a statement of them is requisite. The defendant, in June, 1852, desiring to borrow $5,000,000 on their bonds to construct their railway, issued proposals for a loan to that amount to be taken in London. The prospectus set forth that they had authorized their London agents to negotiate for the amount in their bonds, bearing interest at the rate of six per cent per annum, payable half yearly in London; which bonds would be issued in sums of $500 and $1,000 each, at a certain rate of exchange. Payments for these bonds, or deposits by lenders of the moneys for them, were proposed to be made at various .periods; the first deposit, July 1st, 1852, and the remaining deposits or installments at intervals of three months from that date, and ending on 2d October, 1854; but the installments might be anticipated by advancing the whole subscription, which would entitle the subscriber to interest at six per cent per annum from the date of payment. On the payment of the first deposit on the bonds, “ provisional certificates ” to bearer would be issued, and, on the remaining payments being completed, the provisional certificates would be exchanged for the bonds. The prospectus in question, after thus giving the terms of such loan, stated that the company would also create a share capital, divisible into shares of $100 each, and went on to say: “ It is proposed to give the privilege to *680subscribers of the loan of $5,000,000, now offered, to become shareholders therein for half of that subscription ($2,500,000), and as it can hardly be doubted that the bonds will be paid off by means of the sale of lands, there is every probability that the railroad will be constructed without any call upon the share capital. A small deposit may be required on the shares, and these shares will thus become an actual bonus, and entitle the holder to a participation in all the profits of the line.” It was further stated that a banker’s receipt would be given on payment of the first deposit on the bonds, which would be exchanged for the “ provisional certificates ” as soon as they could be obtained from America; and at the same time a further “provisional certificate,” entitling the bearer in addition to fifty per cent on the amount of his subscription to the bonds in the capital stock of the company would be delivered to him. The “ provisional certificates ” would be exchanged for scrip shares on payment of the last installment on the bonds.”
The plaintiff subscribed for $300,000 of the loan as thus proposed; paying the first installment in London, and the remaining installments in Hew York, in pursuance of arrangements made with the defendant. About the first of October, 1852, on paying the second installment on his subscription, he received from the defendant three hundred “ provisional certificates ” for bonds of $1,000 each. The counsel for the defendant errs in his statement that these were the bonds themselves delivered to and accepted by the plaintiff. They were the instruments called a “ provisional bond certificate,” contemplated by the proposals, that the subscribers to the loan were to receive after depositing the first installment, and were identical in form with those received by other subscribers. Each contained a stipulation that “ after the payment of the last installment they would be exchanged for the definitive construction bonds.” At the same time, the plaintiff received from the defendant, forty-three “ provisional certificates ” for stock, amounting to nine hundred and seventy-five shares. ' These provisional stock certificates bore date 16th August, 1852, were signed by the defendant’s *681president and secretary, and, after specifying the amount and number of the bonds subscribed for, were in this form: “ This certifies that the bearer hereof will be entitled, on and after the first day of October next, to scrip certificates for (a specified number, corresponding with the one-half of the bonds referred to) shares of one hundred dollars each, in the capital stock of seventeen millions of dollars of the Illinois Central Railroad company, on presentation hereof, at the Messrs. Haywood, Kennards & Co., Bankers, London. Provided all the installments on the subscription for the bonds, numbered as above, shall then have been fully paid up.” At the bottom of each of the stock certificates, thus declared, and below the signatures of the officers of the company, was this memorandum : “ ÍL B. The exchange of the provisional certificates for the scrip certificates is limited to 1st January, 185 .” The plaintiff anticipated the payments of the installments on the loan, paying the last in January, 1853. In January, 1857, he presented to the defendant the provisional stock certificates issued to and held by him (offering to pay them all installments that had been called on the stock, with interest thereon), and demanded his scrip. They refused to issue or deliver the stock to him.
In view of these facts, I see no ground for any defense. The defendant, soliciting a loan of money, proposed to give these bonds to lenders, bearing interest at six per cent per annum, payable at a certain period, and also give them the privilege to become stockholders to the amount of half their subscriptions, promising them, upon paying in the first installment of the loan (which was proposed to be paid in installments), certificates entitling the bearer to that amount-in their capital stock, which certificates would be exchanged for scrip shares on payment of the last installment. The plaintiff subscribed for, $300,000 of the loan. The proposals and an acceptance thereof by a subscription to the proposed loan constituted the original contract between him and the company. The terms of this contract were that the defendant should pay him interest, and should give, him, also,-an open, 'unmolested privilege to subscribe for their capital *682stock, at par, whenever-he desired to do so. The claim that there was only á right of election, .on a fixed date, given to subscribers, whether they would or would not' take stock, is not maintainable; It is not a proper construction of the contract created by the proposals and acceptance of them, that the option to take stock was to be exercised on' payment ■(that is, at the time of payment) of the last installment of the loan. When the contract was reduced to certainty, on the 1st October,-1852,- by the issue of the provisional bonds and the provisional certificates, no such condition of election, on a fixed day, was prescribed. The provisional bond cer- . tificate declared that, “ after the payment of the last installment, their provisional certificates will'be exchanged for the definitive construction bonds,” and the provisional certificates of stock declared “ the bearer • hereof will be entitled, on and after the 1st day of October next, to scrip certificates for shares.” The right to stock, after' October 1st, 1852, became precisely as absolute as the right to bonds, after paying in the last installment of the loan. If it were argued that the subscriber had- only a right of election to take stock, which he forfeited after a certain date, it must be equally true that he had only a right of election to take bonds, which he forfeited in the same way if he did not take them.
I'repeat that I regard the case as a plain one. The plaint- ■ iff, by subscribing to the loan solicited by the defendant,purchased, for a valuable consideration, the sttiek issuable to him as such subscriber, upon the single condition that, before it was so issued, he should have paid in to the defendant the amount of his subscription. Whether the right thus acquired was an actual title to stock, of which the provisional certificate was a sufficient document, or a right to the stock obligatory ’ or optional, such right could be determined, like- every other right, only by contract between the parties, or by judgment against the plaintiff.
There is no ground for a pretense that his rights can be affected by the incomplete memorandum at the foot of the stock certificate. This was not filled up with any date in' any of the forty-three certificates held by the plaintiff. These *683certificates were issued under a resolution of the company, adopted 17th of November, 1852, and when issued they had not determined the filling up of the date; nor did they determine it until March, 1854. Meantime, they had issued these to the plaintiff with the date left blank intentionally. But the company had no power or right to cut off the plaintiff’s stock-right by a notice of any kind. The delivery and acceptance of these certificates might make a contract, but, if this date had been filled in, the plaintiff might have refused to accept them. Even if it had been filled up, and the plaintiff had accepted them thus, it would have had no more effect than a notice, and it was impossible for the company thus to clear itself of a perfect obligation.
I am of the opinion that the judgment should be affirmed. All the judges concurring,
Judgment affirmed.