Court Opinion

ID: 6642176
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:46:40.455045+00
Date Added: 2024-06-11T15:59:17.230455
License: Public Domain

Maxwell, J.,

dissenting.

If we admit, for argument’s sake, that the original contract for the sale of the plaintiff’s railroad lines to the defendant is against public policy and will not be specifically enforced by a court of equity, still he is entitled to relief. On the 31st day of December, 1869, the plaintiff subscribed for two hundred shares of stock in his own and others’ names. The articles subscribed contained a provision that the stock so subscribed should be paid for in money. Whatever may have been the object of this provision no one will contend that it could not be waived by the parties. The plaintiff subscribed for the stock in question without objection, and was elected one of the directors of the company defendant, and continued to act in that capacity for a long time thereafter. There is no claim in the answer of a want of power in the corporation to permit stock to be taken in this manner, and no such issue made in the case. The answer to the seventh paragraph of the petition states that “the defendant permitted him (the plaintiff) to subscribe for one hundred shares in one parcel, and fifty in another, and also fifty shares in the names of Caldwell and Briggs, tfie plaintiff to pay in cash the same as other stockholders, all this being a matter of grace and favor to him, for the purpose of keeping said additional shares of stock from passing into other hands before the plaintiff oóuld pay for the same.”
The answer further states that but $10,000 has been paid by the plaintiff, and that no part of that sum was applied on the fifty shares held by Caldwell and Briggs, *333or on the fifty shares held by plaintiff. The question, therefore, as to whether any portion of the $10,000 paid by the plaintiff was applied to either or both of the parcels of shares above referred to, is in issue. In regard to the shares held in trust for the plaintiff by Caldwell and Briggs, the plaintiff testified (page 28, printed record): “ I paid to the correspondents of Caldwell, Hamilton & Co., in Chicago, $2,500; they insisted I should make these payments. They said I could afford to carry this stock. I could afford to credit the company that amount. I made this payment upon the stock which Galdwell and Briggs subscribed for me in trust.” And, again, on page 31, when referring to the same shares, the plaintiff testified: “ I placed this money to their credit for those shares, as directed by Mr. Caldwell when I left Chicago. This was the agreement for the pa/rcel of shares subscribed in trust for me.” This testimony is not denied. The defendant evidently could have produced witnesses to disprove these statements if they were untrue; but, having failed to do so, this testimony must be taken as true. And the testimony is confirmed by the fact that the shares in question were not returned to the defendant until nearly two months after this suit was commenced. The plaintiff is, therefore, clearly entitled to a decree for this parcel of shares on the payment into court of such sum as may be found to remain unpaid thereon. The answer also admits that the plaintiff paid $1,000 on the 8th day of February, 1870, $250 on the 5th day of March, 1870, and $6,250 on the 6th day of March, 1870. There is no distinct plea that this money was to be applied on one-half of the shares subscribed for by the plaintiff; the allegation being “ that the plaintiff never made any payment whatever upon the fifty shares subscribed for by him in one parcel, nor upon the fifty shares held in the names of Caldwell and Briggs, nor did plaintiff ever offer to pay for the same.” As the *334proof shows, there was no appropriation of the $7,500 paid on and after the 8th day of February, 1870, by the plaintiff or defendant to any particular parcel of shares subscribed for by the plaintiff. It is the duty of the court to apply it pro rata to all; and this is merely justice. It is apparent from the record that the $10,000 due plaintiff for the surveys and right of way was to be applied as the first payment of fifty per cent on the stock in question. The objection that the stock was to be paid for in money, can have no weight in a court of equity, where the corporation is solvent, as in this case, and the amount is due in money. It is clearly shown that the plaintiff was recognized by the defendant for a long period after the 31st of December, 1869, as the owner of two hundred shares of stock; and it is also shown that he loaned his credit to the company in connection with other stockholders to purchase iron for the road on that basis.
But, it is urged that the resolution of September 1, 1870, for which the plaintiff voted, formed a new contract, binding on the plaintiff, by which he consented to the reduction of his shares to one hundred. The preamble to that resolution recites, among other things, that “Whereas, It is desirable that the stock of said company, together with said bonds, should equal the cost of said road; therefore, be it
“Resolved, That the company issue stock to the amount of $200,000, to be divided among the stockholders aeeording to their respective interests, as shown by the amount of money paid in by each.”
It will be seen by a reference to this case in 4 Neb., 479, that the entire amount of stock subscribed for was $100,000, of which the plaintiff had $20,000. It will also be observed that this resolution recognizes the entire amount of stock as having been subscribed, but that it was desirable to water it to the extent of $100,000. On *335the passage of the resolution, the plaintiff was permitted to vote two hundred shares of stock without objection.
No one, I think, from a careful reading of the resolution, would suspect that it was intended to deprive a stockholder of any portion of his shares.
Suppose the plaintiff had paid for his two hundred shares in ties for the railroad or in grading its line, will it be contended that by voting for such a resolution he forfeited his stock and is remediless? I think not. A fair construction of the resolution is, that the increased stock shall be divided among the stockholders according to their respective interests. And it evidently was so Understood by the parties at the time.
No consideration of any kind passed from the defendant to the plaintiff on the adoption of this resolution; how, then, can its adoption form a new contract between the parties, by which the plaintiff is deprived of his property?
Did the adoption of such a resolution forfeit his stock or a portion of it? I think not, and no case has been referred to holding such doctrine. There is nothing in the resolution to show an intention to reduce the number of the plaintiff’s shares, how then can it be said he assented? “Assent must be to the same thing in the same sense." 1 Parsons on Oont., 475.
Up to this time, at least, the plaintiff has been permitted to vote upon all the shares of stock subscribed for by him; and has been treated as the owner thereof. Had the road proved a failure he would have been compelled to take the stock thus subscribed for, and have been required to pay the entire amount due thereon. Is the stock thus held less his, because the enterprise is successful? No one will contend that such is the case. Neither can the value of the stock after the completion of the road make any difference. The plaintiff had taken the stock at a time when, so far as appears, it had no *336determinate value. When the road was an experiment; when there was at least an equal chance that it might prove a failure, financially, to its proving a success, he bore the burden of its construction, and took the chances of failure. A sale or lease of the line made the enterprise an assured success financially; and the plaintiff having hazarded his property in its construction, is entitled to reap the benefits resulting 'from such success
So far as the record discloses there is nothing to show that the resolution of December 6, 1869, for the payment of the plaintiff’s claim was ever rescinded; or that he had any notice whatever, that such claim would not be applied as part payment on his stock. The plaintiff was certainly entitled to such notice; and in my opinion is fairly entitled to the stock prayed for in the petition, on the payment into court of such sum, if anything, as may be found to remain unpaid.
But was the sale of plaintiff’s lines against public policy? If so, why? When a statute expressly prohibits a particular thing, or affixes a penalty which implies prohibition, or where from the nature or object of a statute prohibition may be implied, then contracts made in violation thereof, will not be enforced. But nothing of the kind appears in this case. Where there is no prohibition the law permits men to contract in matters concerning their own interests as they see fit.
The following is the-contract entered into by the parties, prior to the organization on the 27th day of November, 1869:
“ Memorandum of agreement between Henry T. Clarke & Co. of the first part, and John McCormick, George W. Frost, Enos Lowe, S. S. Caldwell, their associates'of the second part, concerning the building of ten miles of the Omaha & Southwestern Railroad by the 15th day of February, 1869, and continuing the road thereafter, as soon as practicable.
*337“ 1. The party of the first part is to have four-tenths of the stock in said railroad to start with.
“ 2. The party of the second part is to have six-tenths of the stock in said railroad to start with.
“ 3. The company made up as above by the parties of the first part and second part are to pay Henry T. Clarke, ($10,000) ten thousand dollars in consideration, 1st, of the survey of the route of said road as at this day made, and, 2nd, the right of way through Sarpy county, as secured at this date.
“ 4. The party of the first part agrees to assign, transfer and set over so much of the Bellevue & Sioux City railroad rights and line and privileges as lies south of Omaha, and the Bellevue, Ashland & Lincoln Railroad Company, with all their rights, property and franchises to the Omaha & Southwestern Railroad Company.
“ 5. The party of the first part further agrees to pay at start, as the first assessment upon their four-tenths of stock, the sum of twenty thousand dollars in cash, and to stand and hold themselves in readiness to take at par the bonds of Douglas county if issued said Omaha & Southwestern Railroad, to whatever amount may not otherwise be cashed at par, in proportion of four-tenths of the wdiole, and also to further pay, in same ratio, whatever is necessary to complete ten miles of road.
“ 6. The parties of the second part agree to pay at start, as first assessment upon their six-tenths, the sum of thirty thousand dollars in cash, and to stand and hold themselves in readiness to take at par the bonds of Douglas county, if issued said Omaha & Southwestern Railroad, to whatever amount may not otherwise be cashed at par, in proportion of six-tenths of the whole, and also to further pay in same ratio whatever is necessary to complete ten miles of the road.
“ In penalty whereof, the two parties, first and second, shall forfeit to the residue of the company such stock as *338tlie assessments necessary to bnild the road are not paid upon.
“ It is a distinct understanding that no person shall assume more stock than he can carry, and must satisfactorily show his ability to do so at outset.
Henry T. Clarke, Henry Gray,
S. S. Caldwell,
John T. Cloppee,
O. P. Hureokd.”
It is contended that this agreement has no force nor effect, because it is not referred to in the proceedings of the defendant, at the time of the organization of the company on the 27th day of November, 1869. I think it is referred to and the proof clearly shows, that about the time of the organization, the surveys, plats and profiles of plaintiff’s railway companies were turned over to the defendant, and that upon these surveys, plats and profiles, bids were invited for the grading of. the road; the bids to be opened on the 30th day of November, 1869; and contracts for grading were let on that day.
The stockholders and directors of the defendant must have known that these contracts were being let on the surveys, maps and profiles prepared by the plaintiff. And the resolution adopted by the board of directors, six days thereafter, instructing the president to draw his order on the treasurer for $10,000, for surveys and right of way, certainly confirms the ante-organization agreement. This resolution contained the following provision: “ When he shall have made in behalf of said companies a full legal transfer of the same, together with all interests of every name and nature in the franchises, claimed by them, to the Omaha & Southwestern Eailroad Company.” The objection is now made that the plaintiff has not made a legal transfer as required by this resolution. *339Such transfer need not be in writing. It is clearly shown that the surveys, maps and profiles were turned over to the defendant; it is also shown that the line actually occupied by the defendant railway is the same, with slight exceptions, as that surveyed for plaintiff’s lines; it is also shown that plaintiff gave the right of way across his own land, and procured it for the defendant across the land of others. What interests in these franchises then were not transferred ? We are not informed. It is apparent that there has been an aettial transfer to the defendant, and that is sufficient. The claim that the defendant refused to receive certain paper assignments about the time of the completion of the first ten miles of defendant’s railroad, is not entitled to much weight. The proof shows that the railroad was constructed with slight variations on plaintiff’s lines, and froin his surveys, maps and profiles, all of which the defendant had possession of at that time. The Omaha & Southwestern Railroad Company, organized under the general railroad law; and after such organization possessed all the rights and privileges necessary to construct a railroad.
But the ante agreement was referred to, indirectly at least, at the meeting held on the 27th day of November, 1869. On page 91, of the printed record, we find the following:
At a meeting held November 27, 1869, to organize “The Omaha & Southwestern Railway Company,” there were present the following gentlemen:
Smith S. Caldwell, Ezra Millard, John Y. Clopper, Henry T?Clarke, Enos Lowe, Thomas Malloy, George W. Erost, Isaac Weightman, Jonas Gise, M. W. Kennard, John F. Young, Clinton Briggs, Alvin Saunders, Henry Gray, A. S. Paddock.
On motion of Mr. Caldwell, Mr. George W. Frost was chosen temporary chairman.
*340On motion of Mr. Briggs, A. S. Paddock was elected temporary secretary.
On motion of Mr. Briggs it was
Resolved, That a committee of three be appointed on organization, and Mr. Briggs, Mr. Caldwell and Mr. Young were appointed such committee.
Mr. Briggs reported for the committee on organization, recommending the formation of a new company, and that the franchises of the “Omaha & Southwestern,” “the Bellevue & Sioux City,” and -“the Bellevue, Ash-land & Lincoln” Railroad Companies heretofore organized, shall be used by this company only as far as may be necessary or advisable to do so to further the object of this organization.
On motion of Mr. Saunders the report of the committee was adopted.
Articles of incorporation were then signed and executed as follows:
On motion of Mr. Caldwell it was
Resolved, That ten per centum of the capital stock be subscribed for. The subscriptions were so made, and fifty per centum of said subscriptions at once paid into the treasury of the company.
A new company was to be organized, and the franchises refen’ed to in the ante agreement were to be used only so far as they would further the organization of the new company. This was at the time, and in the very act of organizing the company defendant, and is not only a recognition of the ante agreement but a virtual ratification thereof. •
The Omaha and Southwestern R. R. Co. was organized under the general railroad law (and could have been organized under no other); and possessed all the rights arrd franchises necessary to construct a railroad. Under such circumstances it seems frivolous to urge the objection that the franchises were not transferred. The *341defendant could not take sucb franchises unless the company organized as the assignee of plaintiff’s companies; and it is not claimed that such action was intended. It also appears from the record that on the 29th of November, 1869, H. T. Clarke, Clinton Briggs and John Y. Clopper were appointed a committee to procure right of way. Had the entire right of way been purchased, it certainly would not have been deemed necessary to have done this.
It is claimed that as a condition precedent-the plaintiff must show that his companies were legal organizations, and that he made a legal assignment. The proof clearly shows that the plaintiff assigned to the defendant everything pertaining to his companies that was susceptible of assignment, and the defendant received the property thus assigned and applied it to its own use, and it is now too late to object to the form of the assignment, or to the organization.
This is not a case where it was attempted to consolidate two or more lines of railroad. The plaintiff had taken the preliminary steps to organize two railroad companies, commencing at Bellevue, and had caused surveys to be made of the lines, and had caused maps and profiles of such lines to be prepared; and to some extent had secured the right of way. In the ante organization agreement, entered into about the 20th day of November, 1869, it was proposed to organize a new company, of which the plaintiff was to be a large stockholder, and for the new company thus organized to take his surveys, maps and profiles, and the right of way so far as obtained, and construct the road on the lines thus surveyed, and from these surveys, maps and profiles, for which the plaintiff was to be paid by the defendant the sum of $10,000. I think it will not be seriously contended that such a contract cannot be enforced, where it is accepted and practically ratified by the company. *342Even contracts vitiated by fraud are voidable, not void, and the injured party may annul or enforce the sale as he sees fit; but if he wishes to rescind the contract he must act without unreasonable delay, on the discovery of the fraud, otherwise he will be held to have affirmed it. And the rule certainly applies in this case, where the defendant has retained all that it received from plaintiff, including the right of way across his own and others’ lands, and insists that it is not liable on a contract made with its officers within the scope of their authority.
But if relief is denied to the plaintiff on this branch of the case, he is still entitled to a re-hearing on the second branch of the case.
The answer to the thirteenth paragraph of the petition alleges, “that on the 5th day of December, 1871, at a legal meeting of all the stockholders of said railroad company, defendant, a resolution, authorizing and directing the president of said company to execute a conveyance and assignment of the lands, bonds, money, etc., in said contract, in the name of the company, to said Nebraska Land and Improvement Company, was adopted by a vote of more than two-thirds of all the stock, and the said plaintiff did in person vote his four hundred and fifty shares in favor of said resolution; that at said meeting the whole subject embi’aced in said contract, and each axid all of the terms thereof, were fully and thoroughly discussed, and at gx’eat length, the said plaintiff being jn’esent and participating in said discussion, after which he voted four hundred and fifty shares in favor of the l’esolution, not claiming that he was entitled to vote any more stock.. Also at a legal xneeting of the board of directors of said company, held on the seventh of said month, said board ratified and confirmed said resolution, the plaintiff being present, but did not object to such ratification, but sixnply declined to vote.”
The record shows (page 121) that on the 5th day of *343December, 1871, the stockholders of the Omaha and Southwestern Railroad Company met at the office of the company in the city of Omaha, at ten o’clock, a. m.; present, the following stockholders:
S. S. Caldwell, one hundred and fifty shares.
A. Saunders, two hundred and fifty shares.
E. Lowe, one hundred shares.
Henry Gray, fifty shares.
Frank Murphy, one hundred shares.
Clinton Briggs, one hundred shares.
A. S. Paddock, one hundred shares.
H. T. Clarke, four hundred and fifty shares.
Smith Saunders, one hundred shares.
Jonas Gise, one hundred shares.
John Y. Clopper, one hundred shares.

Represented Try proxy:

George W. Smith, one hundred shares; Francis Smith, proxy.
John H. Green, one hundred shares; Clinton Briggs, proxy.
Capital stock of the company, amounting to eighteen hundred shares, represented in full personally or by proxy.
On motion of Clinton Briggs, the following resolutions were adopted by a vote of stock as given below:
Resolved, 1. That for the purpose of carrying into effect the covenants and agreements contained in a contract bearing date, July 31, 1871, made- by the stockholders of the company and S. S. Caldwell, Alvin Saunders and Francis Smith, parties of the first part, and Nebraska Land and Improvement Company, party of the other part, the president of the company, Smith S. Caldwell, is hereby authorized, empowered and directed to convey in the name of this company, to said Nebraska *344Land and Improvement Company, by a good and sufficient warranty deed, in fee simple all of the following described lands, situate in the state of Nebraska, to-wit: The forty thousand acres of land which this company has received from said state, under the provisions of an act of the legislature of said state, entitled, “An act to dispose of public lands granted to the state of Nebraska for works of public improvement,” approved February 15,1869, in aid of the construction of the first and second ten miles of its road, for which lands said state has executed and delivered to this company letters patent;' also, all land which this company has received or may hereafter receive from said state in aid of the construction of the third, fourth and fifth ten miles of its road; the consideration for said deeds being the mutual covenants and agreements in said contract contained: That the secretary of the company is hereby directed to attest said deeds, affix the corporate seal of the company thereto, and deliver the same to the said Nebraska Land and Improvement Company.
Resolved, 2. That the president and treasurer of this company are hereby authorized and directed to receive and deliver into the possession of the said Nebraska Land and Improvement Company all county bonds, and other bonds 40 which this company is or may be entitled to receive in aid of the construction of the third, fourth and fifth ten miles of its road.
Resolved, 3. That the treasurer of this company be and he is hereby authorized and directed to pay over to said Nebraska Land and Improvement Company the $61,000 mentioned in said contract, according to the terms and conditions thereof.

Voted by stock:

Clinton Briggs, one hundred shares.
Henry Gray, fifty shares.
*345Enos Lowe, one hundi'ed shares.
Frank Murphy, one hundred shares.
Smith S. Caldwell, one hundred and fifty shares.
A. S. Paddock, one hundred shares.
Henry T. Clarke, four hundred and fifty shares.
John Y. Clopper, one hundred shares.
John H. Green (by Clinton Briggs, proxy), one hundred shares.
George W. Smith (by Francis Smith, proxy), one hundred shares.
In all, thirteen hundred and fifty shares.

Against the resolution:

Alvin Saunders, two hundred and fifty shares.
Smith Saunders, one hundred shares.
Jonas Gise, one hundred shares.
In all, four hundred and fifty shares.
A. Saunders served the following protest on the president of the railroad company, immediately after the announcement of the vote:
Omaha, December 4 and 5, 1871.
To S. S. Caldwell, President Omaha and Southwestern Railroad Oomyany:
Mr. President, I hereby give notice to you and all the members of the Omaha and Southwestern Railroad Company present, not to deed any of my part of the lands, lots or other property which is in your company, to the “Nebraska Land and Improvement Company,” or any other party or parties, as I do not wish any of my property to go into any other company, and in the vote of the directors agreeing to the action of the stockholders, the same notice was given, with the additional clause of this: I want my part of the land of the Omaha and Southwestern Railroad deeded to me immediately.
Alvin Saunders.
*346On the 11th day of December, 1871, this action was commenced, at which time the dissenting stockholders had not given their assent to the proposition to convey the lands and other property of the Omaha and Southwestern Eailroad Company to the Nebraska Land and Improvement Company. Can the plaintiff take advantage of such dissent? I think he can. The proposition is to convey all the lands and other property specified, to the Nebraska Land and Improvement Company. Until this proposition is accepted by all the stockholders it remains a merz proposition, and any shareholder before the final acceptance by all the stockholders, may withdraw his assent thereto, which he would do by commencing suit to set the proceedings aside. The rule is well settled that a suit in equity will lie against a corporation by one of its members, where the funds of the company without his consent are diverted from the purpose for which the company was incorporated, notwithstanding such misapplication is sanctioned by a majority of the stockholders. Cunliff v. Manchester Canal Co., 2 Russ. and M., 480. Mandeson v. Commercial Bank, 28 Penn. State, 379. Dodge v. Woolsey, 18 How., 331.
The leading case on this subject is that of Natusch v. Swing, found in the appendix to Gow on Partnership, 576, where a partnership was formed for life insurance. Afterward, by act of Parliament, they were authorized to enter upon the business of marine insurance. A majority of the members decided to engage in the business of marine insurance. Lord Eldon held them bound by the contract of co-partnership, unless every partner agreed to its alteration. See also, Livingston v. Lynch, 4 John. Ch., 573. Kean v. Johnson, 1 Stockton, Ch., 401. Stevens v. The Rutland R. R. Co., 29 Vt., 548.
The rule is well settled that where a number of persons become members of a corporation for definite purposes and objects specified in their articles of incorporation *347which in such case is their contract, that the object and business of such corporation cannot be changed or abandoned or sold oul, during the existence of such corporation, without the consent of all the stockholders, although a majority may manage the business against the will or interest of the minority, so long as it is within the scope of the articles of incorporation.
It -will be observed, by reference to the resolution of December 5, 1871, above quoted, that it was proposed to transfer all the lands, amounting to 40,000 acres, belonging to the Omaha & Southwestern Railroad Company, together with certain bonds and $61,000 in money, to the Nebraska Land and Improvement Company. The proposition was that all this property should be transferred. "Will it be seriously contended that one, or two or even a majority of such stockholders would be bound by their assent to such a proposition, if all the stockholders did not accede to it? I think not. This court has already held in the Omaha hotel cases, that the entire amount of capital stock fixed by the articles of incorporation, must have been subscribed before an action can be maintained against a subscriber on his subscription; and the same principle applies in this case. The plaintiff only assented to the transfer of the property to the new company, upon condition that all the stockholders assented. "While the matter was pending, and before these stockholders had given their assent, he withdrew his. In Clarke v. The Omaha & Southwestern Railroad Co., 4 Neb., 473, is the following: “The contract transferring these lands and assets to the Nebraska Land and Improvement Company was executed July 31, 1871, and was signed by the plaintiff as well as the other members of the corporation.” The judge who prepared the opinion of the majority of the court in that case overlooked the fact that Smith Saunders had not signed the contract, even at the time suit was instituted, he *348being the owner of one hundred shares of stock. This oversight undoubtedly arose from the fact that the fourth volume of Nebraska Reports was being printed at the time the opinion was being prepared; and, therefore, no opportunity occurred to correct the mistake until after its publication. But the grounds of affirmance of the judgment of the court below, on that branch of the case, were based on the assumption of the assent of all the stockholders to such transfer. Upon what grounds, then, can such judgment be sustained, when it is discovered that all the stockholders did not give their assent to such transfer?
There is no doubt that the testimony must be confined to the issues presented by the pleadings. But this rule applies only to cases where objection is made at the proper time to the introduction of improper testimony. “An objection on the ground of variance between the proof and the pleadings should be taken on the trial. Where this is not done, it is too late on error to make the objection.” Speer v. Bishop, 24 Ohio State, 598.
But is there a substantial variance between the allegations of the petition and the proof? 1 think not. The petition alleges that the plaintiff was to receive from the defendant $10,000 for certain surveys, right of way and franchises; the sum so due to be applied in part payment of his stock, and that he purchased and has paid for two hundred shares of the original stock. Had the answer been a general denial the plaintiff must have proved that he had paid for his stock in full, or have amended his petition on the trial in order to show a partial payment. But the answer expressly states that plaintiff subscribed for two hundred shares but alleges he has paid for only one hundred. The question of payment is one of the questions at issue. The testimony in the case appears to have been admitted without objection from either party, and is all before us, therefore, if the testi*349mony shows a cause of action it is the duty of the court to require the pleadings to conform to the proof, no material change being required.
In Doty v. Rigour, 9 Ohio State, 525, in an action at law, while the case was pending in the supreme court, that court permitted an amendment to the original petition, and afterwards affirmed the judgment.
“ There are instances where the English court of king’s bench, as the appellate court, made the amendments themselves upon error from the inferior courts; but the exchequer chamber and the house of lords usually require the amendments to be made in the court below, and have the record corrected after that, as upon suggestion of diminution of record, as the practice has been stated to be in the supreme court of Ohio, the supreme court of the United States, and in most of the States.” Powell on Appellate Proceedings, 151, and cases cited.
And in Grant v. Ludlow, 8 Ohio State, 31, it was held in a case reserved from the district court to which it had been appealed from the court of common pleas, that “ the amendments of pleadings in the appellate court, cannot be permitted so as to substitute for the cause of action originally brought, a new and different cause of action for determination of the appellate court. But it not unfrequently happens, especially in equity cases, that facts and allegations necessary to determine the subject matter of the original cause of action, and dependent upon and growing out of the original cause of action, is imperfectly stated. Such amendments have been heretofore allowed on appeal in this state; and when the collateral facts in equity suits made it necessary to bring a new party before the court, it has been allowed. Such amendments are made for the purpose of settling and fully determining the cause of action appealed.”
Section 138 of the code provides that: “No variance between the allegations in the pleading and the proof is *350to be deemed material, unless it shall have actually misled the adverse party to his prejudice in maintaining his action or defense on the merits.”
Section 144 provides that: “The court in furtherance of justice may amend any pleading, process, or proceeding * * by conforming the pleading or proceeding to the facts proved,” etc.
Section 145 provides that: “ The court at every stage of the action must disregard any error or defect in the pleadings or proceedings which do not affect the substantial rights of the adverse party.”
Under our code, will it be contended in a case like this on appeal, where the testimony is all before the court, and it is apparent that the plaintiff is entitled to relief, although the proof may not fully conform to the pleadings, that he must be turned out of court without relief? I think not. To do so would be to sacrifice substance for a shadow, and make the forms of proceedings in court of more importance than the administration of justice. There is no doubt of the power of this court, in a proper case, to permit an amendment of any pleading or proceeding when such an amendment is in furtherance of justice.
The plaintiff was the owner of the companies whose surveys, right of way and franchises he sold to the defendant, therefore is the real party in interest, and the action is properly brought in his name.
The shareholders of an incorporated company cannot change the contract which they have entered into with each other, and form a new one without the consent of every shareholder in the company. Ernest v. Nichols, 6 H. L., 401. Ex parte Morgan, 1 M. & G., 236.
For some time before and at the time this action was commenced, at least three of the members dissented to the transfer of the property to the new company. By what authority, then, was a deed made on the 7th day of *351December, 1871? Such a conveyance could not affect the plaintiff’s rights. A party must enter voluntarily into a partnership or corporation. And the law will not compel him against his will to place his property and interests under the control of those whom he may believe to be unfriendly to his interests. It is not for us to inquire whether the plaintiff had sufficient grounds to cause him to withdraw from the new company; but, did he withdraw his assent before all the other members had given their assent? Of this there is no doubt. The assent of the other members was not procured until the 8th day of January, 1872. The plaintiff, therefore, is entitled to the- relief prayed for. I cannot concur in either the statement of facts, or the law as laid down in the opinion of the majority of the court in this case. It seems to me that great injustice (however, unintentional), has been done. I have, therefore, given my reasons for my dissent, together with so much of the record as seemed to be necessary to understand the issues in the case. The motion for a rehearing should be sustained.