Court Opinion

ID: 6994680
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:31:10.65315+00
Date Added: 2024-06-11T16:09:44.004771
License: Public Domain

Mr. Justice Watermab delivered the opibiob of the Court. It is strenuously urged that section 39 of the articles of association is so unreasonable and unjust, that the courts will not enforce it; that this suit is an attempt to enforce a penalty created by the laws of another sovereignty, and that this is never done; and it is also insisted that appellant ■was entitled to know what had been done with his forfeited shares, and to be credited with whatever the company had received therefor. We see nothing unreasonable or unjust in the provisions of section 39, nor do we regard this suit as an attempt to enforce a penalty. Stockholders are presumed to know the provisions of the charter and by-laws of the companies in which they are members. Morawetz on Oorporations, Sec. 591. By becoming a holder of stock having a par value of £10 upon which ¿only £6 had been paid, appellant obligated himself to pay when duly called upon £4 upon each of his shares; so soon as he was thus duly called upon to pay any portion of _ the unpaid £4 the amount of such call became a debt. It is for this debt that the present suit was brought. The defense to it is based entirely upon certain of the articles of association, and what has been done thereunder. If they are so unjust and unreasonable that courts will not enforce them, the forfeiture of appellant’s shares may be held to have been unwarranted and be set aside, but a defense to this suit will not therefrom arise; the debt of appellant will not thus be paid. This suit is brought to collect a debt, not to enforce a penalty; the penalty provided by the articles of association was the forfeiture of shares; with whether such forfeiture was legal or illegal, warranted or unwarranted, binding upon appellant, or a thing- which affected him not, we have in this litigation nothing to do, and as to such declaration of forfeiture, the judgment in this case will establish nothing. Whether appellee has sold or still retains the forfeited shares, is in this action immaterial. Save and by virtue of certain provisions of its articles, it could not forfeit at all; if they are incapable of enforcement, or if the proceedings for forfeiture, taken thereunder, were unwarranted or inadequate, then appellant is yet the owner of the 380 shares, and any sale the company may have made of them is not binding upon him; if the forfeiture was in all respects regular and warranted, then the company became thereby the absolute owner of these shares and need not account for the proceeds thereof. The numerous cases cited by appellant to the effect that the amount of a call, for the non-payment of which' stock has been forfeited, can not be collected, are all in respect to companies whose by-laws contained no provision like section 39. But for that section it might well be held that the company having elected under its powers to forfeit shares, could not recover the amount of the call, for the non-payment of which the forfeiture was made; while in the present instance the right to recover such call, notwithstanding forfeiture, is plain; to this appellant agreed; all stockholders stood as to this, upon an equality, and we see no re'ason why appellant should be allowed to get rid of his unmistakable agreement. That the stockholder remains, notwithstanding forfeitures, liable to pay all calls due at the time of forfeiture, is, under provisions like section 39, held in England, and as we think with good reason. Dawes case, 38 Law Journal, N. S. 512. Appellant, in purchasing these shares, contracted with reference to the charter and by-laws of the corporation of which he became a member, and the laws of the country in which such company was created. Beach on Corporations, Sec. 148; Morawetz on Corporations, Secs. 874 and 875; First National bank of Deadwood v. Gustin Minerva Con. Mining Co., 42 Minnesota 327. We do not regard section 26 of chapter 32, entitled Corporations, of the statutes of this State, as having any bearing' upon this case. Appellee did not undertake to do business in this State, and it is now merely attempting to enforce the payment of a debt created in and in accordance with the laws of another sovereignty. A corporation doing business in this State can not contract to receive more than seven per cent interest, but a corporation of another State, may in that State, make a valid contract for interest at any rate permissible with the laws of that State, and may in this State bring suit and recover judgment according to the law of the State where its contract was made. The validity of contracts is determined by the lex loei contradi. The relief afforded for a breach of contract is in accordance with the law of the forum where suit for breach is brought. The authorities cited by appellant, to the effect that calls can not be made until the entire stock has been subscribed, have no reference to cases in which the corporation, as in this case, is authorized to begin and carry on its contemplated business before the stock has all been taken. Where a company, for the purposes of its being, is to come into existence only upon the full amount of its stock being subscribed, it is manifest that it coaid not make and enforce payment of calls ere it had passed its embryonic condition. Such is not the condition of appellee. Buckley on Companies’ Acts,4th Ed. 19; Ornamental Pyrographic Co. v. Brown, 2 Hurl. & Colt. 63. It is urged by appellant that it was incumbent on appellee to have its books actually present in court if it desired to show their contents; that it was not sufficient to, as was done, take by deposition the testimony of the secretary of the company and the custodian of its records at its office, the books being thére produced, proven, and the entries desired to be introduced then and there copied and verified by the witness. The entries, copies of which were introduced in evidence, were such as the company was by law required to keep; they were made when appellant was a stockholder, and therefore by his agents, and the copies were examined and sworn to by credible witnesses. See statutes of this State, Secs. 13 to 18, of chapter entitled Evidence; Greenl. on Ev., Vol. 1, Sec. 493, 13th Ed. see also Scarlett v. The Academy of Music, 43 Md. 203. The making of the call for which suit was brought was proven by the testimony of witnesses as well as by copies of entries in the books of the company. The making of a call is a fact which it is not indispensable should be proved by an introduction of or transcripts from the books of the company. Hays & Black v. Pittsburgh & Steubenville R. R. Co., 38 Penn. St. 81-90; Reynolds et al. v. Schweenfus, 27 Ohio St. 311, 321, 324; Ratcliff v. Teters, 27 Ohio St. 66; Tatmouth v. Koehler, 33 Mich. 22; Bank of the United States v. Dandridge, 12 Wheat. 64. The opinion in this case being applicable to Frank v. Swan Land & Cattle Co., and Friend v. Swan Land & Cattle Co., at this term, the jugdment in each of said causes is affirmed. Mb. Justice Gaby. If the question were now whether there was any good cause for suppressing any part of the depositions I should say that there was, but a motion made upon specific grounds is to be sustained or denied upon those. The principal objection made to the depositions was that no secondary evidence of the contents of the corporation books was admissible, but the books themselves must be put in evidence on the trial. The 15th and 18th sections of chapter 51, Evidence and Depositions, permit copies to be used either certified or sworn, and whether the contents of the depositions were partly testimony of the witnesses as to corporate acts which should be proved by the books, or competent copies, is a question not necessary to consider.