* 10. Where a corporation have abandoned all proceedings under their charter, from insolvency, and still owe debts, the subscriptions to the capital stock not being all paid, a judgment creditor may proceed, in equity, against the delinquent shareowners, there being no longer any mode by which calls upon the stock may be enforced, under the provisions of the charter, or by action at law, in favor of the company.7

11. It is held by the English statutes, in regard to fully registered companies, which never go into full operation, but have to be closed under the winding-up acts, that a shareholder, who has paid up the full amount of his shares, is still liable to pay the necessary calls, to defray the expenses of winding up the company, the subscribers to such joint-stock companies, under the statute, being held liable to the same extent as partners.8

of an action at law, even in states where no court of chancery existed. Vose v. Grant, 15 Mass. R. 505. In equity the suit may be in the name of the receiver, Nathan v. Whitlock, 9 Paige, 152, or in the name of a creditor, suing on behalf of himself and others, standing in the same relation. Mann v. Pentz, 3 Comst. 415,422. And all the shareholders, who have not paid their subscriptions, should be made parties to the bill, and compelled to contribute proportionally. Ib.

The same principle is recognized in numerous other cases. Mumma v. The Potomac Co., 8 Pet. 281; Wright v. Petrie, 1 Sm. & M. Ch. 282, 319; Nevitt v. Bank of Port Gibson, 6 Sm. & M. 513; Hightower v. Thornton, 8 Georgia R. 486; Fort Edward, &c. Plank Road Co., v. Payne, 17 Barb. 567; Gillet v. Moody, 3 Comst. 479. This case This case is where the bank, of which the plaintiff was receiver, had transferred specie funds to defendant, in exchange for his own stock in the bank. The transaction was held illegal, and the defendant was compelled to refund, for the benefit of the creditors of the bank. And where the subscriber to a bank, which became insolvent, assigned all his interest in the bank, it was held not to exonerate him from liability to assessments upon his subscription, to pay debts due from the bank, although contracted subsequent to the assignment. Dayton v. Borst, 7 Bosw. 115.

See also Morgan v. New York & Albany R. 10 Paige, 290.

Henry v. The Vermilion & Ashland Railw., 17 Ohio R. 187. See also Miers v. Z. & M. T. Co., 11 Ohio R. 273; s. c. 13 Ohio R. 197. And where the company retains its organization, and officers, it may be compelled, by writ of mandamus, to enforce calls against the shareholders, to the extent of their liability, as well as to perform other duties. Commonwealth v. Mayor of Lancaster, 5 Watts, 152.

8 Matter of the Sea, Fire, and Life Assurance Society, 23 Eng. L. & Eq. 422. The form of proceeding and the extent of responsibility is extensively considered, as to delinquent subscribers to an insolvent corporation, in Adler v. Milw. Patent Brick Co., 13 Wisc. R. 57.

SECTION V.

Conditions precedent to making Calls.

1. Conditions precedent must be performed | 6. Legislature cannot repeal conditions precebefore calls.

dent.

2. But collateral, or subsequent conditions not. 7. Limit of assessments cannot be exceeded 3. Definite capital must all be subscribed be

8.

for any purpose.

Where charter fails to limit stock, corporation may.

9. Alteration in charter reducing amount of stock.

§ 51. 1. Conditions precedent must be complied with, before any binding calls can be made. Anything, which, by the express provisions of the charter, or the general laws of the state, is made a condition to be performed on the part of the company, or its agents, before and as the foundation of the right to make calls, upon the subscriptions to the stock; or where the thing is required to be done, before calls shall be made, and is an important element in the consideration of the agreement to take stock in the company, it should ordinarily be regarded as a condition precedent.

*

2. But where the matter to be done is rather incidental to the main design, and only affects the enterprise collaterally, it will commonly be regarded as merely directory to the company, or at most as a concurrent or subsequent condition, to be enforced by independent proceedings, and in the performance of which time is not indispensable.1

1 Carlisle v. Cahawba & Marion Railway Co., 4 Ala. R. 70; Ante, § 18; Banet v. Alton & Sangamon Railway Co., 13 Ill. R. 504; Utica & Schenectady This last case is an action upon a Railway Co. v. Brinkerhoff, 21 Wend. 139. special undertaking to pay land damages, on condition the company would locate their road so as to terminate at a particular place, which the company alleged they had done, and defendant was held not liable, for want of mutuality, the company not being bound by the contract. Cooke v. Oxley, 3 T. R. 653. But it admits of some question, we think, whether the case of 21 Wend. 139, comes fairly within the principle upon which it was decided. The case of Cooke v. Oxley, which has been sometimes questioned, is an obvious case of want of consideration on the part of defendant, it being a mere naked refusal

And where the company voted to issue six hundred additional shares and to allow each stockholder to take one new share for

of goods, for a fixed time, the plaintiff in the mean time having an election, to take them or not. This class of cases is numerous and sound, resting upon the mere want of consideration. Burnet v. M. Bisco, 4 Johns. 235. But where such an option is given upon consideration, or as a standing offer, and in the mean time the other party proceeds to perform the contract on his part, it is as binding in this form as in any other. And it was so held, in the case of the Cumberland Valley Railway Co. v. Baab, 9 Watts, 458. In this case the inhabitants of one portion of Harrisburg made a subscription to induce the company to cross the river at a particular point, and to build their depot upon a particular street, which being done, the subscribers were held liable to pay their subscriptions to the company, and, as we think, upon the most obvious and satisfactory grounds.

In Henderson & Nashville Railway Co. v. Leavell, 16 B. Monr. 358, it was held, that a subscription to the stock of a railway, conditioned that the road should pass through a certain town, and the money subscribed should be expended in a certain county, was a valid subscription. The Court, Stimpson, J., say: "The stock in this case is not conditional, although the defendant has, in the act of subscribing for it, brought the company under certain obligations to him, in relation to it, with which they are bound to comply. Such stipulations are not incompatible with sound policy, or with any of the provisions of the charter. They do not render the subscription void, but operate, as it was intended they should, for the benefit of the stockholder. But even if the subscription had been made, upon the express condition that the money should not be paid until certain acts were done by the company, when these acts were done, the stock would then be unconditional, and the subscribers would then be compelled to pay it, as was held in McMillan v. Maysville & Lexington Railway Co., 15 B. Monr. 218." If a subscription for stock be conditioned, that the subscriber may withdraw his subscription, at his election, if the whole stock is not taken, at a given time, and the defendant pay part of his subscription after that date, he is liable for the balance, unless he show the failure of the condition, and his own election, in a reasonable time after, to withdraw. Wilmington & Raleigh Railway Co. v. Robeson, 5 Iredell, 391. On a subscription to stock in a railway upon condition the road should "pass" on a certain route through a certain county, it is not a condition precedent to the right to demand payment, that the road should be actually constructed upon that line; it is sufficient if the road be permanently located there. North Missouri R. Co. v. Winkler, 29 Mo. R. 318; A. & N. L. Railw. Co. v. Smith, 15 Ohio St. 328. See also Vicksburg, Shreveport, and Texas Railw. v. McKean, 12 La. Ann. 638. There is a recent case in Vermont. Conn. & Pass. Railw. Co. v. Baxter, 32 Vt. R. 805, where the court seem to hold, that where the subscription defined the route of the proposed railway, that the representations of the agent who carried about the paper, that the written words really defined one particular route, and not another, the subscribers themselves being equally connusant of

every two held by him, if he subscribed for the same, paid a certain sum and gave his note for the balance, before a day named; the facts with the agent, was binding upon the company, and would preclude them from recovering calls upon such subscription, provided the road were not in fact located upon the particular route indicated by the agent, although in fact so located as to comply with the conditions of the written subscription, and although the agent in expressing the opinion he did, acted in perfect good faith. The case is not one of sufficient importance to require much discussion, but it may be well to bear in mind, what seems to have escaped the apprehension of the court for the moment, that the point ruled as stated in the marginal note and in the opinion of the court, seems to be adopting the oral representations of the agent, made at the time of the subscription, as part of the written contract of subscription. The charge of the court below puts the case upon the ground, that the subscriber is bound by the legal construction of his written subscription, and that he cannot escape such responsibility by showing that those who acted on behalf of the company maintained a different opinion, unless that was done fraudulently, with a view to deceive the defendant. We understood that to be the law at the time, and we cannot fairly say that we understand it differently

now.

In Chamberlain v. Painesville & Hudson R. Co., 15 Ohio N. S. 225, it was decided that where a subscription was made for a given number of shares of stock in a railway company, payable at such times, and in such instalments, as the directors may prescribe, provided the road is "permanently located” on a given route, and that a “freight house and depot be built” at a point named :--1. That on the permanent location of the road in accordance with the terms proposed, the subscription became absolute. 2. That the provision in relation to the erection of the buildings must be regarded as a stipulation merely, and its performance could not be reasonably considered a condition precedent to the right to collect the amount of the subscription. 3. The giving by a subscriber, of his note for the balance of his subscription, and taking, therefor, from the company, a receipt, stipulating, that when paid, the amount of the note should be applied on his stock, was primâ facie a waiver of conditions precedent. But this is denied in a recent case, Parker v. Thomas, 19 Ind. R. 213.

And in McAllister v. The Ind. & Cin. Railw. Co., 15 Ind. R. 11, a question similar to the one stated in Conn. & Pass. Railw. Co. v. Baxter, supra, arose and received a far more just and reasonable determination. The plaintiff made an unconditional subscription to the stock of the plaintiff's company, and paid the amount and took and retained his certificate without offering to surrender the same. But at the time of the subscription the company promised that a branch of their line should come to Milford, the place of the plaintiff's residence, which had not been done. The suit was brought to recover the money paid. Held, that the parol promise to construct the branch to Milford, could not be proven as part of the written contract of subscription; and hence the money paid could not be recovered on the ground of a breach of contract. 2. A recovery could not be had on the ground of fraud: the parol promise and

it was held there was no implied condition that the whole six hundred shares should be issued, and the failure to do so was representation being, under the circumstances, no more than the expression of an existing intention to make the branch. 3. Under the circumstances the company was not liable to repay the money.

See also Andrews v. Ohio & Miss. Railw. Co., 14 Ind. R. 169; Eakright v. L. & N. Ind. Railw., 13 Ind. R. 404, where the question of controlling written subscriptions by oral declarations of those who solicit them, as to the probable route of the road, is further discussed and placed upon the true ground, that such representations can have no effect, unless upon the ground of fraud. See also Parker v. Thomas, 19 Ind. R. 213; Cunningham v. E. & K. Railw. Co., 2 Head, 23; Brownlee v. O., Ind. & Ill. Railw. 18 Ind. R. 68.

There are some cases which go the length of saying that as the directors of a railway company have no power to give any binding assurance as to the route which shall be finally adopted, it being their duty to place it where, in their ultimate judgment, the public good requires, it is the folly of any subscriber to rely upon any such representation, and that even where it could be shown that such representations were fraudulently made, to induce subscriptions, and had the purposed effect, the subscriptions could not be avoided on that ground. Ellison v. Mobile & Ohio Railw., 36 Miss. R. 572; Walker v. Same, 34 Id. 245. See also Piscataqua Ferry Co. v. Jones, 39 N. H. R. 491. The verbal promise of the agent who takes up subscriptions for a railway, that the time of payment shall be delayed beyond the time named in the charter, and which induces the subscriptions, is not binding upon the company. Thigpen v. Miss. Central Railw., 32 Miss. R. 347.

One subscribed, in 1853, for twenty shares of the stock of the P. & C. R. R. Co., on the express condition that the company "should locate and construct their railway along the route contemplated by the Meyer's Mill Plank Road Co., for their road,” paid one instalment, part of the second, but delayed the payment of the balance, as the calls were made, until the company, before the road was constructed along the route mentioned, suspended operations, after which payment was refused on the ground that, though the road had been located by the company, they had not constructed it, according to the condition in the subscription. In an action brought by the company, it was Held, 1. That the promise of subscription being precedent to that of construction, upon the part of the company, the defendant could not insist upon performance by the railroad company, while he refused performance on his part, and that the road having been located as stipulated, and completed so far as the means of the company would allow, it was a compliance with the condition, and the company were entitled to recover. 2. That the condition in the contract of subscription was not a condition precedent, and did not require the completion of the road before payment could be required, but only that when located and constructed it should occupy the route designated, the undertaking being on the part of the subscriber, to pay, as calls should be made by the directors, and on the part of the company to locate as stipulated, and construct as fast as their means would allow.