4. One may so conduct as to estop him from 10. denying his liability.

If lost secondary evidence admissible. What acts will constitute one a shareholder.

5. The register of the company evidence of 11. May take and negotiate or enforce notes membership. for subscriptions. 6. Subscriptions must be made in conformity 12. But note fraudulently obtained not ento charter. forceable.

§ 53. 1. All the original subscribers to the stock in a railway company are usually made liable to calls, by the charter of the company, or by general statute.

2. Some question has arisen in the English courts, as to what is necessary to constitute one a subscriber. In an early case 1 upon this subject, it was held, that the word "subscriber," in the act of parliament constituting the company, applied only to those who had stipulated that they would make payment, and not to all those who had advanced money; and that one, who was named in the recital of the act, as one of the original proprietors, and who had paid a deposit on eight shares, but who had not signed any contract, was not a subscriber within, the meaning of the act, and not liable to be sued by the directors for calls on the remainder of such shares.

3. This is the generally received opinion upon that subject, in this country. In one case,2 a plea to an action to recover calls on stock subscribed, that another person had agreed to take the stock, and that the commissioners had counted this stock to such other person, is insufficient. The signature of the first subscriber should have been erased, and that of the other substituted, or something done to hold the latter liable. A subscriber for stock

1 Thames Tunnel Company v. Sheldon, 6 B. & C. 341.

cannot subrogate another person to his obligation, without a substitution of his name upon the books of the company, or some other equivalent act recognized by the charter and by-laws of the company.

4. But the principal difficulty, in regard to liability for calls, arises, where there have been transfers, and the name of the transferee not entered upon the books of the company. For whenever the name of the vendee of shares is transferred to the register of shareholders, the cases all agree that the vendor is exonerated, (unless there is some express provision of law, by which the liability of the original subscriber still continues,) and the vendee becomes liable for future calls.3 And the vendee having made such representation to the company, as to induce them to enter his name upon the register of shares, is estopped to deny the validity of the transfer.4 And even where the party has represented himself to the company as the owner of shares, and sent in scrip certificates, which had been purchased by him, claiming to be registered as a proprietor, in respect thereof, and had received from the company receipts therefor, with a notice that they would be exchanged for sealed certificates on demand, he was held estopped * to deny his liability for calls, although his name had not been entered upon the register of shareholders, or any memorial of transfer entered, as required by the act.5 And where one has paid calls on shares, or attended meetings of the company, as the proprietor of shares, he is estopped to deny such membership.

5. The holders of scrip certificates are properly entered as proprietors of shares before the passing of the act, although they have neither signed the parliamentary contract, nor been original subscribers; and the register-book of shareholders, which is re

* Sheffield & Ashton-under-Lyne & Man. R. v. Woodcock, 2 Railw. C. 522; s. c. 7 M. & W. 574; London & Grand J. R. v. Freeman, 2 Railw. C. 468; s. c. 2 M. & G. 606; post, § 54.

* ↑ Sheffield, Ash. & M. R. v. Woodcock, supra; London & Grand J. R. Freeman, supra.

5 Cheltenham & Great Western Union R. v. Daniel, and Same v. Medina, 2 Railw. C. 728. And this being matter of estoppel in pais, may be used in evidence, in answer to the defence, without being pleaded.

* London & Grand J. R. v. Graham, 2 Railw. C. 870; s. c. 1 Q. B. 271.

quired by the statute to be kept, in a prescribed form, by the company, though irregularly kept, is prima facie evidence who are proprietors.7

6. The subscription for stock, to be valid, must be made in conformity with the act. So that where it was required to be made in such form as to bind the subscriber and his heirs, it was deemed requisite to be made under seal. But such a provision is of no force in this country, simple contracts being of the same force as against heirs as specialties.

7. If by the act of incorporation the shares are made assignable without restriction, and no express provision exists in regard to the party liable for calls, it would seem to follow, upon the general principles of the law of contract, that the proprietor of the share, for the time being, is liable for calls. And where certain formalities are requisite, in the transfer of shares, and these have been complied with on the part of the transferee, or waived by the company at his request, his liability to calls then attaches.9 The liability of the original subscriber often continues, at the election of the company, after that against the vendee attaches, but when the company consent to accept the name of the transferee, that of the subscriber, or former proprietor, ceases.10

8. It seems to be regarded as settled law, that the best evidence of an original subscription to the capital stock of a railway company is the production of the original subscription book, or the book of records of the company on which the subscriptions were made.11

7 Birmingham, Boston & Th. J. R. v. Locke, 2 Railw. C. 867; s. c. 1 Q. B.

256.

• Cromford & High Peak R. v. Lacey, 3 Y. & Jer. 80. See ante, § 18, n. 2. • Huddersfield Canal Co. v. Buckley, 7 T. R. 36; Aylesbury R. v. Mount, 5 Scott, New R. 127; West Philadelphia Canal Co. v. Innes, 3 Whart. 198; Mann v. Currie, 2 Barb. Sup. Ct. 294; Hall v. U. S. Insurance Co., 5 Gill, 484; Bend v. Susquehannah Bridge Co., 6 Har. & J. 128; Angell & Ames, ch. 15, § 534.

10 Post, § 54.

11 Graff's executor v. Pittsburg & Steubenville Railw. Co., 11 Am. Railw. Times, No. 14. These subscriptions are, in fact, sometimes made upon different books, and then brought together upon one book, for the purpose of permanent preservation. But it would seem there should be evidence of the original subscription.

9. But where the books are shown not to be in the proper place of deposit and custody, and no trace can be found of their present existence elsewhere, secondary evidence is admissible. And the court decide the question of loss, as a preliminary one to the admission of the secondary evidence.11

10. One who accepts a subscription made by another on his behalf, and pays the calls made thereon and receives a certificate of ownership, is responsible as a shareholder; and it makes no difference that his name does not appear upon the transfer books or the alphabetical list of stockholders as a transferee of stock. And one may become a shareholder without receiving a certificate of stock.12

11. It seems clear that railway companies may accept promissory notes in payment of subscriptions, and either negotiate or enforce them by suit.18 The questions of pleading and evidence. which may be raised in suits upon such notes are extensively discussed in the case last cited.

12. And where the subscription to railway stock is dependent upon the condition that no calls shall be made until work should be begun upon a particular section of the road, and the subscriber was induced to execute his note for the amount upon the representation of the agents of the company that work had been so commenced, when in fact it had not, the note cannot be enforced.14

*SECTION VIII.

Release from liability for Calls.

1, 2. Where the transfer of shares, without | 4. Dues cannot be enforced which accrue upon registry, will relieve the proprietor from calls.

3. Where shares are forfeited, by express condition, subscriber no longer liable for calls.

shares after they were agreed to be cancelled.

54. 1. One may relieve himself of his liability for calls, by

12 Burr v. Wilcox, 6 Bosw. 198.

13 Goodrich v. Reynolds, 31 Ill. R. 490. See also Straus v. Eagle Ins. Co., 5 Ohio St. 59.

14 Taylor v. Fletcher, 15 Ind. R. 80.

the transfer of his shares, and the substitution of the name of his assignee for his own upon the books of the company. But until this change upon the books of the company is made, they are at liberty to hold the original subscriber liable, if they so elect.1 But where the act of incorporation of a joint-stock company declared the shares should be vested in subscribers, their executors and assigns, with power to the subscribers to assign their shares, and a committee, to be appointed under the act, were authorized to make calls upon the proprietors of shares, it was held, that an original subscriber, who had transferred his shares, was no longer liable to calls.2

2. But this case is determined upon the express provisions of the charter of the company. The general rule, in England, at present, under their consolidated acts, is undoubtedly as stated above. And we see no good reason why it should not equally apply in this country. It would seem to be the only mode of securing the ultimate payment of calls. But some of the cases seem to assume, that the mere transfer of the shares in the market does exonerate the subscriber from the payment of future calls. But this depends chiefly upon the provisions of special charters, and the general laws of the state, applicable to the subject.3

* 3. Where shares are allotted to one upon the express condition to be forfeited if a certain deposit is not paid in a certain time, and nothing more is done by the allottee, he is not liable

1 Ante, § 47, and cases there cited. In Everhart v. West Chester and Philadelphia Railw., 28 Penn. St. 339, it is said that a transfer of stock, made for the purpose of exonerating a subscriber, without the consent of the company, is not a valid defence to an action against him for the purchase-money of the shares subscribed. Ante, § 32.

2 Huddersfield Canal Company v. Buckley, 7 T. R. 36, 42.

* In West Philadelphia Canal Co. v. Innes, 3 Wharton, 198, it was held, that where the proprietor of shares of the plaintiff's stock transferred them upon the books of the company, after calls were made, but before they fell due, that the transferee was liable for such calls, although he had never received certificates, or given notice of the acceptance of the transfer. And it was held to make no difference, that the transfer was from an original subscriber, without consideration, and that the holder is nevertheless liable for unpaid calls. Mann v. Pentz, 2 Sand. Ch. 258; Hartford & New H. R. v. Boorman, 12 Conn. R. 530; Aylesbury R. v. Mount, 5 Scott, New R. 127.