for calls, although the company have entered his name upon the register of shares as a shareholder.4

4. Where the corporation resolve to release subscribers and to cancel their stock upon making certain payments, which are made and the stock cancelled, the company cannot enforce any dues on such shares which subsequently accrue,5 since the former arrangement amounted to an accord and satisfaction of all claim on the part of the company. But if the company thereby materially lessened the remedy of creditors, they might possibly interfere.

§ 55. 1. It is certainly not competent for a subscriber, when sued for calls, to go, in his defence, into every minute deviation from the express requirements of the charter, in the organization and proceedings of the company. Any member of the association, who intends to hold the company to the observance of those matters which are merely formal, should be watchful, and interpose an effectual barrier to their further progress, at the earliest opportunity, by mandamus, or injunction out of chancery, or other appropriate mode.1 In cases of this kind often, where vast

4 Waterford, Wexford, Wicklow, & D. R. v. Pidcock, 18 Eng. L. & Eq. 517. s. c. 17 Jur. 26; s. c. 22 Law J. Rep. (N. s.) Exch. 146; s. c. 8 Exch. R. 279. Where the company accept a conveyance of shares to themselves, it will exonorate the owner from calls. But a sale to another company of all the effects of the company, will not release the shareholders from calls already made. Plate Glass Insurance Co. v. Sunley, 29 Law Times, 277.

5 Miller v. Second Jefferson Building Association, 50 Penn. St. 32. And where the company accept another in the place of the original subscriber, the latter is wholly released. Haynes v. Palmer, 13 Louis. Ann. 240.

1 The London & Brighton Railw. Co. v. Wilson, 6 Bing. N. C. 135. This case

*

expense has been incurred, and important interests are at stake, courts will incline to conclude a member of the association, by the briefest acquiescence, in any such immaterial irregularity, and often, in regard to those, which, if urged in season, might have been regarded as of more serious moment. In one case, Tindal, Ch. J., says, in regard to the offer of a plea, that the money sued for, being the amount of a call, was intended for other purposes than those warranted by the act, "It seems to me it was never intended, nor ought it to be allowed, that so general a question as that should be litigated, in the question, whether a call is due from an individual subscriber." And it was held no sufficient ground of enjoining the directors from making calls, that the proceedings had been such as to amount to an abandonment of the enterprise, as it was possible that there were still legal obligations to answer.2 And where the directors were authorized to limit the number of shares, but could not proceed with the road until two hundred and fifty shares were subscribed, and after that number were taken they resolved to close the books, it was held that this vote was equivalent to a vote fixing the number of shares, and that the company might therefore proceed to make and enforce calls, under the statute, and to collect the deficiency remaining, after the sale of forfeited stock.3

4

2. But where the statute prescribes the terms on which shares may be sold, it must be strictly followed, or the sale will be void, as where the prescribed notice is not given. And it would seem, that the courts are reluctant to admit defences to actions for calls, upon the ground of informality in the proceedings of the company, or even of alleged fraud, where there has been any considerable acquiescence on the part of the shareholder.5

decides, that a plea, that the company had made deviations in their line, and that the money sued for was needed only in regard to such deviations, could not be entertained or regarded as a proper inquiry in an action for calls upon shares ; and so also of a plea, that fewer shares had been allotted than the act required. Walford, 279; Wight v. Shelby Railway, 16 B. Monr. 5.

&

* Lexington & West Cambridge R. v. Chandler, 13 Met. 311.

✦ Portland, Saco, & Portsmouth R. v. Graham, 11 Met. 1.

5 Walford, 278, 279; Cromford & High P. R. v. Lacey, 3 Y. & Jer. 80;

3. It seems to have been held, in some cases, that a subscriber for stock may defend against an action for calls, upon the ground that he did not pay the amount required by the charter to be paid down at the time of subscription.6

4. But it is questionable how far one can be allowed to plead his own non-performance of a condition in discharge of his undertaking. And a different view seems to have obtained to some extent. It has been held the stockholder cannot object, that he * has not complied with the charter, after having voted at the election of officers, or otherwise acted as a shareholder.8 And so also where the subscription is made, while defendant held the books of the company and acted as commissioner. And pay

Mangles v. Grand Collier Dock Co., 2 Railw. C. 359; Thorpe v. Hughes, 3 Mylne & Cr. 742.

6

• Highland Turnp. Co. v. McKean, 11 Johns. 98; Jenkins v. Union Turnp. Co., 1 Caines's Cas. in Error, 86; Hibernia Turnpike Co. v. Henderson, 8 S. & R. 219; Charlotte & C. R. v. Blakely, 3 Strob. 245.

' Henry v. The Vermilion R. 17 Ohio R. 187. A similar rule is recognized in Louisiana, in the case of Vicks. S. & Texas Railw. v. McKean, 12 La. Ann. 638. Nor can a subscriber, 9 Clark v. Monongahela Nav. Co., 10 Watts, 364. after having transferred his stock to another, thus treating it as a valid security, object, in the trial of a suit against him on the original subscription, that the same was originally invalid, by reason of the non-payment of the sums requisite to give it validity, at the time of making the subscription. Everhart v. West Chester & Ph. Railw., 28 Penn. St. 339.

And where commissioners were appointed, by an act of the legislature, and were authorized to receive subscriptions for the purpose of constructing a railway, no subscription to be valid unless five dollars was paid upon each share at the time of subscribing; the act providing that when a certain number of shares shall have been so subscribed, and the same certified under the oath of the commissioners to the governor, he should issue letters-patent, incorporating the subscribers, and such as should thereafter subscribe, and this was done, and the company duly organized, it was held :

That the act imposed no restriction upon the corporation after it was organized, in regard to the payment of the five dollars at the time of subscription. That the condition, that subscriptions should not be valid till a certain amount was subscribed, was one which the parties had a right to annex to the contract of subscription, and as such, was valid, and the subscriptions could not be enforced till the condition was performed. Philadelphia & West Chester Railw. v. Hickman, 28 Penn. St. 318. See also Black River & Utica Railw. Co. v. Clarke, 25 N. Y. R. 208; H. & P. Plank Road Co. v. Bryan, 6 Jones Law, 82; Piscataqua Ferry Co. v. Jones, 39 N. H. R. 491.

• Highland Turnp. Co. v. McKean, 11 Johns. 98; Grayble v. The York

ment before the books are closed, has been held sufficient to bind the subscriber.10 So also if the sum have been collected by suit. And a promissory note has been held good payment, where the charter required cash on the first instalment, at the time of subscription.12 And, by parity of reason, if the subscription binds the subscriber to pay for the stock taken, in conformity to the requisitions of the charter, which is the more generally received notion upon the subject at present, we do not well comprehend why the subscription itself may not be regarded as effectual, to create the subscriber a stockholder, and as much a compliance with the condition to pay, as giving a promissory note. In either case, the company obtain but a right of action for the money, and if the party can be allowed to urge his own default in defence, it is perhaps no compliance with the charter. But upon the ground that, so far as the subscriber is concerned, the company may waive this condition, upon what is equivalent to payment, it ought also to be equally held, that when the subscriber has obtained such a waiver, for his own ease, he shall be estopped to deny, that it was so far a compliance with the charter as to render the contract binding.

5. And upon the other hand, the company having consented to accept the subscriber's promise, instead of money, for the first instalment, cannot defeat his right to be regarded as a stockholder, on account of his not complying with a condition which they have expressly waived. It would seem, that under these circumstances, the immediate parties to the contract could not obtain any advantage over each other, by reason of the waiver, by mutual consent, of strict performance of such condition. But that the objection must come properly from some other quarter, either the * public, or the other shareholders. But possibly the cases decided upon this subject do not justify any such relaxa

& Gettysburg Turnp. Co., 10 Serg. & Rawle, 269. So also if one act as a stockholder in the organization of the company. Greenville & Columbia Railw. v. Woodsides, 5 Rich. 145.

10 Klein v. Alton & Sangamon Railw., 13 Ill. R. 514.

11 Hall v. Selma & Ten. Railw., 6 Alabama, 741.

12 McRae v. Russell, 12 Ired. 224; Selma & Ten. Railw. v. Tipton, 5 Alabama, 787; Tracy v. Yates, 18 Barb. 152; Greenville & Columbia Railw. v. Woodsides, 5 Rich. 145; Mitchell v. Rome Railw., 17 Georgia R. 574.

tion, even between the parties to the immediate contract of subscription. Upon general principles, applicable to the subject, as educed from the law of contracts, we see no objection to the waiver of such a condition on behalf of the company. And if there be any objection upon other grounds, it is not for the benefit of the subscriber.13

13 It has been held that the misstatement of the length of the road, in the articles of association, if there be no fraud; or the lease, or sale, of the franchises of the corporation to another company, which is void; or the neglect to make the whole road, even without legislative sanction, will not exonerate a subscriber from paying calls. Troy & Rutland Railw. v. Kerr, 17 Barb. 581. But where a preliminary subscription is required, it must be absolute and not dependent upon conditions. Troy & Boston Railw. v. Tibbits, 18 Barb. 297. But a condition that provides for interest, by way of dividends, to paying subscribers, until the full completion of the road, at the expense of subscribers who do not pay, or one that imposes a limitation upon the directors in calling in stock, is void as being against good policy. Ib.

In a recent case in Kentucky, Wight v. Selby Railw., 16 B. Monr. 5 (1855), it was held, that a subscription to stock, in a railway, is not rendered invalid by reason of the subscriber's failure to pay a small sum required by the charter to be paid upon each share when he subscribed. Simpson, J. "It was their duty to pay it, at the time the stock was subscribed, but they should not be allowed to take advantage of their own wrong, and release themselves from their whole obligation, by a failure to perform part of it." This seems to us a sound view of the subject, and the only one, which is consistent with the general principles of the law of contract, as applicable to the question.

In a still more recent case, S. subscribed for $500 of stock in a railway company upon the understanding that the first ten per cent. required by law to be paid in cash upon subscribing should be paid by his services in securing subscriptions and right of way. He subsequently presented an account against the company for services, from which it appeared, that at the date of the subscription the company was indebted to him in an amount greater than the cash payment required, in which account he applied and credited $50 for ten per cent. upon his subscription, and $ 50 for the first call made thereon. The account was allowed by the company and the balance paid by S. Held, that this was a sufficient compliance with the statute in respect to the payment of the first ten per cent., and made the subscription obligatory upon S. Beach v. Smith, 30 N. Y. R. 116. See also Vicksburg, Sh. and Texas R. Co. v. McKean, 12 La. Ann. 638.

In this case it is further held, to be no valid defence to a subscription to the stock of a railway, that it was delivered as an escrow to one of the commissioners appointed to receive subscriptions. It should have been delivered to a third person, to become effectual as an escrow. Such subscribers are presumed to know the conditions of the charter under which the subscription is taken, and that if they desire to make their subscriptions conditional, it must be so ex