Page images
PDF
EPUB

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.6

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 *required 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.8 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. The liability of the original subscriber often continues, at the election of the

5 Cheltenham & Great Western Union R. v. Daniel, 2 Q. B. 281, 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.

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

7 Birmingham, Boston & Th. J. R. v. Locke, 2 Railw. C. 867; s. c. 1 Q. B. 256.

8 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.

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

*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."1

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.13 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

10 Post, § 54.

"Graff v. Pittsburgh & Steubenville Railw. Co., 31 Penn. St. 489. 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.

12 Burr v. Wilcox, 6 Bosw. 198.

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

14 Taylor v. Fletcher, 15 Ind. 80.

13. Subscriptions in the capacity of executor are to be regarded as distinct contracts from those in the personal capacity of the subscriber, so that the pendency of a suit for one will not abate or render vexatious a subsequent suit for the other.15

SECTION VIII.

Release from liability for Calls.

1, 2. Where the transfer of shares, without registry, will relieve the proprietor from calls.

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

4. Dues cannot be enforced which accrue upon shares after they were agreed to be cancelled.

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

15 New York City & Erie Railw. v. Patrick, 39 N. Y. 256.

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.

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

ket 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 * 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.

3 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 Sandf. Ch. 258; Hartford & New H. R. v. Boorman, 12 Conn. 530; Aylesbury R. v. Mount, 5 Scott, New R. 127.

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. 279. Where the company accept a conveyance of shares to themselves, it will exonerate 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, 8 El. & Bl. 47.

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. An. 240. * 185

[blocks in formation]

§ 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 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 obliga

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

« PreviousContinue »