Black River and Utica Railroad Company v. Clarke

Black River and Utica Railroad Company v. Clarke. The signature to a subscription for stock in an alleged railroad corporation which recites that a company had been formed under the general act, and that the articles of association, with the necessary affidavits, had been duly filed, is conclusive evidence of an incorporation 'against the subscriber. The defendant did not, at the time of his subscription, pay the ten per cent required by ch. 140 of 1850, § 4, but subsequently paid forty per cent: Held, that the subscription was thereby made valid. Appeal from the- Supreme Court. Action to recover unpaid calls to the amount of six hundred dollars, upon the defendant’s subscription for one thousand dollars of the capital stock of the plaintiff. Upon the trial before a referee, the plaintiff produced a book containing this paper: “ Subscription Book of the Black River and Utica R. R. Co. A company having been formed under the law of the State of New York, passed April 2, 1850, entitled, an act to authorize the formation of railroad corporations, and to regulate the same, to construct and operate a railroad from Utica to Clayton, under the corporate name of the Black River and Utica Railroad Company; and the articles of association, with the necessary affidavits, having been duly filed, for the purpose of making subscriptions in consideration of the premises, &c., we the undersigned, do each for himself agree to take the number of shares-set opposite to our respective names, &c., and to pay, &c.” The defendant’s subscription for ten shares of one hundred dollars each, was proved, as were calls for six installments of ten per cent each, made subsequent to the payment" of four hundred dollars by the defendant, upon his subscription and the first three calls succeeding it. . The defendant moved for a nonsuit, which was denied, and he took an exception. There was another exception which is sufficiently stated in the following opinion. The plaintiff had- judgment, which was affirmed at general term in the fifth district, and the defendant appealed to this court. Alexander S. Johnson, for the appellant. E. A. Graham, for the respondent. [MAJORITY — Smith, J.] Smith, J. The motion for a nonsuit was made upon the single ground that it was not proved that the plaintiff was a corporation. The subscription book introduced and proved, signed by the defendant, distinctly recites and declares the formation and existence of a corporation organized under the general railroad act, “ under the corporate name of the Black River and Utica Railroad Company,” and that the articles of association, and the necessary affidavits showing due compliance with the law, had been duly filed. This must be sufficient proof of the corporate character of the plaintiff as against the defendant. By his subscription to this paper he recognized the corporate character of the plaintiff, and became a stockholder in such corporation. He is estopped, by his own acts and admissions, from denying thereafter the corporate char' acter of the plaintiff. Judge Thompson, in Dutchess Cotton Factory v. Davis (14 Johns., 245), said of a defendant sued like the defendant in this action, upon an installment due upon his subscription to the stock of the company: “The defendant having undertaken to enter into a contract with the plaintiffs, in their corporate name, he thereby admits them to be duly ‘ constituted a body politic and corporate, under such name.” The soundness of this rule of evidence has been asserted in numerous cases. (Palmer v. Lawrence, 3 Sandf., 170; Steam Navigation Company v. Weed, 17 Barb., 382.) It was questioned in Welland Canal Company v. Hathaway (8 Wend., 480), but that case did not present the point between a corporation and one of its own stockholders. This is a case like that in 14 Johnson (supra), of an action by the corporation against a stockholder, upon his subscription to its stock. In such case I think the rule stated by Judge Thompson, in the Dutchess Cotton Factory v. Davis (supra), the true one, and should apply. The admission, in the defendant’s subscription, of the existence of the corporation, we think, should be held conclusive against him in such an ‘action. The motion for a nonsuit was therefore properly denied. The remaining exception discussed, arises upon the offer to prove by the defendant, that at the time of his subscription to the stock, he paid nothing, although subsequently he paid four hundred dollars, in ca'sh, on account thereof. The defendant’s subscription not having been made to the articles of association for the purpose of organizing the company, or made previous to the filing of such articles, it was essential that the ten per cent be paid before it became a valid subscription. His subscription was under the fourth and not under the first section of the general railroad act. This section requires the payment of ten per cent by each subscriber, upon the amount subscribed by him, at the time of subscribing. The intent of this section doubtless was, that no subscription should be valid until ten per cent was paid thereon, and not that it should be invalid if a short interval occur between the actual subscription and the payment of the money. The subscription and the payment of the ten per cent must both concur to make a valid subscription. The subscription one day, with payment the next, would satisfy the statute, and so would actual payment at any period after subscription, with • intent to effectuate and complete the subscription. The writing of the name in the subscription book, should be deemed but part of the transaction, and provisional or conditional till the ten per cent is paid. But after the payment of ten per cent, and certainly after the payment of forty per cent on the subscription, the statute requirement on this point must be deemed fully complied with by the defendant. We" think this exception not well taken, and that the judgment below should be affirmed. Judgment affirmed.