Robert McK. Ormsby, Appellant, v. The Vermont Copper Mining Company, Respondent

Robert McK. Ormsby, Appellant, v. The Vermont Copper Mining Company, Respondent. (Argued February 2, 1874; decided March 24, 1874.) The doctrine of laches, and acquiescence as a bar to an action through lapse of time finds its just application in respect to equitable rights only; as to legal rights mere lapse of time, before an action to enforce them, is of no moment, unless it come up to the requirements of the statute of limitations. Neither the stockholders nor the directors of a corporation can do a corporate act out of the jurisdiction creating the corporation, which will bind those who do not participate in it. It seems that in an action for the conversion of personal property, in the absence of special circumstances, the value of the property at the time of the conversion, with interest, is the proper measure of damages. This action was brought to recover for certain shares of defendant’s stock alleged to have been converted by it. Defendant was a corporation organized and created by a statute of the State of Vermont. Its shares were issued as full paid. One Durand became the owner, by purchase and transfer, of 800 of these shares and one Gilbert of 500. While they were the owners and the stock standing in their names upon the books a meeting of the stockholders was held in the city of New York, at which neither Durand nor Gilbert were present or represented. At that meeting an amendment of the by-laws was adopted authorizing the directors to assess the stock to pay debts, and to furnish means to carry on the company, and empowering the treasurer to sell the shares of any stockholder refusing or neglecting to pay the .assessment. Subsequently, and in February, 1857, the directors met in New York and made an assessment of three cents on a share, payable on or before March fifth. On the twenty-sixth March Gilbert’s shares were sold by the company at auction and Durand’s on the twenty-fifth June, and new certificates issued to the purchasers. Evidence was given tending to show that notices of the stockholders meeting and of the assessment were sent to Gilbert and Durand. They did not pay the assesssment, nor did it appear that they took any steps to assert their rights to the stock. It appeared that Durand received notice of the assessment, but regarding the stock of no value he paid no attention to it. He knew of the sale also. Gilbert died in 1863; his administrators were advised of the sale. In 1867 plaintiff purchased of Durand and of Gilbert’s administrators their shares and received assignments of the certificates. He demanded to be allowed to transfer the shares into his own name upon defendant’s book; this was refused, defendant claiming the stock to have been forfeited. The judge submitted the case to the jury substantially upon the proposition, that if Durand and Gilbert knew of the action at the stockholders meetings and of the assessment, and assented to it or acquiesced in it for a long period of time, without objection, and neglected to pay, plaintiff was not entitled to recover, that the great lapse of time was an element to be considered on the question of assent or acquiescence. Held, error; that the mere neglect under the circumstances to take affirmative action for a time, short of that prescribed by the statute of limitations, could not affect the parties rights; that the sale of the stock being invalid a cause of action then arose; and the delay in enforcing redress, except as it refers to the statutory limitation, was immaterial, that there was no distinction between the tort of defendant and any other wrongful conversion of property. The court below laid down as the rule of damages, in case the jury found the plaintiff was entitled to recover, to be the highest market-price to the day of the trial. The court here state that, although the case is disposed of upon the other point in view of another trial, it cannot be amiss to say that this rule would probably be found in conflict with Baker v. Drake (53 N. Y., 211). According to which the value, at the time of the conversion, with interest, will, in the absence of special circumstances, furnish the rule of compensation. Also held, that, according to the settled law of corporations, neither stockholders nor directors can do a corporate act, out of the jurisdiction creating the corporation, which shall have any force to bind those who do not participate in it; and that, therefore, neither of the meetings in New York, ex propria vigore, bound Durand or Gilbert, or imposed upon them any obligations, even conceding that the corporation had power to impose further assessments on full paid stock. John Flanders for the appellant. Moses Ely for the respondent. [MAJORITY — Johnson, J.,] Johnson, J., reads for reversal and new trial. All concur. Judgment reversed.