This suit is brought on a subscription in the following terms: —
"Providence, June, 1873. We, the subscribers, severally agree to and with the Warwick Railroad Company that we will take the number of shares of one hundred dollars ($100) each in the capital stock of said company, set opposite our respective names, under the provisions of its charter, and that we will pay for the same in such manner as the board of directors may, under the charter, direct."
The charter was granted in May, 1873, and amended in January, 1874. It provided that the capital should not exceed two thousand shares of one hundred dollars each.
The persons named in the charter organized and accepted the charter and chose directors June, 1873.
The defendant subscribed in August, 1873, for twenty shares.
In March, 1874, the records show an informal meeting when they were advised by their counsel that the subscribers for stock were to be considered members. After about $90,000 (of which $10,000 were conditional) were subscribed, the directors began to prepare for building. An assessment was ordered March 23, 1874.
At a meeting of stockholders, April 4, 1874, the capital was fixed at $200,000.
A contract was made by the directors to build, May 9, 1874; and at the annual meeting, June 8, the subscription standing at the amount we have stated (defendant being present), this contract was ratified and a board of directors elected.
The defendant claims that he is not liable to pay his subscription until the whole capital is subscribed.
Was there any such condition to his subscription, either expressed or implied?
It is evident that the subscription contains no express conditions.
The agreement is to take a certain number of shares of $100 each in the capital stock of said company,. . . . under the provisions of its charter.
If the charter had provided for a definite capital, or if by general law provision had been made that the enterprise should not be commenced until some definite proportion or amount should *Page 138 be subscribed (which is the case under the New York Plank Road Act), or if before subscription the capital had been fixed by vote or agreement, then it might well be held that the raising the whole amount was a condition of the subscription. And so, also, if the amount was named in the paper subscribed. And this, we think, is the doctrine implied in the majority of the cases to which we have been referred.
In Contoocook Valley R.R. v. Barker, 32 N.H. 363, the capital was fixed by the charter, and it was held that they could not assess until all was subscribed.
In Littleton Manufacturing Company v. Parker, 14 N.H. 543, the capital was fixed in the written agreement, and it was held that the whole must be subscribed.
In Pitchford v. Davis, 5 M. W. 2, it was held that if the capital was fixed the subscriber was not liable, unless the amount fixed was subscribed, unless he knew of the proceedings and had acquiesced in them.
In Wontner v. Shairp, 4 C.B. 404, a capital was fixed in the prospectus. On the plaintiff's application shares were allotted to him, and he paid a deposit on them. The amount fixed was never subscribed, and he recovered back what he paid.
In Cabot W. Springfield Bridge v. Chapin et als. 6 Cush. 50, the amount of capital was fixed by agreement.
But in the present case the reference to the charter settles nothing, for the reason that nothing except the limit was settled in the charter.
The subscribers had the right to affix a condition to their signatures, but they have not done so.
In the present case could they have organized as a corporation, and could they have been obliged to receive the defendant as a stockholder? There must be some sort of mutuality, and the answer to this question may tend to illustrate the case.Union Turnpike Co. v. Jenkins, 1 Cai. R. 381; 1 Cai. Cas. 86.
In Minor et al. v. Mechanics' Bank of Alexandria, 1 Pet. 46, the United States Supreme Court, by Story, J., held that, in a case where the charter provided that the capital of a bankmay consist of so much in amount, the raising the amount so limited was not a condition precedent to its organization and going legally into operation. *Page 139
If it could do so, it would seem to follow that in such a case the subscriber would be bound for his subscription, and thus this case would be in harmony with the conclusion we have deduced from the other cases.
To the argument that, if the subscription did not prove sufficient, the amount subscribed would be lost, it seems to be a reasonable reply that the subscribers themselves would have the control of this matter as stockholders.
It is contended that the word share implies a proportion of a definite capital. This argument would be entitled to weight if the value of the shares was not affixed. In its present shape it is equivalent to a subscription of $2,000.
Upon the ground taken by the defendant, the subscribers could organize and make a contract, and then afterwards discharge themselves from legal liability by fixing the capital at an amount above the subscription. It is easy to see the great injustice that might be done in this way.
In this case it is alleged, and not denied, that the defendant was present at the annual meeting for election of directors, at which the contract to build the road was ratified. But we do not decide the case upon the point of estoppel, but upon the more general ground we have stated.
New trial granted.