Hart v. St. Charles Street Railroad

The opinion of the court on the original hearing was delivered by Spencer, J., and on the rehearing by Manning, C. J.

Spencer, J.

Plaintiffs owned, .as surviving widow and heirs of Henry

Hart, who was one of the original corporators of the defendant railroad, 818 shares of its capital stock.

The eighth article of the charter of said company is as follows :

“These articles of association may be modified or altered, and the capital stock may be increased to any sum not exceeding two millions of, dollars, in the manner provided by law, with the consent of two thirds in amount of all the stockholders, obtained in general meeting convened after thirty days’ notice. Whenever any increase of capital shall be duly authorized, sixty days’ notice shall be given in two newspapers published in the city of New Orleans, within which time stockholders shall have the privilege of taking additional shares in proportion to the amount of their stock, and any shares not taken at the expiration of that time may be disposed of by the directors, for the benefit of the association, but at not less than par value.”

In accordance with said article the capital stock of the company was increased on August 5,1873, $>100,000, in shares of $>50 each.*

Notice to the stockholders was duly published for sixty days, to the end that they might exercise their “ privilege of taking additional shares in proportion to the amount of their stock.”

' On September 29,1873,, the board of directors passed a resolution “ that the time for subscription to the stock authorized to be issued,” etc., “ be extended thirty days, and interest at the rate of eight per cent per annum be added after October 4, 1873.” Notice of this extension was duly published by the secretary, who substituted the words “ payment for,” in lieu of the words “ subscription to ” the stock.

On November 3,1873, the board of directors again passed a resolution extending “the time for the subscription to the stock” until November 15,1873.

Notice of this extension was also published by the secretary, who again substituted “payment” in place of “subscription.”

It is admitted on all hapds that no particular form or manner was prescribed for “taking” or “subscribing to” this stock by the original stockholders. Being subscribers to the original stock, and under the charter entitled to the privilege of “taking” the new stock" in proportion to the stock already held by them, no subscription book would seem to have been necessary, or was used.

Plaintiffs claim that, as owners of the 818 shares of the original stock, they were entitled, under the charter, to take 163 shares of this •new stock, at par. That they had, in due time, signified their intention to exercise their privilege to do so, and had accordingly tendered the amount necessary to pay for their said shares. That the president and directors unlawfully refuse to issue and deliver them the certificates for said stock, or to recognize their right thereto.

The defendants answer in substance, that the privilege claimed by plaintiffs is, by the charter, expressly limited to sixty days from date of publication of notice to the stockholders of the increase of stock; that the stock can not be taken without payment being made for the same; that plaintiffs failed to take the stock covered by their privilege within the time limited, or any authorized extension thereof, but, on the contrary, admitted their inability to take and pay for the same within said period, and only made a tender of the money after said delay, and all extensions thereof, had expired; that thereby their said privilege was forfeited, and the stock to which plaintiffs would have been entitled became the property of the association.

There was judgment for defendant, and plaintiffs appeal.

"We find the facts to be as follows: 359 shares of this new stock had never been issued or disposed of by the company. On the fourteenth November, 1873, the day before expiration of the last extension, the plaintiff, Mrs. Hart, representing herself and children, went to the presiident and notified him verbally, at the office of the company, that she ■claimed her privilege of taking 163 shares of the new stock, and would be prepared to pa.y for it within two or three days. She was told that she had delayed too long, and given to understand that she could not “take” the stock unless it was paid for at once, although no such requirement was found in said resolutions; and although, so far as we can see, the board of directors had never, by any formal action, imposed such restriction upon the right of subscription. She persisted, and on the twenty-second November made a formal tender of the money, and demand for the stock, which was refused. Thereupon she brought this suit.,

There is and can be no dispute that plaintiffs had the privilege, within sixty days after publication of notice, of “ takiDg ” 163 shares of this stock, at par. We think it also clear that under the charter the board of directors had the power to extend the time for “taking” this stock; and that the board did, in point of fact, extend that time to November 15,1873, by passing resolutions extending the time “for subscription” thereto. Wo think, also, that.the words “taking stock,” and “subscription to stock,” in their ordinary use and acceptation, arc synonymous, and mean practically the same thing. The board of directors, in this case, manifestly so understood it, for in their resolutions for extension they say the “time for subscription” is extended. Of course the secretary ■could not,by any authority he had, substitute “payment” for “subscription,” unless they mean the same thing. We do not think that the usage or etymology of these words make them synonymous. We know' that, in point of fact, in transactions of the nature of these w'e are considering, the “ subscription to,” “ the taking of,” the stock most generally, if not always, precedes any payments.. The. payment is the consequence of “ the subscription,'-' of “ the taking.” When we are told that a man has “ subscribed to ” or “ taken ” stock, we understand that he has agreed and bound himself to take and pay for it — not necessarily or even usually that he has paid for it. So that there remains to discuss the two questions: First, did the plaintiff’s acts and declarations on the fourteentli November amount to a subscription, i. e., to an agreement on her part to take the stock, and if so, second, did she forfeit her subscription by failing to tender the money on or before the fifteenth November ?

In our opinion the first of these questions must be answered in the affirmative, and the second in the negative. The legal status of affairs was this: The company, by its directors, had formally offered to its stockholders the privilege of “ subscription ” to its stock at par until fifteenth November without specifying any particular mode of subscription, or fixing any special conditions thereto, except the payment of eight per cent interest from October 4. Plaintiff clearly had the right, up to November 15, “ to subscribe,” to accept this offer, so tendered. She did accept it verbally — no other way being prescribed — -and thereby became bound by its terms; and she must be considered as having subscribed for 163 shares on the fourteenth November; and when we say she had the right to subscribe we do not mean that she had a right to require, the delivery of the certificates of stock before payment. Here, we think, is the capital error in defendants’ argument: it consists in confounding the right to subscribe, with the right to delivery and possession of the stock. Having, subscribed, she could only be put iu default by a formal tender and demand for payment. There is no pretense that such tender aud demand were ever made. Hence the question as to whether she forfeited her rights by non-payment does not arise, since she was not put legally in default.

We conclude, therefore, that plaintiff’s demand is well founded, and, therefore, that the judgment appealed from should be reversed.

It is therefore ordered, adjudged, and decreed that the judgment appealed from be reversed and set aside ; and it is now ordered and decreed than plaintiffs are entitled to 163 shares, of fifty dollars each, of the new and increased stock of the St. Charles Street Railroad Company, directed to be issued by resolution of the company, of date July 28, 1873, together with all dividends accrued thereon, and that said plaintiffs be decreed owners of said shares, and that said company issue to them certificates therefor, upon said plaintiffs paying to said company fifty dollars per share for said stock, with eight per cent interest from October 4.1873. It is further ordered that defendants pay costs of both courts.