Proprietors of the Cabot & West Springfield Bridge v. Chapin

Dewey, J.

The true construction of the contract of the defendants is, that they were to take and pay for three shares in a stock company, the capital stock of which was to consist of four hundred shares of $100 each. Before the making of the subscription by the defendants, the capital stock and the number of shares had been fixed by the corporation. The number of shares, and the sum to be paid for each being thus fixed, and inserted in the articles of subscription, the subscription was to that extent a conditional one; and every subscriber was at liberty to refuse to proceed with the proposed undertaking, until the requisite number of shares had been taken.

It might materially affect the interests of the subscribers, whether the whole number of shares, or a less amount, was subscribed for; both as respects the assessments to be made upon the stock, and also as to the ability of the corporation to complete the bridge, and thus entitle themselves to tolls. The whole undertaking, as a matter of profit and loss to the subscribers, might depend upon having the full amount of the capital taken up. When the purpose of the subscribers to a stock is that of proceeding to the execution of the business of the company, upon a partial filling up of the capital, and it is deemed expedient to levy assessments before the entire stock is taken up, there should be inserted a provision to that effect in the articles of subscription.

In the absence of such a provision, it is necessary, before an individual subscriber can be charged upon his subscription, that the whole capital stock, or number of shares which constitute it, should have been taken up, or the party must have waived his right to insist upon that condition by his own acts. If a subscriber, knowing that the requisite subscriptions had not been made' to fill up the capital, had attended meetings of the corporation, and had cooperated in the votes for expending money, and for making contracts, and in other acts which could only be properly done upon the assumption, that the subscribers intended to proceed with the stock partially taken up, such subscriber might be estopped from setting up this defence. But nothing of this kind appears in the case stated by the parties, and we must therefore assume, that the defendant has done nothing to waive his rights to the defence arising from the want of a full subscription to the capital stock of the company.

The further inquiry then arises, whether four hundred shares were duly taken and subscribed for. Various facts are relied upon by the defendant, to show that no proper subscription to the full amount of the capital was ever made. Without expressing any opinion upon the other grounds, we think the defence may be well maintained upon the facts stated in relation to the subscription of James K. Mills, as treasurer of certain manufacturing corporations. This subscription, which was for two hundred shares, was upon the condition of paying for them by a transfer of a similar number of shares in the Connecticut River Railroad company, at their par value of $100 a share, the market price of the same being only $93 a share, making a difference of $1,400 in the entire sum to be paid for two hundred shares, from what would be paid at $100 a share in cash.

In our opinion, the subscription for the four hundred shares was to be a subscription payable in cash, or its equivalent, calculating the shares at the rate of $100 each. The defendants subscribed for three shares at that rate ; and they had a right to expect that their associates should take then.- shares on similar terms with themselves, if they were to be held to the payment of their subscription.

It may have been a very important and necessary arrangement, to secure the object in view, that of building a bridge between Cabotville and West Springfield, to take the subscription of the manufacturing companies, at the rate of $93 a share; but if this was done without the assent of the other shareholders, they were not bound to treat" such subscriptions as legal subscriptions, in order to make up the required number of four hundred shares.

The result is, therefore, that the subscription of four hundred shares, at the value of $100 a share, was not effected, and there being no waiver of this condition, on the part of the defendants, no liability to pay the assessments attached to them by reason of their subscription for three shares.

Judgment for the defendants