FROM CHESHIRE CIRCUIT COURT. Let us first examine, and see what the contract relied on was. It was a mutual agreement, on the part of nineteen individuals and firms, to subscribe for stock in a corporation to be thereafter organized, for certain purposes and upon certain conditions therein named. It then contained an agreement, claimed to be binding on the defendants, by which they, in consideration of the fact that these nineteen individuals and firms had agreed to take stock as *Page 557 therein set forth, agreed to contribute or pay in cash one thousand dollars. Was this agreement, so far as the subscribers to it were concerned, binding upon them? In Low v. Railroad, 45 N.H. 376, it is said, that "agreements made with corporations after their charter, but before organization, such as agreements to take and pay for shares in the capital stock, have been repeatedly enforced, and even by suits at law;" and BELLOWS, J., cites 16 Mass. 94, and 6 Pick. 23, as cases where "subscribers to stock, before organization, were held liable for assessments to pay preliminary expenses incurred in obtaining the act of incorporation, and ascertaining the practicability of the enterprise."
That this was a voluntary corporation, organized under general laws, can make no difference. One of the first acts to be done was to procure the subscription for stock; and if parties who subscribed therefor were not bound by their subscription, it would be strange indeed. In the case of a special charter by the legislature, one of the first acts to be done after the charter is granted is to obtain the subscriptions to stock. Under the general law, the same thing is required to be done, — namely, to procure the stock subscriptions.
In Railroad v. Mason, 16 N.Y. 451, which was the case of a corporation organized under the general railroad law of that state, the defendants subscribed for certain shares of stock in the corporation before the articles of association were signed and filed according to law; and the court held that the subscription was valid, and that it could be enforced. If, then, the agreement was binding on the subscribers, I am of opinion that it was properly admitted in evidence, and that the first and second grounds for nonsuit cannot, on the authority of Low v. Railroad, supra, and S.C., 46 N.H. 284, be sustained.
But it is said that the nonsuit should have been ordered because the undertaking of the defendants was nudum pactum; but I am unable to take that view. The undertaking of the defendants was, to pay towards the enterprise specified in the agreement the sum of one thousand dollars. The consideration upon which the defendants made this promise was, that the subscribers to the stock should proceed and erect their factory, and commence business with the capital raised by the subscriptions to the stock. The agreement was, on the one part, by the subscribers to the stock, of whom the plaintiffs are the successors, or, rather, with the plaintiffs, — for the understanding and agreement was, that the subscribers to stock should unite and form the plaintiff corporation, — and on the other part by the defendants. The subscribers to the stock carried out their part of the contract. They organized a corporation, they erected their building, Leverett conveyed the land, the street was opened, and everything which they agreed to do was done; and the defendants, having received the benefit of the consideration upon which their contract was made, are now liable upon their promise.
It is urged that the agreement of the defendants was a gratuity; that it is so expressed; and that, being a gift, it is without consideration; — but the court will not confine themselves to the strict language used, but will look at the whole contract, and see whether it is in fact a gift *Page 558 and without consideration, or whether there is in fact a consideration. Looking, then, at this instrument, — what was it? Simply a promise on the part of the defendants that if the subscribers for stock would go forward and carry out their enterprise to completion, they, in consideration of that fact, and that their property would thereby be benefited, would contribute towards the same object the gum of one thousand dollars. When, as we have seen, the plaintiffs have executed their part of the agreement, and the defendants have received the benefit of it, I can see no reason why the defendants should not be held to perform their part of it.
The exception that the evidence shows, that some of the subscriptions were paid in labor, and that by its terms they were to be paid in cash, cannot avail. They were to be paid in cash, — that is, they were unconditional. The fact, that afterwards labor was received by the plaintiffs in lieu of cash, does not invalidate the agreement, or excuse the defendants from the performance of their promise. There is no suggestion that the labor was not performed, or that an exorbitant price was allowed for it. Of what consequence then was it, whether the plaintiffs received the money from the subscriber to stock, and then paid it back to him for his labor, or that they received his account for labor as part payment towards the subscription for stock? To require that the subscription should be paid in in cash, and then pay to the subscriber cash for his labor which he had performed for the plaintiffs, would be an idle ceremony, and one which could be of no advantage to any one.
The exception to the admissibility of the agreement cannot be sustained on the ground that it was res inter alios acta. It was, in fact, the act of the parties to this suit; for, as we have seen, the subscribers to the stock, with whom it was made, are represented by the plaintiffs, or, rather, the plaintiffs are the legal representatives of the subscribers to stock. It seems to me that it may as well be claimed that if the defendants made a special agreement with a person deceased, and the administrator had brought a suit thereon, the contract could not be admitted in evidence. The two cases are the same in principle, and the statement of the proposition, or, rather, of the objection, of the defendants in this form, shows its fallacy. Judgment on the verdict. *Page 559
Loading…