Raleigh Improvement Co. v. Andrews

Brown, J. The following written contract was entered into by the late Col. A. B. Andrews, the defendant’s testator, with plaintiff on II February, 1914: “I hereby subscribe for ten shares of stock of the par value of one hundred dollars each in the Raleigh Improvement Company, a corporation organized under the laws of the State of North Carolina, for the purpose of erecting a modern apartment building at the corner of Eden-ton and Wilmington streets, in the city of Raleigh. I also agree to make immediate payment of 30 per cent of the amount of my subscription, and the balance as and when called for by the board of directors of said corporation. A. B. Andrews. (seal)” *282 Tbe executors having declined to pay tbe subscription, tbis action is brought to recover it. 1. Tbe declarations of Colonel Andrews to bis son "William, to tbe effect that be bad subscribed to tbe bouse proposition “provided tbe balance of tbe money is raised to complete it,” are incompetent. Such declarations to a third party are purely hearsay, not being under oath and not subject to cross-examination. If tbe testator were living, such declarations would be incompetent and tbe fact that be is dead does not alter tbe rule. Lockhart on Ev., 148, and cases cited. Shaffer v. Gaynor, 117 N. C., 24; Redman v. Redman, 70 N. C., 257. The evidence is also incompetent because it tends to vary tbe terms of a written contract. Wa lker v. Venters, 148 N. C., 388. Tbis rule of law is fully discussed and tbe precedents collected by Mr. Justice Walker in Basnight v. Jobbing Co., 148 N. C., 356. Tbe fact that tbis is a subscription to stock does not take tbe case out of tbe usual rule. It seems to be generally agreed that where a subscription contract is reduced to writing and signed, all oral agreements, whether prior or cotemporaneous, are merged in it and parol evidence of them cannot be received to vary tbe legal purport of tbe writing. Boushall v. Stronach, 172 N. C., 273; 7 R. C. L., 228-9; R. R. v. Leach, 49 N. C., 340; Boushall v. Myatt, 167 N. C., 328; 26 A. and E., 911; 10 Cyc., 413-414. Tbe subscriber to tbe stock should have caused tbe condition upon which be subscribed to be inserted in tbe written instrument. 2. In our opinion, there is no evidence that tbe purpose of plaintiff to build an apartment bouse has been abandoned. There is evidence that, owing to present conditions, it has been postponed. That is a matter resting in tbe discretion of tbe directors. Tbe mere fact that tbe work on tbe corporate undertaking has been suspended is not such evidence of an abandonment of tbe enterprise as will discharge a subscriber from bis obligation of. payment, since tbe refusal of tbe subscribers to pay according to their contracts may be tbe very cause of suspension, and tbe very object of tbe attempt to enforce their contracts may be to get money to revive or continue tbe prosecution of tbe work. 10 Cyc., 406; 28 A. and E., 932. Thompson Commentaries on Law of Corporations, vol. 1, sec. 1272. Assuming that tbe corporate authorities have decided that it is best under present conditions to abandon tbe building of tbe apartment bouse, that does not necessarily release tbe unpaid subscriptions. A mere abandonment of tbe corporate enterprise is not necessarily a good defense to an action upon a subscription. 28 A. and E., 932. It may be good ground for an action to dissolve tbe corporation and to wind up its affairs. Conceding that tbe corporation has arrived at tbe *283 conclusion not to construct tbe building as designed, it by no means follows tbat its contracts and engagements are thereby at an end. Debts due by tbe corporation are not abrogated, and its ability to discharge these may be dependent upon its realizing from tbe claims owing to it. Tbe unpaid subscriptions to its stock constitute assets of tbe corporation and are a trust fund to which creditors may resort. If all tbe debts of the corporation are discharged, even then the legal consequences claimed by defendant would not necessarily follow. A few stockholders may have paid all their subscriptions, while others may have paid none, and thereby defeated the undertaking. It would be manifestly unjust to hold those subscriptions that have been paid and to turn loose those that remain unpaid. Inasmuch as stock subscriptions are assets, they must be collected.as other assets, and when the debts are all paid and the corporate affairs settled the balance on hand should be divided among stockholders according to their respective rights. Dorman v. R. R., 7 Fla., 281; R. R. v. Bailey, 18 Ohio St., 208. It is true that on being satisfied that stockholders have paid in an amount equal to their engagements, so as to make the burden equal amongst them-all, a court of equity will sometimes interfere in case of an abandonment of the undertaking to prevent further calls upon such stockholders, but no such conditions appear to be presented upon this record and no such equitable relief is asked. "We are of opinion that upon all the evidence and in any view of it, the court should have directed a verdict for plaintiff as requested. New trial.