Frost v. Walker

Walton. J. An unincorporated joint-stock company is a mere partnership, and each member is personally liable for all its debts. ‘ It is important for the public to know, that if persons connect themselves with a company of this description, they are every one of them liable to pay the demands upon it.’ Chief Justice Abbott in Keasley v. Codd, 2 C. & P. 408. See also to the same effect, Tappan v. Bailey, 4 Met. 535, and Tyrrel v. Washburn, 6 Allen, 466. The New England Express Company was never incorporated. It was, therefore, a mere partnership, and each member was personally liable for all its debts. This is not denied. But it is insisted that the evidence was not sufficient to warrant the jury in finding that these' defendants were members of the company. We think it was. The defendants’ names are signed to what purports to be a subscription to the capital stock of the company, and they allowed themselves to be assessed for the precise number of shares set against their names, and paid the assessments without objection; and we think it is a reasonable inference that they would not have done this, if they had not either signed the paper in person, or authorized some one to sign it for them, or ratified the signing after it was made. And by thus contributing to the actual-working capital of the company, we think they became entitled to share in the profits of the business, in case profits should be realized ; and that this, by operation of law, made them co-partners, and liable for the co-partnership debts. It is stated by an English author, as the result of a very full examination of the English cases, that shareholders and subscribers alike embark together in a concern of which they expect to share [471] the profits or losses ; and that ‘ they are liable as partners, whenever they have agreed, unconditionally, to become shareholders.’ Smith’s Law of Contracts, 262, 3d Am. ed. And it was held in Spear v. Crawford, 14 Wend. 20, that a subscription in these words, ‘We, the subscribers, do severally agree to take the shares, by us severally subscribed, in the Harlaem Canal Company,’ made the subscriber liable as a stockholder to the creditors of the company, although he had paid no part of his subscription, and had never done any act whatever as a stockholder. There, as here,' the point was distinctly taken, that a mere subscription for stock did not make the subscriber a stockholder; but the court held otherwise; and we are not aware that the correctness of the decision has ever been questioned. But it is not necessary, in this case, to decide whether an unconditional subscription for shares will, alone, make the subscriber liable as a partner; for these defendants not only subscribed for shares, but actually paid one or more assessments upon them; and we cannot doubt that, by thus contributing to the actual working capital of the company, they became entitled to share in its profits, if any should be made, and, as a legal consequence, became partners in the concern, and liable, as such, to its creditors. Our conclusion, therefore, is that the requested instruction, that the evidence was not sufficient to authorize a verdict for the plaintiffs, was properly withheld, and that the instructions given were correct. Exceptions overruled. Judgment on the verdict. Appleton, C. J.; Cutting, Dickerson, and Barrows, JJ., concurred.