Parks v. Washington & Lincolnton Railroad

Jenkins, P. J. This was a suit by the Washington & Lincoln-ton Eailroad Company against A. G. Parks, upon a promissory note dated April 8, 1920, maturing December 1, 1920, and containing the following provision: “This note having been given for one share of the preferred stock of the Washington & Lincoln - ton Eailroad Company, it is understood that upon payment of same the said Eailroad Company shall deliver to the maker thereof the number of shares of said stock mentioned herein.” The petition alleges, in substance, that at the time of the execution of said note there was no preferred stock of the Washington & Lincolnton Eailroad Company, and that the charter of said corporation did not at that time authorize the issuance of preferred stock; that on. March 4, 1920, by a proper resolution of the stockholders of said corporation it was voted to issue and sell $100,000 of preferred seven per cent, stock of the corporation; that pursuant to such resolution application was made to the Secretary of State for an amendment to the charter of the corporation to authorize the issuance of such stock; that on May 24, 1920, the charter was so amended; that the corporation also applied to the Eailroad Commission of Georgia for permission and authority to issue such preferred stock in the amount provided by the resolution of the stockholders, and that on April 15, 1920, this permission and authority was granted by the Eailroad Commission; that thereafter, on June 27, 1920, an act of Congress known as the “transportation act of 1920” became effective, and under the provisions of that act petitioner applied to the Interstate Commerce Commission of the United States for permission and authority to issue said preferred stock voted to be issued by the stockholders, and on June 20, 1921, by proper order, the Interstate Commerce Commission authorized the issuance and sale of said preferred stock; and that the corporation had incurred indebtedness on the faith of subscriptions to such stock, and had expended large sums of money in the improvement of its tracks and property. It is set up by way of amendment to the petition, that at the time of filing the suit the corporation was indebted to the persons and corporations furnishing it money and materials for the improvement of its [638] property, and that it was necessary to collect said stock subscription note in order to pay these debts. Defendant filed a plea in which he set up by way of affirmative defense, in paragraph 12, that at the time he executed the note sued on it was represented to him by a committee of citizens engaged in selling the stock that the plaintiff was undertaking to sell $100,000 worth of such preferred stock, and that unless that amount was sold it would return defendant’s note to him, and the same would be binding only in the event the plaintiff sold said issue of $100,000; that while the plaintiff and said committee obtained subscriptions amounting to $100,000, many of them were from people known by the committee and the plaintiff to be insolvent, or the plaintiff should have known, by the exercise of ordinary diligence, that such subscribers were insolvent; and therefore that he was not liable on the note sued on. The defendant further set up, in paragraph 13 of his answer, that he had been ready and willing to pay said note at its maturity, and went to the plaintiff’s collecting agent for the purpose of paying the note and receiving the stock agreed to be purchased, but was notified that said stock had not been issued and could not then be issued, because the plaintiff had not received legal authority to issue it, and that he could only be given a receipt for the payment until such authority was granted; whereupon he notified the plaintiff’s agent that if he could not get the stock then he would not take it at all. He further set up, in paragraph 14 of his answer, that the consideration of the note had totally failed, in that there was no preferred stock of the plaintiff corporation in existence at-the time of the contract of sale, and plaintiff had no authority to issue the same then or at the time of the maturity of the defendant’s note. The defendant interposed a general demurrer to the plaintiff’s petition as amended, which was overruled by the trial judge; to which judgment exception is taken in the main bill of exceptions. The defendant also, by his main bill of exceptions, excepts to the judgment of the court in sustaining the plaintiff’s demurrer to paragraphs 13 and 14 of the plea, relating to the invalidity of the note sued on, on account of the plaintiff’s admitted incapacity to issue and sell the stock for which it -was given, at the time the contract of sale was effected; and setting up that de [639] fendant repudiated his contract of purchase upon being informed by the plaintiff, at the time of the maturity of his note, that it was then unable to issue and deliver the stock. By a cross-bill of exceptions the plaintiff excepts to the judgment overruling its demurrer to paragraph 12 'of the plea, relating to the alleged insolvency of certain subscriptions obtained by the plaintiff, which the plea alleges were necessary to make up the minimum amount of subscriptions that the committee obtaining them informed the defendant would be obtained before any of them would be binding. Our rulings on the demurrers appear in the syllabus. ■ Judgment reversed on each hill of exceptions. Stephens and Bell, JJ., concur.