Garrett v. Dillsburg & Mechanicsburg Railroad

Chief Justice Agnew delivered the opinion of the court, May 24th 1875. It is clear that the charter of the railroad company cannot be attacked collaterally for bad faith' in obtaining it; Cochran v. Arnold, 8 P. F. Smith 399. The only question, therefore, is whether the subscription of the defendant is illegal and void, because of the non-payment of any part in cash at the time of [468] making it. The law does not expressly require payment of ten per cent, or any other sum when making an original subscription before application for the charter. Whether non-payment of ten per cent, by each subscriber, before application for the charter, is not an act of bad faith to the state, is a different question, and not before us now. It may be said, however, on this point, it is an omission attended with risk. But whether a subscriber who suffers his name to remain on the articles until organization, can defeat his subscription by non-payment of the ten per cent., is the matter before us. It would be unreasonable to hold that payment must be made at the time of subscription. Until the requisite number of subscriptions, and the sum of $9000 per mile are obtained, the project is experimental and inchoate, and the association has no binding obligation on any one, for until these conditions are complied with no charter can be had, and no authority is vested in the directors named in the articles to act. During the experiment it would be unreasonable to require any one to pay in his money; and to whom, during' this period of uncertainty, could the first subscriber pay ? The important period in the transaction is, when the association is ready to file their articles in the office of the secretary of the Commonwealth. Until this time the whole scheme is inchoate, and the subscriber may withdraw. But when he suffers his.name to remain, and the articles to be filed, and organization of the corporation to become complete, he is in a different position. His subscription is there fully set out, and his obligation final. Surely he cannot then be permitted to set up his own omission of duty against his associates. He had his locus pcenitentice and suffered it to pass from him. In the absence of an express provision of law requiring the original subscribers to pay ten per cent, in the manner required of the subscribers after the organization, it seems to us an original subscriber ought not to be permitted to escape from his contract which he suffered to ripen into a finality, by permitting his name to remain until organization became complete, on its faith. Eor these same reasons it is obvious, that the testimony as to the part Mr. Watts took, and what he said at the meeting to obtain subscribers, was not competent. It was true, as he then stated, that no subscriber would be bound; his subscription then was only experimental; the scheme was inchoate. But when the subscriber suffered it to remain, and to become a part of the articles of association filed, and an organization founded upon it, the case was widely different. Then he could not set aside his subscription. The fact that it was not binding when Mr. Watts spoke did not prevent it from ripening into a perfect obligation when the articles were duly filed as required by law. Upon the whole case we discover no reason for reversing the judgment. Judgment affirmed.