McCarty v. Selinsgrove & North Branch Railroad

Mr. Justice Gordon delivered the opinion of the court, Where subscriptions are made to the stock of a proposed public corporation, previous to and for the purpose of procuring a charter, any conditions annexed thereto, whether written or parol, are void. But after the organization of the company, a condition is binding and obligatory, and ordinarily, this is so, though it rests in parol, if, except for such condition, the- subscription would not have been made. The latter part of this proposition is subject, however, to the qualification that the rights of co-subscribers are not affected thereby: Bowser v. Bedford, 12 Wright 29 ; Caley v. The Railroad Co., 30 P. F. Smith 363 ; Graff v. The Railroad Co., 7 Casey 489, and Miller v. The Railroad Co., ante, 95. Now, as at the time the defendants entered into the contract in suit, the plaintiff was a chartered and fully organized corporation, it had all the powers to make contracts, conditional or unconditional, by deed or in parol, that are possessed by natural persons. This being so, it remains to inquire whether the offer of the defendants comes within the rules which permit the introduction of oral testimony to add to or vary the terms of a written instrument. And, first, supposing the proposed oral conditions to be admissible, as between the company and the defendants, would their interposition prove to be injurious to, or in fraud of, the rights of co-subscribers? Would the effect be to relieve the defendants from payment whilst their fellows in the common adventure would be still held ? An affirmation of this proposition determines the question against the offer proposed. For it would be intolerable that one, who had joined with others in a common undertaking, should be permitted to escape from the common burthen by the interposition of a condition of which his co-obligors had no knowledge. The inequitable character of such a transaction becomes obvious when we reflect, that one in this manner would not merely relieve himself, but would thereby add to the burthen of the others. But the offer, proposes nothing of this kind; for the alleged conditions were common to all subscribers. All might have taken advantage of them, and though some may not have seen fit so to do, yet that is no fault of the defendants, and, for such reason, they cannot be deprived of a common right. The proposed proof was that all the subscriptions, contained in the book, offered by the plaintiff, were obtained for a special purpose; that they were to be applied to the building of a branch from the main road, at Burns [337] Junction, to the town of. Selinsgrove, and that these subscriptions were not to be of force until they represented an amount fully equal to $20,000. These stipulations were reasonable and proper. The subscribers desire to have the road built to Selinsgrove; for this purpose and none other they will agree to pay their money, and that there may be a reasonable certainty that this design be fulfilled, they stipulate that if the subscriptions do not amount to a figure that will insure this reasonable certainty, then the whole adventure is to be treated as abandoned. Had the company fulfilled the first condition,'by building the road to Selinsgrove, the second might be disregarded, for the main design, to wit, the construction of the improvement, being accomplished, the necessity for the second would fall, and the subscriber could not allege a want' of consideration for the money which he had agreed to pay. But the company did nothing of the kind; it did not build the road, hence, any one can see that it would be a most inequitable perversion of the agreement should these people be compelled to pay for that which was not embraced in their compact; that is, for the construction of the main line instead of the branch. It is true these provisions were oral, but the offer was to prove that the defendants, and their co-subscribers refused to put their names to the contract until they were assured, by the president of the company, that they should form part of the terms of that contract and be of the same force as though written therein. This offer brought the proposition within the rule which allows of the introduction of parol evidence to add to or vary the terms of a written contract, for it is clear, that the attempt to enforce the writing, without the oral conditions, was but an attempt to enforce what was not the contract of the parties, and if successful, would be a fraud on the rights of the defendants. In order to prevent a result of this kind the offer should have been admitted. The third and the fourth assignments, covering as they do, the same subject-matter, may be considered together. By the contract the subscriptions were payable at such time or times as the company should direct, “but not to be called for faster than ten per cent, a month.” As this corporation is made subject to the General Railroad Act of 1849, we must construe the above contract with reference to the provisions of that statute. The 8th section thereof provides that “the capital stock of such company shall be divided into shares of $50 each, and shall be called in and paid at such times and places, and in such proportions and instalments, not, however, exceeding $5 per share in any period of thirty days, as the directors shall require, of which public notice shall be given for at least two weeks next preceding the time or times appointed for that purpose.” It does seem, therefore, that the statute contemplates notice, and unless the officers of this corpora [338] tion may disregard this plain precept, they cannot move until it has been complied with. It is urged, however, that publication of notice is necessary only when the penalties for non-payment, subsequently provided for, are sought to be enforced, and this reading of the act is supposed to be sustained by the cases of Gray v. The Monongahela Navigation Co., 2 W. & S. 162, and Grubb v. The Mahoning Navigation Co., 2 Harris 306. But these cases are not in point, since the facts involved therein are not similar to those in the case now in hand. In the first there was not only notice by publication, but there was also evidence of personal notice, and the exception was only to the fact that the publication did not set out the full name of the company, an exception purely technical and amounting to nothing in a suit for the price of the stock subscribed. In the second there was no provision in the act of incorporation requiring notice of any kind previously to a suit for the subscriptions; hence, it was held that if the defendant was aggrieved for want of notice he should have pleaded the matter in abatement, but could not avail himself of it on the general issue. On the other hand, in the case of Sinkler v. The Turnpike Co., 3 P. & W. 149, where the act of incorporation did provide for notice by publication, we have it said by Mr. Justice Kennedy, that no action could be maintained for the defendant’s subscription, nor any part of it, until the managers had fixed the time and had given notice as required by the act. Authority, however, in the case under review, beyond the statute itself, is not necessary, for there is nothing therein that is in the least degree ambiguous. Notice is just as positively required as are calls and apportionment, and if the latter are necessary, so is the former. This corporation cannot go outside of its charter for its power to sue, and that power, as found within that instrument, must be exercised, if at all, under the conditions therein prescribed. We do not say that the spirit of the act would not be complied with by a personal notice, but we do think that neither the spirit nor letter of the act is complied with when there has been a total neglect of notice of any kind; nor are we disposed, by a forced construction, to abolish, or even relax, a condition which, whilst it fairly protects the subscriber, is not cumbersome to the company. The exception, covered by the first assignment, taken to the ruling of the court on the offer of the plaintiff to prove by its secretary that the words “and monthly thereafter,” were omitted by mistake, in the resolution of February 19th, ordering the call for the stock subscriptions, is not sustained. The learned judge properly said that the object of the evidence was not to impeach the writing as a contract between the parties, but only by the correction of a mistake to make the minutes conform to the fact. The judgment is reversed, and a new venire is ordered.