Boston, Barre & Gardner Railroad v. Wellington

Morton, J. The original charter authorized the plaintiff to build a road from Worcester through Princeton to Barre, and also a road from Princeton to Gardner. It provided that the [85] capital stock should not exceed ten thousand shares, the number to be determined from time to time by the directors, and that no assessment should be laid thereon greater in the whole than $100 on each share. St. 1847, c. 276. By the act of 1853, c. 336, § 2, it is provided that the corporation may “ construct their road by sections ; ” the first section to extend from Worcester to Princeton ; the second from Princeton to Gardner, and the third from Princeton to Barre; and that “ after it has commenced the construction of the first section,” it “ may construct either or both of the second and third sections, or so much of the third section as it may think proper, subject to the provisions hereinafter contained as to capital stock.” The fifth section provides that the corporation may commence the construction of the first section whenever two thousand shares of the capital named in the act of incorporation shall have been subscribed for by responsible parties, and twenty per cent, on such shares paid in and a certificate thereof filed with the secretary of the Commonwealth; and that it may “ also commence the construction of either the second or third sections of its railroad, whenever two thousand shares of said stock (additional) shall have been subscribed for such section, and twenty per cent, paid thereon and a certificate thereof filed as hereinbefore provided.” No further change was made in the plaintiff’s charter before the defendant subscribed, except that from time to time laws were passed extending the time allowed for constructing the road. 1. The defendant contends that he is not liable under his subscription until the directors have fixed the number of shares and such shares have been subscribed for ; and relies upon Salem Mill Dam Corporation v. Ropes, 6 Pick. 23, and the later cases to the same effect cited by him. But the provisions of the charter above cited take this case out of the principle of those cases. The provision, that the corporation may commence the construction of the first section when two thousand shares are subscribed, by implication gives the corporation the right to assess the shares when they reach the number thus fixed. The defendant subscribed with reference to this provision and assented to it. His promise to pay assessments, therefore, was upon the condi [86] tion that he would pay when two thousand shares were subscribed according to the charter and the terms of the subscription paper. If this condition has been fulfilled he is liable on his contract, and the question whether the number of shares was legally fixed, before the assessments were laid is immaterial for the purposes of this case. This point was substantially decided in Lexington & West Cambridge Railroad Co. v. Chandler, 13 Met. 311. See also Penobscot & Kennebec Railroad Co. v. Bartlett, 12 Gray, 244. It appears by the agreed facts that, before the first assessment was laid, more than two thousand shares had been subscribed for each of the first and second sections, and it follows that the corporation had a right to lay and collect assessments, upon the stock subscribed for by the defendant. 2. The defendant contends that he is released from his liability to pay the assessments upon his stock by the contract made by the corporation with Cooke & Co. By this contract Cooke & Co. agreed to build the first and second sections of the road, it being stipulated that ten per cent, of the amount to be paid them should be paid in the capital stock of the corporation at its par value. At the time of executing the contract Cooke & Co. subscribed for a number of shares equal to said ten per cent., divided between the first and second sections. This contract was made after the first assessment had been laid, and after two thousand shares had been subscribed for - each of the first and second sections, and therefore after the liability of the defendant according to the conditions of his promise, had become fixed. The stock subscribed for by Cooke & Co. was not needed to make up. the number of two thousand shares required to be taken before assessments could be made. The case thus differs from Troy & Greenfield Railroad Co. v. Newton, 8 Gray, 596, as also in the fact that the subscription of Cooke & Co. appears to have been an absolute subscription for the stock at par. The contract with Cooke & Co. was made in good faith and was fully performed by them ; there is nothing to show that all the assessments were not duly made on the stock subscribed for by them; if such assessments were paid by offsetting a debt due by the company for building the [87] road, it was to all purposes equivalent to a cash payment. It did not vitiate any condition upon which the defendant agreed to take his stock, in no way injured him, and would not invalidate his previous subscription. 3. The objection that the road was not divided into sections, as contemplated by the subscription paper, cannot be sustained. The corporation in its original location filed in 1848 divided the road into “ divisions,” and in the contract with Cooke & Co. and the other acts of the corporation, these divisions were recognized and acted upon as the sections by which the road was to be built under the act of 1853. The road was in fact built by these divisions. The fact that in the relocation filed in 1871, after all the assessments sued for had been made, the corporation neglected to indicate any point in Princeton as the end of the first section, was at most a formal irregularity, which could not defeat the liability of the defendant to pay his assessments according to his promise. It violated no condition upon which the promise was made. 4. The defendant further contends that by the terms of the subscription paper no action can be maintained for the assessments unless the shares are first sold by the directors and a less sum than the amount assessed is realized from the sale. But such are not the terms of the subscription paper. It contains an express promise to pay all the assessments to the amount of one hundred dollars per share. The additional clause authorizing the directors to sell the stock in case of neglect to pay assessments, and promising to pay the deficiency if the stock sells for less than one hundred dollars per share, does not affect the first express promise, but gives the directors the alternative to sue upon the promise or proceed under the statute and sell the stock and recover of the subscribers the deficiency. City Hotel v. Dickinson, 6 Gray, 586. The result of the whole case is that the plaintiffs are entitled to recover all of the assessments. Judgment for the plaintiffs.