Holland v. Cheshire Railroad

Devens, J. The meeting of stockholders of the defendant corporation when the vote was passed under which the plaintiff contends that he had in 1888 the right to surrender his old stock in the defendant company, and to subscribe for new and preferred stock according to the terms of the vote, was held on December 10, 1851. It was called by a vote of the directors of November 18, 1851, which set forth its object to be “to take into consideration the subject of preferred stock for the purpose of paying off the floating debt and the bonds of the company becoming due July 1, 1852, and also any other modes of procuring means of paying said debt and bonds, and to act in relation to [235] the above as may be thought proper.” Under the first clause of the stockholders’ vote, every stockholder was entitled to take one new share for every three old shares which he might hold, and was “ entitled to a dividend of three dollars per share on every three old shares to one new share subscribed for on payment of twenty per cent on said new shares with interest after the first day of January next or before the first day of February next.” Upon this payment the certificate of the old shares was to be surrendered, and “ a new certificate issued for every three old and one new share, to be designated preferred stock.” The remaining twenty per cent on the preferred stock was payable on the fifteenth day of the next June, the three old shares and the twenty per cent previously paid on the new shares being “ credited as eighty per cent paid on four shares of preferred stock.” The effect of this would be that every four shares of preferred stock would thus cost three shares of old stock and one hundred dollars in money. It is the contention of the plaintiff, that, although “the remaining twenty per cent on the preferred stock ” was made payable on June 15th next thereafter, this only refers to those who subscribed and made their first payment before February 1, in order to obtain the dividend of three dollars offered as a bonus for early subscription and payment; that the fourth clause of the vote, which provides that “ every shareholder subscribing for his proportion of new stock at any time after the first day of February next shall be entitled to have his stock preferred in like manner as the above,” recognizes the right of the stockholder to subscribe at any time thereafter. This clause should be construed in connection with the first, and provides, it may iairly be argued, only for those who, not having subscribed before February 1, still subscribe in season to make their final payment on June 15, when the last payment by those who had subscribed earlier was to be made. To construe it as the plaintiff does would make it destructive of the very object for which the stockholders by their vote were providing; viz. the raising of funds by which their floating debt and the bonds due July 1, 1852, could be paid. We have no occasion carefully to consider whether the time for subscribing is definitely limited by the last payment to be made on June 15, as, if no time is thus fixed, the [236] right of the plaintiff to subscribe must have been exercised within a reasonable time. The principle on which it is held that, where in an executory contract one stipulates to do some act and no time is limited, it is to be done within a reasonable .time, applies where one is entitled to a privilege, or receives an offer of which he may at his option take advantage. He must avail himself of the privilege and exercise his option within a reasonable time. Wilson v. Clements, 3 Mass. 1, 13. Atwood v. Cobb, 16 Pick. 227. Loving v. Boston, 7 Met. 409, 414. When circumstances have wholly changed, when the preferred stockholders have as yet received for many years only about two and a half per cent of the six per cent per annum promised them, as appears by the exhibit annexed to the report, and when by their means and money the corporation has been brought into a comparatively prosperous condition, and when thirty-six years have elapsed since the plaintiff was offered the option of taking the preferred stock, it must be held that his demand now to be allowed to take it on the terms of the vote is unreasonable, and one that the defendant is not obliged to entertain. Unless the plaintiff is ready to put himself in the position of the preferred stockholders, — and he makes no proposition of this character, — to whom large amounts of unpaid dividends are due, it would be obviously unjust that he should at this time come in on an equality with them. He made his election, as they made theirs. The price which the preferred stock now bears is the result of the risks that the owners have taken and the exertions they have made while he has remained quiet. The plaintiff urges that the construction which the corporation itself has given to this vote recognizes the right that he has now to demand preferred stock. He principally relies on a transaction with one Edwards, by which, in 1870, Edwards relinquished to the corporation, under votes of the corporation passed in 1870 and 1871, some eighty-two shares of common stock which he had purchased, receiving in exchange fifty shares of preferred stock, these latter shares being a portion of certain preferred shares which the corporation had itself previously purchased, and which constituted a part of its assets. This transaction was certainly not an issue of preferred stock under the vote of 1851. Its terms and conditions were entirely different, and they do not [237] affect the present discussion. The vote authorized a committee to confer with certain holders of unpreferred stock, “ with authority to arrange the same by purchase or otherwise, and to use preferred stock in so doing if they shall think best,” and the transaction which took place was a sale of certain shares of old stock for certain preferred stock then owned by the company. As we are satisfied that the plaintiff has sustained no wrong, it is unnecessary to consider whether, if he had, he has adopted the correct remedy. Judgment affirmed.