M'Laughlin v. Detroit & Milwaukee Railway Co.

Cheistianct J.: The plaintiff’s counsel, upon the argument of this cause, seemed to concede that, if the plaintiff was a stockholder or member of the company, he would be bound by the resolution of the 11th of November, for the payment of the interest in bonds instead of money; and hence, he insists that the certificate upon which the action is brought, is not properly a certificate of stock, but merely evidence of a conditional subscription; and that the plaintiff would not become a stockholder until the condition should be performed by the opening of the road to Lake Michigan. We think the certificate, if valid (a point we shall presently consider) is in every proper sense an absolute certificate of stock, with an agreement incorporated in it for the payment of semi - annual interest; and that it constituted the plaintiff a stockholder and a member of the company. [103] But as the case does not show that the plaintiff ever assented to, or acquiesced in, the resolution of the company, we can see no plausible ground for holding him bound by the resolution.' The stipulation in the certificate, for the payment of interest, constituted a contract between the company and the plaintiff, as an individual: it created the relation of debtor and creditor to the extent of the semi-annual interest. The company could no more change, affect or -modify, his rights or their liability under this contract, by a resolution or by-law, without his individual consent, than they could in the same way affect their contract with or liability to a stranger : — Revere v. Boston Copper Company, 15 Pick. 363; Ins. Co. v. Conner, 17 Pa. St. 136 ; American Bank v. Baker, 4 Met. 176. The authorities cited on the part of the defendants have no bearing upon this question; they only show the general right of the majority to bind the individual stockholders in all matters legitimately within the corporate powers of the company, and subject to the law of the land: not to make their own bonds a tender in 'payment of an acknowledged indebtedness to an individual, whether a stockholder or not. The power of the company to issue stock with such a stipulation for interest, is not denied by the defendant’s counsel; but he insists that it is not within the ordinary powers of the president and treasurer to issue stock of this kind, without special authority from the company; and hence, to bind the company, that their authority should be shown. We do not deem it necessary to enter upon the consideration of this question, since ,the power of the corporation to have authorized it, is not disputed. If they could authorize their officers to do it, they can ratify their acts when done; and the very resolution upon which the defendant relies for a defense, very clearly recognizes the validity of - this interest-bearing stock, and thereby ratifies it, [104] if it needed ratification. The company can not deny that this resolution applies to this identical stock, since they prove it, and rely upon it as a defense to an action upon this certificate. The judgment of the Circuit Court must be reversed, and a new trial granted. Martin Ch. J., and Manning J., concurred. Campbell J., did not sit, being a stockholder in the company.