Town Council v. Elliott

Kennon, J., delivered the opinion of the court. By an act of the Legislature of 1849, the town council of the town of Newark was authorized to subscribe to the stock of the Newark Plank Road Company not more than $10,000, and to issue bonds in payment of the stock, payable at such times, not exceeding ten years, and for such amounts, as the council might determine, bearing interest payable annually, at the rate of seven per cent, per annum; and the town council was authorized to sell and transfer the stock, so soon as it could be sold at par. Held: That the par value of the stock is an amount equal to the amount of stock subscribed. [121] That a sale of such stock, by which the purchaser is bound to pay the bonds of $10,000, and interest, given by the town of Newark for the $10,000 stock, is a sale of such stock at its par value. That where there is no restraining clause in the charter of a corporation, it may dispose of any property which it has the right to acquire. That the town council of the town of Newark is restrained from selling the plank road stock for less than the par value, but it may sell the stock on credit, provided the sales amount to the par value of the stock. Where a corporation issues its own bonds, payable at a future day, with seven per cent, interest thereon, payable semi-annually, when by law it was authorized to make the interest payable annually only, the person who contracts with the corporation for a valuable consideration to redeem such bonds, cannot avoid his contract upon the ground that the corporation exceeded its authority in making the interest on such bonds payable semi-annually instead of annually. If the object of the purchaser of this stock was, to obtain the control of the plank road company, and thereby improperly use the provisions of the charter of the plank road company for the purpose of issuing and putting in circulation, as money and currency, the notes of the company payable to bearer, in violation of law, and such fact at the time of sale was known to the town council of the town of Newark, and it made the sale for the purpose of enabling the purchaser to carry out such illegal purpose, and the purchaser was, by such sale, enabled more effectually to carry out his intention, and he did in fact do so, the sale of the stock was illegal and void. The demurrers to all the pleas of Elliott are sustained, and also the demurrers to all the pleas of Brady, except the ninth, as to which the demurrer is overruled, and the cause remanded to the district court for further proceedings.