Thrasher v. Pike County Railroad

Breese, J. The appellee, who was plaintiff in the court below, urges several reasons justifying a recovery in this case, which it is necessary to notice. The declaration contains a special count, averring, that on the nineteenth of March, 1856, the plaintiffs were a body politic and corporate,' with power to construct and operate a railroad within the county of Pike, and authorized by law, as such corporation, to secure subscriptions to the capital stock of the company to the amount of one million of dollars, in shares of one hundred dollars each, and, desiring to ascertain what amount of stock would be subscribed, and not having opened regular subscription books, but intending so to do, agreed with the defendant that they would, in a reasonable time thereafter, open books for the purpose of securing such subscriptions, and that they would permit and allow the defendant, when the books should be opened, to subscribe to the capital stock of the company thirty shares of one hundred dollars each, and upon payment therefor, the defendant should be the owner of thirty shares of the capital stock of the company. It is then averred, that the defendant, in consideration of this promise, undertook and promised the plaintiff that he would subscribe to the stock of this company the sum of three thousand dollars, when the books should be opened for subscriptions ; that this promise was by a writing, signed by the defendant, and by him delivered to the plaintiff. It is then averred, that on the same day, subscription books to the capital stock of the company were opened, of which the defendant had notice. The breach is, that the defendant neglected and refused to subscribe anything to the capital stock, accompanied by an averment that the subscription, when the books were opened, was due and payable before the commencement of the suit, and although notified thereof, the defendant has refused to pay any part of the sum of three thousand dollars. The common counts are added, in one of which the indebtedness is alleged to be for one hundred shares of the stock of the Pike County Railroad, before that time bargained and sold to the defendant. This is the cause of action as set forth by the plaintiffs, and it is claimed by them, that they are entitled to recover as damages the par value of the stock, or the amount of calls made from time to time upon it, and which, at the commencement of the suit, amounted to fourteen installments, of five per cent, each, making, in all, twenty-one hundred dollars. This, we do not think, is a fair view of the defendant’s liability upon his promise, if one was made to the plaintiffs. His undertaking is, to subscribe a certain amount of stock, when the subscription books should be opened. This promise does not make him a stockholder, and, as such, liable to calls. The company has parted with no stock to him, and can only claim as damages, the actual loss sustained by them by his failure, or refusal to subscribe, when he was notified the books were opened for such' purpose. The company has the stock which the defendant promised to take, but did not take. His promise is like any other promise, or agreement to purchase any specific article of property. If the property contracted for be retained by the vendor, and there is no delivery to the purchaser, or offer to deliver, the damages must not be measured by the value of the property ; for it would not be just, in such cases, that the vendor should retain the property, and recover, also, the value of it from the promisor. Some damage might result from the loss of a bargain, and to such the vendor would be entitled, if the extent could be established. In many cases, they would be merely nominal. On an agreement for the sale and purchase of stocks, and a refusal by the purchaser to take the stocks, the measure of damages, ordinarily, might be the difference between the par value of the stocks and their market value, or between them and money. As well argued by the appellant, the defendant having violated his promise by failing to subscribe, he has acquired no right to stock; nor could a recovery in this action entitle him to become a stockholder. The company retains its stock, and the defendant his money. A stock certificate of three thousand dollars would represent a value to the company equivalent to so much money, and, in a statement of their liabilities, this would appear against the company as so much held by the stockholders, for which the company was responsible. If there is no actual subscription, the company does not incur this liability. There being no special damages alleged, or proved, we do not think the plaintiffs could recover under this declaration, as they have done, the par value of the stock the defendant promised and agreed to take. A proper count might doubtless be so framed as to justify a full recovery, under sufficient proof. Upon the common counts, the appellees contend they are entitled to recover, because indebitatus assumpsit will lie for stock bargained and sold, and for installments due upon stock subscribed; and they insist, that the defendant was, to all intents and purposes, a stockholder in the company of the plaintiff; that is to say, in the company organized in 1854 — for that was the only company in existence at the time of the promise, and that is the company suing. To determine this point, a brief review of the history of this company, and of the legislation in regard to it, is necessary. On the eighth day of February, 1854, certain articles of association were filed in the office of the Secretary of State, in pursuance of the general railroad law of 1849, by which an incorporation styled “ The Pike County Railroad Company” was formed. On the 22nd February, of the same year, the General Assembly passed an act entitled “An act to authorize the construction of the Pike County Railroad,” by the first section of which it was declared, that the Pike County Railroad Company, as formed under their articles of association, was a valid and subsisting corporation by that name, and was thereby invested with all and singular the rights, privileges and powers contained in an act entitled “An act to provide for a general system of railroad corporations,” approved November 5th, 1849, and the said company was authorized to construct the road, styled in said articles of association the Pike County Railroad, as specified in those articles, from a point opposite Naples, on the Illinois river, or from a point on said river not more than three miles distant from that town, to a point on the Mississippi river, opposite, or nearly opposite, Hannibal. At the same session, a supplemental .act was passed, entitled “An act to amend an act to authorize the construction of the Pike County Railroad,” by which the company were authorized to construct a branch* from any convenient point on their road to Quincy, and to connect with any railroad terminating in that city; power was also given it to obtain the right of way, as given by the general railroad law ; and by section three, the company was authorized to increase the capital stock to a sum not exceeding two millions of dollars. By the articles of association, the duration of the corporation was limited to fifty years, and the amount of the capital stock to one million of dollars. Ten directors were appointed to manage the affairs of the company, and four commissioners appointed to open books for subscriptions. These directors held a meeting on the 18th of March, 1854, at which these acts of the General Assembly were accepted and spread upon the records. On the nineteenth of March, 1856, the appellant signed, with others, the following agreement: “ We, the undersigned, agree to subscribe to the stock of the Pike County Railroad, the sums set against our names, when the books may be opened for subscription.” Against appellant’s name are the figures $3,000. On the third of September following, there was a meeting, in pursuance of public notice, of the stock subscribers, and an election held for directors, and, on the same day, they met and organized by- the election of a president, secretary, and other necessary officers. A report was made at this meeting, that a survey for the route of the road had been made, which was not accompanied by any survey. These facts appear from entries on the book kept by the corporation, and put in evidence. No further proceedings of this board, or of the stockholders, appear on the record. The testimony of Mr. Starne shows that they have never held a meeting or transacted any business since, under this charter. The appellees read in evidence an act entitled “ An act to incorporate the Pike County Railroad Company,” approved February 14,1857, by which Alexander Starne, and certain other persons named therein, their associates, successors and assigns, were created a body corporate, by the name of the Pike County Railroad Company, with power to build and use a railroad, from some point on the west bank of the Illinois river, opposite, or nearly opposite, the town of Naples, in Scott county, running westerly across the county of Pike, by the way of Griggsville, to the east bank of the Mississippi river, opposite, or nearly opposite, the city of Hannibal, in the State of Missouri, with power to fix the amount of capital stock, to borrow money, and pledge or mortgage its property or franchises, to condemn lands for track, etc., and to construct a bridge across any river or lake, for the purpose of connecting with other railroads. This act confers upon the company the rights granted to the Illinois Central Railroad Company, and all the rights and privileges conferred by the general railroad act of 1849, and the several acts amendatory thereto, and authorizes township subscriptions to the capital stock, and is unlimited in duration; upon condition, however, that the company should expend fifty thousand dollars in the construction of the road, within one year from the passage of. the act, and should complete it within two and a half years from the passage of the act. This corporation, it seems to us, was wholly distinct from that of 1854, to which the promise was alleged to have been made. It nowhere refers to that company, or recognizes it in any manner, and there are provisions in it materially differing from those in the act of 1854. By the first charter, the capital stock was limited to one million of dollars; a branch road to Quincy was allowed; its starting point was fixed within three miles of Naples; its duration was limited to fifty years, and no points intermediate the Illinois and Mississippi rivers were fixed. By its very terms the act is original, and purports to create a new corporation. There are essential points of difference between the two charters, and the corporators are different, though the main objects of the charter were the same. There is evidence going to show, that the object and intent of this charter of 1857 was to supersede that of 1854, and, we think, taking into consideration the fact, that the company organized under this charter of 1857, without any reference to the acts or proceedings under the charter of 1854, and proceeded to construct the road under it, the fact is pretty well established that the charter of 1854 was no longer of use for the purposes designed. Mr. Starne says, “ The directors of the old company have never done any act as a body, since September 8, 1856 — they have never had a meeting or done anything since. A majority of them, as individuals, considered the new act beneficial, and adopted it, and organized under it, claiming the benefit of both, and assessed the stock subscribed before the passage of the act of 1857,; that the work of building the road commenced in the fall of 1857, and was begun and carried on under the new organization.” There seems, from the evidence, to have been an impression on the minds of the subscribers to the articles of association, that the new charter would supersede these articles, and the acts of the General Assembly based upon them, and the evidence shows that the original subscriptions had been crossed with a pen, and, in that mode, cancelled. But it is insisted, that the defendant, in the fall of 1857, admitted he was liable as a subscriber, and bound to pay the calls. This proof, we think, must dispose of this case. For inasmuch as the suit is brought by the corporation of 1854, a promise made to the corporation of 1857, being a new, distinct and independent corporation, cannot enure, under the allegations in the declaration, to the benefit of the corporation suing. Nor can the defendant be liable on the count for stock bargained and sold, because the proof, if any there be on that point, goes to show that such contract, if made at all, was made with the corporation of 1857, who are not the plaintiffs. If the defendant was a stockholder, it is clear it was in the corporation organized under the act of 1857,— the only operative company acting in building the road, in the fall of 1857, at’ which time, if at all, the defendant was notified of the call on his supposed subscription, and that company has not brought this suit. We think, therefore, under this declaration and proofs as they stand, the appellant cannot be made liable, and this judgment must be reversed. What position the corporation of 1857, suing, might occupy, we do not determine. It may be well to state here, that we do not think Starne or Jones was a competent witness for the company, for they were both stockholders, and continued so to be, after the execution of the releases. They could be made competent only by an assignment of their stock. The release only went to pecuniary claims upon the company, and could not affect their stock. As stockholders, they are individually liable for all the debts of the company to the amount of their stock. Act of 1849, § 14, Scates’ Comp. 940. Judgment reversed.