Cox v. Gould

HALL, District Judge. The 2d section of the act of February 17th, 1S48, under which the paint works company was incorporated, declares, that the corporations created under that act “shall, by their corporate name, be capable in law of purchasing, holding and conveying any real and personal estate whatever, which may be necessary to enable the said company to carry on their operations named in such certificate,” (their certificate of incorporation.) “but shall not mortgage the same, or give any lien thereon.” The purchase from Bunting, set out in the declaration, was, in substance and fact, made by the company, through its committee or agents, of whom the plaintiff was one, although not made in its corporate name, as authorized by the act. The declaration shows, that the agents were authorized, as the agents of the company, to make the purchase for the company; that they did make and complete it, for the benefit and on the account of the company; and that the purchase was completed by a deed to the company’s agents, and by their giving bonds and mortgages, in their own names, for the very purpose of evading the provisions of this 2d section. By these means the statute was substantially violated, and the company did indirectly what the statute declares they shall not do, and what it is admitted they could not lawfully do, unless by indirection. The transaction was in fraud of the statute, and the whole arrangement was illegal and void, as against an innocent stockholder. I am. therefore, of the opinion that the agreement to indemnify the plaintiff was void, and that the plaintiff cannot recover in this action. Again, the 24th section of the act declares, that “no stockholder shall be personally liable for the payment of any debt contracted by any company formed under this act, which is not to be paid within one year from the time the debt is contracted, nor unless a suit for the collection of such debt shall be brought against such company within one year after the debt shall become due.” It is urged, by the plaintiff’s counsel, that the debt in this case was contracted at the time the payment was made by the plaintiff upon the debt or bond against which the company agreed to indemnify him. But, if the agreement of indemnity, and the payment under it, constitute the plaintiff a creditor, holding a debt which may be enforced against an individual stockholder, I ám quite clear, upon the statement made in the declaration, that such debt was “contracted” as early, at least, as January 25th, 1854. The term “contracted,” as used in this section, is the past tense of the verb “to contract.” There is no allegation of any contract made with the plaintiff by the company after the date 1 have just mentioned; and, most clearly, the principal of this debt, for which the company then in form became liable, was not to be paid within one year from that time. It is barely possible that the stockholders might be liable for two semi-annual payments of interest, when the principal was not to be paid within a year, but I am inclined to think that, even if that position can be sustained, it sufficiently appears that all the interest accruing within the year was paid by the sale of the mortgaged premises. These conclusions render it unnecessary that I should consider the other questions raised in the cause, for they are fatal to the plaintiff’s claim to recover. The demurrer is allowed, with leave to the plaintiff to amend in twenty days, on payment of costs.