Anderson v. Middle & East Tenn. Cent. R. Co.

• Decision Date: 17 December 1891
• Citation: 17 S.W. 803,91 Tenn. 44
• Parties: Anderson et al. v. Middle & East Tennessee Cent. R. Co.
• Court: Tennessee Supreme Court

17 S.W. 803

91 Tenn. 44

Anderson et al. v. Middle & East Tennessee Cent. R. Co.

Supreme Court of Tennessee.

December 17, 1891

Appeal from chancery court, Sumner county; W. C. Dismukes, Special Judge.

Bill by D. B. Anderson and others against the Middle & East Tennessee Central Railroad Company to enjoin suits to enforce stock subscriptions. Defendant filed a cross bill to recover on such subscriptions. Decree for plaintiffs. Defendant appeals. Modified.

Lurton J.

A number of subscribers to the original stock of the defendant company have joined in filing this bill for the purpose of enjoining suits at law upon their several contracts of subscription. The corporation, expressly waiving all questions of jurisdiction, answers, and submits the liability of complainants to the judgment of the court, and by cross-bill seeks a recovery against each of them. The learned chancellor was of opinion that no liability existed, and perpetually enjoined suits at law, and dismissed the cross-bill. In support of this decree a number of propositions have been urged.

1. It is insisted that the defendant company has no legal existence, because its charter has not been registered in the several counties through which it is authorized to construct and operate a line of railway. The charter of the defendant company was obtained under the general incorporation act of 1875. It was granted in 1883, and, as recited in the written parts, was "for the purpose of constructing a railway from the town of Gallatin, in the county of Sumner, to the city of Knoxville, in the county of Knox, through the counties of Sumner, Trousdale, Smith, Putnam, De Kalb, White Cumberland, Roane, and Knox, over the most direct and practical route between the said termini." This charter after registration in Sumner, was transmitted to the secretary of state, who affixed his certificate of registration in his office and the great seal of state. This certificate, together with the great seal, was subsequently registered in the county of original registration. Whether there has been any registration in any of the other counties on the projected line of road is, on the record, left in doubt. Complainants insist that until registration in these other counties, and particularly in the county of Trousdale where work has been begun, and where directors' meetings have been lately held, the company has no valid corporate existence. By section 26 of the act of 1875 it is required that the charter shall be registered in the office of the county where the principal office of the company is situated that it shall then be transmitted to the secretary of state, who shall affix his certificate of registration, together with the great seal of state; and that these shall be likewise registered "where said instrument was originally registered." This section then declares that this registration shall complete the formation of the company as a body politic, and the validity of the same in any legal proceeding shall not be collaterally questioned. When these conditions of existence have been fulfilled as required, and not before, can the corporation rely upon its exemption from collateral attack. Brewer v. State, 7 Lea, 682. All this was done in this case. We must take the registration in the first instance as a corporate determination of the location of its "principal office." Registration in the county where its principal office is situated completes its identity as a corporation. It is true that by a subsequent clause in the same section it is provided "that, if the corporation establishes agencies in any other county or counties, the instrument must be also registered in said county." Failure to comply with this provision may subject the corporation to a proceeding by the state for a forfeiture, but its corporate existence cannot be collaterally questioned after registration in the county of its principal office. Complainants are not in a situation to make any question as to the failure to register in Trousdale county. It is shown that, after they had subscribed, the meetings of the directors and stockholders were held at Hartsville. This cannot change the fact that the corporators determined Sumner county to be the location of the principal office. The subsequent opening of an office in that county, or the removal of the principal office, if permissible, cannot affect the character acquired by the registration in Sumner.

2. The capital stock was fixed by the corporators, at a meeting held for purposes of organization, at $3,000,000. Something less than $50,000 of this had been taken when this bill was filed. Complainants' contention is that, until the whole of the stock is taken, they cannot be made liable for calls on their subscriptions. It is well settled that there is an implied condition that the amount of stock specified in the charter articles of association, or contract of subscription, or fixed by the corporators when authorized to settle same, shall be actually taken before the subscribers shall become liable. Read v. Gas Co., 9 Heisk. 545; Mor. Priv. Corp. § 156; Burt, Priv. Corp. § 535. This implication may, however, be rebutted by the terms of the charter, or the provisions of the enabling act, articles of association, action of stockholders or corporation fixing capital, or by the conditions of the contract of subscription. So a subscriber may waive such condition, and this waiver may be either express or implied. A waiver will generally be implied if the subscriber consents to the letting of contracts, the creation of debt, or the doing of any corporate act involving the necessity of calling in the...