Caley v. Phila. & Chester County Railroad Co.

• Decision Date: 31 January 1876
• Citation: Caley v. Phila. & Chester County Railroad Co., 80 Pa. 363 (Pa. 1876)
• Parties: Caley <I>versus</I> Philadelphia and Chester County Railroad Co.
• Court: Pennsylvania Supreme Court

80 Pa. 363

Caley versus Philadelphia and Chester County Railroad Co.

Supreme Court of Pennsylvania.

January 17, 1876.

January 31, 1876.

January 17th 1876.

Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON and WOODWARD, JJ.

Error to the Court of Common Pleas of Delaware county: Of July Term 1875, No. 7.

COPYRIGHT MATERIAL OMITTED

C. E. Morris and H. C. Howard (with whom was E. S. Dixon), for plaintiff in error.—The evidence offered would not contradict the written subscription, although it might vary its operation; it was therefore admissible: Chalfant v. Williams, 11 Casey 212. It showed a promise which was the inducement to execute the paper: Shugart v. Moore, 28 P. F. Smith 469; Powelton Coal Co. v. McShane, 25 Id. 238. The offer was evidence also to show what was intended by "sufficient funds:" Woods v. Wallace, 10 Harris 176; Baltimore & Philadelphia Steamboat Co. v. Brown, 4 P. F. Smith 77; Gould v. Lee, 5 Id. 99; Miller v. Henderson, 10 S. & R. 290. It was evidence to show that the consideration was that the eastern terminus should be near Hestonville; the consideration can always be inquired into: Geiger v. Cook, 3 W. & S. 266; Clement v. Reppard, 3 Harris 111; McCullough v. McKee, 4 Id. 289; Plankroad Co. v. Arndt, 7 Casey 317. The promises by officers at a public meeting are evidence: Pittsburg & Conn. Railroad Co. v. Stewart, 5 Wright 54; Nippenose Manufacturing Co. v. Stadon, 18 P. F. Smith 256; Henderson v. Railroad Co, 17 Texas 560. The location according to the route stated in the subscription is a condition precedent: Plankroad Co. v. Arndt, supra; Rhey v. Ebensburg & Susquehanna Railroad Co., 3 Casey 261; 1 Redf. on Railways 184, 210 and notes. The resolution to construct the road five miles from Hestonville relieved the defendant: Mercer Co. v. Coovert, 6 W. & S. 70; Middlesex Corp. v. Locke, 8 Mass. 268; Hartford & N. H. Railroad Co. v. Crosswell, 5 Hill 383.

W. Ward (with whom was G. L. Crawford), for defendants in error.—The offer rejected was to prove a parol agreement varying a written contract: Hacker v. Nat. Oil Refining Co., 23 P. F. Smith 93; Anspach v. Bast, 2 Id. 356; Craig v. Normal School, 22 Id. 346. Whether there were sufficient funds to carry the work through was for the officers of the company: Angell & Ames on Corp., sect. 146, 531, 532, note a; Brices's Ultra Vires 152, and note: Custar v. Titusville Gas & W. Co., 13 P. F. Smith 381. The location was not a condition precedent: Miller v. Pittsburg & Conn. Railroad Co., 4 Wright 237.

Mr. Justice GORDON delivered the opinion of the court, January 31st 1876.

Where one subscribes to the stock of a public corporation prior to the procurement of its charter, such subscription is to be regarded as absolute and unqualified, and any condition attached thereto is void: Bedford Railroad Co. v. Bowser, 12 Wright 29. The reason for this rule is obvious; the commissioners, who are appointed to receive such subscriptions, are not the accredited agents of the corporation, for it is not yet in being, but are rather the agents of the public, acting under limited and definite powers, which every one is bound to know, and if he be misled by representations which such agents have no right to make, it is his own folly. Any other rule would lead to the procurement from the Commonwealth of valuable charters without any absolute capital for their support, and thus give rise to a system of speculation and fraud which would be intolerable. When, however, the company is once organized, a different order prevails. Such a company may receive conditional subscriptions for its stock, and, when it does so do, it is bound to the performance of the conditions therein contained: Railroad Co. v. Stewart, 5 Wright 54; Railroad Co. v. Hickman, 4 Casey 318. Doubtless the act of incorporation might alter this rule, and put all stock subscriptions within the same category, and subject them to the same conditions as those made before organization. But the Act of 1849, subject to the provisions of which the plaintiff company was erected, has in it nothing to indicate that the legislature intended to restrict the powers which corporations ordinarily possess over their own stock. It follows, that the plaintiff might dispose of its stock, as of any other of its property, in such manner as, in its judgment, might best subserve the purposes of its erection, and, to this end, might receive conditional subscriptions for such stock.

Again, after the organization of a company, chartered for some public purpose, as, in this case, for the building of a railroad, if one subscribe, without condition to the stock of such company, he does so in view of the general powers conferred upon it by the legislature, and he is responsible with his fellow corporators for the proper and lawful exercise of those powers, and he cannot, therefore, set up an unlawful act of the directors as an excuse for the non-payment of his subscription; for it is within his own power to prevent such abuse of authority.

As was said in Graff v. The Railroad Co., 7 Casey 489, the contract of subscription is not only with the company, but, also, with all the other shareholders; hence the subscriber may not set up even the fraud of the directors in order to defeat his contract. But whenever a power intervenes, over which he can have no control, to alter in a material point the character of his contract without his assent, actual or implied, such intervention works his release. As, where, by Act of the General Assembly, a turnpike company was authorized to alter the termini of its road; in that case it was held that a subscriber to its stock was released from his contract of subscription: Turnpike Co. v. Phillips, 2 Penna. R. 184; Plankroad Co. v. Arndt, 7 Casey 317. The reason for this is, that such termini form part of the conditions which enter into the contract, and as the supreme power, over which the subscriber has no control, intervenes to alter such conditions, he is thereby released. A contrary doctrine would involve the unreasonable supposition that a contract might be imposed upon a party...