Cleaveland v. Mullin

• Decision Date: 31 March 1903
• Citation: 54 A. 665,96 Md. 598
• Parties: CLEAVELAND v. MULLIN.
• Court: Maryland Court of Appeals

54 A. 665

96 Md. 598

CLEAVELAND v. MULLIN.

Court of Appeals of Maryland

March 31, 1903

Appeal from Baltimore City Court; J. Upshur Dennis, Judge.

Action by Michael A. Mullin, receiver of the Atlantic Trust & Deposit Company of Baltimore, against Edwin R. Cleaveland Jr. From a judgment for plaintiff, defendant appeals. Reversed.

Argued before McSHERRY, C.J., and FOWLER, BRISCOE, BOYD, PEARCE SCHMUCKER, and JONES, JJ.

Wm. S Bryan, Jr., and Bernard Carter, for appellant.

Alfred S. Niles and Wm. L. Marbury, for appellee.

McSHERRY C.J.

This suit was instituted by the receiver of the Atlantic Trust & Deposit Company of Baltimore against the appellant to recover the amount of an alleged subscription by the latter to the capital stock of the company. The declaration contains the usual money counts, and a special count which sets forth the contract sued on. Eleven pleas were filed. Upon some issues were joined and to others demurrers were interposed. The demurrers were sustained, and the case went to trial on the issues of fact made by the other pleas. During the progress of the trial eight exceptions were reserved. Seven of them concern the admissibility of evidence, and the eighth relates to the instructions granted and to the prayers for instructions which were rejected by the court.

There are several interesting questions presented on the record but there is one raised by the ruling on the demurrer to the appellant's ninth plea, and by the rejection of the appellant's tenth prayer, which we regard as decisive of the case, and consequently to the consideration of that question this judgment will be limited.

By Acts Assem.1898, p. 1173, c. 504, approved April 9, 1898, it was provided that 11 named individuals, "and the subscribers to the stock of the corporation hereby created and their successors and assigns, be and they are hereby created a body corporate by the name of the Atlantic Trust and Deposit Company of Baltimore, and by that name shall have perpetual succession, and shall be competent to sue and be sued in any court of law or equity whatever," etc. By the fourth section of the act it was enacted "that the capital stock of said company shall consist of ten thousand shares of the par value of fifty dollars each, and when the amount of two hundred thousand dollars shall have been subscribed and fully paid in, the said corporation shall be entitled to all the powers, privileges and franchises conferred by this act," etc.

On the 25th of May, 1899, the appellant addressed the following letter to the president and board of directors of the Atlantic Trust & Deposit Company of Baltimore: "Gentlemen: I hereby apply for 25 shares of the capital stock of the Atlantic Trust and Deposit Company of Baltimore at one hundred dollars per share. If any of said shares are alloted to me, I do hereby agree to make payment therefor as and when called upon so to do by said company." On June 10th of the same year the following reply was mailed to the appellant: "You are hereby notified that you have been allotted 25 shares of the capital stock of the Atlantic Trust and Deposit Company of Baltimore, under the terms of your letter of subscription. A call of twenty-five per cent. of the capital and surplus has been made, payable at the office of the company in the Atlantic Trust Building, on or before the 20th day of June, 1899. ***" Six days afterwards, or on June 16th, the appellant wrote a letter to the president of the company in these words: "When I subscribed for 25 shares of stock in your company I did it for investment, expecting to receive some money (which has failed to materialize) to pay for it when due, but find it will be impossible, so I ask you as a personal favor to cancel my subscription. While this step is necessary I regret very much to have to do it," etc.

By Code Pub.Gen.Laws (Poe's Supp.) art. 81, § 88f, it is declared: "Every corporation incorporated after the twenty-first day of March, 1894, under any general or special law of this state, except cemetery companies, companies created for purely benevolent and charitable purposes, railroad companies and building or homestead associations incorporated under article 23 of the Code of Public General Laws, title 'Corporations' sub-title 'Provisions for the Formation of Corporations' section 18 (class five), shall pay to the State Treasurer for the use of the state a bonus of one-eighth of one per centum upon the amount of capital stock which said company is authorized to have, *** said bonus upon the original capital stock shall be due and payable upon the incorporation of said company, *** and no company as aforesaid which shall be incorporated after the twenty-first day of March, 1894, shall have or exercise any corporate powers until said bonus has been paid to the State Treasurer.'' By section 88g it is provided that, if any company shall fail or neglect for the space of two months to pay the bonus tax, the Comptroller shall cause suit to be instituted therefor; and by section 88i it is declared that if, after suit brought and judgment rendered for the amount of the bonus due, the company shall remain in default for the space of two years, "such failure and neglect shall be deemed to amount to and shall constitute a forfeiture of the charter of such corporation, and said charter shall be decreed to be so forfeited and annulled ipso facto."

Without pausing to inquire into the causes which led to that result, it is sufficient to say the Atlantic Trust & Deposit Company became insolvent, and upon a bill being filed in equity against it the appellee was, on January 12, 1901, appointed receiver to take possession of its books and assets, and on March 12th the receiver was directed by an order of circuit court No. 2 to institute suits for the collection of the unpaid subscriptions to the company's capital stock. Under the last-named order the pending suit was brought.

The appellant's ninth plea avers that the bonus tax required by law to be paid by the Atlantic Trust & Deposit Company was not paid until the 12th day of April, 1900, and that no act was done and no proceedings taken by the Atlantic Trust & Deposit Company after the payment of said bonus tax to accept the appellant's alleged subscription, or to allot the shares in the appellant's said alleged contract mentioned to the appellant. The demurrer to that plea admitted those averments to be true, and the demurrer was sustained. The appellant's tenth prayer reads: "That the plaintiff [the receiver] is not entitled to recover because the Atlantic Trust & Deposit Company did not pay the bonus on capital stock required of it, under the provisions of section 88f, art. 81, Code Pub.Gen.Laws (Poe's Supp.), until the 17th day of April, 1900, and no act to accept the defendant's subscription or to allot him any shares of the capital stock of the Atlantic Trust & Deposit Company was done by the said corporation after the payment of the said tax." That prayer was rejected.

The precise question presented by the demurrer to the ninth plea and by the appellant's rejected tenth prayer is this: Was the Atlantic Trust & Deposit Company, at the time the appellant offered to subscribe to its capital stock, capable in law of making any valid contract because of the nonpayment of the bonus tax, and did it, after the payment of that tax, accept the appellant's proposal to subscribe?

Now, it is obvious at a glance--it is self-evident--that the appellant's letter of May 25, 1899, hereinbefore transcribed, was a mere offer to subscribe to the capital stock. It was not, and in the nature of things it could not be, a definite, unqualified subscription to 25 shares of stock; for the subscription was, as offered to be made, wholly dependent on an acceptance and allotment before it could become an actual subscription at all. Without an acceptance and an allotment by the company there was, and there could have been, no binding contract to subscribe. An acceptance of the offer and an allotment of the shares, to be valid, could only have been made by some one capable in law to accept and to allot. In a word, there must have been two parties competent to contract before there could be a contract. Was the Atlantic Trust and Deposit Company capable in law of accepting the appellant's offer and of alloting, the shares on June 10, 1899, the date when it is alleged the allotment was made? The answer to that question must be sought in the provisions of the statutes to which reference has already been made.

Whatever may be the terms employed in the act of 1898, p. 1173, c 504, under which the Atlantic Trust Company was organized, they are to be read and interpreted as subordinate to, and not as a repeal or modification of, the broad and comprehensive provisions of section 88f et seq. of article 81 of the Code. And this is so because the Legislature has declared that it should be so; and because, even if there were a doubt as to whether or not there existed a conflict between the company's charter and the general law, that doubt would be resolved against the corporation according to the familiar principle that a surrender of the power of the Legislature in any matter of public concern can never be presumed from uncertain or equivocal expressions. L. & N.R.R....