Cooke v. Marshall

• Citation: 43 A. 314,191 Pa. 315
• Decision Date: 08 May 1899
• Docket Number: 68
• Parties: O. R. Cooke v. James L. Marshall, Appellant
• Court: United States State Supreme Court of Pennsylvania

43 A. 314

191 Pa. 315

O. R. Cooke v. James L. Marshall, Appellant

No. 68

Supreme Court of Pennsylvania

May 8, 1899

Argued November 12, 1898

Appeal, No. 68, Oct. T., 1898, by defendant, from judgment of C.P. No. 1, Allegheny Co., March T., 1897, No. 684, on case stated. Reversed.

Case stated on quo warranto.

From the case stated it appeared that on April 5, 1862, a corporation, named the Chartiers Cemetery Company, was created by special act of assembly; that immediately after the organization of the company, a certain amount of stock was issued, which was afterwards increased; that on February 15, 1893, an informal meeting of some of the stockholders was held, changing the number of the board from five to seven and electing a new board. At a meeting of the so-called new board, O. R. Cooke, plaintiff, was selected as secretary and treasurer, all against the personal protest of J. L Marshall, defendant, whereupon, on May 4, 1894, he, with Moses Chess, organized a new board, wholly ignoring all idea of capital stock and share stock, elected "associates" and officers, and Mr. Marshall has ever since claimed to be the lawful secretary and treasurer. The stock board, however, has always since February, 1893, actually controlled the entire management of the cemetery grounds and property, excepting the corporate seal and books of the company, which have always been in Mr. Marshall's possession. Regular meetings, monthly and annual, have been held by each of the hostile boards to this time.

The question involved was whether the Chartiers Cemetery Company had power to issue stock, and whether the plaintiff who had been elected secretary and treasurer by the holders of stock issued by the company was the lawful secretary and treasurer.

The facts appear by the opinion of the Supreme Court.

The court entered judgment for plaintiff. Defendant appealed.

Error assigned was the judgment of the court.

The judgment of the court below is reversed and judgment is now entered for the defendant with costs under the case stated.

William M. Watson and C. S. Fetterman, with them J. J. Miller, for appellant. -- Bonds and not stock should have been issued for the land: Thompson on Corporations, sec. 5697; 2 Cook on Stock, etc., sec. 764; McMasters v. Reed, 1 Grant's Cases, 36; Seymour v. Spring Forest Cemetery Assn., 19 N.Y.S. 94; Gordon v. Preston, 1 Watts, 385.

The creation of the stock was wholly contrary to the purpose of the charter and void, for it sought to divert the control and management of the company away from the plan intended by the charter, and sought to convert a corporation created for general welfare into one for private control and gain: Evergreen Cemetery Assn. v. Beecher, 53 Conn. 551.

If the creation of the stock or the voting power attached to it be a matter of doubt, then that doubt requires a decision against the stock, for no corporation can adopt a doubtful way of paying for its land, and wherever a corporate power is doubtful it is denied: Pearce v. R.R. Co., 7 Am. Law Reg. 409; R.R. Co. v. Clarke & Thaw, 29 Pa. 146; Bank of Penna. v. Com., 19 Pa. 144; Bank of Easton v. Com., 10 Pa. 442; Com. v. R.R. Co., 27 Pa. 339.

A. W. Duff, for appellee. -- Whenever anything is authorized, and especially, if as matter of duty required to be done by law, and it is found impossible to do that thing unless something else not authorized in express terms be also done, then that something else will be supplied by necessary intendment: Broom's Legal Maxims, 486.

Charters of incorporation frequently prescribe the main objects of the companies formed under them, authority to use the means necessary to attain these objects must, therefore, be supplied by implication: 1 Morawetz on Private Corporations, sec. 320; Com. v. Erie, etc., R.R. Co., 27 Pa. 339; Phila. & Sunbury R.R. Co. v. Lewis, 33 Pa. 33; McMasters v. Reed, 1 Grant's Cases, 36; Com. v. Detwiller, 131 Pa. 614; Kirksey v. Florida, etc., Co., 7 Florida, 23.

Statutes are to be construed as may best effectuate the intention of the makers, which sometimes may be collected from the cause or occasion of passing the act, and when discovered, it ought to be followed with judgment and discretion in the construction, though that construction may seem contrary to the letter of the statute: Big Black Creek Imp. Co. v. Com., 94 Pa. 450; Com. v. Fraim, 16 Pa. 163.

Before GREEN, McCOLLUM, MITCHELL, DEAN and FELL, JJ.

OPINION

MR. JUSTICE GREEN:

The Chartiers Cemetery Company was created by an act of assembly approved the 5th day of April, 1862, P.L. 419. The 1st section of the act created certain named persons, and other persons who might become their associates, into a body corporate "by the name, style and title of the Chartiers Cemetery Company, and by that name shall have perpetual succession and shall be capable in law to have and use a common seal and from time to time change the same; to hold, purchase and dispose of property, real or personal, sue and be sued, plead and be impleaded in any court of law or elsewhere to ordain, pass and put in execution all such laws, rules and regulations not contrary to the constitution and laws of the United States or of this commonwealth, as shall be necessary or convenient for carrying into effect the objects of the company, and generally to do all such other matters and things as are incident to a corporation." By the 3d section it is made the duty of the corporators to establish a cemetery on the land of James L. Marshall not less than thirty nor more than 100 acres in extent. The 4th section authorizes the corporation to lay out the ground into lots, plots, avenues, lanes, sites for offices, dwellings for its necessary officers or servants, chapel for religious services, etc., and to sell and convey by deed or otherwise lots, plots, etc., to individuals, societies or congregations. The remaining sections contain minor provisions for the regulation and management of the cemetery.

After the passage of the act the corporators met and organized the company and passed a resolution to establish a cemetery on the ground designated in the act, containing thirty-two acres and seventy-five perches, "and for this purpose the capital stock of the said Chartiers Cemetery Company shall be $8,000, divided into 160 shares of the par value of $50 each." A committee was appointed to take subscriptions and on May 14, 1862, the full amount of stock was subscribed by several persons, and the said stock was issued to J. L. Marshall and his associates in payment for the cemetery grounds. At successive meetings after that the stock was increased, first to $50,000, and later to $150,000 in consideration of various improvements and expenditures made upon the ground. The question then is, was the original creation and issue of stock lawful, and if so were the subsequent increases lawful? The issue was made for the purpose of performing the original duty to establish a cemetery. It was necessary to acquire land in order to create the cemetery, and the corporators adopted the method of obtaining the land by issuing stock in payment for it. It is not denied that the corporation might have borrowed money for this purpose and made a mortgage on the property to secure the payment of it, although no such power was expressly conferred by the charter. On the question whether capital stock might be issued for the same purpose where the charter has not specially authorized a capital stock, not a single authority is cited for or against in the paper-books of either party. There is no doubt that this particular corporation did possess full corporate powers, and there is also no doubt that it was not only authorized but expressly enjoined to create a cemetery of not less than thirty acres in extent, and after that to lay it out into lots and plots, and roads and walks, and to do various other things necessary to its proper development as a cemetery. No method of raising money to acquire the land and do these various things was provided in the charter. The ordinary method in which such things are done is by the creation and issue of capital stock, and it may be argued with apparent reason that it is a necessary implication from the grant of corporate existence and powers that a right to issue stock is conferred. It was decided by this Court in Gordon v. Preston, 1 Watts, 385, that a corporation which by its charter is authorized to purchase in fee or for any less estate "all such lands, tenements and hereditaments, and estate, real and personal, as shall be necessary and convenient for them in the prosecution of their works;...