Crump v. United States Mining Co.

• Decision Date: 28 April 1851
• Court: Virginia Supreme Court
• Parties: CRUMP & c. v. UNITED STATES MINING COMPANY.

48 Va. 352

CRUMP & c. v. UNITED STATES MINING COMPANY.

Supreme Court of Appeals of Virginia.

April 28, 1851

(Absent Cabell, P. and Moncure, ^[a1] J.)

1. In an action by a corporation, the question whether the corporation has forfeited its charter is not open for enquiry, unless the forfeiture has been ascertained by the sentence of a Court in a proper proceeding for the purpose.

2. The organization of a corporation may be proved by its records and parol proof, without the production of its list of subscribers.

3. The stockholders of a corporation having directed the directors to create new stock and sell it; and the directors having instead, acquired original stock and sold it, their act may be ratified subsequently by the stockholders, so as to render the sales valid and binding upon the purchasers.

4. In written proposals for a sale of stock in a mining company, if the representations contained therein are false as to any material fact, by which the purchasers have been misled to their injury, and in which they are presumed to have trusted to the vendors, then the contract founded on such representations, is void; whether the vendors knew the representations to be false at the time they were made, or not; and whether made with a fraudulent intent or not.

5. In such a case the suppression from the written proposals, of any fact within the knowledge of the vendors, materially affecting the value of the thing to be sold, and inconsistent with the statements in the written proposals, vitiates the contract as fully as the false affirmation of any material facts; if the purchaser is injured thereby.

6. If in such a case the representations contained in the written proposals of sale were in all material respects true, and no fact within the knowledge of the vendors materially affecting the value of the thing sold, was suppressed to the injury of the purchasers, the subsequent failure of the mine in value and productiveness, does not impair the right of the vendors to enforce the contract.

7. Owners of property employ an agent to sell it, and they give him written proposals containing the terms of sale and a description of the property. If the agent makes other representations of the value and condition of the property which are false, and by these false representations induces persons to buy, the owners, though they neither authorized or were informed of these representations, are bound by them and the contracts are void.

8. The president of a corporation is not ex officio the agent of the corporation to sell property which it may direct to be sold; and unless appointed the agent to sell, his representations are not binding on the corporation.

This was an action of debt, brought in the Circuit court of law for the county of Henrico and the city of Richmond, by the United States Mining Company, against Crump and Liggon. It was one of twenty-eight actions brought by the same plaintiffs against certain subscribers to the stock of the company, for arrears due upon their stock. All the cases turned upon the same questions, and were submitted to the same jury.

On the trial of the causes the plaintiffs introduced in evidence an act of the General Assembly of Virginia for the incorporation of the United States Mining Company, and then offered in evidence a minute book purporting to be a minute book of the company, for the purpose of proving the existence of the corporation. To this evidence the defendants objected, upon the ground that it was not competent until it was shewn by the subscription list of stockholders, that the persons who assembled on the 16th of August 1834, (the day when according to the minute book the company was organized,) were stockholders authorized to associate and act as such; and they called for the production of such list. Whereupon the plaintiffs offered to prove by J. J. Chew, that shortly after the passage of the act of incorporation, the company had an office or place of business, where the business to carry on which they were incorporated, was carried on; and that the affairs of the company had been managed by directors who were chosen from time to time. That he was himself a subscriber and had paid after the organization of the company, a portion of his subscription as called for from time to time; and that he had sold out his stock to a person who had fully paid up to the company the instalments due upon it. That he had transferred said stock in the office of the company on the books of the company. And that the various books purporting to be the books of the company, including the minute book aforesaid, were kept in the handwriting of Richard B. Maury who was the recognized, notorious secretary of the company from the time it purported in said books to have been organized, and his appointment as secretary, until the death of said Maury. The plaintiffs by their counsel stated also, that they proposed to follow up the evidence of Chew, in further proof of the organization of the company, by evidence that each and all of the present defendants recognized the company as an existing corporation, by entering into the contracts with the said corporation upon which the present actions were brought. Whereupon the defendants moved to exclude the testimony of Chew, upon the ground that such testimony was not competent in the absence of the subscription book, which being written evidence of the fact that the persons who claimed the right to act as a corporation, were subscribers to stock, could not be dispensed with, unless shewn to be lost or destroyed, by any parol proof of the fact which such subscription list would establish. But the Court overruled the motion, and admitted the testimony; and the defendants excepted.

In the further progress of the cause, the plaintiffs offered in evidence the prospectus of a sale of the stock of the company signed by William Jackson the president, and the contract annexed thereto, on which this action is founded, and proved the signatures of the defendants to the contract by which they each subscribed for the number of shares annexed to his name. They also introduced a printed report of the president and directors giving a description of the property and of the condition and prospects of the company, which was referred to in the prospectus. They also introduced copies of the certificates of stock issued by the company to the defendants, and offered evidence to prove that the defendants had received a dividend of five per cent. upon the amount of forty dollars a share paid in by them for their stock. And they introduced certain proceedings of the defendants, by which they expressed their determination to pay no requisitions which should be made upon them on account of their stock. And the plaintiffs then rested their case. Whereupon the defendants called a witness, John H. Eustace, whose name appears first upon the list of subscribers mentioned above, who stated that the signature of his name was not in his handwriting, and that he had no recollection of having given any person authority to make it for him; though he has no doubt he did: but that he had never paid anything for the stock standing against his name, nor had he been called upon to pay anything for it. The defendants then called a witness, James B. Cowles, who proved that his signature to the subscription list aforesaid was genuine. That the book which contained the prospectus and list, was in the hands of James Williams, who came to the city of Richmond as the agent of the plaintiffs to sell their stock, and presented the said prospectus and subscription list, but did not shew him, and he did not ask for, the printed report before referred to, and induced the witness to subscribe for stock, which he did without reading the prospectus. And then the defendants offered to prove by the witness Cowles, that Williams at the time of procuring the subscriptions to the said stock from the witness and the defendants, and for the purpose of inducing him and them to subscribe for and purchase the stock, made representations to them in addition to those contained in the report and prospectus, as to the description, condition and value of the gold mine, upon the faith of which, he and the defendants became subscribers for the stock, as shewn by the list aforesaid; which representations were false and fraudulent: And for the purpose of getting such proof, asked the witness to state what representations were made to him and the defendants, as aforesaid, by Williams touching the value and description of the mine and condition of the company. But the plaintiffs objected to the question and any answer thereto, upon the ground that it was not competent for the defendants to give evidence of any representations by said Williams, because they insisted he was a limited agent, whose authority was defined by the prospectus aforesaid and the printed report referred to in it. The Court sustained the objection, and excluded the evidence; and the defendants again excepted.

After the introduction of the evidence mentioned in the previous exceptions, the defendants proposed to prove by the witness Cowles, that when Williams made the representations referred to in the preceding bill of exceptions, William Jackson the then president of the company, whose name was signed to the prospectus, was present and assented to them; and also proposed to prove that the same representations were made sometimes by Williams in the presence of Jackson, and sometimes by Jackson himself, to other subscribers for stock who are defendants in these causes. The witness did not identify Jackson very confidently, though he expressed the belief that the person who was with Williams was the same with William Jackson the president of the company, who was then...