Great Western Tel. Co. v. Gray

• Decision Date: 09 November 1887
• Citation: 14 N.E. 214,122 Ill. 630
• Parties: GREAT WESTERN TEL. CO. v. GRAY.
• Court: Illinois Supreme Court

122 Ill. 630

14 N.E. 214

GREAT WESTERN TEL. CO.

v.GRAY.

Supreme Court of Illinois.

November 9, 1887.

Error to appellate court, Second district.

CRAIG and SHOPE, JJ., dissent.

Thomas J. Sutherland, for plaintiff in error.

Eric Winterd, for defendant in error.

SHELDON, C. J.

This was an action of assumpsit, brought by the Great Western Telegraph Company for the use of Elias R. Bowen, receiver, to recover from the defendant the sum of $875, being [122 Ill. 634]35 per cent. of the par value of 100 shares of the capital stock of the plaintiff company, which the defendant had agreed to take and pay for. There was judgment for the defendant on a demurrer to the declaration, which judgment on appeal was affirmed by the appellate court for the Second district, and from that judgment of affirmance the plaintiff appealed to this court.

There had been an order of assessment of this amount of 35 per cent. made upon the stockholders of the company by the circuit court of Cook county, in a suit pending therein on the chancery side thereof, wherein the company was a party defendant, and wherein a receiver had been appointed for the company. The assessment was made by the court for the purpose of paying the debts due from the company, and after finding the amount of those debts, and the proper assessment to be made pro rata upon the stockholders for that purpose, demand upon defendant had been duly made for the payment of this money before action brought. The unpaid balance on defendant's subscription was 60 per cent. of the par value of the shares agreed to be taken by him. The declaration sets forth fully the above and other requisite facts, stating particularly the proceedings in said chancery suit, and giving a copy of the decree of assessment. The subscription paper signed by the defendant, as set forth in the declaration, is as follows:

‘COPY OF CONTRACT AND ACCOUNT SUED ON.

‘Capital, $3,000,000; shares, $25; assessments not to exceed $10 on a share.

‘Subscription list for the capital stock of the Great Western Telegraph Company.

‘We, the subscribers hereunto, for value received, severally, but not jointly, agree to take the number of shares in the capital stock of the Great Western Telegraph Company placed opposite our respective names, and pay for the same in installments, to-wit: Five per cent. on amount paid in, and the balance as the directors from time to time may order; in consideration thereof, the Great Western Telegraph Company agree that when forty per cent. of the par value of the shares shall have been paid under such orders, and the installment receipts therefor surrendered to the company, the number of shares severally subscribed by the undersigned shall be issued to them as fullpaid stock of said company.

‘_____ is appointed agent to solicit stock, and receive only the first installment of five per cent., (fifty cents on a share,) at the time of subscribing.

_____, Secretary.

The declaration admits a payment of $10 upon each share, and avers a balance unpaid of $15 upon each share.

It is alleged by the defendant that the declaration does not state a good cause of action in three respects: (1) That the contract of the defendant, therein set forth, is a limited contract, and provides for the payment by defendant of 40 per centum of the par value of the shares subscribed for by him, and no more; that he paid said 40 per centum, and is not liable to pay any further sum. (2) That the plaintiff's right of action against defendant on said contract is barred by the statute of limitations. (3) It does not appear by the declaration that the defendant was a party to the proceeding in the circuit court of Cook county wherein the assessment was ordered.

The construction which defendant would place upon his contract, that the payment of 40 per cent. of the par value of the shares is a full compliance, and that, having paid such 40 per cent., he is not further liable, is not admissible. Defendant's promise to take, and pay the par value of, the shares is clear and unqualified, and binds him for the payment. The company's promise when 40 per cent. is paid to issue certificates for the shares as full-paid stock, may well consist with defendant's promise to pay the par value of the shares; and the issuance of such certificates after the payment of 40 per cent. may well consist with the liability remaining on the defendant to pay the other 60 per cent. Such promise of the company, then, does not operate to qualify that made by the defendant, and to limit his liability to the payment of 40 per cent. of the par value of shares. To give it that effect it should have been expressly so declared.

Nor, as we conceive, do the words at the top of the paper on which the contract is written, ‘Assessments not to exceed $10 on a share,’ assist to limit the liability of the defendant to $10 a share. Assuming those words as incorporated into the contract, whatever their meaning may be, we cannot assign to them any such effect as to in any way qualify the express promise made by the defendant. In connection and on the same line with those words are also the words and figures, ‘Capital, $3,000,000; shares, $25,’ showing no intention to reduce the capital stock nor the par value of the shares. In Upton v. Tribilcock, 91 U. S. 45, the stockholder had a certificate for the whole number of shares agreed to be taken, and the word ‘non-assessable.’ together with the amount ‘$100,’ were stamped across the certificate, although only 20 per cent. had been paid; and yet the stockholder was held liable for the remaining 80 per cent.

There is nothing in the point as to the statute of limitations. Although the contract was made in 1868, it was to pay as the directors from time to time might order. The directors neglected to make order for the payment. A court of equity, then, might make the order in place of the directors. Scovill v. Thayer, 105 U. S. 155;Glenn v. Saxton, 68 St. 353. The order of assessment or call for payment made by that court was in 1866. Until then, as we view it, the cause of action did not accrue, and since then there has not been time for any period of limitation to run. Scovill v. Thayer, supra.

The claim of the necessity that the defendant should have been a party to the proceeding in the circuit court of Cook county, to admit of this action against him, is vested upon the authority of the cases of Chandler v. Brown, 77 Ill. 333; and Insurance Co. v. Gulick, 102 Ill. 41.

The former case was a suit by Chandler, receiver of the Lamar Insurance Company, against Brown, a stockholder in the company, to recover payment for his unpaid stock. The proceeding wherein Chandler had been appointed receiver, and the order of assessment was made, was under section 25 of the act of 1872, relating to corporations, which provided that in the contingency therein named suits in equity might be brought against all persons, stockholders at the time, by joining the corporation in...