Hager v. Cleveland

• Decision Date: 20 June 1872
• Citation: 36 Md. 476
• Parties: WILLIAM H. HAGER v. EDWIN E. CLEVELAND and JOSEPH M. BASSETT, trading as CLEVELAND & BASSETT.
• Court: Maryland Court of Appeals

36 Md. 476

WILLIAM H. HAGER v. EDWIN E. CLEVELAND and JOSEPH M. BASSETT, trading as CLEVELAND & BASSETT.

Court of Appeals of Maryland

June 20, 1872

APPEAL from the Circuit Court for Washington County.

This was an action brought by the appellees under the provisions of sec. 52 of Article 26 of the Code of Public General Laws to recover of the appellant a debt due them by the Antietam Manufacturing Company of Washington county, and contracted when he was a stockholder in the company. At the trial below the plaintiffs gave in evidence the certificate of incorporation of the company, and the record thereof; which certificate was filed some time in May, 1867; and proved that the defendant was one of the parties who acknowledged said certificate to be their act and deed. They then gave in evidence three notes, each for the sum of $3,000, payable to the plaintiffs, executed by the president of the manufacturing company in the year 1868, and also an account or accounts due by the company to the plaintiffs; and also gave in evidence the minutes of proceedings of the company showing its admission of indebtedness to the plaintiffs and authority for executing the notes; and further gave in evidence a mortgage or deed of trust by the company to William T. Hamilton and others; and further gave in evidence by the treasurer of said company, that the amount of capital stock subscribed to the Company was $92,600, of which the sum of $67,000 was paid in, and that $66,000 of this sum was so paid in before the 5th day of February, 1869; that the defendant was a director in the company up to the time he transferred his stock, which was on or about the 10th of February, 1869; that the defendant paid up the whole of his stock, amounting to $5,000, as it was called; that the company had a settlement with the plaintiffs and gave notes for the amount due, and that the present indebtedness of the company to them was about $10,000. The plaintiffs then rested their case.

The defendant then gave in evidence certain minutes and proceedings of the company; and further proved that the capital stock was originally fixed at $50,000, and that he was a subscriber for fifty shares, $5,000; that when he signed the certificate of incorporation the capital stock was fixed at $50,000; that he paid up his stock in full, and that on the 10th day of February, 1869, he transferred it to his son, Jonathan H. Hager, upon the transfer book of the company before the institution of this action.

The plaintiffs then for the purpose of rebutting the testimony of the defendant, proved by a witness that he copied from a paper furnished him by his brother, the certificate of incorporation of the company, and when it was written and read to his brother, he said there was a mistake in it; the capital was to be $150,000, and not $50,000; and that he, the witness, then corrected the mistake by interlining the words "one hundred and," and neglected to make the corresponding correction in the number of shares; that the certificate of incorporation offered in evidence, was the identical paper he so copied and interlined; that the interlineation was made before any name had been subscribed to it; thought that no name was subscribed to the paper from which he made the copy, but was not certain.

Upon all the evidence the plaintiffs submitted the following prayers:

1. If the jury believe that the paper-writing given in evidence as a subscription of stock to the Antietam Manufacturing Company of Washington county, was signed by the parties whose names appear thereto, or any five of them, and that they, or said five of them were, at the time, free white persons, and that they, or said five persons acknowledged the same before John Cook, and that said Cook was at the time a justice of the peace of the State of Maryland, in and for Washington county and that the said paper was then recorded in the office of the clerk of the Circuit Court for Washington county; and if they shall further believe from the evidence that the defendant was a stockholder in said company, specified in said paper, to the amount of $5,000, or for fifty shares at $100 each, and that, whilst the defendant was such stockholder, the said Antietam Manufacturing Company of Washington county became indebted to the plaintiffs in the sum of $10,000 or thereabouts, and that the entire amount of said indebtedness was contracted whilst said defendant remained such stockholder, and said debt still continues due and unpaid; and if the jury shall believe from the evidence that the capital stock of said company was not taken or paid up to the full amount specified in said paper-writing, at the time of bringing the plaintiffs' suit or since, then the plaintiffs are entitled to recover from the defendant the said sum of $5,000, the amount of his subscription, and the verdict should be for the plaintiffs for that amount notwithstanding the jury may believe from the evidence that the defendant transferred his stock before or since the bringing of this suit.

2. [Identical with the first, except that it contained the following clause, which came immediately after the word " since" in the twenty-third line of the first prayer:] And shall believe that one-half of said capital stock of $150,000 had not been paid up within one year after the incorporation of said company, or after said paper was left for record as aforesaid.

3. If the jury shall further find, in addition to the facts set forth in the plaintiffs' first prayer, and which is made a part of this, that the interlineation of the words, "one hundred and," in said paper-writing, was on said paper at the time it was acknowledged by the defendant and other signers thereto, specified in the acknowledgment taken before John Cook and thereto appended, then the defendant is not discharged from his liability to the plaintiffs in this action by reason of said interlineation.

4. If the jury shall believe, from the evidence, the facts stated in the first and third prayers of the plaintiffs, and made part of this, that the said paper-writing, with the interlineation therein, was delivered to the clerk of said Circuit Court to be recorded, by the president and directors of said company, or that the same was so delivered with their authority, then the defendant is not discharged from his liability to the plaintiffs in this action.

The defendant then offered the following prayers:

1. That the plaintiffs, to recover in this action, must first show to the jury that they have taken legal proceedings against the said company to enforce payment of their claim, and have prosecuted the same to judgment, and the plaintiffs having offered no evidence of any such proceeding in this cause, are not entitled to recover.

2. That if the jury find that the capital stock of said company was fixed and limited by the corporation at $50,000, and that the same was all paid in before the institution of this suit, then the plaintiffs are not entitled to recover.

3. That if the jury shall find that the capital stock of said company was fixed and limited by the corporation at $50,000, and shall further find that the same was paid in, one-half in one year, and the other half thereof in two years from and after the incorporation of said company, then the plaintiffs are not entitled to recover; provided, the jury further find that the whole amount of said capital stock was paid in before the institution of this suit.

4. That if the jury find that the whole amount of the capital stock of said corporation was fixed and limited by the original certificate thereof at $50,000, and was so written therein, and that the said certificate so written was, on the 21st of May, 1867, delivered to the clerk of the Circuit Court for Washington county as the Act of incorporation, and that the said clerk so received and endorsed the same for record, and that afterwards, and before the actual recording thereof, the directors of said company, or certain of them, and without a general meeting of the stockholders of said company called for that purpose, increased the capital stock of said company from $50,000 to $150,000, and interlined such increase of stock in said original certificate, after the same was as aforesaid delivered to the said clerk and endorsed as aforesaid, but before the actual recording of the same, then such alteration of said certificate and increase of said stock is void, and said capital stock remains fixed at $50,000, as first written in said certificate, if so found; and if the jury further find that the said capital stock was paid in, one-half thereof in one year, and the other half thereof in two years, from the 21st of May, 1867, when the same was incorporated, and shall in addition find that the whole amount of the capital stock, so fixed, was paid in before the institution of this suit, then the plaintiffs are not entitled to recover.

5. If the jury find that the defendant, before the bringing of this suit, in good faith assigned the stock held by him on the books of said company, in accordance with the by-laws thereof, and that at the time of the bringing of this suit he was not a stockholder in said company, then the plaintiffs are not entitled to recover.

6. That the certificate or paper purporting to be the article of incorporation of the Antietam Manufacturing Company of Washington county, given in evidence to the jury, is not a good and sufficient incorporation of said company, and that said company is not legally incorporated, and the plaintiffs are not entitled to recover.

7. That the certificate of incorporation of said company, and the record thereof given in evidence, by the legal construction thereof, fixes and limits the capital stock of said company at fifty thousand dollars, and...