Merrimac Mining Co. v. Levy

• Decision Date: 14 February 1867
• Citation: 54 Pa. 227
• Parties: The Merrimac Mining Company <I>versus</I> Levy.
• Court: Pennsylvania Supreme Court

Page 227

54 Pa. 227

The Merrimac Mining Company versus Levy.

Supreme Court of Pennsylvania.

February 4, 1867.

February 14, 1867.

February 4th 1867.

Before WOODWARD, C. J., THOMPSON, STRONG and READ, JJ. AGNEW, J., at Nisi Prius

Error to the District Court of Philadelphia.

C. Sergeant and C. Gilpin, for plaintiffs in error, cited Carson v. Arctic Mining Company, 5 Mich. R. 288; Merrimac Mining Company v. Bagley, in Supreme Court of Michigan, not reported; Hartford and N. Hav. Railroad v. Kennedy, 12 Conn. 499; Herkimer v. Small, 21 Wend. 273; Id. 296; Palmer v. Ridge Mining Co., 10 Casey 288; Small v. Herkimer, 12 Comstock 530.

G. W. Biddle, for defendant in error, cited Canal Company v. Sansom, 1 Binn. 70; Palmer v. Ridge Mining Company, 10 Casey 288.

The opinion of the court was delivered, February 14th 1867, by STRONG, J.

The plaintiffs are a Michigan corporation, and this suit is brought to recover from the defendant, who is a transferee of stock from an original subscriber, the instalments on the stock called since he became a stockholder. In Carson v. The Arctic Mining Company, 5 Michigan 288, it was ruled that one who had signed the original articles of association, and thus subscribed to the stock of a mining company organized under a law similar to that under which these plaintiffs are organized, is liable personally for instalments called while he remains a stockholder. And in a later case, decided by the same court, The Merrimac Mining Company v. Bagley, it was held, that one who had purchased stock in the company from an original subscriber, is liable to pay such instalments as are called while he owns the stock. In this latter case the law of incorporation was the same as that of the company under which the defendant held his stock. Indeed, the plaintiffs in that case and this are the same. If the decision of the Michigan court is a correct exposition of the law, the judgment in this case should have been for the plaintiffs.

We do not propose now to spend time in showing that were the defendant an original subscriber to the stock of the plaintiffs, he would be personally liable for the instalments called. It is quite plain, from the articles of association, taken in connection with the general mining law of Michigan, that he would. It is true, the articles contain no express promise of the subscribers to pay instalments as called, but the stock is fixed at twenty thousand shares of $25 each. By the act of subscribing, each associate undertook to raise his proportion of the capital, as it might be called for by the directors — and the directors were, by the act of the legislature, authorized to call in the subscription. A right to call, ordinarily implies a corresponding duty to pay. The act also speaks of the instalment called as "becoming due." This is language appropriate to an existing debt.

There is another consideration of much importance, tending to show that personal liability was contemplated. The articles of association, under the Mining Law, contemplated a substantial capital raised for a defined purpose. This was not only to carry out the avowed object of the corporation, but for the protection of its creditors. If the subscribers were not bound to pay for their stock, there is nothing more than a nominal capital. Certainly it was intended that creditors should have the security of a real capital to the extent of the sum named as the aggregate stock. But without saying more upon this subject, we refer to Carson v. The Arctic Mining Co., already cited, and to Hartford & New Haven Railroad Co. v. Kennedy, 12 Conn. 499. In the latter case a subscription to the stock of a railroad company in these words, "we do hereby subscribe to the stock of the said railroad the number of shares annexed to our names respectively, on the terms, conditions and limitations mentioned" in the resolutions of the General Assembly incorporating the company, was held to amount to an assumption to pay instalments as called, and this though the resolutions did not declare there should be any personal liability, but provided that the...