Monroe v. Fort Wayne, Jackson & Saginaw R. R. Co.
| Decision Date | 04 November 1873 |
| Citation | 28 Mich. 271 |
| Court | Michigan Supreme Court |
| Parties | Charles Monroe v. The Fort Wayne, Jackson & Saginaw R. R. Co |
Heard October 22, 1873; October 23, 1873
Error to Jackson Circuit.
Assumpsit. Defendant brings error. Affirmed.
Judgment affirmed, with costs.
C. A & S. C. Stacy and Fidus Livermore, for plaintiff in error.
John D Conely, for defendant in error.
The Fort Wayne, Jackson & Cincinnati Railroad Company, a Michigan corporation, consolidated with the Fort Wayne, Jackson & Saginaw Railroad Company, a corporation of Indiana, and the two companies, when so consolidated, took the style of the latter company. The plaintiff in error, prior to the consolidation, and at or before the 7th of December, 1868, became a subscriber to the capital stock of the Michigan company, and having refused to pay his subscription, this suit was brought by the consolidated company, the defendant in error, to collect it.
They recovered in the court below, and the plaintiff in error insists that he was not liable. The first ground of defense relates to the legality of the supposed incorporation of the Michigan company under the general railroad law.
The general act, as passed in 1855 (Sess. L. 1855, p. 153), required that the affidavit of the amount subscribed, and the amount paid in, to be annexed to the articles filed in the office of the secretary of State, should be made by at least three of the directors, but the amendatory act of 1867 (Sess. L. 1867, p. 90) required this affidavit to be made by at least one-half of the directors. The promoters of the Michigan company framed their articles in the summer of 1868 and therein provided for nine directors; but failing to notice the change made by the act of 1867, they proceeded to file their articles with an affidavit attached made by three only of the directors, when it should have been made by five, in order to comply with the act as amended. They seem not to have discovered this error until the following winter, when, on the 19th of January, they annexed to the articles on file an affidavit made by five directors, and they there stated that their first affidavit was made by too small a number through inadvertence. In this interval between the 26th of September, 1868, when the articles were filed, and the 19th of January, 1869, when the second affidavit was annexed, the company had completed a formal organization and had steadily and very actively prosecuted their enterprise. The commissioners named in the articles to open books of subscription had been zealously engaged, and by the 7th of December, 1868, had obtained actual subscriptions to an amount above six thousand dollars per mile for the whole road intended to be build by such company. Among these subscriptions was that of the plaintiff in error, and all were formally accepted by the company. The plaintiff in error contends that the company were not legally incorporated and empowered to receive subscriptions under the articles as first filed, in consequence of the insufficiency of the first affidavit, and that under the circumstances the filing of the second affidavit on the 19th of January, and subsequent to his subscription, superseded the first proceeding and operated to establish the corporation as of that date. His counsel argued very ingeniously in favor of their position and against an adverse application of our decision in Swartwout v. Mich. Air Line R. R. Co., 24 Mich. 389; but we think the doctrine of that case is clearly opposed to the defense made here.
The projectors of this company seem in good faith to have undertaken to incorporate themselves under a law authorizing them to do so, and they appear to have truly supposed that they had consummated a valid incorporation. On the faith of this belief they in fact organized and exercised corporate functions; incurred expense and liabilities, and in various ways extensively promoted their contemplated enterprise.
The plaintiff in error met and contracted with them on the footing that they were legally incorporated and competent to receive subscriptions, and gave the weight of his name to their project and pretentions. He became a subscriber for stock on the books opened by the commissioners, and voluntarily put himself in a position to claim the rights of a stockholder.
In thus agreeing with the company for stock and to pay for it, he encouraged the...
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