Robertson v. Sibley

• Decision Date: 01 January 1865
• Citation: 10 Minn. 253
• Parties: DANIEL A. ROBERTSON, SHERIFF, ETC., vs. HENRY H. SIBLEY.
• Court: Minnesota Supreme Court

10 Minn. 253

DANIEL A. ROBERTSON, SHERIFF, ETC., vs. HENRY H. SIBLEY.

Supreme Court of Minnesota.

Appeal from order of district court, Ramsey County.

From the complaint it appears that the defendant was a stockholder in and subscriber to the stock of the Minneapolis

and Cedar Valley Railroad Company, and that only five per cent. upon such subscription has been paid; that the company is insolvent and unable to pay its debts, except by requiring payment of subscriptions to its stock; that it has refused to call for such payment; had abandoned its work and organization; that the plaintiff, as sheriff, under an execution against the company, levied upon the remainder unpaid of defendant's subscription to stock as upon a debt. The action is to recover the unpaid portion of the subscription.

Defendant demurred on the grounds —

Of want of capacity in plaintiff to sue.

That the complaint does not state facts sufficient to constitute a cause of action.

The demurrer was sustained.

Points and authorities for appellant: —

The appellant refers to the following authorities in support of his right to maintain the action, as set forth in the complaint: Comp. Stat. 551, § 148, sub. 3, and p. 553, § 156, sub. 4; Henry v. Vermillion and Ashland R. R. Co. 17 Ohio, 187; Miers et al. v. Zanesville and M. Turnpike Co. 11 Ohio, 273, and 13 Ohio, 197.

Points and authorities for respondent: —

The franchises and organization of the company long ago ceased by nonuser and were moreover entirely forfeited, and the existence of the company ceased, and its civil death was duly declared. See allegations of the complaint; Session Laws, 1856, p. 325; id. 1857, p. 20, § 6, et seq.; id. 1858, p. 491; id. 1861, p. 213; id. 1862, p. 227; id. 1863, p. 137; id. 1864, p. 164. To render subscription to capital stock a binding contract at all for any purpose, there must of course be mutuality, as in any other contract. If there is a failure on the one side or the other, there is of course to that extent, failure of consideration, and the other side is therefore released from performance on his part, as in other contracts. In the case at bar it is therefore clear that the defendant's obligation or debt on his subscription ceased on the disorganization of the company and the forfeiture of its franchises, which was long before the commencement of this action. If the company could not maintain an action for this subscription against the defendant, then the plaintiff cannot; for the plaintiff can have no greater rights in the premises than the company. Whatever rights the plaintiff has, if any, are obtained by a sort of legal or statutory subrogation to those possessed by the company. He stands at best only in the company's shoes, in this action.

It is clear that the company could have no claims whatever against the defendant on his subscription when this action was commenced, nor since the disorganization and dissolution of the company — since it ceased to exercise its function and lost its franchises. Angell & Ames on Corp. 478, § 4, p. 159, § 2, pp. 160, 736, § 4, p. 741, § 5, p. 750, § 6. Sections 16 and 17 of the original act of incorporation of 1856, sufficiently reserve the powers exercised by the legislature by the acts of 1861-2-3, if any such reservation was necessary. But the nonuser of its franchises, and the abandonment of its organization by the company, and its relinquishment of the objects for which it was created, as long ago as 1859, furnished a sufficient justification to the legislature for the acts of 1861-2-3. And, moreover, as nothing appears to the contrary, it must be presumed that the company has acquiesced in these acts of the legislature, which acquiescence would of itself be tantamount to the voluntary surrender of its franchises. But the abandonment by the company of its organization and the objects for which it was created as alleged in the complaint, is of itself equivalent to a surrender of its rights and franchises; it being a well established principle, that whenever a corporation does, or suffers to be done, acts which destroy the end and object for which it was instituted, it thereby surrenders its rights. Bradt v. Benedict, 17 N. Y. 96, 99.

Smith & Gilman, for appellants.

Lorenzo Allis, for respondent.

McMILLAN, J.

This action is brought under sub. 4, § 156, of the Pub. Stat. 553, to recover the unpaid amount of subscription of the defendant to the stock of the Minneapolis and Cedar Valley Railroad Company, the judgment debtor. The plaintiff sues as sheriff by virtue of a levy upon the said indebtedness of the defendant Sibley to the railroad company, under an execution upon a judgment in favor of McDonald, Graham & Co., against the said Minneapolis and Cedar Valley Railroad Company. His right of action must depend, therefore, entirely upon the statute authorizing him to collect debts thus levied upon. Pub. Stat. 572, ch. 61, § 109. The Minneapolis and Cedar Valley Railroad Company was incorporated during our territorial existence, by special act of the legislature approved March 1, 1856, and does not, therefore, come within the provisions of the state constitution relating to corporations, nor is there in the act of incorporation any provision making the stockholders individually liable to any extent for the debts of the company. It is not claimed that the general provisions of statute relating to corporations (Pub. Stat. 330-1-2-3, §§ 321-2) affect this case,...