Rutz v. the Esler

• Decision Date: 28 February 1878
• Citation: Rutz v. the Esler, 3 Ill.App. 83, 3 Bradw. 83 (Ill. App. 1878)
• Parties: EDWARD RUTZv.THE ESLER AND ROPIEQUET MF'G CO.
• Court: Appellate Court of Illinois

3 Ill.App. 83

3 Bradw. 83

EDWARD RUTZ

v.THE ESLER AND ROPIEQUET MF'G CO.

Appellate Court of Illinois, Fourth District.

February Term, 1878.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of St. Clair county; the Hon. WM. H. SNYDER, Judge, presiding.

Mr. R. A. HALBERT, Mr. F. A. MCCONAUGHY and Messrs. WILDERMAN & HAMILL, for appellant; that it was error to give verdict and judgment for an amount greater than that claimed in the declaration, cited Stephens v. Sweeney, 2 Gilm. 375;Brown v. Smith, 24 Ill. 198;Walcott v. Holcomb, 24 Ill. 331;Riues v. Kumler, 27 Ill. 291;Altes v. Hinckler, 36 Ill. 266.

The capital stock not having been fully subscribed, no legal organization could be effected, and the call was made by persons unauthorized to make it: Rev. Stat. 1874, 286;G. G. N. Q. M. C. v. McLister, 15 Eng. Rep.(Moak) 1;Bigelow v. Gregory et al.73 Ill. 197.

Appellant's subscription was induced by fraud, and this can be set up as a defense;Bwlch-Plwm Lead Co. v. Baynes, 2 LawRep. 324;McCreight v. Stevens, 1 H. & C. 454;Glamorganshire Co. v. Irvine, 4 F. & F. 947;Henderson v. Railway Co.17 Tex. 560;Peek v. Gurney, 1 Eng. Rep.(Moak) 567;Upton v. Triblecock, 1 Otto, 53;Miller v. Barber, 66 N. Y. 558;Burrows v. Smith, 6 Seld. 550;Neil v. Cummings, 75 Ill. 170;Blalock v. Randall, 76 Ill. 224;Thomas v. Coultas et ux.76 Ill. 493;Angell & Ames on Corporations, § 531; 1 Redfield on Railways, 159; Brice on Ultra Vires, 152;Allen v. Hart, 72 Ill. 104;Case v. Ayers, 65 Ill. 142;Williams v. Franklin, etc., Asso.26 Ind. 315;Brookville Lumber Co. v. McCarty, 8 Ind. 392;Hubbard v. Chappel, 14 Ind. 601;Evert v. C. & A. Lumber Co.19 Ind. 242.

A release of certain of the subscribers from a portion of their subscription, releases all: County of Crawford v. Pittsburg R. R. Co.32 Pa. St. 141;New York Ex. Co. v. DeWolf, 31 N. Y. 282;Angell & Ames on Corporations, § 531;McConaty v. Cent. Lum. Co.1 Penn. 426.

Mr. C. W. THOMAS, for appellee; that the remittitur by appellee cured the objection that verdict and judgment were greater than claimed in the declaration, cited Rev. Stat., chap. 110, § 82.

The appellant is estopped to deny the legal organization of the corporation: Herman on Estoppel, § 569;Wight v. Shelby R. R. Co.16 B. Mon. 7;Central Plank Road Co. v. Clemens, 16 Mo. 359;Stone v. Great Western Oil Co.41 Ill. 85;Kansas City Hotel Co. v. Harris, 51 Mo. 464;Lane v. Brainerd, 30 Conn. 577;Crump v. U. S. Mining Co.7 Gratt. 352;Southern P. R. R. Co. v. Hixon, 5 Ind. 166;Northern Mo. R. R. Co. v. Winkler, 33 Mo. 354;Smith v. Heidecker, 39 Mo. 157.

The fact that the directors who make the call are not legally elected is no defense to this action: Eakright v. Logansport R. R. Co.13 Ind. 404;O. & M. R. R. Co. v. McPherson, 35 Mo. 13;Johnson v. Crawfordsville, etc. R. R. Co.11 Ind. 280.

A corporation has power to enforce a contract for subscription, though it might not maintain its corporate existence if attacked in a direct proceeding: Buffalo & Albany R. R. Co. v. Cary, 26 N. Y. 75;Swartout v. M. C. R. R. Co.24 Mich. 389.

No representations made by the commissioners as to what the proposed company would do, would be binding upon the company after it was organized: Cabeyv. R. R. Co. Sup. Ct. Penn. 1876;Wharton on Contracts, § 1068.

ALLEN, J.

To the April term of the St. Clair Circuit Court suit was brought by appellee against appellant for the recovery of $2,250, on a call of subscription to capital stock to appellee by appellant.

The declaration alleges that appellee is a body corporate.That appellant, on the 6th day of February, 1875, became a subscriber for thirty shares of the capital stock of appellee; that the shares were $100 each, to be paid in such installments as the directors of appellee might call for; and that on the 1st of September, 1875, appellee, by its directors, pursuant to its by-laws and the statute laws of the State, made a call upon appellant to pay $75 on each of his thirty shares, by which call appellant became liable to pay $2,250; damages claimed, $2,500.

It was stipulated between the parties that all legal defenses to the action might be proved on the trial under the general issue that might be proved under a special plea.A jury trial was had and verdict returned for appellee, fixing his damages at $2,587.50.Appellant moved for a new trial.Motion overruled and judgment by court for $2,587.50 and cost of suit.Appeal prayed and allowed to this Court.

Several errors are assigned, among which are:

1.Refusal of the court to give third instruction asked for by appellant.

2.In refusing to grant a new trial.

3.In rendering judgment for amount of damages found by jury.

The first point made by appellant is the refusal of the court to give the following instruction:

“If the jury find, from the evidence, that at the time the commissioners to open books for subscription to the capital stock of the proposed Esler and Ropiequet Manufacturing Company gave notice of a meeting of the subscribers for the purpose of electing directors or managers of said proposed corporation, the said capital stock had not been fully subscribed, and said commissioners knew that it had not been so subscribed, and that said capital stock was not fully subscribed at the time appointed for said meeting, and that at said meeting, one of said commissioners then subscribed eleven shares, of one hundred dollars each, to complete the full amount of the authorized subscription; and that the directors who made the call sued on in this case, were elected at said meeting; and that said commissioners, in their report to the Secretary of State of their proceedings, made it appear that said notice was given after said stock was fully subscribed, and thereby procured said Secretary of State to issue a license or certificate of the complete organization of said corporation, then the directors so elected would not be authorized to make calls for the payment of subscriptions to such capital stock; then such subscribers should afterward knowingly carry on business in the name of such proposed corporation would be liable as partners to all persons to whom such proposed corporation might become indebted in business; and if such subscription of eleven shares was made as aforesaid, without the knowledge or consent of the defendant in this case, then it was fraudulent as to him, and he cannot be compelled to pay calls upon his subscription to such stock, unless the jury further believe, from the evidence, that the defendant, after a full knowledge of all the facts, has ratified the aforesaid acts.”

It is shown, by the evidence, that when the stockholders' meeting was called, and up to the time of that meeting, the amount of necessary capital stock had not been subscribed; that just before the meeting organized, Ropiequet, one of the commissioners, made a subscription of $1,100 in the name of Jacob J. Esler, which made the amount required.The evidence tends to show that appellant had no knowledge of the deficit in the amount, or that it had thus been made complete.

It is insisted by appellant that inasmuch as the full amount of subscription to capital stock had not been made before the stockholders' meeting was called, that under the law authorizing the corporation to be formed, Rev. Stat. Ch. 32, 286, no organization could then be had, and that a directory elected under an organization had at that meeting could not legally make a call on subscribers to the capital stock.

But the evidence shows that appellant was present and took part in the organization of the company at that meeting; that he was appointed a director and accepted the appointment, and acted as such for a time at least, and our opinion is that he is estopped from setting up such an irregularity in its organization.

The case referred to by appellant, Bigelow v. Gregory et al.73 Ill. 197, is, we think, not in point.In that case the question was as to the liability of the members of the association as partners for a debt contracted by them before they had become organized under the laws of the State, and the court held that inasmuch as they had not complied with the law so as to become a corporation at the time they incurred the debt for which they were sued, they were liable as individuals for that debt, and that they could not shield themselves from their personal liability by showing that they had afterward become incorporated.See Angell & Ames on Corporations, 636;Kansas City Hotel v. Harris, 51 Wis. 464;Danbury & Norwalk R. R. Co. v. Wilson, 22 Conn. 435;Law v. Brainard, 30 Conn. 577;Smith v. Hardecker, 39 Mo.

And in Stone v. G. W. Oil Co., 41 Ill. 85, the court holds that the subscriber is estopped when h...