Shurtz v. Schoolcraft & Three Rivers Railroad Co.

• Decision Date: 30 October 1861
• Parties: Daniel Shurtz v. The Schoolcraft & Three Rivers Railroad Company
• Court: Michigan Supreme Court

9 Mich. 269

Daniel Shurtz v. The Schoolcraft & Three Rivers Railroad Company

Supreme Court of Michigan

October 30, 1861

Heard October 18, 1861; October 19, 1861

Error to St. Joseph circuit. The case is sufficiently stated in the opinion.

Judgment reversed, with costs, and a judgment entered in his favor.

W Saviers and C. Upson, for plaintiff in error, insisted that the subscription was not binding on the subscribers: 3 Kent 33; A. and A. on Corp., 210, 212; 26 Wend. 685; 4 D. and R 117; 2 B. and C., 602; 2 La. R., 568; 6 Paige 497; 4 Mass 595; 12 Mass. 237; 8 Serg. and R., 521; 12 Wheat. 113. (2) No assessments could be made until the whole capital stock was subscribed: 2 Gray 277; 6 Pick. 23; 9 Pick. 187; 6 Cush. 50; 8 Cush. 110; 13 Met. 312; 10 Fost. 390; 40 Me. 192; 1 M. and M., 151; 2 B. and Ald., 518; 9 Cush. 423; 39 Me. 571, 587; 34 N. H., 124.

H. H. Riley, for defendant in error.

OPINION

Campbell J.

Defendant was sued upon a subscription to the stock of plaintiffs, made December 18, 1855. It appears from the finding, that the company had been previously organized, by an original subscription and filing of articles under the general railroad law, and that five commissioners were named in the articles to open books for further subscriptions under the statute. The amount of capital stock, fixed by the articles of agreement, was $ 130,000, divided into 5,200 shares of $ 25 each. The directors, by vote June 14, 1855 (which was during the same month when the organization took place), passed a resolution instructing the commissioners to require payment of five per cent upon all subscriptions when made. The court finds that the subscription was made on a subscription paper, circulated by an agent appointed by the board of directors, and that no books of subscription were opened. It is not found that the commissioners or any of them acted in the matter. It is found that the whole amount of stock was never subscribed. The directors called assessments from time to time, up to the full amount of each share subscribed. Defendant never paid any portion of his subscription, but on divers occasions promised to do so. It is also found that he voted at a stockholders' meeting after he made his subscription. The subscription is in the following terms:

Dec. 18th, 1855. Schoolcraft & Three Rivers Railroad Company stock subscription. We, the undersigned, agree to take the number of shares of stock in the Schoolcraft & Three Rivers railroad company, which is set opposite our names respectively, and bind ourselves, our heirs and executors, to pay for the same in monthly installments, to the order of the president and directors of said railroad company, or their agent or attorney, for the purpose of constructing or building said road, whenever called upon so to do; which installments shall not exceed twenty per cent at any one time.

"Names.

Shares.

Amounts.

"Daniel Shurtz,

10

$ 250.00

"Daniel Shurtz,

10

$ 250.00

"To be paid in one year.

The court below found the facts in writing, and made several rulings of law, which were excepted to. Judgment was given for the full amount claimed.

The principal legal questions arising on this finding relate to the validity of the subscription, and the right to levy assessments upon it, if valid, before all the stock was subscribed.

The general railroad law contemplates that, after the organization is made legal, by filing articles in proper form after payment of five per cent upon the preliminary subscription of $ 1,000 per mile, the commissioners named in the articles shall open books of subscription to the capital stock from time to time, at such places and on such notice as a majority of them shall direct; and shall keep open the books until all the capital stock shall be subscribed. Provision is made for an equal distribution in case the subscriptions exceed the sum fixed. After the whole sum is subscribed and distributed, they are to call a stockholders' meeting to choose directors: L. 1855, pp. 153-4-5, §§ 1, 2, 3, 4.

These commissioners act as a statutory board, and derive their powers from the law and not from the corporation: Walker v. Devereaux, 4 Paige 229. They are expressly required to give notice of the times and places fixed by them for receiving subscriptions, and to keep their subscription books open. The design of the law was to enable all persons to subscribe upon equal terms. No one else was authorized to receive subscriptions, and they were not required to recognize or protect in their distributions any stock not subscribed for on their own lists. It follows, of necessity, that no person could by any other means, obtain any assurance that he would be entitled to any share in the concern, and any subscription made without such assurance would be void for want of mutuality.

It is unnecessary to decide whether the subscriptions must be made literally in books, although such a course would be certainly much safer and less liable to mistake and abuse. Nor is the question whether, after the books are legally opened for subscription, any portion of the work may not be done by single commissioners, or by clerks or other agents under the immediate inspection of the commissioners, or...