Supreme Court of Rhode Island, 1867

Woonsocket Union Railroad Co. v. Sherman

Supreme Court of Rhode Island · Decided October 6, 1867 · Ames

8 R.I. 564

Counsel

Browne, with whom was William H. Potter, for the defendant. I. The Woonsocket Union Railroad Company cannot maintain this suit. It sues as an existing corporation by that name. Its charter contemplates and provides for its union with another railroad, and for its extinction thereby. Charter, Sec. 21. The plaintiff claims that a union was effected under this provision, and that the united companies constituted a corporation by the name of the New York and Boston Railroad Company. By the union all the powers, privileges and franchises of the Woonsocket Union Railroad Company passed to the New York and Boston Railroad Company. The corporation formed by the union of the two corporations is as separate and distinct from either of the two, as they two, before the union, were from each other. The language of the charter is, — "the two corporations united shall constitute one corporation, by such name," c. Again, — the plaintiff corporation, while a corporation, never made their assessments. Defendant could not, therefore, be liable for an assessment, it, the plaintiff corporation, never made. These assessments were made by the corporation constituted by the union of the two. If not united, then as the plaintiff corporation retained its corporate existence and never made these assessments, it certainly cannot sue for them. The plaintiff corporation, not some other corporation, must have the power to assess, and must have, in fact, made these assessments on the defendant, in order to make defendant liable therefor to the plaintiff in this suit. II. The subscription is a conditional subscription. It contains a condition, precedent, which has not been performed or complied with by the plaintiff. It is this: The undersigned subscribers are on condition "that the union road is built through the village of Pascoag." The defendant was the owner of a manufacturing establishment in Pascoag. He did not want the stock, as stock, for its dividend. He wanted the railroad built, and built there, as an appurtenance to an improvement upon his mill estate. This was the sole motive, and the entire consideration to the defendant for his subscription. Both parties so understood it. The contract so expresses it — this is the contract. The conditions which must be performed by a corporation before, and as the basis of a suit for assessments, may be contained in the charter or in the subscription itself. Anything which by the express provisions of the charter or general laws is made a condition to be performed on the part of the company or its agents, before, and as foundation of right to make calls for subscriptions or where a thing is required to be done before calls can be made, and is an important element in the consideration in the agreement to take stock, should ordinarily be regarded as condition precedent. Redfield on R.R. pp. 77 8. It is an essential conditions to making calls in these companies, where the number of shares and the amount of capital is fixed, that the whole stock shall be subscribed before any call can lawfully be made. Ibid, p. 79. Worcester Nashua R.R. Co. v. Hinds, 8 Cush. 110. Stoneham Branch R.R. v. Gould, 2 Gray, 277. Salem Mill Dam Corp. v. Ropes, 9 Pick., 187. Littleton Manfg. Co. v. Parker, 14 N.H., 543. Contocook Valley R.R. v. Barker, 32 N.H. 363 . And where a charter of a railroad company requires their stock to consist of a certain number of shares, assessments cannot be made before the required number is taken, and in such case conditional subscriptions are not reckoned. Redfield on R.R. p. 80. It is no subscription where the subscriber agrees to pay share for share in other stock of equal nominal, though not actual value. Cabot West Springfield Bridge Co. v. Chapin, 6 Cushing, 50. See as to subscriptions of insolvent persons, 9 Pick. 187 — as above. When charter requires stock to consist of not less than so many shares, assessments made before the required number are taken are illegal and cannot be collected. Old Town Lincoln R.R. Co., v. Veasey, 39 Me., 571. If commissioner takes check of a subscriber, it is no subscription. Crooker v. Crane, 23 Wend., 211. And where charter requires a given number of shares, and after subscription of a number of shares, the number is lessened, prior subscribers are not liable. Penobscot Kennebec R.R. v. Dunn 39 Me., 587. Fundamental alteration of charter releases a prior subscriber. Redfield 191, as where so altered as to allow road to stop short of terminus. Winter v. Muscogee R.R. Co., 11 Ga., 438. So, when so chartered for railroad company, altered so as to authorize it to buy steamboats. Hartford New Haven R.R. Co. v. Croswell, 5 Hill, 383. And if a majority of a railroad company obtain an alteration of their charter which is fundamental, as to enable them to build an extension of their road, any stockholder who has not assented to the alteration may restrain the company, by injunction, from applying the funds of the original organization to the extension. Stevens v. Rutland Burlington R.R. Co., 1 Law Register, 154. Conditional Subscriptions — When subscriptions are made upon the express condition that the road shall go in a particular place, the performance of such condition is commonly regarded as indispensable to the liability of the subscribers, the same as in other contracts. But an alteration in the line of the road which did not affect the interest of the subscriber, will not absolve him from his subscription. Redfield, p. 85. Baltimore v. Alton Sangammon R.R. 13 Ill., 514. See 22 Conn. 435 . The alteration in charter of line of road, to release a subscriber, must be one which removes the prevailing motive for the subscription, c. Redfield, p. 95. Buffalo, Corning N.Y.R.R. v. Pottle, 23 N.Y., 21. Hester v. Memphis Charleston R.R. 32 Miss., 378. So where agents of railroad represented to subscriber that the railroad would run near or through his plantation, and it did not. Niles v. Plank Road Co., 30 Ala., 92. O'Neal v. King, 3 Jour. (N.C.) 517. III. The subscription of $500,000 capital stock of the Woonsocket Union Railroad Company was a condition precedent to plaintiff's right to make or receive assessments made on the capital stock. The subsequent provision that the company might complete sections of their road whenever $200,000 was subscribed, did not waive or affect the right of subscribers to refuse and withhold payment of their subscriptions till the whole $500,000 was subscribed. The $500,000 was not subscribed — see subscription books. IV. This suit being between the Woonsocket Union Railroad Company and one of its subscribers, the record book of the doings of the directors and stockholders of the company was not admissible evidence (being objected to) to prove by their recitals that three-fourths of the stockholders in amount and votes, assented in writing to the union of the Woonsocket Company with the New York and Boston Company; and also, in the absence of all other written evidence of the written assent of the stockholders to that union, except the record book of Mr. Edward Harris, and containing the signatures of certain of the stockholders to said union, this book was the only evidence, on that point, that the jury could consider. And it appearing by said book that three-fourths of the stockholders in amount and votes did not sign therein, the jury must find for defendant. V. This being a suit between the Woonsocket Union Railroad Company, and one of the subscribers, for its stocks, the book of records of the doings of the stockholders and directors of the Woonsocket Union Railroad Company and the New York and Boston Railroad Company were not admissible to prove that it had secured the right of way to Boston and New York. No other evidence was submitted on this point. E. Harris' testimony. There was not only no written evidence that three-fourths of the stockholders of the Woonsocket Union Railroad Company assented to the union, but it did appear that three-fourths did not so assent. This was in the small memorandum book produced by Edward Harris. T.A. Jenckes, for the plaintiff. I. The action is well brought. 1. The defendant is the promisor; the Woonsocket Union Railroad Company is the promisee, in the contract declared upon. The succession of the New York and Boston Railroad Company to the benefit of the promise is accurately stated in the writ, and averred in the declaration; and also the rights of Harris, Black Co. as assignees of the New York and Boston Railroad Company. The plaintiffs are therefore accurately described, and the cause of action correctly stated. The rule with regard to corporations, either as plaintiffs or defendants is, that the identity of the parties to the contract sued upon, should be sufficiently averred in the pleadings, and made apparent in proof. Angell Ames, § 234, and cases there cited. 2. The exception of the defendant is in fact an objection on account of a misnomer of the plaintiff corporation in the writ and declaration. But the identity of the corporation being sufficiently averred in the pleadings, this objection of misnomer comes too late. It should have been taken by plea in abatement. Angell Ames, § 647, § 650. 3. The name of the New York Boston Railroad Company being used as plaintiff, as well as that of the Woonsocket Union Railroad Company, the latter name may be rejected as surplusage, or withdrawn by amendment. Angell Ames, § 651. 4. The circumstances of this case, as shown in proof at the trial, are such as ought to preclude the defendant from setting up or making any technical points in defence. Angell Ames, § 635. This form has been adopted in similar suits in this court. See Providence and Plainfield Railroad Company's suits on files. II. The actual building of the railroad through or near the village of Pascoag, was not a condition precedent to the collection of the subscription money. The road could not have been built until the money subscribed for the stock had been paid. 15 B. Monroe, 218. McMillan v. Maysville Lexington R.R. Co., 41 Maine, 512. Penobscot R.R. Co. v. Daniel White, 4 Jones, N. Carolina Reports, 340. N. Carolina R.R. Co. v. James T. Leach. III. The condition that $500,000 should be subscribed before any assessment should be made upon the stock subscribed for, was waived by the agreement that the branch road to Pascoag should be built when $200,000 of the stock should be subscribed for. This waiver appears from the language of the instrument, and is also proved by the acquiescence of the defendant in the right of the corporation to assess, and the payment by him of several of the assessments. IV. The record books and minutes of the corporation were properly admitted as evidence prima facie, but not conclusive, that three-fourths of the corporators were present at the meeting of the corporation which authorized the record of the two corporations. Angell Ames on Corp. §§ 513, 514. So also the testimony of Mr. Harris. See 41 Maine, 512, ante. V. So, also, the record books of the corporation were admissible for the purpose of showing that the right of way had been secured as required. See Angell Ames on Corp., as above cited. VI. Judgment should be entered upon the verdict. Subsequently, Mr. Jenckes referred the court to the case of the Ohio Mississippi R.R. Co. v. Wheeler, 1 Black's. (Sup. Ct. U.S.) R. 286 — published since the hearing of the motion — to the point of the distinct and separate character of corporations, and of their continued existence in that character, for the purpose of being parties to a suit, notwithstanding their union or merger under legislative sanction of two or more states which had respectively incorporated them.Jenckes, for the plaintiff, now moved the court to increase the verdict by the amount of the note, reading an affidavit that it had been lost, and offering security to the defendant against any claim that might be made upon it. Van Slyck, with whom was W.H. Potter, opposed the motion.

Opinion of the Court

The first objection made in this case to the plaintiffs retaining their verdict is, that the suit is brought in the name of the Woonsocket Union Railroad Company, instead of the name of the New York and Boston Railroad Company, in which last corporation, it is said, that the former is merged and lost. The objection is not taken by plea of misnomer in abatement, but by plea of nul tiel corporation, and under the general issue, so that the question is, whether the description of the plaintiff corporation in the writ and declaration sufficiently identifies it with an existing corporation entitled to sue the cause of action, and not whether that corporation sues in its proper name. The description of the plaintiff in the writ and declaration is, — "The Woonsocket Union Railroad Company, a corporation created by the General Assembly of the State of Rhode Island, and united according to the provisions of its charter with the New York and Boston Railroad Company, a corporation created by the Legislature of the State of Connecticut, and transacting business under the corporate name of said united corporation, trustees," c. No language could more accurately describe or clearly identify the corporation entitled to sue in this case. Such a corporation, and by the name given, *Page 578 was created by this state, and was authorized by its charter to unite, and did unite, with the New York and Boston Railroad Corporation, incorporated by the state of Connecticut, and has since transacted business with that corporation, as a united corporation, under the corporate name thereof. Without deciding whether a plea of misnomer, in abatement, would not have prevailed on the technical ground, that by the act of incorporation, the proper name in which the plaintiff should sue, since the union, is, "The New York and Boston Railroad Company," we cannot say that no such corporation as that named and described, did exist when this suit was brought, and hence this objection falls to the ground.

Another objection to the verdict is, that the judge who presided at the trial refused to instruct the jury, that the calls upon the defendant's subscription for stock, could not, according to the condition of the same, be collected until the union railroad was actually built, or completed, through the village of Pascoag. Such an interpretation is, no doubt, theliteral interpretation of the subscription, but not the reasonable one. There were two routes for this railroad in contemplation, one by the way of Pascoag where the defendant did, and one by the way of Chepachet, where he did not, own property. We understand his subscription to mean, "if the road is built, in the sense of `to be built,' by the former route, where it will benefit me, I will take fifteen shares; if by the other route, where I shall receive no benefit from it, I will not subscribe at all." The proof was, and so the jury have found, under the instructions of the court, that the road was in good faith located and designed to be built, and in part built, on the Pascoag line; and we must hold this to be a fulfillment of the condition of the defendant's subscription, unless, indeed, we suppose that the company was not to have the defendant's aid to do that, which he subscribed to enable them to do. The suggestion, that the corporation was to build the road on this line on credit, so far as the subscriptions of the defendant and of others on like condition were concerned, and then, only if the road was completed to have the aid of those subscriptions to pay their debt, is unreasonable *Page 579 towards those engaged in the same enterprise, and unjust to the contractors on the road, and cannot, as an interpretation of this subscription, be entertained by us.

For the same reason we approve the ruling of the judge, that the proviso in the subscription, that a section of the road might be built, beginning at Woonsocket and ending at Pascoag or Chepachet, when 2000 shares of the capital stock should be subscribed, was a waiver, to that extent, of the general condition, that the subscriptions were not to be binding until $500,000 were subscribed to said stock. Upon any other construction the proviso would be senseless, in view of the only purpose it was inserted to accomplish.

With regard to the propriety of admitting the corporation records, or minutes of the doings of the Woonsocket Union Railroad Company, and of the New York and Boston Railroad Company, — regularly kept as such, — for the purpose of proving the corporate proceedings, and all that may be fairly intended from them, we suppose that there can be no doubt. The evidence derivable from them is never conclusive, and may not, in some cases, be sufficient for the purpose for which they are introduced. All that is matter for the jury; but upon looking into the evidence in this case, bearing upon the points to which the evidence from this source was deemed insufficient, we see enough in the conduct of the defendant himself, coupled with that coming from other sources, to induce us to refuse him a new trial, upon the ground that this verdict was against the evidence.

New trial refused, and judgment ordered to be entered uponthe verdict.

At the trial of the case, it appeared, that the defendant had paid fourteen assessments on his shares, of five per cent. each, for which he produced the receipts of Lebbeus Gaskill, an agent of the corporation, appointed to collect assessments of subscribers, for six of which assessments, amounting to the sum of $450, the defendant, on the sixth day of May, 1854, gave his promissory note, payable to the corporation in four months from *Page 580 date, which Gaskill turned over to Stokes, the then treasurer of the corporation. The defendant swore that he had never paid this note; but the note not being produced, or accounted for, the amount of the six assessments covered by it, were treated as paid, and did not enter into the verdict.

Addendum

The court has no power to increase or diminish the amount of the debt, or damages found by a jury in their verdict; since this would be a power to make, rather than to amend a verdict. 1 Bac. Abc. Amendment, D. 5. The reservation of such a power at the trial, or the exercise of it in the way of imposing a condition upon the grant, or refusal of a new trial, are supported only by the consent or acceptance of the parties.

As the case at bar stood before the jury, they rightly, and without objection on the part of the plaintiffs excluded the six calls covered by the note, in computing the amount of their verdict. If, as the facts really were, and can now be proved, the plaintiffs, through ignorance of them, and not by their own negligence, have suffered an injury in this matter, certainly, their remedy is not by such a motion as this.

The motion must be dismissed, with costs.

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