Scarlett v. Academy of Music

Exceptions to Evidence — Action against a subscriber to stoclc in a Corporation to recover an assessment on the amount subscribed — Admissibility of parol evidence to vary the terms of subscription — Sufficiency of notice of assessment — Misnomer — Agency—Construction of contract of subscription. Where an exception states that it was taken to the admissibility of certain evidence offered in the case, although it does not state what action was taken by the Court below upon the exception, it may be assumed that the exception was overruled and the evidence admitted. Where an exception was taken to all the evidence offered, and especially to a specified portion of it; and there was no question as to the admissibility of any but that part specially objected to, all except that being clearly admissible. Held : That there was no error in overruling the objection to the whole. In an action.by the Academy of Music of Baltimore City, a body corporate, to recover from a subscriber to its stock an assessment or call on the shares subscribed by him, it appeared in evidence that D. was a well known merchant of Baltimore, who with others had undertaken the task of procuring subscribers to said stock, and as such being himself a subscriber and stockholder, had obtained the signature of the defendant to the contract of subscription given in evidence. The defendant offered in evidence certain representations made by D., under which he claimed to be released from liability under his subscription. On objection to the admissibility of this evidence, it was Held : 1st. That generally parol representations or agreements made at the time of subscribing for stock are inadmissible and void unless fraud is shown. 2nd. That the defendant not having added in writing to his signature, the terms of the representations, on the terms of which he claimed to have made his subscription, he cannot be allowed to add by parol testimony, other conditions to the terms of his written contract. The evidence showed that the board of directors of said corporation, on the 1th of October, 1810, passed a resolution, that in case the committee previously appointed for that purpose, should conclude the purchase of a site for the building, the treasurer should notify the subscribers, that the first •instalment of forty per cent, would be payable on a day to be fixed by the president, within thirty days thereafter, at the F. & M. Bank, and at the meeting of the board on the 31st of October, 1810, the committee reported the purchase, and the treasurer reported that he had called the assessment as directed, payable on the 10th of November, following. The notice of this call purporting to have been signed by the treasurer, was in effect as follows: “The stockholders of the Academy of Music of Baltimore City, are hereby notified that the first instalment of forty per cent, will be due and payable on the 10th inst., (to-morrow,) at the National Farmers’ and Merchants’ Bank,” and it was proved that this notice was published in a newspaper printed in Baltimore City, on the 9th and 10th of November, 18Í0. Held: 1st. That from this, and the other evidence in the case, it was competent for the jury to find that the call was duly made by the board of directors, that O. was the then secretary of the corporation, and was duly authorized to give the newspaper notice of the call, that the time and place of payment was fixed and designated by the board of directors, and that such designation of time and place was in accordance with the resolution of the board of the 7th of October, 1870. 2nd. That under section 65 of the Act of 1868, ch. 471, which is substantially a re-enactment of sec. 49 of Art. 26 of the Code, it is immaterial whether the notice by publication required by those sections to entitle a corporation to sue its subscribers for assessments, be published for only one or for any number of days before the time of payment mentioned in it. 3rd. That all that the law requires, is that the notice shall be given by publication in a newspaper printed nearest the place where the principal office of the corporation is located, and one such publication before the day fixed for payment is sufficient. By the terms of the contract of subscription which the defendant signed, he agreed to subscribe for stock in the “Baltimore Academy of Music.” The corporate name of the plaintiff was, ‘ The Academy of Music of Baltimore City, ’ ’ and the declaration averred that the “ Baltimore Academy of Music ’' mentioned in the contract was the plaintiff, and that the contract was intended to be, and was in fact, made with the plaintiff. The proof showed that there was no other corporation in the City of Baltimore, which could possibly set up any pretence to this subscription, that all the subscriptions were taken like this in the name of the “Baltimore Academy of Music,” and that when the enterprise was started it was commonly known by that name. Hei,d : 1st. That this was quite sufficient to authorize the jury to find the averments of the declaration to be true, and that the defendant in fact, subscribed, and in fact intended to subscribe for shares of the capital stock of the plaintiff, under the name of the “Baltimore Academy of Music.” 2nd. That the obligation of the defendant rested upon the terms of the contract, and it matters not whether the person who solicited him to sign it, was a mere volunteer in obtaining subscriptions, or was expressly authorized so to do by the corporation. The condition of the subscription was, that it was “not to be binding until stock amounting in the aggregate at'par, to $200,000, shall be subscribed.” Hem> : That the true construction of this condition, was that the subscriptions should be binding on every subscriber when that sum was subscribed, and the amount to be subscribed by each one, whether he might be the party sued or not, was to be included in making up the aggregate amount.

Appeal from the Superior Court of Baltimore City. The nature of this case and of the first, second and third exceptions is stated in the opinion of the Court. Fourth Exception. — The evidence being concluded, the plaintiff offered the following prayer : If the jury believe that the defendant subscribed for ten shares of the capital stock of the plaintiff, under the name of the “Baltimore Academy of Music,” by signing the contract of subscription offered in evidence, and that two hundred thousand dollars of said stock was subscribed for before the instalment sued for in the declaration in this cause was called in, and if they shall further find that the said instalment was called in, and that the notice thereof offered in evidence in this cause was published in the “Baltimore American,” a newspaper published in the City of Baltimore, more than ninety days before the institution of this suit, and that the principal office of the plaintiff was located in said City of Baltimore, and that said instalment has not nor has any part of it, been paid by the defendant to the plaintiff, then the plaintiff is entitled to recover the amount of said instalment, with interest in the discretion of the jury. And the defendant offered the ten following prayers: 1. The defendant prays the Court to instruct the jury, that the notice by advertisement offered in evidence, is not in legal contemplation sufficient under the provisions of the Act of 1868, ch. 471, sec. 65. 2. That there is no evidence in this cause sufficient to establish that the call or assessment, sued for in this case, was duly made by the board of directors. 3. That there is not sufficient evidence in this cause that the corporation, plaintiff, duly appointed Mr. Cohen, treasurer of said corporation, prior to the 10th November, 1870, and that Mr. Cohen was duly authorized to give the newspaper notice offered in evidence, in manner and form as therein set forth. 4. That under section 65 of the Act of 1868, ch. 471, it was the duty of the board of directors to establish the time and place of payment of assessments made or ordered by said board of directors, and that there is no evidence in this cause of such designation of time of payment. 5. If the jury find that Mr. Cohen, in giving the newspaper notice, acted solely under the authority of the resolution of October 7th, 1870, then the notice given is insufficient to charge defendant in this case. 6. If the jury find that the paper-writing signed by the defendant for subscription for stock, was brought to him by Mr. Devries, as stated in the evidence, and that the defendant signed the same at the request of said Devries, then the plaintiff cannot recover in this case, because there is no evidence that said Devries was the agent of the plaintiff, or had any authority to bind the plaintiff in manner as in said paper set forth. 7. That in order to recover under the pleadings and evidence in this cause, the jury must find that the subscription contract of the defendant for stock, was made by him with the plaintiff, with knowledge and intent so to do on his part, and that there is no sufficient evidence of such facts in this cause to identify the Baltimore Academy of Music with the corporation, plaintiff, as within such knowledge and intent of the defendant. 8. The defendant prays the Court to instruct the jury, that if the jury find that defendant signed the paper-writing offered in evidence, as his subscription for stock as therein stated, then such paper so signed by the defendant, is not binding in law as a valid contract between the defendant and the plaintiff bringing this suit. 1st. Because the plaintiff in this suit is not named in the said contract, and is no party thereto. 2d. Because there is no evidence offered to the jury that the name of the defendant was obtained to said paper-writing, by authority of the plaintiff in this case, or that plaintiff accepted the same price prior to the date of the call in this case. 9. If the jury find the signing by the defendant of the paper-writing offered in evidence as his agreement; to subscribe for stock, said agreement was upon condition that $200,000 therein spoken of, should be subscribed by others, exclusive of the subscriptions there mentioned, before the conditional subscriptions should be operative and binding on the parties signing said agreement. 10. The defendant prays the Court to instruct the jury, that there is no sufficient evidence that the board of directors did fix the 10th day of November, 1870, as the time for the payment of the first instalment of the subscription for stock mentioned in manner and form as required by law under their charter, as set forth in the amended declaration filed in this cause. The Court (Dobbin, J.,) granted the prayer of the . plaintiff, and rejected all the prayers of the defendant. The defendant excepted. The jury rendered a verdict for the plaintiff, and judgment was entered accordingly. The defendant appealed. The subscription in this case was not made in the name of this corporation plaintiff. The narr. avers that while this is true, yet it says that “The Baltimore Academy of Music” was intended to be, and was, in fact, “The Academy of Music of Baltimore City,” the plaintiff aforesaid. That said contract was intended to be and was, in fact, made with the said plaintiff. This covers the case in 13 Md., 117 ; and one of the cases cited in that case, 5 Halsted, 323, from which I quote— “ the misnomer of a corporation in a grant or obligation, does not destroy or defeat the grant or obligation, nor .prevent a recovery upon it in the true name, provided the corporation designed and intended by the parties to the instrument, be shown by proper and apt averments and proofs.” 10 New Hamp., 124; 3 Md., 121. Now appellant complains that the question of design and intent was not fairly, if at all, put to the jury in the prayer of the plaintiff granted by the Court. The Court used this language in the instruction, “if the jury believe that the defendant subscribed for ten shares of the capital stock of the plaintiff, under the name of the ‘ Baltimore Academy of Music/ by signing the contract of subscription offered in evidence, &c.” The Court makes the signing of the contract offered in evidence, the test and proof to the jury of the fact to be established. The signing of the contract was admitted, hut the design and intent to contract with this corporation in so doing, was the fact to be submitted, and the absence of any proof of such design and intention, or even that defendant had the slightest knowledge of the existence of this corporation, was so apparent, that defendant offered his 1th prayer, which .was refused because it required the finding by the jury, that Scarlett’s contract was made with the plaintiff, with knowledge and intent so to do on his part — and that no evidence was offered by plaintiff showing such knowledge and intent. The signing of the contract proved nothing whatever as to intent, and the language of the plaintiff’s prayer made the signing of the contract the only fact to be found by the jury, to establish a contract in law between Scarlett and this corporation. Prima facie, it is apparent from the contract itself, that the corporation was not one of the contracting parties — and it can only be made such, by showing hy competent evidence, that Mr. Devries was acting for this corporation at the time he obtained the subscription, and that Scarlett intended to deal with this corporation, and in order to such intent, a knowledge of its existence as a corporation is indispensable. The plaintiff’s prayer does not cover this ground, and was well calculated to mislead the jury. Mr. D. was the agent of the corporation and made the representations at the time of subscription, as its inducement and as part of the transaction — in fact they were the inception of the transaction. And when the respectable gentleman discovered that the statements which had been the inducement, had proved to be untrue, he sought Scarlett and cancelled the subscription. This cancellation by mutual assent, was as effective as if the subscription paper had then and there been torn up, and the attempt to enforce it against Scarlett is a gross fraud upon Scarlett, and a manifest wrong to the high-minded gentleman concerned. To confirm his action in the part which is beneficial to the corporation, and to disaffirm it in the part which makes against, cannot be allowed. The corporation take the unworthy ground that Mr. D. was authorized (by subsequent ratification of his act,) to procure a subscription, but that the corporation is not bound by representations honestly make to induce the subscription, and to cancel it when the inducement failed. The contract signed by Scarlett, required him to pay fifty dollars per share in such instalments, and at such times as may be fixed by the board of directors. How was the instalment in this case called for ? On October, 7th, 1870, the board resolved, (hypothetically,) in case the committee should conclude the purchase of a site, the treasurer is hereby directed to notify the subscribers of stock, that the first instalment thereon of 40 per cent., will be payable on a day to be fixed by the president, within thirty days thereafter, at the F. & M. Bank. How it is clear that the board delegated to the president, the fixing of the time of payment. Delegata potestas non potest delegari. This is not only a maxim of common sense, but of the common law. The narr. in this case avers, that the hoard of directors did fix the tenth day of November, 1870, as the best time of payment of this instalment — this was a material averment, and was a fact to he found by the jury. Without such averment, the defendant could have demurred. Is it true ? Has not the corporation plaintiff itself, proved that it is not true? Is'not the day on which the instalment is to he paid, left first to the uncertainty of a purchase being concluded by a committee, and if concluded, then entirely to the discretion of the president. And stranger than all; is not the treasurer directed to notify the subscribers that the first instalment will he payable on a day to he fixed by the president, &c.? Did the hoard give the treasurer any other order or direction in the premises ? And Mr. Lucas says: that so far as he knew, this resolution was the authority under which Mr. Cohen published the notice in the American. Does the newspaper notice in this case harmonize with the order given by the hoard of directors to its treasurer ? How was this call of the treasurer made ? He reported that he had called instalments as directed — he had fulfilled the duty — and his report was approved. The record booh open before Court and jury, showed that he had given the notice by printed notices, through the post office, and one of said printed notices was pasted in said booh, as the proof that he had so given the notice. By the 9th November, Cohen discovered that his notice, given and approved. by the hoard, was illegal and worthless, and then resorted to the newspaper notice on his own authority — the authority under the resolution being exhausted — the hoard having ten days before approved his action of notice through the post office. It is also to he noted, that the hoard of directors ordered by resolution, that the subscribers should have thirty days notice, whereas, the newspaper notice gave one day. The question to he decided is, was this instalment duly called in and notified to the appellant ? (a.) The board could not delegate its power to the president in the manner set forth; and even if the board could do so, there is not a particle of evidence, that the president fixed any time or ever acted under the resolution in any manner whatever. (b.) The treasurer did not give the notice contained in the resolution, as directed (c.) The treasurer gave the official notice through the post office, and reported it to the board, and the board approved what he had, done. (d.) The board provided by resolution, that subscribers should have 30 days for payment after notice, and the newspaper notice only allowed one day. The charter and contract were properly admitted in evidence, the latter being coupled by the evidence in the second bill of exceptions, with the appellee. That evidence showing beyond a doubt that the contract sued on was, in fact, made with the appellee. It has long been established law that when mistakes are made in the names of corporations, in contracts with them, the corporations suing in their true corporate names have been allowed to recover; the only requirement being that the declaration shall contain an averment identifying the plaintiff with, the contracting corporation, as in this case. Hagerstown Turnpike Road Co. vs. Greeger, 5 H. & J., 122; N. Y. African Society vs. Varick, 13 Johns., 38 ; Balto. Cemetery Co. vs. First Independent Church of Balto., 13 Md., 123-6 ; Newport Mechanics’ Manfg. Co. vs. Starbird, 10 N. H. 124-5; Medway Cotton Manf. vs. Fisher, Adams, &c., 10 Mass., 368-9-70; The Medford & Chillicothe Turnpike Co. vs. Brush, 10 Ohio, 111-12-14-15 ; Angell & Ames on Corporations, sec. 647. But, even if the variance was such as might prove fatal if availed of by demurrer or motion in arrest, it has been cured, by verdict and judgment in this case, which establish the identity, if the evidence, was not overwhelming to that point. It being admitted that Mr. Cohen had died since the trial in the Baltimore City Court, it was competent to prove his ■ testimony upon that trial by a witness who was present at that trial, and recollected what he had testified to, such evidence, being, from the necessities of the case, admissible, and never excluded except in the single case .when the witness recollects only a part of what the deceased witness had testified to. The witness in this case was pi’esent during the whole trial, and had Mr. Cohen’s testimony impressed upon his memory for the double reason, that he was counsel in the case, and that Mr. Cohen was the only witness examined upon that occasion. It will be seen, that the testimony so given covers the whole contract, and recites all the facts necessary to the recovery ; the witness, while saying that he recollects substantially what Mr. Cohen’s testimony was, having detailed the facts testified to and not his conclusions from those facts, and that is all that the law requires. That is the word, “ substantially” used by the witness, applied to the language of the deceased witness, not his testimony. And it cannot be contended that the contract sued on in this case is not the same contract, made between the same parties, as the contract sued on in the Baltimore City Court. The fact that the instalments sued for were different, cannot affect this principle, the contract being the thing regulating the right to recover any or all of the instalments. 1 Taylor on Evidence, p. 455, sec. 440 ; Pyke vs. Crouch, 1 Lord Ray., 730; 1 Greenleaf on Evidence, secs. 163-4-5-6, (n. 1, p. 192;) Phila. Wilm. & Balto. R. R. Co. vs. Howard, 13 How., 307, 334-35 ; United States vs. McComb, 5 McLean, 286; Davis vs. State, 17 Ala., 354; Blach vs. Woodrow & Richardson, 39 Md., 219-20-21-22; Garrott vs. Johnson, 11 Gill & J., 173-182-3-4; Bowie vs. O’ Neale, 5 H. & J., 231 ; Calvert vs. Coxe, 1 Gill, 116. All of the testimony tending to identify the plaintiff in this case with the corporation named in the contract was not only admissible, but absolutely necessary, and that the newspaper notice, was properly admitted, and under the statute, Act of 1868, ch. 471, sec. 65, was one of the forms of notice specially required. Hughes vs. Antietam Manf. Co., 34 Md., 331-2 ; Busey vs Hooper, 35 Md., 30-31 ; Academy of Music vs. Scarlett, 43 Md., 203. The offer to prove hy Mr. Scarlett, the defendant, certain verbal representations alleged to have been made to him by Mr. Devries at the time of subscribing, for the purpose of changing the contract of subscription by interpolating into it provisions or conditions, materially at variance with the contract of subscription, was properly rejected, especially as it had been stated and not denied, that Mr. Devries was “not the agent of the appellee for the purpose of making any representations to bind it,” The law is so well established as to be elementary, that parol representations or agreements made at the time of subscribing for stock in a corporation, and inconsistent with the written terms of the subscription, are inadmissible, inoperative and void. In fact, any other ruling would open the gate for fraud upon all the other subscribers who acted in ignorance of such parol representations. 1 Taylor on Evidence, p. 401, sec. 372 ; 2 Taylor on Evidence, p. 980, secs. 1035-6; Conn. & Pass. Rivers R. R. Co., 24 Vt., 468-9, 476-7-8; Piscataqua Ferry Co. vs. Jones, 39 N. H, 491-7; Smith vs. Plank Road Co., 30 Ala., (N. S.,) 651-2-6, 667; Johnson vs. Grawfordsville R. R. Co., 11 Ind., 280-4-5; Thornburg vs. New Castle, dec. R. R. Co., 14 Ind., 500, 501; 4 Jones, N. C., (Law,) 340-1-3-4-5; Rives vs. Montgomery South Plank R. Co., 30 Ala., 97-8-9; East Turnpihe Va. R. R. Co. vs. Wm. Gammon, 5 Sneed, 567-9-70-1-2. The plaintiff’s prayer was properly granted. The suit was on a contract setting forth explicitly the terms upon compliance with which the plaintiff, (appellee,) would he entitled to recover. This prayer simply asks the instruction that if the jury find that the plaintiff had complied with its part of this contract, and had given to the defendant the printed notice, it is entitled to recover. The sufficiency of this notice is the only question, and has been already decided' by this Court. Academy of Music vs. Scarlett, 43 Md., 203 ; Huqhes vs. Antietam Manf. Co., 34 Md., 331-2. The defendant’s first prayer denies the sufficiency of this notice and was properly rejected.- His second, third and fourth prayers ask for instructions directly in opposition to the evidence, and were properly refused. His fifth prayer states the proposition that the resolution of the board of directors, contained in the regular hook of proceedings of the corporation, directing the treasurer to give to subscribers the newspaper notice offered in evidence, were not sufficient proof that he had authority to give the notice. It is hard to see how there could he any stronger or better evidence of his authority ; but in addition to this, we have the positive evidence of Mr. Cohen, that he had such authority; and this prayer was properly refused. His sixth prayer involves the propriety of admitting the alleged parol representations to vary the contract of subscription and was properly rejected. ■ The defendant’s seventh and eighth prayers object to the sufficiency of the proof identifying the plaintiff with the “ Baltimore Academy of Music,” the name in which the contract was made, which would appear to be as complete as it possibly could be, and was decided by this Court, when this case was last before it. The second part of the eighth prayer involves the novel pi’oposition that Mr. Devries’ authority, and not the .contract, is to regulate the rights of the parties to this suit. As the contract was made in the name of the plaintiff, and the plaintiff chose to adopt it, it would seem that Mr. Devries’ authority could not in any manner affect the right to recover, even if it was true, which it is not, that Mr. Devries had no authority to obtain the defendant’s subscription. These two prayers were properly refused. The ninth prayer has already been passed upon by this Court; but even if it had not been, it totally disregards the evidence. The contract does not exclude the plaintiff’s subscription in making up the $200,000, and it was properly refused. The tenth prayer must be disposed of by the action of this Court upon the second, third, and fourth prayers, and for 'the same reason was properly refused. If Mr. Cohen’s testimony is admissible at all, which it clearly is, he says distinctly, that the “board of directors directed the first assessment to be called in in October, 1870, payable on 10th November, 1870, and that it was called in as directed.”