Central Plank Road Co. v. Clemens

GAMBLE, Judge,

delivered the opinion of the court.

The judgment below having been rendered upon the petition and answer, upon the motion of the plaintiff, the'only ques *363 tion to be determined is, whether the original or amended answer sufficiently denied any material allegation o£ the petition, to require its proof by the plaintiff, or alleged any fact as. a defence which would bar the plaintiff’s right of recovery.

The act of the 27th of February, 1851, “ allows persons to form themselves into a corporation for the purpose of constructing a plank road, by complying with the requirements of the act.” In order to create the corporation, articles of association are to be signed, setting forth the “ name which they assume, the beginning, termination and route of the road they purpose to construct, and its general plan ; the amount of the capital stock of the company; the amount of each share; the names and residence of the subscribers ; and the amount of stock taken by each ; the term of years to which the existence of the association shall be limited, which shall not exceed thirty; and the number of directors proposed to be elected, which shall not be less than three nor more than nine.” It is next provided that “ whenever the stock subscribed amounts to one thousand dollars per mile of the proposed road, a copy of the articles of association, sworn to by at least two of the subscribers thereto, shall be filed in the office of the recorder of each county through which the road passes.” The thirty-third section provides that “associations, framed under the provisions of the act, shall, from the filing of said articles with the recorder, be corporations known by the name they may assume in their articles of association.”

The petition states the facts which, under this act, would constitute the association to which the defendant belonged, a corporation.

The defendant’s original answer admits the existence of the facts which constituted the plaintiff a corporation, and alleged, by way of defence to the action, that the president and directors had located the road in such manner as very materially to depart from the route mentioned in the articles of association, and that such departure was without any necessity, but was made from an improper subserviency to the wishes of individ *364 uals and against the interest of the company. Upon this ground of a change in the route of the road from that prescribed in the articles, the defendant claimed to be-exonerated from all obligations to pay for his stock. The amendment to the answer retracts the admission that the plaintiff was, under the act, constituted a corporation, and denies “that the amount of stock, as required by law, had been duly subscribed before the election of the officers of the said supposed company.” He also denies “that due notice of the time and place for holding the election of officers was given, as- required by the law above referred to.”

The three grounds of defence stated in the answer, naturally take this order : 1st, that the amount of stock required by law to be subscribed before the articles of association were filed in the Recorder’s office, was not subscribed; 2d, that there was not legal notice given of the election of the officers, and, 3d, that the president and directors, after they were elected, had caused the road to be located on a route different from that proposed in the articles of association.

1. In regard to-the first point, the allegation of the petition is, “ that after there had been more than enough stock subscribed to amount to one thousand dollars per mile of the proposed road, a copy of the articles was filed,” &e. The answer to this allegation, instead of specifically denying it, says “ that the amount of stock, as required by law, had not been duly subscribed before the election of the officers of said alleged company.”

But what is the effect of the fact here alleged-, and how can it avail the defendant? The act of the general assembly provides a mode by which the subscribers for stock in a company, which proposes to make a plank road, may obtain the name and privileges of a corporation. When the act is complied with,, and a copy of the articles of association filed in the recorder’s office, the incorporation is complete. It is undoubtedly true, that a defendant, in an action commenced by such corporation, may put the plaintiff to the proof of the facts *365 which confer the corporate character ; but, in the present case, the question arises whether the defence, which is attempted to be made, can be allowed to this defendant. It is alleged, not only that the requisite amount of stock was subscribed, -but that when the company was organized, under the charter, and officers elected, the defendant was present at the election and voted as a member of the company-. In the President, Managers & Co. of K. & C. Turnpike Co. v. McConaby, 16 Serg. & R. 140, it was held, that when a corporation was created under an act which provided ‘ ‘ that when six hundred shares had been subscribed, the commissioners should certify that fact to the Governor, who should 'thereupon, by the name of the president,’5 &c., a subscriber for stock could not dispute the corporate character of the company, on the ground that three hundred of those six hundred -shares had been subscribed fictitiously, when it appeared that the defendant, who was sued upon his subscription, had accepted the charter and acted upon it. In that case, it appeared that the defendant was -one of the seven persons named in the charter, that he advertised the election of managers and voted by proxy. The same doctrine is maintained in the Selma & T. R. R. Co. v. Tipton, 5 Ala. 807 , and Chief Justice Collier applies the law of estop-pels in pais, to the defence thus attempted by the subscriber for stock, who has participated in the organization of the company and then denies its corporate character, because of a failure to comply with some of the requirements of the statute under which it claims being.

In the present case, as it stands admitted upon the record, that the defendant has assisted in the organization of this company, he will not be permitted to escape the duty he assumed when he subscribed for the stock, upon the ground that the company was not organized in strict conformity to the law.

2. The second ground of defence, that there was not legal notice given of the election -of directors, is not entitled to consideration in this case. The insufficiency of the notice of the election has no effect to discharge the defendant from his promise to pay for his stock.

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3. The third ground of defence is equally unavailing. If the directors of the company, in locating the road, have departed from the route proposed in the articles of association, So as in fact to make it a different enterprise from that in which the defendant engaged, and different from that which is authorized under the law, they have violated their duty to the company and to the law, but not more to the defendant than to every other member of the company. If their act stands as the act of the company, and is such a departure from the route proposed in the articles, as to be a different enterprise, then the whole corporate franchise may be taken from the company by the appropriate proceeding. But in the present suit for an instalment due upon the defendant’s stock, this question cannot arise. The authorities cited from New York and Massachusetts, to show that an alteration in the charter of an incorporated company, made after the original subscription of the stock, materially changing the character and objects of the company, discharges a subscriber from his obligation to pay upon his original subscription, when he has refused to consent to any such alteration, do not apply to a case like the present. Let the judgment be affirmed.