New Jersey Midland Railway Co. v. Strait

The opinion of the court was delivered by Beasley, Chief Justice.

The defendant agreed, in writing, to advance to the Neiv Jersey, Hudson and Delaware Railroad Company the sum of $500, to be paid in certain installments, and the company, on its part, stipulated to deliver to the defendant, when the entire subscription should be paid, its bond or bonds, secured by a specified guaranty for the amount of such payment. The substantial ground on which the defendant repels the claim made for this money is, that the above-named railroad company has disabled itself from the performance of the contract on its side. The entire consideration for the promise of the defendant, and which forms the foundation of this action, is the obligation to render, as an equivalent for the money demanded, the bonds of the New Jersey, Hudson, and Delaware Railroad Company, whereas it is insisted the plaintiff offers its own bonds instead of those of the company first named.

Neither the court nor the legislature can alter the bargain between these parties. The defendant had the right to stipulate for the bonds of a particular company, and it is clear he cannot be required to accept, in lieu of the promised consideraation, the obligation of any other company, no matter how much the latter may exceed in value the former. There is no legal mode in which the contract of a man can be improved for him against his consent. As the bond of the contracting company formed the entire consideration for the promise of the defendant, if such company have put it out of its power to render such bond to the defendant, it has destroyed this contract by its own voluntary act, and has, in consequence, discharged the defendant.

*325 This defence was met on the argument by the contention that the Yew Jersey, Hudson and Delaware Railroad Company had not ceased to exist, but had merely changed its name, and in a manner, the form of its organization. But this view appears to me very unreasonable. The consolidated companies, in the nature of things, cannot be the same as any one of their constituents. Such a company has larger purposes, wider powers, and heavier responsibilities than those inherent in either of its component parts. In the case of Zabriskie v. Hackensack and New York R. R. Co., 3 C. E. Green 178, the Chancellor decided that an act of the legislature would not legalize the extension of a railroad against the dissent of any stockholder, beyond the bounds designated in its charter. The ground of this judgment was, that to carry the road beyond the prescribed termini introduced an enterprise substantially different from''that which the stockholders agreed to undertake. The- case cited involved the nice question as to the power of a majority of the stockholders to consent to a change or substitution of the corporate objects, and its only importance in the present inquiry consists in its expression of the opinion that an authority to extend the railroad was a substantial variation of the purposes of the company as originally incorporated. But in the present instance, as it appears to me, the change lias been so great thaf, at all events, as between the company and a stranger to its organization, the new undertaking must be considered as essentially different from the old one. Almost every material circumstance on which the defendant must have relied in forming a judgment as to the safety of making his promise of a loan has been altered. The length of the road, the nature of the ground to be traversed, and the amount of the outlay, were the ingredients of the enterprise proper to be considered in forming an opinion as to the probable success of the project, and all these have been varied in material particulars. It seems undeniable that the bond of a company which designs to build a road of ten miles is, or may be, an entirely different security from the bond of a company having in view the construction *326 of a road a hundred miles in length. For present purposes, it is enough to know that such bonds are different things, because the defendant had the undoubted right to bargain for either of them, and if they are not identical in a legal point of view, he cannot be compelled to take the other against his will. He bargained for the bond of the New Jersey, Hudson and Delaware Railroad Company, and the bond of the plaintiff, a compány constructed out of the company just named and two other companies, cannot, without his consent, be substituted for the consideration specified.

If it was deemed important to hold these subscribers to their engagements, the separate existence of the New Jersey, Hudson and Delaware Railroad Company should have been preserved, so that its bonds could have been rendered according to its agreement. This lias not been done, and the consequence is, there is not the ability to perform the contract on the part of the company. This, of necessity, .avoids the agreement. The rule is, that a party who disables himself from rendering the agreed consideration, cannot require the performance of a promise which rests on such consideration. This doctrine formed the ground of decision in the folloAving cases: Keys v. Harwood, 2 C. B. 905; Planche v. Colburn, 8 Bing. 14; Frost v. Clarkson, 7 Cow. 24 ; Newcomb v. Brackett, 16 Mass. 161 .

But the plaintiff’s case is also fatally defective on another point. There .was no proof of any legal call made on the defendant tó pay the moneys according to the contract. The defendant agreed to pay his subscription in installments “ to be called for by said company, 'which installments were not to be larger than ten per cent, each; and such installments were not to be called for at a shorter period than thirty days from each other.” There was evidence that certain notices were sent around to various parties in the neighborhood of the residence of the defendant, and a copy of a notice of this class was produced; but the testimony failed to show that one of such notices came to the hands of the defendant. That he received some kind of a notice to pay his subscriptions was *327 admitted by him, but what were the requisitions of such notice did not appear. It was an indispensable part of the plaintiff’s case to show a demand of this money in conformity with the terms of the defendant’s stipulations to pay it, and the circumstances exhibited did not warrant the conclusion that the paper received by the defendant was of the required character.

And even if it liad appeared that the defendant received a copy of the notice which is now before us, I should still think the plaintiff’s case defective in this particular, for the notification would be insufficient in two fundamental respects: first, there is an entire absence of all proof, with regard to the authority by which the call for this money was made. The notice itself declares that such call was made by a resolution of the board of directors, but such recital is no proof of the fact. It was incumbent on the plaintiff to manifest a call for this money, before suit, by the proper corporate authority. This was not done at the trial.

But again. This call, if authoritatively made, was not in accordance with the contract. By the terms of the subscription, the installments could not be demanded at a shorter period than thirty days from each other. The call, as recited in the notice, is for “ ten per cent, of such subscription, to be paid on the first Monday of each month, for the period of ten months, commencing with the first Monday in March.” There are not thirty days between each of these periods. This, I think, is an incurable defect in the call itself.

On all these points the non-suit was right.