Opinion
(June Term, 1851.)
Where one of the subscribers to the Wilmington and Manchester Railroad Company, under the charter granted by the Legislature in 1846, gave his note for the first installment to one of the commissioners appointed to take subscriptions for the use of the company instead of paying the cash: Held, PEARSON, J., dissent., that the subscription was not void, and that the payee could recover on the note.
APPEAL from Manly, J., at NEW HANOVER Spring Term, 1851.
This is an action of debt on a bond, commenced by warrant before a single justice and brought by successive appeals to the Superior Court The pleas are general issue, consideration of the bond unlawful, consideration fraudulent as against the policy of the law. The following facts are agreed:
The Legislature of this State, at its session of 1846-7, passed an act to incorporate the Wilmington and Manchester Railroad Company. Books of subscription for stock in said company were opened by the commissioners named in the act, of whom the plaintiff was one, and the defendant signed an agreement in the said book in the following words:
"WILMINGTON, N.C. 1 March, 1847.
"We, the undersigned, agree to take the number of shares opposite our names in the capital stock of the Wilmington and Manchester Railroad Company, to be paid as follows: The first installment to be paid on the formation of the company; the second and other subsequent installments to be paid whenever it shall appear that seventy-five (225) hundred shares in all have been taken in the capital stock of said company. But it is understood and agreed that the second and other installments may be made and paid up in work or materials or money, at the option of the subscribers; and whenever materials or labor shall be so subscribed, they shall be valued by engineers hereafter to be appointed to superintend the Wilmington and Manchester Railroad."
And the defendant, at the time of signing the above, wrote the words " five shares" opposite to his name so signed, but did not pay the cash installment of 5 per cent on the amount of said subscription at the time of making the same, as required by the third section of the said act.
Afterwards, to wit, on 1 May, 1847, the defendant executed and delivered to the plaintiff the bond declared on, which is in the words and figures following:
"On demand, I promise to pay to John McRae, or order, twenty-five dollars, for value received, being the first installment of five per cent on five shares of stock subscribed by me to the Wilmington and Manchester Railroad. "W. S. RUSSELL. (SEAL)
"1 May, 1847."
On the foregoing case, the court being of opinion for the plaintiff, gave judgment accordingly for the amount of the bond, with interest from the date of the warrant, from which judgment the defendant appealed.
J. H. Bryan for plaintiff.
D. Reid and Norwood for defendant.
The opinion of the Court is that the judgment ought to be affirmed. As the suit was commenced by warrant before a justice of the peace, on which the proceedings are summary, the question arises without any special plea on the facts agreed. In them there is nothing, we think, rendering this bond void as being founded on an illegal and vicious consideration. It is not stated whether the (226) corporation has been organized or not. If it has not, then clearly the plaintiff must recover on a voluntary bond executed to him by the defendant, as there is no statute declaring it void. But it is the same if the charter took effect by the requisite amount, including the defendant's stock, having been subscribed and a due election of a president and directors, for, giving the defendant the benefit of presuming all the facts he can ask — which are that the bond was taken for the first installment on five shares of stock subscribed by him and was made payable to the plaintiff in trust for the corporation — still that would not vitiate the bond. The provisions of the charter material to the question are that the subscriptions are to be received for $1,500,000 in shares of $100 as the capital stock of the Wilmington and Manchester Railroad Company; and certain commissioners, of whom the plaintiff was one, are appointed to receive the subscriptions; and upon each share of stock subscribed the subscriber is to pay to the commissioners taking the same $5; and on nonpayment of said installment, the subscription shall be void. Then it provides that, upon the subscription of $300,000 in manner aforesaid, the company is declared to be incorporated, and a general meeting of the proprietors of the stock shall be called, and the president and directors elected; and in such meetings and others afterwards, each share of stock shall be entitled to a vote; and in a subsequent part it authorizes a sale of the stock of delinquent stockholders, and also suits against such delinquents for their installments. We see nothing in any or all of those provisions to avoid this deed of the defendant. It is true, the act says his subscription was void unless he paid the first installment. That only proves that no recovery could be had on the subscription; but it does not show that, if instead of paying cash he got a receipt for it by giving his bond, the bond would be also void. To invalidate the bond, it is not sufficient that it is without consideration, but there must be an unlawful and vicious consideration. (227) No one would impute such a consideration to this bond were it not for the words in the statute that on nonpayment of the first installment the subscription shall be void. But they cannot have that effect. The provisions was intended manifestly to prevent persons who were nominal subscribers and had paid nothing from coming forward at the general meeting for the organization of the company and claiming to have a vote for every share standing in their names. The purpose was to protect real stockholders from such men of straw. It was, moreover, meant to protect men from the consequences of making such subscriptions under the influence of momentary excitements which they could not fulfill. It gave them a locus penitentiae until they deliberately chose to confirm the subscription by making the requisite payment on it. The meaning was that until such payment the one party should have no voice in the concerns of the company, and the other party should not be able to recover the charter price of the share. That, it seems to the Court, was the whole scope and purpose of the provisions. It is a shield to the one class of subscribers against another, and that merely. It involves no matter of public policy or morals more than any other contract between private or corporate bodies. The law, for example, says that a parol contract for a sale of land is void. It says so, no doubt, as a matter of policy, but it is a policy affecting private rights, and does not involve the interest of the community as such. But although such a contract be void, yet if the purchaser give his bond for the price, that bond is not void. Nor if the other party, though not bound, give a deed for the land, will that be void. So, in this case, the defendant could not have been compelled to pay the $5 a share by force of the subscription; yet if he and the other subscribers chose to waive the provisions thus made for their benefit respectively, and agreed that, upon his (228) giving his bond for the same, it should be taken as cash and he admitted into the company, and he deliberately does so, it is not seen that any principle of law or justice is violated, or that there is any reason why he should not pay this as much as any voluntary bond. The State has no concern in the question as now presented, which simply involves the inquiry whether this or that man is one of these corporators, and not any breach of good morals or public weal. The bond, therefore, is not impeached, and the plaintiff is entitled to judgment on it.